TRITON ENERGY CORPORATION
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PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
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TRITON ENERGY LIMITED
TRITON ENERGY CORPORATION
PROSPECTUS FOR
UP TO 36,233,372 CLASS A ORDINARY SHARES OF TRITON ENERGY LIMITED
UP TO 9,058,343 UNIT DEPOSITARY SHARES, EACH REPRESENTING
ONE EQUITY UNIT CONSISTING OF ONE CLASS B ORDINARY SHARE
OF TRITON ENERGY LIMITED AND 1/10 OF ONE SHARE OF
PARTICIPATING PREFERRED STOCK OF TRITON ENERGY CORPORATION
This Proxy Statement/Joint Prospectus ("Proxy Statement/Prospectus") is
being furnished to stockholders of Triton Energy Corporation, a Delaware
corporation ("Triton Delaware"), in connection with the solicitation of proxies
by the Board of Directors of Triton Delaware for use at the special meeting of
Triton Delaware stockholders (the "Special Meeting") to be held at Triton Energy
Corporation, 6688 North Central Expressway, 12th Floor, Dallas, Texas 75206 on
March 25, 1996 at 10:00 a.m., Dallas time (or at any adjournments or
postponements thereof). This Proxy Statement/Prospectus relates to the proposed
reorganization (the "Reorganization") pursuant to which Triton Energy Limited, a
newly formed Cayman Islands company and a wholly-owned subsidiary of Triton
Delaware ("Triton Cayman"), will become the parent holding company of Triton
Delaware through the merger (the "Merger") of TEL Merger Corp., a Delaware
corporation and a newly formed, wholly-owned subsidiary of Triton Cayman
("Sub"), with and into Triton Delaware. The Reorganization will be effected
pursuant to the Agreement and Plan of Merger, dated as of February 8, 1996 (the
"Merger Agreement"), among Triton Delaware, Triton Cayman and Sub. Upon
consummation of the Merger, each outstanding share of common stock, par value
$1.00 per share ("Triton Delaware Common Stock"), of Triton Delaware (other than
those shares held by Triton Delaware in its treasury and those shares with
respect to which an Equity Unit Election (as hereinafter defined) has been
properly made and not withdrawn, subject to the Equity Unit Limitation (as
hereinafter defined)) will be automatically converted into one class A ordinary
share, par value $.01 per share ("Class A Share"), of Triton Cayman.
In connection with the Merger, holders of not less than 15% but not more
than 25% of the outstanding shares of Triton Delaware Common Stock (the "Equity
Unit Limitation"), in the aggregate, may make an unconditional election (the
"Equity Unit Election") to receive an equity unit ("Equity Unit") consisting of
(i) one class B ordinary share, par value $.01 per share ("Class B Share"), of
Triton Cayman and (ii) one-tenth of one share of participating preferred stock,
par value $.01 per share ("Triton Delaware Preferred Stock"), of Triton
Delaware, for each share of Triton Delaware Common Stock owned of record by such
stockholder in lieu of such shares being automatically converted into Class A
Shares. Each such Class B Share and fraction of a share of Triton Delaware
Preferred Stock will be paired and after such pairing, such securities may only
be traded together as a unit and will not be separately transferable. The Equity
Units will be deposited with Chemical Mellon Shareholder Services, L.L.C., as
depositary (the "Depositary"), in exchange for the issuance of Depositary Shares
(the "Unit Depositary Shares"), each representing one Equity Unit, receipts for
which ("Receipts") will be distributed to stockholders. See "Description of
Authorized Shares of Triton Cayman ," "Description of Receipts" and "Comparison
of Rights of Stockholders."
Triton Delaware Common Stock is currently listed on the New York Stock
Exchange (the "NYSE") under the symbol "OIL" and, immediately following the
Reorganization, the Class A Shares will be listed on the NYSE under the same
symbol. The last reported sale price for the Triton Delaware Common Stock on the
New York Stock Exchange Composite Transactions Tape on February 20, 1996 was
$52.25. Currently, there is no established public trading market for the Class A
Shares or the Unit Depositary Shares. The Unit Depositary Shares have been
approved for listing, subject to notice of issuance, on the NYSE.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH THE REORGANIZATION, SEE "RISKS FACTORS," BEGINNING ON PAGE 24.
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This Proxy Statement/Prospectus and the form of proxy are first being mailed
to the stockholders of Triton Delaware on or about February 23, 1996.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS FEBRUARY 23, 1996.
TABLE OF CONTENTS
PAGE
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AVAILABLE INFORMATION................................ 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...... 3
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN
PERSONS............................................. 4
SUMMARY OF SECURITIES TO BE RECEIVED IN CONNECTION
WITH THE REORGANIZATION............................. 5
SUMMARY.............................................. 10
Special Meeting.................................... 10
Triton Delaware.................................... 10
Triton Cayman...................................... 10
The Reorganization................................. 11
Recommendation of the Board of Directors........... 15
Vote Required for Adoption......................... 16
Comparison of Rights of Stockholders............... 17
Odd Lot Shares..................................... 17
Tax Considerations................................. 17
Rights of Dissenting Stockholders.................. 20
Accounting Treatment of the Reorganization......... 20
Risk Factors....................................... 20
Stock Exchange Listing............................. 20
Depositary and Exchange Agent...................... 20
Selected Historical Financial and Oil and Gas
Data.............................................. 21
Summary Pro Forma Financial Information............ 23
RISK FACTORS......................................... 24
Certain Tax Consequences........................... 24
Absence of Prior Market............................ 24
No Assurance as to Trading Value................... 25
The Oil and Gas Industry Generally................. 25
Financial Position................................. 25
Environmental Matters.............................. 26
Risks of Foreign Operations........................ 26
Certain Factors Relating to Colombia............... 26
Regulatory Matter.................................. 27
THE SPECIAL MEETING.................................. 27
Special Meeting.................................... 27
Record Date........................................ 27
Vote Required for Adoption......................... 27
Proxies............................................ 28
Solicitation of Proxies............................ 28
Proposals of Stockholders.......................... 29
TRITON DELAWARE AND TRITON CAYMAN.................... 29
THE REORGANIZATION................................... 30
General............................................ 30
Background and Reasons for the Reorganization...... 30
The Merger Agreement............................... 31
Conditions to Consummation of the Reorganization... 32
Equity Unit Election............................... 32
Effective Time..................................... 33
Rights of Dissenting Stockholders.................. 33
Exchange of Share Certificates..................... 33
Odd-Lot Program.................................... 34
Stock Compensation Plans........................... 34
Shareholder Rights Plan............................ 34
Stock Exchange Listing............................. 35
Accounting Treatment of the Reorganization......... 35
Transfer of Assets................................. 35
CERTAIN TAX CONSIDERATIONS........................... 35
DESCRIPTION OF AUTHORIZED SHARES OF TRITON CAYMAN.... 43
Ordinary Shares; General........................... 43
PAGE
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Voting and Other Rights............................ 44
Special Rights Upon the Occurrence of Certain
Events............................................ 45
Dividend Rights.................................... 46
Purchase of Equity Units........................... 47
Liquidation of Triton Delaware..................... 47
Liquidation of Triton Cayman....................... 48
Changes in Capitalization.......................... 49
Distributions...................................... 49
Stock Dividends.................................... 49
Reduction of Capital and Purchase of Shares........ 50
Transfer of Shares................................. 50
Preference Shares.................................. 50
DESCRIPTION OF TRITON DELAWARE PREFERRED STOCK....... 54
General............................................ 54
Dividends.......................................... 55
Liquidation Rights................................. 55
Purchase of Equity Units........................... 56
Voting Rights...................................... 57
Preemptive Rights.................................. 58
DESCRIPTION OF RECEIPTS.............................. 58
Receipts........................................... 58
Deposit and Withdrawal of Deposited Securities..... 58
Dividends, Other Distributions and Rights.......... 59
Record Dates....................................... 60
Voting of the Underlying Deposited Securities...... 60
Inspection of Transfer Books....................... 60
Reports and Notices................................ 60
Changes Affecting Deposited Class B Shares......... 61
Purchase of Equity Units........................... 61
Exchange of Receipts upon Conversion of Class B
Shares or Class C Shares.......................... 62
Resignation and Removal of Depositary.............. 62
Amendment and Termination of the Deposit
Agreement......................................... 62
Charges of Depositary.............................. 63
General............................................ 63
COMPARISON OF RIGHTS OF STOCKHOLDERS................. 64
Stockholder Approval of Business Combinations...... 64
Absence of Required Vote for Certain Mergers....... 64
Appraisal Rights................................... 65
Stockholder Consent to Action Without Meeting...... 65
Special Meetings of Stockholders................... 66
Distributions and Dividends; Repurchases and
Redemptions....................................... 66
Vacancies on Board of Directors.................... 66
Removal of Directors; Staggered Term of
Directors......................................... 66
Inspection of Books and Records.................... 66
Amendment of Charter............................... 67
Amendment of Bylaws................................ 67
Indemnification of Directors and Officers.......... 67
Limited Liability of Directors..................... 67
Stockholders' Suits................................ 68
MANAGEMENT OF TRITON CAYMAN.......................... 68
Committees of the Board of Directors............... 68
Executive Compensation............................. 68
LEGAL MATTERS........................................ 68
EXPERTS.............................................. 69
GLOSSARY OF DEFINED TERMS............................ 71
INDEX TO FINANCIAL STATEMENTS........................ F-1
AGREEMENT AND PLAN OF MERGER.............................Annex I
2
AVAILABLE INFORMATION
Triton Delaware is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by Triton Delaware may be inspected and
copied at the public reference facilities maintained by the Commission, 450
Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549; and at
regional offices of the Commission at the Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, New
York, New York 10048. Copies of such material may be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Triton Delaware Common Stock is
listed on the NYSE. Reports, proxy statements and other information concerning
Triton Delaware may also be inspected and copied at the offices of such exchange
at 20 Broad Street, New York, New York 10005. In addition, reports, proxy
statements and other information concerning Triton Delaware can be inspected at
the offices of Triton Delaware, 6688 North Central Expressway, Suite 1400,
Dallas, Texas 75206-9926. Following the Reorganization, both Triton Delaware and
Triton Cayman will file such reports and other information under the Exchange
Act.
Triton Delaware and Triton Cayman have filed with the Commission a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Triton Delaware Preferred Stock, the Unit Depositary Shares, the Class A Shares
and the Class B Shares offered hereby. This Proxy Statement/Prospectus, which
constitutes a part of that Registration Statement, does not contain all the
information set forth in that Registration Statement and the exhibits relating
thereto. Statements made in this Proxy Statement/ Prospectus as to the contents
of any contract, agreement or other document are not necessarily complete; and
while Triton Delaware and Triton Cayman believe the descriptions of the material
provisions of such contracts, agreements and other documents contained in this
Proxy Statement/ Prospectus are accurate summaries of such material provisions,
reference is made to such contract, agreement or other document filed as an
exhibit to the Registration Statement for a more complete description of the
matter involved, and each such statement is qualified in its entirety by such
reference.
Triton Cayman and Triton Delaware will also furnish the Depositary for the
Unit Depositary Shares with all notices of shareholder meetings and other
reports and communications that are made generally available to shareholders of
Triton Cayman and Triton Delaware. Such Depositary will, to the extent permitted
by law, arrange for the prompt transmittal to the holders of Unit Depositary
Shares of all notices, reports and communications provided by Triton Cayman and
Triton Delaware and will make such notices, reports and communications, together
with the governing instruments affecting the Class B Shares and the Triton
Delaware Preferred Stock and amendments thereto, available for inspection by
holders of Unit Depositary Shares at such Depositary's office, presently located
at Chemical Mellon Shareholder Services, L.L.C., Reorganization Department, 120
Broadway, 13th Floor, New York, New York 10271.
Upon completion of the Reorganization, the Class A Shares and the Unit
Depositary Shares will be listed on the NYSE. At the time of such listing, the
Triton Delaware Common Stock will be delisted and will no longer be registered
pursuant to Section 12 of the Exchange Act.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Triton Delaware hereby incorporates by reference in this Proxy
Statement/Prospectus the following documents previously filed by Triton Delaware
with the Commission pursuant to the Exchange Act: (i) Triton Delaware's Current
Report on Form 8-K dated August 24, 1995 that includes the restated consolidated
financial statements to reflect the aviation sales and services segment as
discontinued operations, (ii) Triton Delaware's Transition Report on Form 10-K
for the transition period
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from June 1, 1994 to December 31, 1994, (iii) Triton Delaware's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and
September 30, 1995, and (iv) Triton Delaware's Current Reports on Form 8-K filed
June 2, 1995, June 8, 1995 and February 9, 1996.
Each document filed by Triton Delaware pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the termination of the offering of the
securities pursuant hereto shall be deemed to be incorporated by reference in
this Proxy Statement/Prospectus and to be a part of this Proxy
Statement/Prospectus from the date of filing of such document. Any statement
contained in this Proxy Statement/Prospectus or in a document incorporated or
deemed to be incorporated by reference in this Proxy Statement/Prospectus shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Proxy Statement/Prospectus to the extent that a statement
contained in this Proxy Statement/ Prospectus or in any subsequently filed
document that also is or is deemed to be incorporated by reference in this Proxy
Statement/Prospectus modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statement or this Proxy
Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THE INCORPORATED
DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE THEREIN) WILL BE FURNISHED UPON REQUEST
WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED. WRITTEN OR TELEPHONE REQUESTS SHOULD BE DIRECTED TO TRITON ENERGY
CORPORATION, 6688 NORTH CENTRAL EXPRESSWAY, SUITE 1400, DALLAS, TEXAS
75206-9926, ATTENTION: INVESTOR RELATIONS, TELEPHONE (214) 691-5200. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE INCORPORATED DOCUMENTS, ANY REQUEST SHOULD BE MADE
BY MARCH 18, 1996.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
Neither delivery of this Proxy Statement/Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of Triton Delaware and Triton Cayman since the
date of this Proxy Statement/Prospectus.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
Triton Cayman is a Cayman Islands company, certain of its officers and
directors may be residents of various jurisdictions outside the United States
and its Cayman Islands counsel, W.S. Walker & Company, are residents of the
Cayman Islands. All or a substantial portion of the assets of Triton Cayman and
of such persons may be located outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States
upon such persons or to enforce in United States courts judgments obtained
against such persons in United States courts and predicated upon the civil
liability provisions of the Securities Act. Notwithstanding the foregoing,
Triton Cayman has irrevocably agreed that it may be served with process with
respect to actions based on offers and sales of securities made hereby in the
United States by serving Robert B. Holland, III, c/o Triton Energy Corporation,
6688 North Central Expressway, Suite 1400, Dallas, Texas 75206-9926, its United
States agent appointed for that purpose. Triton Cayman has been advised by its
Cayman Islands counsel, W.S. Walker & Company, that there is doubt as to whether
Cayman Islands courts would enforce (a) judgments of United States courts
obtained in actions against such persons or Triton Cayman that are predicated
upon the civil liability provisions of the Securities Act or (b) in original
actions brought against Triton Cayman or such persons predicated upon the
Securities Act. There is no treaty in effect between the United States and the
Cayman Islands providing for such enforcement, and there are grounds upon which
Cayman Islands courts may not enforce judgments of United States courts. Certain
remedies available under the United States federal securities laws would not be
allowed in Cayman Islands courts as contrary to that nation's policy.
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SUMMARY OF SECURITIES TO BE RECEIVED
IN CONNECTION WITH THE REORGANIZATION
THE FOLLOWING IS A SUMMARY OF THE SECURITIES TO BE RECEIVED IN THE
REORGANIZATION BY HOLDERS OF TRITON DELAWARE COMMON STOCK (I) WHO DO NOT MAKE AN
EQUITY UNIT ELECTION AND (II) WHO MAKE AN EQUITY UNIT ELECTION. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION CONTAINED IN THIS
PROXY STATEMENT/PROSPECTUS AND THE ANNEX HERETO. UNLESS OTHERWISE DEFINED
HEREIN, CAPITALIZED TERMS USED IN THIS SUMMARY HAVE THE RESPECTIVE MEANINGS
ASCRIBED TO THEM ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS. SEE "GLOSSARY OF
DEFINED TERMS." STOCKHOLDERS ARE URGED TO READ CAREFULLY THIS PROXY
STATEMENT/PROSPECTUS AND THE ANNEX HERETO IN THEIR ENTIRETY.
NO ELECTION BY ELECTION BY TRITON DELAWARE
TRITON DELAWARE STOCKHOLDER STOCKHOLDER TO RECEIVE EQUITY UNITS
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SECURITY RECEIVED IN Each share of Triton Delaware Common Each share of Triton Delaware Common
EXCHANGE FOR TRITON Stock will be automatically converted Stock will be exchanged for an Equity
DELAWARE COMMON into one Class A Share of Triton Cayman. Unit comprised of (i) one Class B Share
STOCK IN THE MERGER of Triton Cayman and (ii) one-tenth of
one share of Triton Delaware Preferred
Stock, which securities will be paired
and after such pairing may only be trad-
ed together as a unit and will not be
separately transferable.
TAX CONSEQUENCES The receipt of Class A Shares in ex- Special tax counsel to Triton Delaware
change for shares of Triton Delaware are of the opinion that it is more likely
Common Stock will be a taxable than not that the shares of Triton
transaction to the stockholder in which Delaware Preferred Stock will be treated
gain, if any (but not loss), will be as stock of Triton Delaware and that the
recognized. See "Certain Tax receipt of shares of Triton Delaware Pre-
Considerations." ferred Stock will not be a taxable
transaction. However, in view of the
absence of any authority dealing with
transactions similar to the Re-
organization or securities of a type
similar to the Equity Units, no as-
surance can be given that the Internal
Revenue Service (the "IRS") or the courts
will agree. In any event, the receipt of
Class B Shares in exchange for shares of
Triton Delaware Common Stock will be a
taxable transaction to the stockholder in
which gain, if any (but not loss), will
be recognized. See "Certain Tax
Considerations."
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NO ELECTION BY ELECTION BY TRITON DELAWARE
TRITON DELAWARE STOCKHOLDER STOCKHOLDER TO RECEIVE EQUITY UNITS
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ELECTION PROCEDURE As of the Effective Time of the Merger, Properly complete and sign the Form of
stockholders who do not make an Equity Election accompanying this Proxy
Unit Election will automatically become Statement/Prospectus. Such form, together
owners of the Class A Shares without with certificates for the shares of
taking any action. Triton Delaware Common Stock to which
such form relates, duly endorsed in blank
or otherwise acceptable for transfer on
the books of Triton Delaware must be
received by the Exchange Agent by 5:00
p.m., New York City time, on the business
day next preceding the date of the
Special Meeting.
PRORATION; MINIMUM ELECTION Not applicable. If the number of Electing Shares exceeds
NUMBER 25% of the number of shares of Triton
Delaware Common Stock outstanding
immediately prior to the effective time
of the Merger (the "Maximum Election
Number"), then the aggregate number of
Electing Shares to be exchanged for Eq-
uity Units in the Merger in connection
with any Equity Unit Election will be
reduced by multiplying the number of
Electing Shares covered by such Equity
Unit Election by a proration factor (the
"Proration Factor") determined by
dividing the Maximum Election Number by
the total number of Electing Shares. The
number of Electing Shares covered by each
Equity Unit Election which will be
exchanged for Equity Units will be that
number which results from multiplying the
number of such Electing Shares by the
Proration Factor. Electing Shares not
exchanged for Equity Units as a result of
proration will instead be automatically
converted into Class A Shares. In the
event that the number of Electing Shares
is less than 15% of the number of shares
of Triton Delaware Common Stock out-
standing immediately prior to the Merger,
no Equity Units will be issued and
Electing Shares will be automatically
converted into Class A Shares.
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NO ELECTION BY ELECTION BY TRITON DELAWARE
TRITON DELAWARE STOCKHOLDER STOCKHOLDER TO RECEIVE EQUITY UNITS
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DIVIDENDS Holders of Class A Shares will be Holders of Equity Units will be entitled
entitled to receive, at any time, such to receive, if declared by the Board of
dividends as are declared by the Board of Directors of Triton Delaware or Triton
Directors of Triton Cayman. Aggregate Cayman, as the case may be, (a) dividends
dividends declared on one Class A Share on the Triton Delaware Preferred Stock
are expected to be equivalent to the when the Board of Directors declares a
aggregate dividends, if any, declared and dividend on Triton Delaware's common
paid on the securities included in an Eq- stock outstanding after the Merger, such
uity Unit, considered as a whole. that the aggregate amount of the
dividends declared with respect to the
Triton Delaware Preferred Stock shall be
a portion of the aggregate amount of the
dividends declared with respect to the
Triton Delaware Preferred Stock and the
common stock equal to the percentage of
shares of Triton Delaware Common Stock
that receive Equity Units in the Merger,
subject to certain adjustments and (b)
dividends on the Class B Shares in such
amounts as the Board of Directors of
Triton Cayman may determine, subject to
certain preferential rights of the
holders of the Class A Shares.
REDEMPTION The Class A Shares are not subject to The shares of Triton Delaware Preferred
redemption. Stock are not subject to redemption
except pursuant to the purchase right
described below.
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NO ELECTION BY ELECTION BY TRITON DELAWARE
TRITON DELAWARE STOCKHOLDER STOCKHOLDER TO RECEIVE EQUITY UNITS
----------------------------------------- -----------------------------------------
PURCHASE RIGHT Not applicable. The Equity Units are subject to purchase
by Triton Cayman or Triton Delaware, in
whole or in part, at any time on or after
the third anniversary of the Effective
Time or by Triton Cayman at any time
immediately prior to the date on which a
sale or other disposition of the stock of
Triton Delaware is consummated. The
purchase price for the Equity Units will
generally be equal to the greater of .95
of a Class A Share and the fair market
value of an Equity Unit, payable in cash
or, in the case of a purchase by Triton
Cayman, in ordinary shares. Neither
Triton Cayman nor Triton Delaware can
exercise its option to purchase the
Equity Units in certain circumstances,
including in the event of the bankruptcy
or insolvency of Triton Delaware.
LIQUIDATION Upon the liquidation of Triton Cayman, Upon the liquidation of Triton Delaware,
holders of Class A Shares are entitled to a holder of one-tenth of one share of
receive an amount per share equal to Triton Delaware Preferred Stock is
certain payments made with respect to entitled to receive a liquidation
one-tenth of one share of Triton Delaware preference equal to the fair market value
Preferred Stock and will thereafter par- of one-tenth of one share of Triton
ticipate in the assets of Triton Cayman Delaware Preferred Stock at the Effective
pari passu with the holders of any other Time, which will be determined by Triton
class of ordinary shares outstanding. Delaware based upon the advice of its
financial advisors at the Effective Time,
and will share thereafter in any other
distribution of assets by Triton Delaware
with the holders of the common stock of
Triton Delaware. Upon the liquidation of
Triton Cayman, after payment to holders
of Class A Shares of amounts equal to
certain payments made with respect to the
Triton Delaware Preferred Stock, holders
of Class B Shares are entitled to
participate in the assets of Triton
Cayman pari passu with the holders of any
other class of ordinary shares outstand-
ing.
8
NO ELECTION BY ELECTION BY TRITON DELAWARE
TRITON DELAWARE STOCKHOLDER STOCKHOLDER TO RECEIVE EQUITY UNITS
----------------------------------------- -----------------------------------------
VOTING RIGHTS One vote per Class A Share with respect One vote per Class B Share with respect
to matters submitted to the shareholders to matters submitted to the shareholders
of Triton Cayman, voting together as a of Triton Cayman, voting together as a
single class with the holders of any single class with the holders of any
other class of ordinary shares and any other class of ordinary shares and any
voting preference shares. voting preference shares, subject to
certain special class voting rights under
certain circumstances. Each share of
Triton Delaware Preferred Stock will be
entitled to two votes per share (and each
holder of an Equity Unit will therefore
be entitled to 1/5 of one vote per unit)
and certain other voting rights with
respect to matters submitted to the
stockholders of Triton Delaware.
STOCK EXCHANGE LISTING; NYSE The Equity Units will be listed on the
LIQUIDITY NYSE. Triton Delaware expects that
because the number of Equity Units will
be, at most, one-third the number of
Class A Shares issued upon consummation
of the Merger, the trading market for the
Equity Units will be less liquid.
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, INCLUDING
THE ANNEX, AND IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. CERTAIN
CAPITALIZED TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS. SEE "GLOSSARY OF DEFINED TERMS."
SPECIAL MEETING
TIME, DATE, PLACE A Special Meeting of the Triton Delaware stockholders
AND PURPOSE........ will be held at 10:00 a.m., Dallas time, on March 25,
1996, at Triton Energy Corporation, 6688 North Central
Expressway, 12th Floor, Dallas, Texas 75206 (or any
adjournments or postponements thereof) to consider and
vote on the proposal to adopt the Merger Agreement and
any other matters that may properly come before such
meeting. The presence, in person or by proxy, of
stockholders holding a majority of the outstanding
shares of Triton Delaware Common Stock entitled to vote
at the Special Meeting will constitute a quorum. See
"The Special Meeting."
RECORD DATE......... Only Triton Delaware stockholders of record at the close
of business on February 20, 1996, as shown on Triton
Delaware's records, will be entitled to vote, or to
grant proxies to vote, at the Special Meeting. See "The
Special Meeting -- Record Date."
TRITON DELAWARE....... Triton Delaware is an international oil and gas
exploration company primarily engaged in exploration and
production through subsidiaries and affiliates. Triton
Delaware's principal properties and operations are
located in Colombia and Malaysia-Thailand. Triton
Delaware also has oil and gas interests in other Latin
American and Asian countries, Europe, Australia and
North America. Triton Delaware's principal offices are
located at 6688 North Central Expressway, Suite 1400,
Dallas, Texas 75206-9926. Triton Delaware's telephone
number is (214) 691-5200. See "Triton Delaware and
Triton Cayman."
TRITON CAYMAN......... Triton Cayman is a newly formed Cayman Islands company
and a wholly-owned subsidiary of Triton Delaware. Triton
Cayman was formed to become the parent holding company
of Triton Delaware. All of the capital stock of Triton
Cayman is currently held by Triton Delaware. After the
consummation of the Reorganization, Triton Delaware will
become a subsidiary of Triton Cayman, and Triton Cayman
will continue to conduct the businesses (through
subsidiaries and affiliates) in which Triton Delaware is
now engaged. Triton Cayman's principal offices are
located at Caledonian House, Mary Street, P.O. Box 1043,
George Town, Grand Cayman, Cayman Islands. Triton
Cayman's telephone number is (809) 949-0050. Triton
Cayman has a newly formed, wholly-owned subsidiary, Sub,
specifically to effect the Reorganization. See "Triton
Delaware and Triton Cayman."
10
THE REORGANIZATION
GENERAL............. The Board of Directors of Triton Delaware has
unanimously approved, and recommends that the
stockholders of Triton Delaware adopt, a proposed
corporate reorganization pursuant to which Triton
Cayman, a Cayman Islands company, will become the parent
holding company of Triton Delaware. It is proposed that
the Reorganization be effected pursuant to the Merger
Agreement, a copy of which is attached hereto as Annex I
and the terms of which are incorporated herein by
reference. After the consummation of the Reorganization,
Triton Cayman will continue to conduct the businesses
(through subsidiaries and affiliates) in which Triton
Delaware is now engaged and substantially all of the
businesses or subsidiaries of Triton Delaware located
outside of the United States, other than Triton
Delaware's interests in the Cusiana and Cupiagua fields
in Colombia and interests in Argentina, will be
transferred to Triton Cayman. The relative voting rights
of Triton Delaware stockholders as shareholders of
Triton Cayman will not change as a result of the
Reorganization. See "The Reorganization," "Description
of Authorized Shares of Triton Cayman -- Voting and
Other Rights," "-- Special Rights Upon the Occurrence of
Certain Events", "Comparison of Rights of Stockholders"
and the Pro Forma Consolidated Condensed Financial
Statements, included elsewhere herein.
REASONS FOR THE
REORGANIZATION..... The Board of Directors of Triton Delaware believes that
the establishment of a Cayman Islands holding company
for Triton Delaware and its subsidiaries will allow
Triton Delaware to organize its international and United
States business activities to avail itself of certain
business, tax and financing advantages compared to those
available domestically. In particular, the Board of
Directors of Triton Delaware is recommending the
Reorganization for the following reasons: (a) the
creation of a Cayman Islands parent corporation will
reduce corporate income taxes because, unlike the U.S.
tax system which imposes corporate income tax on the
worldwide income of United States corporations, the
Cayman Islands generally imposes no corporate income
taxes on foreign income. Income taxes will therefore be
reduced to the extent operations, for example, in the
Malaysia-Thailand Joint Development Area, are conducted
after the Reorganization by Triton Cayman or its foreign
subsidiaries; (b) the Reorganization may, in certain
circumstances, have a favorable effect on Triton
Cayman's ability to sell assets or raise additional
capital in the future; and (c) an offshore holding
company structure in the form proposed by the
Reorganization may provide a more suitable corporate
structure for expansion of its current business and
future acquisitions and diversification opportunities.
11
In determining to recommend the Reorganization, the
Board consulted with Triton Delaware's management, its
financial advisors, Lehman Brothers Inc. ("Lehman") and
J.P. Morgan Securities Inc. ("J.P. Morgan"), and its
legal advisors and considered a number of factors,
including the opinions of its financial advisors that,
on the date of such opinions, the inherent values of a
Class A Share and an Equity Unit are substantially
equivalent, as well as the Board's desire to afford
stockholders electing to receive Equity Units the oppor-
tunity to defer a substantial portion of their taxable
gain. As described in "Certain Tax Considerations," in
the opinion of special tax counsel, while no assurance
can be given, it is more likely than not that the
receipt of the shares of Triton Delaware Preferred Stock
by stockholders who elect to receive Equity Units will
not be a taxable transaction. See "The Reorganization --
Background and Reasons for the Reorganization" and
"Certain Tax Considerations."
THE MERGER.......... The Reorganization will be accomplished through the
merger of Sub with and into Triton Delaware, which will
be the surviving corporation in the Merger, at which
time each outstanding share of Triton Delaware Common
Stock (other than shares of Triton Delaware Common Stock
held by Triton Delaware in its treasury and other than
Electing Shares (as hereinafter defined), subject to the
Equity Unit Limitation) will be automatically converted
into one Class A Share. As is further described in
"Equity Unit Election" below, each share of Triton
Delaware Common Stock (an "Electing Share") with respect
to which an election to receive one Equity Unit has been
properly made by the holder thereof and not withdrawn
will be exchanged for one Equity Unit; provided that the
maximum number (the "Maximum Election Number") of shares
of Triton Delaware Common Stock with respect to which
Equity Unit Elections can be made shall be 25% of the
number of shares of Triton Delaware Common Stock
outstanding immediately prior to the Effective Time;
provided further that the minimum number (the "Minimum
Election Number") of shares of Triton Delaware Common
Stock with respect to which Equity Unit Elections can be
made shall be 15% of the number of shares of Triton
Delaware Common Stock outstanding immediately prior to
the Effective Time (such limitations, the "Equity Unit
Limitation"). In connection with the Merger, each
outstanding share of 5% convertible preferred stock of
Triton Delaware (the "Convertible Preferred Stock") will
be automatically converted into one 5% convertible
preference share of Triton Cayman (the "Convertible
Preference Shares"), subject to dissenters' appraisal
rights. See "The Reorganization -- The Merger
Agreement," "-- Equity Unit Election" and "Description
of Authorized Shares of Triton Cayman."
12
EFFECTIVE TIME...... If the Merger Agreement is adopted by the stockholders
of Triton Delaware and not terminated by the Board of
Directors of Triton Cayman, the Reorganization will
become effective (the "Effective Time") at the close of
business on the date that an appropriate certificate of
merger is filed with the Delaware Secretary of State as
required by Delaware law or at such later time as is
specified in such certificate of merger. Triton Delaware
anticipates that the Reorganization will become
effective promptly following the Special Meeting. See
"The Reorganization -- Effective Time."
EQUITY UNIT Subject to the Equity Unit Limitation, record holders of
ELECTION........... Triton Delaware Common Stock will be entitled to make an
unconditional election (an "Equity Unit Election") on or
prior to the Election Date (as defined below) to receive
Equity Units in exchange for any or all shares of Triton
Delaware Common Stock owned of record by such holders in
lieu of such shares being automatically converted into
Class A Shares upon consummation of the Reorganization.
If the number of Electing Shares exceeds the Maximum
Election Number, then the aggregate number of Electing
Shares to be exchanged for Equity Units in the Merger in
connection with any Equity Unit Election will be reduced
by multiplying the number of Electing Shares covered by
such Equity Unit Election by a proration factor (the
"Proration Factor") determined by dividing the Maximum
Election Number by the total number of Electing Shares.
The number of Electing Shares covered by each Equity
Unit Election which will be exchanged for Equity Units
will be that number which results from multiplying the
number of such Electing Shares by the Proration Factor.
Electing Shares not exchanged for Equity Units as a
result of proration will instead be automatically
converted into Class A Shares on the basis described
above under "The Merger." In the event that the number
of Electing Shares is less than the Minimum Election
Number, no Equity Units will be issued and Electing
Shares will be automatically converted into Class A
Shares on the basis described above under "The Merger."
Holders of Triton Delaware Common Stock electing to
receive Equity Units in exchange for all or a portion of
their Triton Delaware Common Stock must properly
complete and sign the Form of Election ("Form of
Election") accompanying this Proxy Statement/Prospectus,
and such form, together with certificates for the shares
of Triton Delaware Common Stock to which such form
relates, duly endorsed in blank or otherwise in form
acceptable for transfer on the books of Triton Delaware,
must be received by the Exchange Agent, by 5:00 p.m.,
New York City time, on the business day next preceding
the date of the Special Meeting (the "Election Date").
See "The Reorganization -- Equity Unit Election."
13
DIVIDENDS........... Aggregate dividends declared and paid on one Class A
Share are expected to be equivalent to the aggregate
dividends declared and paid on the securities included
in one Equity Unit. Holders of Equity Units will be
entitled to receive, if declared by the Board of
Directors of Triton Delaware or Triton Cayman, as the
case may be, (a) dividends on the shares of Triton
Delaware Preferred Stock when the Board of Directors de-
clares a dividend on the common stock of Triton Delaware
outstanding after the Merger, such that the aggregate
amount of the dividends declared with respect to the
Triton Delaware Preferred Stock shall be a portion of
the aggregate amount of the dividends declared with
respect to the Triton Delaware Preferred Stock and the
common stock equal to the percentage of shares of Triton
Delaware Common Stock that receive Equity Units in the
Merger, subject to certain adjustments and (b) dividends
on the Class B Ordinary Shares in such amounts as the
Board of Directors of Triton Cayman may determine,
subject to certain preferences of the holders of the
Class A Shares contained in the Articles of Association.
Holders of Class A Shares will be entitled to receive,
at any time, such dividends as are declared by the Board
of Directors of Triton Cayman. At the time of the
Reorganization, Triton Cayman and Triton Delaware will
be parties to certain indentures which contain covenants
that will restrict the ability of Triton Cayman and
Triton Delaware to pay dividends. Triton Cayman and
Triton Delaware currently intend to retain earnings for
use in their respective businesses and the financing of
their respective capital requirements. The payment of
any future cash dividends on the Triton Delaware
Preferred Stock, and on the Class A Shares and Class B
Shares (collectively, the "Ordinary Shares"), is
necessarily dependent upon the earnings and financial
needs of Triton Delaware and Triton Cayman,
respectively, along with applicable legal and con-
tractual restrictions. See "Description of Authorized
Shares of Triton Cayman -- Dividend Rights" and
"Description of Triton Delaware Preferred Stock --
Dividends."
14
PURCHASE RIGHT...... The Equity Units are subject to purchase by Triton
Cayman or Triton Delaware, in whole or in part, at any
time on or after the third anniversary of the Effective
Time, or by Triton Cayman at any time immediately prior
to the date on which a sale or other disposition of the
stock of Triton Delaware is consummated. The purchase
price for the Equity Units will generally be equal to
the greater of .95 of a Class A Share and the fair
market value of an Equity Unit, payable in cash or, in
the case of a purchase by Triton Cayman, Ordinary
Shares. Neither Triton Cayman nor Triton Delaware can
exercise its option to purchase the Equity Units in
certain circumstances, including in the event of the
bankruptcy or insolvency of Triton Delaware. See
"Description of Triton Delaware Preferred Stock --
Purchase of Equity Units." For a discussion of the
consequences to the holders of Ordinary Shares of the
purchase of the Equity Units, see "Description of
Authorized Shares of Triton Cayman -- Purchase of Equity
Units."
LIQUIDATION......... Upon the liquidation of Triton Cayman, holders of Class
A Shares are entitled to receive an amount per share
equal to certain payments made with respect to one-tenth
of one share of Triton Delaware Preferred Stock and
thereafter the holders of Class A Shares and Class B
Shares will participate in the assets of Triton Cayman
pari passu with the holders of any other class of
ordinary shares outstanding. Upon the liquidation of
Triton Delaware, a holder of one-tenth of one share of
Triton Delaware Preferred Stock is entitled to receive a
liquidation preference equal to the fair market value of
one-tenth of one share of Triton Delaware Preferred
Stock at the Effective Time, which will be determined by
Triton Delaware based upon the advice of its financial
advisors at the Effective Time, and will share
thereafter in any other distribution of assets by Triton
Delaware with the holders of the common stock of Triton
Delaware.
VOTING RIGHTS....... Each Ordinary Share will be entitled to one vote in the
affairs of Triton Cayman, voting together as a single
class with the holders of any other class of ordinary
shares and any voting preference shares, subject to
certain special class voting rights of the Class B
Shares under certain circumstances. In addition, each
share of Triton Delaware Preferred Stock will be
entitled to two votes per share in all matters submitted
to a vote of stockholders of Triton Delaware (and each
holder of an Equity Unit will therefore be entitled to
1/5 of one vote per unit) and certain other voting
rights. See "Description of Authorized Shares of Triton
Cayman -- Voting and Other Rights" and "-- Special
Rights Upon the Occurrence of Certain Events" and
"Description of Triton Delaware Preferred Stock --
Voting Rights."
RECOMMENDATION OF THE
BOARD OF
DIRECTORS............ THE BOARD OF DIRECTORS OF TRITON DELAWARE HAS
UNANIMOUSLY APPROVED THE PROPOSED REORGANIZATION AND THE
MERGER AGREEMENT AND RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL TO ADOPT THE MERGER AGREEMENT.
15
VOTE REQUIRED FOR Adoption of the Merger Agreement requires the
ADOPTION............. affirmative vote of the stockholders of Triton Delaware
who hold a majority of the outstanding shares of Triton
Delaware Common Stock. Abstentions and broker
"non-votes" will be treated as votes against the
proposal to adopt the Merger Agreement. As of the record
date described above, there were 35,917,480 shares of
Triton Delaware Common Stock outstanding and entitled to
vote. In addition, as of January 31, 1996, the direc-
tors and executive officers of Triton Delaware and
affiliates of such persons directly owned, in the
aggregate, approximately 200,000 shares (less than 1%)
of the total number of shares of Triton Delaware Common
Stock outstanding and have indicated their intention to
vote such shares in favor of the proposal to adopt the
Merger Agreement. See "The Special Meeting -- Vote
Required for Adoption."
PROXIES............. Each Triton Delaware common stockholder as of the record
date will receive a Proxy Card (the "Proxy Card"). A
common stockholder of Triton Delaware may grant a proxy
to vote for or against, or to abstain from voting on,
the proposal to adopt the Merger Agreement by marking
the Proxy Card appropriately, executing it in the space
provided, and, in the case of holders of Triton Delaware
Common Stock appearing on the stock records of Triton
Delaware, returning it to Triton Delaware. Triton
Delaware stockholders who hold their Triton Delaware
Common Stock in the name of a bank, broker or other
nominee should follow the instructions provided by their
bank, broker or nominee on voting their shares.
To be effective, a Proxy Card must be received at or
prior to the Special Meeting. Any properly executed
proxy will be voted in accordance with the specification
indicated on such Proxy Card. A properly executed and
returned Proxy Card in which no specification is made
will be voted FOR the proposal to adopt the Merger
Agreement.
If any other matters are properly presented at the
Special Meeting for consideration, including
consideration of a motion to adjourn the Special Meeting
to another time and/or place (including adjournments for
the purpose of soliciting additional proxies), the
persons named in the Proxy Card and acting thereunder
will have the discretion to vote on such matters in
accordance with their best judgment. See "The Special
Meeting -- Proxies."
16
REVOCATION.......... In the case of holders of Triton Delaware Common Stock
appearing on the stock records of Triton Delaware, a
Proxy Card may be revoked at any time prior to its
exercise by (a) giving written notice of such revocation
to Triton Delaware, (b) appearing and voting in person
at the Special Meeting, or (c) properly completing and
executing a later-dated proxy and delivering it to
Triton Delaware at or before the Special Meeting.
Presence without voting at the Special Meeting will not
automatically revoke a proxy, and any revocation during
the meeting will not affect votes previously taken.
Triton Delaware stockholders who hold their Triton Dela-
ware Common Stock in the name of a bank, broker or other
nominee should follow the instructions provided by their
bank, broker or nominee in revoking their previously
voted shares. See "The Special Meeting -- Proxies --
Revocation."
COMPARISON OF RIGHTS
OF
STOCKHOLDERS......... The principal attributes of the Triton Delaware Common
Stock and the Ordinary Shares will be similar. However,
there are certain differences between the rights of
stockholders under Delaware law and Cayman Islands law.
In addition, there are differences between Triton
Delaware's Certificate of Incorporation and Bylaws and
Triton Cayman's Articles of Association and Memorandum
of Association. See "Comparison of Rights of
Stockholders."
ODD LOT SHARES........ Each holder of Triton Delaware Common Stock who holds
fewer than 100 shares thereof prior to the Merger may
elect to participate in the Odd-Lot Program pursuant to
which such holder may have Chemical Mellon Shareholder
Services, L.L.C. (the "Exchange Agent") sell all, but
not less than all, of such holder's shares of Triton
Delaware Common Stock. See "The Reorganization --
Odd-Lot Program." Triton Delaware expects that the
proceeds of such sales will be distributed shortly after
such sales. The Odd-Lot Program is not contingent on
adoption of the Merger Agreement or consummation of the
Merger.
TAX CONSIDERATIONS.... The following is a brief summary of the United States
federal income tax consequences of the Reorganization
and is not intended to be, nor should it be construed to
be, advice to any particular stockholder of Triton
Delaware. Stockholders of Triton Delaware should consult
their own tax advisors with respect to their particular
circumstances. A more detailed summary of certain tax
consequences of the Reorganization is set out under
"Certain Tax Considerations."
The discussion contained in this Proxy
Statement/Prospectus is based on the law in effect as of
the date of this Proxy Statement/Prospectus. Triton
Delaware will receive opinions at the Effective Time
from Special Tax Counsel reaffirming as of such date
certain conclusions reached in this Proxy State-
ment/Prospectus.
17
There are no regulations, published rulings or judicial
decisions directly on point with respect to certain
aspects of the Reorganization and the securities to be
issued pursuant thereto. Accordingly, Special Tax
Counsel are unable to reach an unqualified conclusion on
certain matters as indicated below. Opinions of counsel
are not binding upon either the IRS or the courts.
Triton Delaware does not intend to request a ruling from
the IRS with respect to the Reorganization. Stockholders
are urged to consult their own tax advisors as to the
particular tax consequences to them of the Reorganiza-
tion.
The receipt of Class A Shares by U.S. stockholders in
exchange for Triton Delaware Common Stock will be a
taxable transaction. Stockholders will recognize gain,
if any (but not loss), in an amount equal to the excess
of the fair market value of the Class A Shares received
in the Reorganization over their tax basis in the Triton
Delaware Common Stock exchanged therefor.
Special Tax Counsel are of the opinion that it is more
likely than not that the shares of Triton Delaware
Preferred Stock will be treated as stock of Triton
Delaware and that the receipt of such shares of Triton
Delaware Preferred Stock in exchange for Triton Delaware
Common Stock will not be a taxable transaction. In such
case, the basis of the shares of Triton Delaware
Preferred Stock will be the same as the Triton Delaware
Common Stock treated as exchanged therefor. However, in
view of the absence of any authority dealing with
transactions similar to the Reorganization or securities
of a type similar to the Equity Units, there is
significant uncertainty with respect to such conclusion
and no assurance can be given that the IRS or the courts
will agree. In any event, the receipt of Class B Shares
by U.S. stockholders in exchange for Triton Delaware
Common Stock will be a taxable transaction. Stockholders
will recognize gain, if any (but not loss), in an amount
equal to the excess of the fair market value of the
Class B Shares received in the Reorganization over their
tax basis in the Triton Delaware Common Stock treated as
exchanged therefor. Triton Delaware believes, based upon
the advice of Lehman and J.P. Morgan, that, as of
February 14, 1996, the fair market value of a Class B
Share would be approximately $3.50 and the fair market
value of one-tenth of a share of Triton Delaware
Preferred Stock would be approximately $49 based upon
the closing price of the Triton Delaware Common Stock on
the NYSE Composite Transactions Tape on February 13,
1996 of $52.50. Triton Delaware will provide
stockholders making an Equity Unit Election with its
updated estimate (after consultation with Lehman and
J.P. Morgan) of the fair market value of one-tenth of
one share of Triton Delaware Preferred Stock and the
Class B Share as of the Effective Time of the
Reorganization. However, the IRS is not bound by such
valuations and no assurance can be given that the IRS
will agree with such valuations.
18
The Merger Agreement provides (and by making an Equity
Unit Election stockholders will agree with Triton
Delaware and Triton Cayman) that, with respect to
stockholders making an Equity Unit Election, a portion
of each such stockholder's Triton Delaware Common Stock
so exchanged in the Reorganization will be transferred
to Triton Delaware as consideration for the issuance of
the Triton Delaware Preferred Stock and the remaining
portion of the Triton Delaware Common Stock so exchanged
by each such stockholder in the Reorganization will be
transferred to Triton Cayman as consideration for the
issuance by Triton Cayman of the Class B Shares. The
allocation of such consideration will be determined
based on the respective fair market values of the Tri-
ton Delaware Preferred Stock and the Class B Shares as
estimated by Triton Delaware (after consultation with
Lehman and J.P. Morgan) as of the Effective Time of the
Reorganization. No assurance can be given that such
allocation will be respected by the IRS.
The IRS may assert that the shares of Triton Delaware
Preferred Stock were received as taxable consideration
in the Reorganization, in which case the entire fair
market value of each Equity Unit received (rather than
the portion of such fair market value attributable to
the Class B Share) would have to be taken into account
in determining the amount of gain, if any, required to
be recognized on the Reorganization by stockholders who
make the Equity Unit Election. Consequently, each Triton
Delaware stockholder making an Equity Unit Election
would recognize gain to the extent the fair market value
of the Equity Units received in exchange for Triton
Delaware Common Stock exceeds such stockholder's basis
in its Triton Delaware Common Stock. No loss would be
recognized as a result of the Reorganization.
The receipt of cash by stockholders of Triton Delaware
selling their shares pursuant to the odd-lot program
will be a taxable transaction in which gain or loss will
be recognized in an amount equal to the difference
between the cash received and the tax basis in the
shares of Triton Delaware Common Stock exchanged
therefor.
The receipt of Convertible Preference Shares in exchange
for Convertible Preferred Stock in the Reorganization
will be a taxable transaction. Holders of Convertible
Preferred Stock will recognize gain, if any (but not
loss), in an amount equal to the excess of the fair
market value of the Convertible Preference Shares
received in the Reorganization over their tax basis in
the Convertible Preferred Stock exchanged therefor. The
receipt of cash by holders of Convertible Preferred
Stock exercising dissenters' rights will be a taxable
transaction for holders in which gain or loss will be
recognized in an amount equal to the difference between
the cash received and the tax basis in the shares of
Convertible Preferred Stock exchanged therefor.
19
For United States federal income tax purposes, exercise
of Triton Delaware's or Triton Cayman's right to
purchase the Equity Units for cash will be a taxable
transaction to the holder. Exercise of Triton Cayman's
right to exchange Class A Shares or Class C Shares for
Equity Units will be a partially taxable transaction
except possibly as described further herein.
STOCKHOLDERS ARE ADVISED TO READ THE MORE DETAILED
SUMMARY OF THE TAX CONSEQUENCES OF THE REORGANIZATION,
AS SET FORTH UNDER "CERTAIN TAX CONSIDERATIONS."
RIGHTS OF DISSENTING
STOCKHOLDERS......... Under applicable Delaware law, the holders of Triton
Delaware Common Stock will not have dissenters'
appraisal rights in connection with the Reorganization.
Holders of Convertible Preferred Stock are entitled to
dissenters' appraisal rights, subject to compliance with
the procedures set forth in Section 262 of the Delaware
General Corporation Law (the "DGCL"), in connection with
the Merger. See "The Reorganization -- Rights of
Dissenting Stockholders."
ACCOUNTING TREATMENT
OF THE
REORGANIZATION....... The acquisition by Triton Cayman of Triton Delaware in
connection with the Reorganization will be accounted for
as a combination of entities under common control (as if
it were a pooling of interests). See "The Reorganization
-- Accounting Treatment of the Reorganization."
RISK FACTORS.......... See "Risk Factors" for a discussion of certain risk
factors to be considered in connection with the
Reorganization, including with respect to stockholders
who receive Unit Depositary Shares, the absence of any
prior market for the Unit Depositary Shares and Triton
Delaware's expectation that the trading market for the
Unit Depositary Shares will be less liquid.
STOCK EXCHANGE There is currently no established public trading market
LISTING.............. for the Class A Shares or the Unit Depositary Shares.
Immediately following the Reorganization, the Class A
Shares will be listed on the NYSE under the symbol
"OIL," the same symbol under which the Triton Delaware
Common Stock is currently listed. The Unit Depositary
Shares have been approved for listing, subject to notice
of issuance, on the NYSE. See "The Reorganization --
Stock Exchange Listing."
DEPOSITARY AND
EXCHANGE AGENT....... Chemical Mellon Shareholder Services, L.L.C. will act as
Depositary for the Unit Depositary Shares and as
Exchange Agent in connection with the Merger.
20
SELECTED HISTORICAL FINANCIAL AND OIL AND GAS DATA
The selected historical financial data presented below for the nine month
periods ended September 30, 1995 and 1994, the seven month transition period
ended December 31, 1994 and each of the years in the five-year period ended May
31, 1994, are derived from the Consolidated Financial Statements of Triton
Delaware and its subsidiaries (see note 1 in the table below). The Consolidated
Financial Statements as of and for the seven month transition period ended
December 31, 1994 and years ended May 31, 1994 and 1993 and the adjustments that
were applied to restate the 1992 consolidated financial statements for
discontinued aviation sales and services operations and wholesale fuel products
operations were audited by Price Waterhouse LLP, independent accountants. The
Consolidated Financial Statements as of and for the three years ended May 31,
1992 (before restatements for discontinued aviation sales and services
operations and wholesale fuel products operations) were audited by KPMG Peat
Marwick LLP, independent accountants. The Consolidated Financial Statements as
of December 31, 1994, May 31, 1994 and 1993, and for the seven month transition
period ended December 31, 1994 and each of the years in the three year period
ended May 31, 1994, and the reports of such accountants thereon, are included in
Triton Delaware's Current Report on Form 8-K dated August 24, 1995 incorporated
by reference herein.
The selected unaudited financial data presented below under the captions
"Operating Data" and "Balance Sheet Data" for the nine month periods ended
September 30, 1995 and 1994, and as of September 30, 1995, are derived from the
unaudited consolidated condensed financial statements of Triton Delaware and its
subsidiaries. With respect to such unaudited consolidated financial information
for the nine month periods ended September 30, 1995 and 1994, Price Waterhouse
LLP reported that they have applied limited procedures in accordance with
professional standards for a review of such information. The unaudited
consolidated condensed financial statements as of September 30, 1995, and for
the nine month periods ended September 30, 1995 and 1994, and the review report
on the nine month periods ended September 30, 1995 and 1994, are included in
Triton Delaware's Quarterly Report on Form 10-Q incorporated by reference
herein. The information as of September 30, 1995 and 1994, and for the nine
month periods then ended is unaudited, but includes all adjustments of a normal
recurring nature which Triton Delaware considers necessary for a fair
presentation of the financial position and results of operations at those dates
and for those periods. The results of operations for the nine months ended
September 30, 1995, are not necessarily indicative of the results to be expected
for the full year.
The selected financial data reflect revenues and earnings (loss) since the
date of acquisition of various companies or assets, or to the date of
disposition in the case of divestitures, which materially affect comparability
with prior years. The information below should be read in conjunction with the
Pro Forma Consolidated Condensed Financial Statements, included elsewhere herein
and the Consolidated Financial Statements of Triton Delaware and related notes
included in the Current Report on Form 8-K dated August 24, 1995 incorporated
herein by reference and "Management's Discussion
21
and Analysis of Financial Condition and Results of Operations" included in
Triton Delaware's Transition Report on Form 10-K for the transition period from
June 1, 1994 to December 31, 1994 and Triton Delaware's Quarterly Report on Form
10-Q for the nine month period ended September 30, 1995 incorporated herein by
reference.
AS OF OR FOR AS OF OR FOR AS OF OR FOR
NINE MONTHS NINE MONTHS SEVEN MONTHS
ENDED ENDED ENDED AS OF OR FOR YEAR ENDED MAY 31,
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, ------------------------------------------------
1995 1994 1994 1994 1993 1992 1991 1990
------------- ------------- ------------ -------- -------- -------- -------- --------
OPERATING DATA (in thousands,
except per share data):
Sales and other operating
revenues(1)...................... $ 80,841 $ 24,510 $20,736 $ 43,208 $ 84,414 $ 90,724 $118,667 $117,793
Total revenues(1)................. 98,096 33,584 25,321 107,394 90,362 97,203 150,849 127,354
Earnings (loss) from continuing
operations(1)(2)................. 5,933 (33,421) (26,630) (4,597) (76,509) (81,333) (7,390) (50,162)
Earnings (loss) before
extraordinary items and
cumulative effect of accounting
change........................... 2,112 (35,754) (27,708) (9,341) (93,552) (94,037) 4,745 (54,769)
Net earnings (loss)(2)............ 2,112 (35,754) (27,708) (9,341) (89,535) (94,037) 6,185 (54,176)
Weighted average number of common
shares outstanding............... 35,088 34,901 34,944 34,775 34,241 29,898 20,368 20,346
EARNINGS (LOSS) PER COMMON SHARE:
Continuing operations(1)(2)..... $ 0.15 $ (0.97) $ (0.78) $ (0.13) $ (2.23) $ (2.77) $ (0.64) $ (2.73)
Before extraordinary item and
cumulative effect of accounting
change......................... $ 0.04 $ (1.04) $ (0.81) $ (0.27) $ (2.73) $ (3.19) $ (0.04) $ (2.96)
Net earnings (loss)............. $ 0.04 $ (1.04) $ (0.81) $ (0.27) $ (2.61) $ (3.19) $ 0.03 $ (2.93)
Cash dividends per common share... -- -- -- -- -- -- -- 0.10
Ratio of earnings to combined
fixed charges and preferred
dividends(3)..................... 1.1x (3) (3) (3) (3) (3) 1.1x (3)
BALANCE SHEET DATA (in thousands):
Net property and equipment........ $465,816 $365,320 $399,658 $308,498 $330,151 $385,979 $391,862 $424,850
Total assets...................... 827,155 611,826 619,201 616,101 561,931 571,169 553,809 646,128
Long-term debt.................... 404,944 305,218 315,258 294,441 159,147 27,587 160,667 233,134
Redeemable preferred stock of
subsidiaries..................... -- -- -- -- 11,399 12,972 13,608 22,615
Stockholders' equity.............. 243,212 253,408 237,195 263,422 255,432 336,013 186,503 173,796
CERTAIN OIL AND GAS DATA(4)
Sales price realized per BOE...... $ 15.79 $ 13.51 $ 14.26 $ 12.91 $ 13.18 $ 13.05 $ 15.52 $ 12.87
BOE produced (in thousands)....... 5,741 2,597 2,059 4,399 7,351 7,838 8,302 8,821
- ------------------------------
(1) Operating data for the nine months ended September 30, 1994, the seven
months ended December 31, 1994 and the years ended May 31, 1994, 1993,
1992, 1991, and 1990 are restated to reflect the aviation sales and
services segment and the wholesale fuel product segment as discontinued
operations in 1995 and 1993, respectively.
(2) Gives effect to the writedown of assets and loss provisions of $14.7
million, $1.0 million, $45.8 million, $99.9 million, $48.8 million, $2.7
million, and $29.2 million for the nine months ended September 30, 1994,
the seven months ended December 31, 1994 and the years ended May 31, 1994,
1993, 1992, 1991 and 1990, respectively.
(3) For purposes of computing the ratio of earnings to combined fixed charges
and preferred dividends, earnings consist of earnings (loss) from
continuing operations before income taxes, minority interest and
extraordinary items and cumulative effect of accounting changes, plus fixed
charges (interest charges and preferred stock dividend requirements of
subsidiaries, adjusted to a pretax basis), less interest capitalized, less
preferred stock dividend requirements of subsidiaries adjusted to a pretax
basis and less undistributed earnings of affiliates whose debt is not
guaranteed by Triton Delaware. Earnings were inadequate to cover fixed
charges and preferred dividends for the nine months ended September 30,
1994 by $54,078,000, for the seven months ended December 31, 1994 by
$31,014,000 and for the years ended May 31, 1994, 1993, 1992 and 1990 by
$40,976,000, $152,391,000, $94,261,000 and $59,603,000, respectively.
Without nonrecurring items, earnings would have been inadequate to cover
fixed charges and preferred dividends for the nine months ended September
30, 1995 and 1994 by $7,062,000 and $40,212,000, respectively, for the
seven months ended December 31, 1994 by $30,030,000, and for the years
ended May 31, 1994, 1993, 1992, 1991 and 1990 by $51,415,000, $45,183,000,
$33,687,000, $17,452,000 and $28,864,000, respectively.
(4) Includes Triton Delaware's interest in the net production attributable to
minority interests in consolidated subsidiaries, but includes only Triton
Delaware's proportionate interest in a non-consolidated affiliate. Includes
production only since or up to the effective dates of their respective
acquisitions or sales, as the case may be.
22
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following summary pro forma combined financial information of Triton
Cayman and Triton Delaware gives effect to (i) the acquisition of Triton
Delaware in connection with the proposed Reorganization, whereby Triton Cayman
will become the parent holding company of Triton Delaware and (ii) subsequent to
the Reorganization, the transfer to Triton Cayman of substantially all of the
businesses or subsidiaries of Triton Delaware located outside of the United
States, other than Triton Delaware's interests in the Cusiana and Cupiagua
fields in Colombia and interests in Argentina. The following summary pro forma
combined financial information of Triton Cayman and Triton Delaware should be
read in conjunction with the Pro Forma Consolidated Condensed Financial
Statements included elsewhere herein and the separate historical financial
statements of Triton Delaware and notes thereto incorporated by reference in
this Proxy Statement/Prospectus. The pro forma combined financial data of Triton
Delaware are not necessarily indicative of the operating results that would have
been achieved had the transfers described in note (1) below been effected during
the periods presented or the results that may be obtained in the future.
SUMMARY PRO FORMA COMBINED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA
--------------------------------------------
SEVEN MONTHS
NINE MONTHS ENDED
ENDED DEC. 31, YEAR ENDED
TRITON DELAWARE SEPT. 30, 1995 1994 MAY 31, 1994
- ----------------------------------- -------------- ------------ ------------
STATEMENT OF OPERATIONS DATA (1):
Total revenue...................... $101,572 $ 28,319 $ 110,982
Earnings (loss) from continuing
operations before income taxes and
minority interest................. 23,872 (12,485) 46,709
Earnings (loss) from continuing
operations........................ 15,753 (14,892) 40,162
Earnings (loss) from continuing
operations per common share....... $ 0.43 $ (0.44) $ 1.15
Weighted average number of shares
outstanding....................... 35,088 34,944 34,775
SEPTEMBER 30, 1995
--------------------------------------------
PRO FORMA
TRITON DELAWARE HISTORICAL ADJUSTMENTS PRO FORMA
- ----------------------------------- -------------- ------------ ------------
BALANCE SHEET DATA (1):
Working capital.................... $135,790 $ 7,319 $ 143,109
Total assets....................... 827,155 116,209 943,364
Long-term debt, less current
portion........................... 404,944 -- 404,944
Total stockholders' equity......... 243,212 130,552 373,764
SEPTEMBER 30, 1995
--------------------------------------------
PRO FORMA
TRITON CAYMAN HISTORICAL ADJUSTMENTS PRO FORMA
- ----------------------------------- -------------- ------------ ------------
BALANCE SHEET DATA (2):
Working capital.................... -- $ 135,790 $ 135,790
Total assets....................... -- 827,155 827,155
Long-term debt, less current
portion........................... -- 404,944 404,944
Preferred stock of a subsidiary
(3)............................... -- 439,086 439,086
Total stockholders' equity
(deficit) (3)..................... -- (195,874) (195,874)
- ------------------------------
(1) Following the Reorganization, Triton Cayman intends to acquire
substantially all of the businesses or subsidiaries of Triton Delaware
located outside of the United States, other than Triton Delaware's
interests in the Cusiana and Cupiagua fields in Colombia and interests in
Argentina. The aggregate consideration to be received by Triton Delaware,
estimated to be approximately $233 million, will consist of preferred stock
of Triton Oil Company of Thailand JDA Ltd., through which Triton Cayman
will hold its interest in Block A-18 of the Malaysia-Thailand Joint
Development Area, and certain other subsidiaries to be sold, with an
aggregate stated value expected to approximate the aggregate value of the
businesses and subsidiaries, and a promissory note of Triton Cayman for any
remainder. The excess of the consideration over Triton Delaware's net book
value of the assets to be sold, estimated to be approximately $131 million,
has been reported as an increase to stockholders' equity in the unaudited
Pro Forma Consolidated Condensed Balance Sheet of Triton Delaware. The
consideration for the contemplated transfers will be determined at the time
of such transfers by Triton Delaware and will be based on independent third
party appraisals.
(2) Pro forma consolidated condensed statements of operations for Triton Cayman
are not presented herewith because the pro forma consolidated condensed
statements of operations of Triton Cayman for the nine months ended
September 30, 1995, the seven month transition period ended December 31,
1994 and the three years in the period ended May 31, 1994 would be
identical to the historical Consolidated Condensed Statements of Operations
of Triton Delaware as reported in Triton Delaware's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, and historical
Consolidated Statements of Operations of Triton Delaware as reported in
Triton Delaware's Current Report on Form 8-K dated August 24, 1995,
respectively, which are incorporated herein by reference.
(3) This pro forma presentation assumes that .9 million shares of Triton
Delaware Preferred Stock are issued, that holders of 25% of Triton Delaware
Common Stock make an Equity Unit Election and that one-tenth of a share of
Triton Delaware Preferred Stock is valued at $49. If holders of 15% of
Triton Delaware Common Stock make an Equity Unit Election, the amount shown
for preferred stock of subsidiary would be $263 million and total
stockholder's equity (deficit) would be ($20 million).
23
RISK FACTORS
Certain statements included or incorporated by reference in this Proxy
Statement/Prospectus, such as proven oil reserves, the value of the assets to be
transferred to Triton Cayman and the amount of net operating loss carryforwards
available to offset the anticipated gain thereon, the tax treatment of the
Triton Delaware Preferred Stock, the value of an Equity Unit in relation to a
Class A Share and the allocation of fair market value to the Equity Units, are
forward-looking statements (as such term is used in the Private Securities
Litigation Reform Act of 1995), and the factors discussed hereunder could cause
actual results and developments to be materially different from those expressed
in or implied by such statements. Accordingly, before voting on the proposal to
adopt the Merger Agreement, Triton Delaware stockholders should carefully read
this entire Proxy Statement/Prospectus and should give particular attention to
the following risks factors:
CERTAIN TAX CONSEQUENCES. Triton Delaware will receive opinions of Special
Tax Counsel to the effect that it is more likely than not that the Triton
Delaware Preferred Stock will be treated as stock of Triton Delaware and that
the receipt of such Triton Delaware Preferred Stock will not be a taxable
transaction. In such case, stockholders electing to receive Equity Units will be
subject to U.S. federal income tax only with respect to that portion of the fair
market value (on the date of the Reorganization) of such Equity Unit
attributable to the Class B Share. However, in view of the absence of authority
dealing with transactions similar to the Reorganization or securities of a type
similar to the Equity Units, Special Tax Counsel believe there is significant
uncertainty and no assurance can be given that the IRS or the courts will agree.
Triton Delaware believes, based upon the advice of Lehman and J.P. Morgan, that,
as of February 14, 1996, the fair market value of a Class B Share would be
approximately $3.50 and the fair market value of one-tenth of one share of
Triton Delaware Preferred Stock would be approximately $49, based upon the
closing price of the Triton Delaware Common Stock on the NYSE Composite
Transactions Tape on February 13, 1996 of $52.50. Triton Delaware will provide
stockholders making an Equity Unit Election with its updated estimate (after
consultation with Lehman and J.P. Morgan) of the fair market value of the Triton
Delaware Preferred Stock and the Class B Shares as of the Effective Time of the
Reorganization. No assurance can be given that the IRS will not take the
position that Class B Shares have a higher fair market value than that estimated
by Triton Delaware. Moreover, the IRS may argue that the entire fair market
value of the Equity Units should be treated as taxable consideration in the
Reorganization. See "Certain Tax Considerations -- United States Federal Income
Tax Consequences -- The Reorganization -- Equity Unit Election."
Following the Reorganization, Triton Delaware intends to transfer
substantially all the common stock of its subsidiaries engaged in business
outside the United States, other than Triton Delaware's interests in the Cusiana
and Cupiagua fields in Colombia and interests in Argentina, to Triton Cayman.
Triton Delaware will retain preferred stock interests in a number of the
subsidiaries so transferred to Triton Cayman. It is not expected that the
transfers will result in significant gain for U.S. federal income tax purposes.
The actual purchase prices of the common stock to be transferred will be
determined by Triton Delaware based on independent third party appraisals on the
dates of the transfers. The appraisals will not be binding on the IRS, which may
argue that the taxable gain on the transfer is larger, perhaps exceeding Triton
Delaware's available net operating loss carryforwards of approximately $200
million.
ABSENCE OF PRIOR MARKET. Currently, there is no established trading market
for the Class A Shares or the Unit Depositary Shares. Although application has
been granted to list the Unit Depositary Shares for trading on the New York
Stock Exchange, there can be no assurance that an active public market for the
Unit Depositary Shares will develop or be sustained. In addition, although
Receipts must be issued, if at all, in respect of at least the Minimum Election
Number, it is not possible to determine how many Unit Depositary Shares will be
issued upon the consummation of the Reorganization and therefore the extent to
which a trading market in the Unit Depository Shares will
24
develop. Triton Delaware expects that because the number of Unit Depositary
Shares will be, at most, one-third the number of Class A Shares issued upon
consummation of the Merger, the trading market for the Unit Depositary Shares
will be less liquid.
NO ASSURANCE AS TO TRADING VALUE. Triton Delaware believes that the
inherent value of a Class A Share is substantially equivalent to the inherent
value of an Equity Unit. There can be no assurance, however, that the market
price of a Class A Share will equal the market price of an Equity Unit upon
consummation of the Reorganization or at any time thereafter.
THE OIL AND GAS INDUSTRY GENERALLY. Oil prices have been subject to
significant fluctuations over the past two decades. Levels of production
maintained by the Organization of Petroleum Exporting Countries member nations
and other major oil producing countries, and the actions of oil traders, are
expected to continue to be major determinants of petroleum price movements in
the near term. It is impossible to predict future petroleum price movements with
any certainty. Triton Delaware and Triton Cayman may from time to time enter
into contracts to hedge risk against changing oil prices.
Triton Delaware's oil and gas business is, and Triton Cayman's oil and gas
business will be, subject to all of the operating risks normally associated with
the exploration for and production of oil and gas, including blowouts,
cratering, pollution, earthquakes, labor disruptions and fires, each of which
could result in damage to or destruction of oil and gas wells, formations,
production facilities or properties, or in personal injury. In accordance with
customary industry practices, Triton Delaware maintains, and Triton Cayman will
maintain, insurance coverage limiting financial loss resulting from certain of
these operating hazards. Losses and liabilities arising from uninsured or
underinsured events would reduce revenues and increase costs to Triton Delaware
and Triton Cayman.
Triton Delaware's oil and gas business is, and Triton Cayman's oil and gas
business will be, also subject to laws, rules and regulations in the countries
in which they operate, which generally pertain to production control, taxation,
environmental and pricing concerns and other matters relating to the petroleum
industry.
Moreover, because Triton Delaware or Triton Cayman may not be the operator
or own a majority interest in a number of contract areas, it will not be able to
control the timing or manner in which capital expenditures will occur in these
areas to the same degree as if it were the operator or owner of a majority
interest. The inability of Triton Delaware or Triton Cayman to meet its
obligations in these and other contract areas could have a material adverse
effect on its interests in these contract areas.
FINANCIAL POSITION. Triton Delaware reported income from continuing
operations of $1.3 million and $5.9 million for the three and nine months ended
September 30, 1995, respectively, but losses from continuing operations for the
seven month transition period ended December 31, 1994 ($26.6 million) and for
each of the last five fiscal years in the period ended May 31, 1994 ($4.6
million, $76.5 million, $81.3 million, $7.4 million and $50.2 million for 1994,
1993, 1992, 1991 and 1990, respectively). To date, working capital (amounting to
$135.8 million as of September 30, 1995, excluding $3.9 million of long-term
marketable securities), external sources of funding, asset sales and net cash
flow from operations have been sufficient to service Triton Delaware's existing
debt obligations, even though Triton Delaware has experienced losses. Triton
Delaware expects to pursue financing alternatives and to dispose of certain
assets or operations in order to meet expenditure requirements on existing or
contemplated projects and to service its debt obligations, the timing and nature
of which may be affected by, among other things, the timing and extent of
production and capital expenditures in Colombia, Malaysia-Thailand and
elsewhere. There can be no assurance as to the ability of Triton Delaware and,
following the Reorganization, Triton Cayman, to effect sales of assets or to
access public or private markets for such financings, the timing of such sales
or financings or the proceeds, if any, that Triton Delaware or Triton Cayman
could realize therefrom. Moreover, Triton Delaware's ability to pursue
additional debt financing is, and Triton Cayman's ability to pursue debt
financing will be, limited by covenants in the indenture pursuant to which $240
million principal amount of
25
Triton Delaware's 12% Senior Subordinated Discount Notes due 1997 (the "1997
Notes") were issued in 1992 and in the indenture pursuant to which $170 million
principal amount of Triton Delaware's 9 3/4% Senior Subordinated Discount Notes
due 2000 (the "2000 Notes") were issued in 1993.
For information regarding Triton Delaware's financial position and results
of operations and Triton Delaware's deficits of earnings to combined fixed
charges and preferred dividends, see "Summary -- Selected Historical Financial
and Oil and Gas Data" herein and Triton Delaware's Consolidated Statements of
Operations, Consolidated Balance Sheets and Consolidated Statements of Cash
Flows in Triton Delaware's annual and periodic reports and other documents
incorporated herein by reference. For information regarding the pro forma
financial position and results of operations of Triton Delaware and Triton
Cayman, see the Pro Forma Consolidated Condensed Financial Statements, included
elsewhere herein.
ENVIRONMENTAL MATTERS. Triton Delaware is subject to extensive
environmental laws and regulations. These laws regulate the discharge of oil,
gas or other materials into the environment and may require Triton Delaware to
remove or mitigate the environmental effects of the disposal or release of such
materials at various sites. Triton Delaware does not believe that its
environmental risks are materially different from those of comparable companies
in the oil and gas industry. Nevertheless, no assurance can be given that
environmental laws and regulations will not, in the future, adversely affect
Triton Delaware's or Triton Cayman's results of operations, cash flows or
financial position. Pollution and similar environmental risks generally are not
fully insurable.
RISKS OF FOREIGN OPERATIONS. Triton Delaware derives a significant portion
of, and Triton Cayman will derive substantially all of, its consolidated
revenues from foreign operations. Risks inherent in foreign operations include
loss of revenue, property and equipment from such hazards as expropriation,
nationalization, war, insurrection and other political risks, risks of increase
in taxes and governmental royalties, renegotiation of contracts with
governmental entities, as well as changes in laws and policies governing
operations of foreign based companies. Other risks inherent in foreign
operations are the possibility of realizing economic currency exchange losses
when transactions are completed in currencies other than United States dollars
and Triton Delaware's or Triton Cayman's ability to freely repatriate its
earnings under existing exchange control laws.
CERTAIN FACTORS RELATING TO COLOMBIA. Triton Delaware is a participant in
significant oil and gas discoveries located in the Llanos Basin in the foothills
of the Andes Mountains, approximately 160 kilometers (100 miles) northeast of
Bogota, Colombia. Triton Delaware owns interests in three contiguous areas known
as the Rio Chitamena, Santiago de las Atalayas ("SDLA") and Tauramena contract
areas. Test results for the initial exploratory and subsequent delineation wells
indicate that significant oil and gas deposits lie across the Rio Chitamena,
SDLA and Tauramena contract areas (the "Cusiana Field"), and within the SDLA
contract area (the "Cupiagua Field").
Largely due to complex geology, drilling of wells in the Cusiana and
Cupiagua fields has been comparatively difficult, lengthy in duration and
expensive. Triton Delaware believes that considerable progress has been achieved
in reducing the time and expenditures required to drill and complete wells in
the Cusiana and Cupiagua fields based on experience gained from initial wells
drilled. Although there can be no assurance, Triton Delaware believes that the
experience gained in the area to date will allow the operator to continue to
reduce the time and expenditures required to drill and complete wells in the
area. However, because Triton Delaware is not the operator of these contract
areas, Triton Delaware does not control the timing or manner of these
operations.
Full development of reserves in the Cusiana and Cupiagua fields will take
several years and require additional drilling and extensive production
facilities, which in turn will require significant additional capital
expenditures, the ultimate amount of which cannot be predicted. Pipelines
connect the major producing fields in Colombia to export facilities and to
refineries. These pipelines are in the process of being upgraded to accommodate
production from the Cusiana and Cupiagua fields.
26
Guerilla activity in Colombia has from time to time disrupted the operation
of oil and gas projects and increased costs. Although the Colombian government,
Triton Delaware and its partners have taken steps to improve security and
improve relations with the local population, there can be no assurance that
attempts to reduce or prevent guerrilla activity will be successful or that such
activity will not disrupt operations in the future.
REGULATORY MATTER. On July 28, 1992, the Commission requested that Triton
Delaware provide to the Commission, on a voluntary basis, information and
documents regarding certain of Triton Delaware's employees and former employees,
Triton Delaware's operations in Indonesia, Triton Delaware's dealings with
Indonesian officials, and Triton Delaware's internal accounting controls. The
staff of the Commission has advised Triton Delaware that Triton Delaware should
not construe this inquiry as an indication that any violation of law has
occurred or as an adverse reflection upon any person, entity or security.
Subsequently, Triton Delaware has been advised that the Justice Department is
conducting a similar inquiry. Triton Delaware continues to cooperate with both
agencies. Based upon the information available to Triton Delaware to date,
Triton Delaware believes that it will be able to resolve any issues that either
agency ultimately might raise concerning these matters in a manner that would
not have a material adverse effect on Triton Delaware's consolidated financial
position.
THE SPECIAL MEETING
SPECIAL MEETING
A Special Meeting of the Triton Delaware stockholders will be held at 10:00
a.m., Dallas time, on March 25, 1996, at Triton Energy Corporation, 6688 North
Central Expressway, 12th Floor, Dallas, Texas 75206 (or any adjournments or
postponements thereof) to consider and vote on the proposal to adopt the Merger
Agreement and any other matters that may properly come before such meeting. The
presence, in person or by proxy, of stockholders holding a majority of the
outstanding Triton Delaware Common Stock entitled to vote at the Special Meeting
will constitute a quorum.
Management of Triton Delaware knows of no matters other than as described in
the accompanying Notice of Special Meeting which are likely to be brought before
the Special Meeting. However, if any other matters, not now known, properly come
before such meeting, the persons named in the enclosed proxy will vote the proxy
in accordance with their best judgment on such matters.
THE BOARD OF DIRECTORS OF TRITON DELAWARE HAS UNANIMOUSLY APPROVED THE
PROPOSED REORGANIZATION AND THE MERGER AGREEMENT AND RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE PROPOSAL TO ADOPT THE MERGER AGREEMENT.
RECORD DATE
Only Triton Delaware stockholders of record at the close of business on
February 20, 1996, as shown on Triton Delaware's records, will be entitled to
vote, or to grant proxies to vote, at the Special Meeting.
The vote of any Triton Delaware stockholder who is represented at the
Special Meeting by proxy will be cast as specified in the proxy or, if no vote
is specified in the proxy, such vote will be cast FOR the proposal. Any Triton
Delaware stockholder of record who is present at the Special Meeting in person
will be entitled to vote at the meeting regardless of whether such stockholder
has previously granted a proxy with respect thereto.
VOTE REQUIRED FOR ADOPTION
Adoption of the Merger Agreement requires the affirmative vote of the
stockholders of Triton Delaware who hold a majority of the outstanding shares of
Triton Delaware Common Stock. Abstentions and broker "non-votes" will be treated
as votes against the proposal to adopt the Merger Agreement. As of the record
date described above, there were 35,917,480 shares of Triton Delaware Common
Stock outstanding and entitled to vote. In addition, as of January 31, 1996, the
directors and executive officers of Triton Delaware and affiliates of such
persons directly owned, in the aggregate,
27
approximately 200,000 shares (less than 1%) of the total number of shares of
Triton Delaware Common Stock outstanding and have indicated their intention to
vote such shares in favor of the proposal to adopt the Merger Agreement.
PROXIES
GENERAL
Each Triton Delaware stockholder as of the record date will receive a Proxy
Card. A stockholder of Triton Delaware may grant a proxy to vote for or against,
or to abstain from voting on, the proposal to adopt the Merger Agreement by
marking his/her Proxy Card appropriately, executing it in the space provided,
and, in the case of holders of Triton Delaware Common Stock appearing on the
stock records of Triton Delaware, returning it to Triton Delaware. Triton
Delaware stockholders who hold their Triton Delaware Common Stock in the name of
a bank, broker or other nominee should follow the instructions provided by their
bank, broker or nominee on voting their shares.
To be effective, a Proxy Card must be received prior to the Special Meeting.
Any properly executed proxy will be voted in accordance with the specification
indicated on such Proxy Card. A properly executed and returned Proxy Card in
which no specification is made will be voted FOR the proposal to adopt the
Merger Agreement.
If any other matters are properly presented at the Special Meeting for
consideration, including consideration of a motion to adjourn the meeting to
another time and/or place (including adjournments for the purpose of soliciting
additional proxies), the persons named in the Proxy Card and acting thereunder
will have the discretion to vote on such matters in accordance with their best
judgment.
REVOCATION
In the case of holders of Triton Delaware Common Stock appearing on the
stock records of Triton Delaware, a Proxy Card may be revoked at any time prior
to its exercise by (a) giving written notice of such revocation to Triton
Delaware, (b) appearing and voting in person at the Special Meeting, or (c)
properly completing and executing a later-dated proxy and delivering it to
Triton Delaware at or before the Special Meeting. Presence without voting at the
Special Meeting will not automatically revoke a proxy, and any revocation during
the meeting will not affect votes previously taken. Triton Delaware stockholders
who hold their Triton Delaware Common Stock in the name of a bank, broker or
other nominee should follow the instructions provided by their bank, broker or
nominee in revoking their previously voted shares.
VALIDITY
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of Proxy Cards will be determined by the inspectors of
election. Any such determination will be final and binding. The Board of
Directors of Triton Delaware will have the right to waive any irregularities or
conditions as to the manner of voting. Triton Delaware may accept proxies by any
reasonable form of communication so long as it can reasonably be assured that
the communication is authorized by the Triton Delaware stockholder.
SOLICITATION OF PROXIES
The accompanying proxy is being solicited on behalf of the Board of
Directors of Triton Delaware. The expenses of preparing, printing and mailing
the proxy and the materials used in the solicitation thereof will be borne by
Triton Delaware.
Georgeson & Company Inc. has been retained by Triton Delaware to aid in the
solicitation of proxies, for a fee of $50,000 and the reimbursement of
out-of-pocket expenses. Proxies may also be solicited by personal interview,
telephone and telegram by directors, officers and employees of Triton Delaware
who will not receive additional compensation for such services. Arrangements
also may be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of
28
solicitation materials to the beneficial owners of Triton Delaware Common Stock
held by such persons, and Triton Delaware will reimburse them for reasonable
expenses incurred by them in connection therewith.
PROPOSALS OF STOCKHOLDERS
Any stockholder who desired to present proposals to Triton Delaware's (or,
if the Reorganization is consummated, Triton Cayman's) 1996 Annual Meeting of
Stockholders and to have such proposals set forth in the proxy statement mailed
in conjunction with such Annual Meeting was required to have submitted such
proposals to Triton Delaware by December 5, 1995. All stockholder proposals are
required to comply with Rule 14a-8 promulgated by the Commission pursuant to the
Exchange Act.
TRITON DELAWARE AND TRITON CAYMAN
Triton Delaware is an international oil and gas exploration company
primarily engaged in exploration and production through subsidiaries and
affiliates. Triton Delaware's principal properties and operations are located in
Colombia and Malaysia-Thailand. Triton Delaware also has oil and gas interests
in other Latin American and Asian countries, Europe, Australia and North
America.
Triton Cayman is a newly formed Cayman Islands company and a wholly-owned
subsidiary of Triton Delaware. Triton Cayman was formed to become the parent
holding company of Triton Delaware. All of the capital stock of Triton Cayman is
currently held by Triton Delaware. After the consummation of the Reorganization,
Triton Delaware will become a subsidiary of Triton Cayman and substantially all
of Triton Delaware's businesses or subsidiaries located outside of the United
States, other than Triton Delaware's interests in the Cusiana and Cupiagua
fields in Colombia and interests in Argentina, will be transferred to Triton
Cayman. See the Pro Forma Consolidated Condensed Financial Statements, included
elsewhere herein. Triton Cayman has formed a wholly-owned subsidiary, Sub,
specifically to effect the Reorganization. Neither Triton Cayman nor Sub has any
significant assets or capitalization nor has engaged in any business or prior
activities other than in connection with the Reorganization.
29
THE REORGANIZATION
GENERAL
The Board of Directors of Triton Delaware has unanimously approved, and
recommends that the stockholders of Triton Delaware adopt, a proposed corporate
reorganization pursuant to which Triton Cayman, a Cayman Islands company, will
become the parent holding company of Triton Delaware. It is proposed that the
Reorganization be effected pursuant to the Merger Agreement. After the
consummation of the Reorganization, Triton Cayman will continue to conduct the
businesses in which Triton Delaware is now engaged and substantially all of the
businesses or subsidiaries of Triton Delaware located outside of the United
States, other than Triton Delaware's interests in the Cusiana and Cupiagua
fields in Colombia and interests in Argentina, will be transferred to Triton
Cayman. The relative voting rights of Triton Delaware stockholders as
shareholders of Triton Cayman will not change as a result of the Reorganization.
See " -- Transfer of Assets," "Description of Authorized Shares of Triton
Cayman-Voting and Other Rights," " -- Special Rights Upon the Occurrence of
Certain Events" and "Comparison of Rights of Stockholders."
BACKGROUND AND REASONS FOR THE REORGANIZATION
International activities of Triton Delaware and its subsidiaries are a
significant part of Triton Delaware's business activities. Triton Delaware's
income is now, and is expected to continue to be, primarily derived from
activities outside of the United States.
The Board of Directors of Triton Delaware believes that the establishment of
a Cayman Islands holding company for Triton Delaware and its subsidiaries will
allow Triton Delaware to organize its international business activities to avail
itself of certain business, tax and financing advantages compared to those that
would be available to it if the parent corporation were a U.S. corporation.
Accordingly, the Board of Directors of Triton Delaware believes the
Reorganization should have a favorable impact on the conduct of Triton
Delaware's future business operations. In particular, the Board of Directors of
Triton Delaware is recommending the Reorganization for the following reasons:
(a)
The Board believes that the creation of a Cayman Islands parent
corporation will reduce corporate income taxes because, unlike the
U.S. tax system which imposes corporate income tax on the worldwide income
of United States corporations, the Cayman Islands generally imposes no
corporate income taxes on foreign income. Income taxes will therefore be
reduced to the extent operations, for example, in the Malaysia-Thailand
Joint Development Area, are conducted after the Reorganization by Triton
Cayman or its foreign subsidiaries.
(b)
The Board believes that the change of domicile may have a favorable
effect on its ability to sell assets or raise additional capital in
the future. The Code currently provides for the payment of certain estate
taxes in respect of the value of shares in a U.S. corporation owned by a
non-U.S. investor. In addition, the distributions with respect to stock in a
U.S. corporation to non-resident aliens could be subject to certain
withholding taxes under the Code. The Code currently does not generally
provide for estate or withholding taxes on distributions for non-resident
aliens in respect of stock of a non-U.S. corporation.
(c)
The Board believes that an offshore holding company structure in the
form proposed by the Reorganization may provide a more suitable
corporate structure for expansion of its current business and future
acquisitions and diversification opportunities. Triton Delaware currently
has no plans for specific acquisitions or to diversify its business from the
business it is currently conducting.
In determining to recommend the Reorganization, the Board consulted with
Triton Delaware's management and its financial and legal advisors, and
considered a number of factors, including the opinions of its financial advisors
that, as of the date of such opinions, the inherent value of a Class A Share and
the inherent value of an Equity Unit are substantially equivalent, as well as
the Board's desire to afford stockholders electing to receive Equity Units the
opportunity to be able to defer a substantial portion of their taxable gain.
Special Tax Counsel are of the opinion that it is more likely
30
than not that the Triton Delaware Preferred Stock will be treated as stock of
Triton Delaware and that the receipt of shares of the Triton Delaware Preferred
Stock by stockholders who elect to receive Equity Units will not be a taxable
transaction. See "Certain Tax Considerations."
FINANCIAL ADVISORS
The Board of Directors of Triton Delaware has received opinions, each dated
February 14, 1996, from Lehman and J.P. Morgan that, as of the date of such
opinions, (i) the inherent value of a Class A Share is substantially equivalent
to the inherent value of an Equity Unit and (ii) an allocation of the fair
market value of the components of an Equity Unit of $3.50 for a Class B Share
and $49.00 for one-tenth of one share of Triton Delaware Preferred Stock, based
on a closing trading price of $52.50 per share of Triton Delaware Common Stock
on February 13, 1996, is reasonable. The full text of each of the opinions has
been filed as an exhibit to the Registration Statement of which this Proxy
Statement/ Prospectus is a part.
In connection with rendering their opinions, Lehman and J.P. Morgan (a)
reviewed and analyzed the Merger Agreement, this Proxy Statement/Prospectus, the
specific terms of the Reorganization and certain publicly available information
concerning Triton Delaware; (b) reviewed and analyzed financial and operating
information and projections of Triton Delaware and Triton Cayman provided by
Triton Delaware; (c) reviewed and analyzed reserve reports and projected
economics relating to Triton Delaware's oil and gas assets provided by Triton
Delaware; (d) compared the trading history of Triton Delaware Common Stock with
that of the securities of certain other publicly-traded companies; and (f)
compared the historical financial results and present financial condition of
Triton Delaware with those of certain other companies. In addition, both Lehman
and J.P. Morgan discussed with management of Triton Delaware the business,
operations, assets, financial conditions and prospects of Triton Delaware and
undertook such other analyses and examinations and considered such other factors
as such financial advisors deemed appropriate.
In rendering their opinions, Lehman and J.P. Morgan assumed and relied upon
the accuracy and completeness of the financial and other information used by
them without assuming any responsibility for independent verification of such
information and further relied upon the assurances of management of Triton
Delaware that they are not aware of any facts that would make such information
inaccurate or misleading. With respect to the financial projections referred to
in clause (b) above, Lehman and J.P. Morgan assumed that such projections were
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of Triton Delaware as to the future financial
performance of Triton Delaware and Triton Cayman and that Triton Delaware and
Triton Cayman will perform substantially in accordance with such projections.
Neither Lehman nor J.P. Morgan conducted a physical inspection of the properties
and facilities of Triton Cayman or Triton Delaware. In addition, each opinion
states that it is necessarily based on the economic, market and other conditions
as in effect on, and the information made available to such financial advisor as
of, the date of such opinion.
THE BOARD OF DIRECTORS OF TRITON DELAWARE HAS UNANIMOUSLY APPROVED THE
PROPOSED REORGANIZATION AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADOPTION
OF THE MERGER AGREEMENT.
THE MERGER AGREEMENT
GENERAL
It is proposed that the Reorganization be effected pursuant to the Merger
Agreement. Pursuant to the Merger Agreement:
(i)
Sub will be merged with and into Triton Delaware, with Triton
Delaware being the surviving corporation.
(ii)
Except as set forth below in paragraph (iv) and under "Equity Unit
Election," each outstanding share of Triton Delaware Common Stock
will be automatically converted into one Class A Share.
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(iii)
The outstanding shares of common stock of Sub will be automatically
converted into a number of shares of common stock of Triton Delaware
equal to the number of shares of Triton Delaware Common Stock outstanding
immediately prior to the Effective Time of the Merger.
(iv)
The outstanding ordinary shares of Triton Cayman and the Triton
Delaware Common Stock held by Triton Delaware prior to the time the
Reorganization is effected will be cancelled.
As a result of the foregoing, upon effectiveness of the Merger, Triton
Delaware, as the surviving corporation in the Merger, will become a subsidiary
of Triton Cayman, and all the Class A Shares of Triton Cayman outstanding
immediately after the Merger will be owned by former common stockholders of
Triton Delaware.
The certificate of incorporation of Triton Delaware shall be the Certificate
of Incorporation of the surviving corporation of the Merger and will be amended
as set forth in Exhibit A to the Merger Agreement.
Also in connection with the Merger, each outstanding share of Convertible
Preferred Stock of Triton Delaware will be automatically converted into one
Convertible Preference Share of Triton Cayman, subject to dissenters' appraisal
rights. See " -- Rights of Dissenting Stockholders" and "Description of
Authorized Shares of Triton Cayman -- Preference Shares -- Convertible
Preference Shares."
AMENDMENT OR TERMINATION
Triton Delaware, Triton Cayman and Sub, by action of their respective Boards
of Directors, may amend, modify or supplement the Merger Agreement at any time
before or after its adoption by the stockholders of Triton Delaware. After such
approval, no amendment, modification or supplement may be made or effected that
by law requires further approval by such stockholders without the further
approval of such stockholders.
The Merger Agreement provides that it may be terminated, and the
Reorganization abandoned, at any time, whether before or after stockholder
approval of the Merger Agreement is obtained, by action of the Board of
Directors of Triton Cayman.
CONDITIONS TO CONSUMMATION OF THE REORGANIZATION
The Reorganization will not be consummated unless the Merger Agreement is
adopted by the requisite vote of stockholders of Triton Delaware.
EQUITY UNIT ELECTION
Subject to the Equity Unit Limitation, record holders of Triton Delaware
Common Stock will be entitled to make an unconditional election (an "Equity Unit
Election") on or prior to the Election Date to receive one Equity Unit in
exchange for each share of Triton Delaware Common Stock held by such holders in
lieu of such shares being automatically converted into Class A Shares upon
consummation of the Reorganization. If the number of Electing Shares exceeds the
Maximum Election Number, then the aggregate number of Electing Shares to be
exchanged for Equity Units in the Merger in connection with any Equity Unit
Election will be reduced by multiplying the number of Electing Shares covered by
such Equity Unit Election by a proration factor (the "Proration Factor")
determined by dividing the Maximum Election Number by the total number of
Electing Shares. The number of Electing Shares covered by each Equity Unit
Election which will be exchanged for Equity Units will be that number which
results from multiplying the number of such Electing Shares by the Proration
Factor. Electing Shares not exchanged for Equity Units as a result of proration
will instead be automatically converted into Class A Shares on the basis
described above under "The Merger Agreement." In the event that the number of
Electing Shares is less than the Minimum Election Number, no Equity Units will
be issued and Electing Shares will be automatically converted into Class A
Shares on the basis described above under "The Merger Agreement."
Each Equity Unit issued in connection with the Merger will consist of one
Class B Share and one-tenth of one share of Triton Delaware Preferred Stock,
which securities will be paired and after such
32
pairing may only be traded together as an Equity Unit and will not be separately
transferable. In lieu of distributing the Equity Units to holders who make an
Equity Unit Election, such Equity Units will be deposited with the Depositary in
exchange for the issuance of Unit Depositary Shares, each representing one
Equity Unit, Receipts for which will be distributed to stockholders. To the
extent required, the Exchange Agent will requisition from the Depositary such
number of Receipts as are issuable in respect of shares of Triton Delaware
Common Stock properly delivered to the Exchange Agent along with the Form of
Election up to the Maximum Election Number.
EQUITY UNIT ELECTION PROCEDURE
The form for making an Equity Unit Election (the "Form of Election") is
being mailed to holders of Triton Delaware Common Stock with this Proxy
Statement/Prospectus. FOR A FORM OF ELECTION TO BE EFFECTIVE, HOLDERS OF TRITON
DELAWARE COMMON STOCK MUST PROPERLY COMPLETE SUCH FORM OF ELECTION, AND SUCH
FORM, TOGETHER WITH CERTIFICATES FOR THE SHARES OF TRITON DELAWARE COMMON STOCK
TO WHICH SUCH FORM RELATES, DULY ENDORSED IN BLANK OR OTHERWISE IN FORM
ACCEPTABLE FOR TRANSFER ON THE BOOKS OF TRITON DELAWARE, MUST BE RECEIVED BY
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C. (THE "EXCHANGE AGENT"), AT THE
ADDRESS SET FORTH IN THE FORM OF ELECTION AND NOT WITHDRAWN, BY 5:00 P.M., NEW
YORK CITY TIME ON THE BUSINESS DAY NEXT PRECEDING THE DATE OF THE SPECIAL
MEETING (THE "ELECTION DATE").
The determinations of the Exchange Agent as to whether or not Equity Unit
Elections have been properly made or revoked and when such elections or
revocations were received will be binding.
For a description of the Class B Shares and the Triton Delaware Preferred
Stock contained in an Equity Unit, see "Description of Authorized Shares of
Triton Cayman" and "Description of Triton Delaware Preferred Stock." For a
description of the Receipts, see "Description of Receipts."
EFFECTIVE TIME
If the Merger Agreement is adopted by the stockholders of Triton Delaware
and not terminated by the Board of Directors of Triton Cayman, the
Reorganization will become effective (the "Effective Time") at the close of
business on the date that an appropriate certificate of merger is filed with the
Delaware Secretary of State as required by Delaware law or at such later time as
is specified in such certificate of merger. Triton Delaware anticipates that the
Reorganization will become effective promptly following the Special Meeting.
Immediately following the Effective Time of the Reorganization, Triton
Cayman will have the same subsidiaries and affiliates and the same directors and
executive officers as Triton Delaware had immediately prior to such date. See
the Pro Forma Consolidated Condensed Financial Statements, included elsewhere
herein.
RIGHTS OF DISSENTING STOCKHOLDERS
Pursuant to Section 262 of the DGCL, the holders of Triton Delaware Common
Stock do not have "dissenters appraisal rights" in connection with the
Reorganization because, among other reasons, such shares are listed on a
national securities exchange. Record holders of Convertible Preferred Stock of
Triton Delaware, although not entitled to vote in connection with the Merger
under Delaware law, are entitled to appraisal rights under Section 262 of the
DGCL in connection with the Merger subject to compliance with the procedures set
forth in Section 262 of the DGCL in connection with the Merger.
EXCHANGE OF SHARE CERTIFICATES
As of the Effective Time of the Reorganization, the stockholders of Triton
Delaware prior to the Effective Time (other than those stockholders who receive
Equity Units) will automatically become the owners of Class A Shares and, as of
the Effective Time, will cease to be owners of Triton Delaware Common Stock.
Stock certificates representing Triton Delaware Common Stock will, at the
Effective
33
Time, automatically represent Class A Shares. Stockholders of Triton Delaware
Common Stock will not be required to exchange their stock certificates as a
result of the Reorganization. Should a stockholder desire to sell some or all of
his Class A Shares after the Effective Time, delivery of the stock certificate
or certificates which previously represented shares of Triton Delaware Common
Stock will be sufficient.
Following the Reorganization, certificates bearing the name of Triton Cayman
will be issued in the normal course upon surrender of outstanding Triton
Delaware Common Stock certificates for transfer or exchange. If any stockholder
surrenders a certificate representing shares of Triton Delaware Common Stock for
exchange or transfer and the new certificate to be issued is to be issued in a
name other than that appearing on the surrendered certificate theretofore
representing the Triton Delaware Common Stock, it will be a condition to such
exchange or transfer that the surrendered certificate be properly endorsed and
otherwise be in proper form for transfer and that the person requesting such
exchange or transfer either (i) pay Triton Cayman or its agents any taxes or
other governmental charges required by reason of the issuance of a certificate
registered in a name other than that appearing on the surrendered certificate or
(ii) establish to the satisfaction of Triton Cayman or its agents that such
taxes or other governmental charges have been paid.
ODD-LOT PROGRAM
On a date as soon as practicable after this Proxy Statement/Prospectus is
mailed to stockholders (the "Mailing Date"), Triton Delaware will mail to each
stockholder who holds fewer than 100 shares of Triton Delaware Common Stock
information with respect to, and a form for use in connection with, the Odd-Lot
Program. Pursuant to the terms of the Odd-Lot Program, each holder of Triton
Delaware Common Stock who holds fewer than 100 shares thereof and elects to
participate in the Odd-Lot Program may instruct the Exchange Agent, acting as
the agent for such stockholder, to sell all, but not less than all, of such
stockholder's shares of Triton Delaware Common Stock on the NYSE for its account
for cash.
The Odd-Lot Program will commence shortly after the Mailing Date and remain
open until the business day prior to the Special Meeting. A stockholder selling
shares of Triton Delaware Common Stock under the Odd-Lot Program will receive
the weighted average price for all shares of Triton Delaware Common Stock sold
under the Odd-Lot Program in open market transactions on the day the
participant's sale occurs, less a small fee to cover administrative fees and
brokerage transactions. Triton Delaware will not solicit or make any
recommendations to stockholders to sell shares of Triton Delaware Common Stock
in the Odd-Lot Program. See "Certain Tax Considerations" for a discussion of the
federal income tax treatment of the sale of shares in the Odd-Lot Program.
STOCK COMPENSATION PLANS
If the Reorganization is consummated, Triton Delaware's stock option plans
(including the Amended and Restated 1992 Stock Option Plan) will be amended to
provide that Class A Shares will thereafter be issued by Triton Cayman upon
exercise of any options issued thereunder. The retirement, restricted stock,
convertible debenture and other employee benefit plans of Triton Delaware will
be similarly revised or amended, as necessary.
Stockholder approval of the Merger Agreement will also constitute
stockholder approval of amendments to the stock option, restricted stock,
convertible debenture and other employee benefit plans providing for future use
of Class A Shares in lieu of Triton Delaware Common Stock thereunder.
SHAREHOLDER RIGHTS PLAN
Under the Shareholder Rights Plan of Triton Delaware, dated as of May 22,
1995 (the "Shareholders Rights Plan"), between Triton Delaware and Chemical
Bank, as Rights Agent, preferred stock purchase rights were issued to holders of
Triton Delaware's Common Stock at the rate of one right for each share of Triton
Delaware Common Stock. In connection with the Reorganization, the Shareholder
Rights Plan will be amended to provide that the existing rights will expire
immediately prior to the Effective Time.
34
Triton Cayman will adopt a Shareholder Rights Plan pursuant to which
preference share purchase rights will be issued to holders of Class A Shares and
Class B Shares at the rate of one right for each share issued in connection with
the Merger. See "Description of Authorized Shares of Triton Cayman -- Preference
Shares -- Preference Share Purchase Rights."
STOCK EXCHANGE LISTING
There is currently no established public trading market for the Class A
Shares or the Unit Depositary Shares. Immediately following the Reorganization,
the Class A Shares will be listed on the NYSE under the symbol "OIL," the same
symbol under which the Triton Delaware Common Stock is currently listed. The
Unit Depositary Shares have been approved for listing, subject to notice of
issuance, on the NYSE under the symbol "OIL.B".
ACCOUNTING TREATMENT OF THE REORGANIZATION
The acquisition by Triton Cayman of Triton Delaware in connection with the
Reorganization will be accounted for as a combination of entities under common
control (as if it were a pooling of interests).
TRANSFER OF ASSETS
Following the Reorganization, subject to the retention of certain preferred
stock interests, Triton Delaware intends to transfer to Triton Cayman
substantially all of its businesses and subsidiaries located outside of the
United States, other than Triton Delaware's interests in the Cusiana and
Cupiagua fields in Colombia and interests in Argentina. Such actions will not
require the approval of the stockholders of Triton Delaware. See the Pro Forma
Consolidated Condensed Financial Statements, included elsewhere herein.
CERTAIN TAX CONSIDERATIONS
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal income tax
consequences generally applicable to holders of Triton Delaware Common Stock and
Convertible Preferred Stock of the Reorganization, and of the ownership of
Triton Delaware Preferred Stock, Class B Shares, Class A Shares and Convertible
Preference Shares. The discussion contained in this Proxy Statement/Prospectus
is based on the law in effect as of the date of this Proxy Statement/Prospectus.
Triton Delaware will receive opinions at the Effective Time from Simpson Thacher
& Bartlett and Weil, Gotshal & Manges LLP ("Special Tax Counsel") reaffirming as
of such date certain opinions set forth in this Proxy Statement/Prospectus. In
delivering their opinions Special Tax Counsel will receive and rely upon certain
representations from Triton Delaware, and certain other information, data,
documentation and other materials as Special Tax Counsel deem necessary. There
are no regulations, published rulings or judicial decisions directly on point
with respect to certain aspects of the Reorganization and the securities to be
issued pursuant thereto. Accordingly, Special Tax Counsel are unable to reach an
unqualified conclusion on certain matters as indicated below. Opinions of
counsel are not binding upon either the IRS or the courts. Triton Delaware does
not intend to request a ruling from the IRS with respect to the Reorganization.
This summary does not address the tax treatment of the Reorganization under
applicable state, local, foreign or other tax laws and generally does not take
account of rules that may apply to holders that are subject to special
treatment, including, without limitation, insurance companies, dealers in
securities, certain retirement plans, financial institutions, tax exempt
organizations or stockholders who acquired shares pursuant to the exercise of an
employee stock option or otherwise as compensation. Stockholders are urged to
consult their own tax advisors as to the particular tax consequences to them of
the Reorganization. For purposes of this discussion, a "U.S. Holder" is any
stockholder that is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust the
income of which is subject to U.S. federal income
35
taxation regardless of its source. A Non-U.S. Holder is any stockholder other
than a U.S. Holder. The discussion below assumes that the Triton Delaware Common
Stock, Triton Delaware Preferred Stock and Convertible Preferred Stock exchanged
in the Reorganization are held as capital assets.
THE REORGANIZATION
RECEIPT OF CLASS A SHARES
Pursuant to Section 367(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and recently issued temporary Treasury Regulations promulgated
thereunder, U.S. Holders exchanging their Triton Delaware Common Stock for Class
A Shares will recognize gain, if any (but not loss) on the transaction. In
general, for U.S. federal income tax purposes, a U.S. Holder will recognize gain
equal to the excess of the fair market value of the Class A Shares received by
the holder pursuant to the Reorganization over the holder's aggregate adjusted
basis in the Triton Delaware Common Stock exchanged therefor. Any such gain will
be capital gain and will be long-term if, as of the date of the Reorganization,
the Triton Delaware Common Stock was held for more than one year. In such event
(i) the basis of the Class A Shares will be equal to their fair market value on
the date of the Reorganization (except in the case of holders realizing a loss
on the exchange whose basis will be the same as the basis of their Triton
Delaware Common Stock exchanged therefor) and (ii) the holding period of the
Class A Shares will commence on the day after the date of the Reorganization
(except in the case of holders realizing a loss on the exchange whose holding
period will include the period such holders held their Triton Delaware Common
Stock). Subject to certain exceptions, Non-U.S. Holders will be subject to U.S.
federal income tax on gain realized, if any, on the exchange of Triton Delaware
Common Stock for Class A Shares only if such gain is effectively connected with
the conduct of a trade or business in the United States or, in the case of a
Non-U.S. Holder that is an individual who holds the Triton Delaware Common Stock
as a capital asset, such holder is present in the United States for 183 or more
days in the taxable year and certain other conditions apply.
EQUITY UNIT ELECTION
The tax consequences of the Reorganization to U.S. Holders who make an
Equity Unit Election will depend in part upon whether the Triton Delaware
Preferred Stock received from Triton Delaware in the Reorganization is treated
as stock of Triton Delaware for U.S. tax purposes. Special Tax Counsel are of
the opinion that it is more likely than not that the Triton Delaware Preferred
Stock will be treated as stock of Triton Delaware. However, in view of the
absence of any authority dealing with transactions similar to the Reorganization
or securities of a type similar to the Equity Units, there is significant
uncertainty regarding this conclusion and no assurance can be given that the IRS
or the courts will agree. Special Tax Counsel have reached this conclusion
based, among other things, on the liquidation preference, the right to share in
dividends and the voting rights attached to the Triton Delaware Preferred Stock.
Assuming the Triton Delaware Preferred Stock is treated as stock of Triton
Delaware issued by Triton Delaware in exchange for Triton Delaware Common Stock
then (A)(i) no gain or loss would be recognized by exchanging stockholders with
respect to the receipt of the Triton Delaware Preferred Stock, (ii) the basis of
the Triton Delaware Preferred Stock will be the same as the basis of the Triton
Delaware Common Stock treated as exchanged therefor, and (iii) the holding
period of the Triton Delaware Preferred Stock will include the holding period of
the shares of Triton Delaware Common Stock treated as exchanged therefor and (B)
pursuant to Section 367(a) of the Code and applicable Treasury Regulations, U.S.
Holders will recognize gain, if any (but not loss), in an amount equal to the
excess of the fair market value of the Class B Shares received by the holder
pursuant to the Reorganization over the holder's aggregate adjusted tax basis in
the Triton Delaware Common Stock treated as exchanged therefor. Any such gain
will be capital gain and will be long-term if, as of the date of the
Reorganization, the Triton Delaware Common Stock was held for more than one
year. In such event, (i) the basis of such Class B Shares will be equal to their
fair market value on the date of the Reorganization (except in the case of
holders realizing a loss on the exchange whose basis will be the same as the
basis of their Triton Delaware Common Stock treated as exchanged therefor) and
(ii) the holding period of the Class B Shares will commence on the day after the
date of the Reorganization (except in the case of holders realizing a loss on
the exchange whose holding period
36
will include the period such holders held their Triton Delaware Common Stock).
Non-U.S. Holders receiving Equity Units will not generally be subject to U.S.
federal income tax on gain realized as a result of the Reorganization except in
the circumstances described above for non-U.S. Holders receiving Class A Shares.
See "Receipt of Class A Shares".
Based upon the advice of Lehman and J.P. Morgan, Triton Delaware believes
that, on February 14, 1996, the fair market value of a Class B Share would be
approximately $3.50 and the fair market value of one-tenth of one share of
Triton Delaware Preferred Stock would be approximately $49 based upon the
closing price of the Triton Delaware Common Stock on the NYSE Composite
Transactions Tape on February 13, 1996 of $52.50. Triton Delaware will provide
stockholders making an Equity Unit Election with its updated estimate (after
consulatation with Lehman and J.P. Morgan) of the fair market value of one-tenth
of one share of Triton Delaware Preferred Stock and the Class B Share as of the
date of the Reorganization. However, the IRS is not bound by such valuations and
no assurance can be given that the IRS will agree with them. If the IRS were to
successfully assert, for example, that the fair market value of the Class B
Shares was greater than the updated valuation, stockholders making the Equity
Unit Election and filing their tax return on the basis of such valuation would
be subject to tax based on the higher valuation of the Class B Shares.
The Merger Agreement provides (and by making an Equity Unit Election such
stockholders will agree with Triton Delaware and Triton Cayman) that, with
respect to stockholders exchanging Triton Delaware Common Stock for Equity
Units, a portion of each such stockholder's Triton Delaware Common Stock so
exchanged in the Reorganization will be transferred to Triton Delaware as
consideration for the issuance of the Triton Delaware Preferred Stock and the
remaining portion of the Triton Delaware Common Stock so exchanged by each such
stockholder in the Reorganization will be transferred to Triton Cayman as
consideration for the issuance by Triton Cayman of the Class B Shares. Such
allocation shall be determined based on the respective fair market values of the
Triton Delaware Preferred Stock and the Class B Shares as estimated by Triton
Delaware as described above on the date of the Reorganization. No assurance can
be given that such allocation will be respected by the IRS.
The IRS may assert that the Triton Delaware Preferred Stock should be
treated as stock of Triton Cayman and was received as taxable consideration in
the Reorganization. In that case, (i) the entire fair market value of the Equity
Units would be taken into account in determining the gain recognized (rather
than just the portion of such value attributable to the Class B Share), if any,
in the Reorganization, (ii) the basis of the Equity Units would equal their fair
market value on the date of the Reorganization (except in the case of holders
realizing a loss on the exchange whose basis will be the same as their basis in
the Triton Delaware Common Stock treated as exchanged therefor) and (iii) the
holding period of the Equity Units would commence on the day after the date of
the Reorganization (except in the case of holders realizing a loss in the
Reorganization whose holding period would include the period such holders held
their Triton Delaware Common Stock). As discussed above, Special Tax Counsel are
of the opinion that it is more likely than not that the Triton Delaware
Preferred Stock will be treated as stock of Triton Delaware. Nonetheless,
Special Tax Counsel have advised Triton Delaware that there is significant
uncertainty concerning this conclusion and in view of the lack of authority on
transactions of this nature no assurance can be given that the IRS will not seek
to treat the Triton Delaware Preferred Stock as stock of Triton Cayman or to
recharacterize the transaction in some other manner which would result in
additional income or gain being realized by U.S. Holders making the Equity Unit
Election. U.S. Holders are urged to consult with their own tax advisors
concerning the consequences of making an Equity Unit Election.
Owners of the Unit Depositary Shares will be treated for U.S. federal income
tax purposes as if they were owners of the Triton Delaware Preferred Stock and
Class B Shares represented by such Unit Depositary Shares. Accordingly, such
owners will be entitled to take into account for U.S. federal income tax
purposes income and deductions to which they would be entitled if they were
direct holders of such Triton Delaware Preferred Stock and Class B Shares.
37
FORM 926 REPORTING REQUIREMENTS
Pursuant to Section 6038B of the Code, a U.S. Holder is required to file an
information return on IRS Form 926 along with certain additional information
which must be attached thereto. Form 926 and its required attachments must be
filed with such holder's U.S. federal income tax return for the taxable year
that includes the Reorganization. The information which must be included with
Form 926 is described in temporary Treasury Regulation Section 1.6038B-1T.
Triton Delaware intends to provide such information to each U.S. Holder so as to
enable each such holder to timely file Form 926.
A U.S. Holder's failure to provide the information required by Section 6038B
of the Code will result in, among other things, such holder being subject to a
penalty equal to 25 percent of the amount of gain realized by the holder
pursuant to the Reorganization.
CERTAIN PROPOSED LEGISLATION
Legislation has recently been proposed which could affect the tax treatment
of the Reorganization. In particular, holders who make an Equity Unit Election
should note that the President has proposed that certain "disqualified preferred
stock" will generally no longer be permitted to be received as tax free
consideration in corporate reorganizations occurring after December 7, 1995.
Although the Triton Delaware Preferred Stock does not appear to constitute
"disqualified preferred stock" within the meaning of the President's proposal
because (among other things) of its participation rights, no assurance can be
given that the proposal will not be altered so as to become applicable to the
Triton Delaware Preferred Stock. In such case, holders who make an Equity Unit
Election would be subject to tax with respect to the entire value of the Equity
Units and not just the value attributable to the Class B Shares.
Moreover the President's Budget proposal also contains provisions treating
certain transactions as giving rise to constructive sales of appreciated
securities for U.S. federal income tax purposes. Under this provision, taxpayers
are generally deemed to have sold appreciated securities held by them if they
have substantially eliminated both risk of loss and opportunity for gain on the
appreciated securities. For these purposes, the granting of a call option with
respect to appreciated securities may be treated as a deemed exchange on the
date such option is granted but only if there is "substantial certainty" that
such call will be exercised. Triton Delaware believes that neither the right of
Triton Delaware or Triton Cayman to purchase the Equity Units is an option with
respect to which there is "substantial certainty" of exercise. Nonetheless, it
is uncertain how the term substantial certainty is to be interpreted for these
purposes and in any event no assurance can be given that the provision will not
be amended (or interpreted) so as to apply to the Triton Delaware Preferred
Stock. In such case, holders who make an Equity Unit Election would be subject
to tax with respect to the entire value of the Equity Units and not just the
value attributable to the Class B Shares.
RECEIPT OF CONVERTIBLE PREFERENCE SHARES
The receipt of Convertible Preference Shares in exchange for Convertible
Preferred Stock in the Reorganization by U.S. Holders will be a taxable
transaction in which U.S. Holders of Convertible Preferred Stock will recognize
gain, if any (but not loss), in an amount equal to the excess of the fair market
value of the Convertible Preference Shares received in the Reorganization over
their tax basis in the Convertible Preferred Stock exchanged therefor. Such gain
will be capital gain and will be long term if as of the date of the
Reorganization the Convertible Preferred Stock was held for more than one year.
In such event (i) the basis of the Convertible Preference Shares will equal
their fair market value on the date of the Reorganization (except in the case of
holders realizing a loss on the exchange whose basis will be the same as the
basis of their Convertible Preferred Stock) and (ii) the holding period of the
Convertible Preference Shares will begin on the day after the date of the
Reorganization (except in the case of holders realizing a loss in the
Reorganization whose holding period would include the period such holders held
their Convertible Preferred Stock). U.S. Holders of Convertible Preferred Stock
who exercise their dissenters rights and receive cash in exchange for their
Convertible Preferred Stock will recognize gain or loss equal to the difference
between the basis of the Convertible
38
Preferred Stock and the cash received in exchange therefor. Such gain or loss
will be capital gain or loss and will be long term if as of the date of the
Reorganization the Convertible Preferred Stock was held for more than one year.
Non-U.S. Holders of Convertible Preferred Stock will not generally be
subject to U.S. federal income tax upon the receipt of Convertible Preference
Shares or upon the exercise of dissenters rights except in the circumstances
described above for Non-U.S. Holders receiving Class A Shares. See "Receipt of
Class A Shares."
Holders of Convertible Preferred Stock that also hold Triton Delaware Common
Stock may be subject to special rules and should consult with their own tax
advisors regarding the treatment to them of the receipt of Convertible
Preference Shares.
ODD-LOT PROGRAM
U.S. Holders who exchange all of their Triton Delaware Common Stock for cash
pursuant to the Odd-Lot program will recognize gain or loss equal to the
difference between the basis of the Triton Delaware Common Stock and the cash
received in exchange therefor. Such gain or loss will be capital gain or loss
and will be long term if, as of the date of the disposition, the Triton Delaware
Common Stock was held for more than one year. Non-U.S. Holders will not
generally be subject to U.S. federal income tax on gain realized, if any, on the
exchange of Triton Delaware Common Stock for cash except under the circumstances
described above for Non-U.S. Holders receiving Class A Shares. See "The
Reorganization -- Receipt of Class A Shares."
TRITON DELAWARE PREFERRED STOCK
UNITED STATES FEDERAL INCOME TAXATION OF DIVIDENDS
Assuming the Triton Delaware Preferred Stock is treated as stock of Triton
Delaware, dividends paid on the Triton Delaware Preferred Stock should be
taxable as ordinary income for U.S. federal income tax purposes to the extent of
Triton Delaware's earnings and profits for the year in which the dividends are
paid or Triton Delaware's earnings and profits accumulated in prior years. To
the extent amounts paid as dividends to a holder of shares of Triton Delaware
Preferred Stock are not paid out of Triton Delaware's current or accumulated
earnings and profits, such amounts will first be applied to reduce the holder's
tax basis in the shares of Triton Delaware Preferred Stock, and any amount in
excess of tax basis will be treated as gain from the sale or exchange of the
shares of Triton Delaware Preferred Stock.
In the case of corporate holders of shares of Triton Delaware Preferred
Stock the portion of the dividends paid from current or accumulated earnings and
profits should qualify, subject to the limitations under Sections 246(c) and
246A of the Code, for the 70% dividends received deduction. In addition, under
Section 1059 of the Code, a corporate holder of Triton Delaware Preferred Stock
may be required to reduce its tax basis in its shares of Triton Delaware
Preferred Stock by the portion of any dividend paid on the Triton Delaware
Preferred Stock that was not taxed because of the dividends received deduction
if such dividend constitutes an "extraordinary dividend".
UNITED STATES TAXATION OF NON-U.S. HOLDERS
Under present U.S. federal income and estate tax law, and subject to the
discussion below concerning backup withholding:
(a) Withholding of U.S. federal income tax will be required with respect
to the payment by Triton Delaware of dividends on Triton Delaware
Preferred Stock owned by a Non-U.S. Holder at a rate of 30%, or such lower
rate as may be specified by an applicable tax treaty. However, dividends
received by a Non-U.S. Holder which are effectively connected with the
conduct of a U.S. trade or business by the Non-U.S. Holder are exempt from
such withholding, in which case, such dividends will be subject to regular
U.S. federal income tax.
39
(b) No U.S. federal income tax will be payable with respect to any gain
or income realized by a Non-U.S. Holder upon the sale or exchange of
Triton Delaware Preferred Stock unless (i) such gain is effectively
connected with the conduct of a U.S. trade or business by the Non-U.S.
Holder or (ii) the Non-U.S. Holder is an individual who is present in the
U.S. for a period aggregating 183 days or more during the calendar year in
which such sale occurs and certain other conditions are met. Moreover, no
withholding of U.S. federal income taxation will be required unless Triton
Delaware is or has been a "United States real property holding corporation"
for federal income tax purposes (Triton Delaware believes it is not and has
not been a "United States real property holding corporation"); and
(c) Triton Delaware Preferred Stock owned by an individual who at the
time of death is a Non-U.S. Holder will be included in such Non-U.S.
Holder's gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.
Under current Treasury Regulations, dividends paid to an address outside the
United States are presumed to be paid to a resident of such country for purposes
of the withholding discussed above and, under the current interpretation of
Treasury Regulations, for purposes of determining the applicability of a tax
treaty rate. However, under proposed Treasury Regulations not currently in
effect, a Non-U.S. Holder who wishes to claim a reduced rate of (or exemption
from) withholding would be required to provide Triton Delaware with a properly
executed (1) Internal Revenue Service Form 1001 (or successor form) claiming a
reduced rate of withholding under the benefit of a tax treaty or (2) Internal
Revenue Form 4224 (or successor form) stating that dividends paid on the Triton
Delaware Preferred Stock are not subject to withholding tax because it is
effectively connected with the Non-U.S. Holder's conduct of a trade or business
in the United States.
CLASS A AND CLASS B SHARES AND CONVERTIBLE PREFERENCE SHARES
UNITED STATES FEDERAL INCOME TAXATION OF DIVIDENDS
For U.S. federal income tax purposes, the gross amount of dividends paid by
Triton Cayman to U.S. Holders will be treated as foreign source dividend income
to the extent paid out of Triton Cayman's current or accumulated earnings and
profits. These dividends will not be eligible for the dividends received
deduction generally allowed to U.S. corporate shareholders on dividends from
U.S. domestic corporations. To the extent that an amount received by a U.S.
Holder exceeds the allocable share of Triton Cayman's current and accumulated
earnings and profits, such excess will be applied first to reduce such U.S.
Holder's tax basis in its shares and then, to the extent in excess of such U.S.
Holder's tax basis, such excess will constitute gain from a deemed sale or
exchange of such shares. For U.S. foreign tax credit purposes, dividends on the
shares will generally constitute "passive income", or, in the case of certain
U.S. Holders, "financial services income."
Certain adjustments (or failures to make adjustments) of the conversion rate
of Convertible Preference Shares, based on Triton Cayman's issuance of certain
rights, warrants, indebtedness, securities or other assets to holders of
Ordinary Shares, may result in constructive distributions taxable as dividends
to holders of Convertible Preference Shares or to holders of Ordinary Shares.
Moreover, depending upon the circumstances, the payment of certain stock
dividends to U.S. Holders of Ordinary Shares may be treated as taxable
dividends.
CONVERSION OF CLASS B SHARES
If Triton Delaware liquidates, is dissolved or wound up, the Board of
Directors of Triton Cayman may cause the Class B Shares to be converted into
Class A Shares. Such conversion should not result in gain or loss to the holders
of the Class B Shares.
UNITED STATES TAXATION OF NON-U.S. HOLDERS
Subject to certain exceptions, Non-U.S. Holders will be subject to U.S.
federal income tax on dividend distributions with respect to, and gain realized
from the sale or exchange of, Class A Shares, Class B Shares or Convertible
Preference Shares only if such dividends or gains are effectively connected with
the conduct of a trade or business within the United States or in the case of
gains
40
realized by Non-U.S. Holders that are individuals, such holders are present in
the United States for 183 days or more during the taxable year of the sale and
certain other conditions exist. Except as discussed below with respect to backup
withholding, dividends paid by Triton Cayman will not be subject to U.S.
withholding tax. Nonresident alien individuals will not be subject to U.S.
estate tax with respect to shares of Triton Cayman.
EXCHANGE OF EQUITY UNITS
An exchange of Equity Units with Triton Cayman or Triton Delaware for cash
will be a taxable transaction for U.S. federal income tax purposes.
Consequently, U.S. Holders will be required to recognize gain or loss in an
amount equal to the difference between the cash proceeds received in the
exchange and the holder's adjusted tax basis in its Equity Units so exchanged.
Such gain or loss will be capital gain or loss and will be long term, if as of
the date of the disposition, the Equity Units were held for more than one year.
U.S. Holders exchanging Equity Units for Ordinary Shares of Triton Cayman will
be treated as though they had received such Ordinary Shares of Triton Cayman in
exchange for an allocable portion of the Triton Delaware Preferred Stock and
Class B Shares. Except possibly as described below, the part of the exchange
attributable to the Triton Delaware Preferred Stock will be treated as a taxable
transaction. U.S. Holders will recognize gain or loss equal to the difference
between the fair market value of the Ordinary Shares of Triton Cayman treated as
received in exchange for the Triton Delaware Preferred Stock and the basis of
such Triton Delaware Preferred Stock. In such event (i) the basis of such
Ordinary Shares of Triton Cayman will be equal to their fair market value and
(ii) the holding period for such Ordinary Shares of Triton Cayman will commence
on the day after the date of the exchange.
No gain or loss will be recognized by U.S. Holders with respect to Ordinary
Shares of Triton Cayman treated as exchanged for Class B Shares. As a result,
U.S. Holders will have (i) a basis in such Ordinary Shares of Triton Cayman
equal to the basis of the Class B Shares treated as exchanged therefor and (ii)
the holding period of such Ordinary Shares of Triton Cayman will include the
holding period of such Class B Shares.
It is possible that the exercise by Triton Cayman of its right to purchase
the Equity Units in exchange for Ordinary Shares of Triton Cayman could qualify
as a tax-free reorganization (in whole, rather than in part) notwithstanding the
provisions of Section 367(a) of the Code and applicable Treasury Regulations. In
such case, (i) no gain or loss would be recognized by U.S. Holders exchanging
Equity Units solely for Ordinary Shares of Triton Cayman, (ii) the tax basis of
Ordinary Shares of Triton Cayman received in the exchange will be the same as
the Equity Units exchanged therefor and (iii) the holding period of the Ordinary
Shares of Triton Cayman received in the exchange will include the holding period
of the Equity Units exchanged therefor.
The foregoing discussion describes the tax consequences relating to a
purchase of all of a U.S. Holder's Equity Units. In the event either Triton
Delaware or Triton Cayman exercises its purchase right with respect to some (but
not all) of a U.S. Holder's Equity Units a portion of the consideration received
may, depending on the particular circumstances, be treated as a dividend for
U.S. federal income tax purposes. U.S. Holders are advised to consult their own
tax advisors concerning the tax consequences to them of a transfer of some but
not all of their Equity Units to Triton Delaware or Triton Cayman.
CLASSIFICATION OF TRITON CAYMAN AS A CONTROLLED FOREIGN CORPORATION
Under Section 951(a) of the Code, each "United States shareholder" of a
"controlled foreign corporation" ("CFC") must include in its gross income for
U.S. federal income tax purposes its pro rata share of the CFC's "subpart F
income," even if the subpart F income is not distributed. In addition, gain on
the sale of stock in a CFC realized by a United States shareholder is treated as
ordinary income to the extent of the CFC's accumulated undistributed earnings
and profits. Section 951(b) of the Code defines a United States shareholder
("U.S. Shareholder") as any U.S. corporation, citizen, resident or other U.S.
person who owns (directly or through certain deemed ownership rules) 10% or more
of the total combined voting power of all classes of stock of a foreign
corporation. In
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general, a foreign corporation is treated as a CFC only if such U.S.
Shareholders collectively own more than 50% of the total combined voting power
or total value of the corporation's stock. Under these rules Triton Cayman does
not expect to be a CFC. While it is possible that Triton Cayman could in the
future be treated as a CFC, so long as a shareholder of Triton Cayman is not a
U.S. Shareholder, Triton Cayman's status as a CFC should have no adverse effect
on such holder.
PASSIVE FOREIGN INVESTMENT COMPANIES
Sections 1291 through 1297 of the Code contain special rules applicable with
respect to foreign corporations that are "passive foreign investment companies"
("PFICs"). In general, a foreign corporation will be a PFIC if 75% or more of
its income constitutes "passive income" or 50% or more of its assets produce
passive income. If Triton Cayman were to be characterized as a PFIC, a U.S.
Holder would be subject to a penalty tax at the time of its sale of (or receipt
of an "excess distribution" with respect to) its shares. Moreover any such gain
on the sale of shares would be taxable as ordinary income. In general, a
shareholder receives an "excess distribution" if the amount of the distribution
is more than 125% of the average distribution with respect to the stock during
the three preceding taxable years (or the taxpayer's holding period if it is
less than three years). In general, the penalty tax is equivalent to an interest
charge on taxes that are deemed due during the taxpayer's holding period but not
paid, computed by assuming that the excess distribution or gain (in the case of
a sale) with respect to the shares was realized ratably over the holder's
holding period. The interest charge is equal to the applicable rate imposed on
underpayments of U.S. federal income tax for such period.
The PFIC statutory provisions contain a look-through rule that states that,
for purposes of determining whether a foreign corporation is a PFIC, such
foreign corporation shall be treated as if it "received directly its
proportionate share of the income" and as if it "held its proportionate share of
the assets" of any other corporation in which it owns at least 25% of the stock.
Under the look-through rule Triton Cayman would be deemed to own the assets and
to have received the income of its subsidiaries directly for the purposes of
determining whether Triton Cayman will be treated as a PFIC. As a result, Triton
Cayman does not expect to be treated as a PFIC.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements may apply to payments made
with respect to, or cash proceeds of a sale or exchange of, the Triton Delaware
Preferred Stock and Ordinary Shares. In addition, a holder may be subject to
backup withholding under Section 3406 of the Code at a rate of 31% on such
payments. Backup withholding will apply only if the holder (i) fails to furnish
its Taxpayer Identification Number ("TIN"), which for an individual would be his
or her social security number, (ii) furnishes an incorrect TIN, (iii) is
notified by the IRS that it has failed to properly report payments of interest
and dividends or (iv) under certain circumstances, fails to certify, under
penalties of perjury, that it has furnished a correct TIN and has not been
notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments. Backup withholding will not apply with
resect to payments made to certain exempt recipients, such as corporations,
tax-exempt organizations and foreign persons receiving payments that are subject
to withholding under Section 1441 or Section 1442 of the Code or that would be
subject to such withholding but for the provisions of a treaty or certain other
exceptions.
The amount of any backup withholding from a payment to a holder are allowed
as a credit against such holder's federal income tax liability and may entitle
such holder to a refund, provided that the required information is furnished to
the IRS.
POST-REORGANIZATION TAXATION OF TRITON CAYMAN AND TRITON DELAWARE
All of Triton Delaware's foreign subsidiaries are presently CFCs. As
discussed above, under subpart F of the Code, a CFC is a foreign corporation
that is owned (directly, indirectly or by attribution) more than fifty percent
(50%), by vote or by value, by U.S. Shareholders. In the event that a foreign
corporation is a CFC, a U.S. Shareholder of the CFC must include in income in
its taxable year in which or with which the taxable year of the CFC ends, the
total of, among other things, (i) its
42
pro rata share of the CFC's subpart F income for such taxable year, (ii) its pro
rata share of the CFC's increase in earnings invested in United States property
for such year and (iii) its pro rata share of the lesser of the CFC's earnings
and profits accumulated in taxable years beginning after September 30, 1993 or
the amount of the CFC's passive assets in excess of twenty-five percent (25%) of
total assets, computed on the basis of treating all CFC's commonly owned,
directly or indirectly, by a more than fifty percent (50%) CFC parent as a
single CFC. Thus, immediately prior to the Reorganization, Triton Delaware is,
and has been, subject to the deemed income inclusion provisions described above
as the only United States shareholder of Triton Delaware's foreign subsidiaries.
After the Reorganization, Triton Delaware will continue to be subject to the
deemed inclusion provisions with respect to any foreign subsidiaries that
continue to be owned by Triton Delaware and Triton Cayman will not be subject to
any deemed income inclusion with respect to its other direct or indirect
subsidiaries.
CAYMAN ISLANDS TAX CONSEQUENCES
According to Cayman Islands counsel, W.S. Walker & Company, at the present
time there is no Cayman Islands income or profits tax, withholding tax, capital
gains tax, capital transfer tax, estate duty or inheritance tax payable by a
Cayman Islands company or its shareholders, other than shareholders resident in
the Cayman Islands. Triton Cayman has obtained an assurance from the Minister of
Finance of the Cayman Islands under the Tax Concessions Law (Revised) that, in
the event that any legislation is enacted in the Cayman Islands imposing tax
computed on profits or income, or computed on any capital assets, gain or
appreciation, or any tax in the nature of estate duty or inheritance tax, such
tax shall not until October 31, 2015 be applicable to Triton Cayman or to any of
its operations or to the shares, debentures or other obligations of Triton
Cayman except insofar as such tax applies to persons ordinarily resident in the
Cayman Islands and holding such shares, debentures or other obligations of
Triton Cayman or any land leased or let to Triton Cayman. Therefore, there will
be no Cayman Islands tax consequences with respect to the Reorganization or with
respect to subsequent distributions in respect of the Class A Shares, Class B
Shares, Convertible Preference Shares and Triton Delaware Preferred Stock.
DESCRIPTION OF AUTHORIZED SHARES OF TRITON CAYMAN
The following statements with respect to Triton Cayman's capital stock are
subject to the detailed provisions of Triton Cayman's Articles of Association
(the "Articles of Association"), its Memorandum of Association (the "Memorandum
of Association"), the resolutions with respect to the Preference Shares (the
"Resolutions"), and the Preference Share Purchase Rights created pursuant to the
Rights Agreement to be entered into between Triton Cayman and Chemical Bank, as
Rights Agent (the "Rights Agreement"). These statements do not purport to be
complete and, while Triton Cayman believes the descriptions of the material
provisions of the Articles of Association, Memorandum of Association,
Resolutions and Rights Agreement contained in this Proxy Statement/Prospectus
are accurate statements with respect to such material provisions, such
statements are subject to the detailed provisions in the Articles of
Association, Memorandum of Association, Resolutions and Rights Agreement to
which reference is hereby made for a full description of such provisions.
ORDINARY SHARES; GENERAL
The Articles of Association provide that the authorized share capital of
Triton Cayman is divided into 200,000,000 Class A Shares, 10,000,000 Class B
Shares, 10,000,000 class C ordinary shares, par value $.01 per share (the "Class
C Shares"), and 20,000,000 preference shares. The Class A Shares, the Class B
Shares and the Class C Shares rank pari passu in all respects and have equal
voting and other rights, except as set forth in the Articles of Association. For
purposes of the discussion under "Description of Authorized Shares of Triton
Cayman," the term "Ordinary Shares" includes Class A Shares, Class B Shares and
Class C Shares.
As described under "The Reorganization -- Equity Unit Election," at the
Effective Time, subject to the Equity Unit Limitation, each Equity Unit
exchanged for an Electing Share will be comprised of one Class B Share and
one-tenth of one share of Triton Delaware Preferred Stock, which securities
43
will be paired and will not be separately transferable. The aggregate number of
Class B Shares issuable will be the aggregate number of Equity Units for which
shares of Triton Delaware Common Stock are exchanged in the Merger. As described
below, one Class A Share is designed to generally have economic rights
substantially equivalent to the rights of the securities included in an Equity
Unit, considered as a whole, except that, among other things, the holders of
Equity Units, as a result of their ownership of the Triton Delaware Preferred
Stock component of the Equity Units, are entitled to certain liquidation
preferences and dividend and voting and other rights with respect to Triton
Delaware (see "Description of Triton Delaware Preferred Stock") and the holders
of Class A Shares are entitled to certain additional rights over the holders of
Class B Shares with respect to Triton Cayman. See "Dividend Rights," "Purchase
of Equity Units," "Liquidation of Triton Delaware" and "Liquidation of Triton
Cayman" below.
The rights of holders of Class B Shares have been specifically designed to
permit such shares to be paired with and only transferable with one-tenth of one
share of Triton Delaware Preferred Stock in the form of an Equity Unit that is
to be distributed only in connection with the Merger to holders electing to
receive such consideration. Accordingly, it is not intended that there be, and
the Articles of Association do not permit, any further issuances of Class B
Shares, or any security convertible into or exchangeable for any Class B Shares
or any option or right of subscription to acquire any Class B Shares, except in
connection with a stock dividend or stock split of Class B Shares. It is
intended that Class A Shares will be available for future issuances of equity
securities, if any, required by Triton Cayman to raise capital, in connection
with acquisitions or otherwise. Accordingly, the Articles of Association provide
for a greater number of Class A Shares to be authorized than Class B Shares.
Moreover, because there will be no separate trading market for the Class B
Shares and because the Class B Shares are not intended to be transferable
independently of the shares of Triton Delaware Preferred Stock, any stock
dividend of Class B Shares or any Class B Shares resulting from a consolidation
or subdivision of the capital of Triton Cayman will be included in an Equity
Unit. Pursuant to the Articles of Association, the number of Class B Shares
included in an Equity Unit may be adjusted from time to time to take account of
such events; PROVIDED, HOWEVER, that the number of Class B Shares included in an
Equity Unit is required to be a whole number. One-tenth of one share of Triton
Delaware Preferred Stock will be included in an Equity Unit. The number of Class
B Shares included in an Equity Unit is hereinafter referred to as the "Pairing
Ratio." As of the Effective Time, the Pairing Ratio will be one.
It is intended that the Class C Shares will only be issued if (i) Triton
Cayman exercises its right to purchase the Equity Units as described under
"Description of Triton Delaware Preferred Stock - Purchase of Equity Units,"
(ii) Triton Cayman chooses to use Ordinary Shares rather than cash in connection
with such purchase and (iii) the Cumulative Dividend Amount (as hereinafter
defined) is a positive number. See "Purchase of Equity Units." The holders of
the Class C Shares will be entitled to the same dividend rights, liquidation
preferences and voting and other rights as the holders of the Class A Shares
described below, except that they will be subject to certain preferential rights
of the holders of the Class A Shares. See "Dividend Rights" and "Liquidation of
Triton Cayman" below.
VOTING AND OTHER RIGHTS
Under the Articles of Association, the holders of Ordinary Shares will be
entitled to one vote for each share held on all matters submitted to
shareholders' meetings, including the election and removal of directors, and
will vote together as a single class with any voting preference shares unless
the terms of any voting preference shares or the Articles of Association
otherwise provide. The Articles of Association of Triton Cayman provide that the
quorum required for a general meeting of the shareholders is a majority of the
outstanding Ordinary Shares entitled to vote at such meeting. All matters voted
upon at any duly held shareholders' meeting shall be carried by a majority of
the votes cast at the meeting by shareholders represented in person or by proxy,
except (i) election of directors, who are elected by plurality vote, (ii)
approval of a merger or a similar arrangement, which, pursuant to Cayman Islands
law, requires the approval by 75% of the votes cast (but, in any event, under
the Articles of Association, at least a majority of the outstanding shares), and
(iii) approval of a Special
44
Resolution (as defined below). See "Comparison of Rights of Stockholders --
Stockholder Approval of Business Combinations." A change of corporate name, the
voluntary dissolution, liquidation or winding-up of the affairs of Triton
Cayman, a reduction of paid-up share capital, and any amendment to Triton
Cayman's Articles of Association or Memorandum of Association require approval
by a Special Resolution by the shareholders of Triton Cayman. A Special
Resolution requires the approval of at least two-thirds of the votes cast by the
shareholders represented in person or by proxy at a duly convened meeting. The
Board of Directors or the President may at any time proceed to convene a general
meeting of Triton Cayman. Triton Cayman must provide at least 10 days' notice of
a general meeting.
Because holders are not entitled to cumulate their votes, shareholders
holding a majority of the outstanding Ordinary Shares, voting together as a
class with the holders of any voting preference shares which may be issued, are
able to elect all members of the board of directors of Triton Cayman. The
Articles of Association of Triton Cayman provide that the directors are to be
elected in three classes of approximately equal number and for a term of three
years, with the result that shareholders will not vote for the election of a
majority of directors in any single year. Holders of Ordinary Shares have no
preemptive rights.
As the registered holder of the Class B Shares contained in the Equity
Units, pursuant to the Articles of Association, the Depositary will be entitled
to appoint one or more persons (who may be one or more holders of the Unit
Depositary Shares) to act as its representative at any general meeting of Triton
Cayman. Any person so authorized may attend, vote and speak at such meeting as
if he were an individual shareholder of Triton Cayman in respect of the number
of Class B Shares that he is authorized to represent. It is presently expected
that the Depositary will authorize each holder of a Unit Depositary Share to act
as its representative with respect to the number of Class B Shares included in
Equity Units represented by the Receipt of that holder. The Articles of
Association provide that whenever the share capital of Triton Cayman is divided
into different classes of shares, the rights attached to any class may (unless
otherwise provided by the terms of issue of the shares of that class) be varied
only with the consent in writing of all holders of such class or pursuant to a
Special Resolution adopted at a meeting with such holders voting separately as a
class.
The Articles of Association further provide that, unless otherwise provided
by the rights attached to any shares, such rights will not be deemed to be
varied by the allotment of further shares which confer on the holders voting
rights more favorable than those conferred by such shares. Such rights will not
otherwise be deemed to be varied by the creation or issuance of further shares,
including any additional Class A Shares, Class B Shares or Class C Shares or
different classes of shares with preferential rights as to dividends or capital.
There are no limitations on the right of nonresident shareholders to hold or
vote their Ordinary Shares imposed by Cayman Islands law or Triton Cayman's
Articles of Association.
SPECIAL RIGHTS UPON THE OCCURRENCE OF CERTAIN EVENTS
The Articles of Association provide that as long as the Class B Shares (or
Class C Shares) are outstanding, Triton Cayman shall not enter into any
agreement with another entity providing for the consolidation, merger,
amalgamation or other similar transaction of Triton Cayman and such other entity
if the holders of Ordinary Shares receive consideration in respect of such
transaction and the consideration to be received by holders of the Equity Units
per Equity Unit or per share by holders of Class B Shares (or Class C Shares)
(in each case, less the amount due per Class A Share in respect of the
Cumulative Dividend Amount (as defined below) or the Liquidation Available
Amount (as defined below), as the case may be) is less than the consideration to
be received by holders of the Class A Shares per share in connection with such
consolidation, merger, amalgamation or other similar transaction, unless such
agreement shall have been approved by the holders of a majority of the Class B
Shares (or Class C Shares), voting separately as a class.
In addition, the Rights Agreement provides that at any time after any person
or group of persons (an "Offeror") makes an offer to acquire all or part of the
Class A Shares, unless at the same time such offeror makes an offer to acquire
the Equity Units or Class B Shares (or Class C Shares) for the same
45
consideration (as determined in good faith by the Board of Directors) and upon
the same conditions per unit or per share as that offered in respect of a Class
A Share (less the amount due per Class A Share in respect of the Cumulative
Dividend Amount or the Liquidation Available Amount, as the case may be), then
the Board of Directors of Triton Cayman shall not be permitted to redeem the
rights issued pursuant to the Rights Agreement during the pendency of such
offer. See "-- Preference Shares -- Preference Share Purchase Rights."
DIVIDEND RIGHTS
The holders of Ordinary Shares will be entitled at any time to receive such
dividends as are declared by the Board of Directors. The ability of Triton
Cayman to pay dividends on capital stock is restricted by covenants in
indentures to which Triton Cayman will be a party upon the consummation of the
Reorganization. Triton Cayman currently intends to retain earnings for use in
Triton Cayman's business and the financing of its capital requirements. The
payment of any future cash dividends is necessarily dependent upon the earnings
and financial needs of Triton Cayman, along with applicable legal and
contractual restrictions.
Aggregate dividends declared and paid on one Class A Share, if any, are
expected to be equivalent to the aggregate dividends declared and paid on
one-tenth of one share of Triton Delaware Preferred Stock and one Class B Share
included in one Equity Unit, if any. The holders of the Equity Units, in their
capacity as holders of shares of Triton Delaware Preferred Stock, may receive
dividends at a time or times when no dividends are being declared or paid on the
Class A Shares or the Class B Shares. See "Description of Triton Delaware
Preferred Stock." Accordingly, the Articles of Association contain certain
provisions which regulate the relative amounts of any dividends which may be
declared or paid on the Class A Shares and the Class B Shares as described
below.
The holders of Class A Shares will be entitled, on the declaration of a
dividend, at any time, to a dividend on each Class A Share of an amount which
exceeds the amount of the dividend (if any) declared at the same time on a Class
B Share (or Class C Share), by an amount equal to (i) the Cumulative Dividend
Amount (as defined below) at such time divided by (ii) the Pairing Ratio at such
time, and to the extent of any such excess, a dividend may be declared at any
time on the Class A Shares even if no dividend is declared at the same time on
the Class B Shares (or Class C Shares). (Such provision is referred to
hereinafter as the "Dividend Provision".) The term "Cumulative Dividend Amount"
at any time is defined to mean the amount by which the aggregate of all
dividends declared on one-tenth of one share of Triton Delaware Preferred Stock
from the date of adoption of the Articles of Association up to and including the
time of determination exceeds the amount (if any) by which (x) the sum of the
products of the amount of each dividend declared on one Class A Share from the
date of adoption of the Articles of Association until immediately prior to the
time of determination and the Pairing Ratio in effect as of the date of its
declaration, exceeds (y) the sum of the products of the amount of each dividend
declared on one Class B Share from the date of adoption of the Articles of
Association until immediately prior to the time of determination and the Pairing
Ratio in effect as of the date of its declaration. For purposes of the Dividend
Provision, dividends on shares of Triton Delaware Preferred Stock are deemed to
be declared when resolved to be declared on the Triton Delaware Preferred Stock
by Triton Delaware's Board of Directors. Dividends on Class A Shares and Class B
Shares are deemed to be declared when the Board of Directors of Triton Cayman
resolves to declare any dividend.
As a result of the Dividend Provision, for so long as the authorized capital
stock of Triton Cayman is divided into Class A Shares and Class B Shares or
Class C Shares, if the Board of Directors of Triton Cayman determines to pay
dividends on the share capital of Triton Cayman and dividends have been paid in
prior periods by Triton Delaware on the Triton Delaware Preferred Stock when no
corresponding dividend was paid on the Class A Shares, Triton Cayman may be
required to pay dividends on the Class A Shares when no or a lesser dividend is
being paid on the Class B Shares or Class C Shares or the shares of Triton
Delaware Preferred Stock included in an Equity Unit. The Dividend Provision does
not impute any interest component on dividends paid in earlier periods when
determining the appropriate allocation of dividends in any given subsequent
period.
46
PURCHASE OF EQUITY UNITS
In the event Triton Cayman or Triton Delaware purchases the Equity Units,
holders of Class A Shares are not entitled to any payment in respect of any
amounts paid in cash or Class A Shares or Class C Shares, as the case may be, as
the purchase price for the Equity Units. See "Description of Triton Delaware
Preferred Stock -- Purchase of Equity Units."
The Articles of Association provide that if all of the Equity Units are
purchased by Triton Cayman or Triton Delaware, the Pairing Ratio will thereafter
be deemed to be the Pairing Ratio in effect on the date of the last such
purchase, adjusted in relation to any time thereafter in the case of a stock
split, stock combination or stock dividend by Triton Cayman after such time as
if such purchase had not occurred.
In the event that the Equity Units are purchased at a time when the
Cumulative Dividend Amount is positive, and Class C Shares are issued as part of
the Purchase Price, at such time as the Cumulative Dividend Amount has been
reduced to zero, whether by means of cash or stock dividends to the holders of
Class A Shares, the Board may resolve that each Class C Share then outstanding
will be converted into one Class A Share and that thereafter there shall be one
class of ordinary shares.
LIQUIDATION OF TRITON DELAWARE
At any time after the liquidation, dissolution or winding-up of Triton
Delaware has been completed, the Board of Directors of Triton Cayman may in its
discretion determine (which determination shall be final and binding) that the
Class B Shares included in the Equity Units should be allowed to be transferred
separately. In addition, at any time after such liquidation, dissolution or
winding-up has been completed, the Board of Directors of Triton Cayman may
ascertain the product of (a) the sum of (i) the amount of the Liquidation
Preference, if any, paid in respect of one-tenth of one share of Triton Delaware
Preferred Stock plus the amount of any other distribution to the holders of
one-tenth of one share of Triton Delaware Preferred Stock in connection with the
liquidation, dissolution or winding-up and (ii) the Cumulative Dividend Amount
immediately preceding the time of such determination times (b) the number of
Class A Shares outstanding at such time divided by the Pairing Ratio at such
time. Such product at any time is referred to as the "Liquidation Available
Amount" at such time.
In any such event, the Board of Directors of Triton Cayman may, in its
discretion, at any time and from time to time, apply all or any part of any
Liquidation Available Amount to declare dividends in cash to the holders of the
Class A Shares and/or to pay stock dividends on the Class A Shares in each case
in accordance with the provisions described below. Any such cash or stock
dividend will reduce the then applicable Liquidation Available Amount by the
amount so applied (determined in accordance with the terms of the Articles of
Association) and the Cumulative Dividend Amount will be reduced correspondingly.
If the Board of Directors of Triton Cayman determines at any time to utilize
all or any part of the then applicable Liquidation Available Amount for the
declaration of a stock dividend payable in Class A Shares to the holders of the
Class A Shares (any amount to be so utilized, the "Specified Amount"), the
aggregate number of additional Class A Shares to be so distributed will be
calculated by dividing the then applicable Specified Amount by the average of
the Closing Prices (as defined under "Description of Triton Delaware Preferred
Stock -- Purchase of Equity Units") for the Class A Shares on the five
consecutive trading days ending five days prior to the date on which the Board
of Directors of Triton Cayman announces its intention to declare such stock
dividend. Such stock dividend may only be made if the amount by which the
Liquidation Available Amount will be reduced as a result of such stock dividend
divided by the number of Class A Shares entitled to such stock dividend and
multiplied by the Pairing Ratio at that time, equals or exceeds the amount of
the Cumulative Dividend Amount (if any) at the time of the payment. Such stock
dividend will be made to the holders of record of the Class A Shares, on the
date determined for such purpose by the Board, in the proportions to which they
would have been entitled had such sum been distributed in cash.
47
The Board is not required to make any such distribution, but, to the extent
that it does, distributions in cash or stock dividends of additional Class A
Shares will be made to the holders of Class A Shares and not to the holders of
Class B Shares. In the event of any liquidation, dissolution or winding-up of
Triton Delaware, holders of the Equity Units, by virtue of holding one-tenth of
one share of Triton Delaware Preferred Stock included in each Equity Unit, will
be entitled to receive out of the assets of Triton Delaware available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of the common stock of Triton
Delaware or other junior stock, the Liquidation Preference.
The Articles of Association provide that if Triton Delaware is dissolved,
liquidated or wound up, the Pairing Ratio will thereafter be deemed to be the
Pairing Ratio in effect as of the date of completion of such liquidation,
dissolution or winding-up, as the case may be, adjusted in relation to any time
thereafter in the case of a stock split, stock combination or stock dividend
after such time as if such liquidation, dissolution or winding-up had not
occurred.
If Triton Delaware has been liquidated, dissolved or wound up and the
Liquidation Available Amount has been reduced to zero, whether by means of cash
or stock dividends to the holders of Class A Shares, the Board may resolve that
each Class B Share then outstanding will be converted into one Class A Share and
that thereafter there shall be one class of ordinary shares.
LIQUIDATION OF TRITON CAYMAN
The Articles of Association provide that before any amount is paid to the
holders of Class B Shares (or Class C Shares, if any) on a winding-up of Triton
Cayman, the holder of each Class A Share will be entitled to receive an amount
in respect of each Class A Share held by him equal to the sum of (a) the amount
of the Liquidation Preference paid, if any, in respect of one-tenth of one share
of Triton Delaware Preferred Stock plus the amount of any other distribution to
the holders of one-tenth of one share of Triton Delaware Preferred Stock in
connection with the liquidation dissolution or winding-up of Triton Delaware,
plus (b) the Cumulative Dividend Amount as at the commencement of the winding-up
of Triton Cayman, divided by the Pairing Ratio at such date. The holder of a
Class B Share (or Class C Share) will thereafter have the right to participate
in any assets of Triton Cayman PARI PASSU with the holder of a Class A Share.
The Articles of Association provide for an adjustment to the foregoing in the
event that the whole or any part of the Liquidation Available Amount has been
applied to the declaration of cash dividends on, or stock dividends in, Class A
Shares in the event of the prior liquidation of Triton Delaware (see
"Liquidation of Triton Delaware" above).
If, at the time of any such liquidation, the holder of Class A Shares or
Class B Shares has any outstanding debts, liabilities or engagements to or with
Triton Cayman (whether presently payable or not), either alone or jointly with
any other person, whether a shareholder or not (including, without limitation,
any liability associated with the unpaid purchase price of such Ordinary
Shares), the liquidator appointed to oversee the liquidation of Triton Cayman
may deduct from the amount payable in respect of such Ordinary Shares the
aggregate amount of such debts, liabilities and engagements and apply such
amount to any of such holder's debts, liabilities or engagements to or with
Triton Cayman (whether presently payable or not). The liquidator may distribute,
in kind, to the holders of the Ordinary Shares remaining assets of Triton Cayman
or may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other company, trust or entity and receive payment therefor in
cash, shares or obligations of such other company, trust or entity or any
combination thereof, and may sell all or any part of the consideration so
received, and may distribute the consideration received or any balance or
proceeds thereof to holders of the Ordinary Shares in accordance with the
procedures set forth above. The liquidator may, with the like sanction, vest the
whole or any part of such assets in trustees upon such trusts for the benefit of
the contributories as the liquidator, with the like sanction shall think fit,
but so that no shareholder shall be compelled to accept any shares or other
securities whereon there is any liability.
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CHANGES IN CAPITALIZATION
Triton Cayman may by Special Resolution (i) increase its share capital by
new shares of such amounts as the resolution prescribes; (ii) consolidate all or
any of its share capital into shares of larger amount than its existing shares
(similar to a stock combination); (iii) subject to the provisions of the
Companies Law, sub-divide its shares or any of them, into shares of smaller
amount than is fixed by its Articles of Association (similar to a stock split);
and (iv) cancel shares which, at the date of the passing of the resolution, have
not been taken or agreed to be taken by any person and diminish the amount of
its share capital by the amount of the shares so cancelled provided that, for as
long as Triton Cayman's share capital is divided into Class A Shares, Class B
Shares and Class C Shares, no consolidation or sub-division may be effected by
Triton Cayman unless (a) immediately following any consolidation or
sub-division, the ratio of the number of Class A Shares then outstanding to the
number of Class B Shares and Class C Shares then outstanding is equal to such
ratio immediately preceding such consolidation or sub-division and (b) the
effect thereof will result in an Equity Unit comprising a whole number of Class
B Shares and one-tenth of one share of Triton Delaware Preferred Stock. All
Class B Shares resulting from such consolidation or sub-division will be
thereafter included in Equity Units, resulting in a corresponding adjustment in
the Pairing Ratio.
DISTRIBUTIONS
The Articles of Association provide that, for as long as the share capital
of Triton Cayman is divided into Class A Shares, Class B Shares and Class C
Shares, Triton Cayman will not (except for certain distributions provided for in
the Articles of Association) make any offer or distribution of any share capital
of Triton Cayman or any option, right or warrant to subscribe for or purchase
any share capital of Triton Cayman, or any other security convertible into or
exchangeable for share capital of Triton Cayman to the holders of any class of
Ordinary Shares unless an offer or distribution on the same basis (in all
material respects) is made to the holders of any other class of Ordinary Shares
outstanding, subject to the Board of Directors of Triton Cayman having certain
rights to deal with shareholders in any territory (other than the Cayman Islands
or the United States) and fractional entitlements. Dividends to be satisfied by
distributions of property other than cash will be made or paid (as the case may
be) on the same basis (in all material respects) to holders of Ordinary Shares,
but no such distribution may be made unless at the time of declaration the
Cumulative Dividend Amount is zero.
No Class B Shares or Class C Shares, or any security convertible into or
exchangeable for any Class B Shares or Class C Shares, may be issued and no
option or right of subscription to acquire any Class B Shares or Class C Shares
may be granted, except in connection with a stock dividend of Class B Shares or
Class C Shares or, with respect to Class B Shares only, in connection with the
Merger or, with respect to Class C Shares only, in connection with the purchase
of the Equity Units.
STOCK DIVIDENDS
The Articles of Association provide that the Board of Directors of Triton
Cayman may declare and pay stock dividends to the extent permitted by Cayman
Islands law (without the need for shareholder approval), provided that (a) stock
dividends of Class B Shares (or Class C Shares) may be declared only on the
Class B Shares (or Class C Shares) and only if the Board of Directors
simultaneously declares a stock dividend on each Class A Share of a number of
Class A Shares equal to the number of Class B Shares (and Class C Shares) being
so issued on each Class B Share (or Class C Share) and (b) except with respect
to stock dividends applied to the Liquidation Available Amount after Triton
Delaware has been liquidated, dissolved or wound-up, stock dividends of Class A
Shares may be declared only if the Board simultaneously declares either (i) a
stock dividend on each Class B Share (or Class C Share) of a number of Class B
Shares (or Class C Shares) equal to the number of Class A Shares then being
issued on each Class A Share or (ii) a stock dividend of an equal number of
Class A Shares on each Class A Share and each Class B Share (or Class C Share).
No Class A Shares, Class B Shares or Class C Shares Shares may be issued as
stock dividends unless the effect would be to result in an Equity Unit
49
containing a whole number of Class B Shares and one-tenth of one share of Triton
Delaware Preferred Stock. All Class B Shares issued in connection with any stock
dividend will be thereafter included in Equity Units resulting in a
corresponding adjustment in the Pairing Ratio.
REDUCTION OF CAPITAL AND PURCHASE OF SHARES
Subject to the provisions of the Companies Law, Triton Cayman may by Special
Resolution reduce its share capital in any way provided that no such reduction
may be made if as a result all of the Class B Shares contained in Equity Units
will be cancelled unless prior to such reduction becoming effective the Board of
Directors of Triton Cayman is satisfied that the fraction of a share of Triton
Delaware Preferred Stock contained in such Equity Units will be cancelled and
any determination by the Board that it is so satisfied shall be conclusive and
binding.
Subject to the provisions of the Companies Law, any issued and outstanding
Ordinary Shares may be redeemed by Triton Cayman in such circumstances and on
such terms as shall be agreed by Triton Cayman and the holder thereof, and
Triton Cayman may deduct from the purchase price therefor the aggregate amount
of any outstanding debts, liabilities and engagements to or with Triton Cayman
by the holder of such shares. Triton Cayman may purchase all or part of the
Ordinary Shares of any holder upon the agreement of such holder whether or not
it has made a similar offer to all or any other holders. Notwithstanding the
foregoing, no purchase may be made of any Class B Shares contained in any Equity
Units unless Triton Cayman (or if Triton Delaware purchases the Equity Unit,
Triton Delaware) purchases the entire Equity Unit as set forth under "Purchase
of Equity Units."
TRANSFER OF SHARES
Upon surrender to Triton Cayman or the transfer agent of Triton Cayman of a
certificate for Ordinary Shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, and otherwise meeting all
legal requirements for transfer, Triton Cayman shall issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction on its books. Triton Cayman may refuse to register the transfer of
shares of any holder which have been called for redemption unless otherwise
provided by the terms of such shares or the Board of Directors in connection
with the call of such shares.
The Board of Directors of Triton Cayman shall refuse to register the
transfer of any Class B Share contained in an Equity Unit unless there is
produced to the Board of Directors of Triton Cayman such evidence as it may in
its discretion require to ensure that on the same occasion there is being
transferred to the same person the fraction of a share of Triton Delaware
Preferred Stock and any other Class B Shares contained in the same Equity Unit.
PREFERENCE SHARES
GENERAL
Under the Articles of Association, Triton Cayman has authority to issue
20,000,000 preference shares. There are currently no preference shares
outstanding; however, Triton Cayman has authorized the issuance of up to 420,000
preference shares to be designated the 5% convertible preference shares (the
"Convertible Preference Shares"). Upon consummation of the Reorganization, each
share of Convertible Preferred Stock of Triton Delaware will be automatically
converted into one Convertible Preference Share, subject to dissenters' rights.
As of February 20, 1996, there were 410,017 shares of Convertible Preferred
Stock outstanding. Under the Articles of Association of Triton Cayman, the Board
of Directors of Triton Cayman may establish one or more additional classes or
series of preference shares having the number of shares, designations, relative
voting rights, dividend rates, liquidation and other rights, preferences, and
limitations that the Board of Directors fixes without any shareholder approval.
Such provisions could hinder an attempt to acquire control of Triton Cayman.
CONVERTIBLE PREFERENCE SHARES
DIVIDENDS. Holders of Convertible Preference Shares will be entitled to
receive, when, as, and if declared by the Board of Directors of Triton Cayman
out of funds of Triton Cayman legally available
50
for payment, cumulative cash dividends at the annual rate per share equal to 5
percent of the Redemption Price (defined below) of the shares payable
semi-annually on September 30 and March 30 in each year commencing March 30,
1996, except that if any such date is a Saturday, Sunday, or legal holiday, then
such dividend shall be payable on the next day that is not a Saturday, Sunday,
or legal holiday. Dividends will accrue from the date on which the Convertible
Preference Shares are issued and will be payable to holders of record as they
appear on the stock books of Triton Cayman on such record dates as are fixed by
the Board of Directors of Triton Cayman. The amount of dividends payable for
each semi-annual dividend period will be computed by dividing the annual
dividend amount by two. The amount of dividends payable for the initial dividend
period shall be an amount equal to the dividend accumulated and unpaid with
respect to the Convertible Preferred Stock of Triton Delaware through the
Effective Time plus an amount equal to the dividend accumulated with respect to
the Convertible Preference Shares from the Effective Time through such dividend
payment date. The amount of dividends payable for any period other than a full
semi-annual dividend period will be computed on the basis of a 360-day year of
twelve 30-day months. No interest will be payable in respect of any dividend
payment on the Convertible Preference Shares which may be in arrears.
If dividends on the Convertible Preference Shares shall not have been
declared and paid in full, or funds set aside for payment, by a date 15 days
after a dividend payment date (a "Calculation Date"), dividends payable on the
Convertible Preference Shares shall be increased by an amount equal to the prime
rate of Morgan Guaranty Trust Company of New York as in effect on each
Calculation Date plus 1 percent applied against the amount of dividends so due
and unpaid until such dividends shall be paid (the "Penalty Dividend").
The Convertible Preference Shares will have priority as to dividends over
Ordinary Shares and any other series or class of Triton Cayman's shares
hereafter issued which ranks junior as to dividends to the Convertible
Preference Shares ("Junior Dividend Shares"), and no dividend (other than
dividends payable solely in Junior Dividend Shares) may be paid on, and no
purchase, redemption, or other acquisition may be made by Triton Cayman of, any
Junior Dividend Shares unless all accrued and unpaid dividends on the
Convertible Preference Shares have been paid or declared and set apart for
payment. Triton Cayman may not pay dividends on any class or series of its
shares having parity with the Convertible Preference Shares as to dividends
("Parity Dividend Shares"), unless it has paid or declared and set apart for
payment or contemporaneously pays or declares and sets apart for payment all
accrued and unpaid dividends for all prior periods on the Convertible Preference
Shares and may not pay dividends on the Convertible Preference Shares unless it
has paid or declared and set apart for payment or contemporaneously pays or
declares and sets apart for payment all accrued and unpaid dividends for all
prior periods on the Parity Dividend Shares. Notwithstanding the preceding
sentence, whenever all accrued dividends are not paid in full on the Convertible
Preference Shares or any Parity Dividend Shares, all dividends declared on the
Convertible Preference Shares and such Parity Dividend Shares will be declared
or made pro rata so that the amount of dividends declared per share on the
Convertible Preference Shares and such Parity Dividend Shares will bear the same
ratio that accrued and unpaid dividends per share on the Convertible Preference
Shares and such Parity Dividend Shares bear to each other. The Convertible
Preference Shares will be junior as to dividends to any series or class of
Triton Cayman's stock hereafter issued which ranks senior as to dividends to the
Convertible Preference Shares ("Senior Dividend Shares"), and if at any time
Triton Cayman has failed to pay or declare and set apart for payment accrued and
unpaid dividends on any Senior Dividend Shares, Triton Cayman may not pay any
dividend on the Convertible Preference Shares.
LIQUIDATION RIGHTS. In case of the voluntary or involuntary liquidation,
dissolution, or winding up of Triton Cayman, holders of Convertible Preference
Shares are entitled to receive an amount per share equal to the Redemption
Price, plus any accrued and unpaid dividends (including Penalty Dividends) to
the payment date (the "Liquidation Price"), before any payment or distribution
is made to the holders of Ordinary Shares or any other series or class of Triton
Cayman's shares hereafter issued which ranks junior as to liquidation rights to
the Convertible Preference Shares, but the holders of Convertible Preference
Shares will not be entitled to receive the Liquidation Price of such
51
shares until the liquidation price of any other series or class of Triton
Cayman's shares hereafter issued which ranks senior as to liquidation rights to
the Convertible Preference Shares ("Senior Liquidation Shares") has been paid in
full; provided, if, at such time, any holder of Convertible Preference Shares
has any outstanding debts, liabilities or engagements to or with Triton Cayman
(whether presently payable or not), either alone or jointly with any other
person, whether a shareholder or not, (including, without any limitation, any
liability associated with the unpaid purchase price of such Convertible
Preference Shares), the liquidator appointed to oversee the liquidation of
Triton Cayman may deduct from the fixed liquidation amount payable in respect of
such Convertible Preference Shares the aggregate amount of such debts,
liabilities and engagements and apply such amount to any of such debts,
liabilities or engagements. The holders of Convertible Preference Shares and all
series or classes of Triton Cayman's shares hereafter issued which rank on a
parity as to liquidation rights with the Convertible Preference Shares are
entitled to share ratably, in accordance with the respective preferential
amounts payable on such stock, in any distribution (after payment of the
liquidation price of the Senior Liquidation Shares) which is not sufficient to
pay in full the aggregate of the amounts payable thereon. After payment in full
of the Liquidation Price of the Convertible Preference Shares, the holders of
such shares will not be entitled to any further participation in any
distribution of assets by Triton Cayman. Neither a consolidation or merger of
Triton Cayman with another company nor a sale or transfer of all or part of
Triton Cayman's assets for cash, securities, or other property will be
considered a liquidation, dissolution, or winding up of Triton Cayman.
REDEMPTION. Triton Cayman may, at its option, redeem the Convertible
Preference Shares, in whole or in part, at any time on or after March 30, 1998
or at any time when there are fewer than 133,005 Convertible Preference Shares
outstanding. The redemption price payable upon such optional redemption shall be
the Redemption Price plus any accrued and unpaid dividends (including Penalty
Dividends) to the redemption date. Such Redemption Price shall be payable in
cash.
The Convertible Preference Shares shall be subject to mandatory redemption
by Triton Cayman on March 30, 2004. At the option of Triton Cayman, such
redemption may be for (i) cash at the Redemption Price plus any accrued and
unpaid dividends (including Penalty Dividends) to the redemption date; (ii) such
number of Class A Shares whose aggregate value (based on the then current market
price determined as set forth in the resolution of the Board of Directors
designating the Convertible Preference Shares) equals the Redemption Price plus
any accrued and unpaid dividends (including Penalty Dividends) to the redemption
date; or (iii) a combination of cash and Class A Shares equal to the Redemption
Price plus any accrued and unpaid dividends (including Penalty Dividends) to the
redemption date. The Redemption Price equals $34.41 per share.
VOTING RIGHTS. The holders of Convertible Preference Shares will have no
voting rights except as described below or as required by Cayman Islands law. In
exercising any such vote each outstanding Convertible Preference Share will be
entitled to one vote.
So long as any Convertible Preference Shares are outstanding, Triton Cayman
will not, without the affirmative vote or consent of the holders of at least
two-thirds of the outstanding Convertible Preference Shares, voting or
consenting separately as a class with holders of any other class of Triton
Cayman's preference shares similarly affected, issue other than wholly for cash
consideration, any shares of any class of Senior Dividend Shares or Senior
Liquidation Shares, or amend the Articles of Association in a manner adversely
affecting the rights of such shareholders.
The Articles of Association may be amended to increase the number of
authorized shares of Triton Cayman's preference shares without the vote of the
holders of the outstanding Convertible Preference Shares.
The holders of the Convertible Preference Shares have no pre-emptive rights
with respect to any shares of capital stock of Triton Cayman or any other
securities of Triton Cayman convertible into or carrying rights or options to
purchase any such shares.
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CONVERSION RIGHTS. The holders of Convertible Preference Shares will be
entitled to convert their Convertible Preference Shares into Class A Shares
subject to the qualifications described below, except that, with respect to
Convertible Preference Shares called for redemption, conversion rights will
expire at the close of business on the fifth day prior to the redemption date
(unless Triton Cayman defaults in the payment of the Redemption Price). No
payment or adjustment will be made in respect of dividends on the Convertible
Preference Shares that may be accrued or unpaid or in arrears upon conversion of
shares of Convertible Preference Shares except as set forth below. No fractional
shares will be issued and, in lieu of any fractional share, Triton Cayman will
pay a cash adjustment based on the then current market price (determined as set
forth in the resolutions of the Board of Directors designating the Convertible
Preference Shares) of the Class A Shares.
Each Convertible Preference Share shall be convertible initially into one
Class A Share. However, the number of Class A Shares issuable on conversion of
each Convertible Preference Share (the "Conversion Rate") shall be subject to
adjustment as described below.
The Conversion Rate is subject to adjustment in certain circumstances,
including in respect of any dividends not declared and paid in full in respect
of any dividend payment date occurring prior to the date of conversion and any
Penalty Dividends payable thereon, upon the issuance of Class A Shares as a
stock dividend, in connection with combinations and subdivisions of Class A
Shares, upon certain reclassifications of Class A Shares, upon the issuance to
Triton Cayman's shareholders of rights or warrants to subscribe for or purchase
Class A Shares at a price per share less than the then current market price of
Class A Shares, and in connection with certain distributions to Triton Cayman's
shareholders of evidences of indebtedness or assets. Except in the case of the
adjustment in respect of dividends, no adjustment in the Conversion Price will
be required unless it would result in at least a 1 per cent increase or decrease
in the Conversion Price; however, any adjustment not made will be carried
forward.
In case of any consolidation or merger of Triton Cayman with any other
company, or in the case of any merger of another company into Triton Cayman
(other than a merger with a company in which merger Triton Cayman is the
continuing company and which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Triton Cayman), or
in the case of a sale or conveyance of all or substantially all of the assets of
Triton Cayman to another company, Triton Cayman will be required to make proper
provisions so that the holder of each Convertible Preference Share then
outstanding will have the right thereafter to convert such Convertible
Preference Share into the kind or amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale or conveyance by a
holder of the number of Class A Shares into which such Convertible Preference
Share might have been converted immediately prior to such consolidation, merger,
sale or conveyance.
PREFERENCE SHARE PURCHASE RIGHTS
The Board of Directors of Triton Cayman has adopted a Shareholder Rights
Plan pursuant to which preference share purchase rights attach to all Ordinary
Shares at the rate of one right for each Ordinary Share. Chemical Bank is the
Rights Agent for the Preference Share Purchase Rights. Each right entitles the
registered holder to purchase from Triton Cayman one one-thousandth of a Series
A Junior Participating Preference Share, par value $.01 per share (the "Junior
Preference Shares"), of Triton Cayman at a price of $120 per one one-thousandth
of a share of such Junior Preference Shares, subject to adjustment.
Generally, the rights only become distributable ten days following public
announcement that a person has acquired beneficial ownership of 15% or more of
the Ordinary Shares or ten business days following commencement of a tender or
exchange offer for 15% or more of the outstanding Ordinary Shares. If, among
other events, any person becomes the beneficial owner of 15% or more of the
Ordinary Shares, each right not owned by such person generally becomes the right
to purchase such number of Class A Shares that is equal to the amount obtained
by dividing the right's exercise price (currently $120) by 50% of the market
price of the Class A Shares on the date of the first occurrence.
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In addition, if Triton Cayman is subsequently merged or certain other
extraordinary business transactions are consummated, each right generally
becomes a right to purchase such number of shares of common stock of the
acquiring person that is equal to the amount obtained by dividing the right's
exercise price by 50% of the market price of such Ordinary Shares on the date of
the first occurrence.
Under certain circumstances, Triton Cayman's directors may determine that a
tender offer or merger is fair to all shareholders and prevent the rights from
being exercised. At any time after any person or group acquires 15% or more of
the Ordinary Shares outstanding and prior to the acquisition by such person or
group of 50% or more of the outstanding Ordinary Shares or the occurrence of an
event described in the prior paragraph, the Board of Directors of Triton Cayman
may exchange the rights (other than rights owned by such person or group which
will have become void), in whole or in part, at an exchange ratio of one
Ordinary Share, or one one-thousandth of a Junior Preference Share per right
(subject to adjustment). Triton Cayman has the ability to amend the rights
(except the redemption price) in any manner prior to the public announcement
that a 15% position has been acquired or a tender offer has been commenced.
Any Junior Preference Shares issued pursuant to the Shareholders Rights Plan
will rank junior as to dividends and liquidation to the Convertible Preference
Shares. Junior Preference Shares purchasable upon exercise of the rights will
not be redeemable. Each Junior Preference Share will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1 per
share but will be entitled to an aggregate dividend of 1,000 times the dividend
declared per Class A Share. In the event of liquidation, the holders of the
Junior Preference Shares will be entitled to a minimum preferential liquidation
payment of $1000 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 1,000 times the payment made per Class A
Share. Each Junior Preference Share will have 1,000 votes, voting together with
Ordinary Shares. Finally, in the event of any merger, consolidation or other
transaction in which Ordinary Shares are converted or exchanged, each Junior
Preference Share will be entitled to receive 1,000 times the amount received per
Class A Share. These rights are protected by customary antidilution provisions.
Triton Cayman will be entitled to redeem the rights at $0.01 a right at any
time prior to the time that a 15% position has been acquired; provided that the
Board of Directors will not be permitted to redeem the rights at any time after
any person shall have made an offer to acquire all or part of the Class A
Shares, during the pendency of such offer, unless at the same time such person
shall have made an offer to acquire the Equity Units or the Class B Shares (or
the Class C Shares) for the same consideration (as determined in good faith by
the Board of Directors) and upon the same conditions per unit or per share as
that offered in respect of a Class A Share (less certain amounts due to the
holders of a Class A Share in respect of the Cumulative Dividend Amount or the
Liquidation Available Amount, as the case may be). The rights will expire on May
22, 2005.
DESCRIPTION OF TRITON DELAWARE PREFERRED STOCK
GENERAL
Pursuant to the Merger Agreement, each one-tenth of one share of Triton
Delaware Preferred Stock issued will be paired with, and will not trade
separately from, each Class B Share issued to stockholders who make an Equity
Unit Election, subject to the Equity Unit Limitation. See "The Reorganization"
and "Description of Receipts."
Under the Certificate of Incorporation, Triton Delaware has authority to
issue 5,000,000 shares of preferred stock. As of February 20, 1996, there were
410,017 shares of Convertible Preferred Stock outstanding which will be
automatically converted on a share for share basis into Convertible Preference
Shares of Triton Cayman upon the consummation of the Merger subject to
dissenters' rights. See "Description of Authorized Shares of Triton Cayman --
Preference Shares -- Convertible Preference Shares." In connection with the
Merger, the certificate of incorporation of Triton Delaware will be the
certificate of incorporation (the "Certificate of Incorporation") of the
surviving corporation and will be amended and restated as set forth in Exhibit A
to the Merger Agreement. The Certificate of
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Incorporation contains the same terms and provisions as Triton Delaware's
existing certificate of incorporation except that it provides that (i) the par
value of any capital stock issued by Triton Delaware shall be $.01 per share, as
opposed to $1.00 par value in the case of Triton Delaware Common Stock and no
par value in the case of Triton Delaware's preferred stock, (ii) stockholders
having a sufficient number of votes to approve a corporate act may act without a
meeting by written consent and (iii) directors will be elected annually.
Pursuant to the Certificate of Incorporation, the Board of Directors of
Triton Delaware will be authorized, without further stockholder action, except
as described below under "Voting Rights", to provide for the issuance of one or
more additional series of preferred stock, par value $.01 per share, with such
voting rights, designations, preferences, limitations and special rights as may
be set forth in resolutions providing for the issuance thereof adopted by the
Board of Directors of Triton Delaware.
The following description of certain provisions of the Triton Delaware
Preferred Stock is intended as a summary only and does not purport to be
complete. While Triton Delaware believes the descriptions of the material
provisions of the Certificate of Incorporation of Triton Delaware (the
"Charter") and the Certificate of Designation for the Triton Delaware Preferred
Stock (the "Designation") are accurate statements with respect to such material
provisions, such statements are subject to the detailed provisions in the
Charter and the Designation and are qualified in their entirety by reference to
the complete text of the Charter and the Designation.
Transfers of shares of Triton Delaware Preferred Stock will not be
registered unless a number of Class B Shares equal to the Pairing Ratio is
transferred simultaneously to the same transferee.
DIVIDENDS
The Board of Directors of Triton Delaware shall declare a dividend on the
Triton Delaware Preferred Stock at any time the Board of Directors declares a
dividend on the common stock of Triton Delaware outstanding after the Merger.
When, as and if the Board of Directors declares a dividend on the common stock,
the Board of Directors shall simultaneously declare a dividend on the Triton
Delaware Preferred Stock out of funds of Triton Delaware legally available
therefor, such that the aggregate amount of the dividend declared with respect
to the shares of Triton Delaware Preferred Stock shall be a portion of the
aggregate distribition on the Triton Delaware Preferred Stock and the common
stock (and any other series or class that participates in dividends with holders
of the common stock) equal to (x) ten times the number of shares of Triton
Delaware Preferred Stock outstanding at the time such distribution is made
divided by (y) the total number of shares of Triton Delaware Common Stock
outstanding immediately prior to the Effective Time.
Under Delaware law, Triton Delaware may declare and pay dividends on its
shares of capital stock out of its surplus and, if there is no surplus, out of
net profits for the current and for the preceding fiscal year, unless the net
assets of Triton Delaware are less than the capital represented by issued and
outstanding stock having a preference on asset distributions. Triton Delaware
currently intends is to retain earnings for use in Triton Delaware's business
and the financing of its capital requirements. The payment of any future cash
dividends is necessarily dependent upon the earnings and financial needs of
Triton Delaware, along with applicable legal and contractual restrictions.
LIQUIDATION RIGHTS
In case of the voluntary or involuntary liquidation, dissolution, or
winding-up of Triton Delaware, a holder of one-tenth of one share of Triton
Delaware Preferred Stock is entitled to receive out of the assets of Triton
Delaware available for distribution to its stockholders an amount equal to the
fair market value of one-tenth of one share of Triton Delaware Preferred Stock
at the Effective Time, which will be determined by Triton Delaware based upon
the advice of its financial advisors at the Effective Time (the "Liquidation
Preference"), before any payment or distribution is made to the holders of any
series or class of Triton Delaware's stock which ranks junior as to liquidation
rights to the Triton Delaware Preferred Stock, but the holders of the shares of
the Triton Delaware Preferred Stock will not be entitled to receive the
Liquidation Preference until the liquidation price of any other
55
series or class of Triton Delaware's stock hereafter issued which ranks senior
as to liquidation rights to the Triton Delaware Preferred Stock ("Senior
Liquidation Stock") has been paid in full. The holders of Triton Delaware
Preferred Stock and all series or classes of Triton Delaware's stock hereafter
issued which rank on a parity as to liquidation rights with the Triton Delaware
Preferred Stock are entitled to share ratably, in accordance with the respective
preferential amounts payable on such stock, in any distribution (after payment
of the liquidation price of the Senior Liquidation Stock) which is not
sufficient to pay in full the aggregate of the amounts payable thereon. After
payment in full of the Liquidation Preference, the holders of such shares of
Triton Delaware Preferred Stock will be entitled to share with the holders of
common stock of Triton Delaware (and any other class or series of capital stock
of Triton Delaware entitled to share in any such distribution with the holders
of the common stock) in any distribution of assets otherwise made by Triton
Delaware to the holders of the common stock. In connection with any such
distribution, the holders of shares of Triton Delaware Preferred Stock shall be
entitled to receive, ratably per one-tenth of one share of Participating
Preferred Stock a portion of such distribution equal to (x) the product of (i)
the number of shares of Triton Delaware Preferred Stock outstanding at such time
multiplied by (ii) ten, divided by (y) the total number of shares of Triton
Delaware Common Stock outstanding immediately prior to the Effective Time, and
the holders of common stock of Triton Delaware shall receive the remainder of
such distribution. Neither a consolidation or merger of Triton Delaware with
another corporation nor a sale or transfer of all or part of Triton Delaware's
assets for cash, securities, or other property will be considered a liquidation,
dissolution, or winding-up of Triton Delaware.
PURCHASE OF EQUITY UNITS
Triton Cayman or Triton Delaware may, at its option, purchase Equity Units,
in whole or in part, at any time on or after the third anniversary of the
Effective Time. Triton Cayman may also, at its option, purchase Equity Units, in
whole or in part, at any time immediately prior to the date on which a sale or
other disposition of the stock of Triton Delaware is consummated (including by
merger, consolidation, amalgamation or similar transaction pursuant to which all
of the common stock outstanding prior to such transaction is converted into
cash, securities or other property). The purchase price (the "Purchase Price")
per Equity Unit may be paid in cash or, in the case of a purchase by Triton
Cayman, in Ordinary Shares or a combination thereof. To the extent that the
Purchase Price is paid in cash, the Purchase Price per Equity Unit payable upon
such purchase shall be the greater of (i) 95% of the Fair Market Value (as
defined below) of one Class A Share (less the amount due per Class A Share in
respect of the Liquidation Available Amount) and (ii) the Fair Market Value of
the Equity Unit. To the extent that the Purchase Price is paid in Ordinary
Shares, the Purchase Price per Equity Unit payable upon such purchase shall be
the greater of (i) .95 of a Class A Share and (ii) the number of Class A Shares
obtained by dividing the Fair Market Value of an Equity Unit by the Fair Market
Value of a Class A Share; provided that, if at the time of such purchase, the
Cumulative Dividend Amount is positive, the same number of Class C Shares shall
be issued in lieu of Class A Shares.
The "Fair Market Value" of a Class A Share or an Equity Unit shall equal the
average of the daily Closing Prices for the 20 consecutive Trading Days (as
defined below) ending 15 days prior to the date of such purchase (the "Purchase
Date"). The Closing Price for each day shall be the last reported sale price of
the Class A Share or the Equity Unit, as the case may be, on the principal
national securities exchange on which such security may be listed or if such
security is not then so listed, the closing price of such security as shown by
the National Association of Securities Dealers, Inc. National Market or, if no
such closing price is available, at the average of the representative last bid
and asked prices of such security in the over-the-counter market, as shown by
the National Association of Securities Dealers, Inc. Automated Quotation System
Level I (or comparable system) or in the absence of any of the foregoing, the
fair market value as determined by an investment banking firm of recognized
national standing chosen by the Board of Directors, whose determination shall be
conclusive. "Trading Day"
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shall mean each day on which the Class A Shares or the Equity Units, as the case
may be, are traded on any national securities exchange or quoted in the Nasdaq
National Market or in the over-the-counter market.
Notice of an optional purchase of the Equity Unit by Triton Cayman or Triton
Delaware will be mailed at least 30 days but not more than 60 days before the
Purchase Date to each holder of record of the Equity Unit to be purchased at the
address shown on the books of the Depositary. If less than all of the
outstanding Equity Units are to be purchased, Triton Cayman or Triton Delaware,
as the case may be, will select those Equity Units to be purchased pro rata or
by lot or in such other manner as its Board of Directors determines. Shares of
Triton Delaware Preferred Stock included in Equity Units purchased by Triton
Cayman will be restored to the status of authorized but unissued shares of
preferred stock, without designation as to class, and may thereafter be issued,
but not as shares of Triton Delaware Preferred Stock.
Provided that Triton Cayman or Triton Delaware has made available at the
office of the Transfer Agent a sufficient amount of cash or, in the case of
Triton Cayman, Class A Shares (or Class C Shares), as the case may be, to effect
the purchase, on and after the Purchase Date, dividends will not accrue on the
Triton Delaware Preferred Stock included in such Equity Units, such shares of
Triton Delaware Preferred Stock shall no longer be deemed to be outstanding, and
all rights of the holders of such shares of Triton Delaware Preferred Stock will
cease, other than the right to receive any cash or Class A Shares (or Class C
Shares) payable upon such purchase, without interest.
Neither Triton Cayman nor Triton Delaware can exercise its option to
purchase the Equity Units (i) in the event of the bankruptcy or insolvency of
Triton Delaware, (ii) if an event of default has occurred and is continuing with
respect to any indebtedness of Triton Delaware with an aggregate principal
amount outstanding in excess of $50 million or (iii) if the fair market value of
Triton Delaware's net assets (as determined in good faith by its Board of
Directors) is less than 110% of the product of (x) the Liquidation Preference
times (y) ten times the number of shares of Triton Delaware Preferred Stock
outstanding at such time.
For a description of the rights of holders of Class A Shares and Class B
Shares of Triton Cayman upon any purchase by Triton Cayman or Triton Delaware of
the Equity Units, see "Description of Authorized Shares of Triton Cayman --
Purchase of Equity Units."
VOTING RIGHTS
The holder of each share of Triton Delaware Preferred Stock will be entitled
to two votes per share, voting together with holders of common stock of Triton
Delaware on any matter submitted to a vote of the stockholders of Triton
Delaware, except matters on which holders of Triton Delaware Preferred Stock are
entitled to a class vote under Delaware law. Each holder of an Equity Unit shall
therefore be entitled to 1/5 of one vote per unit.
The holders of the Triton Delaware Preferred Stock will have the right,
voting separately as a class, to elect one director to the Board of Directors of
Triton Delaware at the annual meeting of the stockholders of Triton Delaware
held in 1997 and each annual meeting of the stockholders of Triton Delaware
thereafter; provided that holders of not less than a majority of the shares of
Triton Delaware Preferred Stock then outstanding are present at such meeting in
person or by proxy. Such director will be elected from candidates nominated by a
majority of the Board of Directors of Triton Delaware or by any one or more
holders of Triton Delaware Preferred Stock holding at least 10% of the
outstanding shares; provided that in order for any nomination by any holder to
be valid, any holder desiring to make any such nomination is required to give
written notice specifying certain information including the name of any such
nominee to Triton Delaware within the time period set forth in Triton Delaware's
By-Laws for nominations of directors by stockholders which is presently 90 days
prior to an annual meeting of stockholders and seven days following the date
notice of any special meeting is given to stockholders.
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Except to the extent a class vote is required under Delaware law, each share
of Triton Delaware Preferred Stock will entitle the holder thereof to two votes
per share, voting with the holders of the Triton Delaware common stock on any
matter submitted to a vote of the stockholders of Triton Delaware in connection
with certain mergers, consolidations, combinations or similar transactions
involving Triton Delaware (other than transactions contemplated by the Merger
Agreement). Immediately after the Effective Time, Triton Cayman, as the holder
of all of the Triton Delaware common stock, will be able to approve or reject
all matters submitted for the vote or consent of stockholders of Triton
Delaware, without the affirmative vote or consent of any holder of Triton
Delaware Preferred Stock, except on matters on which the holders of the Triton
Delaware Preferred Stock are entitled to vote as a class.
PREEMPTIVE RIGHTS
The holders of the Triton Delaware Preferred Stock will have no preemptive
rights.
DESCRIPTION OF RECEIPTS
The following is a summary of certain provisions of the Deposit Agreement
(the "Unit Deposit Agreement") pursuant to which Receipts representing Unit
Depositary Shares are to be issued. The Unit Deposit Agreement will be among
Triton Cayman, Triton Delaware, Chemical Mellon Shareholder Services, L.L.C., as
Depositary (the "Depositary"), and all holders from time to time of Receipts.
While Triton Delaware believes the descriptions of the material provisions of
the Unit Deposit Agreement are accurate statements with respect to such material
provisions, such statements are qualified in their entirety by reference to the
Unit Deposit Agreement, a copy of which has been filed as an Exhibit to the
Registration Statement of which this Proxy Statement/Prospectus is a part. For
further information as to how this and other Exhibits to the Registration
Statement may be obtained, see "Available Information."
RECEIPTS
Receipts evidencing Unit Depositary Shares are issuable by the Depositary
pursuant to the Unit Deposit Agreement. See "The Reorganization -- Equity Unit
Election." Each Unit Depositary Share evidenced by a Receipt will represent one
Equity Unit, initially consisting of one Class B Share of Triton Cayman and
one-tenth of one share of Triton Delaware Preferred Stock, each deposited with
the Depositary. A Receipt may evidence any number of Unit Depositary Shares.
Unit Depositary Shares evidenced by the Receipts represent proportional rights
to the Equity Units deposited with the Depositary pursuant to the terms of the
Unit Deposit Agreement and any and all Class B Shares, other securities,
property and cash received at any time by the Depositary in respect or in lieu
of any Equity Units, other securities, property or cash which have previously
been deposited with the Depositary (collectively, the "Deposited Securities").
DEPOSIT AND WITHDRAWAL OF DEPOSITED SECURITIES
Upon deposit of Equity Units with the Depositary, subject to the terms of
the Unit Deposit Agreement, the Depositary will execute and deliver at its
office, which is presently located at 120 Broadway, 13th Floor, New York, New
York 10271, to the person or persons specified by the depositor upon payment of
the fees, charges and taxes provided in the Unit Deposit Agreement, a Receipt or
Receipts registered in the name of such person or persons for the number of Unit
Depositary Shares issuable in respect of such deposit.
Receipt holders will not be entitled to delivery of the Deposited Securities
represented by Receipts unless Triton Cayman or Triton Delaware otherwise
notifies the Depositary.
The initial deposit of Equity Units in connection with the Reorganization
will be made in the manner described under "The Reorganization -- Equity Unit
Election."
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DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
The Depositary is required to distribute any amounts received as cash
dividends or other distributions, as described in the following paragraphs, in
respect of Class B Shares, Triton Delaware Preferred Stock or other Deposited
Securities to holders of Receipts in proportion to the number of Unit Depositary
Shares representing such Deposited Securities held by each of them. The amounts
distributed will be reduced by any amounts required to be withheld on account of
taxes or otherwise.
If a distribution by Triton Cayman consists of a dividend in or free
distribution of Class B Shares, each Unit Depositary Share shall thenceforth
also represent its proportionate interest in the additional Class B Shares so
distributed.
If Triton Cayman offers or causes to be offered to the holders of any of its
securities constituting a part of the Deposited Securities any rights to
subscribe for or acquire additional Class A Shares or any other securities of
Triton Cayman or any other rights of any nature which it is required to offer or
cause to be offered to the holders of such securities pursuant to the Articles
of Association of Triton Cayman or the Companies Act, the Depositary will, after
consultation with Triton Cayman, either (a) distribute the warrants or other
instruments evidencing such rights to holders of Receipts or (b) employ such
other method (after consultation with Triton Cayman) as it may deem feasible to
facilitate the exercise, sale or transfer of such rights by holders of Receipts.
If such rights or warrants are not exercised and appear to be about to lapse,
the Depositary may, in its discretion, sell such rights or warrants at public or
private sale, at such place or places and upon such terms as the Depositary may
deem proper, allocate the proceeds of such sales for the account of the holders
of Unit Depositary Shares otherwise entitled thereto upon an averaged or other
practicable basis without regard to any distinctions among such holders because
of exchange restrictions, or the date of delivery of any Receipt or Receipts, or
otherwise and distribute the net proceeds so allocated to such holders as in the
case of a distribution received in cash.
If Triton Cayman makes a distribution other than cash, Class B Shares or
rights of any nature to holders of any of its securities constituting a part of
the Deposited Securities, Triton Cayman will make such distribution to the
Depositary and the Depositary will cause the securities or other property it
receives as a result of such distribution to be distributed to the holders of
Unit Depositary Shares in proportion to the number of Unit Depositary Shares
representing Deposited Securities held by each of them respectively. If such
distribution consists of securities, the Depositary may, with the consent of
Triton Cayman, deposit such securities in a depositary facility and distribute
depositary shares for such securities in lieu of the securities so deposited to
the holders of Receipts. If the Depositary determines (after consultation with
Triton Cayman) that any such distribution (other than a distribution of
securities having an aggregate fair market value of $5 million or more) cannot
be made proportionately among the holders of the Unit Depositary Shares entitled
thereto, or if for any other reason (including any tax withholding requirement)
the Depositary deems such distribution not to be feasible, the Depositary may
(after consultation with Triton Cayman) adopt such method as it may deem
equitable for the purpose of effecting such distribution, including the sale (at
public or private sale) of the securities or property thus received, or any part
thereof, and the distribution of the net proceeds of any such sale as in the
case of a distribution received in cash.
Triton Cayman has agreed to take all necessary action and to comply in all
material respects with all applicable United States and Cayman Islands laws and
regulations in order to permit the rights and other property referred to in the
three preceding paragraphs to be offered or distributed to the holders of Unit
Depositary Shares except in circumstances where such offer or distribution is of
rights and property (other than Class B Shares) having an aggregate fair market
value of less than $5 million in which case Triton Cayman will not be required
to so comply and the Depositary (after consultation with Triton Cayman) will in
lieu of making such rights or property available to the holders of Unit
Depositary Shares, sell or otherwise dispose of such rights or property and
distribute the net proceeds thereof as in the case of a cash distribution
described above.
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If the Depositary determines that any distribution in property other than
cash (including rights) on Deposited Securities is subject to any tax that the
Depositary is obligated to withhold, the Depositary may (after consultation with
Triton Cayman if practicable) dispose of all or a portion of such property in
such amounts and in such manner as the Depositary deems necessary and
practicable to pay such taxes, by public or private sale, and the Depositary
shall distribute the net proceeds of any such sale or the balance of any such
property after deduction of such taxes to the holders of Receipts entitled
thereto.
RECORD DATES
Whenever any distribution shall be made upon Class B Shares, Triton Delaware
Preferred Stock or any other Deposited Securities, or whenever the Depositary
shall receive notice of any meeting of holders of Class B Shares, Triton
Delaware Preferred Stock or any other Deposited Securities, or whenever the
Depositary shall find it necessary or convenient in connection with the giving
of any notice, solicitation or any consent or any other matter, the Depositary
will fix a record date for the determination of the holders of Unit Depositary
Shares who are entitled to receive such distribution or net proceeds of the sale
thereof, to give instructions for the exercise of voting rights at any such
meeting, to receive such notice or solicitation, or to act in respect of such
other matter, subject to the provisions of the Unit Deposit Agreement. Such
record date shall be identical to that fixed by Triton Cayman or Triton Delaware
with respect to Class B Shares, Triton Delaware Preferred Stock or any other
Deposited Securities, unless otherwise agreed by Triton Cayman or Triton
Delaware, as the case may be.
VOTING OF THE UNDERLYING DEPOSITED SECURITIES
As soon as practicable after receipt of notice of any meeting or
solicitation of consents or proxies of holders of Class B Shares, Triton
Delaware Preferred Stock or any other Deposited Securities, the Depositary will
mail to the record holders of Unit Depositary Shares a notice which shall
include such information as is contained in such notice of meeting or
solicitation and, if applicable, will inform such holders of the procedures to
be followed to permit such holders to attend the meeting in person as permitted
under Triton Cayman's Articles of Association or Triton Delaware's Certificate
of Incorporation. See "Description of Authorized Shares of Triton Cayman --
Voting and Other Rights." The record holders of Unit Depositary Shares at the
close of business on the date specified by the Depositary will be entitled,
subject to any applicable provisions of law and the provisions of or governing
the Deposited Securities, to instruct the Depositary as to the exercise of the
voting rights, if any, pertaining to such Class B Shares, Triton Delaware
Preferred Stock or other Deposited Securities represented by their respective
Unit Depositary Shares. The Depositary has agreed that it will endeavor, insofar
as practicable and permitted by applicable provisions of law and the provisions
of or governing the Class B Shares, Triton Delaware Preferred Stock or other
Deposited Securities, to vote the Deposited Securities so represented in
accordance with any such written instructions of record holders of Unit
Depositary Shares. The Depositary will not vote such Class B Shares, Triton
Delaware Preferred Stock or other Deposited Securities, except in accordance
with nondiscretionary instructions from such record holder.
INSPECTION OF TRANSFER BOOKS
The Depositary will keep, at its transfer office in New York City, a
register for the registration of Receipts and their transfer that at all
reasonable times will be open for inspection by the holders of Unit Depositary
Shares, Triton Cayman and Triton Delaware, provided that such inspection shall
not be for the purpose of communicating with holders of Unit Depositary Shares
in the interest of a business or object other than the business of Triton Cayman
and Triton Delaware or a matter related to the Unit Deposit Agreement or the
Unit Depositary Shares.
REPORTS AND NOTICES
The Depositary will make available for inspection by Unit Depositary Share
holders at its office any reports and communications received from Triton Cayman
or Triton Delaware that are both (a) received by the Depositary as the holder of
Class B Shares or Triton Delaware Preferred Stock or
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any other Deposited Securities which are a part of the Equity Units and (b) made
generally available to the holders of such Class B Shares or Triton Delaware
Preferred Stock or other Deposited Securities which are a part of the Equity
Units by Triton Cayman or Triton Delaware, as the case may be. The Depositary
will also send to Unit Depositary Share holders copies of such reports when
furnished by Triton Cayman or Triton Delaware as provided in the Deposit
Agreement. See "Available Information" for a description of the reports to be
furnished.
On or before the first date on which Triton Cayman or Triton Delaware gives
notice, by publication or otherwise, of any meeting of holders of Class B Shares
or Triton Delaware Preferred Stock which are a part of the Equity Units or other
Deposited Securities or of any adjourned meeting of such holders, or of the
taking of any action by such holders other than at a meeting, Triton Cayman or
Triton Delaware, as the case may be, shall transmit to the Custodian a copy of
the notice thereof in the form given or to be given to holders of Deposited
Securities. The Depositary will, at the expense of Triton Cayman or Triton
Delaware, as the case may be, arrange for the prompt mailing of copies thereof
to all Unit Depositary Share holders and will make such notices available to
holders of Unit Depositary Shares on a basis similar to that for holders of
Deposited Securities.
CHANGES AFFECTING DEPOSITED CLASS B SHARES
Upon any split-up, division, subdivision, consolidation, cancellation or any
other reclassification of Class B Shares or any other Deposited Securities, or
upon any recapitalization, reorganization, merger or consolidation or sale of
assets affecting Triton Cayman or to which it is a party, any securities that
shall be received by the Depositary in exchange for, or in conversion,
replacement, or otherwise in respect of, Class B Shares or any other Deposited
Securities shall be treated as Deposited Securities under the Unit Deposit
Agreement, and the Unit Depositary Shares shall thenceforth represent the right
to receive the Deposited Securities including the securities so received. In any
such case the Depositary may with Triton Cayman's approval, and shall if Triton
Cayman shall so request, subject to the Unit Deposit Agreement, call for the
surrender of outstanding Receipts to be exchanged for new Receipts specifically
describing such newly received Deposited Securities.
Upon any consolidation, cancellation or any other reclassification of Triton
Delaware Preferred Stock, or upon any recapitalization, reorganization, merger
or consolidation or sale of assets affecting Triton Delaware or to which it is a
party, or in connection with the liquidation, dissolution or winding up of
Triton Delaware, any securities that shall be received by the Depositary in
exchange for or in conversion, replacement, or otherwise in respect of, Triton
Delaware Preferred Stock shall be distributed to the holders of Unit Depositary
Shares as in the case of a distribution received in cash, and thereafter an
Equity Unit shall consist only of Class B Shares.
PURCHASE OF EQUITY UNITS
As soon as practicable after receipt of notice that Triton Cayman or Triton
Delaware is purchasing all or part of the Equity Units, the Depositary shall
mail to the holders of Unit Depositary Shares a notice containing (a) such
information as is contained in such notice of purchase and (b) a statement that,
on and after a date specified by the Depositary in such notice, each holder of
the Equity Units to be purchased shall be entitled to receive upon presentation
of the Receipts held by such holder the purchase price for such Equity Units
represented by Unit Depositary Shares less any amount required to be withheld by
Triton Cayman, Triton Delaware or the Depositary from any such payment in
respect of taxes. Upon payment of such purchase price in cash, Class A Shares or
Class C Shares, the Receipts evidencing the Unit Depositary Shares which are so
purchased will thereafter represent the right to receive all Deposited
Securities other than the Class B Shares and the shares of Triton Delaware
Preferred Stock. If the purchase price is paid in Class C Shares, at Triton
Cayman's request, the Depositary will distribute the cash portion of the
purchase price, if any, as in the case of a
distribution received in cash and the Receipts evidencing the Unit Depositary
Shares which are so purchased will thereafter represent the right to receive
such Class C Shares and all Deposited Securities other than the Class B Shares
and the shares of Triton Delaware Preferred Stock. In any such case, the
Depositary may with Triton Cayman's approval, and shall if Triton Cayman shall
so
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request, subject to the Unit Deposit Agreement, call for the presentation of
outstanding Receipts and distribute Class C Shares, if applicable, and the
remaining Deposited Securities, if any, to the holders of the Unit Depositary
Shares in proportion to the number of Unit Depositary Shares representing
Deposited Securities held by each of them respectively.
To the extent that Equity Units are purchased for Class A Shares (or Class C
Shares) and all of such Class A Shares (or Class C Shares) cannot be distributed
to the record holders of Receipts without creating fractional interests in such
Class A Shares (or Class C Shares), the Depositary may, with the consent of
Triton Cayman, adopt such method as it deems equitable and practicable for the
purpose of effecting such distribution, including the public or private sale of
such Class A Shares (or Class C Shares), the proceeds which shall be distributed
or made available for distribution to such record holders of Receipts, net of
any taxes required to be withheld.
EXCHANGE OF RECEIPTS UPON CONVERSION OF CLASS B SHARES OR CLASS C SHARES
In the event that the Board of Directors of Triton Cayman determines
pursuant to the Articles of Association (whether as a result of the redemption
of Triton Delaware Preferred Stock, the liquidation, dissolution or winding up
of Triton Delaware or otherwise) to cause the Class B Shares (or Class C Shares)
to be converted into Class A Shares, then, if so directed by Triton Cayman, the
Depositary is required to call for the surrender of outstanding Receipts for
exchange into Class A Shares.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may at any time resign as Depositary under the Unit Deposit
Agreement by written notice of its election so to do delivered to Triton Cayman
and Triton Delaware or be removed as Depositary by the joint action of Triton
Cayman and Triton Delaware by written notice of such removal delivered to the
Depositary, such resignation or removal to take effect upon the appointment of
and acceptance by a successor depositary. If the Depositary resigns or is
removed, Triton Cayman and Triton Delaware are required, within 45 days after
delivery of the notice of resignation or removal, as the case may be, to use
their best efforts to appoint a successor depositary. If a successor depositary
shall not have been appointed in 45 days, the resigning Depositary may petition
a court of competent jurisdiction to appoint a successor depositary.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Receipts and the Unit Deposit Agreement may at any time be amended by
agreement among Triton Cayman, Triton Delaware and the Depositary. Any amendment
that imposes or increases any fees, taxes or charges (other than charges
referred to in clauses (i) and (ii) under "Charges of Depositary" below), or
that otherwise prejudices any substantial existing right of Unit Depositary
Share holders, will not take effect as to outstanding Receipts until the
expiration of thirty days after notice of such amendment has been given to the
record holders of outstanding Unit Depositary Shares. Every holder of a Unit
Depositary Share at the expiration of such thirty day period will be deemed by
continuing to hold such Unit Depositary Share to consent and agree to such
amendment and to be bound by the Unit Deposit Agreement or the Unit Depositary
Share as amended thereby. In no event may any amendment impair the right of any
Unit Depositary Share holder to surrender his Receipt and receive therefor the
Deposited Securities represented thereby.
Whenever so directed by Triton Cayman and Triton Delaware, the Depositary
will terminate the Unit Deposit Agreement by mailing notice of such termination
to the record holders of all Unit Depositary Shares then outstanding at least 30
days prior to the date fixed in such notice for such termination. After the date
of termination, the Depositary will perform no further acts under the Unit
Deposit Agreement, except to advise holders of Receipts of such termination, to
receive and hold distributions on Deposited Securities (or sell property or
rights or convert Deposited Securities into cash) and, subject to the Unit
Deposit Agreement, deliver Deposited Securities being withdrawn in exchange for
Receipts. As soon as practicable after the expiration of six months from the
date of
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termination, the Depositary shall sell the Deposited Securities and may
thereafter hold the net proceeds, together with any other cash then held,
without liability for interest, for the pro rata benefit of the holders of
Receipts that have not theretofore been surrendered.
CHARGES OF DEPOSITARY
Triton Cayman and Triton Delaware will pay all charges and expenses of the
Depositary and those of any registrar or co-registrar under the Unit Deposit
Agreement in accordance with agreements between the Depositary, Triton Cayman
and Triton Delaware from time to time, but will not pay (i) stock transfer or
other taxes and other governmental charges (which are payable by holders of
Receipts or persons depositing Equity Units) or (ii) any applicable share
transfer or registration fees on deposits or withdrawals of Equity Units.
GENERAL
Neither the Depositary, its agents, Triton Cayman nor Triton Delaware will
incur any liability if they do not perform their obligations under the Unit
Deposit Agreement by reason of any present or future law, the provisions of or
governing any Deposited Securities or circumstances beyond their control. The
obligations of each of Triton Cayman, Triton Delaware and the Depositary under
the Unit Deposit Agreement are expressly limited to performing without
negligence, bad faith or willful misconduct their respective duties specifically
set forth and undertaken by it to perform in the Unit Deposit Agreement.
If any Unit Depositary Shares are listed on one or more stock exchanges in
the United States, the Depositary will act as registrar or, with the approval of
Triton Cayman, appoint a registrar or one or more co-registrars, for registry of
the Receipts evidencing such Unit Depositary Shares in accordance with any
requirements of such exchanges. Such registrars or co-registrars may be removed
and a substitute or substitutes appointed by the Depositary upon the request or
with the approval of Triton Cayman.
The Receipts are transferrable on the register maintained by the Depositary;
provided, however, that the Depositary may close the register at any time or
from time to time when deemed expedient by it in connection with the performance
of its duties or at the request of Triton Cayman or Triton Delaware. As a
condition precedent to the execution and delivery, registration, registration of
transfer, split-up or combination of any Receipt, the delivery of any
distribution thereon (including any distributions on Class B Shares or Triton
Delaware Preferred Stock) or the withdrawal of Deposited Securities, the
Depositary, Triton Cayman or Triton Delaware may require (a) payment of (i) any
stock transfer or other tax or other governmental charge with respect to Class B
Shares, Triton Delaware Preferred Stock or other Deposited Securities and (ii)
any stock transfer or registration fee with respect thereto; (b) the production
of proof satisfactory to it of the identity and genuineness of any signature and
of such other information (including, without limitation, information as to
citizenship, residence, exchange control approval, legal or beneficial
ownership) as it may deem necessary or proper or as Triton Cayman or Triton
Delaware may require; and (c) compliance with such additional regulations as the
Depositary may establish. The delivery of Receipts against deposits of Equity
Units may be suspended, deposits of Equity Units may be refused, or the
registration of transfer of Receipts, their split-up or combination or the
withdrawal of Deposited Securities may be suspended during any period, generally
or in any particular case, when the transfer books of the Depositary are closed,
or when any such action is deemed necessary or advisable by the Depositary,
Triton Cayman or Triton Delaware for any reason.
Holders of Receipts are subject to certain provisions of Triton Cayman's
Articles of Association relating to the exercise of voting rights in connection
with Class B Shares. See "Description of Authorized Shares of Triton Cayman --
Voting and Other Rights."
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COMPARISON OF RIGHTS OF STOCKHOLDERS
The rights of stockholders of Triton Delaware are governed by Delaware law
and Triton Delaware's Certificate of Incorporation and By-Laws. After the
Reorganization, the stockholders of Triton Delaware will become shareholders of
Triton Cayman, a Cayman Islands company, and their rights will be governed by
the Companies Law (1995 Revision) of the Cayman Islands (the "Companies Law"),
Triton Cayman's Articles of Association and Triton Cayman's Memorandum of
Association.
The principal attributes of the Triton Delaware Common Stock and the
Ordinary Shares will be similar; however, there are certain differences between
the rights of stockholders under Delaware law and Cayman Islands law, which is
modeled after that of the United Kingdom. In addition, there are certain
differences between Triton Delaware's Certificate of Incorporation and By-laws
and Triton Cayman's Articles of Association and Memorandum of Association. The
following discussion is a summary of certain changes in the rights of
stockholders resulting from the Reorganization described in this Proxy
Statement/Prospectus. This summary does not purport to be complete or to cover
all of the respects in which Cayman Islands law may differ from laws generally
applicable to Delaware corporations and their stockholders and, while Triton
Cayman and Triton Delaware believe that this summary is accurate, this summary
is subject to the complete text of the relevant provisions of the Companies Law,
the Delaware General Corporation Law ("DGCL"), Triton Delaware's Certificate of
Incorporation and By-Laws and Triton Cayman's Articles of Association and
Memorandum of Association.
STOCKHOLDER APPROVAL OF BUSINESS COMBINATIONS
Under the DGCL, there is no statutory restriction on a Delaware
corporation's ability to acquire the business of another corporation. However, a
merger or consolidation, sale, lease, exchange or other disposition of all or
substantially all of the property of the corporation (a "Disposition") not in
the usual and regular course of the corporation's business, or a dissolution of
the corporation, is required under the DGCL to be approved by the holders of a
majority of the shares entitled to vote thereon unless the charter provides
otherwise. In addition, under the DGCL, class voting rights exist with respect
to amendments to the charter that adversely affect the terms of the shares of a
class. See "Amendment of Charter" below. Such class voting rights do not exist
as to other extraordinary matters, unless the charter provides otherwise; the
Certificate of Incorporation of Triton Delaware does not provide otherwise. In
addition, the Certificate of Incorporation of Triton Delaware provides that
Delaware's statute providing for a supermajority vote in connection with certain
"business combinations" does not apply to Triton Delaware.
The Companies Law requires the approval of the holders of at least 75
percent of the votes cast at a general meeting called for such purpose for
Triton Cayman to (i) merge, consolidate or amalgamate with another company or
(ii) reorganize or reconstruct itself pursuant to a plan sanctioned by the
Cayman Islands courts. In addition, the Articles of Association of Triton Cayman
provide that, subject to any approval required by the Companies Law or any other
law of the Cayman Islands, the approval of the holders of at least a majority of
the outstanding shares is required for Triton Cayman to (i) merge, consolidate
or amalgamate with another company, (ii) reorganize or reconstruct itself
pursuant to a plan sanctioned by the Cayman Islands courts or (iii) sell, lease
or exchange all or substantially all of its assets. An "amalgamation" is
substantially equivalent to a consolidation.
ABSENCE OF REQUIRED VOTE FOR CERTAIN MERGERS
Under the DGCL, no vote of the stockholders of a corporation surviving a
merger is required to approve a merger if (i) the agreement of merger does not
amend the charter of such corporation, (ii) each share of stock of such
corporation outstanding immediately before the merger is to be an identical
outstanding or treasury share of the surviving corporation thereafter and (iii)
the number of shares of common stock of such corporation to be issued in the
merger, if any, does not exceed 20 percent of the number of shares outstanding
immediately before the merger.
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There is no equivalent provision in the Companies Law and therefore the
shareholders of the surviving company in such a situation would be entitled to
vote on the merger as described above. See "Stockholder Approval of Business
Combinations" above.
APPRAISAL RIGHTS
Under the DGCL, a stockholder of a corporation does not have appraisal
rights in connection with a merger or consolidation or, in the case of a
Disposition, if (i) the shares of such corporation are listed on a national
securities exchange or held of record by more than 2,000 stockholders, as is
presently the case with Triton Delaware, or (ii) such corporation will be the
surviving corporation of the merger and no vote of the stockholders of the
surviving corporation is required to approve such merger, provided, however,
that a stockholder is entitled to appraisal rights in the case of a merger or
consolidation if such stockholder is required by the terms of an agreement of
merger or consolidation to accept in exchange for the shares of such stockholder
anything other than (a) shares of stock of the corporation surviving or
resulting from such merger or consolidation, (b) shares of any other corporation
that on the effective date of the merger on consolidation will be either listed
on a national securities exchange or held of record by more than 2,000
stockholders, (c) cash in lieu of fractional shares of the corporation described
in the foregoing clauses (a) and (b), or (d) any combination of the foregoing.
Triton Delaware's Common Stock is presently listed on the NYSE and Triton
Cayman's Ordinary Shares will be listed or authorized for listing upon official
notice of issuance by the NYSE.
The Companies Law does not provide for appraisal rights. However, in the
case of a court sanctioned reorganization of a Cayman Islands company as
described in "Stockholder Approval of Business Combinations" above, a dissenting
shareholder has the right to express to the court such shareholder's view that
the transaction sought to be approved would not provide the shareholders with
the fair value of their shares but (i) Triton Cayman believes the court
ordinarily would not disapprove the transaction on that ground absent other
evidence of fraud or bad faith, and (ii) if the transaction were approved and
consummated, the dissenting shareholder would have no rights comparable to the
appraisal rights (as here defined, rights to receive payments in cash for the
judicially determined value of their shares) available to dissenting
stockholders of Delaware corporations.
In addition, the Companies Law provides that where an offer is made by a
Cayman Islands company for shares of another Cayman Islands company and, within
four months of the offer, the holders of not less than 90 percent of the shares
which are the subject of the offer accept, the offeror may by notice require the
dissenting shareholders to transfer their shares on the terms of the offer. A
dissenting shareholder may apply to the court within one month of the notice
objecting to the transfer. The burden is on the dissenting shareholders to show
that the court should exercise its discretion to prevent the requirement of such
transfer, which it will be unlikely to do unless there is evidence of fraud or
bad faith or collusion as between the offeror and the holders of the shares who
have accepted the offer as a means of unfairly forcing out minority
stockholders.
STOCKHOLDER CONSENT TO ACTION WITHOUT MEETING
Under the DGCL, unless otherwise provided in the charter, any action that
can be taken at a meeting of the stockholders may be taken without a meeting if
written consent thereto is signed by the holders of outstanding stock having the
minimum number of votes necessary to authorize or take such action at a meeting
of the stockholders. Triton Delaware's Certificate of Incorporation provides
that stockholders cannot, by less than unanimous written consent, take action
without a meeting of stockholders, although in connection with the Merger, this
provision will be deleted.
The Companies Law provides that shareholders may take action requiring a
Special Resolution without a meeting only by unanimous written consent. The
Articles of Association provide that shareholders cannot, by less than unanimous
written consent, take action without a meeting of shareholders.
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SPECIAL MEETINGS OF STOCKHOLDERS
Under the DGCL, a special meeting of stockholders may be called only by the
Board of Directors or by persons authorized in the charter or the bylaws. The
Bylaws of Triton Delaware provide for the call of a special meeting of
stockholders only by the President or the Secretary at the request in writing of
the majority of the Board of Directors of Triton Delaware.
Under the Articles of Association, an extraordinary meeting may be called
only by the President or the Board of Directors of Triton Cayman.
DISTRIBUTIONS AND DIVIDENDS; REPURCHASES AND REDEMPTIONS
Under the DGCL, a corporation may pay dividends out of surplus and, if there
is no surplus, out of net profits for the current and/or the preceding fiscal
year, unless the net assets of the corporation are less than the capital
represented by issued and outstanding stock having a preference on asset
distributions. Surplus is defined in the DGCL as the excess of the net assets
over capital, as such capital may be adjusted by the board. A Delaware
corporation may purchase or redeem shares of any class except when its capital
is impaired or would be impaired by such purchase or redemption. A corporation
may, however, purchase or redeem out of capital shares that are entitled upon
any distribution of its assets to a preference over another class or series of
its stock if such shares are to be retired and the capital reduced.
Under the Companies Law, the directors may pay to the shareholders such
dividends as appear to the directors to be justified by the profits of Triton
Cayman or out of the "share premium account" (similar to the concept of
additional paid in capital) if Triton Cayman has the ability to pay its debts as
they become due.
VACANCIES ON BOARD OF DIRECTORS
Under the DGCL, a vacancy and a newly created directorship may be filled by
a majority of the remaining directors, although less than a quorum, unless
otherwise provided in the charter or bylaws. Neither the Certificate of
Incorporation nor the Bylaws of Triton Delaware otherwise so provides.
The Articles of Association of Triton Cayman provide that a vacancy and a
newly created directorship may be filled by a majority of the remaining
directors, although less than a quorum.
REMOVAL OF DIRECTORS; STAGGERED TERM OF DIRECTORS
Under the DGCL, except in the case of a corporation with a classified board,
any director or the entire board may be removed, with or without cause, by the
holders of a majority of the shares entitled to vote at an election of
directors. The Certificate of Incorporation of Triton Delaware provides that the
Board of Directors will consist of three classes of directors, with each class
to consist of as nearly an equal number of directors as possible and with each
class of directors coming up for election by the stockholders every three years.
Under the DGCL, because Triton Delaware has a classified board, directors of
Triton Delaware may only be removed for cause. The Certificate of Incorporation
does not provide for a supermajority vote for removal of directors, but provides
that the provision for the staggered board may not be amended except by a
two-thirds vote of the stockholders. After the Merger, the Board of Directors
will no longer be divided into classes.
The Companies Law does not provide for classified boards of directors.
However, the Articles of Association of Triton Cayman provide that the Board of
Directors of Triton Cayman consists of three classes of directors, with each
class to consist of approximately equal numbers of directors and with each class
coming up for election by the shareholders of Triton Cayman every three years.
In addition, the Articles of Association of Triton Cayman provide that directors
may be removed only for cause by the affirmative vote of the holders of at least
a majority of the outstanding shares entitled to vote.
INSPECTION OF BOOKS AND RECORDS
Under the DGCL, any stockholder may inspect the corporation's books and
records for a proper purpose.
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Shareholders of a Cayman Islands company have no general rights to inspect
or obtain copies of the list of shareholders or corporate records of a company.
However, Triton Cayman's Articles of Association provide that any shareholder
may inspect Triton Cayman's books and records for a proper purpose.
AMENDMENT OF CHARTER
Under the DGCL, the certificate of incorporation may be amended if (i) the
board of directors sets forth the proposed amendment in a resolution, declares
the advisability of the amendment and directs that it be submitted to a vote at
the meeting of stockholders and (ii) the holders of at least a majority of
shares of stock entitled to vote thereon approve the amendment, unless the
charter requires the vote of a greater number of shares. If the holders of the
outstanding shares of a class are entitled to vote as a class upon a proposed
amendment, the holders of a majority of the outstanding shares of such class
must also vote in favor of the amendment.
Under the Companies Law, the Memorandum of Association may only be amended
by a Special Resolution of the shareholders.
AMENDMENT OF BYLAWS
Under the DGCL, the board of directors may amend bylaws if so authorized in
the charter. The stockholders of a Delaware corporation also have the power to
amend bylaws. The Certificate of Incorporation of Triton Delaware authorizes the
Board of Directors to alter, amend, repeal or adopt its bylaws.
Under the Companies Law, the Articles of Association may only be amended by
a Special Resolution of the shareholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Companies Law and the DGCL have different provisions and limitations
regarding indemnification by a corporation of its officers, directors, employees
and agents. If the Reorganization is approved, the Companies Law indemnification
provisions will not apply to any act or omission that occurs before the
Effective Time. The following is a summary comparison of Companies Law and DGCL
indemnification provisions:
Under the DGCL, indemnification rights are expressly non-exclusive. A
corporation is permitted to provide indemnification or advancement of expenses,
by bylaw provision, agreement or otherwise, against judgments, fines, expenses
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such proceeding if 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.
The Certificate of Incorporation of Triton Delaware makes indemnification
mandatory on the part of Triton Delaware to the fullest extent permitted by law.
Cayman Islands law does not limit the extent to which a company's Articles
of Association may provide for the indemnification of officers and directors,
except to the extent that such provision may be held by the Cayman Islands
courts to be contrary to public policy (for instance, for purporting to provide
indemnification against the consequences of committing a crime). In addition, an
officer or director may not be indemnified for his own dishonesty or wilful
neglect or default.
The Articles of Association of Triton Cayman contain provisions providing
for the indemnity by Triton Cayman of an officer, director, employee or agent of
Triton Cayman to the same extent as permitted under the Certificate of
Incorporation of Triton Delaware.
LIMITED LIABILITY OF DIRECTORS
Section 102(b)(7) ("Section 102") of the DGCL permits the adoption of a
charter provision limiting or eliminating the monetary liability of a director
to a corporation or its stockholders by reason of a director's breach of the
fiduciary duty of care. Section 102 does not permit any limitation of the
liability of a director for (i) breaching the duty of loyalty to the corporation
or its stockholders,
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(ii) failing to act in good faith, (iii) engaging in intentional misconduct or a
known violation of law, (iv) obtaining an improper personal benefit from the
corporation or (v) paying a dividend or approving a stock repurchase that was
illegal under the DGCL. The Certificate of Incorporation of Triton Delaware
eliminates the monetary liability of a director to the fullest extent permitted
by the DGCL.
There is no equivalent provision under the Companies Law. However, the
Articles of Association of Triton Cayman state that the directors of Triton
Cayman shall have no personal liability to Triton Cayman or its shareholders for
monetary damages for breach of fiduciary or other duties as a director, except
(i) for any breach of a director's duty of loyalty to Triton Cayman or its
shareholders, (ii) for acts or omissions not in good faith which involve
intentional misconduct or a knowing violation of law, or (iii) for any
transaction from which a director derived an improper personal benefit.
STOCKHOLDERS' SUITS
Section 327 of the DGCL requires only that the stockholder bringing a
derivative suit must have been a stockholder at the time of the wrong complained
of or that the stock devolved to him by operation of law from a person who was
such a stockholder. In addition, the stockholder must remain a stockholder
throughout the litigation.
The Cayman Islands courts have recognized derivative suits by shareholders;
however, the consideration of such suits has been limited. In this regard, the
Cayman Islands courts ordinarily would be expected to follow English precedent,
which would permit a minority stockholder to commence an action against or a
derivative action in the name of the company only (i) where the act complained
of is alleged to be beyond the corporate power of the company or illegal, (ii)
where the act complained of is alleged to constitute a fraud against the
minority perpetrated by those in control of the company, (iii) where the act
requires approval by a greater percentage of the company's shareholders than
actually approved it or (iv) where there is a an absolute necessity to waive the
general rule that a stockholder may not bring such an action in order that there
not be a denial of justice or a violation of the company's memorandum of
association.
MANAGEMENT OF TRITON CAYMAN
The Board of Directors of Triton Cayman, upon the effectiveness of the
Reorganization, is to consist of those persons who, at the Effective Time, are
serving as directors of Triton Delaware, each to have the term of office for
which he or she was elected or appointed. Triton Cayman's executive officers are
now, and upon the effectiveness of the Reorganization are expected to be, the
same as those persons who are presently employed as executive officers of Triton
Delaware.
COMMITTEES OF THE BOARD OF DIRECTORS
Triton Cayman has established committees of the Board of Directors which
committees have identical members and functions as the committees of the Board
of Directors of Triton Delaware immediately prior to the Effective Time.
EXECUTIVE COMPENSATION
Triton Cayman has not paid compensation to any person before the date of
this Proxy Statement/ Prospectus and is not expected to do so prior to the
Effective Time.
LEGAL MATTERS
Certain legal matters in connection with Class A Shares and Class B Shares
to be issued in the Reorganization have been passed upon for Triton Cayman by
W.S. Walker & Company, Cayman Islands. W.S. Walker & Company has also rendered
an opinion regarding the Cayman Islands tax consequences of the Reorganization
referred to in "Certain Tax Considerations." Certain legal matters in connection
with the Triton Delaware Preferred Stock to be issued in the Reorganization have
been passed upon for Triton Delaware by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), New York, New York. The
opinions regarding the United States federal tax
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consequences of the Reorganization referred to in "Certain Tax Considerations"
were rendered by Simpson Thacher & Bartlett and Weil, Gotshal & Manges LLP (a
partnership which includes professional corporations), New York, New York.
EXPERTS
The financial statement of Triton Energy Limited ("Triton Cayman") as of
December 31, 1995 and the pro forma consolidated condensed statements of
operations of Triton Energy Corporation ("Triton Delaware") for the seven months
ended December 31, 1994 and for the year ended May 31, 1994 included in this
Proxy Statement/Prospectus has been so included in reliance on the respective
reports of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts, with respect to the balance sheet of Triton Cayman, in
auditing and accounting and, with respect to the pro forma financial information
of Triton Delaware, in performing examinations of pro forma financial
information in accordance with standards established by the American Institute
of Certified Public Accountants.
The restated consolidated financial statements of Triton Delaware as of and
for the seven months ended December 31, 1994 and the years ended May 31, 1994
and 1993, incorporated herein by reference to Triton Delaware's Current Report
on Form 8-K dated August 24, 1995 appearing on pages F-1 through F-54, have been
so incorporated in reliance upon the reports (which included an audit of the
adjustments that were applied to restate the 1992 financial statements for
discontinued aviation sales and services operations and wholesale fuel products
operations as described in Notes 1 and 4 of the financial statements) of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
With respect to the unaudited pro forma consolidated condensed balance sheet
of Triton Cayman as of September 30, 1995, and with respect to the unaudited
consolidated condensed financial information of Triton Delaware and its
subsidiaries (i) for the three month periods ended March 31, 1995 and 1994,
which include financial statements that have not been restated to reflect the
aviation sales and services segment as discontinued operations, (ii) for the
three and six month periods ended June 30, 1995 and 1994, (iii) for the three
and nine month periods ended September 30, 1995 and 1994 incorporated by
reference in this Proxy Statement/Prospectus, and (iv) for the unaudited pro
forma consolidated condensed balance sheet as of September 30, 1995 and the pro
forma consolidated condensed statement of operations for the nine month period
then ended included in this Proxy Statement/Prospectus, Price Waterhouse LLP
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, the report
dated February 14, 1996 with respect to the pro forma consolidated condensed
balance sheet of Triton Cayman included in this Proxy Statement/Prospectus, and
their separate reports dated May 2, 1995, August 1, 1995 and October 31, 1995
included in Triton Delaware's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995, June 30, 1995, and September 30, 1995, respectively, and
incorporated by reference herein, and their report on the pro forma consolidated
condensed balance sheet of Triton Delaware as of September 30, 1995 and the pro
forma consolidated condensed statement of operations for the nine month period
then ended dated February 14, 1996 included in this Proxy Statement/Prospectus,
state that they did not audit and they did not express an opinion on the
referenced unaudited consolidated condensed financial information and unaudited
pro forma consolidated condensed financial information. Price Waterhouse LLP did
not carry out any significant or additional tests beyond those which would have
been necessary if their reports had not been included. Accordingly, the degree
of reliance on their reports on such information should be restricted in light
of the limited nature of their review procedures applied. Price Waterhouse LLP
is not subject to the liability provisions of section 11 of the Securities Act
of 1933, as amended, for their reports on the unaudited consolidated historical
and pro forma condensed financial information because such reports are not a
"report" or a "part" of the Registration Statement prepared or certified by
Price Waterhouse LLP within the meaning of sections 7 and 11 of the 1933 Act.
69
The consolidated statements of operations, shareholders' equity and cash
flows of Triton Delaware for the year ended May 31, 1992 (before restatement for
discontinued aviation sales and services operations and wholesale fuel products
operations), incorporated herein by reference to Triton Delaware's Current
Report on Form 8-K dated August 24, 1995, have been so incorporated in reliance
upon the report of KPMG Peat Marwick LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated statements of earnings, shareholders' equity and cash flows
of Crusader Limited for the year ended May 31, 1992, incorporated herein by
reference to Triton Delaware's Transition Report on Form 10-K for the seven
months ended December 31, 1994, have been so incorporated in reliance upon the
report of KPMG, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
Certain information with respect to the gas and oil reserves of Triton
Delaware and its subsidiaries derived from the report of DeGolyer and
MacNaughton, independent petroleum engineers, has been incorporated by reference
herein in reliance upon such firm as experts with respect to the matters
contained therein.
Certain information with respect to the gas and oil reserves of Triton
Delaware and its subsidiaries derived from the report of McDaniel & Associates
Consultants, Ltd., independent petroleum engineers, has been incorporated by
reference herein in reliance upon such firm as experts with respect to the
matters contained therein.
70
GLOSSARY OF DEFINED TERMS
PAGE
---------
Articles of Association................................................................................... 43
CFC....................................................................................................... 41
Calculation Date.......................................................................................... 51
Certificate of Incorporation.............................................................................. 54
Charter................................................................................................... 55
Class A Shares............................................................................................ 1
Class B Shares............................................................................................ 1
Class C Shares............................................................................................ 43
Closing Price............................................................................................. 56
Code...................................................................................................... 36
Commission................................................................................................ 3
Companies Law............................................................................................. 64
Conversion Rate........................................................................................... 53
Convertible Preference Shares............................................................................. 12
Convertible Preferred Stock............................................................................... 12
Cumulative Dividend Amount................................................................................ 46
Depositary................................................................................................ 1
Deposited Securities...................................................................................... 58
Designation............................................................................................... 55
Disposition............................................................................................... 64
Dividend Provision........................................................................................ 46
DGCL...................................................................................................... 20
Effective Time............................................................................................ 13
Electing Share............................................................................................ 12
Election Date............................................................................................. 13
Equity Unit............................................................................................... 1
Equity Unit Election...................................................................................... 1
Equity Unit Limitation.................................................................................... 1
Exchange Act.............................................................................................. 3
Exchange Agent............................................................................................ 17
Fair Market Value......................................................................................... 56
Form of Election.......................................................................................... 13
J.P. Morgan............................................................................................... 12
Junior Dividend Shares.................................................................................... 51
Junior Preference Shares.................................................................................. 53
IRS....................................................................................................... 5
Lehman.................................................................................................... 12
Liquidation Available Amount.............................................................................. 47
Liquidation Preference.................................................................................... 55
Liquidation Price......................................................................................... 51
Mailing Date.............................................................................................. 34
Maximum Election Number................................................................................... 6
Memorandum of Association................................................................................. 43
Merger.................................................................................................... 1
Merger Agreement.......................................................................................... 1
Minimum Election Number................................................................................... 12
1997 Notes................................................................................................ 26
NYSE...................................................................................................... 1
Offerer................................................................................................... 45
71
PAGE
---------
Ordinary Shares........................................................................................... 14
PFICs..................................................................................................... 42
Pairing Ratio............................................................................................. 44
Parity Dividend Shares.................................................................................... 51
Penalty Dividend.......................................................................................... 51
Proration Factor.......................................................................................... 6
Proxy Card................................................................................................ 16
Proxy Statement/Prospectus................................................................................ 1
Purchase Date............................................................................................. 56
Purchase Price............................................................................................ 56
Receipts.................................................................................................. 1
Registration Statement.................................................................................... 3
Reorganization............................................................................................ 1
Resolutions............................................................................................... 43
Rights Agreement.......................................................................................... 43
Section 102............................................................................................... 67
Securities Act............................................................................................ 3
Senior Dividend Shares.................................................................................... 51
Senior Liquidation Shares................................................................................. 52
Senior Liquidation Stock.................................................................................. 56
Shareholders Rights Plan.................................................................................. 34
Special Meeting........................................................................................... 1
Special Tax Counsel....................................................................................... 35
Specified Amount.......................................................................................... 47
Sub....................................................................................................... 1
TIN....................................................................................................... 42
Trading Day............................................................................................... 56
Triton Cayman............................................................................................. 1
Triton Delaware........................................................................................... 1
Triton Delaware Common Stock.............................................................................. 1
Triton Delaware Preferred Stock........................................................................... 1
2000 Notes................................................................................................ 26
Unit Deposit Agreement.................................................................................... 58
Unit Depositary Shares.................................................................................... 1
U.S. Holder............................................................................................... 35
U.S. Shareholder.......................................................................................... 41
72
TRITON ENERGY LIMITED
TRITON ENERGY CORPORATION
INDEX TO FINANCIAL STATEMENTS
PAGE
---------
Triton Energy Limited:
Review Report of Independent Accountants on Pro Forma Consolidated Condensed Financial Information....... F-2
Basis of Presentation.................................................................................... F-3
Pro Forma Consolidated Condensed Balance Sheet -- September 30, 1995..................................... F-4
Notes to Pro Forma Consolidated Condensed Financial Statement............................................ F-5
Report of Independent Accountants........................................................................ F-8
Balance Sheet as of December 31, 1995.................................................................... F-9
Notes to Balance Sheet................................................................................... F-10
Triton Energy Corporation:
Review Report of Independent Accountants on Pro Forma Consolidated Condensed Financial Information....... F-11
Report of Independent Accountants on Pro Forma Consolidated Condensed Financial Information.............. F-12
Basis of Presentation.................................................................................... F-13
Pro Forma Consolidated Condensed Balance Sheet -- September 30, 1995..................................... F-14
Pro Forma Consolidated Condensed Statement of Operations -- Nine Months ended September 30, 1995......... F-15
Pro Forma Consolidated Condensed Statement of Operations -- Seven Months ended December 31, 1994......... F-16
Pro Forma Consolidated Condensed Statement of Operations -- Year ended May 31, 1994...................... F-17
Notes to Pro Forma Consolidated Condensed Financial Statements........................................... F-18
F-1
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
ON PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
To the Board of Directors
of Triton Energy Limited
We have reviewed the pro forma adjustments reflecting the transaction
described in Note 1 and the application of those adjustments to the historical
amounts in the accompanying pro forma consolidated condensed balance sheet of
Triton Energy Limited and subsidiaries as of September 30, 1995. The historical
consolidated condensed balance sheets of Triton Energy Limited and Triton Energy
Corporation are derived from the historical unaudited financial statements of
Triton Energy Limited and Triton Energy Corporation, which were reviewed by us.
The historical unaudited consolidated condensed financial statements of Triton
Energy Corporation as of and for the nine months ended September 30, 1995 are
incorporated by reference in the accompanying Proxy Statement/ Prospectus. Such
pro forma adjustments are based on management's assumptions as described in Note
1. Our review was conducted in accordance with standards established by the
American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective
of which is the expression of an opinion on management's assumptions, the pro
forma adjustments and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical information might have been had the
transaction occurred at an earlier date. However, the pro forma consolidated
condensed balance sheet is not necessarily indicative of the related effects on
financial position that would have been attained had the above-mentioned
transaction actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable basis for presenting
the significant effects directly attributable to the above-mentioned transaction
described in Note 1, that the related pro forma adjustments do not give
appropriate effect to those assumptions, or that the pro forma column does not
reflect the proper application of those adjustments to the historical balance
sheet amounts in the pro forma consolidated condensed balance sheet as of
September 30, 1995.
PRICE WATERHOUSE LLP
Dallas, Texas
February 14, 1996
F-2
TRITON ENERGY LIMITED AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(NOT COVERED BY INDEPENDENT ACCOUNTANTS' REPORT)
BASIS OF PRESENTATION
The accompanying unaudited Pro Forma Consolidated Condensed Balance Sheet of
Triton Energy Limited ("Triton Cayman"), a Cayman Islands company and
wholly-owned subsidiary of Triton Energy Corporation ("Triton Delaware"), gives
effect to (i) the acquisition of Triton Delaware in connection with the proposed
Reorganization, whereby Triton Cayman will become the parent holding company of
Triton Delaware and (ii) subsequent to the Reorganization, the acquisition by
Triton Cayman of substantially all of the businesses or subsidiaries of Triton
Delaware located outside of the United States, other than Triton Delaware's
interests in the Cusiana and Cupiagua fields in Colombia and interests in
Argentina. The unaudited Pro Forma Consolidated Condensed Balance Sheet presents
the combined financial position of Triton Cayman and Triton Delaware as of
September 30, 1995 assuming the proposed Reorganization and purchase of assets
had occurred as of September 30, 1995. The consolidated condensed balance sheet
of Triton Delaware was derived from Triton Delaware's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, incorporated herein by reference.
The Reorganization will be accounted for as a combination of entities under
common control (as if it were a pooling of interests). Unaudited pro forma
consolidated condensed statements of operations for Triton Cayman are not
presented herewith because the unaudited pro forma consolidated condensed
statements of operations of Triton Cayman for the nine months ended September
30, 1995, the seven month transition period ended December 31, 1994 and the
three years in the period ended May 31, 1994 would be identical to the
Consolidated Condensed Statement of Operations of Triton Delaware as reported in
Triton Delaware's Quarterly Report on Form 10-Q for the quarter ended September
30, 1995, and the historical Consolidated Statements of Operations of Triton
Delaware as reported in Triton Delaware's Current Report on Form 8-K dated
August 24, 1995, respectively, which are incorporated herein by reference.
The Pro Forma Consolidated Condensed Balance Sheet of Triton Cayman should
be read in conjunction with the restated consolidated financial statements and
the related notes included in Triton Delaware's Current Report on Form 8-K dated
August 24, 1995 and Triton Delaware's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995. The pro forma financial information is not
indicative of Triton Cayman's financial position that might have occurred had
such transaction actually occurred on the date indicated above.
F-3
TRITON ENERGY LIMITED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1995
TRITON ENERGY ISSUANCE OF
HISTORICAL CORPORATION (A) EQUITY UNITS (B) PRO FORMA
----------- -------------- ---------------- ------------
(IN THOUSANDS)
(UNAUDITED)
ASSETS
Current assets:
Cash and equivalents.............................. $ -- $ 75,989 $ -- $ 75,989
Short-term marketable securities.................. -- 57,338 -- 57,338
Receivables....................................... -- 33,122 -- 33,122
Inventories, prepaid expenses and other........... -- 5,927 -- 5,927
----------- -------------- ---------------- ------------
Total current assets.......................... -- 172,376 -- 172,376
Long-term marketable securities..................... -- 3,930 -- 3,930
Property and equipment, at cost, less accumulated
depreciation and depletion of $261,504............. -- 465,816 -- 465,816
Investments and other assets........................ -- 185,033 -- 185,033
----------- -------------- ---------------- ------------
$ -- $ 827,155 $ -- $ 827,155
----------- -------------- ---------------- ------------
----------- -------------- ---------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt............ $ -- $ 1,313 $ -- $ 1,313
Accounts payable and accrued liabilities.......... -- 35,273 -- 35,273
----------- -------------- ---------------- ------------
Total current liabilities..................... -- 36,586 -- 36,586
----------- -------------- ---------------- ------------
Long-term debt, excluding current installments...... -- 404,944 -- 404,944
Deferred income taxes............................... -- 26,137 -- 26,137
Deferred income and other........................... -- 116,276 -- 116,276
Convertible debentures due to employees............. -- -- -- --
Preferred stock of a subsidiary..................... -- -- 439,086(f) 439,086
Stockholders' equity:
5% Convertible preference shares.................. -- -- 14,119(c) 14,119
5% Convertible preferred stock.................... 14,119(c) (14,119)(c) --
Ordinary shares:
Class A......................................... 1 35,871 (35,603)(d) 269
Subscription receivable....................... (1) -- 1 --
Class B......................................... -- -- 90(d) 90
Class C......................................... -- -- -- --
Additional paid-in capital........................ -- 514,266 (403,574)(e) 110,692
Accumulated deficit............................... -- (311,902) -- (311,902)
Foreign currency translation adjustment........... -- (8,519) -- (8,519)
Other............................................. -- (281) -- (281)
----------- -------------- ---------------- ------------
-- 243,554 (439,086) (195,532)
Less cost of common stock in treasury............. -- 342 -- 342
----------- -------------- ---------------- ------------
Total stockholders' equity.................... -- 243,212 (439,086) (195,874)
Commitments and contingencies....................... -- -- -- --
----------- -------------- ---------------- ------------
$ -- $ 827,155 $ -- $ 827,155
----------- -------------- ---------------- ------------
----------- -------------- ---------------- ------------
Triton Energy Limited uses the full cost method to account for its oil and gas
producing activities.
See accompanying notes to pro forma consolidated condensed financial statements.
F-4
TRITON ENERGY LIMITED AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENT
1. PLAN OF REORGANIZATION
Triton Energy Corporation ("Triton Delaware") has proposed a reorganization
pursuant to which Triton Energy Limited ("Triton Cayman"), a Cayman Islands
company and a wholly-owned subsidiary of Triton Delaware, will become the parent
holding company of Triton Delaware. The Reorganization will be effected pursuant
to the Agreement and Plan of Merger among Triton Cayman, Triton Delaware and TEL
Merger Corp., a Delaware corporation and a wholly-owned subsidiary of Triton
Cayman ("Sub").
In connection with the Reorganization, holders, in the aggregate, of not
less than 15% but not more than 25% of the outstanding shares of Triton Delaware
Common Stock may make an unconditional election (the "Equity Unit Election") to
receive one Equity Unit ("Equity Unit") comprised of (i) one Class B ordinary
share of Triton Cayman, par value $.01 per share ("Class B Share"), and (ii)
one-tenth of one share of participating preferred stock, par value $.01 per
share, of Triton Delaware ("Triton Delaware Preferred Stock"), which securities
shall be paired and after such pairing may only be traded together as a unit and
will not be separately transferable. Each outstanding share of Triton Delaware
Common Stock, other than those with respect to which an Equity Unit Election has
been made, will be automatically converted into one Class A ordinary share, par
value of $.01 per share ("Class A Share") of Triton Cayman. Each outstanding
share of 5% convertible preferred stock of Triton Delaware will be automatically
converted into one 5% convertible preference share of Triton Cayman.
Pro forma adjustments are made to reflect:
(a) the acquisition of Triton Delaware and subsidiaries as if the
acquisition occurred on September 30, 1995 and will be accounted for
as a combination of entities under common control (as if it were a pooling
of interests);
(b) the issuance of 9 million Equity Units, each consisting of one Class
B Share of Triton Cayman and one-tenth of one share of Triton
Delaware Preferred Stock, assuming holders of 25% of Triton Delaware Common
Stock make an Equity Unit Election and that each one-tenth of one share of
Triton Delaware Preferred Stock is valued at $49, as determined by Triton
Delaware as of February 14, 1996, based upon the advice of its financial
advisors. If holders of 15% of Triton Delaware's Common Stock make an Equity
Unit Election, the amount shown for preferred stock of a subsidiary would be
$263 million as determined by Triton Delaware based upon the advice of its
financial advisors. At the Effective Time, the value of one-tenth of one
share of Triton Delaware Preferred Stock will be determined by Triton
Delaware based upon the advice of its financial advisors at such time.
(c) the conversion, pursuant to the Reorganization, of .4 million shares
of Triton Delaware's 5% convertible preferred stock into .4 million
5% convertible preference shares of Triton Cayman;
(d) the reduction of the par value of 35.9 million shares of Triton
Delaware Common Stock from $1.00 per share to $.01 per share, in
connection with the issuance of Ordinary Shares. Following the
Reorganization, Triton Cayman will have 26.9 million Class A Shares and 9
million Class B Shares outstanding, assuming holders of 25% of the
outstanding shares of Triton Delaware Common Stock make an Equity Unit
Election;
(e) the net reduction to additional paid-in capital resulting from the
issuance of Class A Shares and Equity Units pursuant to the
Reorganization. If holders of 15% of Triton Delaware's Common Stock make an
Equity Unit Election, the net reduction in additional paid-in capital would
be $228 million; and
(f) the issuance of the Triton Delaware Preferred Stock pursuant to the
Reorganization.
F-5
TRITON ENERGY LIMITED AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENT (CONTINUED)
2. FORMATION OF TRITON CAYMAN
Triton Cayman was incorporated on August 23, 1995 to become the parent
holding company of Triton Delaware. The balances of Triton Cayman reported in
the unaudited Pro Forma Consolidated Condensed Balance Sheet as of September 30,
1995 reflect the initial capitalization of Triton Cayman.
3. TRANSFER OF ASSETS
Following the Reorganization, Triton Delaware intends to transfer
substantially all of its businesses or subsidiaries located outside of the
United States, other than Triton Delaware's interests in the Cusiana and
Cupiagua fields in Colombia and interests in Argentina, to Triton Cayman. The
aggregate consideration to be received by Triton Delaware, estimated to be
approximately $233 million, will consist of preferred stock of Triton Oil
Company of Thailand JDA Ltd., through which Triton Cayman will hold its interest
in Block A-18 of the Malaysia-Thailand Joint Development Area, and other
subsidiaries to be sold, with an aggregate stated value expected to approximate
the aggregate value of the businesses and subsidiaries being transferred, and a
promisary note of Triton Cayman for any remainder. No book gain or loss will be
recognized by Triton Cayman on a consolidated basis. The consideration for the
contemplated transfers will be determined by Triton Delaware at the time of such
transfers and will be based on independent third party appraisals. The
appraisals will not be binding on the IRS, which may argue that the
consideration on the transfer is larger.
4. TRITON DELAWARE PREFERRED STOCK
When, as and if the Board of Directors of Triton Delaware declares a
dividend on the common stock of Triton Delaware outstanding after the
Reorganization, the Board of Directors shall simultaneously declare a dividend
on the Triton Delaware Preferred Stock out of funds of Triton Delaware legally
available therefor, such that the aggregate amount of the dividend declared with
respect to the shares of Triton Delaware Preferred Stock shall be a portion of
the aggregate distribution on the Triton Delaware Preferred Stock and the common
stock (and any other series or class that participates in dividends with holders
of the common stock) equal to (x) ten times the number of shares of Triton
Delaware Preferred Stock outstanding at the time such distribution is made
divided by (y) the total number of shares of Triton Delaware Common Stock
outstanding immediately prior to the Effective Time. In case of the voluntary or
involuntary liquidation, dissolution, or winding-up of Triton Delaware, a holder
of one-tenth of one share of Triton Delaware Preferred Stock is entitled to
receive out of the assets of Triton Delaware available for distribution to its
stockholders an amount equal to the fair market value of one-tenth of one share
of Triton Delaware Preferred Stock at the Effective Time, which will be
determined by Triton Delaware based upon the advice of its financial advisors at
the Effective Time (the "Liquidation Preference"), before any payment or
distribution is made to the holders of any series or class of Triton Delaware's
stock which ranks junior as to liquidation rights to the Triton Delaware
Preferred Stock. After payment in full of the Liquidation Preference, the
holders of such shares of Triton Delaware Preferred Stock will be entitled to
share with the holders of common stock of Triton Delaware in any distribution of
assets by Triton Delaware. In connection with any such distribution, the holders
of the shares of Triton Delaware Preferred Stock shall receive a portion of such
distribution equal to the product of the aggregate distribution and the
percentage of shares of Triton Delaware Common Stock that receive Equity Units
in the Merger, and the holders of common stock of Triton Delaware shall receive
the remainder of such distribution. In the event that the number of outstanding
shares of Triton Delaware Preferred Stock decreases, such percentage shall be
decreased in proportion to such decrease in number of shares of Triton Delaware
Preferred Stock. Neither a consolidation or merger of Triton Delaware with
another corporation nor a sale or transfer of all or part of Triton Delaware's
assets will be considered a liquidation, dissolution or winding-up of Triton
Delaware.
F-6
TRITON ENERGY LIMITED AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENT (CONTINUED)
4. TRITON DELAWARE PREFERRED STOCK (CONTINUED)
Either Triton Cayman or Triton Delaware may, at its option, purchase Equity
Units, in whole or in part, at any time on or after the third anniversary of the
Effective Time. Triton Cayman may also, at its option, purchase Equity Units, in
whole or in part, at any time immediately prior to the date on which a sale or
other disposition of the stock of Triton Delaware is consummated. The purchase
price of one Equity Unit payable upon such purchase will generally be equal to
the greater of .95 of one Class A Share and the fair market value of an Equity
Unit, payable in cash or, by Triton Cayman, in Ordinary Shares. Neither Triton
Cayman nor Triton Delaware can exercise its option to purchase the Equity Units
in certain circumstances, including in the event of the bankruptcy or insolvency
of Triton Delaware.
5. ORDINARY SHARES
The authorized capital stock of Triton Cayman is divided into 200,000,000
Class A Shares, 10,000,000 Class B Shares, 10,000,000 class C ordinary shares,
par value $.01 per share (the "Class C Shares"), and 20,000,000 preference
shares. The Class A Shares, the Class B Shares and the Class C Shares rank pari
passu in all respects and have equal voting and other rights, except as set
forth in the Articles of Association.
The rights of holders of Triton Cayman's Class B Shares have been
specifically designed to permit a Class B Share to be paired with and only
transferable with one-tenth of one share of Triton Delaware Preferred Stock in
the form of an Equity Unit which is to be distributed only in connection with
the Reorganization to holders electing to receive such consideration. It is
intended that Class A Shares will be available for future issuances of equity
securities, if any, required by Triton Cayman to raise capital, in connection
with acquisitions or otherwise. It is intended that the Class C Shares will only
be issued in certain circumstances. The holders of the Class C Shares will be
entitled to the same dividend rights, liquidation preferences and voting and
other rights as the holders of the Class A Shares, except that they will be
subject to certain preferential rights of the holders of the Class A Shares.
The holders of Ordinary Shares will be entitled at any time to receive such
dividends as are declared by the Board of Directors of Triton Cayman. The
ability of Triton Cayman to pay dividends on capital stock is restricted by
covenants in indentures to which Triton Cayman will be a party upon the
consummation of the Reorganization.
Aggregate dividends declared and paid on one Class A Share are expected to
be equivalent to the aggregate dividends, if any, declared and paid on one-tenth
of one share of Triton Delaware Preferred Stock and one Class B Share included
in one Equity Unit. The holders of the Equity Units, in their capacity as
holders of shares of Triton Delaware Preferred Stock, may receive dividends at a
time or times when no dividends are being declared or paid on the Class A Shares
or the Class B Shares.
F-7
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and
Shareholder of Triton Energy Limited
In our opinion, the accompanying balance sheet presents fairly, in all material
respects, the financial position of Triton Energy Limited at December 31, 1995
in conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Company's management; our responsibility
is to express an opinion on this financial statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Dallas, Texas
February 8, 1996
F-8
TRITON ENERGY LIMITED
BALANCE SHEET
DECEMBER 31, 1995
(EXPRESSED IN UNITED STATES DOLLARS)
SHAREHOLDER'S EQUITY
Preferred stock, par value $1, authorized 5,000,000 shares......................... $ --
Common stock, par value $1, authorized 200,000,000 shares; issued 1,000............ 1,000
Subscription receivable.......................................................... (1,000)
---------
Total shareholder's equity..................................................... $ --
---------
---------
See accompanying notes to balance sheet.
F-9
TRITON ENERGY LIMITED
NOTES TO BALANCE SHEET
1. GENERAL
Triton Energy Limited (formerly named TC Holdings Limited, "Triton Cayman"),
a wholly-owned subsidiary of Triton Energy Corporation ("Triton Delaware"), a
Delaware Corporation, was incorporated on August 23, 1995 under the laws of the
Cayman Islands. Triton Cayman was formed to become the ultimate holding company
of Triton Delaware if the Board of Directors of Triton Delaware and the
stockholders of Triton Delaware approve such transaction. Triton Delaware is an
international oil and gas exploration company primarily engaged in exploration
and production through subsidiaries and affiliates. Triton Delaware's principal
properties and operations are located in Colombia and Malaysia-Thailand. Triton
Delaware also has oil and gas interests in other Latin American and Asian
countries, Europe, Australia and North America.
Triton Cayman had no operations from the date of incorporation on August 23,
1995 to December 31, 1995.
2. TAXATION
Under current Cayman Islands law, Triton Cayman is not required to pay any
Cayman Islands taxes on either income or capital gains. Triton Cayman has
applied for and expects to receive an Undertaking as to Tax Concessions
Certificate to be issued by the Governor-in-Council pursuant to the provisions
of the Tax Concessions Law which would provide that Triton Cayman would not be
subject to any future income or capital gains taxes which may be imposed for a
period of twenty years beginning on the date of the Undertaking.
F-10
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
ON PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
To the Board of Directors
of Triton Energy Corporation
We have reviewed the pro forma adjustments reflecting the transaction
described in Note 1 and the application of those adjustments to the historical
amounts in the accompanying pro forma consolidated condensed balance sheet of
Triton Energy Corporation as of September 30, 1995, and the pro forma
consolidated condensed statement of operations for the nine months then ended.
The historical consolidated condensed financial statements are derived from the
historical unaudited financial statements of Triton Energy Corporation, which
were reviewed by us, appearing in Triton Energy Corporation's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995, and are incorporated by
reference in the accompanying Proxy Statement/Prospectus. Such pro forma
adjustments are based upon management's assumptions described in Notes 1 and 2.
Our review was conducted in accordance with standards established by the
American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective
of which is the expression of an opinion on management's assumptions, the pro
forma adjustments and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical information might have been had the
transaction occurred at an earlier date. However, the pro forma consolidated
condensed financial statements are not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above-mentioned transaction actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable basis for presenting
the significant effects directly attributable to the above-mentioned transaction
described in Note 1, that the related pro forma adjustments do not give
appropriate effect to those assumptions, or that the pro forma column does not
reflect the proper application of those adjustments to the historical financial
statement amounts in the pro forma consolidated condensed balance sheet as of
September 30, 1995, and the pro forma consolidated condensed statement of
operations for the nine months then ended.
PRICE WATERHOUSE LLP
Dallas, Texas
February 14, 1996
F-11
REPORT OF INDEPENDENT ACCOUNTANTS
ON PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
To the Board of Directors
of Triton Energy Corporation
We have examined the pro forma adjustments reflecting the transaction
described in Note 1 and the application of those adjustments to the historical
amounts in the accompanying pro forma consolidated condensed statement of
operations for the seven months ended December 31, 1994 and the year ended May
31, 1994 of Triton Energy Corporation. The historical consolidated condensed
financial statements are derived from the historical financial statements of
Triton Energy Corporation, which were audited by us, appearing in Triton Energy
Corporation's Current Report on Form 8-K, dated August 24, 1995, and are
incorporated by reference in the accompanying Proxy Statement/ Prospectus. Such
pro forma adjustments are based upon management's assumptions described in Notes
1 and 2. Our examination was made in accordance with standards established by
the American Institute of Certified Public Accountants and, accordingly,
included such procedures as we considered necessary in the circumstances.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transaction occurred at an earlier date. However, the pro forma consolidated
condensed financial statements are not necessarily indicative of the results of
operations that would have been attained had the above-mentioned transaction
actually occurred earlier.
In our opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transaction described in Note 1, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma column reflects the
proper application of those adjustments to the historical financial statement
amounts in the pro forma consolidated condensed statement of operations for the
seven months ended December 31, 1994 and the year ended May 31, 1994.
PRICE WATERHOUSE LLP
Dallas, Texas
February 14, 1996
F-12
TRITON ENERGY CORPORATION AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(NOT COVERED BY INDEPENDENT ACCOUNTANTS' REPORT)
BASIS OF PRESENTATION
The accompanying pro forma consolidated condensed financial statements of
Triton Energy Corporation ("Triton Delaware") give effect to the transfer of
substantially all of its businesses or subsidiaries located outside of the
United States, other than Triton Delaware's interests in the Cusiana and
Cupiagua fields in Colombia and interests in Argentina, to Triton Energy Limited
("Triton Cayman"), a Cayman Islands company and wholly-owned subsidiary of
Triton Delaware, following the proposed Reorganization, whereby Triton Cayman
will become the parent holding company of Triton Delaware. The Pro Forma
Consolidated Condensed Balance Sheet adjust the September 30, 1995 consolidated
condensed balance sheet as though such transactions occurred on September 30,
1995. The Pro Forma Consolidated Condensed Statements of Operations adjusts the
consolidated condensed statements of operations for the nine months ended
September 30, 1995, the seven month transition period ended December 31, 1994
and the year ended May 31, 1994 as though such transactions occurred on June 1,
1993. The pro forma results exclude any nonrecurring charges or credits directly
attributable to the transaction. The Triton Delaware historical unaudited
consolidated condensed balance sheet at September 30, 1995 and the historical
unaudited consolidated condensed statement of operations for the nine months
then ended are derived from the Triton Delaware Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995, incorporated herein by reference. The
historical consolidated condensed statements of operations for the seven months
ended December 31, 1994 and the year ended May 31, 1994 are derived from Triton
Delaware's Current Report on Form 8-K dated August 24, 1995, incorporated herein
by reference.
The pro forma consolidated condensed financial statements should be read in
conjunction with the restated consolidated financial statements and the related
notes included in Triton Delaware's Current Report on Form 8-K dated August 24,
1995 and Quarterly Report on Form 10-Q for the quarter ended September 30, 1995.
The pro forma financial information is not indicative of the Triton Delaware's
financial position or the results of operations that might have occurred had
such transaction actually occurred on the dates indicated above.
F-13
TRITON ENERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1995
DISPOSITION OF ISSUANCE OF
DESIGNATED PREFERRED
ASSETS HISTORICAL SUBSIDIARIES STOCK PRO FORMA
---------- --------------- --------------- ----------
(IN THOUSANDS)
(UNAUDITED)
Current assets:
Cash and equivalents............. $ 75,989 $ (1,020)(a) $ -- $ 74,969
Short-term marketable
securities...................... 57,338 -- (a) -- 57,338
Receivables...................... 33,122 (1,022)(a) -- 32,100
Inventories, prepaid expenses and
other........................... 5,927 (2,045)(a) -- 3,882
---------- --------------- --------------- ----------
Total current assets........... 172,376 (4,087) -- 168,289
Long-term marketable securities.... 3,930 -- -- 3,930
Property and equipment, at cost,
less depreciation and depletion... 465,816 (91,611)(a) -- 374,205
Investments and other assets....... 185,033 (21,093)(a) -- 163,940
Investments in affiliates.......... -- 233,000(b) -- 233,000
---------- --------------- --------------- ----------
$ 827,155 $ 116,209 $ -- $ 943,364
---------- --------------- --------------- ----------
---------- --------------- --------------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term
debt............................ $ 1,313 $ -- $ -- $ 1,313
Accounts payable and accrued
liabilities..................... 35,273 (11,406)(a) -- 23,867
---------- --------------- --------------- ----------
Total current liabilities...... 36,586 (11,406) -- 25,180
---------- --------------- --------------- ----------
Long-term debt, excluding
current........................... 404,944 -- -- 404,944
Deferred income taxes.............. 26,137 (2,937)(a) -- 23,200
Deferred income and other.......... 116,276 -- -- 116,276
Convertible debentures due to
employees......................... -- -- -- --
Stockholders' equity:
5% Convertible preferred stock... 14,119 -- (14,119)(d) --
Participating preferred stock.... -- -- 439,086(c) 439,086
Common stock..................... 35,871 -- (35,512)(e) 359
Additional paid-in capital....... 514,266 130,411(b) (403,574)(f) 255,222
14,119(d)
Accumulated deficit.............. (311,902) -- -- (311,902)
Foreign currency translation
adjustment...................... (8,519) 141(a) -- (8,378)
Other............................ (281) -- -- (281)
---------- --------------- --------------- ----------
243,554 130,552 -- 374,106
Less cost of common stock in
treasury........................ 342 -- -- 342
---------- --------------- --------------- ----------
Total stockholders' equity..... 243,212 130,552 -- 373,764
Commitments and contingencies...... -- -- -- --
---------- --------------- --------------- ----------
$ 827,155 $ 116,209 $ -- $ 943,364
---------- --------------- --------------- ----------
---------- --------------- --------------- ----------
Triton Energy Corporation uses the full cost method to account for its oil and
gas producing activities.
See accompanying notes to pro forma consolidated condensed financial statements.
F-14
TRITON ENERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995
DISPOSITION OF DISPOSITION OF
TRITON FRANCE DESIGNATED
HISTORICAL (2) SUBSIDIARIES (H) PRO FORMA
--------------- ---------------- --------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Revenues:
Sales and other operating revenues......... $ 80,841 $ (9,257) $ -- $ 71,584
Other income............................... 17,255 (3,516) 521 14,260
Investment income from affiliates.......... -- -- 15,728(g) 15,728
--------------- -------- --------------- -----------
98,096 (12,773) 16,249 101,572
--------------- -------- --------------- -----------
Costs and expenses:
Operating.................................. 27,210 (5,460) -- 21,750
General and administrative................. 18,982 (764) (1,506) 16,712
Depreciation, depletion and amortization... 17,597 (1,720) (41) 15,836
Writedown of assets........................ -- -- -- --
Interest................................... 18,210 (12) 4,735 22,933
Equity in (earnings) loss of affiliates,
net....................................... 1,014 -- -- 1,014
Foreign exchange (gain) loss............... (773) (78) 306 (545)
--------------- -------- --------------- -----------
82,240 (8,034) 3,494 77,700
--------------- -------- --------------- -----------
Earnings (loss) from continuing operations
before income taxes and minority
interest.................................. 15,856 (4,739) 12,755 23,872
Income tax provision (benefit):
Current.................................... 921 -- -- 921
Deferred................................... 9,002 (129) (1,675) 7,198
--------------- -------- --------------- -----------
5,933 (4,610) 14,430 15,753
Minority interest in loss of subsidiaries.... -- -- -- --
--------------- -------- --------------- -----------
Earnings (loss) from continuing
operations................................ $ 5,933 $ (4,610) $ 14,430 $ 15,753
--------------- -------- --------------- -----------
--------------- -------- --------------- -----------
Weighted average number of shares
outstanding................................. 35,088 35,088
--------------- -----------
--------------- -----------
Earnings (loss) from continuing operations
per common share............................ $ 0.15 $ 0.43
--------------- -----------
--------------- -----------
See accompanying notes to pro forma consolidated condensed financial statements
F-15
TRITON ENERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
SEVEN MONTHS ENDED DECEMBER 31, 1994
DISPOSITION OF DISPOSITION OF
TRITON FRANCE DESIGNATED
HISTORICAL (2) SUBSIDIARIES (H) PRO FORMA
--------------- ---------------- --------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Sales and other operating revenues......... $ 20,736 $ (9,179) $ -- $ 11,557
Other income............................... 4,585 (218) 162 4,529
Investment income from affiliates.......... -- -- 12,233(g) 12,233
--------------- ------- --------------- -----------
25,321 (9,397) 12,395 28,319
--------------- ------- --------------- -----------
Costs and expenses:
Operating.................................. 12,362 (5,784) -- 6,578
General and administrative................. 15,997 (480) (1,044) 14,473
Depreciation, depletion and amortization... 7,339 (2,363) (26) 4,950
Writedown of assets........................ 984 -- -- 984
Interest................................... 7,754 (47) 2,187 9,894
Equity in (earnings) loss of affiliates,
net....................................... 4,102 -- -- 4,102
Foreign exchange (gain) loss............... (383) 21 185 (177)
--------------- ------- --------------- -----------
48,155 (8,653) 1,302 40,804
--------------- ------- --------------- -----------
Earnings (loss) from continuing operations
before income taxes and minority
interest.................................. (22,834) (744) 11,093 (12,485)
Income tax provision (benefit):
Current.................................... (773) -- -- (773)
Deferred................................... 4,569 -- (1,389) 3,180
--------------- ------- --------------- -----------
(26,630) (744) 12,482 (14,892)
Minority interest in loss of subsidiaries.... -- -- -- --
--------------- ------- --------------- -----------
Earnings (loss) from continuing
operations................................ $ (26,630) $ (744) $ 12,482 $(14,892)
--------------- ------- --------------- -----------
--------------- ------- --------------- -----------
Weighted average number of shares
outstanding................................. 34,944 34,944
--------------- -----------
--------------- -----------
Earnings (loss) from continuing operations
per common share............................ $ (0.78) $ (0.44)
--------------- -----------
--------------- -----------
See accompanying notes to pro forma consolidated condensed financial statements
F-16
TRITON ENERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1994
DISPOSITION OF DISPOSITION OF
TRITON FRANCE DESIGNATED
HISTORICAL (2) SUBSIDIARIES (H) PRO FORMA
--------------- ---------------- --------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Sales and other operating revenues......... $ 43,208 $ (17,494) $ -- $ 25,714
Gain on sale of Triton Canada common
stock..................................... 47,865 -- -- 47,865
Other income............................... 16,321 (396) 508 16,433
Investment income from affiliates.......... -- -- 20,970(g) 20,970
--------------- -------- --------------- -----------
107,394 (17,890) 21,478 110,982
--------------- -------- --------------- -----------
Costs and expenses:
Operating.................................. 27,887 (10,347) -- 17,540
General and administrative................. 30,429 (3,535) (446) 26,448
Depreciation, depletion and amortization... 19,821 (9,878) (20) 9,923
Writedown of assets........................ 45,754 (43,201) (168) 2,385
Interest................................... 7,504 (132) 1,410 8,782
Equity in (earnings) loss of affiliates,
net....................................... (645) -- -- (645)
Foreign exchange (gain) loss............... (252) 83 9 (160)
--------------- -------- --------------- -----------
130,498 (67,010) 785 64,273
--------------- -------- --------------- -----------
Earnings (loss) from continuing operations
before income taxes and minority
interest.................................. (23,104) 49,120 20,693 46,709
Income tax provision (benefit):
Current.................................... 3,688 2,045 -- 5,733
Deferred................................... (10,224) 10,661 -- 437
--------------- -------- --------------- -----------
(16,568) 36,414 20,693 40,539
Minority interest in (earnings) loss of
subsidiaries................................ 11,971 (12,027) (321) (377)
--------------- -------- --------------- -----------
Earnings (loss) from continuing
operations................................ $ (4,597) $ 24,387 $ 20,372 $ 40,162
--------------- -------- --------------- -----------
--------------- -------- --------------- -----------
Weighted average number of shares
outstanding................................. 34,775 34,775
--------------- -----------
--------------- -----------
Earnings (loss) from continuing operations
per common share............................ $ (0.13) $ 1.15
--------------- -----------
--------------- -----------
See accompanying notes to pro forma consolidated condensed financial statements
F-17
TRITON ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. PLAN OF REORGANIZATION
Triton Energy Corporation ("Triton Delaware") has proposed a reorganization
pursuant to which Triton Energy Limited ("Triton Cayman"), a Cayman Islands
company and a wholly-owned subsidiary of Triton Delaware, will become the parent
holding company of Triton Delaware. The Reorganization will be effected pursuant
to the Agreement and Plan of Merger among Triton Cayman, Triton Delaware and TEL
Merger Corp., a Delaware corporation and a wholly-owned subsidiary of Triton
Cayman ("Sub").
In connection with the Reorganization, holders in the aggregate of not less
than 15% but not more than 25% of the outstanding shares of Triton Delaware
Common Stock may make an unconditional election (the "Equity Unit Election") to
receive one equity unit ("Equity Unit") comprised of (i) one Class B ordinary
share of Triton Cayman, par value $.01 per share ("Class B Share"), and (ii)
one-tenth of one share of participating preferred stock, par value $.01 per
share, of Triton Delaware ("Triton Delaware Preferred Stock"), which securities
will be paired and after such pairing may only be traded together as a unit and
will not be separately transferable. Each outstanding share of Triton Delaware
Common Stock, other than those shares with respect to which an Equity Unit
Election has been made, will be automatically converted into one Class A
ordinary share, par value of $.01 per share ("Class A Shares"), of Triton
Cayman. Each outstanding share of 5% convertible preferred stock of Triton
Delaware will be automatically converted into one 5% convertible preference
share of Triton Cayman.
Following the Reorganization, Triton Delaware intends to transfer
substantially all of its businesses or subsidiaries located outside of the
United States, other than Triton Delaware's interests in the Cusiana and
Cupiagua fields in Colombia and interests in Argentina, to Triton Cayman. The
aggregate consideration to be received by Triton Delaware, estimated to be
approximately $233 million, will consist of preferred stock of Triton Oil
Company of Thailand JDA Ltd., through which Triton Cayman will hold its interest
in Block A-18 of the Malaysia-Thailand Joint Development Area, and other
subsidiaries to be sold, with an aggregate stated value expected to approximate
the aggregate value of the businesses and subsidiaries being transferred, and a
promissory note of Triton Cayman for any remainder. The excess of the
consideration over the net book value of the assets to be sold, estimated to be
approximately $131 million, has been reported as an increase to stockholders'
equity in the unaudited Pro Forma Consolidated Condensed Balance Sheet of Triton
Delaware. The consideration for the contemplated transfers will be determined by
Triton Delaware at the time of such transfers and will be based on independent
third party appraisals. The appraisals will not be binding on the IRS, which may
argue that the consideration on the transfer is larger.
Pro forma adjustments are made to reflect:
(a) the disposition of assets, liabilities and intercompany accounts of
the designated subsidiaries as if the sales occurred on September 30,
1995;
(b) the consideration received by Triton Delaware and resulting gain, net
of taxes, from the sale of the designated subsidiaries;
(c) the issuance of .9 million shares of Triton Delaware Preferred Stock,
assuming holders of 25% of Triton Delaware Common Stock make an
Equity Unit Election and that each one-tenth of one share of Triton Delaware
Preferred Stock is valued at $49, as determined by Triton Delaware as of
February 14, 1996, based upon the advice of its financial advisors. If
holders of 15% of Triton Delaware's Common Stock make an Equity Unit
Election, the amount shown for participating preferred stock would be $263
million, as determined by Triton Delaware based upon the advice
F-18
TRITON ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
1. PLAN OF REORGANIZATION (CONTINUED)
of its financial advisors. At the Effective Time, the value of one-tenth of
one share of Triton Delaware Preferred Stock will be determined by Triton
Delaware based upon the advice of its financial advisors at such time;
(d) the conversion, pursuant to the Reorganization, of .4 million shares
of Triton Delaware's 5% convertible preferred stock into .4 million
5% convertible preference shares of Triton Cayman;
(e) the reduction of the par value of Triton Delaware Common Stock (35.9
million shares outstanding on a historical and pro forma basis) from
$1.00 per share to $.01 per share, in connection with the Merger;
(f) the net reduction in additional paid-in capital resulting from the
issuance of Class A shares of Triton Cayman and Triton Delaware
Preferred Stock pursuant to the Reorganization. If holders of 15% of Triton
Delaware's Common Stock make an Equity Unit Election, the net reduction to
additional paid-in capital would be $83 million;
(g) interest charged at a rate of 9% per annum on the promissory note
from Triton Cayman due after a period of ten years with interest
payable on the maturity date, and accrued dividends at a rate of 9% per
annum on the preferred stock of Triton Oil Company of Thailand JDA Ltd. and
the other subsidiaries to be sold; and
(h) the elimination of the results of operations related to the
designated subsidiaries as if the acquisition occurred on June 1,
1993. The designated subsidiaries primarily represent Triton Delaware's
exploration operations. Interest expense increased on a pro forma basis due
to decreased capitalized interest.
2. SALE OF TRITON FRANCE S.A.
On August 18, 1995, Triton Delaware sold Triton France S.A. ("Triton
France") through which it held its interest in the Villeperdue field. The pro
forma adjustments are made to reflect the sale of Triton France as if it
occurred on June 1, 1993.
3. TRITON DELAWARE PREFERRED STOCK
When, as and if the Board of Directors of Triton Delaware declares a
dividend on the common stock of Triton Delaware outstanding after the
Reorganization, the Board of Directors shall simultaneously declare a dividend
on the Triton Delaware Preferred Stock out of funds of Triton Delaware legally
available therefor, such that the aggregate amount of the dividend declared with
respect to the shares of Triton Delaware Preferred Stock shall be a portion of
the aggregate distribution on the Triton Delaware Preferred Stock and the common
stock (and any other series or class that participates in dividends with holders
of the common stock) equal to (x) ten times the number of shares of Triton
Delaware Preferred Stock outstanding at the time such distribution is made
divided by (y) the total number of shares of Triton Delaware Common Stock
outstanding immediately prior to the Effective Time. In case of the voluntary or
involuntary liquidation, dissolution, or winding-up of Triton Delaware, a holder
of one-tenth of one share of Triton Delaware Preferred Stock is entitled to
receive out of the assets of Triton Delaware available for distribution to its
stockholders an amount equal to the fair market value of one-tenth of one share
of Triton Delaware Preferred Stock at the Effective Time, which will be
determined by Triton Delaware based upon the advice of its financial advisors at
the Effective Time (the "Liquidation Preference"), before any payment or
distribution is made to the holders of any series or class of Triton Delaware's
stock which ranks junior as to liquidation rights to the Triton Delaware
Preferred Stock. After payment in full of the Liquidation Preference, the
holders of such shares of Triton Delaware Preferred Stock will be entitled to
share with the holders of common stock of Triton Delaware in any distribution of
assets by Triton Delaware.
F-19
TRITON ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
3. TRITON DELAWARE PREFERRED STOCK (CONTINUED)
In connection with any such distribution, the holders of shares of Triton
Delaware Preferred Stock shall receive a portion of such distribution equal to
the product of the aggregate distribution and the percentage of shares of Triton
Delaware Common Stock that receive Equity Units in the Merger, and the holders
of common stock of Triton Delaware shall receive the remainder of such
distribution. In the event that the number of outstanding shares of Triton
Delaware Preferred Stock decreases, such percentage shall be decreased in
proportion to such decrease in number of shares of Triton Delaware Preferred
Stock. Neither a consolidation or merger of Triton Delaware with another
corporation nor a sale or transfer of all or part of Triton Delaware's assets
will be considered a liquidation, dissolution, or winding-up of Triton Delaware.
Either Triton Cayman or Triton Delaware may, at its option, purchase Equity
Units, in whole or in part at any time on or after the third anniversary of the
Effective Time. Triton Cayman may also, at its option, purchase Equity Units, in
whole or in part, at any time immediately prior to the date on which a sale or
other disposition of the stock of Triton Delaware is consummated. The purchase
price of one Equity Unit payable upon such purchase will generally be the
greater of .95 of one Class A Share and the fair market value of an Equity Unit,
payable in cash or, in the case of Triton Cayman, Ordinary Shares. Neither
Triton Cayman nor Triton Delaware can exercise its option to purchase the Equity
Units in certain circumstances, including in the event of the bankruptcy or
insolvency of Triton Delaware.
4. TRITON DELAWARE COMMON STOCK
Upon consummation of the Reorganization, Triton Cayman will own all
outstanding shares of Triton Delaware Common Stock.
F-20
ANNEX I
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 8, 1996 among TRITON
ENERGY CORPORATION, a Delaware corporation ("Triton Delaware"), TRITON ENERGY
LIMITED, a Cayman Islands company and a wholly-owned subsidiary of Triton
Delaware ("Triton Cayman"), and TEL MERGER CORP., a Delaware corporation and a
newly formed, wholly-owned subsidiary of Triton Cayman ("Sub").
WHEREAS, the respective Boards of Directors of Triton Delaware, Triton
Cayman and Sub have determined that it is in the best interests of their
respective stockholders to reorganize (the "Reorganization") so that Triton
Cayman becomes the parent holding company for Triton Delaware;
WHEREAS, the respective Boards of Directors of Triton Delaware, Sub and
Triton Cayman have approved the merger of Sub with and into Triton Delaware (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each outstanding share of common stock, par value $1.00 per
share ("Triton Delaware Common Stock"), of Triton Delaware (other than those
shares held by Triton Delaware in its treasury and those outstanding shares of
Triton Delaware Common Stock ("Electing Shares") with respect to which an Equity
Unit Election (as hereinafter defined) has been properly made and not withdrawn,
subject to the Equity Unit Limitation (as hereinafter defined)), will be
automatically converted into one class A ordinary share, par value $.01 per
share (the "Class A Share"), of Triton Cayman;
WHEREAS, the Board of Directors of Triton Delaware has determined that
holders of an aggregate of not less than 15% but not more than 25% (the "Equity
Unit Limitation") of the outstanding shares of Triton Delaware Common Stock in
the aggregate, may make an unconditional election (the "Equity Unit Election")
to receive an equity unit ("Equity Unit") consisting of (i) one Class B ordinary
share, par value $.01 per share (the "Class B Share" and, together with the
Class A Shares, the "Ordinary Shares"), and (ii) 1/10th of one share of Triton
Delaware's Participating Preferred Stock, par value $.01 per share ("Triton
Delaware Preferred Stock"), which securities will be paired and after such
pairing may only be traded together as a unit and will not be separately
transferable, for each share of Triton Delaware Common Stock owned of record by
such stockholder in lieu of such shares being automatically converted into Class
A Shares;
WHEREAS, the Merger requires the approval of the holders of a majority of
the outstanding shares of the Triton Delaware Common Stock entitled to vote
thereon at the meeting of holders of Triton Delaware Common Stock to be called
therefor (the "Triton Delaware Stockholder Approval");
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
MERGER
1.1 MERGER
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Sub shall be merged with and into Triton Delaware at the Effective Time
of the Merger (as defined in Section 1.2). Following the Effective Time of the
Merger, the separate corporate existence of Sub shall cease and Triton Delaware
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL.
I-1
1.2 EFFECTIVE TIME
Subject to the provisions of this Agreement, as soon as practicable
following the satisfaction or waiver of the conditions set forth in Section 5.1,
the parties shall file a certificate of merger or other appropriate documents
(in any case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at the close of
business on the date that an appropriate Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such later time as
Sub and Triton Delaware shall agree should be specified in the Certificate of
Merger (the time the Merger becomes effective being hereinafter referred to as
the "Effective Time of the Merger").
1.3 EFFECTS OF THE MERGER
The Merger shall have the effects set forth in Section 259 of the DGCL.
ARTICLE II
NAME, CERTIFICATE OF INCORPORATION,
BY-LAWS, DIRECTORS AND OFFICERS OF
THE SURVIVING CORPORATION
2.1 NAME OF SURVIVING CORPORATION
The name of the surviving corporation shall be "Triton Energy Corporation".
2.2 CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of Triton Delaware shall be the Certificate
of Incorporation of the Surviving Corporation after the Effective Time of the
Merger until amended thereafter as provided therein or by law except that the
certificate of incorporation of Triton Delaware shall be amended in its entirety
by virtue of the Merger to read in full as set forth in Exhibit A hereto.
2.3 BY-LAWS
The by-laws of Triton Delaware as in effect at the Effective Time of the
Merger shall be the by-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
2.4 DIRECTORS
The directors of Triton Delaware at the Effective Time of the Merger shall
be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
2.5 OFFICERS
The officers of Triton Delaware at the Effective Time of the Merger shall be
the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
ARTICLE III
CONVERSION, ELECTION AND EXCHANGE OF STOCK
3.1 CONVERSION
At the Effective Time of the Merger, by virtue of the Merger and without any
action on the part of the holder of any shares:
(a) COMMON STOCK OF SUB. The issued and outstanding shares of common stock
of Sub shall be converted into and become such number of fully paid and
nonassessable shares of Triton Delaware Common Stock, par value $.01 per share,
equal to the number of shares of Triton Delaware Common Stock outstanding
immediately prior to the Effective Time of the Merger.
I-2
(b) CANCELLATION OF TRITON DELAWARE-OWNED STOCK. Each outstanding Class A
Share and each share of Triton Delaware Common Stock that is owned by Triton
Delaware prior to the Effective Time of the Merger shall automatically be
cancelled and retired and shall cease to exist, and no Ordinary Shares or other
consideration shall be delivered or deliverable in exchange for such Class A
Shares or shares of Triton Delaware Common Stock.
(c) CONVERSION OF TRITON DELAWARE COMMON STOCK. (i) Each issued and
outstanding share of Triton Delaware Common Stock (other than shares to be
cancelled in accordance with Section 3.1(b) and other than Electing Shares which
shall be converted as described in (ii) below) shall be automatically converted
into and shall become one validly issued, fully paid and non-assessable Class A
Share and (ii) each share of Triton Delaware Common Stock with respect to which
an Equity Unit Election has been effectively made and not revoked or lost,
pursuant to Section 3.2(c), (d) and (e), subject to the limitation contained in
Section 3.2(f), shall be automatically converted into a one Depositary Share
(which will be evidenced by a receipt) consisting of one Class B Share and
1/10th of one share of Triton Delaware Preferred Stock which will trade together
as an Equity Unit and not be separately transferable.
(d) CONVERSION OF CONVERTIBLE PREFERRED STOCK. At the Effective Time of the
Merger, each outstanding share of 5% convertible preferred stock, no par value
("Triton Delaware Convertible Preferred Stock"), of Triton Delaware (other than
Dissenting Shares (as defined below)) shall be automatically converted into and
shall become one 5% convertible preference share, par value $.01 per share
("Convertible Preference Shares"), of Triton Cayman. Notwithstanding anything in
this Agreement to the contrary, shares of Triton Delaware Convertible Preferred
Stock issued and outstanding immediately prior to the Effective Time of the
Merger held by a holder who demands an appraisal of such shares in accordance
with Section 262 of the DGCL (or any successor provision) ("Dissenting Shares")
shall not be converted into Convertible Preference Shares unless such holder
fails to perfect or otherwise loses such holder's right to such an appraisal.
If, after the Effective Time of the Merger, such holder fails to perfect or
loses any such right to an appraisal, each such share of such holder shall be
treated as a share that had been converted as of the Effective Time of the
Merger into one Convertible Preference Share in accordance with the first
sentence of this subsection.
(e) STOCK OPTION PLANS. Triton Cayman shall assume all the rights and
obligations of Triton Delaware under the 1981 Employee Non-Qualified Stock
Option Plan, 1985 Stock Option Plan, Amended and Restated 1986 Convertible
Debenture Plan, 1988 Stock Appreciation Rights Plan, 1989 Stock Option Plan,
Amended and Restated 1992 Stock Option Plan and Amended and Restated Restricted
Stock Plan, as each such plan has been or may be amended to the Effective Time
of the Merger (collectively, the "Plans"). The outstanding options or debentures
assumed by Triton Cayman shall be exercisable or convertible upon the same terms
and conditions as under the Plans and the agreements relating thereto
immediately prior to the Effective Time of the Merger, except that upon the
exercise of such options or the conversion of such debentures, Class A Shares
shall be issuable in lieu of shares of Triton Delaware Common Stock. The number
of Class A Shares issuable upon the exercise of an option or the conversion of a
debenture immediately prior to the Effective Time of the Merger and the option
price of each such option and the conversion price of each such debenture shall
be the option price and the conversion price in effect immediately prior to the
Effective Time of the Merger. All options or debentures issued pursuant to the
Plans after the Effective Time of the Merger shall entitle the holder thereof to
purchase, or convert into, Class A Shares in accordance with the terms of the
Plans.
3.2 EQUITY UNIT ELECTION
(a) Each person who, on or prior to the Election Date referred to in
subsection (c) below, is a record holder of shares of Triton Delaware Common
Stock shall be entitled to make an Equity Unit Election with respect to any or
all of such person's shares (such shares thereby becoming Electing Shares,
subject to the provisions of this Section 3.2) on or prior to such Election Date
to receive a Receipt representing an Equity Unit consisting of one Class B Share
and 1/10th of one share of Triton
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Delaware Preferred Stock for each Electing Share in lieu of such shares being
automatically converted into Class A Shares. The Class B Share and 1/10th of one
share of Triton Delaware Preferred Stock contained in an Equity Unit may only be
traded together as an Equity Unit and will not be separately transferable.
(b) Prior to the mailing to the record holders of Triton Delaware Common
Stock as of the record date for the special meeting of stockholders of Triton
Delaware (the "Stockholders Meeting") of the Proxy Statement/Joint Prospectus
relating to the Stockholders Meeting (the "Proxy Statement"), Triton Delaware
shall appoint a bank or trust company to act as exchange agent (the "Exchange
Agent") for the Equity Units.
(c) Triton Delaware shall prepare and mail a form of election (the "Form of
Election") with the Proxy Statement to the record holders of Triton Delaware
Common Stock as of the record date for the Stockholders Meeting, which Form of
Election shall be used by each record holder of shares of Triton Delaware Common
Stock who wishes to make an Equity Unit Election. Triton Delaware will use
reasonable efforts to make the Form of Election and the Proxy Statement
available to all persons who become holders of Triton Delaware Common Stock
during the period between such record date and the Election Date referred to
below. Any such holder's election to receive Equity Units shall have been
properly made only if the Exchange Agent shall have received at its designated
office, by 5:00 p.m., New York City time, on the business day (the "Election
Date") next preceding the date of the Stockholders Meeting, a Form of Election
properly completed and signed and accompanied by the stock certificates
representing such Electing Shares to which such Form of Election relates, duly
endorsed in blank or otherwise in a form acceptable for transfer on the books of
Triton Delaware.
(d) Any Form of Election may be revoked by the stockholder submitting it to
the Exchange Agent only by written notice received by the Exchange Agent (i)
prior to 5:00 p.m., New York City time, on the Election Date or (ii) after the
date of the Proxy Statement, if (and to the extent that) the Exchange Agent is
legally required to permit revocations and the Effective Time of the Merger
shall not have occurred prior to such date. In addition, all Forms of Election
shall automatically be revoked if the Exchange Agent is notified in writing by
Triton Delaware that the Merger has been abandoned. If a Form of Election is
revoked, the certificate or certificates representing the Electing Shares to
which such Form of Election relates shall be promptly returned to the
stockholder submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent as to whether or not the Equity
Unit Election has been properly made or revoked pursuant to this Section 3.2
with respect to Electing Shares and when elections and revocations were received
by it shall be binding. If the Exchange Agent determines that any Equity Unit
Election was not properly made with respect to shares of Triton Delaware Common
Stock, such shares shall be treated by the Exchange Agent as shares which were
not Electing Shares at the Effective Time of the Merger, and such shares will be
automatically converted into Class A Shares pursuant to subsection (g) below.
The Exchange Agent shall also make all computations as to the allocation and the
proration contemplated by Section 3.2(f), and any such computation shall be
conclusive and binding on the holders of Electing Shares. The Exchange Agent
may, with the agreement of Triton Delaware, make such rules as are consistent
with this Section 3.2 for the implementation of the elections provided for
herein as shall be necessary or desirable fully to effect such elections.
(f) (i) The maximum number (the "Maximum Election Number") of shares of
Triton Delaware Common Stock with respect to which Equity Unit Elections can be
made shall be 25% of the number of shares of Triton Delaware Common Stock
outstanding immediately prior to the Effective Time of the Merger and the
minimum number (the "Minimum Election Number") of shares of Triton Delaware
Common Stock with respect to which Equity Unit Elections can be made shall be
15% of the number of shares of Triton Delaware Common Stock outstanding
immediately prior to the Effective Time of the Merger (such limitations, the
"Equity Unit Limitation"). (ii) If the number of Electing Shares exceeds
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the Maximum Election Number, then such Electing Shares shall be automatically
converted into Equity Units and Class A Shares in accordance with the terms of
subsection (g) below in the following manner:
(I)A proration factor (the "Proration Factor") shall be determined by
dividing the Maximum Election Number by the total number of Electing
Shares.
(II)
The number of Electing Shares covered by each Equity Unit Election to be
converted into Equity Units shall be determined by multiplying the
Proration Factor by the total number of Electing Shares covered by such
Equity Unit Election.
(III)
All Electing Shares, other than those shares converted into Equity Units
in accordance with Section (f)(ii)(ii), shall be converted into Class A
Shares as if such shares were not Electing Shares in accordance with the
terms of subsection (g) below.
(iii) If the number of Electing Shares is less than the Minimum Election
Number, no Class B Shares or Triton Delaware Preferred Stock will be issued and
all Electing Shares shall be converted into Class A Shares as if such shares
were not Electing Shares in accordance with the terms of subsection (g) below.
(iv) If the number of Electing Shares is less than or equal to the Maximum
Election Number and greater than or equal to the Minimum Election Number, then
all Electing Shares shall be converted into Equity Units in accordance with the
terms of Section 3.1(c)(ii), and all shares of Triton Delaware Common Stock
other than Electing Shares shall be converted into Class A Shares in accordance
with the terms of Section 3.1(c)(i).
(g) If (i) the number of Electing Shares is less than the Minimum Election
Number, (ii) the Exchange Agent determines that any Equity Unit Election was not
properly made with respect to shares of Triton Delaware Common Stock or (iii)
the Electing Shares are prorated and only a portion of the Electing Shares are
converted into Equity Units, each such Electing Share that is not automatically
converted into Equity Units shall be treated by the Exchange Agent as a share
which was not an Electing Share at the Effective Time of the Merger and shall be
converted into one Class A Share.
(h) A portion of each stockholder's Triton Delaware Common Stock exchanged
for Equity Units in the Reorganization will be transferred to Triton Delaware as
consideration for the issuance of the Triton Delaware Preferred Stock and the
remaining portion of such Triton Delaware Common Stock so exchanged will be
transferred to Triton Cayman as consideration for the issuance by Triton Cayman
of the Class B Shares. Allocation of the value of the exchanged Triton Delaware
Common Stock between the Triton Delaware Preferred Stock and Class B Shares
issued in exchange for such Triton Delaware Common Stock shall be determined
based on the respective fair market values of the Triton Delaware Preferred
Stock and the Class B Shares at the date of the Reorganization.
3.3 EXCHANGE OF STOCK
(a) Exchange Procedures. Following the Effective Time of the Merger, each
holder of an outstanding certificate or certificates theretofore representing
shares of Triton Delaware Common Stock (other than those stockholders who elect
to receive Equity Units in the Merger) may, but shall not be required to,
surrender the same to Triton Cayman for cancellation or transfer, and each such
holder or transferee will be entitled to receive certificates representing the
same number of Class A Shares as the shares of Triton Delaware Common Stock
previously represented by the stock certificates surrendered. Following the
Effective Time of the Merger, receipts evidencing depositary shares representing
the Equity Units will be issued to holders of Electing Shares, subject to
Section 3.2, and certificates representing Class A Shares will be issued to
holders of Electing Shares to the extent that such Electing Shares are not
converted into Equity Units as provided in Section 3.2. If any certificate
representing Class A Shares is to be issued in a name other than that in which
the certificate theretofore representing Triton Delaware Common Stock
surrendered is registered, it shall be a condition to such issuance that the
certificate surrendered shall be properly endorsed and otherwise
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in proper form for transfer and that the person requesting such issuance shall
either: (i) pay Triton Cayman or its agents any taxes or other governmental
charges required by reason of the issuance of certificates representing Class A
Shares in a name other than that of the registered holder of the certificate so
surrendered; or (ii) establish to the satisfaction of Triton Cayman or its
agents that such taxes or governmental charges have been paid. Until so
surrendered or presented for transfer each outstanding certificate which, prior
to the Effective Time of the Merger, represented Triton Delaware Common Stock
shall be deemed and treated for all corporate purposes to represent the
ownership of the same number of Class A Shares as though such surrender or
transfer and exchange had taken place.
(b) No Further Ownership Rights in Triton Delaware Common Stock. All Class
A Shares or Equity Units issued upon the surrender for exchange of certificates
in accordance with the terms of this Article III shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares of
Triton Delaware Common Stock theretofore represented by such certificates,
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
of the Merger which may have been declared or made by Triton Delaware on such
shares of Triton Delaware Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time of the Merger, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Triton Delaware Common Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
certificates are presented to the Surviving Corporation they shall be cancelled
and exchanged as provided in this Article III, except as otherwise provided by
law.
ARTICLE IV
EMPLOYEE BENEFIT AND COMPENSATION PLANS
At the Effective Time of the Merger, each employee benefit plan and
incentive compensation plan to which Triton Delaware is then a party shall be
assumed by, and continue to be the plan of, the Surviving Corporation. To the
extent any employee benefit or incentive compensation plan of Triton Delaware
provides for the issuance or purchase of, or otherwise relates to, Triton
Delaware Common Stock, after the Effective Time of the Merger, such plan shall
be deemed to provide for the issuance or purchase of, or otherwise relate to,
Class A Shares.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER
The respective obligation of each party to effect the Merger is subject to
the satisfaction or waiver of the following conditions:
(a)
Stockholder Approval. The Triton Delaware Stockholder Approval shall have
been obtained.
(b)
Form S-4. The registration statement on Form S-4 filed with the Securities
and Exchange Commission by Triton Delaware and Triton Cayman in connection
with the issuance of the Class A Shares, Equity Units consisting of the
Class B Shares and the Triton Delaware Preferred Stock in the Merger shall
have become effective under the Securities Act of 1933, as amended, and
shall not be the subject of any stop order or proceedings seeking a stop
order.
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ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time of
the Merger, whether before or after approval by the stockholders of Triton of
matters presented in connection with the Merger, by action of the Board of
Directors of Triton Cayman.
6.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in Section 6.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Triton Delaware, Sub or Triton Cayman,
other than the provisions of this Section 6.2 and Article VII.
6.3 AMENDMENT
This Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by the
stockholders of Triton Delaware provided, however, that after any such approval,
there shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
6.4 WAIVER
At any time prior to the Effective Time of the Merger, the parties may waive
compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party of this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
6.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER
A termination of this Agreement pursuant to Section 6.1, an amendment of
this Agreement pursuant to Section 6.3 or a waiver pursuant to Section 6.4
shall, in order to be effective, require in the case of Triton Delaware, Sub or
Triton Cayman, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE VII
GENERAL PROVISIONS
7.1 NOTICES
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Triton Delaware,
Triton Energy Corporation
6688 North Central Expressway, Suite 1400
Dallas, Texas 75206-9926
(b) if to Triton Cayman, to
Triton Energy Limited
Caledonian House
Mary Street
Post Office Box 1043, George Town
Grand Cayman, Cayman Islands
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(c) if to Sub, to
c/o Triton Energy Corporation
6688 North Central Expressway, Suite 1400
Dallas, Texas 75206-9926
7.2 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement (including the documents and instruments referred to herein)
(a) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article
III, are not intended to confer upon any person other than the parties any
rights or remedies.
7.3 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
IN WITNESS WHEREOF, Triton Delaware, Sub and Triton Cayman have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
TRITON ENERGY CORPORATION
By: /s/_ROBERT B. HOLLAND, III________
Name: Robert B. Holland, III
Title: Senior Vice President, General
Counsel and Secretary
TEL MERGER CORP.
By: /s/_ROBERT B. HOLLAND, III________
Name: Robert B. Holand, III
Title: Vice President
TRITON ENERGY LIMITED
By: /s/_ROBERT B. HOLLAND, III________
Name: Robert B. Holland, III
Title: Senior Vice President
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EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
TRITON ENERGY CORPORATION
ARTICLE I.
The name of the corporation is Triton Energy Corporation.
ARTICLE II.
The period of its duration is perpetual.
ARTICLE III.
The purposes of the corporation are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV.
The aggregate number of shares which this corporation shall have authority
to issue is Two Hundred Five Million (205,000,000) shares consisting of Two
Hundred Million (200,000,000) shares of Common Stock of the par value of $0.01
per share and Five Million (5,000,000) shares of Preferred Stock of the par
value of $0.01 per share.
The Preferred Stock may be divided into and issued into series. If the
shares of any such class are to be issued in series, then each series shall be
so designated as to distinguish the shares thereof from the shares of any such
class and variations and the relative rights and preferences as between
different series can be fixed and determined by the Board of Directors. The
authority of the Board of Directors with respect to each series shall include,
without limitation thereto, the determination of any or all of the following and
the shares of each series may vary from the shares of any other series in the
following respects:
The Board of Directors of this corporation is hereby authorized to issue the
Preferred Stock at any time and from time to time, in one (1) or more series and
for such consideration as may be fixed from time to time by the Board of
Directors, but not less than the par value thereof. The number of shares to
comprise each such series, which number may be increased (but not above the
total number of authorized shares of the class except where otherwise provided
by the Board of Directors in creating such series) or decreased (but not below
the number of shares thereof then outstanding), shall be determined from time to
time by the Board of Directors. The Board of Directors is hereby expressly
authorized, before issuance of any shares of a particular series, to determine
any and all rights, preferences and limitations pertaining to such series
including but not limited to:
(1)Voting rights, if any, including without limitation, the authority to
confer multiple votes per share, voting rights as to specified matters or
issues such as mergers, consolidations or sales of assets, or voting
rights to be exercised either together with holders of common stock as a
single class, or independently as a separate class;
(2)Rights, if any, permitting the conversion or exchange of any such shares,
at the option of the holder into any other class or series of shares of
this corporation and the price or prices or the rates of exchange and any
adjustment thereto at which such shares will be convertible or
exchangeable;
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(3)The rate (or method of determining the rate) of dividends, if any,
payable on shares of such series, the conditions and the dates upon which
such dividends shall be payable and whether such dividends shall be
cumulative or non-cumulative;
(4)The amount payable on shares of such series in the event of any
liquidation, dissolution or winding up of the affairs of this
corporation;
(5)Redemption, repurchase, retirement and sinking fund rights, preferences
and limitations, if any, the amount payable on shares of such series in
the event of such redemption, repurchase or retirement, the terms and
conditions of any sinking fund, the manner of creating such fund or funds
and whether any of the foregoing shall be cumulative or non-cumulative;
and
(6)Any other preference and relative, participating, optional or other
special rights and qualifications, limitations or restrictions of shares
of such series not fixed and determined herein, to the extent permitted
to do so by law.
All shares of Preferred Stock shall be of equal rank and shall be identical,
except with respect to the particulars that may be fixed by the Board of
Directors as above provided and as to the date from which dividends thereon, if
any, shall be cumulative if made cumulative by the Board of Directors.
No stockholder of the corporation will, solely by reason of holding shares
of any class, have any preemptive or preferential right to purchase or subscribe
for any shares of the corporation, now or hereafter to be authorized, or any
notes, debentures, bonds or other securities convertible into or carrying
warrants, rights or options to purchase shares of any class, now or hereafter to
be authorized, whether or not the issuance of any such shares or such notes,
debentures, bonds or other securities would adversely affect the dividend,
voting or any other rights of such stockholder. The Board of Directors may
authorize the issuance of, and the corporation may issue, shares of any class of
the corporation, or any notes, debentures, bonds or other securities convertible
into or carrying warrants, rights or options to purchase any such shares,
without offering any shares of any class to the existing holders of any class of
stock of the corporation. Any such securities or additional shares of stock may
be issued or disposed of by the Board of Directors to such persons and on such
terms as in its discretion may be deemed advisable.
At each election for directors every stockholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote. Cumulative voting, for the election
of directors or otherwise, is expressly prohibited. Election of directors need
not be by ballot. On all matters coming before the stockholders, other than the
election of directors, each share of issued and outstanding Common Stock shall
be entitled to one (1) vote.
ARTICLE V.
The post office address of the corporation's registered office is c/o
Corporation Trust Company, 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801, and the name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE VI.
Subject to the rights of any series of Preferred Stock designated pursuant
to Article IV, the number of directors will be determined in accordance with the
Bylaws of the corporation.
ARTICLE VII.
To the fullest extent permitted by the laws of the State of Delaware as the
same exist or may hereafter be amended, a director of the corporation will not
be liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director. Any repeal or modification of this Article will
not increase the personal liability of any director of the corporation for any
act
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or occurrence taking place before such repeal or modification, or adversely
affect any right or protection of a director of the corporation existing at the
time of such repeal or modification. The provisions of this Article shall not be
deemed to limit or preclude indemnification of a director by the corporation for
any liability of a director that has not been eliminated by the provisions of
this Article.
ARTICLE VIII.
The corporation will, to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended, indemnify and advance expenses to any and all persons it has power to
indemnify and advance expenses to under such law from and against any and all of
the expenses, liabilities or other matters referred to in or covered by such
law. Such indemnification and advancement of expenses may be provided pursuant
to any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his director or officer capacity and as to
action in another capacity while holding such office, will continue as to a
person who has ceased to be a director, officer, employee or agent, and will
inure to the benefit of the heirs, executors and administrators of such a
person.
ARTICLE IX.
The corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE X.
The Board of Directors is expressly authorized to alter, amend or repeal the
Bylaws of the corporation or to adopt new Bylaws.
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