As filed with the Securities and Exchange Commission on April 11, 2003
REGISTRATION NO. 333-103652
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NATIONAL-OILWELL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 5084 76-0475815
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
STEVEN W. KRABLIN
10000 RICHMOND AVENUE 10000 RICHMOND AVENUE
HOUSTON, TEXAS 77042-4200 HOUSTON, TEXAS 77042-4200
(713) 346-7500 (713) 346-7773
(Address, including zip code, and telephone number, including (Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices) area code, of registrant's agent for service of process)
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With a copy to: With a copy to:
DWIGHT W. RETTIG MARGARET B. SYMONDS
NATIONAL-OILWELL, INC. BRACEWELL & PATTERSON, L.L.P.
10000 RICHMOND AVENUE 711 LOUISIANA STREET, SUITE 2900
HOUSTON, TEXAS 77042-4200 HOUSTON, TEXAS 77002-2781
PHONE: (713) 346-7550 PHONE: (713) 221-1368
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company or there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
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The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 11, 2003
$200,000,000
NATIONAL-OILWELL, INC.
OFFER TO EXCHANGE
5.65% EXCHANGE SENIOR NOTES DUE 2012
FOR ANY AND ALL OUTSTANDING 5.65% SENIOR NOTES DUE 2012
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This prospectus, and accompanying letter of transmittal, relate to our
proposed exchange offer. We are offering to exchange up to $200,000,000
aggregate principal amount of new 5.65% senior notes due 2012, Series B, which
we call the exchange notes, for any and all outstanding 5.65% senior notes due
2012, which we call the original notes, previously issued in a private offering
on November 22, 2002 and which have certain transfer restrictions because they
were not issued pursuant to a registration statement.
In this prospectus we sometimes refer to the exchange notes and the
original notes collectively as the notes.
o The exchange offer expires at 5:00 p.m., New York City time,
on _______, 2003, unless we extend it.
o The terms of the exchange notes are substantially identical to
the terms of the original notes, except that the exchange
notes will be issued free of any covenants regarding exchange
and registration rights.
o All original notes that are validly tendered and not validly
withdrawn will be exchanged.
o Tenders of original notes may be withdrawn at any time prior
to expiration of the exchange offer.
o We will not receive any proceeds from the exchange offer.
o The exchange of original notes for exchange notes will not be
a taxable exchange for United States federal income tax
purposes.
o Holders of original notes do not have any appraisal or
dissenters' rights in connection with the exchange offer.
o Original notes not exchanged in the exchange offer will remain
outstanding and be entitled to the benefits of the indenture,
but except under limited circumstances, will have no further
exchange or registration rights under the registration rights
agreement discussed in this prospectus.
o Original notes not tendered in the exchange will remain
unregistered securities and your ability to transfer them
could be adversely affected.
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PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF
FACTORS YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the exchange notes or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus,
the accompanying letter of transmittal and related documents and any amendments
or supplements to this prospectus carefully before making your investment
decision.
The date of this prospectus is _________, 2003.
TABLE OF CONTENTS
PAGE
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SUMMARY ................................................................... 3
RISK FACTORS .............................................................. 10
THE EXCHANGE OFFER ........................................................ 14
USE OF PROCEEDS ........................................................... 27
DESCRIPTION OF NOTES ...................................................... 27
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS .................. 40
VALIDITY OF THE EXCHANGE NOTES ............................................ 41
EXPERTS ................................................................... 41
WHERE YOU CAN FIND MORE INFORMATION ....................................... 42
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS .......................... 43
ANNEX A - LETTER OF TRANSMITTAL ........................................... A-1
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THIS PROSPECTUS MAY ONLY BE USED WHERE IT IS LEGAL TO
SELL THE NOTES. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT COVER OF THOSE DOCUMENTS. OUR BUSINESS, FINANCIAL CONDITION, RESULTS
OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THOSE DATES.
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THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT NATIONAL OILWELL THAT IS NOT INCLUDED IN OR DELIVERED WITH
THIS PROSPECTUS. INFORMATION THAT WE HAVE INCORPORATED BY REFERENCE IS
AVAILABLE, WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST.
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FOR INFORMATION REGARDING WHO TO CONTACT FOR INFORMATION WHICH WE HAVE
INCORPORATED BY REFERENCE, SEE "WHERE YOU CAN FIND MORE INFORMATION." IN ORDER
TO OBTAIN TIMELY DELIVERY OF THIS INFORMATION, YOU MUST REQUEST THIS INFORMATION
NO LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE
OFFER.
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SUMMARY
The following is a summary of more detailed information contained
elsewhere in this prospectus. It may not contain all of the information that is
important to you. This prospectus includes or incorporates by reference
information about this offering, our business and our financial and operating
data. Before making an investment decision, we encourage you to read the entire
prospectus carefully, including the "Risk Factors" and "Information Regarding
Forward-Looking Statements" sections and the financial statements and the
footnotes to those statements, which are incorporated by reference in this
prospectus.
NATIONAL-OILWELL, INC.
We design, manufacture and sell comprehensive systems, components and
products used in oil and gas drilling and production, as well as distribute
products and provide services to the exploration and production segment of the
oil and gas industry.
Our principal executive offices are located at 10000 Richmond Avenue,
Houston, Texas 77042 and our telephone number at that address is 713-346-7500.
PRODUCTS AND TECHNOLOGY
National Oilwell designs, manufactures and sells drilling systems and
components for both land and offshore drilling rigs as well as complete land
drilling and well servicing rigs. Mechanical components include drawworks (the
hoisting winch used to raise and lower drill pipe), mud pumps (used to circulate
drilling fluids), top drives (used to turn drill pipe), solids control equipment
(used to remove particulates from drilling fluids), travelling equipment (hooks
and blocks used to hoist and lower drill pipe) and rotary tables (used to rotate
drill pipe). These components are essential to pump fluids and hoist, support
and rotate the drill string. Many of these components are designed specifically
for applications in offshore, extended reach and deep land drilling. This
equipment is installed on new rigs and often replaced during the upgrade and
refurbishment of existing rigs.
We design and manufacture masts, derricks and substructures for use on
land rigs and on fixed and mobile offshore platforms suitable for drilling
applications to depths of up to 30,000 feet or more. Other products include
cranes, jacking and mooring systems (used to raise, lower and anchor offshore
jackup drilling rigs), reciprocating and centrifugal pumps and fluid end
expendables for all major manufacturer's pumps. Our business includes the sale
of replacement parts for our own manufactured machinery and equipment.
We also design and manufacture electrical systems and control data
acquisition systems for drilling related operations and automated and remotely
controlled machinery for drilling rigs. Our control systems can control and
monitor many simultaneous operations on a drilling rig and often form the basis
for our state-of-the-art driller's cabin. Our automated pipe handling system
provides an efficient and cost effective method of joining lengths of drill pipe
or casing as does our iron roughneck. These and similar technologically advanced
products can greatly improve the safety on rigs, often by reducing the number of
persons working on the drilling floor.
While offering a complete line of conventional rigs, National Oilwell
has extensive experience in providing rig designs to satisfy requirements for
harsh or specialized environments. Such products include drilling and well
servicing rigs designed for the Arctic, highly mobile drilling and well
servicing
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rigs for jungle and desert use, modular well servicing rigs for offshore
platforms and modular drilling facilities for North Sea platforms. We also
design and produce fully integrated drilling equipment packages for offshore
rigs.
National Oilwell designs and manufactures drilling motors, drilling
jars and specialized drilling tools for rent and sale. We also design and
manufacture a complete line of fishing tools used to remove objects stuck in the
wellbore.
DISTRIBUTION SERVICES
National Oilwell provides distribution services through its network of
approximately 150 distribution service centers. Our distribution service centers
are located throughout the oil and gas producing regions of North America, with
105 locations in the United States, 40 locations in Canada, and the remainder in
various international locations. These distribution service centers stock and
sell a variety of expendable items for oilfield applications and spare parts for
our proprietary equipment. As oil and gas companies and drilling contractors
have refocused on their core competencies and emphasized efficiency initiatives
to reduce costs and capital requirements, our distribution services have
expanded to offer outsourcing and alliance arrangements that include
comprehensive procurement, inventory management and logistics support. In
addition, we believe we have a competitive advantage in the distribution
services business by distributing products manufactured by us and from the
association of this business with our Products and Technology segment.
The supplies and equipment stocked by our distribution service centers
vary by location. Each distribution point generally offers a large line of
oilfield products including valves, fittings, flanges, spare parts for oilfield
equipment and miscellaneous expendable items.
Most drilling contractors and oil and gas companies typically buy
supplies and equipment pursuant to non-exclusive contracts, which normally
specify a discount from list price for each product or product category. Our
goal is to create strategic alliances with our customers whereby we become the
customer's primary supplier of those items. In certain cases, we assume
responsibility for procurement, inventory management and product delivery for
the customer, occasionally by working directly out of the customer's facilities.
We believe e-commerce brings a significant advantage to larger
companies that are technologically proficient. During the last few years, we
have invested over $20 million to improve our information technology systems.
Our e-commerce system can interface directly with customers' systems to maximize
efficiencies for us and for our customers. We believe we have an advantage in
this effort due to our investment in technology, geographic size, knowledge of
the industry and customers, existing relationships with vendors and existing
means of product delivery.
BUSINESS STRATEGY
National Oilwell's business strategy is to enhance its market positions
and operating performance in the upstream oil and gas business by:
Leveraging our Capital Equipment Installed Base. We believe our market
position and comprehensive product offering present substantial opportunities to
capture a significant portion of expenditures for the construction of new
drilling rigs and equipment as well as the upgrade and refurbishment of existing
drilling rigs and equipment. Over the next few years, the advanced age of the
existing fleet of drilling rigs, coupled with drilling activity involving
greater depths and extended reach, is expected to generate demand for new
equipment. National Oilwell's automation and control systems offer
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the potential to improve the performance of new and existing drilling rigs. The
large installed base of our equipment also provides recurring demand for spare
parts and expendable products necessary for proper and efficient operation.
Expanding our Non-Capital Products Business. Our non-capital equipment
revenues continue to represent over half of our products and technology
business. We rent and sell high-performance drilling motors and downhole tools
and in the manufacture of certain expendable products and spare parts needed in
the drilling and production process. We believe additional expansion in the
non-capital upstream oil and gas industry would be beneficial to our business
and our customers.
Furthering our Information Technology and Process Improvement Strategy.
National Oilwell has developed an integrated information technology and process
improvement strategy to enhance procurement, inventory management and logistics
activities. As a result of the need to improve industry efficiency, oil and gas
companies and drilling contractors are frequently seeking alliances with
suppliers, manufacturers and service providers to achieve cost and capital
improvements. We believe we are well positioned to provide these services as a
result of our:
o large and geographically diverse network of distribution
service centers in major oil and gas producing areas;
o strong relationship with a large community of industry
suppliers;
o knowledge of customers' procurement processes, suppliers'
capabilities and products' performance; and
o information systems that offer customers and suppliers
enhanced e-commerce capabilities.
In addition, the integration of our distribution expertise, extensive
network and growing base of customer alliances provides an increased opportunity
for cost-effective marketing of our manufactured parts and equipment.
Continuing our Acquisitions Strategy. We believe the oilfield service
and equipment industry will continue to experience consolidation as businesses
seek to align themselves with other market participants in order to gain access
to broader markets and integrated product offerings. From 1997 through January
2003, National Oilwell has made a total of thirty-two acquisitions and plans to
continue to participate in this trend. While none of our individual acquisitions
have materially affected the development of our current business or the results
of our operations, the aggregate effect has positively impacted our ability to
provide complete drilling equipment systems to our customers.
RISK FACTORS
o Demand for our products is dependent upon the price of oil and
gas and the willingness to explore and produce oil and gas.
o The price of oil and gas affect companies' decisions to
explore and produce oil and gas, and as a result affects
demand for our products.
o Competition in our industry could ultimately lead to lower
revenues and earnings.
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o Because some of our products are used in potentially hazardous
activities, we face potential product liability and warranty
claims.
o The Location of some of our customers in foreign markets that
may have unstable economies or governments may have a negative
impact on our revenues and operating results.
o National-Oilwell sells products and services outside the
United States. Changes in foreign currency exchange rates
could have a negative impact on our revenues and operating
results.
o Our growth may cause difficulties integrating operations that
we acquire.
o Our indebtedness could limit the ability to borrow additional
funds and/or make us vulnerable to general adverse economic
and industry conditions.
THE EXCHANGE OFFER
Registration Rights
Agreement .......................... When we sold $200 million in aggregate principal amount of original
notes to qualified institutional buyers as defined in Rule 144A under
the Securities Act through Merril Lynch, Pierce, Fenner & Smith,
Incorporated, as initial purchaser, we entered into a registration
rights agreement dated as of November 22, 2002 with the initial
purchaser which granted the holders of the original notes certain
exchange and registration rights. The exchange offer made hereby is
intended to satisfy such exchange rights.
The Exchange Offer ................ $1,000 principal amount of exchange notes in exchange for each $1,000
principal amount of original notes. As of the date hereof, $200 million
aggregate principal amount of the original notes are outstanding.
Although the exchange notes are titled 5.65% Senior Notes due 2012,
Series B, the indenture provides that the original notes and the
exchange notes are treated as a single series of notes under the
indenture. We will issue exchange notes to holders promptly after
expiration of the exchange offer.
Resales of the Exchange
Notes ............................ Based on an interpretation of the Securities Act of 1933 by the staff
of the Securities and Exchange Commission set forth in several
no-action letters issued to third parties, and except as described
below, we believe that the exchange notes issued pursuant to the
exchange offer may be offered for resale, resold and otherwise
transferred by holders thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act.
However, any purchaser of notes who is an "affiliate" of ours within
the meaning of Rule 405 under the Securities Act, or who intends to
participate in the exchange offer for the purpose of distributing the
exchange notes, or any broker-dealer who purchased the notes to resell
pursuant to Rule 144A or any other available exemption under the
Securities Act, (i) will not be able to rely on the interpretation by
the staff of the Securities and Exchange Commission set
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forth in the above referenced no-action letters, (ii) will not be able
to tender the notes in the exchange offer and (iii) must comply with
the registration and prospectus delivery requirements of the Securities
Act in connection with any sale or transfer of the notes, unless such
sale or transfer is made pursuant to an exemption from such
requirements. We do not intend to seek our own no-action letter, and
there is no assurance that the staff of the Securities and Exchange
Commission would make a similar determination with respect to the
exchange notes as it has in such no-action letters to other persons.
Each broker-dealer that receives exchange notes pursuant to the
exchange offer in exchange for original notes that such broker-dealer
acquired for its own account as a result of market-making activities or
other trading activities, other than original notes acquired directly
from us or our affiliates, must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The
letter of transmittal states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
If we receive certain notices in the letter of transmittal, this
prospectus, as it may be amended or supplemented from time to time, may
be used for the appropriate time period by a broker-dealer in
connection with resales of exchange notes received in exchange for
original notes where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities and not acquired directly from us. We have agreed that, if
we receive certain notices in the letter of transmittal, we will make
this prospectus available to any such broker-dealer for use in
connection with any such resale.
The letter of transmittal requires broker-dealers tendering original
notes in the exchange offer to indicate whether such broker-dealer
acquired the original notes for its own account as a result of
market-making activities or other trading activities, other than
original notes acquired directly from us or any of our affiliates. If
no broker-dealer indicates that the original notes were so acquired, we
have no obligation under the registration rights agreement to maintain
the effectiveness of the registration statement past the consummation
of the exchange offer or to allow the use of this prospectus for such
resales. See "The Exchange Offer--Registration Rights" and "--Resale of
the Exchange Notes; Plan of Distribution."
Expiration Date .................. The exchange offer expires at 5:00 p.m., New York City time, on _________,
2003, unless we extend the exchange offer in our sole discretion, in which
case the term "Expiration Date" means the latest date and time to which the
exchange offer is extended.
Conditions to the Exchange
Offer ............................ The exchange offer is subject to certain conditions, which we may waive.
See "The Exchange Offer--Conditions to the Exchange Offer."
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Procedures for Tendering
the Original Notes .............. Each holder of original notes wishing to accept the exchange offer must
complete, sign and date the accompanying letter of transmittal in accordance
with the instructions contained herein and therein, and mail or otherwise
deliver such letter of transmittal together with the original notes and any
other required documentation to the exchange agent identified below under
"Exchange Agent" at the address set forth herein. See "The Exchange
Offer--Registration Rights" and "--Procedures for Tendering Original Notes."
Special Procedures for
Beneficial Owners ............... Any beneficial owner whose original notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on such beneficial owner's behalf. See "The
Exchange Offer --Procedures for Tendering Original Notes."
Guaranteed Delivery
Procedures ...................... Holders of original notes who wish to tender their original notes when those
securities are not immediately available or who cannot deliver their original
notes, the letter of transmittal or any other documents required by the letter
of transmittal to the exchange agent prior to the Expiration Date must tender
their original notes according to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Procedures for Tendering Original Notes - Guaranteed
Delivery."
Withdrawal Rights ............... Tenders of original notes pursuant to the exchange offer may be withdrawn at
any time prior to the Expiration Date.
Acceptance of Original
Notes and Delivery of
Exchange Notes .................. We will accept for exchange any and all original notes that are properly
tendered in the exchange offer, and not withdrawn, prior to the exchange
offer's Expiration Date. The exchange notes issued pursuant to the exchange
offer will be issued promptly after expiration of the exchange offer. See "The
Exchange Offer--Terms of the Exchange Offer."
Exchange Agent .................. The Bank of New York is serving as the exchange agent in connection with the
exchange offer.
Federal Income Tax
Considerations .................. The exchange of original notes for exchange notes pursuant to the exchange
offer will not be treated as a taxable exchange for federal income tax
purposes. See "Material United States Federal Income Tax Considerations."
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SUMMARY FINANCIAL DATA
Data for periods prior to 2002 shown below is restated to combine IRI
International Corporation and Dupre' results pursuant to pooling-of-interests
accounting. The following should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements and the related notes thereto incorporated by reference in
this prospectus.
YEAR ENDED DECEMBER 31,
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2002 2001 2000 1999 1998
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(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
OPERATING DATA:
Revenues ................................................ $ 1,521,946 $ 1,747,455 $ 1,149,920 $ 839,648 $ 1,449,248
Operating income (1) .................................... 134,323 189,277 48,456 1,325 139,815
Income (loss) before taxes .............................. 112,465 168,017 27,037 (14,859) 125,021
Net income (loss) (2) ................................... 73,069 104,063 13,136 (9,385) 81,336
Net income (loss) per share
Basic (2) ............................................ 0.90 1.29 0.17 (0.13) 1.19
Diluted (2) .......................................... 0.89 1.27 0.16 (0.13) 1.19
OTHER DATA:
Depreciation and amortization ........................... 25,048 38,873 35,034 25,541 20,518
Capital expenditure ..................................... 24,805 27,358 24,561 17,547 39,246
BALANCE SHEET DATA:
Working capital ......................................... 768,852 631,257 480,321 452,015 529,937
Total assets ............................................ 1,968,662 1,471,696 1,278,894 1,005,715 1,091,028
Long-term debt, less current maturities ................. 594,637 300,000 222,477 196,053 222,209
Stockholders' equity .................................... 933,364 867,540 767,206 596,375 603,568
RATIOS:
Consolidated Ratios of Earnings to Fixed Charges (3) .... 5.0 7.4 2.3 0.1 9.4
(1) In connection with the IRI International Corporation merger in 2000,
we recorded charges of $14.1 million related to direct merger costs,
personnel reductions, and facility closures and inventory write-offs
of $15.7 million due to product line rationalization. In 1998, a $17.0
million charge was recorded related to personnel reductions and
facility closures and a $5.6 million charge related to the write-down
of certain tubular inventories.
(2) We adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142), effective January
1, 2002. The effects of not amortizing goodwill and other intangible
assets in periods prior to the adoption of SFAS 142 would have
resulted in net income (loss) of $115.0 million, $23.1 million, $(4.0)
million and $84.8 million for the years ended December 31, 2001, 2000,
1999,and 1998, respectively; basic earnings per common share of $1.42,
$0.29, $(0.06) and $1.24 for the years ending December 31, 2001, 2000,
1999 and 1998, respectively; and diluted earnings per common share of
$1.41, $0.29, $(0.06) and $1.24 for the years ending December 31,
2001, 2000, 1999 and 1998, respectively.
(3) In all cases, (i) earnings represent: income before income taxes,
excluding extraordinary gains or losses; plus fixed charges, excluding
capitalized interest and (ii) fixed charges include interest, whether
expensed or capitalized, plus amortization of debt issuance costs,
plus the portion of rental expense which is deemed representative of
interest.
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RISK FACTORS
You should carefully consider the risks described below, in addition to
other information contained or incorporated by reference herein. Realization of
any of the following risks could have a material adverse effect on our business,
financial condition, cash flows and results of operations.
DEMAND FOR OUR PRODUCTS IS DEPENDENT UPON THE PRICE OF OIL AND GAS AND THE
WILLINGNESS TO EXPLORE AND PRODUCE OIL AND GAS.
National Oilwell is dependent upon the oil and gas industry and its
willingness to explore for and produce oil and gas. The industry's willingness
to explore and produce depends upon the prevailing view of future product
prices. Many factors affect the supply and demand for oil and gas and therefore
influence product prices, including:
o level of production from known reserves;
o cost of producing oil and gas;
o level of drilling activity;
o worldwide economic activity;
o national government political requirements;
o development of alternate energy sources; and
o environmental regulations.
If there is a significant reduction in demand for drilling services, in
cash flows of drilling contractors or production companies or in drilling or
well servicing rig utilization rates, then demand for our products will decline.
THE PRICE OF OIL AND GAS AFFECT COMPANIES' DECISIONS TO EXPLORE AND PRODUCE OIL
AND GAS, AND AS A RESULT AFFECTS DEMAND FOR OUR PRODUCTS.
Oil and gas prices have been volatile since 1990, ranging from $10 -
$40 per barrel. Over the last three years, oil prices have generally ranged
within $20-$30 per barrel. Spot gas prices have also been volatile since 1990,
ranging from less than $1.00 per mmbtu of gas to above $10.00. Gas prices were
moderate in 1998 and 1999, generally ranging from $1.80 - $2.50 per mmbtu. Gas
prices in 2000 generally ranged from $4-$8 per mmbtu. In the second quarter of
2001, gas prices came under pressure, generally ranging between $2.20 to $3.00
per mmbtu through the first quarter of 2002. Gas prices have generally ranged
between $3.00 - $5.00 per mmbtu since that time.
Expectations for future oil and gas prices cause many shifts in the
strategies and expenditure levels of oil and gas companies and drilling
contractors, particularly with respect to decisions to purchase major capital
equipment of the type we manufacture. Industry activity and our revenues have
not responded to the higher commodity prices that have existed since the second
quarter of 2002, presumably due to concerns that these prices will not continue
in the current range. We cannot predict future oil and gas prices or the effect
prices will have on exploration and production levels.
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COMPETITION IN OUR INDUSTRY COULD ULTIMATELY LEAD TO LOWER REVENUES AND
EARNINGS.
The oilfield products and services industry is highly competitive. The
following competitive actions can each affect our revenues and earnings:
o price changes;
o new product and technology introductions; and
o improvements in availability and delivery.
National Oilwell's Products and Technology business segment competes
with several companies in North America that have drilling products that compete
directly with certain of our products. National Oilwell's Distribution Services
business segment faces competition from various smaller regional competitors who
leverage geographic strength in a particular market area, as well as other
multinational distribution companies utilizing pricing power to compete.
Competition in our industry could lead to lower revenues and earnings.
BECAUSE SOME OF OUR PRODUCTS ARE USED IN POTENTIALLY HAZARDOUS ACTIVITIES, WE
FACE POTENTIAL PRODUCT LIABILITY AND WARRANTY CLAIMS.
Customers use some of our products in potentially hazardous drilling,
completion and production applications that can cause:
o injury or loss of life;
o damage to property, equipment or the environment; and
o suspension of operations.
National Oilwell may be named as a defendant in product liability or
other lawsuits asserting potentially large claims if an accident occurs at a
location where our equipment and services have been used. We are currently party
to various legal and administrative proceedings. We cannot predict the outcome
of these proceedings, nor can we guarantee any negative outcomes will not be
significant to us.
THE LOCATION OF SOME OF OUR CUSTOMERS IN FOREIGN MARKETS THAT MAY HAVE UNSTABLE
ECONOMIES OR GOVERNMENTS MAY HAVE A NEGATIVE IMPACT ON OUR REVENUES AND
OPERATING RESULTS.
Some of our revenues depend upon customers in the Middle East, Africa,
Southeast Asia, South America and other international markets. These revenues
are subject to risks of instability of foreign economies and governments. Laws
and regulations limiting exports to particular countries can affect our sales,
and sometimes export laws and regulations of one jurisdiction contradict those
of another.
-11-
NATIONAL-OILWELL SELLS PRODUCTS AND SERVICES OUTSIDE THE UNITED STATES. CHANGES
IN FOREIGN CURRENCY EXCHANGE RATES COULD HAVE A NEGATIVE IMPACT ON OUR REVENUES
AND OPERATING RESULTS.
National Oilwell is exposed to the risks of changes in exchange rates
between the U.S. dollar and foreign currencies. Our Norwegian companies enter
into foreign exchange forward contracts, primarily between the Norwegian kroner
and the US dollar, to hedge cash flows on certain significant contracts. Our
decisions regarding the need for hedging foreign currencies in Norway and other
countries can adversely affect our operating results.
OUR GROWTH MAY CAUSE DIFFICULTIES INTEGRATING OPERATIONS THAT WE ACQUIRE.
National Oilwell has acquired 32 companies since April 1997, including
nine in 2001 and four in 2002. In addition, we acquired two other companies in
January 2003. We do not know whether suitable acquisition candidates will be
available on reasonable terms or if we will have access to adequate funds to
complete any desired acquisition. In addition, we may not be able to
successfully integrate the operations of the acquired companies. Combining
organizations could interrupt the activities of some or all of our businesses
and have a negative impact on operations.
OUR INDEBTEDNESS COULD LIMIT OUR ABILITY TO BORROW ADDITIONAL FUNDS AND/OR MAKE
US VULNERABLE TO GENERAL ADVERSE ECONOMIC AND INDUSTRY CONDITIONS.
In 1998, National Oilwell issued $150 million of 6 7/8% unsecured
senior notes due July 1, 2005. In 2001, we issued an additional $150 million of
6 1/2% unsecured senior notes due March 15, 2011. In 2002, we issued $200
million of 5.65% unsecured senior notes due November 15, 2012. We also have a
$175 million revolving line of credit and approximately $200 million in
availability under various borrowing arrangements of our wholly-owned foreign
subsidiaries. Our leverage requires us to use some of our cash flow from
operations for payment of interest on our debt. Our leverage may also make it
more difficult to obtain additional financing in the future. Further, our
leverage could make us more vulnerable to economic downturns and competitive
pressures.
NO PUBLIC MARKET FOR THE NOTES EXISTS AND YOU CANNOT BE SURE THAT AN ACTIVE
TRADING MARKET WILL DEVELOP.
The original notes have not been registered under the Securities Act
and may not be resold by purchasers thereof unless the original notes are
subsequently registered or an exemption from the registration requirements of
the Securities Act is available. At the time of the private placement of the
original notes, the initial purchaser was not obligated to make a market in the
original notes and, if issued, the exchange notes, and any such market-making
activity that commenced or is commenced may be terminated at any time without
notice. In addition, any market-making activity will be subject to restrictions
imposed by the Securities Act and the Exchange Act. Even following registration
or exchange of the original notes for exchange notes, an active trading market
providing liquidity to a holder of original notes or exchange notes may not
exist. The liquidity of any market for the notes will depend upon the number of
holders of the notes, our performance, the market for similar securities, the
interest of securities dealers in making a market in the notes, prevailing
interest rates and other factors.
-12-
BECAUSE THE NOTES ARE REPRESENTED BY A GLOBAL NOTE, HOLDERS OF THE NOTES MUST
RELY ON THE PROCEDURES OF THE DEPOSITARY.
The original notes are represented, and the exchange notes will be
represented, by one or more global notes in definitive fully registered form
without coupons and will be deposited upon issuance with, or on behalf of, The
Depository Trust Company, which we call DTC. DTC (or its nominee) will be the
sole holder of the global notes representing the notes and owners of book-entry
interests will not be considered owners or holders of the notes. After payment
to DTC, we will have no responsibility or liability for any aspect of the
payments made on account of book-entry interests. Accordingly, holders of
book-entry interests must rely on the procedures of DTC or, if such holder is
not a participant in DTC, on the procedures of the participant through which the
interest is owned, to exercise any rights and obligations of a holder under the
indenture governing the notes.
Owners of book-entry interests will not have the direct right to act
upon our solicitations for consents or requests for waivers or other actions
from holders of the notes. Instead, owners of book-entry interests will be
permitted to act only to the extent they have received appropriate proxies to do
so from DTC. There can be no assurance that procedures implemented for the
granting of such proxies will be sufficient to enable owners of book-entry
interests to vote on any requested actions on a timely basis.
Similarly, upon the occurrence of an event of default under the
indenture governing the notes, unless and until definitive registered notes are
issued in respect of all book-entry interests, owners of book-entry interests
will be restricted to acting through DTC. There can be no assurance that the
procedures to be implemented through DTC will be adequate to ensure the timely
exercise of remedies under the notes.
-13-
THE EXCHANGE OFFER
REGISTRATION RIGHTS
At the closing of the sale of the original notes, we entered into a
registration rights agreement with the initial purchaser pursuant to which we
agreed, for the benefit of the holders of the original notes, at our cost,
o to file, no later than March 7, 2003, an exchange offer
registration statement with the Securities and Exchange
Commission with respect to the exchange offer for the exchange
notes;
o to use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the
Securities Act no later than April 21, 2003;
o to use our reasonable best efforts to keep the registration
statement for the exchange notes effective until the closing
of the exchange offer; and
o to use our reasonable best efforts to cause the exchange offer
to be completed no later than May 21, 2003.
Upon the exchange offer registration statement being declared
effective, we agreed to offer the exchange notes in exchange for surrender of
the original notes and to keep the exchange offer open for not less than 30 days
thereafter. For each original note surrendered to us pursuant to the exchange
offer, the holder of that original note will receive an exchange note having a
principal amount equal to that of the surrendered original note. Interest on
each exchange note will accrue from the last interest payment date on which
interest was paid on the original note tendered in exchange therefor or, if no
interest has been paid on the original note, from the date of its initial
issuance. The registration rights agreement also provides an agreement to
include in the prospectus for the exchange offer certain information necessary
to allow a broker-dealer who holds original notes that were acquired for its own
account as a result of market-making activities or other ordinary course trading
activities (other than original notes acquired directly from us or one of our
affiliates) to exchange such original notes pursuant to the exchange offer and
to satisfy the prospectus delivery requirements in connection with resales of
exchange notes received by such broker-dealer in the exchange offer.
The preceding agreement is needed because any broker-dealer who
acquires original notes for its own account as a result of market-making
activities or other trading activities is required to deliver a prospectus
meeting the requirements of the Securities Act. This prospectus covers our offer
and sale of the exchange notes pursuant to the exchange offer. It also covers
the resale of exchange notes received in the exchange offer by any broker-dealer
who held original notes acquired for its own account as a result of
market-making activities or other trading activities other than original notes
acquired directly from us or one of our affiliates.
Under existing interpretations of the staff of the Securities and
Exchange Commission contained in several no-action letters to third parties, the
exchange notes would in general be freely tradeable after the exchange offer
without further registration under the Securities Act. However, any purchaser of
original notes who is an "affiliate" of ours as defined in Rule 405 of the
Securities Act or who intends to participate in the exchange offer for the
purpose of distributing the related exchange notes
o will not be able to rely on the interpretation of the staff of
the Securities and Exchange Commission;
o will not be able to tender its original notes in the exchange
offer; and
-14-
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale
or transfer of the original notes unless such sale or transfer
is made pursuant to an exemption from such requirements.
Each holder of the original notes who wishes to exchange original notes
for exchange notes in the exchange offer will be required to make certain
representations, including that (1) any exchange notes to be received by it will
be acquired in the ordinary course of its business, (2) at the time of
commencement of the exchange offer, it has no arrangement with any person to
participate in the distribution of the original notes or the exchange notes
(within the meaning of the Securities Act) and (3) it is not an affiliate of
ours or, if it is an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent
that it is not engaged in, and does not intend to engage in, the distribution of
the exchange notes. If the holder is a broker-dealer that will receive exchange
notes for its own account in exchange for original notes that were acquired as a
result of market-making activities or other trading activities, it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of the exchange notes.
If:
o we determine that the exchange offer registration statement is
not available or the exchange offer may not be consummated
because it would violate applicable law or Securities and
Exchange Commission interpretations;
o the exchange offer registration statement is not declared
effective on or before April 21, 2003 or the exchange offer
has not been completed on or before May 21, 2003;
o the exchange offer is not available to any holder of original
notes based on an opinion of counsel; or
o the initial purchaser of the original notes (but only with
respect to original notes acquired directly from us) so
requests;
we will, as promptly as practicable, use our reasonable efforts to file a shelf
registration statement for resale of the original notes. We will use our
reasonable best efforts to cause the shelf registration statement to become
effective as promptly as practicable but no later than June 20, 2003, and to
keep the registration statement effective for a period ending on the earlier of:
o the second anniversary of the effective date of the shelf
registration statement; or
o until all of the original notes that are covered by the shelf
registration statement cease to be outstanding or have been
sold to the public under Rule 144 under the Securities Act or
are eligible to be sold to the public under Rule 144(k) under
the Securities Act.
We will provide to the holders of the original notes copies of the
prospectus that is part of the shelf registration statement, notify such holders
when the resale registration for the original notes has become effective and
take other actions as are required to permit unrestricted sales of such notes. A
holder of the original notes that offers or sells such notes pursuant to the
shelf registration generally would be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to the
purchaser, will be subject to certain of the civil liability provisions of the
Securities Act in connection with such sales and will be bound by the provisions
of the registration rights agreement applicable to that holder, including
indemnification obligations.
-15-
We will pay additional interest on the original notes if:
o the exchange offer registration statement is not filed with
the Securities and Exchange Commission on or before March 7,
2003;
o the exchange offer registration statement or the shelf
registration statement, as the case may be, is not declared
effective on or before the date on which such registration
statement is required to become or be declared effective;
o the exchange offer is not consummated on or before May 21,
2003 (if the exchange offer is then required to be made); or
o the shelf registration is filed and declared effective but
thereafter becomes unusable by the holders of notes covered by
the registration statement for more than 45 days in any
12-month period,
in which case, we will be obligated to pay additional interest on the original
notes over and above the applicable interest rate at a rate of 0.25% per year,
which interest shall be further increased by 0.25% for each 90-day period that
we are required to pay additional interest up to a maximum additional interest
rate of 0.50% per year, until the exchange offer registration statement is
filed, the applicable registration statement is declared effective, the exchange
offer is consummated, or the shelf registration statement becomes usable, as the
case may be. Any additional interest will cease to accrue when all of the events
described above have been cured.
We are required to deposit, in immediately available funds, the amount
of any additional interest payable to holders of the notes with the trustee on
or before the semiannual interest payment date.
This summary of the material provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement, a copy of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
Except as set forth above, after consummation of the exchange offer,
holders of original notes which are the subject of the exchange offer will have
no registration or exchange rights under the registration rights agreement.
These consequences are more fully described under "--Consequences of Failure to
Exchange" and "--Resale of the Exchange Notes; Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
The original notes which are not exchanged for exchange notes pursuant
to the exchange offer and are not included in a resale prospectus which, if
required, will be filed as part of an amendment to the registration statement of
which this prospectus is a part, will remain restricted securities and subject
to restrictions on transfer. The circumstances under which we would file a
resale prospectus are more fully described under"--Procedures for Tendering
Original Notes--Determination of Validity." Our indenture requires the original
notes to bear a legend restricting the transfer of the original notes because
the original notes were issued in a private placement and not registered under
the Securities Act. Accordingly, original notes which are not exchanged for
exchange notes will continue to bear a legend restricting the transfer of
original notes. Original notes that are not exchanged may only be resold:
o to us, upon redemption or otherwise;
o so long as the original notes are eligible for resale pursuant
to Rule 144A under the Securities Act, to a person whom the
seller reasonably believes is a qualified institutional
-16-
buyer within the meaning of Rule 144A, purchasing for its own
account or for the account of a qualified institutional buyer
to whom notice is given that the resale, pledge or other
transfer is being made in reliance on Rule 144A;
o in an offshore transaction in accordance with Regulation S
under the Securities Act;
o pursuant to an exemption from registration in accordance with
Rule 144, if available, under the Securities Act;
o in reliance on another exemption from the registration
requirements of the Securities Act; or
o pursuant to an effective registration statement under the
Securities Act.
In all of the situations discussed above, the resale must be in
accordance with any applicable securities laws of any state of the United
States.
To the extent original notes are tendered and accepted in the exchange
offer, the principal amount of outstanding original notes will decrease with a
resulting decrease in the liquidity in the market therefor. Accordingly, the
liquidity of the market of the original notes could be adversely affected. The
risks of failing to exchange original notes are more fully described in "Risk
Factors--Consequences of Failing to Exchange or Properly Tender."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal, a copy of which is attached to this
prospectus as Annex A, we will accept any and all original notes validly
tendered and not withdrawn prior to the Expiration Date. We will issue $1,000
principal amount of exchange notes in exchange for each $1,000 principal amount
of original notes accepted in the exchange offer. Holders may tender some or all
of their original notes pursuant to the exchange offer. However, original notes
may be tendered only in integral multiples of $1,000 principal amount.
The form and terms of the exchange notes are the same as the form and
terms of the original notes, except that:
o the exchange notes will have been registered under the
Securities Act and will not bear legends restricting their
transfer pursuant to the Securities Act;
o holders of the exchange notes will not be entitled to the
rights of holders of original notes under the registration
rights agreement; and
o provisions for additional interest in the event of breach of
certain registration covenants relating to the original notes
will not apply to the exchange notes.
The exchange notes will evidence the same debt as the original notes
that they replace, and will be issued under, and be entitled to the benefits of,
the indenture which governs all of the notes.
Solely for reasons of administration and for no other purpose, we have
fixed the close of business on _____, 2003 as the date for purposes of
determining the persons to whom this prospectus and the letter of transmittal
will be mailed initially. Only a registered holder of original notes or such
holder's legal representative or attorney-in-fact as reflected on the records of
the trustee under the indenture may participate in the exchange offer. There
will be no fixed record date for determining registered holders of the original
notes entitled to participate in the exchange offer.
-17-
Holders of the original notes do not have any appraisal or dissenters'
rights under Delaware law or the indenture in connection with the exchange
offer. We intend to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the Securities
and Exchange Commission thereunder.
We shall be deemed to have accepted validly tendered original notes
when, as and if we have given oral or written notice of our acceptance to the
exchange agent. The exchange agent will act as agent for the tendering holders
of the original notes for the purposes of receiving the exchange notes. The
exchange notes delivered pursuant to the exchange offer will be delivered
promptly after expiration of the exchange offer.
If any tendered original notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events described herein or
otherwise, certificates for any such unaccepted original notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender original notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of the
original notes pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the exchange
offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" with respect to the exchange offer, shall
mean 5:00 p.m., New York City time, on ___________, 2003, unless we, in our sole
discretion, extend the exchange offer, in which case "Expiration Date" shall
mean the latest date and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange
agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date of the exchange
offer.
We reserve the right, in our sole discretion,
o to delay accepting any original notes;
o to extend the exchange offer;
o if any of the conditions set forth below under "--Conditions
to the Exchange Offer" have not been satisfied, to terminate
the exchange offer; or
o to amend the terms of the exchange offer in any manner.
We may effect any such delay, extension or termination by giving oral
or written notice thereof to the exchange agent.
Except as specified in the second paragraph under this heading, any
such delay in acceptance, extension, termination or amendment will be followed
as promptly as practicable by a public announcement thereof. If the exchange
offer is amended in a manner determined by us to constitute a material change,
we will promptly disclose any amendment by means of a prospectus supplement that
will be distributed to the registered holders of the original notes. The
exchange offer will then be extended for a period of five to ten business days,
as required by law, depending upon the significance of the amendment and the
manner of disclosure to the registered holders, if the exchange offer would
otherwise expire during such five to ten business day period.
-18-
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of the exchange
offer, we shall not have an obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
thereof to the Dow Jones News Service.
PROCEDURES FOR TENDERING ORIGINAL NOTES
Tenders of Original Notes. The tender by a holder of original notes
pursuant to any of the procedures set forth below will constitute the tendering
holder's acceptance of the terms and conditions of the exchange offer. Our
acceptance for exchange of original notes tendered pursuant to any of the
procedures described below will constitute a binding agreement between such
tendering holder and us in accordance with the terms and subject to the
conditions of the exchange offer. Only holders of record are authorized to
tender their original notes. The procedures by which original notes may be
tendered by beneficial owners that are not holders of record will depend upon
the manner in which the original notes are held.
DTC has authorized DTC participants that are beneficial owners of
original notes through DTC to tender their original notes as if they were
holders. To effect a tender, DTC participants should either (1) complete and
sign the letter of transmittal or a facsimile thereof, have the signature
thereon guaranteed if required by Instruction 1 of the letter of transmittal and
mail or deliver the letter of transmittal or such facsimile pursuant to the
procedures for book-entry transfer set forth below under "-- Book-Entry Delivery
Procedures," or (2) transmit their acceptance to DTC through the DTC Automated
Tender Offer Program (which we call "ATOP"), for which the transaction will be
eligible, and follow the procedures for book-entry transfer set forth below
under "-- Book-Entry Delivery Procedures."
Tender of Original Notes Held in Physical Form. To tender effectively
original notes held in physical form pursuant to the exchange offer,
o a properly completed letter of transmittal applicable to such
notes (or a facsimile thereof) duly executed by the holder
thereof, and any other documents required by the letter of
transmittal, must be received by the exchange agent at one of
its addresses set forth below, and tendered original notes
must be received by the exchange agent at such address (or
delivery effected through the deposit of original notes into
the exchange agent's account with DTC and making book-entry
delivery as set forth below) on or prior to the Expiration
Date of the exchange offer; or
o the tendering holder must comply with the guaranteed delivery
procedures set forth below.
-19-
LETTERS OF TRANSMITTAL AND ORIGINAL NOTES SHOULD BE SENT ONLY TO THE
EXCHANGE AGENT AND SHOULD NOT BE SENT TO US.
Tender of Original Notes Held Through a Custodian. To effectively
tender original notes that are held of record by a custodian bank, depository,
broker, trust company or other nominee, the beneficial owner thereof must
instruct such holder to tender the original notes on the beneficial owner's
behalf. A letter of instructions from the record owner to the beneficial owner
may be included in the materials provided along with this prospectus which may
be used by the beneficial owner in this process to instruct the registered
holder of such owner's original notes to effect the tender.
Tender of Original Notes Held Through DTC. To effectively tender
original notes that are held through DTC, DTC participants should either
o properly complete and duly execute the letter of transmittal
(or a facsimile thereof), and any other documents required by
the letter of transmittal, and mail or deliver the letter of
transmittal or such facsimile pursuant to the procedures for
book-entry transfer set forth below; or
o transmit their acceptance through ATOP, for which the
transaction will be eligible, and DTC will then edit and
verify the acceptance and send an Agent's Message to the
exchange agent for its acceptance.
Delivery of tendering original notes held through DTC must be made to
the exchange agent pursuant to the book-entry delivery procedures set forth
below or the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND LETTERS OF TRANSMITTAL,
ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OR AGENT'S MESSAGE TRANSMITTED THROUGH
ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING ORIGINAL NOTES AND
DELIVERING LETTERS OF TRANSMITTAL. EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF
TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
Except as provided below, unless the original notes being tendered are
deposited with the exchange agent on or prior to the Expiration Date
(accompanied by a properly completed and duly executed letter of transmittal or
a properly transmitted Agent's Message), we may, at our option, reject such
tender. Exchange of exchange notes for original notes will be made only against
deposit of the tendered original notes and delivery of all other required
documents.
Book-Entry Delivery Procedures. The exchange agent will establish an
account with respect to the original notes at DTC for purposes of the exchange
offer within two business days after the date of this prospectus, and any
financial institution that is a participant in DTC may make book-entry delivery
of the original notes by causing DTC to transfer such original notes into the
exchange agent's account in accordance with DTC's procedures for such transfer.
However, although delivery of original notes may be effected through book-entry
at DTC, the letter of transmittal (or facsimile thereof), with any required
signature guarantees or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted to
and received by the exchange agent at one or more of its addresses set forth in
this prospectus on or prior to the Expiration Date, or compliance must be made
with the guaranteed delivery procedures described below. Delivery of documents
to DTC does not constitute delivery to the exchange agent. The confirmation of a
book-entry transfer into the exchange agent's account at DTC as described above
is referred to herein as a "Book-Entry Confirmation."
-20-
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
a participant in DTC tendering original notes and that such participant has
received the letter of transmittal and agrees to be bound by the terms of the
letter of transmittal and we may enforce such agreement against such
participant.
Signature Guarantees. Signatures on all letters of transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of these being an
"eligible institution"), unless the original notes tendered thereby are tendered
(1) by a registered holder of original notes (or by a participant in DTC whose
name appears on a DTC security position listing as the owner of such original
notes) who has not completed either the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the letter of transmittal or
(2) for the account of an eligible institution. For additional information on
signature guarantees, see Instruction 1 of the letter of transmittal. If the
original notes are registered in the name of a person other than the signer of
the letter of transmittal or if original notes not accepted for exchange or not
tendered are to be returned to a person other than the registered holder, then
the signatures on the letter of transmittal accompanying the tendered original
notes must be guaranteed by an eligible institution as described above.
Additional information on signature guarantees and instruments of transfer is
included in Instructions 1 and 5 of the letter of transmittal.
Guaranteed Delivery. If a holder desires to tender original notes
pursuant to the exchange offer and time will not permit the letter of
transmittal, certificates representing the original notes and all other required
documents to reach the exchange agent, or the procedures for book-entry transfer
cannot be completed, on or prior to the Expiration Date of the exchange offer,
such original notes may nevertheless be tendered if all of the following
conditions are satisfied:
o the tender is made by or through an eligible institution;
o a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by us herewith,
or an Agent's Message with respect to guaranteed delivery that
is accepted by us, is received by the exchange agent on or
prior to the Expiration Date, as provided below; and
o the certificates for the tendered original notes, in proper
form for transfer (or a Book-Entry Confirmation of the
transfer of such original notes into the exchange agent's
account at DTC as described above), together with the letter
of transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees and any
other documents required by the letter of transmittal or a
properly transmitted Agent's Message, are received by the
exchange agent within two business days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery,
telegram, facsimile transmission or mail to the exchange agent and must include
a guarantee by an eligible institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, delivery of exchange notes
by the exchange agent for original notes tendered and accepted for exchange
pursuant to the exchange offer will, in all cases, be made only after timely
receipt by the exchange agent of such original notes (or Book-Entry Confirmation
of the transfer of such original notes into the exchange agent's account at DTC
as described above), and the letter of transmittal (or facsimile thereof) with
respect to such original notes, properly completed and duly executed, with any
required signature guarantees and any other documents required by the letter of
transmittal, or a properly transmitted Agent's Message.
-21-
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of tendered
original notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all original notes not properly tendered or any original notes our
acceptance of which, in the opinion of our counsel, would be unlawful.
We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular original notes. The interpretation of the
terms and conditions of our exchange offer (including the instructions in the
letter of transmittal) by us will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of original
notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with
respect to tenders of original notes through the exchange agent, neither we, the
exchange agent nor any other person is under any duty to give such notice, nor
shall we or they incur any liability for failure to give such notification.
Tenders of original notes will not be deemed to have been made until such
defects or irregularities have been cured or waived.
Any original notes received by the exchange agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if original notes are submitted in a principal amount greater than
the principal amount of original notes being tendered by such tendering holder,
such unaccepted or non-exchanged original notes will either be
o returned by the exchange agent to the tendering holders as
promptly as practicable; or
o in the case of original notes tendered by book-entry transfer
into the exchange agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry transfer procedures
described above, credited to an account maintained with such
Book-Entry Transfer Facility.
By tendering, each registered holder will represent to us that,
o the exchange notes to be acquired by the holder and any
beneficial owner(s) of the original notes in connection with
the exchange offer are being acquired by the holder and any
beneficial owner(s) in the ordinary course of business of the
holder and any beneficial owner(s);
o the holder and each beneficial owner are not participating, do
not intend to participate and have no arrangement or
understanding with any person to participate, in a
distribution of the exchange notes;
o the holder and each beneficial owner acknowledge and agree
that if the offeree is a broker-dealer holding original notes
acquired for its own account as a result of market making
activities or other trading activities, it will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of exchange notes received in
respect of original notes pursuant to the exchange offer, but
by so acknowledging, the holder shall not be deemed to admit
that, by delivering a prospectus, it is an "underwriter"
within the meaning of the Securities Act;
o neither the holder nor any beneficial owner is an "affiliate,"
as defined under Rule 405 of the Securities Act, of ours
except as otherwise disclosed to us in writing; and
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o each holder and each beneficial owner acknowledges and agrees
that any person participating in the exchange offer for the
purpose of distributing the exchange notes cannot rely on the
position of the Staff of the Securities and Exchange
Commission set forth in no-action letters that are discussed
herein under "--Resale of the Exchange Notes; Plan of
Distribution" and that such person must comply with the
registration and prospectus delivery requirements for any
secondary resale transaction with respect to exchange notes
acquired by such person and that such a transaction should be
covered by an effective registration statement containing the
selling security holder information required by Item 507 of
Regulation S-K of the Securities and Exchange Commission.
Each broker-dealer that receives exchange notes for its own account in
exchange for original notes, where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. For additional information, see
"--Resale of the Exchange Notes; Plan of Distribution."
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus and the letter of
transmittal, tenders of original notes pursuant to the exchange offer may be
withdrawn, unless earlier accepted for exchange as provided in the exchange
offer, at any time prior to the Expiration Date of the exchange offer.
To be effective, a written or facsimile transmission notice of
withdrawal must be received by the exchange agent at its address set forth
herein prior to the Expiration Date of the exchange offer. Any such notice of
withdrawal must
o specify the name of the person having deposited the original
notes to be withdrawn;
o identify the original notes to be withdrawn, including the
certificate number or numbers of the particular certificates
evidencing the original notes (unless such original notes were
tendered by book-entry transfer), and aggregate principal
amount of such original notes; and
o be signed by the holder in the same manner as the original
signature on the letter of transmittal (including any required
signature guarantees) or be accompanied by documents of
transfer sufficient to have the trustee under the indenture
register the transfer of the original notes into the name of
the person withdrawing such original notes.
If original notes have been delivered pursuant to the procedures for
book-entry transfer described in "--Procedures for Tendering Original
Notes--Book-Entry Delivery Procedures," any notice of withdrawal must specify
the name and number of the account at the appropriate book-entry transfer
facility to be credited with such withdrawn original notes and must otherwise
comply with such book-entry transfer facility's procedures.
If the original notes to be withdrawn have been delivered or otherwise
identified to the exchange agent, a signed notice of withdrawal meeting the
requirements discussed above is effective immediately upon written or facsimile
notice of withdrawal even if physical release is not yet effected. A withdrawal
of original notes can only be accomplished in accordance with these procedures.
All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by us in our sole discretion,
which determination shall be final and binding on all parties. No withdrawal of
original notes will be deemed to have been properly made until all defects or
irregularities have been cured or expressly waived. Neither we, the exchange
agent nor any other person
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will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or revocation, nor shall we or they incur any liability
for failure to give any such notification. Any original notes so withdrawn will
be deemed not to have been validly tendered for purposes of the exchange offer
and no exchange notes will be issued with respect thereto unless the original
notes so withdrawn are retendered. Properly withdrawn original notes may be
retendered by following one of the procedures described above under
"--Procedures for Tendering Original Notes" at any time prior to the Expiration
Date of the exchange offer.
Any original notes which have been tendered but which are not accepted
for exchange due to the rejection of the tender due to uncured defects or the
prior termination of the exchange offer, or which have been validly withdrawn,
will be returned to the holder thereof unless otherwise provided in the letter
of transmittal, as soon as practicable following the Expiration Date of the
exchange offer or, if so requested in the notice of withdrawal, promptly after
receipt by us of notice of withdrawal without cost to such holder.
CONDITIONS TO THE EXCHANGE OFFER
The exchange offer shall not be subject to any conditions, other than
that:
o the Securities and Exchange Commission has issued an order or
orders declaring the indenture governing the notes qualified
under the Trust Indenture Act of 1939;
o the exchange offer, or the making of any exchange by a holder,
does not violate applicable law or any applicable
interpretation of the staff of the Securities and Exchange
Commission;
o no action or proceeding shall have been instituted or
threatened in any court or by or before any governmental
agency with respect to the exchange offer;
o there shall not have been declared by United States federal or
New York state authorities a banking moratorium or trading on
the New York Stock Exchange or generally in the United States
over-the-counter market shall not have been suspended by order
of the Securities and Exchange Commission or any other
governmental authority; and
o there shall not have been adopted or enacted any law, statute,
rule or regulation prohibiting the exchange offer.
Any determination regarding the satisfaction or waiver of conditions
will be made on or before the Expiration Date. If we determine that any of the
conditions to the exchange offer are not satisfied, we may:
o refuse to accept any original notes and return all tendered
original notes to the tendering holders;
o extend the exchange offer and retain all original notes
tendered prior to the Expiration Date applicable to the
exchange offer, subject, however, to the rights of holders to
withdraw such original notes (see "-- Withdrawal of Tenders");
or
o waive any unsatisfied conditions with respect to the exchange
offer and accept all validly tendered original notes which
have not been withdrawn.
If any waiver constitutes a material change to the exchange offer, we
will promptly disclose such waiver by means of a prospectus supplement that will
be distributed to the registered holders and will
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extend the exchange offer for a period of five to ten business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered holders, if the exchange offer would otherwise expire during such
five to ten business day period.
EXCHANGE AGENT
The Bank of New York, the trustee under the indenture governing the
notes, has been appointed as exchange agent for the exchange offer. Questions
and requests for assistance, requests for additional copies of this prospectus
or of the letter of transmittal and requests for Notices of Guaranteed Delivery
and other documents should be directed to the exchange agent addressed as
follows:
By Registered or Certified Mail:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street - 7 East
New York, New York 10286
By Facsimile: (Eligible Institutions Only):
(212) 298-1915
To Confirm by Telephone or for Information Call:
(212) 815-3738
By Hand or Overnight Delivery:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street
Corporate Trust Services Window
FEES AND EXPENSES
We will bear the expenses of soliciting tenders of original notes. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of National Oilwell and its affiliates.
No dealer-manager has been retained in connection with the exchange
offer and no payments will be made to brokers, dealers or others soliciting
acceptance of the exchange offer. However, reasonable and customary fees will be
paid to the exchange agent for its services and it will be reimbursed for its
reasonable out-of-pocket expenses in connection therewith.
We estimate that our out of pocket expenses for the exchange offer will
be approximately $150,000. These expenses include fees and expenses of the
exchange agent and the trustee under the indenture, accounting and legal fees
and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of
the original notes pursuant to the exchange offer. If, however, a transfer tax
is imposed for any reason other than the exchange of the original notes pursuant
to the exchange offer, then the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
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ACCOUNTING TREATMENT
The exchange notes will be recorded in our books at the carrying value
of the original notes and we will not recognize gain or loss for accounting
purposes. The expenses of the exchange offer will be amortized over the term of
the exchange notes.
RESALE OF THE EXCHANGE NOTES; PLAN OF DISTRIBUTION
Based on interpretation of the Securities Act by the staff of the
Securities and Exchange Commission set forth in several no-action letters to
other persons, and subject to the immediately following sentence, we believe
that the exchange notes issued in the exchange offer may be offered for resale,
resold and otherwise transferred by holders thereof without further compliance
with the registration and prospectus delivery provisions of the Securities Act.
However, any purchaser of notes who is an "affiliate" of ours or who intends to
participate in the exchange offer for the purpose of distributing the exchange
notes, or any broker-dealer who purchased the notes from us to resell pursuant
to Rule 144A or any other available exemption under the Securities Act, (1) will
not be able to rely on the interpretation by the staff of the Securities and
Exchange Commission set forth in the above referenced no-action letters, (2)
will not be able to tender the notes in the exchange offer and (3) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or transfer of the notes, unless such sale or
transfer is made pursuant to an exemption from such requirements. We do not
intend to seek our own no-action letter, and there is no assurance that the
staff of the Securities and Exchange Commission would make a similar
determination with respect to the exchange notes as it has in the no-action
letters to other persons.
Each holder of original notes who wishes to exchange the original notes
for the exchange notes in the exchange offer will be required to make
representations, including that (1) it is neither an affiliate of ours nor a
broker-dealer tendering notes acquired directly from us for its own account, (2)
any exchange notes to be received by it shall be acquired in the ordinary course
of its business and (3) at the time of commencement of the exchange offer, it
has no arrangement or understanding with any person to participate in the
distribution of the exchange notes (within the meaning of the Securities Act).
In addition, in connection with any resales of the exchange notes, any
participating broker-dealer must deliver a prospectus meeting the requirements
of the Securities Act. The staff of the Securities and Exchange Commission has
taken the position that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to the exchange notes (other than
a resale of an unsold allotment from the original sale of the notes) with this
prospectus. Under the registration rights agreement, we are required to allow
participating broker-dealers to use this prospectus (as it may be amended or
supplemented from time to time) in connection with the resale of exchange notes
received in exchange for original notes acquired by such participating
broker-dealers for their own account as a result of market-making or other
trading activities.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions
o in the over-the-counter market;
o in negotiated transactions;
o through the writing of options on the exchange notes or a
combination of such methods of resale;
o at market prices prevailing at the time of resale;
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o at prices related to such prevailing market prices; or
o at negotiated prices.
Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such exchange
notes.
Any broker-dealer that resells exchange notes that were received by it
for its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commission on concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver a prospectus and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
We have agreed to pay all expenses incident to the exchange offer
(including in the case of the filing of a shelf registration statement the
expenses of one counsel for the holders of the original notes) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the original notes (including any broker-dealers) required to use
this prospectus in connection with their resale of exchange notes as described
above against certain liabilities, including liabilities under the Securities
Act.
USE OF PROCEEDS
The net proceeds from the sale of the original notes were approximately
$198,070,000 (after deducting expenses of the original offering and the initial
purchaser's discounts and commissions). These proceeds, together with working
capital and borrowings under National Oilwell's existing revolving credit
facility, were used to finance the acquisition of all of the issued and
outstanding shares of Hydralift ASA in a structured tender offer, at a price of
approximately Norwegian Kroner 55 per share, which was approximately U.S. 7.33
per share at the time of the offering of the original notes.
The exchange offer is intended to satisfy our obligations under the
registration rights agreement. We will not receive any cash proceeds from the
issuance of the exchange notes offered by this prospectus. In consideration for
issuing the exchange notes as contemplated in this prospectus, we will receive
in exchange original notes in like principal amount, the form and terms of which
are the same as the form and terms of the exchange notes, except as otherwise
described in this prospectus under "The Exchange Offer -- Terms of the Exchange
Offer." The original notes surrendered in exchange for the exchange notes will
be retired and canceled and cannot be reissued. Accordingly, the issuance of the
exchange notes will not result in any increase in our indebtedness.
DESCRIPTION OF NOTES
GENERAL
The original notes were issued, and the exchange notes are to be
issued, under an indenture dated as of November 22, 2002. The indenture is a
contract between us and The Bank of New York, which acts as trustee. The
indenture will not be qualified under the Trust Indenture Act of 1939, except
upon effectiveness of the registration statement for the exchange offer. By its
terms however, the indenture incorporates certain provisions of the Trust
Indenture Act and, upon consummation of the exchange offer,
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the indenture will be subject to and governed by the Trust Indenture Act. The
indenture and the notes contain the full legal text of the matters described in
this section. The indenture and the notes are governed by New York law. We have
filed a copy of the indenture as an exhibit to the registration statement of
which this prospectus is a part.
The following is a description of the material provisions of the notes
and the indenture and is a summary only. Because this section is a summary, it
does not describe every aspect of those documents. This summary is subject to
and qualified in its entirety by reference to all the provisions of those
documents, including definitions of terms referenced in this prospectus.
References in this summary to the notes include the original notes and the
exchange notes unless the context otherwise requires.
The notes are direct, unsecured and senior obligations of National
Oilwell. The indenture does not limit our ability to incur additional
indebtedness.
PRINCIPAL AND MATURITY
The notes mature on November 15, 2012, unless sooner redeemed. Although
only $200,000,000 in aggregate principal amount of the original notes were
issued, we may, so long as no Event of Default under the indenture has occurred
and is continuing, issue and sell additional principal amounts of the notes in
the future without the consent of the holders of the notes. The original notes
and the exchange notes, together with any additional notes subsequently issued
under this indenture, will constitute a single series of notes under the
indenture.
The notes are not entitled to the benefits of a sinking fund.
All of the notes are held initially in the form of one or more global
notes. See "--Legal Ownership--Global Notes" for a general description of the
global notes.
INTEREST
The notes bear interest from November 22, 2002 at the annual rate set
forth on the cover page of this prospectus, payable semi-annually in arrears on
May 15 and November 15 of each year to noteholders in whose name the notes are
registered at the close of business on May 1 or November 1 (whether or not a
business day) preceding the applicable interest payment date. We refer to each
of those payment days as an interest payment date. If an interest payment date
or a redemption date occurs on a date which is not a business day, payment will
be made on the next business day and no additional interest will accrue.
Interest payments will commence on May 15, 2003.
Interest on the notes is computed on the basis of a 360-day year
comprised of twelve 30-day months.
RANKING
The notes rank equally with all of our existing and future unsecured
senior indebtedness and senior to all of our existing and future subordinated
debt. The indenture does not limit our ability to incur additional indebtedness.
Because we are a holding company that conducts all of our operations through
subsidiaries, the notes will be effectively subordinated to all obligations of
our subsidiaries. Consequently, our right to receive assets of any subsidiary
(and thus the ability of noteholders to benefit indirectly from these assets) is
subject to the prior claims of creditors of that subsidiary. As of December 31,
2002, we have senior indebtedness of $500 million, none of which is secured. In
addition, Hydralift ASA, a subsidiary of National Oilwell, had unsecured
indebtedness of approximately $94 million at December 31, 2002.
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The indenture governing the notes permits us to incur an unlimited
amount of indebtedness. Our subsidiaries may also incur an unlimited amount of
indebtedness. The notes are not guaranteed by any of our subsidiaries.
OPTIONAL REDEMPTION
The notes are redeemable, at our option, at any time in whole, or from
time to time in part, upon not less than 30 and not more than 60 days' notice
mailed to each holder of notes to be redeemed at the holder's address appearing
in the note register, at a price equal to 100% of the principal amount of the
notes plus accrued and unpaid interest, if any, to the redemption date and a
make-whole premium, if any. Holders of record on the relevant record date have
the right to receive interest due on an interest payment date that is on or
prior to the redemption date. The redemption price will never be less than 100%
of the principal amount of the notes plus accrued interest to the redemption
date.
The amount of the make-whole premium on any note, or portion of a note,
to be redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the redemption
date, of:
o each interest payment that, but for the redemption,
would have been payable on the note, or portion of a
note, being redeemed on each interest payment date
occurring after the redemption date, excluding any
accrued interest for the period prior to the
redemption date; plus
o the principal amount that, but for the redemption,
would have been payable on the maturity date of the
note, or portion of a note, being redeemed;
over
(2) the principal amount of the note, or portion of a note, being
redeemed.
The present values of interest and principal payments referred to in
clause (1) above will be determined in accordance with generally accepted
principles of financial analysis. The present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
redemption date at a discount rate equal to the Treasury Yield, as defined
below, plus 25 basis points.
We will appoint an independent investment banking institution of
national standing to calculate the make-whole premium; provided that if we fail
to appoint an institution at least 45 days prior to the date set for redemption
or if the institution that we appoint is unwilling or unable to make such
calculation, such calculation will be made by Merrill Lynch & Co. or if such
firm is unwilling or unable to make such calculation, by an independent
investment banking institution of national standing appointed by the trustee.
For purposes of determining the make-whole premium, "Treasury Yield"
refers to an annual rate of interest equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the notes, calculated to the
nearest 1/12th of a year, which we call the remaining term. The Treasury Yield
will be determined as of the third business day immediately preceding the
applicable redemption date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release, which we call the H.15 Statistical Release.
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If the H.15 Statistical Release sets forth a weekly average yield for United
States Treasury Notes having a constant maturity that is the same as the
remaining term, then the Treasury Yield will be equal to such weekly average
yield. In all other cases, the Treasury Yield will be calculated by
interpolation, on a straight-line basis, between the weekly average yields on
the United States Treasury Notes that have a constant maturity closest to and
greater than the remaining term and the United States Treasury Notes that have a
constant maturity closest to and less than the remaining term, in each case as
set forth in the H.15 Statistical Release. Any weekly average yields as
calculated by interpolation will be rounded to the nearest 0.01%, with any
figure of 0.005% or more being rounded upward. If weekly average yields for
United States Treasury Notes are not available in the H.15 Statistical Release
or otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the independent investment banking institution.
If less than all of the notes are to be redeemed, the trustee will
select the notes to be redeemed pro rata or by lot or by another method that the
trustee deems fair and appropriate not more than 60 days prior to the redemption
date. The trustee may select for redemption notes and portions of notes in
amounts equal to whole multiples of $1,000.
SAME DAY SETTLEMENT
The original notes trade in, and the exchange notes will trade in, The
Depository Trust Company's settlement system until maturity. As a result, The
Depository Trust Company will require secondary trading activity in the notes to
be settled in immediately available funds. So long as the notes continue to
trade in The Depository Trust Company's settlement system, all payments of
principal and interest on the global notes will be made by us in immediately
available funds.
IMPORTANT COVENANTS
Certain Definitions. The following definitions are applicable to the
discussion of the indenture covenants in this summary.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
included on our consolidated balance sheet, less applicable reserves and other
properly deductible items and after deducting therefrom (a) all current
liabilities (other than liabilities that, by their terms, are extendable or
renewable at the option of the obligor to a date that is 12 months or more after
the date on which such current liabilities are determined) and (b) all goodwill,
trade names, trademarks, patents, copyrights, unamortized debt discount and
expense and other like intangibles, all in accordance with generally accepted
accounting principles consistently applied.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantees
or obligations the full faith and credit of the United States is pledged.
"Lien" means, with respect to any property or asset, any mortgage,
pledge, lien, encumbrance, charge or security interest of any kind in respect of
such property or asset, whether or not filed, recorded or otherwise perfected
under applicable law, but excluding agreements to refrain from granting Liens.
"Permitted Liens" means:
o certain purchase money Liens;
o statutory liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other
similar Liens arising in the ordinary course of
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business and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings;
o Liens existing on property at the time we or a Restricted
Subsidiary acquire it;
o Liens existing on the property or on the outstanding shares or
indebtedness of any Person at the time it becomes a Restricted
Subsidiary;
o Liens on property of a Person existing at the time such Person
is merged into or consolidated with us or a Restricted
Subsidiary;
o Liens in favor of governmental bodies to secure certain
progress or advance payments;
o Liens existing on property we or any of our Subsidiaries own
on the date of the indenture or provided for pursuant to
agreements existing on the date of the indenture;
o Liens created pursuant to the creation of trusts or other
arrangements funded solely with cash, cash equivalents or
other marketable investments or securities of the type
customarily subject to such arrangements in customary
financial practice with respect to long-term or medium-term
indebtedness for borrowed money, the sole purpose of which is
to make provision for the retirement or defeasance, without
prepayment of indebtedness; or
o certain extensions, renewals or replacements in whole or in
part of a Lien enumerated in any of the foregoing.
"Person" means (a) any form of business entity, association, grouping,
trust or other form now or hereafter permitted by the laws of any state of the
United States of America or any foreign government or utilized by businesses in
the conduct of their activities and (b) a natural person, as the context may
require.
"Principal Property" means any real property, manufacturing plant,
office building, warehouse or other physical facility, or any other like
depreciable asset of us or any Restricted Subsidiary, whether owned at the date
of the indenture or thereafter acquired that in the opinion of our Board of
Directors is of material importance to the total business we and our Restricted
Subsidiaries conduct, as a whole; provided, however, that any such property
shall not be deemed a Principal Property if such property does not have a fair
value in excess of 5% of the total assets included on a consolidated balance
sheet of us and our Restricted Subsidiaries prepared in accordance with
generally accepted accounting principles consistently applied.
"Restricted Subsidiary" means (a) any currently existing Subsidiary
whose principle assets and business are located in the United States or Canada
and (b) any Subsidiary that we designate to be a Restricted Subsidiary.
"Sale and Leaseback Transaction" means the sale or transfer by us or a
Restricted Subsidiary of any Principal Property owned by it or us with the
intention of taking back a lease on such property.
"Secured Debt" means indebtedness for money we or a Restricted
Subsidiary borrow, and any other indebtedness of us or a Restricted Subsidiary,
on which interest is paid or payable (other than indebtedness owed by a
Restricted Subsidiary to us, by a Restricted Subsidiary to another Restricted
Subsidiary or by us to a Restricted Subsidiary), that in any such case is
secured by (a) any Lien on any Principal Property of us or a Restricted
Subsidiary or (b) a Lien on any shares of stock or indebtedness of
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a Restricted Subsidiary that owns a Principal Property. The amount of Secured
Debt at any time outstanding shall be the amount we or a Restricted Subsidiary
then owe thereon.
"Significant Subsidiary" means a subsidiary that would be a
"Significant Subsidiary" within the meaning of Rule 1-02 under Regulation S-X
promulgated by the Securities and Exchange Commission.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which we, or we and one or more Subsidiaries, or any one or more Subsidiaries,
directly or indirectly own voting securities entitling any one or more of us and
our Subsidiaries to elect a majority of the directors, either at all times, or
so long as there is no default or contingency which permits the holders of any
other class or classes of securities to vote for the election of one or more
directors, (b) any partnership of which we, or we and one or more of our
Subsidiaries, or any one or more Subsidiaries, is, at the date of determination,
a general or limited partner of such partnership, but only if we and our
Subsidiaries are entitled to receive more than 50% of the assets of such
partnership upon dissolution or more than 50% of the profits of such
partnership, or (c) any other Person (other than a corporation or partnership)
in which we, or we and one or more Subsidiaries, or any one or more
Subsidiaries, directly or indirectly, at the date of determination thereof, has
(x) at least a majority ownership interest or (y) the power to elect or direct
the election of a majority of the directors or other governing body of such
Person.
Limitation on Liens. The indenture provides that we will not, nor will
we permit any Restricted Subsidiary to, create, incur, issue, assume or
guarantee any Secured Debt without making effective provision whereby the notes
then outstanding and any other indebtedness of or guaranteed by us or any of our
Restricted Subsidiaries then entitled thereto, subject to applicable priorities
of payment, shall be secured by a Lien equally and ratably with any and all
other obligations and indebtedness thereby secured, so long as any of the other
obligations and indebtedness shall be so secured; provided, that if any such
Lien securing such Secured Debt ceases to exist, such equal and ratable security
for the benefit of the noteholders shall automatically cease to exist without
any further action; provided, further, that if the Secured Debt is expressly
subordinated to the notes, the Lien securing such subordinated Secured Debt
shall be subordinate and junior to the Lien securing the notes with the same
relative priority as such Secured Debt shall have with respect to the notes.
These provisions do not apply to Secured Debt that is secured by Permitted
Liens.
Notwithstanding these restrictions, we and our Restricted Subsidiaries
may, without equally and ratably securing the notes, create, incur, issue,
assume or guarantee Secured Debt not otherwise permitted or excepted if the sum
of (a) the amount of such Secured Debt plus (b) the aggregate value of Sale and
Leaseback Transactions (excluding Sale and Leaseback Transactions described in
clauses (1) through (4) of "Limitation on Sale and Leaseback Transactions") does
not exceed 10% of Consolidated Net Tangible Assets (as shown in our quarterly
consolidated balance sheet most recently published prior to the date of the
creation, incurrence, issuance, assumption or guarantee).
Limitation on Sale and Leaseback Transactions. The indenture provides
that we will not, and we will not permit any of our Restricted Subsidiaries to,
engage in a Sale and Leaseback Transaction unless:
(1) the Sale and Leaseback Transaction occurs within one year from
the date of completion of the acquisition of the Principal
Property subject thereto or the date of the completion of
construction, development or substantial repair or
improvement, or commencement of full operations, on such
Principal Property, whichever is later;
(2) the Sale and Leaseback Transaction involves a lease for a
period, including renewals, of not more than three years;
(3) we or a Restricted Subsidiary would be entitled to incur
Secured Debt secured by a Lien on the Principal Property
subject thereto in a principal amount equal to or exceeding
the
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net sale proceeds from such Sale and Leaseback Transaction
without equally and ratably securing the notes pursuant to the
covenant "Limitation on Liens" described above; or
(4) we or a Restricted Subsidiary, within a one-year period after
such Sale and Leaseback Transaction, apply or cause to be
applied an amount not less than the net sale proceeds from
such Sale and Leaseback Transaction to:
o the redemption of the notes or the prepayment,
repayment, reduction or retirement of any of our
indebtedness that ranks pari passu with the notes; or
o the expenditure or expenditures for Principal
Property used or to be used in the ordinary course of
our business or the business of any of our Restricted
Subsidiaries.
Notwithstanding the foregoing, our indenture provides that we may, and
may permit each of our Restricted Subsidiaries to, effect any Sale and Leaseback
Transaction that is not excepted by clauses (1) through (4) (inclusive) of the
above paragraph, provided that, after giving effect thereto and the application
of proceeds, if any, received by us or any Restricted Subsidiaries as a result
thereof, the net sale proceeds from such Sale and Leaseback Transaction,
together with the aggregate principal amount of all Secured Debt then
outstanding (other than the notes) secured by Liens upon Principal Property that
are not Permitted Liens would not exceed 10% of the Consolidated Net Tangible
Assets (as shown in our quarterly consolidated balance sheet most recently
published prior to the date such Sale and Leaseback Transaction is effected).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indenture provides that we may (a) consolidate with or merge into,
or (b) sell, convey, transfer, lease or otherwise dispose of our properties and
assets substantially as an entirety to, any Person, provided that (i) the Person
surviving such consolidation or merger (if we are not the continuing entity) or
to which the sale, conveyance, transfer, lease or other disposition will be made
is a Person organized and validly existing under the laws of the United States,
any political subdivision thereof or any State thereof and assumes by
supplemental indenture all of our obligations on the notes and under the
indenture and (ii) after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an Event
of Default, exists. Upon a disposition of assets as described in clause (b) of
the preceding sentence, we will be released from any further liability under the
notes and the indenture.
EVENTS OF DEFAULT
In the indenture with respect to the notes an Event of Default will
mean any of the following:
o failure to pay principal of, or any premium on, any note when
due;
o failure to pay any interest on any note when due, and the
continuance of that failure for 30 days;
o failure to perform or observe any other covenant in the notes
or indenture, and the continuance of such default for 60 days
after written notice has been given by the trustee, or the
holders of at least 25% in principal amount of the notes, as
provided in the indenture;
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o our indebtedness or the indebtedness of any Subsidiary is not
paid when due within the applicable grace period, if any, or
is accelerated by the holders thereof and, in either case, the
principal amount of the unpaid or accelerated indebtedness
exceeds $20 million; or
o the bankruptcy, insolvency or reorganization of us, a
Significant Subsidiary or a group of Subsidiaries that would
constitute a Significant Subsidiary.
If an Event of Default (other than an Event of Default, as a result of
the bankruptcy, insolvency or reorganization of us, a Significant Subsidiary or
a group of Subsidiaries that would constitute a Significant Subsidiary) occurs
and continues, either the trustee or the holders of at least 25% in aggregate
principal amount of the notes, by notice to us, may declare the principal amount
of all notes to be due and payable immediately. If an Event of Default occurs as
a result of the bankruptcy, insolvency or reorganization of us, a Significant
Subsidiary or a group of Subsidiaries that would constitute a Significant
Subsidiary, the principal amount of all the notes will automatically, and
without any action by the trustee or any holder, become immediately due and
payable. After any acceleration, but before a judgment or decree for the payment
of the money due has been obtained by the trustee, the holders of a majority in
aggregate principal amount of the notes, by written notice to the trustee, may
rescind and annul the acceleration and its consequences if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the indenture. For information as to waiver of defaults,
see "Modification and Waiver" below.
Other than its duties in case of a default that is continuing, the
trustee is under no obligation to exercise any of its rights or powers under the
indenture at the request of any holders, unless the holders offer the trustee
security or indemnity satisfactory to the trustee against any loss, liability or
expense. Subject to these provisions to indemnify the trustee, the holders of a
majority in aggregate principal amount of the notes have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee, or exercising any trust or power conferred on the trustee, for the
notes.
No holder of any note has the right to institute any proceeding with
respect to the indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless:
o the holder has previously given written notice of a continuing
Event of Default to the trustee;
o the holders of at least 25% in aggregate principal amount of
the notes have made written request, and have offered
indemnity satisfactory to the trustee against any loss,
liability or expense to be incurred in complying with such
request, to institute proceedings in respect of such Event of
Default; and
o the trustee has failed to institute such proceeding, and has
not received from the holders of a majority in aggregate
principal amount of the notes a direction inconsistent with
such request, within 60 days after notice, request and offer.
These limitations do not apply if a holder institutes a proceeding for
the enforcement or payment of the principal of, or the premium or interest on,
any note on or after the applicable due date specified in such note.
We are required to furnish the trustee with an annual statement from
our officers as to whether or not, to our knowledge, a Default or an Event of
Default has occurred during the year, and, if so, specifying all such known
Defaults or Events of Default. We are also required to furnish the Trustee with
a statement from our officers, as soon as possible, but within 5 days after we
become aware that a Default or Event of Default has occurred specifying the
details of such Default of Event of Default and the action
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we propose to take with respect thereto. If a Default or Event of Default occurs
and is continuing and if it is actually known to a responsible officer of the
trustee, the trustee must mail to the noteholders a notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a Default
or Event of Default in payment of principal, interest or premium, if any, on any
note, the trustee may withhold the notice, if and so long as, a committee of its
responsible officers in good faith determines that withholding the notice is in
the interests of the noteholders.
MODIFICATION AND WAIVER
Under the indenture, generally we and the trustee may modify our rights
and obligations with the consent of the holders of a majority in principal
amount of the notes. We may not modify or amend the indenture, without the
consent of the holder of each note affected thereby, if the amendment or
modification would (with respect to any notes held by a nonconsenting holder):
o change the maturity date of the principal of, or any
installment of principal of or interest on, any note;
o reduce the principal amount of, or any interest on, any note;
o reduce the amount of principal of any note payable upon
acceleration of the maturity date;
o change the place or currency of payment of principal of, or
interest on, any note;
o impair the right to institute suit for the enforcement of any
payment on or with respect to any note;
o reduce the percentage in principal amount of the notes, the
consent of whose holders is required for modification or
amendment of the indenture;
o reduce the percentage in principal amount of the notes
necessary for waiver of compliance with certain provisions of
the indenture or for waiver of certain defaults;
o modify such provisions with respect to modification and
waiver;
o waive, reduce or modify a make-whole premium with respect to
any note called for redemption; or
o make changes to the amendment and waiver provisions of the
indenture, or to the provisions relating to waivers of past
defaults or institution of proceedings for payment of
principal, any premium or interest.
Without the consent of any noteholder, we and the trustee may amend the
indenture:
o to cure any ambiguity, defect or inconsistency;
o to provide for uncertificated notes in addition to or in place
of certificated notes or to alter the provisions relating to
the form, issuance, delivery, transfer, exchange, replacement
and other limited matters with respect to the notes in a
manner that does not materially adversely affect any holder;
o to provide for the assumption of our obligations to
noteholders in the case of a merger, consolidation or sale of
all or substantially all of our assets;
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o to make any change that would provide any additional rights or
benefits to the noteholders or that does not adversely affect
the legal rights of any noteholder in any material respect;
o to comply with requirements of the Securities and Exchange
Commission in order to effect or maintain the qualification of
the indenture under the Trust Indenture Act; or
o to allow any guarantor to guarantee the notes.
Holders of a majority in principal amount of the notes may waive our
compliance with certain restrictive provisions of the indenture or waive any
past default under the indenture, except a continuing default in the payment of
principal of, any premium or interest on the notes and covenants and provisions
of the indenture that require the consent of the holder of each note affected
thereby.
Except in certain limited circumstances, we are entitled to set any day
as a record date for the purpose of determining the noteholders entitled to give
or take any direction, notice, consent, waiver or other action under the
indenture, in the manner and subject to the limitations provided in the
indenture. In certain limited circumstances, the trustee may be entitled to set
a record date for noteholder action or for payments if there is a default. If a
record date is set for action to be taken by the noteholders, only persons who
are noteholders on the record date may take the action. To be effective, action
must be taken by holders of the requisite principal amount of the notes within a
specified period following the record date. For any particular record date, this
period will be 180 days or such shorter period as may be specified by us (or the
trustee, if it sets the record date), and may be shortened or lengthened (but
not beyond 180 days) from time to time.
DISCHARGING OUR OBLIGATIONS; DEFEASANCE
Satisfaction and Discharge. We may satisfy and discharge certain of our
obligations with respect to notes which have not already been delivered to the
trustee for cancellation and which have either become due and payable or are by
their terms due and payable within one year by:
o depositing or causing to be deposited with the trustee money
or Government Securities in an amount sufficient to pay and
discharge the principal and any premium and interest to the
date of such deposit (in case of the notes which have become
due and payable) or to the maturity date, as the case may be;
o paying or causing to be paid all other sums payable under the
indenture with respect to the notes; and
o delivering to the trustee an Officer's Certificate and opinion
of counsel relating to our satisfaction and discharge.
Defeasance and Discharge. We may discharge all of our indebtedness and
obligations with respect to the notes (except for obligations to exchange or
register the transfer of the notes, to replace stolen, lost or mutilated
outstanding notes, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the noteholders of money or
Government Securities, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of, any premium and interest on the
notes on the maturity date in accordance with the terms of the indenture and the
notes. Such defeasance or discharge may occur only if, among other things, we
have delivered to the trustee an opinion of counsel to the effect that we have
received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that the noteholders will not recognize gain or loss for federal
income tax purposes as a result of such deposit, defeasance and
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discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur.
Defeasance of Certain Covenants. The indenture provides that we may
omit to comply with certain restrictive covenants, including the covenants
described under "Limitation on Liens," "Limitation on Sale and Leaseback
Transactions" and "Consolidation, Merger and Sale of Assets," in which event
certain Events of Default, which are described above (with respect to such
respective covenants) under "Events of Default," will no longer constitute
Events of Default. In order to exercise such option to defease such covenants,
we will be required to deposit, in trust for the benefit of the noteholders,
money or Government Securities, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of, any premium and interest
on the notes on the maturity date in accordance with the terms of the indenture
and the notes. We will also be required, among other things, to deliver to the
trustee an opinion of counsel to the effect that noteholders will not recognize
gain or loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance were not to occur.
If subsequent to the completion of a defeasance of certain covenants as
described in the immediately preceding paragraph, the notes are declared due and
payable because of the occurrence of any remaining Event of Default, the amount
of money and Government Securities we deposit in trust may be sufficient to pay
amounts due on the notes on the maturity date but may not be sufficient to pay
amounts due on the notes upon any acceleration resulting from such Event of
Default. In such case, we would remain liable for such payments.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under the indenture.
LEGAL OWNERSHIP
Street Name and Other Indirect Holders. Investors who hold notes in
accounts at banks, brokers and other financial institutions will generally not
be recognized by us as legal holders of notes. This is called holding in street
name. These intermediary banks, brokers and other financial institutions pass
along principal, interest and other payments on the notes, either because they
agree to do so in their customer agreements or because they are legally required
to do so. If you hold notes in street name, you should check with your own
institution to find out:
o how it handles securities payments and notices;
o whether it imposes fees or charges;
o how it would handle voting, if required; and
o how it would pursue rights under the notes if there were a
default or other event triggering the need for holders to act
to protect their interests.
Direct Holders. Our obligations, as well as the obligations of the
trustee and those of any third parties employed by us or the trustee, extend
only to persons who are registered as holders of notes. We do not have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interest in a global note, for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests or for any action taken or omitted to be taken by DTC or any
participant because the notes are issued in the form of global notes as
described below. For example,
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once we make a payment to the registered holder, we have no further
responsibility for the payment, even if that holder is legally required to pass
the payment along to you as a street name customer but does not do so.
Global Notes. A global note is a special type of indirectly held note.
Because we issued the original notes, and will issue the exchange notes only in
the form of global notes, the ultimate beneficial owners can only be indirect
holders. We do this by requiring that the global notes be registered in the name
of a financial institution we select and by requiring that the notes included in
the global notes not be transferred to the name of any other direct holder
unless the special circumstances described below occur. The financial
institution that acts as the sole direct holder of the global note is called the
depositary. Any person wishing to own a note must do so indirectly by virtue of
an account with a bank, broker or other financial institution that in turn has
an account with the depositary.
Special Investor Considerations for Global Notes. As an
indirect holder, an investor's rights relating to the global notes will
be governed by the account rules of the investor's bank, broker or
other financial institution and of the depositary, as well as general
laws relating to securities transfers. We do not recognize this type of
investor as a holder of notes and instead deal only with the depositary
that holds the global notes.
If you are an investor, you should be aware that:
o you cannot get notes registered in your own name, except in
limited circumstances described in the indenture;
o you cannot receive physical certificates for your interest in
the notes, except in limited circumstances described in the
indenture;
o you will be a street name holder and must look to your own
bank, broker or other financial institution for payments on
the notes and protection of your legal rights relating to the
notes; see "--Street Name and Other Indirect Holders;"
o you may not be able to sell or pledge your interest in the
notes to some insurance companies and other institutions that
are required by law to own their securities in the form of
physical certificates;
o the depositary's policies will govern payments, transfers,
exchange and other matters relating to your interest in the
global notes. We and the trustee have no responsibility for
any aspect of the depositary's actions or for its records of
ownership interest in the global notes. We and the trustee
also do not supervise the depositary in any way;
o so long as the depositary, or its nominee, is the registered
owner or holder of a global note, the depositary, or its
nominee, will be considered the sole owner or holder of the
notes represented by the global note for all purposes under
the indenture, the notes and applicable law, including having
the right to sue for nonpayment of principal and interest; and
o as an indirect owner, you will not be able to transfer the
interest in the global note, except in accordance with the
depositary's applicable procedures (in addition to those under
the indenture referred to herein).
Special Situations When Global Notes Will Be Terminated. In a
few special situations described in the next paragraph, the global
notes will terminate and interests in them will be exchanged for
physical certificates representing the notes. After that exchange, the
choice of
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whether to hold notes directly or in street name will be up to you. You
must consult your own bank, broker or other financial institution to
find out how to have your interests in the notes transferred to your
own name, so that you will be a direct holder. The rights of street
name investors and direct holders in the notes have been previously
described in the subsections entitled "--Street Name and Other Indirect
Holders" and "--Direct Holders."
The special situations for termination of the global notes are:
o when the depositary notifies us that it is unwilling, unable
or no longer qualified to continue as depositary; and
o when we notify the trustee that we wish to terminate the
global notes.
ADDITIONAL MECHANICS
Global Notes. The original notes were issued in the form of one or more
registered notes in global form, without interest coupons, which we call the
Rule 144A Global Notes. The Rule 144A Global Notes were deposited on the date of
closing of the initial sale of the original notes with, or on behalf of, The
Depository Trust Company or will remain in the custody of the trustee pursuant
to the FAST Balance Certificate Agreement between The Depository Trust Company
and the trustee, and registered in the name of Cede & Co., as nominee of The
Depository Trust Company. Interests in the Rule 144A Global Notes are available
for purchase only by qualified institutional buyers.
The Depository Trust Company has advised us that it is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to Section 17A of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Depository Trust Company was created to hold securities of persons who have
accounts with The Depository Trust Company, otherwise known as participants, and
to facilitate the clearance and settlement of securities transactions among its
participants in securities through electronic book-entry changes in accounts of
the participants, thereby eliminating the need for physical movement of
certificates. These participants include securities brokers and dealers, banks,
trust companies and other clearing corporations. Indirect access to The
Depository Trust Company's book-entry system also is available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. The
Depository Trust Company is owned by a number of its direct participants and by
the New York Stock Exchange, Inc., the American Stock Exchange LLC and the
National Association of Securities Dealers, Inc. The rules applicable to The
Depository Trust Company and its direct and indirect participants are on file
with the Securities and Exchange Commission.
Form, Exchange and Transfer of Physical Notes. The following discussion
only applies if the global notes are terminated as described above under
"--Legal Ownership--Global Notes--Special Situations When Global Notes Will Be
Terminated" and the notes are issued in the form of physical certificates.
The notes will be issued:
o only in registered form;
o without interest coupons; and
o in denominations that are even multiples of $1,000.
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You may have your notes divided into more notes of smaller
denominations (but not less than $1,000) or combined into fewer notes of larger
denominations, as long as the total principal amount is not changed. This is
called an exchange.
You may exchange or transfer notes at the office of the trustee. The
trustee acts as our agent for registering notes in the names of holders and
transferring notes. We may change this appointment to another entity or perform
these functions ourselves. The entity performing the role of maintaining the
list of registered holders is called the security registrar. It will also
perform transfers. You will not be required to pay a service charge to transfer
or exchange the notes, but you may be required to pay for any tax or other
governmental charge associated with the transfer or exchange. The transfer or
exchange will only be made if the security registrar is satisfied with your
proof of ownership.
We may cancel the designation of any particular transfer agent. We may
also approve a change in the office through which any transfer agent acts.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax consequences of the exchange of original notes for exchange notes.
This discussion is based upon the provisions of the Internal Revenue Code of
1986, as amended, applicable Treasury Regulations promulgated and proposed
thereunder, judicial authority and administrative interpretations, as of the
date hereof, all of which are subject to change, possibly with retroactive
effect, or are subject to different interpretations. We cannot assure you that
the Internal Revenue Service will not challenge one or more of the tax
consequences described herein, and we have not obtained, nor do we intend to
obtain, a ruling from the IRS or an opinion of counsel with respect to the
United States federal tax consequences of the exchange of original notes for
exchange notes.
In this discussion, we do not purport to address all tax considerations
that may be important to a particular holder in light of the holder's
circumstances, or to certain categories of investors that may be subject to
special rules, such as financial institutions, insurance companies, regulated
investment companies, tax exempt organizations, dealers in securities or
currencies, persons whose functional currency is not the U.S. dollar, U.S.
expatriates, persons subject to the alternative minimum tax or persons who hold
the notes as part of a hedge, conversion transaction, straddle or other risk
reduction transaction. This discussion is limited to holders who purchased the
original notes for cash at the original offering price and who hold the notes as
capital assets within the meaning of section 1221 of the Internal Revenue Code.
If a partnership holds notes, the tax treatment of a partner generally will
depend upon the status of the partner and the activities of the partnership.
This discussion also does not address the tax considerations arising under the
laws of any foreign, state, local or other jurisdiction.
WE ADVISE HOLDERS OF ORIGINAL NOTES TO DISCUSS THE APPLICATION OF THE
U.S. FEDERAL INCOME TAX LAWS TO THEM OF THE EXCHANGE OFFER AND THE APPLICABILITY
AND EFFECT OF STATE, LOCAL OR FOREIGN TAX LAWS AND TAX TREATIES WITH THEIR OWN
TAX ADVISERS.
TREATMENT OF EXCHANGES UNDER THE EXCHANGE OFFER
The exchange of original notes for exchange notes under the terms of
the exchange offer will not constitute a taxable exchange. As a result,
o a holder will not recognize taxable gain or loss as a result
of exchanging original notes for exchange notes under the
terms of the exchange offer;
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o the holding period of the exchange notes will include the
holding period of the original notes exchanged for the
exchange notes; and
o the adjusted tax basis for the exchange notes will be the same
as the adjusted tax basis, immediately before the exchange, of
the original notes exchanged for the exchange notes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We will, where required, report to the holders of the notes and the
Internal Revenue Service the amount of any interest paid on the notes in each
calendar year and the amounts of federal income tax withheld, if any, with
respect to payments. A noncorporate noteholder may be subject to information
reporting and to backup withholding with respect to payments of principal,
premium, if any, and interest made on the notes, or on proceeds of the
disposition of the notes before maturity, unless the noteholder provides a
correct taxpayer identification number or proof of an applicable exemption, and
otherwise complies with applicable requirements of the information and backup
withholding rules.
Backup withholding is not an additional tax. Any amount withheld under
the backup withholding rules will be refunded or credited against the
noteholder's federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
VALIDITY OF THE EXCHANGE NOTES
The validity of the exchange notes being offered hereby will be passed
upon for us by Bracewell & Patterson, L.L.P., Houston, Texas.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 2002 and 2001, and for each of three years
in the period ended December 31, 2002, included in National Oilwell, Inc.'s
Annual report on Form 10-K for the year ended December 31, 2002, as set forth in
their report, which is incorporated by reference in this Prospectus and
elsewhere in the registration statement. National Oilwell, Inc.'s financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission.
The SEC allows us to "incorporate by reference" the information we
filed with it, which means that we can disclose important information to you by
referring you to those documents.
We incorporate by reference in this prospectus the following documents:
o Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2002;
o Form 10-K/A for the fiscal year ended December 31, 2002; and
o All documents filed with the Securities and Exchange
Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, between the date
of this prospectus and the completion of the exchange offer.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information as well as
the information included in this prospectus.
You may read and copy any document we file with the Securities and
Exchange Commission at the Securities and Exchange Commission's public reference
room located at:
o 450 Fifth Street, N.W.
Washington, D.C. 20549
Additionally, you may obtain copies of our documents filed with the
Securities and Exchange Commission on our website at www.natoil.com.
Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference room and its copy charges. Our
Securities and Exchange Commission filings are also available to the public on
the Securities and Exchange Commission's web site at http://www.sec.gov and
through the New York Stock Exchange, Inc., 20 Broad Street, New York, New York
10005, on which our shares of common stock are traded.
We have agreed that for so long as the notes remain outstanding, if we
are no longer subject to the informational requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, we will furnish to holders and
beneficial owners of the notes and to prospective purchasers designated by such
holders the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act to permit compliance with Rule 144A in connection with
resales of the notes.
We will provide a copy of any document incorporated by reference in
this prospectus and any exhibit specifically incorporated by reference in those
documents at no cost by request directed to us at the following address and
telephone number:
o National-Oilwell, Inc.
10000 Richmond Avenue
Houston, Texas 77042
Attention: Investor Relations
713-346-7500
To obtain timely delivery of this information, you must
request this information no later than five business days prior to the
Expiration Date of the exchange offer.
-42-
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains, or has
incorporated by reference, forward-looking statements. Statements that are not
historical facts, including statements about our beliefs and expectations, are
forward-looking statements. Forward-looking statements typically are identified
by use of terms such as "may," "will," "expect," "anticipate," "estimate" and
similar words, although some forward-looking statements are expressed
differently. You should be aware that our actual results could differ materially
from those contained in the forward-looking statements due to a number of
factors, including changes in oil and gas prices, customer demand for our
products and worldwide economic activity. You should also consider carefully the
statements under "Risk Factors" which address additional factors that could
cause our actual results to differ from those set forth in the forward-looking
statements. Given these uncertainties, current or prospective investors are
cautioned not to place undue reliance on any such forward-looking statements. We
disclaim any obligation or intent to update any such factors or forward-looking
statements to reflect future events or developments.
-43-
NATIONAL-OILWELL, INC.
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
5.65% SENIOR NOTES DUE 2012
OF
NATIONAL-OILWELL, INC.
PURSUANT TO THE PROSPECTUS DATED _________, 2003
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _________,
________, 2003 UNLESS THE OFFER IS EXTENDED BY THE CORPORATION IN ITS SOLE
DISCRETION (THE "EXPIRATION DATE"). TENDERS OF NOTES MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
BY REGISTERED OR CERTIFIED BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT DELIVERY:
MAIL: (ELIGIBLE INSTITUTIONS ONLY)
The Bank of New York The Bank of New York
Corporate Trust Operations (212) 298-1915 Corporate Trust Operations
Reorganization Unit Reorganization Unit
101 Barclay Street - 7 East To Confirm by Telephone or 101 Barclay Street
New York, New York 10286 for Information Call: Corporate Trust Services
(212) 815-3738 Window
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO
THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR ORIGINAL NOTES
TO THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders ("Holders") of
5.65% Senior Notes due 2012 (the "Original Notes") of National-Oilwell, Inc.
(the "Corporation") to receive 5.65% Senior Notes due 2012, Series B (the
"Exchange Notes") if: (i) certificates representing Original Notes are to be
physically delivered to the Exchange Agent herewith by such Holders; (ii) tender
A-1
of Original Notes is to be made by book-entry transfer to the Exchange Agent's
account at The Depository Trust Company ("DTC") pursuant to the procedures set
forth under the caption "The Exchange Offer -- Procedures for Tendering Original
Notes -- Book-Entry Delivery Procedures" in the Prospectus dated ___________,
2003 (the "Prospectus"); or (iii) tender of Original Notes is to be made
according to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus, and, in each case, instructions are not being
transmitted through the DTC Automated Tender Offer Program ("ATOP"). All
capitalized terms used herein and not defined shall have the meanings ascribed
to them in the Prospectus.
Holders of Original Notes that are tendering by book-entry transfer to
the Exchange Agent's account at DTC can execute the tender through ATOP, for
which the transaction will be eligible. DTC participants that are accepting the
exchange offer as set forth in the Prospectus and this Letter of Transmittal
(together, the "Exchange Offer") must transmit their acceptance to DTC which
will edit and verify the acceptance and execute a book-entry delivery to the
Exchange Agent's account at DTC. DTC will then send an Agent's Message to the
Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to execution and delivery of a Letter of
Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the Exchange Offer by submitting a notice of
guaranteed delivery through ATOP.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT
If a Holder desires to tender Original Notes pursuant to the Exchange
Offer and time will not permit this Letter of Transmittal, certificates
representing such Original Notes and all other required documents to reach the
Exchange Agent, or the procedures for book-entry transfer cannot be completed,
on or prior to the Expiration Date, then such Holder must tender such Original
Notes according to the guaranteed delivery procedures set forth under the
caption "The Exchange Offer -- Procedures for Tendering Original Notes --
Guaranteed Delivery" in the Prospectus. See Instruction 2.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
A-2
TENDER OF ORIGINAL NOTES
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------
Account Number:
-------------------------------------------------------
Transaction Code Number:
-----------------------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
---------------------------------------
Window Ticker Number (if any):
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------
Name of Eligible Institution that Guaranteed Delivery:
-----------------
List below the Original Notes to which this Letter of Transmittal
relates. The name(s) and address(es) of the registered Holder(s) should be
printed, if not already printed below, exactly as they appear on the Original
Notes tendered hereby. The Original Notes and the principal amount of Original
Notes that the undersigned wishes to tender should be indicated in the
appropriate boxes. If the space provided is inadequate, list the certificate
number(s) and principal amount(s) on a separately executed schedule and affix
the schedule to this Letter of Transmittal.
DESCRIPTION OF ORIGINAL NOTES
Name(s) and Address(es)
of Registered Holder(s) Aggregate
(Please fill in if blank) See Certificate Principal Amount Principal Amount
Instruction 3. Number(s)* Represented** Tendered**
----------------------------- ------------------ ---------------- -----------------
------------------ ---------------- -----------------
------------------ ---------------- -----------------
------------------ ---------------- -----------------
------------------ ---------------- -----------------
------------------ ---------------- -----------------
----------------------------- ------------------ ---------------- -----------------
Total Principal
Amount of Original
Notes
----------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, the entire aggregate principal amount
represented by the Original Notes described above will be deemed to be
tendered. See Instruction 4.
----------------------------------------------------------------------------------------------
A-3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to National-Oilwell, Inc. (the
"Corporation"), upon the terms and subject to the conditions set forth in its
Prospectus dated __________, 2003 (the "Prospectus"), and in accordance with
this Letter of Transmittal (which, together with the Prospectus, constitute the
"Exchange Offer"), the principal amount of Original Notes indicated in the
foregoing table entitled "Description of Original Notes" under the column
heading "Principal Amount Tendered." The undersigned represents that it is duly
authorized to tender all of the Original Notes tendered hereby which it holds
for the account of beneficial owners of such Original Notes ("Beneficial
Owner(s)") and to make the representations and statements set forth herein on
behalf of such Beneficial Owner(s).
Subject to, and effective upon, the acceptance for purchase of the
principal amount of Original Notes tendered herewith in accordance with the
terms and subject to the conditions of the Exchange Offer, the undersigned
hereby exchanges, assigns and transfers to, or upon the order of, the
Corporation, all right, title and interest in and to all of the Original Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that the Exchange Agent also acts as the agent of the
Corporation in connection with the Exchange Offer) with respect to such Original
Notes, with full powers of substitution and resubstitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) and
full power and authority to (i) present such Original Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Original Notes on
the account books maintained by DTC to, or upon the order of, the Corporation,
(ii) present such Original Notes for transfer of ownership on the books of the
Corporation, and to transfer the Original Notes on the books and records of the
Corporation, and (iii) receive for the account of the Corporation all benefits
and otherwise exercise all rights of beneficial ownership of such Original
Notes, all in accordance with the terms and conditions of the Exchange Offer, as
described in the Prospectus.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that:
o the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are
being acquired by the undersigned and any Beneficial Owner(s)
in the ordinary course of business of the undersigned and any
Beneficial Owner(s);
o the undersigned and each Beneficial Owner are not
participating, do not intend to participate and have no
arrangement or understanding with any person to participate,
in a distribution of the Exchange Notes;
o the undersigned and each Beneficial Owner acknowledge and
agree that (x) if the offeree is a broker-dealer holding
Original Notes acquired for its own account as a result of
market making activities or other trading activities, it will
deliver a prospectus meeting the requirements of the
Securities Act in connection with any
A-4
resale of Exchange Notes received in respect of Original Notes
pursuant to the Exchange Offer and (y) any person
participating in the Exchange Offer for the purpose of
distributing the Exchange Notes cannot rely on the position of
the Staff of the Securities and Exchange Commission set forth
in no-action letters that are discussed in the Prospectus and
that such person must comply with the registration and
prospectus delivery requirements for any secondary resale
transaction with respect to Exchange Notes acquired by such
person and that such a transaction should be covered by an
effective registration statement containing the selling
securityholder information required by Item 507 of Regulation
S-K of the Securities and Exchange Commission; and
o except as indicated below, neither the undersigned nor any
Beneficial Owner is an "affiliate," as defined in Rule 405
under the Securities Act of 1933, as amended (together with
the rules and regulations promulgated thereunder, the
"Securities Act"), of the Corporation.
If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Original Notes that were acquired as the
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. By so acknowledging and by delivering a prospectus, a broker-dealer shall
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
Tenders of Original Notes may be withdrawn by written notice of
withdrawal received by the Exchange Agent at any time prior to the Expiration
Date in accordance with the Prospectus. In the event of a termination of the
Exchange Offer, the Original Notes tendered pursuant to the Exchange Offer will
be returned to the tendering Holders promptly (or, in the case of Original Notes
tendered by book-entry transfer, such Original Notes will be credited to the
account maintained at DTC from which such Original Notes were delivered). If the
Corporation makes a material change in the terms of the Exchange Offer or the
information concerning the Exchange Offer or waives a material condition of such
Exchange Offer, the Corporation will disseminate additional Exchange Offer
materials and extend such Exchange Offer, if and to the extent required by law.
The tender of Original Notes pursuant to any of the procedures set
forth in the Prospectus and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Exchange Offer. The
Corporation's acceptance for exchange of Original Notes tendered pursuant to any
of the procedures described in the Prospectus will constitute a binding
agreement between the undersigned and the Corporation in accordance with the
terms and subject to the conditions of the Exchange Offer. For purposes of the
Exchange Offer, validly tendered Original Notes (or defectively tendered
Original Notes with respect to which the Corporation has, or has caused to be,
waived such defect) will be deemed to have been accepted by the Corporation if,
as and when the Corporation gives oral or written notice thereof to the Exchange
Agent.
If the undersigned is an affiliate, as defined in Rule 405 of the Act,
neither it nor any other such person may offer for resale, resell or otherwise
A-5
transfer Exchange Notes without registering them under the Act, or without an
exemption therefrom.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the
Original Notes tendered hereby, and that when such tendered Original Notes are
accepted for exchange by the Corporation, the Corporation will acquire good
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim or right. The undersigned and
each Beneficial Owner will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or by the Corporation to be necessary or
desirable to complete the tender, exchange, sale, assignment and transfer of the
Original Notes tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive the death or incapacity
of the undersigned and any Beneficial Owner(s), and any obligation of the
undersigned or any Beneficial Owner(s) hereunder shall be binding upon the
heirs, executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The delivery and surrender of any Original Notes is not effective, and
the risk of loss of the Original Notes does not pass to the Exchange Agent or
the Corporation, until receipt by the Exchange Agent of this Letter of
Transmittal, or a manually signed facsimile hereof, properly completed and duly
executed, together with the Original Notes and all accompanying evidences of
authority and any other required documents in form satisfactory to the
Corporation. All questions as to form of all documents and the validity
(including time of receipt) and acceptance of tenders and withdrawals of
Original Notes will be determined by the Corporation, in its sole discretion,
which determination shall be final and binding.
Unless otherwise indicated herein under "Special Issuance
Instructions," any Original Notes representing principal amounts not tendered or
not accepted for exchange will be issued in the name(s) of the undersigned (and
in the case of Original Notes tendered by book-entry transfer, by credit to the
account of DTC), and Exchange Notes issued in exchange for Original Notes
pursuant to the Exchange Offer be issued to the undersigned. Similarly, unless
otherwise indicated herein under "Special Delivery Instructions," any Original
Notes representing principal amounts not tendered or not accepted for exchange
and Exchange Notes issued in exchange for Original Notes pursuant to the
Exchange Offer will be delivered to the undersigned at the address shown below
the undersigned's signature(s). In the event that the "Special Issuance
Instructions" box or the "Special Delivery Instructions" box is, or both are,
completed, any Original Notes representing principal amounts not tendered or not
accepted for exchange will be issued in the name(s) of, certificates for such
Original Notes will be delivered to, and Exchange Notes issued in exchange for
Original Notes pursuant to the Exchange Offer will be issued in the name(s) of,
and be delivered to, the person(s) at the address(es) so indicated, as
applicable. The Corporation has no obligation pursuant to the "Special Issuance
Instructions" box or "Special Delivery Instructions" box to transfer any
Original Notes from the name of the registered Holder(s) thereof if the
Corporation does not accept for exchange any of the principal amount of such
Original Notes so tendered.
A-6
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL
NOTES IS AN AFFILIATE OF THE CORPORATION.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL
NOTES TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED SUCH NOTES
DIRECTLY FROM THE CORPORATION OR AN AFFILIATE OF THE CORPORATION.
[ ] CHECK HERE AND COMPLETE THE LINES BELOW IF YOU OR ANY BENEFICIAL OWNER
FOR WHOM YOU HOLD ORIGINAL NOTES TENDERED HEREBY IS A BROKER-DEALER WHO
ACQUIRED SUCH NOTES IN MARKET-MAKING OR OTHER TRADING ACTIVITIES. IF
THIS BOX IS CHECKED, THE CORPORATION WILL SEND 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO
TO YOU OR SUCH BENEFICIAL OWNER AT THE ADDRESS SPECIFIED IN THE
FOLLOWING LINES.
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
A-7
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not tendered or not
accepted for exchange are to be issued in the name of, or Exchange Notes are to
be issued in the name of, someone other than the person(s) whose signature(s)
appear(s) within this Letter of Transmittal.
Issue:
[ ] Original Notes
[ ] Exchange Notes
(check as applicable)
Name
----------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
(Please Print)
--------------------------------------------------------------------------------
(Zip Code)
--------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not
tendered or not accepted for exchange or Exchange Notes are to be sent to
someone other than the person(s) whose signature(s) appear(s) within this Letter
of Transmittal or to the undersigned at an address different from that shown in
the box entitled "Description of Original Notes" within this Letter of
Transmittal.
Issue:
[ ] Original Notes
[ ] Exchange Notes
(check as applicable)
Name
----------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
(Please Print)
--------------------------------------------------------------------------------
(Zip Code)
--------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
A-8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF ORIGINAL NOTES)
------------------------------------------------
------------------------------------------------
------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
(See guarantee requirement below)
This Letter of Transmittal must be signed by the registered Holder(s)
exactly as name(s) appear(s) on certificate(s) for Original Notes or, if
tendered by a participant in DTC, exactly as such participant's name appears on
a security position listing as owner of Original Notes or by the person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.
Dated:
--------------------------------------------------------------------------
Name(s):
------------------------------------------------------------------------
(Please Print)
Capacity (Full Title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Tax Identification or Social Security Number:
-----------------------------------
(Complete Accompanying Substitute Form W-9)
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
------------------------------------------------------------
Name of Firm
--------------------------------------------------------------------
Address (including Zip Code):
---------------------------------------------------
Telephone Number (with Area Code): ( )
----- -------------------------------------
Date:
---------------------------------------------------------------------------
[place seal here]
A-9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Signature Guarantees. Signatures of this Letter of Transmittal must
be guaranteed by a recognized member of the Medallion Signature Guarantee
Program or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 promulgated under the Exchange Act (each of the
foregoing, an "Eligible Institution"), unless the Original Notes tendered hereby
are tendered (i) by a registered Holder of Original Notes (or by a participant
in DTC whose name appears on a security position listing as the owner of such
Original Notes) that has not completed either the box entitled "Special Issuance
Instructions" or the box entitled "Special Delivery Instructions" on this Letter
of Transmittal or (ii) for the account of an Eligible Institution. If the
Original Notes are registered in the name of a person other than the signer of
this Letter of Transmittal, if Original Notes not accepted for exchange or not
tendered are to be returned to a person other than the registered Holder or if
Exchange Notes are to be issued in the name of or sent to a person other than
the registered Holder, then the signatures on this Letter of Transmittal
accompanying the tendered Original Notes must be guaranteed by an Eligible
Institution as described above. See Instruction 5.
2. Delivery of Letter of Transmittal and Original Notes. This Letter of
Transmittal is to be completed by Holders if (i) certificates representing
Original Notes are to be physically delivered to the Exchange Agent herewith by
such Holders; (ii) tender of Original Notes is to be made by book-entry transfer
to the Exchange Agent's account at DTC pursuant to the procedures set forth
under the caption "The Exchange Offer -- Procedures for Tendering Original Notes
-- Book-Entry Delivery Procedures" in the Prospectus; or (iii) tender of
Original Notes is to be made according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer -- Procedures for Tendering Original
Notes -- Guaranteed Delivery" in the Prospectus. All physically delivered
Original Notes, or a confirmation of a book-entry transfer into the Exchange
Agent's account at DTC of all Original Notes delivered electronically, as well
as a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof), any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth on the cover page hereto on or
prior to the Expiration Date, or the tendering Holder must comply with the
guaranteed delivery procedures set forth below. DELIVERY OF DOCUMENTS TO DTC
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange
Offer and time will not permit this Letter of Transmittal, certificates
representing such Original Notes and all other required documents to reach the
Exchange Agent, or the procedures for book-entry transfer cannot be completed,
on or prior to the Expiration Date, such Holder must tender such Original Notes
pursuant to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus. Pursuant to such procedures, (i) such tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the
A-10
form provided by the Corporation, or an Agent's Message with respect to
guaranteed delivery that is accepted by the Corporation, must be received by the
Exchange Agent, either by hand delivery, mail, telegram, or facsimile
transmission, on or prior to the Expiration Date; and (iii) the certificates for
all tendered Original Notes, in proper form for transfer (or confirmation of a
book-entry transfer or all Original Notes delivered electronically into the
Exchange Agent's account at DTC pursuant to the procedures for such transfer set
forth in the Prospectus), together with a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) and any other
documents required by this Letter of Transmittal, or in the case of a book-entry
transfer, a properly transmitted Agent's Message, must be received by the
Exchange Agent within two business days after the date of the execution of the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OR AGENT'S
MESSAGE DELIVERED THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE TENDERING
HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY
MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH
DATE.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a facsimile
thereof), waive any right to receive any notice of the acceptance of their
Original Notes for exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the principal amount represented by Original Notes
should be listed on a separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to Holders who tender by book-entry
transfer). If Holders wish to tender less than the entire principal amount
evidenced by an Original Note submitted, such Holders must fill in the principal
amount that is to be tendered in the column entitled "Principal Amount
Tendered." The minimum permitted tender is $1,000 in principal amount of
Original Notes. All other tenders must be in integral multiples of $1,000 in
principal amount. In the case of a partial tender of Original Notes, as soon as
practicable after the Expiration Date, new certificates for the remainder of the
Original Notes that were evidenced by such Holder's old certificates will be
sent to such Holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal. The entire principal amount that is represented by
Original Notes delivered to the Exchange Agent will be deemed to have been
tendered, unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
Holder(s) of the Original Notes tendered hereby, the signatures must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever. If this Letter of Transmittal
is signed by a participant in DTC whose name is
A-11
shown as the owner of the Original Notes tendered hereby, the signature must
correspond with the name shown on the security position listing as the owner of
the Original Notes.
If any of the Original Notes tendered hereby are registered in the name
of two or more Holders, all such Holders must sign this Letter of Transmittal.
If any of the Original Notes tendered hereby are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Original Note or instrument of
transfer is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Corporation of such person's
authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered Holder(s)
of the Original Notes listed herein and transmitted hereby, no endorsements of
Original Notes or separate instruments of transfer are required unless Exchange
Notes are to be issued, or Original Notes not tendered or exchanged are to be
issued, to a person other than the registered Holder(s), in which case
signatures on such Original Notes or instruments of transfer must be guaranteed
by an Eligible Institution.
IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED
HOLDER(S) OF THE ORIGINAL NOTES LISTED HEREIN, THE ORIGINAL NOTES MUST BE
ENDORSED OR ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE
SIGNED EXACTLY AS THE NAME(S) OF THE REGISTERED HOLDER(S) APPEAR ON THE ORIGINAL
NOTES AND SIGNATURES ON SUCH ORIGINAL NOTES OR INSTRUMENTS OF TRANSFER ARE
REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE
IS THAT OF AN ELIGIBLE INSTITUTION.
6. Special Issuance and Delivery Instructions. If certificates for
Exchange Notes or unexchanged or untendered Original Notes are to be issued in
the name of a person other than the signer of this Letter of Transmittal, or if
Exchange Notes or such Original Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
herein, the appropriate boxes on this Letter of Transmittal should be completed.
All Original Notes tendered by book-entry transfer and not accepted for payment
will be returned by crediting the account at DTC designated herein as the
account for which such Original Notes were delivered.
7. Transfer Taxes. Except as set forth in this Instruction 7, the
Corporation will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of Original Notes to it, or to its order, pursuant to the
Exchange Offer. If Exchange Notes, or Original Notes not tendered or exchanged
are to be registered in the name of any persons other than the registered
owners, or if tendered Original Notes are registered in the name of any persons
other than the persons signing this Letter of Transmittal, the amount of any
transfer taxes (whether imposed on the registered Holder or such other person)
payable on account of the transfer to such other person must be paid to the
Corporation or the Exchange
A-12
Agent (unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted) before the Exchange Notes will be issued.
8. Waiver of Conditions. The conditions of the Exchange Offer may be
amended or waived by the Corporation, in whole or in part, at any time and from
time to time in the Corporation's sole discretion, in the case of any Original
Notes tendered.
9. Substitute Form W-9. Each tendering Holder of an Original Note who
is not exempt on the basis of foreign status (or other payee) is required to
provide the Exchange Agent with a correct taxpayer identification number
("TIN"), generally the owner's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided hereafter under "Important Tax Information," and to
certify that the owner (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering owner (or other payee) to a $50 penalty imposed by the Internal
Revenue Service and 30% federal income tax withholding. The box in Part 3 of the
Substitute Form W-9 may be checked if the tendering owner (or other payee) has
not been issued a TIN and has applied for a TIN or intends to apply for a TIN in
the near future. If the box in Part 3 is checked and the Exchange Agent is not
provided with a TIN within 60 days of the date on the Substitute Form W-9, the
Exchange Agent will withhold 30% of all payments made thereafter until a TIN is
provided to the Exchange Agent.
10. Broker-Dealers Participating in the Exchange Offer. If no
broker-dealer checks the last box on page 7 of this Letter of Transmittal, the
Corporation has no obligation under the Registration Rights Agreement to allow
the use of the Prospectus for resales of the Exchange Notes by broker-dealers or
to maintain the effectiveness of the Registration Statement of which the
Prospectus is a part after the consummation of the Exchange Offer.
11. Requests for Assistance or Additional Copies. Any questions or
requests for assistance or additional copies of the Prospectus, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange
Agent at the telephone numbers and location listed above. A Holder or owner may
also contact such Holder's or owner's broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Exchange Offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE
RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, an owner of Original Notes whose tendered
Original Notes are accepted for exchange is required to provide the Exchange
Agent with such owner's current TIN on Substitute Form W-9 below. If such owner
is an individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the owner or other
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recipient of Exchange Notes may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, any interest on Exchange Notes paid to
such owner or other recipient may be subject to 30% backup withholding tax.
Certain owners of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that owner must submit to the Exchange Agent a properly
completed Internal Revenue Service Form W-8ECI, W-8BEN, W-8EXP or W-8IMY
(collectively, a "Form W-8"), signed under penalties of perjury, attesting to
that individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent.
Backup withholding is not an additional tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to an owner,
the owner is required to notify the Exchange Agent of the owner's current TIN
(or the TIN of any other payee) by completing the following form, certifying
that the TIN provided on Substitute Form W-9 is correct (or that such owner is
awaiting a TIN), that the holder is a U.S. person (including a resident alien),
and that (i) the owner is exempt from withholding, (ii) the owner has not been
notified by the Internal Revenue Service that the owner is subject to backup
withholding as a result of failure to report all interest or dividends or (iii)
the Internal Revenue Service has notified the owner that the owner is no longer
subject to backup withholding. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the owner of the Original
Notes. If the Original Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
A-14
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN Social Security Number(s)
FORM W-9 THE BOX AT THE RIGHT AND CERTIFY BY Or
SIGNING AND DATING BELOW. Employer Identification Number(s)
Department of the Treasury Internal ----------------------------------
Revenue Service
----------------------------------
Payer's Request for Taxpayer
Identification Number ("TIN") ----------------------------------
----------------------------------
---------------------------------------------------------------------------
PART 2 -- Certifications -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) I am a U.S. person (including a U.S. resident alien).
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your
tax return.
---------------------------------------------------------------------------
Address:
-----------------------------------
-------------------------------------------
PART 3
------------------------------------------- Check if
Signature Awaiting TIN [ ]
----------------------------------
Date
---------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50
PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING
OF 30%. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
A-15
YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days after the
Letter of Transmittal is received by the Exchange Agent, 30% of all reportable
cash payments made to me thereafter will be withheld until I provide a taxpayer
identification number.
Signature Date
------------------------------------------- ------------------
A-16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
authorizes, inter alia, a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that such person is or was an officer or director of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. A Delaware corporation may
indemnify past or present officers and directors of such corporation or of
another corporation or other enterprise at the former corporation's request, in
an action by or in the right of the corporation to procure a judgment in its
favor under the same conditions, except that no indemnification is permitted
without judicial approval if such person is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in defense of any action referred to above, or in defense of any
claim, issue or matter therein, the corporation must indemnify him against the
expenses (including attorney's fees) which he actually and reasonably incurred
in connection therewith. Section 145 further provides that any indemnification
shall be made by the corporation only as authorized in each specific case upon a
determination by the (i) stockholders, (ii) board of directors by a majority
vote or a quorum consisting of directors who were not parties to such action,
suit or proceeding or (iii) independent counsel if a quorum of disinterested
directors so directs. Section 145 provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 145 of the DGCL also empowers National Oilwell to purchase and
maintain insurance on behalf of any person who is or was an officer or director
of National Oilwell against liability asserted against or incurred by him in any
such capacity, whether or not National Oilwell would have the power to indemnify
such officer or director against such liability under the provisions of Section
145. National Oilwell maintains a directors' and officers' liability policy for
such purposes.
Article Sixth, Part II, Section 1 of National Oilwell's Amended and
Restated Certificate of Incorporation and Article VI of National Oilwell's
Bylaws each provide that directors, officers, employees and agents shall be
indemnified to the fullest extent permitted by Section 145 of the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
4.1* -- Indenture dated November 22, 2002, between National-Oilwell,
Inc. and The Bank of New York, as Trustee.
4.2* -- Form of 5.65% Note (contained in the Indenture filed as
Exhibit 4.1).
4.3* -- Registration Rights Agreement dated November 22, 2002 between
National-Oilwell, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
5* -- Opinion of Bracewell & Patterson, L.L.P. as to the validity of
the notes being offered.
12* -- Calculation of Consolidated Ratios of Earnings to Fixed
Charges.
23.1* -- Consent of Bracewell & Patterson, L.L.P. (included in their
opinion filed as Exhibit 5 hereto).
23.2** -- Consent of Ernst & Young LLP.
II-1
Exhibit
Number Description of Exhibit
------ ----------------------
24* -- Powers of Attorney (included on the signature pages herein).
25* -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York.
99.1** -- Form of Notice of Guaranteed Delivery.
99.2* -- Form of Letter to Clients.
*Previously filed.
**Filed herewith.
(b) Financial Statement Schedules
No financial statement schedules are included herein. All other
schedules for which provision is made in the applicable accounting regulation of
the Commission are not required under the related instructions, are
inapplicable, or the information is included in the consolidated financial
statements, and have therefore been omitted.
(c) Reports, Opinions, and Appraisals
No reports, opinions, and appraisals are included herein.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(1) The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(c) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
II-2
(ii) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4 of this Form, within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
(4) The undersigned hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS
DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS,
ON THIS 10TH DAY OF APRIL, 2003.
NATIONAL-OILWELL, INC.
(Registrant)
By: /s/ Steven W. Krablin
-------------------------------
Steven W. Krablin, Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW IN SO SIGNING ALSO MAKES, CONSTITUTES AND APPOINTS STEVEN W.
KRABLIN AND M. GAY MATHER, OR EITHER OF THEM ACTING SINGLY, HIS TRUE AND LAWFUL
ATTORNEY-IN-FACT AND AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION,
FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO EXECUTE
AND CAUSE TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ANY AND ALL
AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT, AND IN
EACH CASE TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID
ATTORNEY-IN-FACT AND AGENT OR HIS SUBSTITUTE OR SUBSTITUTES MAY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Merrill A. Miller, Jr. Chairman of the Board of Directors April 10, 2003
-------------------------- (Principal Executive Officer)
Merrill A. Miller, Jr.
/s/ Steven W. Krablin Vice President and Chief Financial April 10, 2003
-------------------------- Officer (Principal Financial Officer and
Steven W. Krablin Principal Accounting Officer)
Director
--------------------------
Hushang Ansary
/s/ Robert E. Beauchamp* Director April 10, 2003
--------------------------
Robert E. Beauchamp
/s/ Jon Gjedebo* Director April 10, 2003
--------------------------
Jon Gjedebo
II-4
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Ben A. Guill* Director April 10, 2003
--------------------------
Ben A. Guill
/s/ Roger L. Jarvis* Director April 10, 2003
--------------------------
Roger L. Jarvis
/s/ William E. Macaulay* Director April 10, 2003
--------------------------
William E. Macaulay
/s/ Frederick W. Pheasey* Director April 10, 2003
--------------------------
Frederick W. Pheasey
/s/ Joel V. Staff* Director April 10, 2003
--------------------------
Joel V. Staff
*By: /s/ Steven W. Krablin
--------------------------
Steven W. Krablin
(Attorney-in-Fact for persons indicated)
II-5
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------ ----------------------
4.1* -- Indenture dated November 22, 2002, between National-Oilwell,
Inc. and The Bank of New York, as Trustee.
4.2* -- Form of 5.65% Note (contained in the Indenture filed as
Exhibit 4.1).
4.3* -- Registration Rights Agreement dated November 22, 2002 between
National-Oilwell, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
5* -- Opinion of Bracewell & Patterson, L.L.P. as to the validity of
the notes being offered.
12* -- Calculation of Consolidated Ratios of Earnings to Fixed
Charges.
23.1* -- Consent of Bracewell & Patterson, L.L.P. (included in their
opinion filed as Exhibit 5 hereto).
23.2** -- Consent of Ernst & Young LLP.
24* -- Powers of Attorney (included on the signature pages herein).
25* -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York.
99.1** -- Form of Notice of Guaranteed Delivery.
99.2* -- Form of Letter to Clients.
*Previously filed.
**Filed herewith.