ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS
This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange
Commission (the "SEC") by Ensco (File No. 333-218808), constitutes a prospectus of Ensco under Section 5 of the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Ensco Class A ordinary shares, nominal value $0.10 per share (the "Ensco Class A ordinary shares"), to be issued to holders of Atwood common stock, par value $1.00 per share (the
"Atwood common stock"), pursuant to the merger agreement.
This
joint proxy statement/prospectus also constitutes a joint proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). It also
includes a notice of meeting with respect to the Ensco general meeting, at which Ensco shareholders will be asked to consider and vote upon, among other matters, a proposal to approve the allotment
and issuance of Ensco Class A ordinary shares to Atwood shareholders pursuant to the merger agreement, and a notice of the Atwood special meeting, at which Atwood shareholders will be asked to
consider and vote upon, among other matters, a proposal to approve the merger agreement and the transactions contemplated thereby, including the merger.
You
should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information
that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated August 18, 2017. The
information contained in this joint proxy statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document,
unless the information specifically indicates that another date applies. Neither the mailing of this joint proxy statement/prospectus to Ensco shareholders or Atwood shareholders nor the issuance of
Ensco Class A ordinary shares to Atwood shareholders pursuant to the merger agreement will create any implication to the contrary.
This
joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in
which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
The
information concerning Ensco contained or incorporated by reference in this joint proxy statement/prospectus has been provided by Ensco, and the information concerning Atwood
contained or incorporated by reference in this joint proxy statement/prospectus has been provided by Atwood.
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This
joint proxy statement/prospectus contains a description of the representations and warranties that each of Ensco and Atwood made to the other in the merger agreement.
Representations and warranties made by Ensco, Atwood and other applicable parties are also set forth in contracts and other documents (including the merger agreement) that are attached or filed as
exhibits to this joint proxy statement/prospectus or are incorporated by reference into this joint proxy statement/prospectus. These representations and warranties were made as of specific dates, may
be subject to important qualifications and limitations agreed to between the parties in connection with negotiating the terms of the agreement, and may have been included in the agreement for the
purpose of allocating risk between the parties rather than to establish matters as facts. These materials are included or incorporated by reference only to provide you with information regarding the
terms and conditions of the agreements, and not to provide any other factual information regarding Ensco, Atwood or their respective businesses. Accordingly, the representations and warranties and
other provisions of the merger agreement and the other agreements incorporated by reference herein should not be read alone, but instead should be read only in conjunction with the other information
provided elsewhere in this joint proxy statement/prospectus or incorporated by reference herein, as applicable.
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE MEETINGS
The following are some questions that Ensco shareholders and Atwood shareholders may have regarding the proposals being
considered at the Ensco general meeting and the Atwood special meeting and brief answers to those questions. Ensco and Atwood urge you to read carefully this entire joint proxy statement/prospectus,
including the annexes, and the other documents to which this joint proxy statement/prospectus refers or incorporates by reference because the information in this section does not provide all the
information that might be important to you.
-
Q:
-
What is the merger for which I am being asked to vote?
-
A:
-
Ensco,
Echo Merger Sub LLC, a wholly owned subsidiary of Ensco ("Merger Sub"), and Atwood have entered into an Agreement and Plan of Merger, dated as of
May 29, 2017 (the "merger agreement"), pursuant to which Merger Sub will merge with and into Atwood (the "merger"), with Atwood surviving the merger as a wholly owned subsidiary of Ensco. Each
issued and outstanding share of Atwood common stock, par value $1.00 per share (the "Atwood common stock"), will be converted into the right to receive 1.60 (the "exchange ratio") Ensco Class A
ordinary shares, nominal value $0.10 per share (the "Ensco Class A ordinary shares"), as described under "The Merger AgreementConsideration To Be Received in the Merger." A copy of
the merger agreement is attached as Annex A to this joint proxy statement/prospectus.
-
Q:
-
Why are Ensco and Atwood proposing the merger?
-
A:
-
The
board of directors of Ensco (the "Ensco Board") and the board of directors of Atwood (the "Atwood Board") believe that the merger will benefit Ensco shareholders
and Atwood shareholders, respectively, by creating a leading global offshore drilling company given the complementary fleet composition, geographic scope and customer bases of the two companies. To
review the reasons for the merger in greater detail, see "The MergerEnsco's Reasons for the Merger; Recommendation of the Ensco Board of Directors" beginning on page 57 and "The
MergerAtwood's Reasons for the Merger; Recommendation of the Atwood Board of Directors" beginning on page 59.
-
Q:
-
What are the Ensco shareholders being asked to approve?
-
A:
-
Ensco
shareholders are being asked to approve the authorization of, in addition to all subsisting authorities:
-
1.
-
Ensco Merger Consideration Proposal
: The allotment and issuance of Ensco Class A ordinary shares to Atwood
shareholders pursuant to the merger agreement;
-
2.
-
Ensco General Allotment Authority Increase Proposal
: The allotment and issuance up to a nominal amount of Ensco
Class A ordinary shares, which, together with the nominal amount of shares in Ensco authorized to be allotted and issued pursuant to paragraph (A) of resolution 11 passed at the annual
general meeting of Ensco shareholders held on May 22, 2017 (the "Ensco 2017 Annual General Meeting"), represents approximately 33% of the expected enlarged share capital of Ensco immediately
following the completion of the merger, and up to a further same nominal amount of Ensco Class A ordinary shares in connection with a pre-emptive offering of shares;
-
3.
-
Ensco General Disapplication of Pre-emptive Rights Proposal
: The allotment and issuance up to a nominal amount of
Ensco Class A ordinary shares for cash on a non-pre-emptive basis, which, together with the nominal amount of shares in Ensco authorized to be allotted and issued for cash on a non-pre-emptive
basis pursuant to resolution 12 passed at the Ensco 2017 Annual
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As
a U.K. company publicly traded on the New York Stock Exchange (the "NYSE"), Ensco shareholder approval of the Ensco Merger Consideration is subject to both the shareholder approval requirements
under both the U.K. Companies Act 2006 (the "Companies Act 2006") and NYSE rules. The Ensco Merger Consideration Proposal is being proposed as an ordinary resolution. Assuming a quorum is present,
such proposal will be approved for the purposes of the Companies Act 2006 and NYSE rules if a majority of the votes cast are cast in favor thereof. The Ensco General Allotment Authority Increase
Proposal will be proposed as an ordinary resolution and, assuming a quorum is
present, will be approved if a majority of the votes cast are cast in favor thereof. Each of the Ensco General Disapplication of Pre-emptive Rights Proposal and the Ensco Specified Disapplication of
Pre-emptive Rights Proposal will be proposed as a special resolution, which means, assuming a quorum is present, each such proposal will be approved if at least 75% of the votes cast are
cast in favor thereof.
Approval
of the Ensco Merger Consideration Proposal is required for completion of the merger. Approval of the other Ensco proposals set forth above is not required in order to complete the merger.
Your vote is very important. You are encouraged to submit a proxy or voting instruction card as soon as possible.
-
Q:
-
How does the Ensco Board recommend that Ensco shareholders vote?
-
A:
-
The Ensco Board has unanimously determined that the form, terms and provisions of the merger agreement and the transactions contemplated
thereby, including the merger and the allotment and issuance of the Ensco Class A ordinary shares, are advisable, fair and reasonable to and in the best interests of Ensco and its shareholders
and unanimously recommends that Ensco shareholders vote:
-
-
"FOR" the Ensco Merger Consideration Proposal;
-
-
"FOR" the Ensco General Allotment Authority Increase
Proposal;
-
-
"FOR" the Ensco General Disapplication of Pre-Emptive Rights Proposal;
and
-
-
"FOR" the Ensco Specified Disapplication of Pre-Emptive Rights Proposal.
For
a more complete description of the recommendation of the Ensco Board with respect to the Ensco Merger Consideration Proposal, see "The MergerEnsco's Reasons for the Merger;
Recommendation of the Ensco Board of Directors" beginning on page 57.
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-
Q:
-
What are Atwood shareholders being asked to consider and approve?
-
A:
-
Atwood
shareholders are being asked to consider and approve:
-
1.
-
Atwood Merger Proposal
: The merger agreement and the transactions contemplated thereby, including the merger;
-
2.
-
Atwood Compensatory Proposal
: An advisory (non-binding) vote on the specified compensation that may be received by
Atwood's named executive officers in connection with the transactions contemplated by the merger agreement, including the merger; and
-
3.
-
Atwood Adjournment Proposal
: The adjournment of the Atwood special meeting, if necessary or advisable, to solicit
additional proxies in favor of the Atwood Merger Proposal or take any other action in connection with the merger agreement.
The
Atwood Merger Proposal requires the approval of Atwood shareholders holding at least two-thirds of the Atwood common stock entitled to vote thereon pursuant to the requirements of the Texas
Business Organizations Code (the "TBOC"). Assuming a quorum is present, the Atwood Compensatory Proposal requires the approval of a majority of votes cast by the Atwood shareholders present, in person
or by proxy, at the Atwood special meeting. The vote to approve the Atwood Compensatory Proposal is not a condition to the completion of the merger, and the vote of Atwood's shareholders on such
proposal is advisory in nature and will not be binding on Ensco or Atwood. Accordingly, regardless of the outcome of the Atwood Compensatory Proposal, if the Atwood Merger Proposal is approved and the
merger is completed, specified compensation may be paid to Atwood's named executive officers. Whether or not a quorum is present, the Atwood Adjournment Proposal requires the approval of a majority of
votes cast by the Atwood shareholders present, in person or by proxy, at the Atwood special meeting.
Approval
of the Atwood Merger Proposal is required for completion of the merger. Approval of the other Atwood proposals set forth above is not required in order to complete the merger.
Your vote is very important. You are encouraged to submit a proxy or voting instruction card as soon as possible.
-
Q:
-
How does the Atwood Board recommend that Atwood shareholders vote?
-
A:
-
The Atwood Board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are
advisable and in the best interests of Atwood and its shareholders and unanimously recommends that Atwood shareholders vote:
-
-
"FOR" the Atwood Merger Proposal;
-
-
"FOR" the Atwood Compensatory Proposal; and
-
-
"FOR" the Atwood Adjournment Proposal.
For
a more complete description of the recommendation of the Atwood Board with respect to the Atwood Merger Proposal, see "The MergerAtwood's Reasons for the Merger; Recommendation of the
Atwood Board of Directors" beginning on page 59.
-
Q:
-
When and where is the Ensco general meeting?
-
A:
-
The
Ensco general meeting will be held at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY, England, at 3:00 P.M. (London time)
on October 5, 2017.
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-
Q:
-
When and where is the Atwood special meeting?
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A:
-
The
Atwood special meeting will be held at 15011 Katy Freeway, First Floor, Houston, Texas 77094, at 9:00 A.M. (Houston time) on October 5, 2017.
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Q:
-
Who can attend and vote at the Ensco general meeting?
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A:
-
All
Ensco shareholders of record as of the close of business on August 23, 2017 (the "Ensco record date") are entitled to receive notice of, attend and vote at
the Ensco general meeting. If you are an Ensco shareholder of record as of the close of business on the Ensco record date for the Ensco general meeting and plan to attend the Ensco general meeting,
please bring the notice of meeting as your proof of ownership of Ensco Class A ordinary shares. If you are a "street name" holder of Ensco Class A ordinary shares and wish to attend the
Ensco general meeting, you will need to bring evidence of your share ownership in the form of a recently dated letter from your broker, bank, trust or other nominee as of the Ensco record date and
proof of your identity. On verification of such evidence, you will be admitted to the Ensco general meeting, but may not vote at the Ensco general meeting unless you hold a proxy from the shareholder
of record. Each share is entitled to one vote at the Ensco general meeting, and there is no cumulative voting. In accordance with the Ensco Articles of Association, voting on all resolutions will be
conducted on a poll and not on a show of hands.
Please
note that no cameras, recording equipment, laptops, tablets, cellular telephones, smartphones or other similar equipment, electronic devices, large bags, briefcases or packages will be
permitted in the Ensco general meeting, and security measures will be in effect to ensure the safety of all attendees.
In all cases, you will need a photo ID to gain
admission.
Ensco
will commence its solicitation of proxies on or about August 18, 2017, which is before the Ensco record date. Ensco will continue to solicit proxies until the date of the Ensco general
meeting. Each Ensco shareholder of record on August 23, 2017 who has not yet received a joint proxy statement/prospectus prior to the Ensco record date will receive a joint proxy
statement/prospectus and have the opportunity to vote on the matters described in the joint proxy statement/prospectus. Proxies delivered by Ensco shareholders prior to the Ensco record date will be
valid and effective so long as the Ensco shareholder providing the proxy is an Ensco shareholder on the Ensco record date. If you are not an Ensco shareholder of record on the Ensco record date, any
proxy you deliver will be ineffective. If you deliver a proxy prior to the Ensco record date and remain an Ensco shareholder on the Ensco record date, you do not need to deliver another proxy after
the Ensco record date. If you deliver a proxy prior to the Ensco record date and do not revoke that proxy, your proxy will be deemed to cover the number of Ensco Class A ordinary shares you own
on the Ensco record date even if that number is different from the number of Ensco Class A ordinary shares you owned when you executed and delivered your proxy. Proxies received from persons
who are not Ensco shareholders of record on the Ensco record date will not be effective.
-
Q:
-
Who can attend and vote at the Atwood special meeting?
-
A:
-
All
Atwood shareholders of record as of the close of business on August 23, 2017 (the "Atwood record date") are entitled to receive notice of, attend and vote
at the Atwood special meeting. If you are a "street name" holder of shares of Atwood common stock and wish to attend the Atwood special meeting, you will need to bring evidence of your share ownership
in the form of a currently dated letter from your broker, bank, trust or other nominee and proof of your identity. On verification of such evidence, you will be admitted to the Atwood special meeting,
but may not vote at the Atwood special meeting unless you are a shareholder of record or hold a proxy from a shareholder of record.
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Atwood
will commence its solicitation of proxies on or about August 18, 2017, which is before the Atwood record date. Atwood will continue to solicit proxies until the date of the Atwood
special meeting. Each Atwood shareholder of record on August 23, 2017 who has not yet received a joint proxy statement/prospectus prior to the Atwood record date will receive a joint proxy
statement/prospectus and have the opportunity to vote on the matters described in the joint proxy statement/prospectus. Proxies delivered by Atwood shareholders prior to the Atwood record date will be
valid and effective so long as the Atwood shareholder providing the proxy is an Atwood shareholder on the Atwood record date. If you are not an Atwood shareholder of record on the Atwood record date,
any proxy you deliver will be ineffective. If you deliver a proxy prior to the Atwood record date and remain an Atwood shareholder on the Atwood record date, you do not need to deliver another proxy
after the Atwood record date. If you deliver a proxy prior to the Atwood record date and do not revoke that proxy, your proxy will be deemed to cover the number of shares of Atwood common stock you
own on the Atwood record date even if that number is different from the number of shares of Atwood common stock you owned when you executed and delivered your proxy. Proxies received from persons who
are not Atwood shareholders of record on the Atwood record date will not be effective.
-
Q:
-
If my Ensco Class A ordinary shares or Atwood common stock are held in "street name" by my broker, bank, trust or other nominee, will
my broker, bank, trust or other nominee vote my Ensco Class A ordinary shares or Atwood common stock for me?
-
A:
-
If
your shares are held in the name of a broker, bank, trust or other nominee as a custodian, you are a "street name" holder. Please follow the voting instructions
provided by your broker, bank, trust or other nominee. Please note that you may not vote shares held in street name by returning a proxy card or voting instruction directly to Ensco or Atwood or by
voting in person at the respective general or special meetings unless you provide a "legal proxy," which you must obtain from your broker, bank, trust or other nominee.
If
you are a current or former Ensco employee who holds Ensco Class A ordinary shares in the Ensco Savings Plan, you will receive voting instructions from the trustee of the plan for Ensco
Class A ordinary shares allocated to your account. If you fail to give voting instructions to the trustee of the plan, your Ensco Class A ordinary shares will be voted by such trustee in
the same proportion and direction as Ensco Class A ordinary shares held by such trustee for which voting instructions were received. To allow sufficient time for voting by the trustee and
administrator of the Ensco Savings Plan, your voting instructions for Ensco Class A ordinary shares held in the plan must be received by 11:59 P.M. Eastern Time on October 2,
2017.
Except
as described in the preceding paragraph, unless you instruct your broker, bank, trust or other nominee how to vote your Ensco Class A ordinary shares or Atwood common stock, as
applicable, your shares will
NOT
be voted on any of the proposals presented at the Ensco general meeting or the Atwood special meeting, as applicable.
-
Q:
-
What are the effects of abstentions and broker non-votes at the meetings?
-
A:
-
An
abstention occurs when a shareholder abstains from voting (either in person or by proxy) on one or more of the proposals. Broker non-votes occur when a broker,
bank, trust or other nominee returns a proxy but does not have authority to vote on a particular proposal. You should therefore provide your broker, bank, trust or other nominee with instructions as
to how to vote your Ensco Class A ordinary shares or Atwood common stock, as applicable.
In
connection with the Ensco general meeting, abstentions and broker non-votes will be considered in determining the presence of a quorum. While abstentions and broker non-votes are not considered
votes cast under the Companies Act 2006, under NYSE rules abstentions, but not
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broker
non-votes, will be considered as votes cast for determining whether a sufficient number of votes have been cast on a particular proposal. As a result, for purposes of determining whether the
Ensco Merger Consideration Proposal has been approved in accordance with the Companies Act 2006,
abstentions and broker non-votes will not have any effect on the outcome of the vote. With respect to NYSE rules, abstentions will have the same effect as votes cast "AGAINST" the Ensco Merger
Consideration Proposal and broker non-votes will not have any effect on the outcome of the vote. Abstentions and broker non-votes will have no effect on the outcome of the Ensco General Allotment
Authority Increase Proposal, the Ensco General Disapplication of Pre-emptive Rights Proposal or the Ensco Specified Disapplication of Pre-emptive Rights Proposal.
In
connection with the Atwood special meeting, abstentions and broker non-votes will be considered in determining the presence of a quorum. Abstentions and broker non-votes will have the same effect
as votes cast "AGAINST" the Atwood Merger Proposal, but will have no effect on the outcome of the Atwood Compensatory Proposal or the Atwood Adjournment Proposal.
-
Q:
-
What happens if the merger is not completed?
-
A:
-
If
the Ensco Merger Consideration Proposal is not approved by the Ensco shareholders, if the Atwood Merger Proposal is not approved by the Atwood shareholders or if
the merger is not completed for any other reason, Atwood shareholders will not receive any Ensco Class A ordinary shares in consideration for their shares of Atwood common stock. Instead,
Atwood will remain an independent public company and Atwood common stock will continue to be listed and traded on the NYSE. Under the merger agreement, Ensco may be required to pay Atwood a
termination fee of $50 million (less any expenses previously reimbursed by Ensco) if the merger agreement is terminated under certain circumstances, and Atwood may be required to pay Ensco a
termination fee of $30 million (less any expenses previously reimbursed by Atwood) if the merger agreement is terminated under certain circumstances. See "The Merger
AgreementTermination Fees and Expense Reimbursement" beginning on page 116.
-
Q:
-
Are there risks associated with the merger that I should consider in deciding how to vote?
-
A:
-
Yes.
There are a number of risks related to the merger that are discussed in this joint proxy statement/prospectus and in other documents incorporated by reference.
You should read carefully the detailed description of the risks associated with the merger and the operations of Ensco after the merger described in "Risk Factors" beginning on page 19.
-
Q:
-
Are Atwood shareholders entitled to appraisal or dissenters' rights?
-
A:
-
No.
Atwood shareholders who dissent to the merger will not have rights to an appraisal of the fair value of their shares. Under the TBOC, shareholders generally have
appraisal rights in the event of a merger or consolidation. However, these appraisal rights are not available if (i) the shares held by the shareholder are part of a class of shares listed on a
national securities exchange or held of record by at least 2,000 holders, (ii) the shareholder is not required to accept for his or her shares any consideration that is different than the
consideration to be provided to any other holder of shares of the same class held by the shareholder, and (iii) the shareholder is not required to accept any consideration other than shares of
a corporation that satisfy the requirements in clause (i) above. Because Ensco Class A ordinary shares are listed on the NYSE, a national securities exchange, and are expected to
continue to be so listed following the merger, and because the merger otherwise satisfies the foregoing requirements, Atwood shareholders will not be entitled to appraisal or dissenters' rights in the
merger with respect to their shares of Atwood common stock.
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-
Q:
-
What do I need to do now?
-
A:
-
After
you have carefully read this joint proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instruction card, as
applicable, and returning it in the enclosed postage-paid envelope or, if available, by submitting your proxy or voting instructions by telephone or through the Internet as soon as possible so that
your Ensco Class A ordinary shares or your shares of Atwood common stock, as applicable, will be represented and voted at the Ensco general meeting or Atwood special meeting, as applicable.
If
you are a shareholder of record, please sign the proxy card exactly as your name appears on the card. If shares are owned jointly, each joint owner should sign the proxy card. If a shareholder is a
corporation, limited liability company or partnership, the proxy card should be signed in the full corporate, limited liability company or partnership name by a duly authorized person. If the proxy
card is signed pursuant to a power of attorney or by an executor, administrator, trustee or guardian, please state the signatory's full title and provide a certificate or other proof of appointment.
Please
refer to your proxy card, voting instruction card or the information forwarded by your broker, bank, trust or other nominee to see which voting options are available to you.
The
Internet and telephone proxy submission procedures are designed to verify your holdings and to allow you to confirm that your instructions have been properly recorded.
Neither
the submission of a proxy or voting instructions, nor the method by which you submit a proxy or voting instructions will in any way limit your right to vote at the Ensco general meeting or the
Atwood special meeting, as applicable, if you later decide to attend the meeting in person. If your Ensco Class A ordinary shares are held in the name of a broker, bank, trust or other nominee,
you must obtain a proxy, executed in your favor, from the holder of record to be able to appear and vote at the Ensco general meeting, although "street name" holders of Ensco Class A ordinary
shares are permitted to attend the Ensco general meeting at the invitation of the Chairman of the Ensco general meeting (the "Chairman"). If your shares of Atwood common stock are held in the name of
a broker, bank, trust or other nominee, you must obtain a proxy, executed in your favor, from the holder of record, to be able to vote at the Atwood special meeting.
-
Q:
-
How will my Ensco Class A ordinary shares be voted?
-
A:
-
All
Ensco Class A ordinary shares entitled to vote and represented by properly completed proxies received prior to the Ensco general meeting, and not revoked,
will be voted at the Ensco general meeting as instructed on the proxies.
If you properly complete, sign and return a proxy card, but do not indicate how your Ensco
Class A ordinary shares should be voted on a matter, the Ensco Class A ordinary shares represented by your proxy will be voted as the Ensco Board recommends and,
therefore:
-
-
"FOR" the Ensco Merger Consideration Proposal;
-
-
"FOR" the Ensco General Allotment Authority Increase
Proposal;
-
-
"FOR" the Ensco General Disapplication of Pre-emptive Rights Proposal;
and
-
-
"FOR" the Ensco Specified Disapplication of Pre-emptive Rights Proposal.
-
Q:
-
How will my shares of Atwood common stock be voted?
-
A:
-
All
shares of Atwood common stock entitled to vote and represented by properly completed proxies received prior to the Atwood special meeting, and not revoked, will
be voted at the
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Atwood
special meeting as instructed on the proxies.
If you properly complete, sign and return a proxy card, but do not indicate how your shares of Atwood common stock should
be voted on a matter, the shares of Atwood common stock represented by your proxy will be voted as the Atwood Board recommends and,
therefore,
-
-
"FOR" the Atwood Merger Proposal;
-
-
"FOR" the Atwood Compensatory Proposal; and
-
-
"FOR" the Atwood Adjournment Proposal.
-
Q:
-
Can I revoke my proxy or voting instructions or change my vote after I have delivered my proxy or voting
instructions?
-
A:
-
Yes.
If you are a shareholder of record of Ensco Class A ordinary shares or Atwood common stock, you can do this in any of the three following
ways:
-
-
by sending a written notice to the Secretary of Ensco or the Corporate Secretary of Atwood, as applicable, at the address set forth in the
Ensco notice of general meeting or Atwood notice of special meeting, as applicable, in time to be received before such meeting, stating that you would like to revoke your proxy;
-
-
by completing, signing and dating another proxy card and returning it by mail in time to be received before the Ensco general meeting or the
Atwood special meeting, as applicable, or by submitting a later dated proxy via the Internet or telephone, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
-
-
by attending the meeting and voting in person (simply attending the Ensco general meeting or Atwood special meeting, as applicable, without
voting will not revoke your proxy or change your vote).
If
your Ensco Class A ordinary shares or shares of Atwood common stock are held in an account by a broker, bank, trust or other nominee and you desire to change your vote, you should contact
your broker, bank, trust or other nominee for instructions on how to do so.
-
Q:
-
What happens if I hold both Ensco Class A ordinary shares and shares of Atwood common stock?
-
A:
-
You
will receive separate proxy or voting instruction cards for each company and must complete, sign and date each proxy or voting instruction card and return each
proxy or voting instruction card in the appropriate postage-paid envelope or, if available, by submitting a proxy or voting instructions by telephone or through the Internet for each company.
-
Q:
-
What are the U.S. federal income tax consequences of the merger to Atwood shareholders?
-
A:
-
In
general, subject to the discussion below relating to the potential application of Section 304 of the U.S. Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") under the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the MergerTax Consequences of the
Merger to Atwood Shareholders," the receipt by U.S. holders (as defined in the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the
Merger") of Ensco Class A ordinary shares pursuant to the merger should be a taxable exchange for U.S. federal income tax purposes. Assuming such treatment, a U.S. holder generally will
recognize capital gain or loss equal to the difference between (i) the fair market value of the Ensco Class A ordinary shares received as consideration in the merger on the date of the
exchange and (ii) such U.S. holder's adjusted tax basis in the shares of Atwood common stock surrendered in the exchange. A U.S. holder's adjusted basis in its shares of Atwood common stock
will generally equal such U.S.
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holder's
purchase price for such shares, as adjusted to take into account stock dividends, certain non-dividend distributions, stock splits and similar transactions. For further information, please
refer to "Material United States Federal Income Tax Consequences of the Merger."
A
non-U.S. holder (as defined in the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the Merger") generally should not be subject
to U.S. federal income tax on any gain recognized in the merger other than in certain specific circumstances (including as a result of the potential application of Section 304 of the Internal
Revenue Code), as further described under the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the MergerTax
Consequences of the Merger to Atwood Shareholders."
The
U.S. federal income tax consequences described above may not apply to all Atwood shareholders. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to
consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
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Q:
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Who can answer my questions?
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A:
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If
you have any questions about the merger or how to submit your proxy or voting instructions, or if you need additional copies of this joint proxy
statement/prospectus, the enclosed proxy or voting instructions card, you should contact:
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If you are an Ensco shareholder:
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If you are an Atwood shareholder:
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Proxy Solicitor:
D.F. King & Co., Inc.
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Proxy Solicitor:
Innisfree M&A Incorporated
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Shareholders Call Toll-Free at:
(888) 626-0988
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Shareholders Call Toll-Free at:
(888) 750-5834
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Banks and Brokers Call Collect at:
(212) 269-5550
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Banks and Brokers Call Collect at:
(212) 750-5833
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or
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MacKenzie Partners, Inc.
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Shareholders Call Toll-Free at:
(800) 322-2885
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Banks and Brokers Call Collect at:
(212) 929-5500
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No
other methods of communication will be accepted. You may not use any electronic address provided in this joint proxy statement/prospectus or any related documents to communicate with Ensco or
Atwood for any purposes other than those expressly stated.
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SUMMARY
This summary highlights information contained elsewhere in this joint proxy statement/prospectus. Ensco and Atwood urge
you to read carefully the remainder of this joint proxy statement/prospectus, including the attached annexes and the other documents to which we refer to herein and documents incorporated by reference
into this joint proxy statement/prospectus, as this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the
Ensco general meeting or Atwood special meeting, as applicable. See also the section entitled "Where You Can Find More Information" beginning on page 178. We have included page references to direct
you to a more complete description of the topics presented in this summary.
The Companies (See page 141)
Ensco plc
Ensco is a global offshore contract drilling company and one of the leading providers of offshore contract drilling services to the
international oil and gas industry. Ensco owns and operates an offshore drilling rig fleet of 53 rigs, with drilling operations in most of the strategic markets around the globe. Ensco also has two
rigs under construction. For the three and six months ended June 30, 2017, Ensco's operating revenue totaled approximately $457.5 million and $928.6 million, respectively. For the
year ended December 31, 2016, Ensco had annual revenue of approximately $2.8 billion and employed approximately 4,900 personnel.
The
Ensco Class A ordinary shares are listed on the NYSE under the symbol "ESV." Ensco is a public limited company organized under the laws of England and Wales. Ensco's principal
executive offices are located at 6 Chesterfield Gardens, London, W1J 5BQ, United Kingdom and its telephone number is 44 (0) 20 7659 4660.
Additional
information about Ensco and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See "Where You Can Find More
Information" beginning on page 178.
Echo Merger Sub LLC
Merger Sub, a wholly owned subsidiary of Ensco, is a Texas limited liability company formed on May 26, 2017 for the purpose of effecting
the merger. Under the merger agreement, Merger Sub will merge with and into Atwood, with Atwood continuing as the surviving company and a wholly owned subsidiary of Ensco. Merger Sub has not conducted
any activities other than those incidental to its formation and the matters contemplated by the merger agreement, including the preparation of applicable regulatory filings in connection with the
merger.
Atwood Oceanics, Inc.
Atwood is a global offshore drilling contractor engaged in the drilling and completion of exploratory and developmental oil and gas wells.
Atwood currently owns a diversified fleet of 10 mobile offshore drilling units located in the Mediterranean Sea, offshore West Africa, offshore Southeast Asia and offshore Australia. Atwood recently
executed a sale and recycling agreement with respect to one of the drilling units. For the three and nine months ended June 30, 2017, Atwood's operating revenue totaled $117 million and
$442 million, respectively. For the year ended September 30, 2016, Atwood's operating revenues totaled $1.0 billion and Atwood employed 938 personnel.
The
Atwood common stock is listed on the NYSE under the symbol "ATW." Atwood's registered office and principal executive offices are located at 15011 Katy Freeway, Suite 800,
Houston, Texas 77094 and its telephone number is (281) 749-7800.
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Additional
information about Atwood and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See "Where You Can Find More
Information" beginning on page 178.
The Merger (See page 49)
The merger agreement provides that Merger Sub will merge with and into Atwood, with Atwood continuing as the surviving company and a wholly
owned subsidiary of Ensco. The terms and conditions of the merger are contained in the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus. Please carefully
read the merger agreement as it is the legal document that governs the merger.
Merger Consideration (See page 99)
Subject to the terms and conditions set forth in the merger agreement, at the effective time of the merger (the "Effective Time"), each share of
Atwood common stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive 1.60 Ensco Class A ordinary shares. The merger agreement does not
contain any provision that would adjust the exchange ratio based on the fluctuations in the market value of either the Atwood common stock or Ensco Class A ordinary shares. Because of this, the
implied value of the merger consideration to the Atwood shareholders will fluctuate between now and the completion of the merger.
Comparative Market Prices and Share Information (See page 18)
The Ensco Class A ordinary shares are quoted on the NYSE under the symbol "ESV," and the Atwood common stock is quoted on the NYSE under
the symbol "ATW." The following table shows the closing sale prices of Ensco Class A ordinary shares and Atwood common stock as reported on the NYSE on May 26, 2017, the last trading day
prior to the announcement of the
merger, and on August 17, 2017, the last practicable trading day prior to the date of this joint proxy statement/prospectus.
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Price
per Ensco
Class A
Ordinary Shares
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Price per
Share of Atwood
Common Stock
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Equivalent per
Share Value
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May 26, 2017
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$
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6.70
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$
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8.08
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$
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10.72
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August 17, 2017
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$
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4.16
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$
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6.04
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$
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6.66
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The
market price of the Ensco Class A ordinary shares and the Atwood common stock will fluctuate prior to the completion of the merger. You should obtain current stock price
quotations for Ensco Class A ordinary shares and Atwood common stock.
Treatment of Atwood Equity-Based Awards (See page 100)
Pursuant to the terms of the merger agreement, each award of Atwood restricted stock units other than any Atwood restricted stock units that are
required to be settled in cash ("Atwood RSUs") that is outstanding as of immediately prior to the Effective Time shall vest upon the Effective Time. As soon as practicable after the Effective Time,
the Atwood RSUs will be settled through the issuance to the holders thereof of Ensco Class A ordinary shares in an amount equal to the
number of shares of Atwood common stock originally subject to such award multiplied by the exchange ratio (rounded down to the nearest whole share). Each award of Atwood restricted stock units that is
required to be settled in cash ("Atwood Cash Units") will be treated in accordance with the terms of such award.
Each
award of Atwood stock options that remains outstanding and unexercised immediately prior to the Effective Time (an "Existing Option"), will, as of the Effective Time, automatically
and without
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any
further action being required, be converted into a stock option relating to the Ensco Class A ordinary shares, on the same terms and conditions (including the same expiration restrictions)
as were applicable to such Existing Option immediately prior to the Effective Time (a "Converted Option"), except that (i) the number of Ensco Class A ordinary shares subject to the
Converted Option will be determined by multiplying the number of shares of Atwood common stock subject to the corresponding Existing Option immediately prior to the Effective Time by the exchange
ratio, and then rounded down to the nearest whole share, and (ii) the exercise price per share of the Converted Option will equal the per share exercise or strike price of the Existing Option
immediately prior to the Effective Time divided by the exchange ratio, rounded up to the nearest whole cent.
Material U.S. Federal Income Tax Consequences (See page 130)
In general, subject to the discussion relating to the potential application of Section 304 of the Internal Revenue Code under the section
entitled "Material United States Federal Income Tax Consequences of the MergerTax Consequences of the Merger to Atwood Shareholders," the receipt by U.S. holders (as defined in the
section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the Merger") of Ensco Class A ordinary shares pursuant to the merger should
be a taxable exchange for U.S. federal income tax purposes. Assuming such treatment, a U.S. holder generally will recognize capital gain or loss equal to the difference between (i) the fair
market value of the Ensco Class A
ordinary shares received as consideration in the merger on the date of the exchange and (ii) the holder's adjusted tax basis in the shares of Atwood common stock surrendered in the exchange. A
U.S. holder's adjusted basis in its shares of Atwood common stock generally will equal such holder's purchase price for such shares, as adjusted to take into account stock dividends, certain
non-dividend distributions, stock splits and similar transactions. For further information, please refer to "Material United States Federal Income Tax Consequences of the Merger."
A
non-U.S. holder (as defined in the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the Merger") generally should
not be subject to U.S. federal income tax on any gain recognized in the merger other than in certain specific circumstances (including as a result of the potential application of Section 304 of
the Internal Revenue Code), as further described under the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the
MergerTax Consequences of the Merger to Atwood Shareholders."
The United States federal income tax consequences described above may not apply to all Atwood shareholders. Your tax consequences will depend on your individual
situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
Ensco General Meeting (See page 33)
The Ensco general meeting will be held at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY, England, at
3:00 P.M. (London time) on October 5, 2017.
All
Ensco shareholders of record at the close of business in London on August 23, 2017, the Ensco record date, are entitled to notice of, and to attend and vote at, the Ensco
general meeting or, subject to the Ensco Articles of Association, any adjournments or postponements of the Ensco general meeting. This joint proxy statement/prospectus is being sent to Ensco
shareholders beginning August 21, 2017.
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At
the Ensco general meeting, Ensco shareholders will be asked to approve, in addition to all subsisting authorities:
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1.
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the
Ensco Merger Consideration Proposal (see page 38);
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2.
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the
Ensco General Allotment Authority Increase Proposal (see page 39);
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3.
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the
Ensco General Disapplication of Pre-emptive Rights Proposal (see page 42); and
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4.
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the
Ensco Specified Disapplication of Pre-Emptive Rights Proposal (see page 42).
As
a U.K. company publicly traded on the NYSE, Ensco shareholder approval of the Ensco Merger Consideration Proposal is subject to the shareholder approval requirements under both the
Companies Act 2006 and NYSE rules. The Ensco Merger Consideration Proposal is being proposed as an ordinary resolution. Assuming a quorum is present, such proposal will be approved for purposes of the
Companies Act 2006 and NYSE rules if a majority of the votes cast are cast in favor thereof. The Ensco General Allotment Authority Increase Proposal will be proposed as an ordinary resolution and,
assuming a quorum is present, will be approved if a majority of the votes cast are cast in favor thereof. Each of the Ensco General Disapplication of Pre-emptive Rights Proposal and the Ensco
Specified Disapplication of Pre-emptive Rights Proposal will be proposed as a special resolution, which means, assuming a quorum is present, each such proposal will be approved if at least 75% of the
votes cast are cast in favor thereof.
Approval
of the Ensco Merger Consideration Proposal is required for completion of the merger. Approval of the other Ensco proposals set forth above is not required in order to complete
the merger.
In
connection with the Ensco general meeting, abstentions and broker non-votes will be considered in determining the presence of a quorum. While abstentions and broker non-votes are not
considered votes cast under the Companies Act 2006, under NYSE rules abstentions, but not broker non-votes, will be considered as votes cast for determining whether a sufficient number of votes have
been cast on a particular proposal. As a result, for purposes of determining whether the Ensco Merger Consideration Proposal has been approved in accordance with the Companies Act 2006, abstentions
and broker non-votes will not have any effect on the outcome of the vote. With respect to NYSE rules, abstentions will have the same effect as votes cast "AGAINST" the Ensco Merger Consideration
Proposal and broker non-votes will not have any effect on the outcome of the vote. Abstentions and broker non-votes will have no effect on the outcome of the Ensco General Allotment Authority Increase
Proposal, the Ensco General Disapplication of Pre-emptive Rights Proposal or the Ensco Specified Disapplication of Pre-emptive Rights Proposal.
As
of August 17, 2017, directors and executive officers of Ensco and its affiliates had the right to vote approximately 1,903,037 Ensco Class A ordinary shares, or
approximately 0.63% of the outstanding Ensco Class A ordinary shares on that date.
After
careful consideration, on May 29, 2017, the Ensco Board unanimously determined that the form, terms and provisions of the merger agreement and the transactions contemplated
thereby, including the merger and the allotment and issuance of the Ensco Class A ordinary shares, are advisable, fair and reasonable to and in the best interests of Ensco and its shareholders.
The Ensco Board unanimously
recommends that Ensco shareholders vote "FOR" the Ensco Merger Consideration Proposal.
For a more complete description of
the recommendation of the Ensco Board with respect to the Ensco Merger Consideration Proposal, see "The MergerEnsco's Reasons for the Merger; Recommendation of the Ensco Board of
Directors" beginning on page 57.
In addition, the Ensco Board recommends that Ensco shareholders vote "FOR" the Ensco General Allotment Authority Increase Proposal, "FOR" the Ensco General
Disapplication of Pre-Emptive Rights Proposal and "FOR" the Ensco Specified Disapplication of Pre-Emptive Rights Proposal.
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Atwood Special Meeting (See page 45)
The Atwood special meeting will be held at 15011 Katy Freeway, First Floor, Houston, Texas 77094, at 9:00 A.M. (Houston time) on
October 5, 2017. Only Atwood shareholders of record at the close of business on August 23, 2017, the Atwood record date, are entitled to notice of, and to vote at, the Atwood special
meeting and any adjournments or postponements of the Atwood special meeting.
At
the Atwood special meeting, Atwood shareholders will be asked to consider and approve:
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1.
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the
Atwood Merger Proposal (see page 49);
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2.
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the
Atwood Compensatory Proposal (see page 139); and
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3.
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the
Atwood Adjournment Proposal (see page 140).
The
Atwood Merger Proposal requires the approval of Atwood shareholders holding at least two-thirds of the Atwood common stock entitled to vote thereon pursuant to the requirements of
the TBOC. Assuming a quorum is present, the Atwood Compensatory Proposal requires the approval of a majority of votes cast by the Atwood shareholders present, in person or by proxy, at the Atwood
special meeting. Whether or not a quorum is present, the Atwood Adjournment Proposal requires the approval of a majority of votes cast by the Atwood shareholders present, in person or by proxy, at the
Atwood special meeting.
Approval
of the Atwood Merger Proposal is required for completion of the merger. Approval of the other Atwood proposals set forth above is not required in order to complete the merger.
In
connection with the Atwood special meeting, abstentions and broker non-votes will be considered in determining the presence of a quorum. Abstentions and broker non-votes will have the
same effect as
votes cast "AGAINST" the Atwood Merger Proposal, but will have no effect on the outcome of the Atwood Compensatory Proposal or the Atwood Adjournment Proposal.
As
of August 17, 2017, directors and executive officers of Atwood and its affiliates, had the right to vote approximately 491,689 shares of Atwood common stock, or approximately
0.61% of the outstanding shares of Atwood common stock on that date.
After
careful consideration, on May 29, 2017, the Atwood Board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement,
including the merger, are advisable and in the best interests of Atwood and its shareholders.
The Atwood Board unanimously recommends that Atwood shareholders vote "FOR" the
Atwood Merger Proposal
. For a more complete description of the recommendation of the Atwood Board with respect to the Atwood Merger Proposal, see "The
MergerAtwood's Reasons for the Merger; Recommendation of the Atwood Board of Directors" beginning on page 59.
In addition, the Atwood Board recommends the Atwood shareholders vote "FOR" the Atwood Compensatory Proposal and "FOR" the Atwood Adjournment
Proposal.
Opinion of Financial Advisor to Ensco (See page 63 and Annex B)
On May 29, 2017, at a meeting of the Ensco Board, Morgan Stanley & Co. LLC ("Morgan Stanley") rendered its oral
opinion to the Ensco Board, subsequently confirmed by delivery of a written opinion, dated May 29, 2017, that, as of that date, and based upon and subject to the various assumptions made,
procedures followed, matters considered and qualifications and limitations on the scope of review undertaken as set forth in the written opinion, the exchange ratio pursuant to the merger agreement
was fair from a financial point of view to Ensco.
The
full text of the written opinion of Morgan Stanley to the Ensco Board, dated as of May 29, 2017, is attached as Annex B to this joint proxy statement/prospectus and is
incorporated herein by
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reference
in its entirety. The summary of the opinion of Morgan Stanley in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. You should
read Morgan Stanley's opinion, this section and the summary of Morgan Stanley's opinion carefully and in their entirety for a discussion of the assumptions made, procedures followed, matters
considered and qualifications and limitations upon the review undertaken by Morgan Stanley in rendering its opinion. Morgan Stanley's opinion was directed to the Ensco Board, in its capacity as such,
and addressed only the fairness from a financial point of view to Ensco of the exchange ratio pursuant to the merger agreement as of the date of such opinion.
Morgan
Stanley's opinion did not address any other aspects or implications of the merger. Morgan Stanley's opinion did not in any manner address the price at which the Ensco
Class A ordinary shares would trade following the merger or at any time, and Morgan Stanley expressed no opinion or recommendation to any holder of Ensco Class A ordinary shares or
Atwood common stock as to how such holder should vote at the Ensco general meeting or the Atwood special meeting, respectively, or whether to take any other action with respect to the merger.
Opinion of Financial Advisor to Atwood (See page 75 and Annex C)
Goldman Sachs & Co. LLC ("Goldman Sachs") delivered its opinion to the Atwood Board that, as of May 29, 2017 and
based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Ensco
and its affiliates) of shares of Atwood common stock.
The
full text of the written opinion of Goldman Sachs, dated May 29, 2017, which sets forth assumptions made, procedures followed, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as Annex C to this joint proxy statement/prospectus. Goldman Sachs provided its opinion for the information and assistance of the Atwood
Board in connection with its consideration of the transaction. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Atwood common stock should vote with respect to the
transaction or any other matter. Pursuant to an engagement letter between Atwood and Goldman Sachs, Atwood has agreed to pay Goldman Sachs a transaction fee that is estimated, based on the information
available as of the date of announcement of the transaction, at approximately $21 million,
$3 million of which became payable upon execution of the merger agreement, and the remainder of which is contingent upon consummation of the merger.
Interests of Atwood Directors and Executive Officers in the Merger (See page 93)
Atwood's directors and executive officers have financial interests in the merger that may be different from, or in addition to, those of Atwood
shareholders generally. The Atwood Board was aware of these interests and considered them, among other matters, in approving the merger agreement and making its recommendation that Atwood shareholders
approve the Atwood Merger Proposal. These interests include the following:
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The merger agreement provides that Existing Options outstanding immediately prior to the Effective Time will be exchanged for Converted Options
to acquire Ensco Class A ordinary shares. All of Atwood's Existing Options previously vested. The Converted Options will otherwise remain subject to the same terms and conditions as the
corresponding Atwood options. The number of Ensco Class A ordinary shares subject to the Converted Options will be determined by multiplying the number of shares of Atwood common stock subject
to the Existing Options immediately prior to the Effective Time by the exchange ratio, rounded down to the nearest whole share, and the exercise price per share of the Converted Options will equal the
per share exercise price of the Existing Options immediately prior to the Effective Time divided by the exchange ratio, rounded up to the nearest whole cent.
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Pursuant to the applicable Atwood incentive plans, all time-based Atwood RSUs ("Time-Based RSUs") and performance-based Atwood RSUs
("Performance-Based RSUs") held by Atwood's directors and employees shall vest upon the Effective Time. Time-Based RSUs that so vest will be settled through the issuance of Ensco Class A
ordinary shares equal to the number of vested Time-Based RSUs multiplied by the exchange ratio. Performance-Based RSUs will vest at the Effective Time at the higher of target level of performance or
the amount determined by the compensation committee of the Atwood Board (but not to exceed 200% of target level) and the number of Performance-Based RSUs that vest will be settled through the issuance
of a number of Ensco Class A ordinary shares equal to the number of vested Performance-Based RSUs multiplied by the exchange ratio. Accrued cash dividend equivalents on Time-Based RSUs and
Performance-Based RSUs will also vest and be cashed out at the same time. Atwood Cash Units will be treated as specified in the applicable award agreement. The Atwood Cash Units are performance
vesting awards that will vest in full upon the Effective Time at the higher of target level of performance or the amount determined by the compensation committee of the Atwood Board (up to 200% of
target level) and will be paid in cash based on the closing price of Atwood common stock on the last trading day prior to the closing date. Accrued cash dividend equivalents on the Atwood Cash Units
will also vest and be cashed out at the same time.
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Each of Atwood's executive officers is subject to a non-competition and non-solicitation agreement entered into in May 2016 pursuant to which
specified time-vesting cash awards and Atwood RSUs were granted. The cash awards and the Atwood RSUs will fully vest and become payable upon the Effective Time, and the Atwood RSUs will be treated as
specified above.
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Executive officers are covered under Atwood's Salary Continuation Plan, formerly named the Executive Life Insurance Plan, which provides for
salary continuation to the executive's beneficiary upon the executive's death while employed by Atwood. Payments equal to 2.5 times annual salary are payable in 30 installments or, in the event of
death due to accidental causes, payments equal to five times annual salary are payable in 60 installments. If the executive officer terminates employment within 30 months following a change of
control, the death benefit is payable if the executive dies during that 30-month period.
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Each of Atwood's executive officers is subject to a change of control agreement that provides specified severance benefits if the executive
officer experiences a qualifying termination of employment within 24 months following a change of control. The benefits include cash severance, 24 months of continued coverage under
Atwood's welfare benefit plans and the right to exercise stock options for up to one year following termination.
Atwood's
directors and executive officers are also entitled to continued indemnification/expense advancement and directors' and officers' liability insurance coverage under the merger
agreement.
Board of Directors and Executive Officers of Ensco Following the Merger (See page 91)
The current directors of Ensco are: Paul E. Rowsey, III, Carl Trowell, J. Roderick Clark, Roxanne J. Decyk, Mary E. Francis CBE, C.
Christopher Gaut, Gerald W. Haddock, Francis S. Kalman and Keith O. Rattie. At the Effective Time, Ensco will cause two directors currently serving on the Atwood Board, Jack E. Golden and Phil D.
Wedemeyer, to be appointed to the Ensco Board and will expand the Ensco Board to the extent necessary in connection with appointing such additional directors. The two additional directors were
proposed by Atwood following the execution of the merger agreement and have been mutually agreed upon by Ensco and Atwood. All Ensco directors are elected annually to serve until the next annual
meeting and until their successors are elected.
Ensco's
executive officers will remain the same following the merger, and none of Atwood's executive officers are expected to have any executive officer positions with the combined
company.
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Public Trading Markets (See page 91)
The Ensco Class A ordinary shares are quoted on the NYSE under the symbol "ESV," and the Atwood common stock is quoted on the NYSE under
the symbol "ATW." Upon
completion of the merger, the Atwood common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Ensco Class A
ordinary shares issuable in the merger will be listed on the NYSE and will be freely transferable under the Securities Act of 1933, as amended (the "Securities Act").
Regulatory Approvals Required for the Merger (See page 92)
To complete the merger, Ensco and Atwood must make filings with and obtain authorizations, approvals or consents from a number of regulatory
authorities. The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). On June 9, 2017, Ensco and Atwood filed a
Premerger Notification and Report Form pursuant to the HSR Act with the Antitrust Division of the Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC"). On June 27,
2017, the DOJ and the FTC granted early termination of the waiting period under the HSR Act. In addition, the new Ensco Class A ordinary shares to be issued to Atwood shareholders must be
approved for listing on the NYSE, subject to official notice of issuance.
Expected Timing of the Merger (See page 99)
Unless Ensco and Atwood agree otherwise, completion of the merger will occur as soon as practicable, but no later than within five business days
after the satisfaction or waiver of the conditions set forth in the merger agreement, except for those conditions that are to be satisfied at the closing. The parties expect such conditions to be
satisfied in the third calendar quarter of 2017. However, as the merger is subject to regulatory clearance and the satisfaction or waiver of other conditions described in the merger agreement, it is
possible that factors outside the control of Ensco and Atwood could result in the merger being completed at a later time or not at all.
Adverse Recommendation Changes (See page 109)
Subject to the conditions described in this joint proxy statement/prospectus, the merger agreement provides that neither the Ensco Board nor the
Atwood Board will:
-
-
change, qualify, withhold, withdraw or modify, or authorize or publicly propose to change, qualify, withhold, withdraw or modify, in a manner
adverse to Atwood or Ensco its recommendation with respect to the Ensco Merger Consideration Proposal or the Atwood Merger Proposal, as applicable;
-
-
take any formal action or make any recommendation or public statement in connection with a tender offer or exchange offer;
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adopt, approve or recommend, or publicly propose to adopt, approve, or recommend, to the Ensco shareholders or Atwood shareholders, as
applicable, a takeover proposal; or
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-
authorize, cause or permit Ensco or Atwood or any of its subsidiaries, as applicable, to enter into any letter of intent, agreement, commitment
or agreement in principle with respect to any takeover proposal.
The
taking or failure to take, as applicable, of any of the actions described above is referred to as an "adverse recommendation change." Subject to the conditions described in this
joint proxy statement/prospectus, prior to receiving shareholder approval of the Ensco Merger Consideration Proposal or the Atwood Merger Proposal, as applicable, either the Ensco Board or the Atwood
Board
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may
make an adverse recommendation change in response to an event (an "intervening event") that (i) was not known to such board of directors (or the material consequences of which, based on
facts known to members of such board of directors as of the date of the merger agreement, were not reasonably foreseeable as of the date of the merger agreement); (ii) becomes known by such
board of directors prior to the receipt of shareholder approval; and (iii) does not relate to the receipt, existence or terms of a takeover proposal involving Ensco or Atwood, as applicable.
Either the Ensco Board or the Atwood Board may make an adverse recommendation change in response to an intervening event if such board of directors has determined in good faith after consultation with
its outside financial advisors and outside legal counsel that the failure to take such action would be inconsistent with its fiduciary duties under applicable law, subject to certain conditions
described in this joint proxy statement/prospectus.
Agreement Not to Solicit Other Offers (See page 109)
Except as expressly permitted by the merger agreement, each party will, and will cause its affiliates, and officers, directors and employees to,
and will use reasonable best efforts to cause its agents, financial advisors, investment bankers, attorneys, accountants and other representatives to:
-
-
immediately cease any ongoing solicitation, discussions or negotiations with any person with respect to a takeover proposal;
-
-
promptly instruct (to the extent such party has the contractual authority to do so) any person that has executed a confidentiality or
non-disclosure agreement within the 24-month period prior to the date of the merger agreement in connection with any takeover proposal to return or destroy all confidential information of such party
in its possession; and
-
-
until the Effective Time or termination of the merger agreement, not:
-
-
solicit, initiate or knowingly facilitate or knowingly encourage (including by way of furnishing non-public information) any
inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, a takeover proposal;
-
-
engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnishing to any other person any
non-public information in connection with or for the purpose of encouraging or facilitating, a takeover proposal; or
-
-
approve, recommend or enter into, or propose to approve, recommend or enter into, any letter of intent or similar document,
agreement, commitment or agreement in principle (whether written or oral, binding or nonbinding) with respect to a takeover proposal, other than as expressly permitted by the merger agreement.
In
addition, neither party will release any third party from or waive or amend any standstill provision or confidentiality provision other than any confidentiality provision the waiver
of which would not be reasonably likely to lead to a takeover proposal, and each party will enforce such confidentiality and standstill provisions of any such agreements and take all steps within its
power to terminate any waivers previously granted under any such provisions.
Conditions to Completion of the Merger (See page 114)
Each party's obligation to consummate the merger is conditioned upon the satisfaction (or waiver by such party) at or prior to the completion of
the merger of each of the following:
-
-
the approval of the Atwood Merger Proposal by holders of at least two-thirds of the outstanding Atwood common stock;
9
Table of Contents
-
-
the approval of the Ensco Merger Consideration Proposal by holders of at least a majority of Ensco Class A ordinary shares cast at the
Ensco general meeting;
-
-
the approval for listing by the NYSE, subject to official notice of issuance, of the Ensco Class A ordinary shares issuable to Atwood
shareholders in connection with the merger;
-
-
the effectiveness of the registration statement of which this joint proxy/prospectus is a part under the Securities Act and no stop order
suspending the effectiveness of the registration statement having been issued and no proceedings for that purpose having been initiated or threatened by the SEC;
-
-
no injunction by any court or other tribunal of competent jurisdiction shall have been entered and shall continue to be in effect and no law
shall have been adopted or be effective, in each case that prohibits the completion of the merger;
-
-
the termination or expiration of any waiting period (and any extension thereof) applicable to the merger under the HSR Act as well as any other
approvals that may be required by a competition law authority in any foreign jurisdiction;
-
-
since the date of the merger agreement, there has not been any change in U.S. tax law that would cause Ensco to be treated as a domestic
corporation for U.S. federal income tax purposes;
-
-
(i) the representations and warranties of the other party shall be true and correct both at and as of the date of the merger agreement and at
and as of the completion of the merger as though made at and as of such date, except where such failures to be so true and correct (without regard to "materiality," "material adverse effect" and
similar qualifiers contained in such representations and warranties) would not, individually or in the aggregate, have a material adverse effect on the other party, (ii) the representations and
warranties of the other party with respect to capitalization shall be true and correct both as of the date of the merger agreement and as of the closing date, except for any
de
minimis
inaccuracies, (iii) there have not been any changes with respect to Ensco that would reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Ensco and (iv) there have not been any changes with respect to Atwood that would reasonably be expected to have, individually or in the aggregate, a material adverse effect on
Atwood;
-
-
the performance and compliance, in all material respects, with each and all of the covenants required to be performed with and complied with by
the other party pursuant to the merger agreement; and
-
-
the receipt of a certificate by the chief executive officer, or other senior officer, of the other party, dated as of the closing date,
certifying that the two preceding conditions have been satisfied.
Termination of the Merger Agreement (See page 114)
Generally, the merger agreement may be terminated prior to the completion of the merger, whether before or after the Ensco Merger Consideration
Proposal or the Atwood Merger
Proposal is approved (as applicable and except as otherwise specified below), as follows:
-
-
by the mutual written consent of Ensco, Merger Sub and Atwood;
-
-
by either Ensco or Atwood, if:
-
-
the merger shall not have been consummated on or prior to February 28, 2018 (the "End Date"); provided, however, that if
all conditions of the closing have been satisfied, except for the requirement to receive approval under the HSR Act or certain other governmental
10
Table of Contents
approvals,
either Ensco or Atwood may extend the End Date up to, but not beyond, May 29, 2018;
-
-
an injunction has been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the merger and such
injunction has become final and non-appealable; provided, however, that if such injunction was primarily due to the failure of a party to perform its obligations under the merger agreement, then such
party may not terminate the merger agreement under this provision;
-
-
the Atwood shareholders have not approved the Atwood Merger Proposal;
-
-
the Ensco shareholders have not approved the Ensco Merger Consideration Proposal; or
-
-
the other party has breached or failed to perform any of its representations, warranties, covenants or other agreements contained
in the merger agreement, if such breach or failure of performance occurred and continued to occur on the closing date and would result in the breach or failure of certain conditions set forth in the
merger agreement and, by its nature, such breach or failure cannot be cured prior to the End Date;
-
-
by Atwood, if:
-
-
the Ensco Board makes an adverse recommendation change or Ensco materially breaches its non-solicitation obligations; or
-
-
Atwood is terminating the merger agreement to enter into a definitive agreement relating to a superior proposal in accordance with
the terms of the merger agreement and Atwood pays the Atwood Termination Fee (as defined below);
-
-
by Ensco, if:
-
-
the Atwood Board makes an adverse recommendation change or Atwood materially breaches its non-solicitation obligations; or
-
-
Ensco is terminating the merger agreement to enter into a definitive agreement relating to a superior proposal in accordance with
the terms of the merger agreement and Ensco pays the Ensco Termination Fee (as defined below).
Termination Fees (See page 116)
Atwood must pay Ensco a $30 million termination fee (the "Atwood Termination Fee") if:
-
-
(i) (A) Atwood or Ensco terminates the merger agreement because the End Date has passed or the Atwood shareholders have not approved the
Atwood Merger Proposal or (B) Ensco terminates the merger agreement because Atwood has materially breached the non-solicitation restriction and (ii) (A) a takeover proposal has
been made to Atwood or the Atwood shareholders or any person has publicly announced an intention to make a takeover proposal, (B) such takeover proposal or the intention to make a takeover
proposal was publicly disclosed prior to the termination (and remained pending as of the termination) and (C) within twelve months after termination of the merger agreement Atwood has
consummated, or entered into a definitive agreement to consummate, a takeover proposal;
-
-
Ensco terminates the merger agreement because the Atwood Board changes its recommendation in response to an intervening event; or
-
-
Atwood terminates the merger agreement to accept a superior proposal in accordance with the terms of the merger agreement.
11
Table of Contents
Ensco
must pay Atwood a $50 million termination fee (the "Ensco Termination Fee") if:
-
-
(i) (A) Atwood or Ensco terminates the merger agreement because the End Date has passed or (B) Atwood terminates the merger
agreement because Ensco has materially breached the non-solicitation restriction and (ii) (A) a takeover proposal has been made to Ensco or the Ensco shareholders or any person has
publicly announced an intention to make a takeover proposal, (B) such takeover proposal or the intention to make a takeover proposal was publicly disclosed prior to the termination (and
remained pending as of the termination) and (C) within twelve months after termination of the merger agreement Ensco has consummated, or entered into a definitive agreement to consummate, a
takeover proposal;
-
-
Atwood or Ensco terminates the merger agreement because the Ensco shareholders do not approve the Ensco Merger Consideration Proposal or the
Ensco Board changes its recommendation in response to an intervening event; or
-
-
Ensco terminates the merger agreement to accept a superior proposal in accordance with the terms of the merger agreement.
Expense Reimbursement (See page 116)
If the merger agreement is terminated by either party due to the breach by the other party of its representations, warranties and covenants set
forth in the merger agreement, then the breaching party will reimburse all reasonable out-of-pocket fees and expenses incurred by the other party in connection with the merger up to
$10 million. In addition, Atwood will reimburse Ensco up to $10 million of all reasonable out-of-pocket fees and expenses incurred in connection with the merger in the event that Atwood does
not obtain shareholder approval of the Atwood Merger Proposal.
Accounting Treatment of the Merger (See page 92)
Ensco prepares its financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). The merger
will be accounted for using the acquisition method of accounting with Ensco being considered the acquirer of Atwood for accounting purposes. This means that Ensco will allocate the purchase price to
the fair value of Atwood's tangible and intangible assets and liabilities at the acquisition date, with the excess purchase price, if any, being recorded as goodwill, or the excess of the fair value
of Atwood's tangible and intangible assets and liabilities at the acquisition date over the purchase price, if any, being recognized in Ensco's earnings. Under the acquisition method of accounting,
goodwill is not amortized but is tested for impairment at least annually.
No Appraisal or Dissenters' Rights (See page 91)
Atwood shareholders who dissent to the merger will not have rights to an appraisal of the fair value of their shares. Under the TBOC,
shareholders generally have appraisal rights in the event of a merger or consolidation. However, these appraisal rights are not available if (i) the shares held by the shareholder are part of a
class of shares listed on a national securities exchange or held of record by at least 2,000 holders, (ii) the shareholder is not required to accept for his or her shares any consideration that
is different than the consideration to be provided to any other holder of shares of the same class held by the shareholder, and (iii) the shareholder is not required to accept any consideration
other than shares of a corporation that satisfy the requirements in clause (i) above. Because Ensco Class A ordinary shares are listed on the NYSE, a national securities exchange, and
are expected to continue to be so listed following the merger, and because the merger otherwise satisfies the foregoing requirements, Atwood shareholders will not be entitled to appraisal or
dissenters' rights in the merger with respect to their shares of Atwood common stock.
12
Table of Contents
Comparison of Shareholder Rights (See page 148)
Upon completion of the merger, Atwood shareholders will become Ensco shareholders and will have different rights once they become Ensco
shareholders due to differences between the governing corporate documents of each entity. These differences are described in detail in the section entitled "Comparison of Rights of Atwood Shareholders
and Ensco Shareholders" beginning on page 148.
Litigation Relating to the Merger (See page 92)
On June 23, 2017, a putative class action lawsuit was filed against Atwood, Atwood's directors, Ensco and Merger Sub. The complaint
generally alleges that the directors and Atwood disseminated a false or misleading registration statement which omitted material information regarding the proposed transaction between Ensco and
Atwood, in violation of Section 14(a) of the Exchange Act. Specifically, the complaint alleges that Atwood and the directors omitted material information regarding the parties' financial projections,
the analysis performed by Goldman Sachs in support of its fairness opinion, the timing and nature of communications regarding post-transaction employment of Atwood's directors and officers, potential
conflicts of interest of Goldman Sachs, and whether there were further discussions with another potential acquirer of Atwood following announcement of the merger. The complaint seeks injunctive
relief, including to enjoin the merger, rescission or rescissory damages in the event the merger is consummated, and an award of attorneys' fees, in addition to other relief. On June 27,
June 29 and June 30, 2017, three additional putative class action lawsuits were filed against Atwood and Atwood's directors. These actions allege violations of Sections 14(a) and
20(a) of the Exchange Act by Atwood and Atwood's directors similar to those alleged in the original complaint discussed above; however, neither Ensco nor Merger Sub is named as a defendant in these
actions.
13
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ENSCO
The following selected historical consolidated financial data for each of the years ended December 31, 2016, 2015, 2014, 2013 and 2012
are derived from Ensco's audited historical consolidated financial statements. Financial data for the six months ended June 30, 2017 and 2016 are derived from Ensco's unaudited consolidated
financial statements. These historical results are not necessarily indicative of the future performance of Ensco following completion of the merger.
You
should read the following historical financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the related notes thereto set forth in Ensco's Annual Report on Form 10-K for the year ended December 31, 2016 and Form 10-Q for the quarterly period
ended June 30, 2017, which are incorporated by reference into this joint proxy statement/prospectus. See "Where You Can Find More Information."
14
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Six Months Ended
June 30,
|
|
(in millions, except per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2017
|
|
2016
|
|
Consolidated Statement of Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,776.4
|
|
$
|
4,063.4
|
|
$
|
4,564.5
|
|
$
|
4,323.4
|
|
$
|
3,638.8
|
|
$
|
928.6
|
|
$
|
1,723.6
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling (exclusive of depreciation)
|
|
|
1,301.0
|
|
|
1,869.6
|
|
|
2,076.9
|
|
|
1,947.1
|
|
|
1,642.8
|
|
|
569.4
|
|
|
713.9
|
|
Loss on impairment
|
|
|
|
|
|
2,746.4
|
|
|
4,218.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
445.3
|
|
|
572.5
|
|
|
537.9
|
|
|
496.2
|
|
|
443.8
|
|
|
217.1
|
|
|
225.7
|
|
General and administrative
|
|
|
100.8
|
|
|
118.4
|
|
|
131.9
|
|
|
146.8
|
|
|
148.9
|
|
|
56.5
|
|
|
50.8
|
|
Operating income (loss)
|
|
|
929.3
|
|
|
(1,243.5
|
)
|
|
(2,400.9
|
)
|
|
1,733.3
|
|
|
1,403.3
|
|
|
85.6
|
|
|
733.2
|
|
Other income (expense), net
|
|
|
68.2
|
|
|
(227.7
|
)
|
|
(147.9
|
)
|
|
(100.1
|
)
|
|
(98.6
|
)
|
|
(110.9
|
)
|
|
145.3
|
|
Income tax expense (benefit)
|
|
|
108.5
|
|
|
(13.9
|
)
|
|
140.5
|
|
|
203.1
|
|
|
228.6
|
|
|
43.4
|
|
|
108.1
|
|
Income (loss) from continuing operations
|
|
|
889.0
|
|
|
(1,457.3
|
)
|
|
(2,689.3
|
)
|
|
1,430.1
|
|
|
1,076.1
|
|
|
(68.7
|
)
|
|
770.4
|
|
Income (loss) from discontinued operations, net
|
|
|
8.1
|
|
|
(128.6
|
)
|
|
(1,199.2
|
)
|
|
(2.2
|
)
|
|
100.6
|
|
|
(.2
|
)
|
|
(1.1
|
)
|
Net income (loss)
|
|
|
897.1
|
|
|
(1,585.9
|
)
|
|
(3,888.5
|
)
|
|
1,427.9
|
|
|
1,176.7
|
|
|
(68.9
|
)
|
|
769.3
|
|
Net income attributable to noncontrolling interests
|
|
|
(6.9
|
)
|
|
(8.9
|
)
|
|
(14.1
|
)
|
|
(9.7
|
)
|
|
(7.0
|
)
|
|
(2.3
|
)
|
|
(3.4
|
)
|
Net income (loss) attributable to Ensco
|
|
$
|
890.2
|
|
$
|
(1,594.8
|
)
|
$
|
(3,902.6
|
)
|
$
|
1,418.2
|
|
$
|
1,169.7
|
|
$
|
(71.2
|
)
|
$
|
765.9
|
|
Earnings (loss) per sharebasic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
3.10
|
|
$
|
(6.33
|
)
|
$
|
(11.70
|
)
|
$
|
6.09
|
|
$
|
4.62
|
|
$
|
(0.24
|
)
|
$
|
2.92
|
|
Discontinued operations
|
|
|
0.03
|
|
|
(0.55
|
)
|
|
(5.18
|
)
|
|
(0.01
|
)
|
|
0.43
|
|
|
|
|
|
|
|
|
|
$
|
3.13
|
|
$
|
(6.88
|
)
|
$
|
(16.88
|
)
|
$
|
6.08
|
|
$
|
5.05
|
|
$
|
(0.24
|
)
|
$
|
2.92
|
|
Earnings (loss) per sharediluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
3.10
|
|
$
|
(6.33
|
)
|
$
|
(11.70
|
)
|
$
|
6.08
|
|
$
|
4.61
|
|
$
|
(0.24
|
)
|
$
|
2.92
|
|
Discontinued operations
|
|
|
0.03
|
|
|
(0.55
|
)
|
|
(5.18
|
)
|
|
(0.01
|
)
|
|
0.43
|
|
|
|
|
|
|
|
|
|
$
|
3.13
|
|
$
|
(6.88
|
)
|
$
|
(16.88
|
)
|
$
|
6.07
|
|
$
|
5.04
|
|
$
|
(0.24
|
)
|
$
|
2.92
|
|
Net income (loss) attributable to Ensco sharesBasic and Diluted
|
|
$
|
873.6
|
|
$
|
(1,596.8
|
)
|
$
|
(3,910.5
|
)
|
$
|
1,403.1
|
|
$
|
1,157.4
|
|
$
|
(71.4
|
)
|
$
|
753.9
|
|
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
279.1
|
|
|
232.2
|
|
|
231.6
|
|
|
230.9
|
|
|
229.4
|
|
|
300.7
|
|
|
258.5
|
|
Diluted
|
|
|
279.1
|
|
|
232.2
|
|
|
231.6
|
|
|
231.1
|
|
|
229.7
|
|
|
300.7
|
|
|
258.5
|
|
Cash dividends per share
|
|
$
|
0.04
|
|
$
|
0.60
|
|
$
|
3.00
|
|
$
|
2.25
|
|
$
|
1.50
|
|
$
|
0.02
|
|
$
|
0.02
|
|
Consolidated Balance Sheet and Cash Flow Statement Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
$
|
2,424.9
|
|
$
|
1,509.6
|
|
$
|
1,788.9
|
|
$
|
466.9
|
|
$
|
720.4
|
|
$
|
2,028.8
|
|
$
|
1,943.9
|
|
Total assets
|
|
|
14,374.5
|
|
|
13,610.5
|
|
|
16,023.3
|
|
|
19,446.8
|
|
|
18,554.7
|
|
|
13,723.9
|
|
|
13,765.0
|
|
Long-term debt, net of current portion
|
|
|
4,942.6
|
|
|
5,868.6
|
|
|
5,868.1
|
|
|
4,709.3
|
|
|
4,797.7
|
|
|
4,744.7
|
|
|
4,905.6
|
|
Ensco shareholders' equity
|
|
|
8,250.6
|
|
|
6,512.9
|
|
|
8,215.0
|
|
|
12,791.6
|
|
|
11,846.4
|
|
|
8,184.6
|
|
|
7,879.9
|
|
Cash flows from operating activities of continuing operations
|
|
|
1,077.4
|
|
|
1,697.9
|
|
|
2,057.9
|
|
|
1,811.2
|
|
|
1,954.6
|
|
|
130.5
|
|
|
800.2
|
|
15
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ATWOOD
The following selected historical consolidated financial data for each of the fiscal years ended September 30, 2016, 2015, 2014, 2013 and
2012 are derived from Atwood's historical consolidated financial statements. Financial data for the nine months ended June 30, 2017 and 2016 are derived from Atwood's unaudited condensed
consolidated financial statements also appearing herein and which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair
statement of the results for the unaudited interim periods. These historical results are not necessarily indicative of the future performance of Atwood.
You
should read the following historical financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the related notes thereto set forth in Atwood's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 and Quarterly Reports on Form 10-Q
for the quarterly period ended June 30, 2017 and 2016, respectively, which are incorporated by reference into this joint proxy statement/prospectus. See "Where You Can Find More Information."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the Fiscal Years Ended September 30,
|
|
Nine Months Ended
June 30,
|
|
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2017
|
|
2016
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
1,020,644
|
|
$
|
1,395,851
|
|
$
|
1,173,953
|
|
$
|
1,063,663
|
|
$
|
787,421
|
|
$
|
442,496
|
|
$
|
831,967
|
|
Operating income (loss)
|
|
|
294,282
|
|
|
531,430
|
|
|
438,784
|
|
|
429,471
|
|
|
319,410
|
|
|
25,468
|
|
|
280,512
|
|
Net income (loss)
|
|
|
265,272
|
|
|
432,573
|
|
|
340,822
|
|
|
350,224
|
|
|
272,171
|
|
|
(23,541
|
)
|
|
261,023
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4.09
|
|
|
6.70
|
|
|
5.31
|
|
|
5.38
|
|
|
4.17
|
|
|
(0.32
|
)
|
|
4.03
|
|
Diluted
|
|
|
4.09
|
|
|
6.65
|
|
|
5.24
|
|
|
5.32
|
|
|
4.14
|
|
|
(0.32
|
)
|
|
4.02
|
|
Average common shares outstanding(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
64,789
|
|
|
64,581
|
|
|
64,240
|
|
|
65,073
|
|
|
65,267
|
|
|
74,515
|
|
|
64,750
|
|
Diluted
|
|
|
64,839
|
|
|
65,030
|
|
|
65,074
|
|
|
65,845
|
|
|
65,781
|
|
|
74,515
|
|
|
64,852
|
|
Balance Sheet Data (as of end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
4,539,792
|
|
|
4,801,333
|
|
|
4,507,228
|
|
|
3,657,266
|
|
|
2,943,762
|
|
|
4,828,194
|
|
|
4,715,127
|
|
Total debt
|
|
|
1,227,919
|
|
|
1,678,268
|
|
|
1,742,122
|
|
|
1,263,232
|
|
|
830,000
|
|
|
1,298,136
|
|
|
1,374,780
|
|
Total shareholder's equity
|
|
|
3,230,386
|
|
|
2,947,170
|
|
|
2,555,524
|
|
|
2,207,371
|
|
|
1,939,422
|
|
|
3,399,822
|
|
|
3,222,520
|
|
Statements of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
625,008
|
|
|
604,287
|
|
|
442,620
|
|
|
432,110
|
|
|
255,603
|
|
|
248,828
|
|
|
515,415
|
|
-
(1)
-
Potential
dilutive Atwood common stock outstanding stock-based awards totaling 481,000 shares were considered in the calculation of diluted weighted-average shares
for the nine months ended June 30, 2017; however, due to Atwood's net loss position, those shares have not been reflected above because they would be anti-dilutive.
16
Table of Contents
UNAUDITED COMPARATIVE PER SHARE DATA
The following table sets forth (i) selected per share information for Ensco on a historical basis for the year ended December 31,
2016 and the six months ended June 30, 2017, (ii) selected per share information for Atwood on a historical basis for the year ended September 30, 2016 and the nine months ended
June 30, 2017, (iii) unaudited selected per share information for Ensco on a pro forma basis after giving effect to the merger for the year ended December 31, 2016 and the six
months ended June 30, 2017 and (iv) unaudited selected per share information for Atwood on an equivalent pro forma basis based on the exchange ratio of 1.60 Ensco Class A ordinary
shares for each share of Atwood common stock for the year ended December 31, 2016 and the six months ended June 30, 2017.
The
pro forma information set forth below, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the possible
impact on the combined company that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the
historical results of the combined company would have been had our companies been combined during 2016. Upon completion of the merger, the operating results of Atwood will be reflected in the
consolidated financial statements of Ensco on a prospective basis. You should read the data with the historical consolidated financial statements and related notes of Ensco and Atwood contained in
their Annual Reports on Form 10-K for the years ended December 31, 2016 and September 30, 2016, respectively, and their respective Quarterly Reports on Form 10-Q for the
quarter ended June 30, 2017, all of which are incorporated by reference into this joint proxy statement/prospectus. See "Where You Can Find More Information."
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2016
|
|
Six Months
Ended
June 30,
2017
|
|
EnscoHistorical
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
27.20
|
|
$
|
26.93
|
|
Cash dividends per share
|
|
|
0.04
|
|
|
0.02
|
|
Basic and diluted earnings per share
|
|
|
3.10
|
|
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
Year Ended
September 30,
2016
|
|
Nine Months
Ended
June 30,
2017
|
|
AtwoodHistorical
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
49.85
|
|
$
|
42.21
|
|
Cash dividends per share
|
|
|
0.075
|
|
|
|
|
Basic and diluted earnings per share
|
|
|
4.09
|
|
|
(0.32
|
)
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2016
|
|
Six Months
Ended
June 30,
2017
|
|
EnscoPro Forma Combined
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
21.43
|
|
$
|
21.01
|
|
Cash dividends per share
|
|
|
0.115
|
|
|
0.02
|
|
Basic and diluted earnings per share
|
|
|
2.85
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2016
|
|
Six Months
Ended
June 30,
2017
|
|
Equivalent Atwood
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
34.29
|
|
$
|
33.62
|
|
Cash dividends per share
|
|
|
0.184
|
|
|
0.03
|
|
Basic and diluted earnings per share
|
|
|
4.56
|
|
|
(0.03
|
)
|
17
Table of Contents
COMPARATIVE MARKET PRICES AND DIVIDENDS
Ensco Class A ordinary shares and Atwood common stock are listed on the NYSE. The following table sets forth the high and low sales
prices of Ensco Class A ordinary shares and shares of Atwood common stock as reported on the NYSE, and the quarterly cash dividends declared per share for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ensco Class A
Ordinary Shares
|
|
Atwood Common Stock
|
|
|
|
|
High
|
|
Low
|
|
Dividend
|
|
High
|
|
Low
|
|
Dividend(2)
|
|
|
Quarter Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 (through August 17, 2017)
|
|
$
|
5.80
|
|
$
|
4.15
|
|
|
(1
|
)
|
$
|
8.69
|
|
$
|
6.00
|
|
|
N/A
|
|
|
June 30, 2017
|
|
|
9.34
|
|
|
4.89
|
|
$
|
0.01
|
|
|
10.23
|
|
|
7.18
|
|
|
|
|
|
March 31, 2017
|
|
|
12.04
|
|
|
8.15
|
|
$
|
0.01
|
|
|
14.39
|
|
|
8.44
|
|
|
|
|
|
December 31, 2016
|
|
$
|
12.03
|
|
$
|
7.19
|
|
$
|
0.01
|
|
$
|
15.37
|
|
$
|
6.86
|
|
$
|
|
|
|
September 30, 2016
|
|
|
10.89
|
|
|
6.50
|
|
|
0.01
|
|
|
13.79
|
|
|
6.12
|
|
|
|
|
|
June 30, 2016
|
|
|
12.36
|
|
|
9.00
|
|
|
0.01
|
|
|
13.33
|
|
|
7.52
|
|
|
|
|
|
March 31, 2016
|
|
|
16.10
|
|
|
7.25
|
|
|
0.01
|
|
|
11.46
|
|
|
4.82
|
|
|
0.075
|
|
|
December 31, 2015
|
|
$
|
18.93
|
|
$
|
13.26
|
|
$
|
0.15
|
|
$
|
19.65
|
|
$
|
9.98
|
|
$
|
0.25
|
|
|
September 30, 2015
|
|
|
22.21
|
|
|
13.46
|
|
|
0.15
|
|
|
26.50
|
|
|
14.15
|
|
|
0.25
|
|
|
June 30, 2015
|
|
|
28.40
|
|
|
21.04
|
|
|
0.15
|
|
|
35.66
|
|
|
25.89
|
|
|
0.25
|
|
|
March 31, 2015
|
|
|
32.28
|
|
|
19.78
|
|
|
0.15
|
|
|
35.24
|
|
|
26.12
|
|
|
0.25
|
|
|
-
(1)
-
Dividends
in respect of Ensco's quarter ending September 30, 2017 have not been declared or paid.
-
(2)
-
In
March 2016, Atwood entered into an amendment to its revolving credit facility that, among other things, prohibits Atwood from paying dividends during the
remaining term of its revolving credit facility.
On
May 26, 2017, the last full trading day before the public announcement of the merger agreement, the high and low sales prices of Ensco Class A ordinary shares as
reported on the NYSE were $6.84 and $6.68, respectively. On August 17, 2017, the last full trading day before the date of this joint proxy statement/prospectus, the high and low sale prices of
Ensco Class A ordinary shares as reported on the NYSE were $4.34 and $4.15, respectively.
On
May 26, 2017, the last full trading day before the public announcement of the merger agreement, the high and low sales prices of shares of Atwood common stock as reported on
NYSE were $8.23 and $7.92, respectively. On August 17, 2017, the last full trading day before the date of this joint proxy statement/prospectus, the high and low sale prices of shares of Atwood
common stock as reported on the NYSE were $6.37 and $6.00, respectively.
Ensco
shareholders and Atwood shareholders are advised to obtain current market quotations for Ensco Class A ordinary shares and Atwood common stock. The market price of Ensco
Class A ordinary shares and Atwood common stock will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger. No assurance can be given concerning
the market price of Ensco Class A ordinary shares or Atwood common stock before or after the Effective Time.
18
Table of Contents
RISK FACTORS
In addition to the other information included or incorporated by reference in this joint proxy statement/prospectus,
including the matters addressed in "Cautionary Statement Regarding Forward-Looking Statements" beginning on page 30, you should carefully consider the following risks before deciding how to vote. In
addition, you should read and carefully consider the risks associated with each of Ensco and Atwood and their respective businesses. These risks can be found in Ensco's and Atwood's Annual Reports on
Form 10-K for the year ended December 31, 2016 and September 30, 2016, respectively, and subsequent Quarterly Reports on Form 10-Q, each of which is filed with the SEC and
incorporated by reference into this joint proxy statement/prospectus. For further information regarding the documents incorporated into this joint proxy statement/prospectus by reference, please see
the section titled "Where You Can Find More Information." Realization of any of the risks described below, any of the events described under "Cautionary Statement Regarding Forward-Looking Statements"
or any of the risks or events described in the documents incorporated by reference could have a material adverse effect on Ensco's, Atwood's or the combined company's businesses, financial condition,
cash flows and results of operations and could result in a decline in the trading prices of Ensco's or Atwood's stock.
Risks Relating to the Merger
Because the exchange ratio will not be adjusted for stock price changes and the market price of Ensco
Class A ordinary shares will fluctuate, Atwood shareholders cannot be sure of the value of the merger consideration they will receive.
Upon completion of the merger, each share of Atwood common stock will be converted into the right to receive 1.60 Ensco Class A ordinary
shares. The exchange ratio will not change to reflect changes in the market prices of the Ensco Class A ordinary shares and Atwood common stock. The market price of Ensco Class A
ordinary shares at the time of completion of the merger may vary significantly from the market price of Ensco Class A ordinary shares on the date the merger agreement was executed, the date of
this joint proxy statement/prospectus and the date of the Atwood special meeting. Accordingly, Atwood shareholders will not know or be able to calculate at the time of the Atwood special meeting the
market value of the merger consideration they will receive upon completion of the merger.
In
addition, the merger might not be completed until a significant period of time has passed after the Atwood special meeting. Because the exchange ratio will not be adjusted to reflect
any changes in the market values of Ensco Class A ordinary shares and Atwood common stock, the market value of the Ensco Class A ordinary shares issued, and the Atwood common stock
surrendered, may be higher or lower than the values of those shares on earlier dates. Stock price changes may result from, among other things, changes in the business, operations or prospects of Ensco
or Atwood prior to or following the merger, litigation or regulatory considerations, general business, market, industry or economic conditions and other factors both within and beyond the control of
Ensco and Atwood. Neither Ensco nor Atwood is permitted to terminate the merger agreement solely because of changes in the market price of either company's stock.
The fairness opinions rendered by Ensco's and Atwood's financial advisors were based on the financial
advisors' financial analysis and considered factors such as market and other conditions then in effect, and financial forecasts and other information made available to the financial advisors, as of
the date of the opinions.
The fairness opinions rendered to the Ensco Board and the Atwood Board by Morgan Stanley and Goldman Sachs, respectively, were provided in
connection with, and at the time of, the evaluation of the merger and the merger agreement by the Ensco Board and the Atwood Board. The opinions were based on the financial, economic, market and other
conditions as in effect on, and the information
19
Table of Contents
made
available to, the financial advisors as of the date of the opinions. Events occurring after the date of such opinions may affect such opinions and the assumptions used in preparing them. Neither
the Ensco Board nor the Atwood Board have obtained an updated opinion as of the date of this joint proxy statement/prospectus from their respective financial advisors, and neither the Ensco Board nor
the Atwood Board expects to obtain an updated opinion prior to completion of the merger. Neither Morgan Stanley nor Goldman Sachs assumed any obligation to update, revise or reaffirm their respective
opinions. Changes in the operations and prospects of Ensco or Atwood, general market and economic conditions and other factors that may be beyond the control of Ensco and Atwood, and on which the
fairness opinions were based, may have altered the value of Ensco or Atwood or the prices of Ensco Class A ordinary shares or Atwood common stock since the date of such opinion, or may alter
such values and prices by the time the merger is completed. The opinions do not speak as of any date other than the date of such opinion. For a description of the opinion that Morgan Stanley rendered
to the Ensco Board, please refer to "The MergerOpinion of Financial Advisor to Ensco." For a description of the opinion that Goldman Sachs rendered to the Atwood Board, please refer to
"The MergerOpinion of Financial Advisor to Atwood."
Current Atwood shareholders will have a reduced ownership and voting interest after the merger and will
exercise less influence over management.
Ensco will issue new Ensco Class A ordinary shares to Atwood shareholders in the merger (including Ensco Class A ordinary shares
to be issued in connection with the vesting of certain outstanding Atwood equity awards). After giving effect to these issuances, current Ensco and Atwood shareholders are expected to hold
approximately 69% and 31%, respectively, of the outstanding Ensco Class A ordinary shares immediately following completion of the merger.
Atwood
shareholders currently have the right to vote for their directors and on other matters affecting the company. When the merger occurs, the Ensco Class A ordinary shares that
each Atwood shareholder receives in exchange for its Atwood common stock will represent a percentage ownership of Ensco that is significantly smaller than the Atwood shareholder's percentage ownership
of Atwood. As a result of these reduced ownership percentages, former Atwood shareholders will have less influence on the management and policies of Ensco than they now have with respect to Atwood.
The merger agreement contains provisions that limit Ensco's and Atwood's ability to pursue alternatives to
the merger, which could discourage a potential acquirer of Ensco or Atwood from making an alternative transaction proposal and, in certain circumstances, could require Ensco or Atwood to pay the other
party a termination fee.
Under the merger agreement, each of Ensco and Atwood is restricted from entering into alternative transactions. Unless and until the merger
agreement is terminated, subject to specified exceptions (which are discussed in more detail in "The Merger Agreement"), each of Ensco, Atwood and their respective subsidiaries and representatives are
prohibited from, directly or indirectly, initiating, soliciting, knowingly facilitating or knowingly encouraging (including by way of furnishing non-public information) any inquiry in respect of, or
the making of any proposal or offer that constitutes or could reasonably be expected to lead to, a takeover proposal; engaging in, continuing or otherwise participating in any discussions or
negotiations regarding, or furnishing to any other person any non-public information in connection with or for the purpose of encouraging or facilitating, a takeover proposal; or approving,
recommending, or entering into any letter of intent or similar document, agreement, commitment or agreement in principle with respect to a takeover proposal. Under the merger agreement, in the event
of a potential change by the Ensco Board of its recommendation with respect to the Ensco Merger Consideration Proposal or the Atwood Board of its recommendation with respect to the Atwood Merger
Proposal, Ensco or Atwood, as the case may be, must provide the other party with at least four business days' prior written notice of its intention to
20
Table of Contents
take
such action. In addition, each party is generally required to negotiate in good faith with the other party to modify the terms of the merger in response to any competing acquisition proposals
before the party's board of directors, as the case may be, may change, qualify, withhold, withdraw or modify its recommendation with respect to the merger.
If
the merger agreement is terminated under specified circumstances, then Ensco or Atwood, as applicable, will be required to pay the other party's reasonable out-of-pocket fees and
expenses up to a maximum amount of $10.0 million. In addition, if the merger agreement is terminated under specified circumstances, Ensco or Atwood will be required to pay the other party a
termination fee of
$50.0 million (in the case of a termination fee paid by Ensco) or $30.0 million (in the case of a termination fee paid by Atwood), in each case less any expense reimbursement previously
paid by Ensco or Atwood. Following payment of a termination fee, neither party will be obligated to pay any additional expenses incurred by the other party or its affiliates. Please read "The Merger
Agreement."
These
provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of Ensco's or Atwood's stock or assets from
considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the
merger. Similarly, these provisions might result in a potential third-party acquirer proposing to pay a lower price to Atwood shareholders than it might otherwise have proposed to pay because of the
added expense of the termination fee that may become payable in certain circumstances. If the merger agreement is terminated and Ensco or Atwood determines to seek another business combination, it may
not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger.
Ensco and Atwood will be subject to various uncertainties and contractual restrictions while the merger is
pending that could adversely affect each party's business and operations.
In connection with the merger, it is possible that some customers, suppliers and other persons with whom Ensco or Atwood has business
relationships may delay or defer certain business decisions, or might decide to seek to terminate, change or renegotiate their relationship with Ensco or Atwood as a result of the merger, which could
negatively affect Ensco's and Atwood's respective revenues, earnings and cash available for distribution, as well as the market price of Ensco Class A ordinary shares and Atwood common stock,
regardless of whether the merger is completed.
Under
the terms of the merger agreement, each of Ensco and Atwood is subject to certain restrictions on the conduct of its business prior to completing the merger, which may adversely
affect its ability to execute certain of its business strategies. Such limitations could negatively affect each party's businesses and operations prior to the completion of the merger. Furthermore,
the process of planning to integrate two businesses and organizations for the post-merger period may divert management's attention and resources and could ultimately have an adverse effect on each
party. These uncertainties could cause customers, suppliers and others that deal with Ensco or Atwood to seek to change existing business relationships with such party. For a discussion of these
restrictions, see "The Merger AgreementCovenants and Agreements."
Ensco or Atwood may have difficulty attracting, motivating and retaining executives and other employees in
light of the merger.
Uncertainty about the effect of the merger on Ensco or Atwood employees may impair these companies' ability to attract, retain and motivate
personnel until the merger is completed. Employee retention may be particularly challenging during the pendency of the merger, as employees may feel uncertain about their future roles with the
combined organization. In addition, Ensco or Atwood may have to provide additional compensation in order to retain employees. If employees of Ensco or
21
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Atwood
depart because of issues relating to the uncertainty and difficulty of integration or a desire not to become employees of the combined company, the combined company's ability to realize the
anticipated benefits of the merger could be adversely affected.
The merger is subject to conditions, including certain conditions that may not be satisfied, and may not be
completed on a timely basis, if at all. Failure to complete the merger, or significant delays in completing the merger, could negatively affect the trading prices of Ensco Class A ordinary
shares and Atwood common stock and the future business and financial results of Ensco and Atwood.
The completion of the merger is subject to a number of conditions beyond Ensco's and Atwood's control that may prevent, delay or otherwise
materially adversely affect its completion, including the approval by Ensco's shareholders of the Ensco Merger Consideration Proposal and the approval by Atwood's shareholders of the Atwood Merger
Proposal. Neither Ensco nor Atwood can predict whether and when these other conditions will be satisfied. Any delay in completing the merger could cause the combined company not to realize some or all
of the synergies expected to be achieved if the merger is successfully completed within its expected time frame. See "The Merger AgreementConditions to Complete the Merger."
If
the merger is not completed, each of Ensco and Atwood will be subject to several risks and consequences, including the following:
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certain damages for which the parties may be liable to one another under the terms and conditions of the merger agreement;
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negative reactions from the financial markets, including declines in the price of Ensco Class A ordinary shares or Atwood common stock
due to the fact that current prices may reflect a market assumption that the merger will be completed;
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certain significant costs relating to the merger, including, in certain circumstances, the reimbursement by either Ensco or Atwood of up to
$10.0 million of the other party's expenses and a termination fee payable by Ensco of $50.0 million and payable by Atwood of $30.0 million less any previous expense reimbursements
by each party, as described in "The Merger AgreementTermination Fees and Expense Reimbursement"; and
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diverted attention of management of Ensco and Atwood to the merger rather than each organization's own operations and pursuit of other
opportunities that could have been beneficial to that organization.
Ensco and Atwood will incur substantial transaction fees and costs in connection with the merger.
Ensco and Atwood expect to incur a number of non-recurring transaction-related costs associated with completing the merger, combining the
operations of the two organizations and achieving desired synergies. These fees and costs will be substantial. Non-recurring transaction costs include, but are not limited to, fees paid to legal,
financial and accounting advisors, filing fees and printing costs. Additional unanticipated costs may be incurred in the integration of the businesses of Ensco and Atwood. There can be no assurance
that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will offset the incremental transaction-related
costs over time. Thus, any net benefit may not be achieved in the near term, the long term or at all.
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Certain directors and executive officers of Atwood have interests in the merger that are different from, or
in addition to, those of other Atwood shareholders, which could have influenced their decisions to support or approve the merger.
In considering whether to approve the proposals at the Atwood special meeting, Atwood shareholders should recognize that certain directors and
executive officers of Atwood have interests in the merger that differ from, or that are in addition to, their interests as shareholders of Atwood. These interests include, among others, ownership
interests in the combined company and the accelerated vesting of certain equity awards and/or certain severance benefits, in connection with the merger. These interests, among others, may influence
the directors and executive officers of Atwood to support or approve the Atwood Merger Proposal. Please read "The Atwood Special MeetingProposal 2Compensatory Proposal" and
"The MergerAtwood's Directors and Officers Have Financial Interests in the Merger."
Completion of the merger will trigger change of control or other provisions in certain agreements to which
Atwood is a party.
The completion of the merger will trigger change of control or other provisions in certain agreements to which Atwood is a party. In particular,
the indenture governing Atwood's 6.50% senior notes due 2020 requires Atwood to make an offer to purchase all of each holder's notes at an amount equal to 101% of the aggregate principal amount of
such holder's notes, plus accrued and unpaid interest, if any, within 30 days following a change of control. As a result, Ensco could be required to repay up to an aggregate $449 million
principal amount of senior notes plus approximately $4.5 million in associated premiums.
In
addition, the completion of the merger will constitute a change of control under Atwood's revolving credit facility. As a result, the outstanding balance under the revolving credit
facility will be accelerated and become due and payable by Ensco in connection with the completion of the merger. As of June 30, 2017, Atwood had outstanding borrowings under its revolving
credit facility of approximately $850 million.
If a governmental authority asserts objections to the merger, Ensco and Atwood may be unable to complete the
merger or, in order to do so, Ensco and Atwood may be required to comply with material restrictions or satisfy material conditions.
The completion of the merger is subject to the condition that there is no law, injunction, judgment or ruling by a governmental authority in
effect enjoining, restraining, preventing or prohibiting the merger contemplated by the merger agreement. If a governmental authority asserts objections to the merger, Ensco or Atwood may be required
to divest assets or accept other remedies in order to complete the merger. There can be no assurance as to the cost, scope or impact of the actions that may be required to address any governmental
authority objections to the merger. If Ensco or Atwood takes such actions, it could be detrimental to it or to the combined company following the consummation of the merger. Furthermore, these actions
could have the effect of delaying or preventing completion of the merger or imposing additional costs on or limiting the revenues or cash available for distribution of the combined company following
the consummation of the merger.
Additionally,
state attorneys general could seek to block or challenge the merger as they deem necessary or desirable in the public interest at any time, including after completion of
the transaction. In addition, in some circumstances, a third party could initiate a private action under antitrust laws challenging or seeking to enjoin the merger, before or after it is completed.
Ensco or Atwood may not prevail and may incur significant costs in defending or settling any action under the antitrust laws.
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Risks Relating to the Combined Company Following the Merger
If completed, the merger may not achieve its intended results, and Ensco and Atwood may be unable to
successfully integrate their operations. Failure to successfully combine the businesses of Ensco and Atwood in the expected time frame may adversely affect the future results of the combined
organization, and, consequently, the value of the Ensco Class A ordinary shares that Atwood shareholders receive as the merger consideration.
Ensco and Atwood entered into the merger agreement with the expectation that the merger will result in various benefits, including, among other
things, expanding Ensco's asset base and creating synergies. Achieving the anticipated benefits of the merger is subject to a number of uncertainties, including whether the businesses of Ensco and
Atwood can be integrated in an efficient and effective manner.
It
is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company's ongoing businesses,
processes and systems or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect the combined company's ability to
achieve the anticipated benefits of the merger. The combined company's results of operations could also be adversely affected by any issues attributable to either company's operations that arise or
are based on events or actions that occur prior to the completion of the merger. The companies may have difficulty addressing possible differences in corporate cultures and management philosophies.
The integration process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization. Failure
to achieve these anticipated benefits could result in increased costs or decreases in the amount of expected revenues and could adversely affect the combined company's future business, financial
condition, operating results and prospects.
The pro forma financial statements included in this joint proxy statement/prospectus are based on various
assumptions that may not prove to be correct, and they are presented for illustrative purposes only and may not be an indication of the combined company's financial condition or results of operations
following the merger.
The pro forma financial statements contained in this joint proxy statement/prospectus are based on various adjustments, assumptions and
preliminary estimates and may not be an indication of the combined company's financial condition or results of operations following the merger for several reasons. See "Unaudited Pro Forma Condensed
Combined Financial Statements of Ensco." The actual financial condition and results of operations of the combined company following the merger may not be consistent with, or evident from, these pro
forma financial statements. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the combined company's
financial condition or results of operations following the merger. Any potential decline in the combined company's financial condition or results of operations may cause significant variations in the
price of Ensco Class A ordinary shares.
A downgrade in Ensco's or its subsidiaries' credit ratings following the merger could impact the combined
entity's access to capital and costs of doing business, and maintaining credit ratings is under the control of independent third parties.
Following the merger, rating agencies may reevaluate Ensco's and its subsidiaries' ratings, and any additional actual or anticipated downgrades
in such credit ratings could limit their ability to access credit and capital markets, or to restructure or refinance their indebtedness. As a result of any such downgrades, future financings or
refinancings may result in higher borrowing costs and require more restrictive terms and covenants, including obligations to post collateral with third parties, which may further restrict operations
and negatively impact liquidity.
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Credit
rating agencies perform independent analysis when assigning credit ratings. The analysis includes a number of criteria including, but not limited to, business composition, market
and operational risks, as well as various financial tests. Credit rating agencies continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria
from time to time. Credit ratings are not recommendations to buy, sell or hold investments in the rated entity. Ratings are subject to revision or withdrawal at any time by the rating agencies, and
Ensco cannot assure you that it will maintain its current credit ratings.
Ensco Class A ordinary shares to be received by Atwood shareholders as a result of the merger have
different rights from Atwood common stock.
Following completion of the merger, Atwood shareholders will no longer hold Atwood common stock, but will instead be Class A ordinary
shareholders of Ensco. There are important differences between the rights of Atwood shareholders and the rights of Ensco Class A ordinary shareholders. See "Comparison of Rights of Atwood
Shareholders and Ensco Shareholders" for a discussion of the different rights associated with Ensco Class A ordinary shares and Atwood common stock.
The IRS may not agree with the conclusion that Ensco should be treated as a foreign corporation for U.S.
federal tax purposes following the merger.
Although Ensco is incorporated in the United Kingdom, the U.S. Internal Revenue Service ("IRS") may assert that Ensco should be treated as a
U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes following the merger pursuant to Section 7874 of the Internal Revenue Code. For U.S. federal income
tax purposes, a corporation is generally considered a U.S. "domestic" corporation (or U.S. tax resident) if it is organized in the United States, and a corporation is generally considered a "foreign"
corporation (or non-U.S. tax resident) if it is not a U.S. domestic corporation. Because Ensco is an entity incorporated in England and Wales, it would generally be classified as a foreign corporation
(or non-U.S. tax resident) under these rules. Section 7874 of the Internal Revenue Code provides an exception under which a foreign incorporated entity may, in certain circumstances, be treated
as a U.S. domestic corporation for U.S. federal income tax purposes.
Unless
Ensco satisfies the substantial business activities exception, as defined in Section 7874 of the Internal Revenue Code and described in more detail below (the "Substantial
Business Activities Exception"), Ensco would be treated as a U.S. domestic corporation (that is, as a U.S. tax resident) for U.S. federal income tax purposes following the merger pursuant to
Section 7874 of the Internal Revenue Code if the percentage (by vote or value) of Ensco Class A ordinary shares considered to be held by former holders of shares of Atwood common stock
after the merger by reason of holding shares of Atwood common stock for purposes of Section 7874 of the Internal Revenue Code (the "Section 7874 Percentage") is 80% or more. In order for
Ensco to satisfy the Substantial Business Activities Exception, at least 25% of the employees (by headcount and compensation), real and tangible assets and gross income of the Ensco expanded
affiliated group must be based, located and derived, respectively, in the country in which Ensco is a tax resident after the merger. The Substantial Business Activities Exception is not expected to be
satisfied.
The
Section 7874 Percentage is currently expected to be less than 60%. The calculation of the Section 7874 Percentage, however, is complex, is calculated based on the facts
as of the Effective Time, is subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by changes in such regulations) and is subject to factual
uncertainties (including fluctuations in the value of shares of Atwood common stock and Ensco Class A ordinary shares). As a result, the IRS could assert that the Section 7874 Percentage
is greater than 80% and that Ensco therefore is treated for U.S. federal income tax purposes as a U.S. domestic corporation (that is, as a U.S. tax resident) following the merger. If the IRS
successfully challenged Ensco's status as a foreign
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corporation,
significant adverse tax consequences would result for Ensco and for certain of Ensco's shareholders.
Please
see the section of this joint proxy statement/prospectus entitled "Material United States Federal Income Tax Consequences of the MergerTax Consequences of the Merger
to Atwood and Ensco" for a discussion of the application of Section 7874 of the Internal Revenue Code to the merger.
It is uncertain whether Section 7874 of the Internal Revenue Code will impose an excise tax on gain
recognized by certain individuals
If the Section 7874 Percentage is calculated to be at least 60%, Section 7874 of the Internal Revenue Code and the rules related
thereto may impose an excise tax under Section 4985 of the Internal Revenue Code (the "Section 4985 Excise Tax") on the gain recognized by certain "disqualified individuals" (including
officers and directors of a U.S. company) on certain stock-based compensation held by them at a rate equal to 15%.
Based
on the guidance available, after taking into account the adjustments described in the section of this joint proxy statement/prospectus entitled "Material United States Federal
Income Tax Consequences of the MergerTax Consequences of the Merger to Atwood and Ensco," and based on the facts and circumstances as of the date hereof, the Section 7874
Percentage following the merger is expected to be less than 60% and, thus, the Section 4985 Excise Tax is not expected to apply to "disqualified individuals" of Atwood or Ensco.
Future changes to U.S. and foreign tax laws could adversely affect Ensco.
The U.S. Congress, the Organisation for Economic Co-operation and Development, and other government agencies in jurisdictions where Ensco and
its affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of "base erosion and profit shifting," where payments
are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. Additionally, recent legislative proposals would treat Ensco as a U.S. corporation if the
management and control of Ensco and its affiliates were determined to be located primarily in the United States and/or would
reduce the Section 7874 Percentage threshold at or above which Ensco would be treated as a U.S. corporation. Thus, the tax laws in the United States, the United Kingdom and other countries in
which Ensco and its affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect Ensco. Furthermore, the interpretation and application of
domestic or international tax laws made by Ensco and Ensco's subsidiaries could differ from that of the relevant governmental authority, which could result in administrative or judicial procedures,
actions or sanctions, which could be material.
U.S. tax laws and IRS guidance could affect Ensco's ability to engage in certain acquisition strategies and
certain internal restructurings.
Even if Ensco is treated as a foreign corporation for U.S. federal income tax purposes, Section 7874 of the Internal Revenue Code and
U.S. Treasury Regulations promulgated thereunder, including temporary Treasury Regulations, may adversely affect the ability of Ensco to engage in certain future acquisitions of U.S. businesses in
exchange for Ensco equity, which may affect the tax efficiencies that otherwise might be achieved in such potential future transactions.
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Risks Inherent in an Investment in Ensco
Transfers of Ensco Class A ordinary shares may be subject to stamp duty or stamp duty reserve tax
("SDRT") in the United Kingdom, which would increase the cost of dealing in Ensco Class A ordinary shares.
Stamp duty and/or SDRT are imposed in the United Kingdom on certain transfers of chargeable securities (which include shares in companies
incorporated in the United Kingdom) at a rate of 0.5% of the consideration paid for the transfer. Certain transfers of shares to depositary receipt facilities or clearance systems providers are
charged at a higher rate of 1.5%.
Pursuant
to arrangements that Ensco entered into with the Depository Trust Company ("DTC"), the Ensco Class A ordinary shares are eligible to be held in book-entry form through
the facilities of DTC. Transfers of shares held in book-entry form through DTC will not attract a charge to stamp duty or SDRT in the United Kingdom. A transfer of the shares from within the DTC
system out of DTC and any subsequent transfers that occur entirely outside the DTC system will attract a charge to stamp duty at a rate of 0.5% of any consideration, which is payable by the transferee
of the shares. Any such duty must be paid (and the relevant transfer document stamped by Her Majesty's Revenue & Customs ("HMRC")) before the transfer can be registered in the share register of
Ensco. If a shareholder decides to redeposit shares into DTC, the redeposit will attract SDRT at a rate of 1.5% of the value of the shares.
Ensco
has put in place arrangements with its transfer agent to require that shares held in certificated form cannot be transferred into the DTC system until the transferor of the shares
has first delivered the shares to a depository specified by Ensco so that SDRT may be collected in connection with the initial delivery to the depository. Any such shares will be evidenced by a
receipt issued by the depository. Before the transfer can be registered in Ensco's share register, the transferor will also be required to provide the transfer agent sufficient funds to settle the
resultant liability for SDRT, which will be charged at a rate of 1.5% of the value of the shares.
Following
decisions of the European Court of Justice and the U.K. First-tier Tax Tribunal, HMRC has announced that it will not seek to apply a charge to stamp duty or SDRT on the
issuance of shares (or, where it is integral to the raising of new capital, the transfer of new shares) into a depositary receipt facility or clearance system provider, such as DTC. However, it is
possible that the U.K. government may change or enact laws applicable to stamp duty or SDRT in response to this decision, which could have a material effect on the cost of trading in Ensco's shares.
If the Ensco Class A ordinary shares are not eligible for continued deposit and clearing within the
facilities of DTC, then transactions in Ensco's shares may be disrupted.
The facilities of DTC are widely-used for rapid electronic transfers of securities between participants within the DTC system, which include
numerous major international financial institutions and brokerage firms. Currently, all trades of Ensco Class A ordinary shares on the NYSE are cleared and settled on the facilities of DTC. The
Ensco Class A ordinary shares are, at present, eligible for deposit and clearing within the DTC system, pursuant to arrangements with DTC whereby DTC accepted the Ensco Class A ordinary
shares for deposit, clearing and settlement services, and Ensco agreed to indemnify DTC for any stamp duty and/or SDRT that may be assessed upon it as a result of its service as a clearance system
provider for the Ensco Class A ordinary shares. However, DTC retains sole discretion to cease to act as a clearance system provider for the Ensco Class A ordinary shares at any time.
If
DTC determines at any time that the Ensco Class A ordinary shares are no longer eligible for deposit, clearing and settlement services within its facilities, such shares may
become ineligible for continued listing on a U.S. securities exchange, and trading in such shares would be disrupted. In this
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event,
DTC has agreed it will provide Ensco advance notice and assist Ensco, to the extent possible, with efforts to mitigate adverse consequences. While Ensco would pursue alternative arrangements to
preserve its listing and maintain trading, any such disruption could have a material adverse effect on the trading price of the Ensco Class A ordinary shares.
Investor enforcement of civil judgments against Ensco may be more difficult.
Because Ensco is a public limited company incorporated under the Laws of England and Wales, investors could experience more difficulty enforcing
judgments obtained against Ensco in U.S. courts. In addition, it may be more difficult (or impossible) to bring some types of claims against Ensco in courts in England than it would be to bring
similar claims against a U.S. company in a U.S. court.
Ensco has less flexibility as a U.K. public limited company with respect to certain aspects of capital
management than U.S. corporations due to increased shareholder approval requirements.
Directors of Texas and other U.S. corporations may issue, without further shareholder approval, shares of common stock authorized in their
certificates of incorporation that were not already issued or reserved. The business corporation laws of Texas and other U.S. states also provide substantial flexibility in establishing the terms of
preferred stock. However, English law provides that a board of directors may only allot shares with the prior authorization of an ordinary resolution of the shareholders, which authorization must
state the maximum amount of shares that may be allotted under it and specify the date on which it will expire, which must not be more than five years from the date on which the shareholder resolution
is passed. An ordinary resolution was passed by shareholders at the Ensco 2017 Annual General Meeting to authorize the allotment of additional shares until the next annual general meeting of
shareholders (or, if earlier, at the close of business on August 22, 2018). This authority will be increased if the Ensco General Allotment Authority Increase Proposal is passed at this
meeting, but in any event, this authority will expire in 2018. As such, an ordinary resolution will be put to Ensco shareholders at Ensco's next annual general meeting seeking
shareholder approval to renew the authority of the Ensco Board to allot shares for an additional one year term.
English
law also generally provides shareholders with pre-emption rights over new shares that are issued for cash. However, it is possible, where the board of directors is generally
authorized to allot shares, to exclude pre-emption rights by a special resolution of the shareholders or by a provision in the articles of association. Such exclusion of pre-emption rights will
commonly cease to have effect at the same time as the general allotment authority to which it relates is revoked or expires. If the general allotment authority is renewed, the authority excluding
pre-emption rights may also be renewed by a special resolution of the shareholders. Special resolutions were passed, in conjunction with an allotment authority at the Ensco 2017 Annual General
Meeting, to disapply pre-emption rights until the next annual general meeting of shareholders (or, if earlier, at the close of business on August 22, 2018). These authorities will be increased
if the Ensco General Disapplication of Pre-emptive Rights Proposal and/or the Ensco Specified Disapplication of Pre-emptive Rights Proposal are passed at this meeting, but in any event, these
authorities will expire in 2018. As such, special resolutions will be put to Ensco shareholders at Ensco's next annual general meeting seeking shareholder approval to renew the authority of the Ensco
Board to disapply pre-emption rights for an additional one year term.
English
law prohibits Ensco from conducting "on-market purchases" as Ensco Class A ordinary shares will not be traded on a recognized investment exchange in the United Kingdom.
English law also generally prohibits a company from repurchasing its own shares by way of "off-market purchases" without the approval by a special resolution of the shareholders of the terms of the
contract by which the purchase(s) is affected. Such approval may only last for a maximum period of five years after the date on which the resolution is passed. A special resolution was passed at
Ensco's annual shareholder meeting in May 2013 to permit Ensco to make "off-market" purchases of its own shares pursuant to certain purchase agreements for a five-year term.
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Ensco
cannot provide any assurances that situations will not arise where such shareholder approval requirements for any of these actions would deprive its shareholders of substantial
benefits.
The Ensco Articles of Association contain anti-takeover provisions.
Certain provisions of the Ensco Articles of Association have anti-takeover effects, such as the ability to issue shares under the Rights Plan
(as defined therein). These provisions are intended to ensure that any takeover or change of control of Ensco is conducted in an orderly manner,
all shareholders of Ensco are treated equally and fairly and receive an optimum price for their shares and the long-term success of Ensco is safeguarded. Under English law, it may not be possible to
implement these provisions in all circumstances.
Ensco is not subject to the United Kingdom's Code on Takeovers and Mergers (the "Takeover Code").
The Takeover Code only applies to an offer for a public company that is registered in the United Kingdom (or the Channel Islands or the Isle of
Man) and the securities of which are not admitted to trading on a regulated market in the United Kingdom (or the Channel Islands or the Isle of Man) if the company is considered by the takeover panel
(the "Panel") to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the "residency test." The test for central
management and control under the Takeover Code is different from that used by the U.K. tax authorities. Under the Takeover Code, the Panel will look to where the majority of the directors of the
company are residents for the purposes of determining where the company has its place of central management and control. Accordingly, the Panel has previously indicated that the Takeover Code does not
apply to Ensco and Ensco shareholders therefore do not have the benefit of the protections the Takeover Code affords, including, but not limited to, the requirement that a person who acquires an
interest in shares carrying 30% or more of the voting rights in Ensco must make a cash offer to all other shareholders at the highest price paid in the 12 months before the offer was announced.
English law requires that Ensco meet certain additional financial requirements before declaring dividends and
returning funds to shareholders.
Under English law, Ensco is only able to declare dividends and return funds to its shareholders out of the accumulated distributable reserves on
its statutory balance sheet. Distributable reserves are a company's accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized
losses, so far as not previously written off in a reduction or reorganization of capital duly made. Realized profits are created through the remittance of profits of certain subsidiaries to Ensco in
the form of dividends.
English
law also provides that a public company can only make a distribution if, among other things (a) the amount of its net assets (that is, the total excess of assets over
liabilities) is not less than the total of its called up share capital and non-distributable reserves and (b) if, and to the extent that, the distribution does not reduce the amount of its net
assets to less than that total.
Ensco
may be unable to remit the profits of Ensco's subsidiaries in a timely or tax efficient manner. If at any time Ensco does not have sufficient distributable reserves to declare and
pay quarterly dividends,
Ensco may undertake a reduction in the capital, in addition to the reduction in capital taken in 2014, to reduce the amount of share capital and non-distributable reserves and to create a
corresponding increase in distributable reserves out of which future distributions to shareholders can be made. To comply with English law, a reduction of capital would be subject to
(a) approval of shareholders at a general meeting by special resolution; (b) confirmation by an order of the English Courts and (c) the Court order being delivered to and
registered by the Registrar of Companies in England. If Ensco were to pursue a reduction of capital of Ensco as a course of action, and failed to obtain the necessary approvals from shareholders and
the English Courts, Ensco may undertake other efforts to allow Ensco to declare dividends and return funds to shareholders.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus and the documents incorporated herein by reference contain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are identified as any statement that does not relate strictly to historical or
current facts. They use words such as "anticipate," "believe," "intend," "plan," "projection," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," or the negative of those
terms or other variations of them or comparable terminology. In particular, statements, express or implied, concerning expected financial performance; expected impact of the merger and any synergies
or cost-savings associated therewith; dividends; expected utilization, day rates, revenues, revenue efficiency, operating expenses, contract terms, contract backlog, capital expenditures, insurance,
financing and funding; the timing of availability, delivery, mobilization, contract commencement or relocation or other movement of rigs and the timing thereof; future rig construction (including
construction in progress and completion thereof), enhancement, upgrade or repair and timing and cost thereof, including startup post-idle costs; the suitability of rigs for future contracts; remaining
rig useful lives; the offshore drilling market, including supply and demand,
customer drilling programs, stacking of rigs, effects of new rigs on the market and effects of declines in commodity prices; general market, business and industry conditions, trends and outlook;
future operations; the impact of increasing regulatory complexity; our program to high-grade the rig fleet by investing in new equipment and divesting selected assets and underutilized rigs; expense
management; and the likely outcome of litigation, legal proceedings, investigations or insurance or other claims or contract disputes and the timing thereof. Forward-looking statements are not
guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations may differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine actual results are beyond the ability of Ensco or Atwood to control or predict. Specific factors which could cause actual results to
differ from those in the forward-looking statements include:
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the ability to complete the merger;
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failure, difficulties, and delays in meeting conditions required for closing set forth in the merger agreement;
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the ability to obtain requisite regulatory and shareholder approval and the satisfaction of the other conditions to the consummation of the
merger;
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the potential impact of the announcement or consummation of the merger on relationships, including with employees, suppliers, customers,
competitors, lenders and credit rating agencies;
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Ensco's ability to successfully integrate Atwood's operations and employees and to realize synergies and cost savings;
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Ensco's and Atwood's ability to attract and retain skilled personnel on commercially reasonable terms, whether due to labor regulations,
unionization or otherwise;
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Ensco's and Atwood's ability to obtain financing and pursue other business opportunities which may be limited by debt levels, debt agreement
restrictions and the credit ratings assigned to the debt by independent credit rating agencies;
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changes in worldwide rig supply and demand, competition or technology, including as a result of delivery of newbuild drilling rigs;
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downtime and other risks associated with offshore rig operations, including rig or equipment failure, damage and other unplanned repairs, the
limited availability of transport vessels, hazards, self-imposed drilling limitations and other delays due to severe storms and hurricanes
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Unless
expressly stated otherwise, forward-looking statements are based on the expectations and beliefs of the respective managements of Ensco and Atwood, based on information currently
available, concerning future events affecting Ensco and Atwood. Although Ensco and Atwood believe that these forward-looking statements are based on reasonable assumptions, they are subject to
uncertainties and factors related to Ensco's and Atwood's operations and business environments, all of which are difficult to predict and many of which are beyond Ensco's and Atwood's control. Any or
all of the forward-looking statements in this joint proxy statement/prospectus may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties.
The foregoing list of factors should not be construed to be exhaustive. Many factors mentioned in this joint proxy statement/prospectus, including the risks outlined under the caption "Risk Factors"
contained in Ensco's and Atwood's Exchange Act reports incorporated herein by reference, will be important in determining future results, and actual future results may vary materially. There is no
assurance that the actions, events or results of the forward-looking statements will occur, or, if any of them do, when they will occur or what effect they will have on Ensco's and Atwood's results of
operations, financial condition, cash flows or distributions. In view of these uncertainties, Ensco and Atwood caution that investors should not place undue reliance on any forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Ensco and Atwood undertake no obligation to update or revise any forward-looking
statement to reflect events or circumstances after the date on which it is made or to reflect new information or the occurrence of anticipated or unanticipated events or circumstances.
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THE ENSCO GENERAL MEETING
Date, Time, Place and Purpose of the Ensco General Meeting
A
general meeting of the shareholders of Ensco will be held at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY, England, at 3:00 P.M. (London time) on
October 5, 2017.
You
will be asked to consider and pass the four proposals below.
ORDINARY RESOLUTIONS
-
1.
-
Ensco Merger Consideration Proposal:
To authorize, in addition to all subsisting authorities, the allotment and
issuance of Ensco Class A ordinary shares to Atwood shareholders pursuant to the merger agreement, which provides for, among other things, the merger of Merger Sub with and into Atwood, with
Atwood surviving the merger as a wholly owned subsidiary of Ensco.
-
2.
-
Ensco General Allotment Authority Increase Proposal:
To authorize, in addition to all subsisting authorities, the
allotment and issuance up to a nominal amount of Ensco Class A ordinary shares, which, together with the nominal amount of shares of Ensco authorized to be allotted and issued pursuant to
paragraph (A) of resolution 11 passed at the Ensco 2017 Annual General Meeting and unused as of the date of this document, represents approximately 33% of the expected enlarged share capital of
Ensco immediately following the completion of the merger, and up to a further same nominal amount of Ensco Class A ordinary shares in connection with a pre-emptive offering of shares.
SPECIAL RESOLUTIONS
-
3.
-
Ensco General Disapplication of Pre-emptive Rights Proposal:
To authorize, in addition to all subsisting authorities,
the allotment and issuance up to a nominal amount of Ensco Class A ordinary shares for cash on a non-pre-emptive basis, which, together with the nominal amount of shares in Ensco authorized to
be allotted and issued for cash on a non-pre-emptive basis pursuant to resolution 12 passed at the Ensco 2017 Annual General Meeting and unused as of the date of this document, represents
approximately 5% of the expected enlarged share capital of Ensco immediately following the completion of the merger.
-
4.
-
Ensco Specified Disapplication of Pre-emptive Rights Proposal:
To authorize, in addition to all subsisting
authorities, the allotment and issuance up to a nominal amount of Ensco Class A ordinary shares for cash on a non-pre-emptive basis, which, together with the nominal amount of shares in Ensco
authorized to be allotted and issued for cash on a non-pre-emptive basis pursuant to resolution 13 passed at the Ensco 2017 Annual General Meeting and unused as of the date of this document,
represents approximately 5% of the expected enlarged share capital of Ensco immediately following the completion of the merger, such authority to be used only for the purposes of financing (or
refinancing, if the power is to be used within six months after the merger) a transaction which the Ensco Board deems to be an acquisition or other capital investment.
Ensco Board Recommendation
The Ensco Board has unanimously determined that the form, terms and provisions of the merger agreement and the
transactions contemplated thereby, including the merger and the allotment and issuance of the Ensco Class A ordinary shares, are advisable, fair and reasonable to and in the best
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interests of Ensco and its shareholders. The Ensco Board recommends that the Ensco shareholders vote:
-
-
"FOR" the Ensco Merger Consideration Proposal;
-
-
"FOR" the Ensco General Allotment Authority Increase
Proposal;
-
-
"FOR" the Ensco General Disapplication of Pre-emptive Rights Proposal;
and
-
-
"FOR" the Ensco Specified Disapplication of Pre-emptive Rights Proposal.
Who Can Vote at the Ensco General Meeting
Ensco shareholders who owned Class A ordinary shares at the close of business on August 23, 2017, the Ensco record date, are
qualified to receive notice of, attend and vote at the Ensco general meeting or, subject to the Ensco Articles of Association, any adjournments or postponements thereof. For a period of 10 days
prior to the Ensco general meeting, a list of all shareholders of record entitled to vote at the Ensco general meeting will be on file at Ensco's principal executive offices, 6 Chesterfield
Gardens, London, W1J 5BQ, United Kingdom, and will be available for inspection at the Ensco general meeting for any purpose relevant to the Ensco general meeting. Changes to entries on the
register after the record date will be disregarded in determining the rights of any person to attend or vote at the Ensco general meeting.
On
August 17, 2017, there were 303,979,543 Ensco Class A ordinary shares outstanding and entitled to vote at the Ensco general meeting. As of the Ensco record date,
directors and executive officers of Ensco and its affiliates had the right to vote approximately 1,903,037 Ensco Class A common shares, or 0.63% of the outstanding Ensco Class A common
shares on that date.
Each
Ensco Class A ordinary share is entitled to one vote on each matter to be voted on at the Ensco general meeting.
Vote Required for Approval; Quorum
As a U.K. company publicly traded on the NYSE, Ensco shareholder approval of the Ensco Merger Consideration Proposal is subject to the
shareholder approval requirements under both the Companies Act 2006 and NYSE rules. The Ensco Merger Consideration Proposal is being proposed as an ordinary resolution. Assuming a quorum is present,
such proposal will be approved for purposes of the Companies Act 2006 and NYSE rules if a majority of the votes cast are cast in favor thereof. The Ensco General Allotment Authority Increase Proposal
will be proposed as an ordinary resolution and, assuming a quorum is present, will be approved if a majority of the votes cast are cast in favor thereof. Each of the Ensco General Disapplication of
Pre-emptive Rights Proposal and the Ensco Specified Disapplication of Pre-emptive Rights Proposal will be proposed as a special resolution, which means, assuming a quorum is present, each such
proposal will be approved if at least 75% of the votes cast are cast in favor thereof.
Approval
of the Ensco Merger Consideration Proposal is required for completion of the merger. Approval of the Ensco General Allotment Authority Increase Proposal, the Ensco General
Disapplication of Pre-emptive Rights Proposal or the Ensco Specified Disapplication of Pre-emptive Rights Proposal is not required in order to complete the merger.
The
Chairman may adjourn or postpone the meeting without notice other than announcement at the meeting. At the Ensco general meeting, holders of a majority of the outstanding Ensco
Class A ordinary shares entitled to vote must be present, either in person or represented by proxy, to constitute a quorum. Abstentions and broker non-votes will be considered in determining
the presence of a quorum. While abstentions and broker non-votes are not considered votes cast under the Companies Act 2006, under NYSE rules abstentions, but not broker non-votes, will be considered
as votes cast for
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determining
whether a sufficient number of votes have been cast on a particular proposal. As a result, for purposes of determining whether the Ensco Merger Consideration Proposal has been approved in
accordance with the Companies Act 2006, abstentions and broker non-votes will not have any effect on the outcome of the vote. With respect to NYSE rules, abstentions will have the same effect as votes
cast "AGAINST" the Ensco Merger Consideration Proposal and broker non-votes will not have any effect on the outcome of the vote. Abstentions and broker non-votes will have no effect on the outcome of
the Ensco General Allotment Authority Increase Proposal, the Ensco General Disapplication of Pre-emptive Rights Proposal or the Ensco Specified Disapplication of Pre-emptive Rights Proposal.
Your vote is very important. You are encouraged to vote as soon as possible and in any event by 11:59 p.m. Eastern Time on October 4, 2017 (or
11:59 p.m. Eastern Time on October 2, 2017 for employees holding Ensco Class A ordinary shares in the Ensco Savings Plan).
Manner of Voting
If you are a "shareholder of record" of Ensco Class A ordinary shares, you may vote your shares in person at the Ensco general meeting
(any resolution put to vote at a general meeting shall be decided on a poll) or, in accordance with provisions in the Companies Act 2006 and in accordance with the Ensco Articles of Association, you
are entitled to appoint another person as your proxy to exercise all or any of your rights to attend, speak and vote at the Ensco general meeting and to appoint more than one proxy in relation to the
Ensco general meeting (provided that each proxy is appointed to exercise the rights attached to a different share or shares held by you). Such proxy need not be a shareholder of record.
After
you have carefully read this joint proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instruction card, as applicable, and
returning it in the enclosed postage-paid envelope or, if available, by submitting your proxy or voting instructions by telephone or through the Internet as soon as possible so that your Ensco
Class A ordinary shares will be represented and voted at the Ensco general meeting.
If
you are a shareholder of record, please sign the proxy card exactly as your name appears on the card. If shares are owned jointly, each joint owner should sign the proxy card. If a
shareholder is a corporation, limited liability company or partnership, the proxy card should be signed in the full corporate, limited liability company or partnership name by a duly authorized
person. If the proxy card is signed pursuant to a power of attorney or by an executor, administrator, trustee or guardian, please state the signatory's full title and provide a certificate or other
proof of appointment.
Please
refer to your proxy card, voting instruction card or the information forwarded by your broker, bank, trust or other nominee to see which voting options are available to you.
The
Internet and telephone proxy submission procedures are designed to verify your holdings and to allow you to confirm that your instructions have been properly recorded.
Neither
the submission of a proxy or voting instructions, nor the method by which you submit a proxy or voting instructions will in any way limit your right to vote at the Ensco general
meeting if you later decide to attend the meeting in person. If your Ensco Class A ordinary shares are held in the name of a broker, bank, trust or other nominee, you must either cause your
Ensco Class A ordinary shares to be withdrawn or obtain a proxy, executed in your favor, from the holder of record of your Ensco Class A ordinary shares and obtain a proxy, executed in
your favor, to be able to attend, speak and vote at the Ensco general meeting, although "street name" holders of Ensco Class A ordinary shares are permitted to attend the Ensco general meeting
at the invitation of the Chairman.
If
you are a current or former Ensco employee who holds Ensco Class A ordinary shares in the Ensco Savings Plan, you will receive voting instructions from the trustee of the plan
for Ensco Class A
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ordinary
shares allocated to your account. If you fail to give voting instructions to the trustee of the plan, your Ensco Class A ordinary shares will be voted by such trustee in the same
proportion and direction as Ensco Class A ordinary shares held by such trustee for which voting instructions were received. To allow sufficient time for voting by the trustee and administrator
of the Ensco Savings Plan, your voting instructions for Ensco Class A ordinary shares held in the plan must be received by 11:59 P.M. Eastern Time on October 2, 2017.
Voting instructions for Ensco Class A ordinary shares must be received by 11:59 p.m. Eastern Time on October 4, 2017 (or 11:59 p.m.
Eastern Time on October 2, 2017 for employees holding Ensco Class A ordinary shares in the Ensco Savings Plan).
Revoking a Proxy
You may revoke your proxy or voting instructions or change your vote at any time before the voting cutoff date in the case of holders of record
and "street name" holders of Ensco Class A ordinary shares and before your proxy is voted at the Ensco general meeting in the case of shareholders of record. If your Ensco Class A
ordinary shares are held in an account at a broker, bank, trust or other nominee and you desire to change your vote, you should contact your broker, bank, trust or other nominee for instructions on
how to do so before the voting cutoff date.
If
you are a shareholder of record of Ensco Class A ordinary shares, you can revoke your proxy or voting instructions or change your vote after you have delivered your proxy or
voting instructions in any of the three following ways:
-
-
by sending a written notice to the Secretary of Ensco at the address set forth in this joint proxy statement/prospectus, in time to be received
before the Ensco general meeting, stating that you would like to revoke your proxy;
-
-
by completing, signing and dating another proxy card and returning it by mail in time to be received before the Ensco general meeting, or by
submitting a later dated proxy by the Internet in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
-
-
by attending the Ensco general meeting and voting in person (simply attending the Ensco general meeting without voting will not revoke your
proxy or change your vote).
All
Ensco Class A ordinary shares represented by valid proxies that Ensco receives through this solicitation, and that are not revoked, will be voted in accordance with your
instructions on the proxy card.
If you fail to make a specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted "FOR" the
Ensco Merger Consideration Proposal; "FOR" the Ensco General Allotment Authority Increase Proposal; "FOR" the Ensco General Disapplication of Pre-emptive Rights Proposal; and "FOR" the Ensco Specified
Disapplication of Pre-emptive Rights Proposal.
Tabulation of the Votes
Ensco will appoint an Inspector of Election for the Ensco general meeting to tabulate affirmative and negative votes and abstentions.
Solicitation of Proxies
Ensco will bear its own costs and expenses incurred in connection with the filing, printing and mailing of this joint proxy statement/prospectus
and the retention of any information agent or other service provider in connection with the merger. This proxy solicitation is being made by Ensco on behalf of the Ensco Board. Ensco has hired D.F.
King & Co., Inc. and MacKenzie Partners, Inc. to
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assist
in the solicitation of proxies. Ensco has agreed to pay D.F. King & Co., Inc. a fee of $20,000 plus payment of certain fees and expenses for its services to solicit proxies
and voting instructions. In addition, Ensco has agreed to pay MacKenzie Partners, Inc. a fee of $35,000 plus payment of certain fees and expenses for its services to solicit proxies and voting
instructions. In addition to this mailing, proxies may be solicited by directors, officers or employees of Ensco or its affiliates in person or by telephone or electronic transmission. None of the
directors, officers or employees will be directly compensated for such services.
In
accordance with the regulations of the SEC and the NYSE, Ensco also will reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in
sending proxies and proxy materials to beneficial owners of Ensco Class A ordinary shares.
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Ensco Proposal 4Specified Disapplication of Pre-emptive Rights Proposal
For the reasons described above, Ensco is requesting its shareholders adopt the following resolution, which is a special resolution:
"
THAT
, subject to and conditional on Proposals 1 and 2 being passed and the Class A ordinary shares
representing the merger consideration being allotted in connection with the merger, the board shall be given power, in addition to all subsisting powers and in addition to any power granted under
Proposal 3 to allot equity securities (as defined in the Companies Act) for cash under the authority given pursuant to paragraph (A) of Proposal 2 and/or to sell ordinary shares held by the
company as treasury shares for cash as if Section 561 of the Companies Act did not apply to any such allotment or sale, such power to be:
-
(A)
-
limited to the allotment of equity securities and/or sale of treasury shares up to a nominal amount of $675,560;
and
-
(B)
-
used only for the purposes of financing (or refinancing, if the power is to be used within six months after the original transaction) a
transaction which the board determines to be an acquisition or other capital investment,
such power to apply until the conclusion of the next annual general meeting of shareholders (or, if earlier, at the close of business on August 22, 2018); however, in
each case, during this period the company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the power
ends and the board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power had not ended."
Assuming
a quorum is present, the Ensco Specified Disapplication of Pre-emptive Rights Proposal will be passed if at least 75% of the votes cast at the meeting (in person or by proxy)
are cast in favor of this proposal.
Completion
of the merger is not conditioned on approval of the Ensco Specified Disapplication of Pre-emptive Rights Proposal.
The Ensco Board unanimously recommends that you vote "FOR" the Ensco Specified Disapplication of Pre-emptive Rights Proposal. If no indication is given as to how
you want your Ensco Class A ordinary shares to be voted, the persons designated as proxies will vote the proxies received "FOR" the Ensco Specified Disapplication of Pre-emptive Rights
Proposal.
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THE ATWOOD SPECIAL MEETING
Date, Time, Place and Purpose of the Atwood Special Meeting
The
Atwood special meeting will be held at 15011 Katy Freeway, First Floor, Houston, Texas 77094, at 9:00 A.M. (Houston time) on October 5, 2017 to consider and vote
upon the following proposals:
-
1.
-
Atwood Merger Proposal:
To approve the merger agreement and the transactions contemplated thereby, including the
merger;
-
2.
-
Atwood Compensatory Proposal:
To approve an advisory (non-binding) vote on the specified compensation that may be
received by Atwood's named executive officers in connection with the transactions contemplated by the merger agreement, including the merger; and
-
3.
-
Atwood Adjournment Proposal:
To approve the adjournment of the Atwood special meeting, if necessary or advisable, to
solicit additional proxies in favor of the Atwood Merger Proposal or take any other action in connection with the merger agreement.
Recommendation of the Atwood Board
The Atwood Board has unanimously approved the merger agreement and the transactions contemplated thereby, including the merger. The Atwood Board
determined that the merger, the execution, delivery and performance of the merger agreement and the transactions contemplated thereby are advisable and in the best interests of Atwood and its
shareholders.
The Atwood Board unanimously recommends that Atwood shareholders vote "FOR" the Atwood Merger Proposal.
See "The
MergerAtwood's Reasons for the Merger; Recommendation of the Atwood Board of Directors" for a more detailed discussion of the Atwood Board's recommendation with respect to the Atwood
Merger Proposal.
In addition, the Atwood Board recommends the Atwood shareholders vote "FOR" the Atwood Compensatory Proposal and "FOR" the Atwood Adjournment
Proposal.
Who Can Vote at the Atwood Special Meeting
Atwood shareholders who owned Atwood common stock at the close of business on August 23, 2017, the Atwood record date, are qualified to
receive notice of, attend and vote at the Atwood special meeting and any adjournment or postponement thereof. On August 17, 2017, there were 80,550,558 shares of Atwood common stock outstanding
and entitled to vote at the Atwood special meeting.
Each
share of Atwood common stock is entitled to one vote on each matter to be voted on at the Atwood special meeting.
Vote Required for Approval; Quorum
The presence at the Atwood special meeting of the holders, present in person or represented by proxy, of a majority of the outstanding shares of
Atwood common stock entitled to vote at the meeting is necessary to constitute a quorum. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
Under
the TBOC, the affirmative vote of the holders of two-thirds of the outstanding shares of Atwood common stock entitled to vote as of the Atwood record date is required to approve
the Atwood Merger Proposal. Because the required vote to approve the Atwood Merger Proposal is based upon the number of shares of Atwood common stock issued and outstanding on the Atwood record date
and entitled to vote thereon, abstentions and broker non-votes, if any, will have the same effect as a vote cast "AGAINST" the Atwood Merger Proposal.
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Assuming
a quorum is present, the affirmative vote of holders of a majority of the votes cast is required to approve, on an advisory (non-binding) basis, the Atwood Compensatory
Proposal. The vote to approve the Atwood Compensatory Proposal is not a condition to the completion of the merger, and the vote of Atwood's shareholders on this proposal is advisory in nature and will
not be binding on Ensco or Atwood. Accordingly, regardless of the outcome of the advisory vote, if the Atwood Merger Proposal is approved and the merger is completed, specified compensation may be
paid. For purposes of determining the number of votes cast with respect to such matter, abstentions and any broker non-votes will have no effect on the outcome of the Atwood Compensatory Proposal.
Any
adjournment of the Atwood special meeting pursuant to the Atwood Adjournment Proposal requires the affirmative vote of a majority of votes cast by the holders of shares of Atwood
common stock present at the Atwood special meeting, in person or by proxy, and entitled to vote, whether or not a quorum exists. Abstentions and any broker non-votes will have no effect on the outcome
of the Atwood Adjournment Proposal.
As
of August 17, 2017, directors and executive officers of Atwood and its affiliates, had the right to vote approximately 491,689 shares of Atwood common stock, or 0.61% of the
outstanding Atwood common stock on that date. On the Atwood record date, there were 80,550,558 shares of Atwood common stock outstanding and entitled to vote at the Atwood special meeting.
Approval
of the Atwood Merger Proposal is required for completion of the merger. Approval of the other Atwood proposals set forth above is not required in order to complete the merger.
Proxies
Each copy of this document mailed to holders of Atwood common stock is accompanied by a form of proxy with instructions for voting. If you hold
stock in your name as a shareholder of record, you should complete and return the proxy card accompanying this document to ensure that your vote is counted at the Atwood special meeting, or at any
adjournment or postponement of the Atwood special meeting, regardless of whether you plan to attend the Atwood special meeting. You may also authorize a proxy to vote your shares by telephone by
calling 1-800-690-6903 or through the Internet at www.proxyvote.com.
If
you hold your stock in "street name" through a broker, bank, trust or other nominee, you must direct your broker, bank, trust or other nominee to vote in accordance with the
instructions you have received from your broker, bank, trust or other nominee.
If
you are a shareholder of record of Atwood common stock, you can revoke your proxy or voting instructions or change your vote after you have delivered your proxy or voting instructions
in any of the following ways:
-
-
by sending a written notice to the Corporate Secretary of Atwood at the address set forth in this joint proxy statement/prospectus, in time to
be received before the Atwood special meeting, stating that you would like to revoke your proxy;
-
-
by completing, signing and dating another proxy card and returning it by mail in time to be received before the Atwood special meeting, or by
submitting a later dated proxy by the Internet in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
-
-
by attending the Atwood special meeting and voting in person (simply attending the Atwood special meeting without voting will not revoke your
proxy or change your vote).
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Written
notices of revocation and other communications about revoking your proxy should be addressed to:
Atwood
Oceanics, Inc.
15011 Katy Freeway, Suite 800
Houston, TX 77094
Attention: Corporate Secretary
All
shares of Atwood common stock represented by valid proxies that Atwood receives through this solicitation, and that are not revoked, will be voted in accordance with your
instructions on the proxy card.
If you fail to make a specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted "FOR" the
Atwood Merger Proposal; "FOR" the Atwood Compensatory Proposal; and "FOR" the Atwood Adjournment Proposal.
The
Atwood Board is not currently aware of any business to be acted upon at the special meeting other than the matters described in this joint proxy statement/prospectus. If, however,
other matters are properly brought before the special meeting, the persons appointed as proxies will have discretion to vote or act on those matters as in their judgment is in the best interest of
Atwood and its shareholders.
Solicitation of Proxies
Atwood will bear its own costs and expenses incurred in connection with the filing, printing and mailing of this joint proxy
statement/prospectus and the retention of any information agent or other service provider in connection with the merger. This proxy solicitation is being made by Atwood on behalf of the Atwood Board.
Atwood has hired Innisfree M&A Incorporated to assist in the solicitation of proxies. Atwood has agreed to pay Innisfree M&A Incorporated a fee of $25,000 plus payment of certain fees and expenses for
its services to solicit proxies. In addition to this mailing, proxies may be solicited by directors, officers or employees of Atwood or its affiliates in person or by telephone or electronic
transmission. None of the directors, officers or employees will be directly compensated for such services.
In
accordance with the regulations of the SEC and the NYSE, Atwood also will reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in
sending proxies and proxy materials to beneficial owners of shares of Atwood common stock.
Attending the Meeting; Other Matters
All holders of Atwood common stock, including shareholders of record and shareholders who hold their shares through brokers, banks, trusts,
other nominees or any other holder of record, are invited to attend the Atwood special meeting. Shareholders of record can vote in person at the Atwood special meeting. If you are not a shareholder of
record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank, trust or other nominee, to be able to vote in person at the Atwood special
meeting. If you plan to attend the Atwood special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must
bring a form of personal photo identification with you in order to be admitted. Atwood reserves the right to refuse admittance to anyone without both proper proof of share ownership and proper photo
identification.
According
to Atwood's bylaws, business to be conducted at a special meeting of Atwood shareholders may only be brought before the meeting pursuant to a notice of meeting, which must
specify the purposes of the meeting. Accordingly, no matters other than the matters described in this document will be presented for action at the Atwood special meeting or at any adjournment or
postponement of the Atwood special meeting.
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Adjournments and Postponements
The Atwood special meeting may be adjourned pursuant to the Atwood Adjournment Proposal upon the affirmative vote of a majority of votes cast by
the holders of Atwood common stock present at the Atwood special meeting, in person or by proxy, and entitled to vote, whether or not a quorum exists. Abstentions and any broker non-votes will have no
effect on the
outcome of the Atwood Adjournment Proposal under the Atwood bylaws. The Atwood special meeting may be adjourned without notice other than announcement at the meeting, except, if the adjournment is for
more than 30 days or if after the adjournment a new record date is fixed for the reconvened meeting, a notice of the reconvened meeting must be given to each shareholder entitled to vote at
such meeting.
In
addition, at any time prior to convening the Atwood special meeting, the Atwood Board may postpone the Atwood special meeting without the approval of Atwood's shareholders. If
postponed, Atwood will publicly announce the new meeting date. Similar to adjournments, any postponement of the Atwood special meeting for the purpose of soliciting additional proxies will allow
Atwood shareholders who have already sent in their proxies to revoke them at any time prior to their use.
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THE MERGER
Background of the Merger
The Atwood Board, together with Atwood's management and with the assistance of Atwood's advisors, has periodically reviewed and considered
various strategic opportunities available to Atwood and ways to enhance shareholder value and to enhance Atwood's performance and prospects, including in light of competitive, macroeconomic and
industry developments. These reviews
have included discussions as to whether the continued execution of Atwood's strategy as a stand-alone company or the possible sale of Atwood or certain of its assets to, or combination of Atwood with,
a third party offered the best avenue to enhance shareholder value, and the potential benefits and risks of any such transaction. To assist Atwood in connection with the foregoing and to help Atwood
respond to any proposals it may receive, Atwood formally engaged Goldman Sachs to act as Atwood's financial advisor on June 25, 2015.
At
a meeting on February 27, 2015 between Robert J. Saltiel, a director and the President and Chief Executive Officer of Atwood, and the CEO of Company A, the CEO of Company A
indicated that combining Atwood and Company A could possibly make strategic sense for the two companies and their respective shareholders and if Atwood was ever interested in doing a transaction,
Mr. Saltiel should contact him. Mr. Saltiel responded that Atwood was not focused on combination transactions at that time. Mr. Saltiel subsequently discussed the substance of the
conversation with George S. Dotson, Chairman of the Atwood Board.
The
Ensco Board, together with Ensco's executive management team, periodically reviews strategies to improve Ensco's capital structure and optimize operational efficiency and to enhance
Ensco's future growth opportunities and shareholder value. The review of future growth opportunities encompasses a range of potential strategies, including: improving Ensco's existing drilling rig
fleet through capital improvements and investments in innovation; expanding the markets in which Ensco operates through joint ventures and/or strategic partnerships; acquisitions of individual or
groups of drilling rigs; and larger scale business combinations and strategic transactions.
During
an Ensco Board meeting held on August 22, 2016, Carl G. Trowell, a director and the Chief Executive Officer and President of Ensco, and Patrick Carey Lowe, the Executive
Vice President and Chief Operating Officer of Ensco, presented Atwood to the Ensco Board as one of several potential future growth opportunities and discussed with the Ensco Board Atwood's fleet
quality, potential synergies, backlog, capital structure and geographic footprint. Given the attractiveness of the Atwood fleet and its complementary nature to the Ensco fleet, it was agreed that
executive management would continue to assess Atwood along with other potential acquisition targets.
During
an executive session of an Atwood Board meeting held on August 25, 2016, the Atwood Board discussed the benefits of consolidation in the offshore drilling industry given
the downturn in the industry and potential cost synergies that could be achievable in a combination transaction. Following the discussion of the merits, the Atwood Board authorized Mr. Saltiel
to identify and explore potential opportunities for consolidation.
At
a breakfast meeting on September 9, 2016, Mr. Saltiel indicated to the CEO of Company A that the Atwood Board might be open to considering a combination between Company
A and Atwood if it would be compelling to Atwood's shareholders. The CEO of Company A indicated that he would discuss the matter with the Company A board of directors.
At
a lunch meeting later that day, Mr. Saltiel indicated to the CEO of Company B that the Atwood Board might be open to considering a combination between Company B and Atwood if
it would be compelling to Atwood's shareholders. The CEO of Company B indicated that Company B had not previously analyzed a combination with Atwood, and on September 19, 2016 he emailed
Mr. Saltiel to state that his team was conducting preliminary analysis of a combination. Company B never followed up with any indication of interest in combining with Atwood.
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At
an industry event on November 1, 2016, the CEO of Company C approached Mr. Saltiel to indicate that Company C had analyzed a potential combination with Atwood given the
complementary nature of their respective businesses, but that he did not believe the market conditions at the time were conducive for Company C to pursue a transaction. Company C never followed up
with any indication of interest in combining with Atwood.
During
an executive session of an Atwood Board meeting held on November 17, 2016, Mr. Saltiel discussed his previous meetings with the CEOs of Company A, Company B and
Company C. The Atwood Board discussed those meetings and the potential for continuing to explore other strategic alternatives.
On
January 26, 2017, Mark Smith, Senior Vice President and Chief Financial Officer of Atwood, met for lunch with the CFO of Company D. The CFO of Company D asked Mr. Smith
if Atwood would be interested in a potential combination with Company D and if so, what type of consideration Atwood would accept in such a transaction. Mr. Smith stated that Atwood and the
Atwood Board were open to exploring any strategic alternatives that would be compelling to the Atwood shareholders. Mr. Smith and the CFO of Company D agreed to inform the chief executive
officers of their respective companies. Mr. Smith called Mr. Saltiel that evening to inform him of the meeting and what was discussed.
During
an Ensco Board meeting held on February 21, 2017, Mr. Trowell, Mr. Lowe and Jonathan Baksht, Senior Vice President and Chief Financial Officer, again
presented Atwood along with a range of other strategic alternatives to the Ensco Board as part of its corporate strategy review and noted that Atwood had undertaken certain capital restructuring steps
to improve its balance sheet.
At
a March 1, 2017 breakfast meeting, the CEO of Company D asked Mr. Saltiel if Atwood would be open to engaging in a corporate combination with Company D.
Mr. Saltiel responded that Atwood and the Atwood Board were open to considering any strategic alternatives that are compelling to the
Atwood shareholders. The CEO of Company D stated that he would follow up with Mr. Saltiel on this matter at a later date. Mr. Saltiel subsequently discussed the substance of the
conversation with Mr. Dotson.
In
connection with a change in personnel on the Goldman Sachs team, Atwood and Goldman Sachs entered into a second engagement letter dated March 14, 2017.
On
April 13, 2017, Mr. Saltiel and the CEO of Company A had a telephone conversation in which Mr. Saltiel asked the CEO of Company A if Company A would have interest
in acquiring certain of Atwood's assets if Atwood determined to pursue such a sale. The CEO of Company A followed up this phone call by leaving a voicemail with Mr. Saltiel stating that Company
A would not be interested in acquiring solely those assets but would potentially be interested in a corporate combination. The CEO of Company A indicated that he would discuss it with the Company A
board of directors at its next meeting.
At
an April 18, 2017 meeting between Mr. Saltiel and the CEO of Company D, the CEO of Company D stated that Company D would be prepared to make an all-stock proposal for
Atwood representing an approximately 30% premium to Atwood's then current share price, or an implied value of approximately $10.40 per share of Atwood common stock on that date. Mr. Saltiel
indicated that he would discuss any such proposal with the Atwood Board but that, given recent trading prices of the respective companies' shares, he did not believe the Atwood Board would find the
proposed consideration sufficiently compelling to the Atwood shareholders. Mr. Saltiel subsequently discussed the substance of the conversation with Mr. Dotson.
In
light of the positive changes in the Atwood balance sheet, improving valuations and the belief that Atwood may be pursuing strategic options with other parties, Mr. Trowell
called Mr. Saltiel on April 19, 2017 to express an interest in a potential acquisition of Atwood by Ensco. As a result of its
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periodic
strategic review, the Ensco Board was open to considering a strategic combination with a partner that would provide a good strategic fit with Ensco and enhance shareholder value. The Ensco
Board and Ensco's management believed that a combination with Atwood could enhance Ensco's asset and customer base and geographic scope at an attractive valuation. Ensco also believed that Atwood
might consider such a combination in light of its declining backlog and contracting activity. Mr. Saltiel stated that Atwood and the Atwood Board were open to exploring any strategic
alternatives that would be compelling to the Atwood shareholders.
During
the second half of April 2017 and the first part of May 2017, Ensco conducted a diligence review of Atwood's public filings and publicly available materials related to Atwood and
its operations.
On
April 20, 2017, the CEO of Company A called Mr. Saltiel to inquire whether Atwood would potentially be interested in a combination with Company A. Mr. Saltiel
stated that Atwood and the Atwood Board were open to exploring any strategic alternatives that would be compelling to the Atwood shareholders. There were no further discussions with Company A prior to
the announcement of the merger, nor did Atwood enter into a confidentiality or standstill agreement with Company A.
On
April 25, 2017, the CEO of Company D sent Mr. Saltiel a non-binding indication of interest for Company D to combine with Atwood in which the Atwood shareholders would
receive shares of Company D stock at an exchange ratio which valued Atwood at an implied equity value of $11.00 per share of Atwood common stock, a 40% premium to Atwood's April 24 closing
stock price (the "Company D Proposal"). The Company D Proposal indicated that the transaction would not be subject to any financing contingency and contained a request for a 30-day exclusivity period
for the parties to conduct due diligence and negotiate definitive agreements. The Company D Proposal requested a response from Atwood by May 8, 2017.
On
April 27, 2017, Atwood contacted Gibson, Dunn & Crutcher LLP ("Gibson Dunn") to assist Atwood in connection with the evaluation of the approaches described above,
including the Company D Proposal, and on May 5, 2017 Atwood formally engaged Gibson Dunn to act as Atwood's legal counsel.
On
May 2, 2017, Mr. Saltiel called the CEO of Company D to inform him that, given Atwood management's focus on its upcoming earnings release and an industry conference,
Atwood would need more time to analyze the Company D Proposal and respond. The CEO of Company D acknowledged Mr. Saltiel's request.
On
May 7, 2017, Goldman Sachs provided a letter to the Atwood Board disclosing certain relationships between Goldman Sachs and its affiliates and Atwood and Ensco. Such letter
stated, among other things, that as of that date, none of Goldman Sachs' Investment Banking Division, funds in which Goldman Sachs' Investment Banking Division had a direct investment or funds managed
by Goldman Sachs' Merchant Banking Division had a direct investment in the equity securities of Atwood or Ensco.
The
Atwood Board held a meeting on May 10, 2017 at which members of Atwood management, including Mr. Saltiel and Walter A. Baker, Atwood's Senior Vice President,
General Counsel and Corporate Secretary, were present, along with representatives of Gibson Dunn and Goldman Sachs. Representatives of Gibson Dunn provided the Atwood Board with an overview of
director responsibilities and fiduciary duties in the circumstances. Representatives of Goldman Sachs reviewed its preliminary financial analyses of Atwood and the Company D Proposal. The Atwood Board
discussed the various alternatives presented and the reasonableness of different approaches. They also discussed relative valuations and views on the values of the consideration that could be offered
by the other potential parties. Mr. Saltiel provided his views to the Atwood Board that a transaction with
Company D based on the terms in the Company D Proposal would allow Atwood shareholders to participate in any recovery in the offshore drilling industry and the positive synergies that a
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combination
with Company D would create. Mr. Saltiel recommended that Atwood provide a counter proposal to Company D in order to try to obtain increased value and for representation on
Company D's board of at least two current Atwood directors. The Atwood Board concurred with Mr. Saltiel's recommendations and Mr. Saltiel informed the Atwood Board that he would
keep it apprised of discussions with Company D. The Atwood Board also discussed whether to approach any of the other potential parties, including Company A and Ensco, and concluded that it would be
disadvantageous to do so at that time due to potential risks of jeopardizing the Company D Proposal and reputational and operational risks if the information was made public that Atwood was
approaching other parties about potential business combinations.
On
May 10, 2017, Mr. Saltiel called the CEO of Company D to provide a counter proposal to the Company D Proposal. Mr. Saltiel stated that Atwood would be open to
considering an all-stock acquisition by Company D that valued Atwood at a 66.5% premium to Atwood's May 10 closing share price and which provided for two members of the Atwood Board to be
nominated to the Company D board following the closing of the transaction. The CEO of Company D indicated that the proposed valuation was not in a range that Company D found acceptable.
On
May 11, 2017, Ensco retained Morgan Stanley to act as a financial advisor to Ensco in connection with a potential transaction with Atwood. On the same date, Ensco engaged
Latham & Watkins LLP ("Latham") as its U.S. legal advisor and Slaughter and May ("Slaughter") as its U.K. legal advisor.
Following
its diligence efforts and discussions with Morgan Stanley, Ensco was prepared to submit an initial offer to Atwood. On May 12, 2017, Mr. Trowell and Paul E.
Rowsey, III, Chairman of the Ensco Board, sent a non-binding indication of interest (the "Initial Ensco Indication of Interest") from Ensco addressed to Mr. Saltiel and Mr. Dotson
proposing that Ensco and Atwood combine in an all-stock transaction in which the Atwood shareholders would receive 1.278 Ensco Class A ordinary shares for each share of Atwood common stock held
by such holder, which valued Atwood at an implied equity value of $10.17 per Atwood share and reflected a 20.0% premium to Atwood's closing stock price on May 11, 2017. Following submission of
the Initial Ensco Indication of Interest, several separate discussions were held among Mr. Rowsey, Mr. Trowell, Mr. Baksht and Michael T. McGuinty, Senior Vice President
and General Counsel. Messrs. Rowsey and Trowell then updated the remaining Ensco Board members regarding the submission of the Initial Ensco Indication of Interest.
On
May 16, 2017, at the direction of the Atwood Board, representatives of Goldman Sachs called representatives of Company D's financial advisor to discuss Atwood's counterproposal
of May 10, 2017.
Company D's financial advisor reiterated that the proposed valuation was not in a range that Company D found acceptable and that Company D did not plan to revise its proposal at that
time. There were no further discussions with Company D or its representatives prior to the announcement of the merger, nor did Atwood enter into a confidentiality or standstill agreement with
Company D.
On
May 17, 2017, the Atwood Board held an executive session at which representatives of Gibson Dunn and Goldman Sachs were present. Mr. Saltiel and representatives of
Goldman Sachs reviewed with the Atwood Board the Initial Ensco Indication of Interest. The representatives of Goldman Sachs reviewed its preliminary financial analyses of Atwood and the proposals from
Ensco and Company D. The Atwood Board asked questions with respect to and discussed the respective businesses and prospects for each of Ensco and Company D and potential strategies for negotiating
with both parties. Mr. Saltiel indicated that Ensco's all-stock proposal would require Ensco shareholder approval and that Atwood faced possible business disruption risks if Ensco shareholders
did not approve a transaction. Mr. Saltiel proposed that he would contact Mr. Trowell to explain that Ensco's proposal was at a lower valuation than another opportunity and that if Ensco
made a revised proposal, Atwood's preference would be for the proposal to include both stock and cash, with the stock portion below the threshold requiring an Ensco shareholder vote. The Atwood Board
concurred with Mr. Saltiel's proposal.
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On
May 19, 2017, Mr. Saltiel informed Mr. Trowell on the telephone that the Initial Ensco Indication of Interest represented a lower valuation for Atwood than
another opportunity which Atwood was exploring. Mr. Saltiel also indicated that Atwood would prefer to engage in a transaction with increased closing certainty which did not require a
shareholder vote from Ensco and therefore Mr. Saltiel suggested that any revised proposal from Ensco include both stock and cash, with the stock portion below the threshold requiring an Ensco
shareholder vote.
On
May 20, 2017, at the direction of the Atwood Board, representatives of Goldman Sachs had a call with representatives of Morgan Stanley to discuss the Ensco proposal.
Representatives of Goldman Sachs indicated that value and deal certainty, particularly around the Ensco shareholder vote, were important considerations for Atwood. Representatives of Goldman Sachs
also discussed with Morgan Stanley that the Initial Ensco Indication of Interest represented a lower valuation for Atwood than another opportunity which Atwood was exploring. Representatives of
Goldman Sachs reiterated Atwood's preference that any revised proposal from Ensco include both stock and cash, with the stock portion below the threshold requiring an Ensco shareholder vote.
On
May 22, 2017, the Atwood Board held a meeting at which members of Atwood's management, including Mr. Saltiel and Mr. Baker, acting as Secretary of the meeting,
and representatives of Gibson Dunn were present. Mr. Saltiel updated the Atwood Board on discussions with Mr. Trowell and Morgan Stanley. The Atwood Board discussed with representatives
of Gibson Dunn the possibility of negotiating a reverse termination fee to be paid by Ensco in the event that the Ensco shareholders did
not approve the merger, including the feasibility of such a fee compensating Atwood for any loss in value in the event the merger did not close. Mr. Saltiel then discussed the status of
discussions with Company D. Company D had not responded to Atwood's counterproposal since Mr. Saltiel had spoken with the CEO of Company D on May 10, 2017 and Goldman Sachs' follow up
call with Company D's financial advisor on May 16, 2017, and at then current stock prices, the Company D Proposal represented a 14% premium, a substantial decrease compared to a 40% premium at
the time it was made. Mr. Saltiel proposed to wait until Atwood had heard back from Ensco before potentially approaching Company D again, and the Atwood Board concurred with this suggested
approach.
On
May 23, 2017, in connection with a regularly scheduled meeting of the Ensco Board, Messrs. Trowell and Baksht discussed the potential acquisition of Atwood with the
Ensco Board and the potential benefits of combining the companies. Mr. Trowell updated the Ensco Board on his May 19, 2017 discussion with Mr. Saltiel. During the Ensco Board
meeting, representatives of Morgan Stanley also made a presentation to the Ensco Board regarding a possible business combination with Atwood. Following discussions with Ensco management and Morgan
Stanley, the Ensco Board authorized management to submit a revised indication of interest (the "Revised Ensco Indication of Interest"). Subsequent to the Ensco Board meeting, Mr. Trowell stated
to Mr. Saltiel on a telephone call that Ensco planned to send a revised indication of interest that represented Ensco's best and final proposal.
On
May 24, 2017, Mr. Trowell and Mr. Rowsey sent the Revised Ensco Indication of Interest to Mr. Saltiel and Mr. Dotson. The Revised Ensco Indication
of Interest proposed an all-stock transaction in which the Atwood shareholders would receive 1.60 Ensco Class A ordinary shares per share of Atwood common stock, which valued Atwood at an
implied equity value of $12.19 per Atwood share and reflected a 37% premium to Atwood's closing stock price on May 23, 2017. The Revised Ensco Indication of Interest indicated that, in order to
address Atwood's desire to maximize deal certainty, Ensco proposed to include a $50 million reverse termination fee payable by Ensco to Atwood in the event that Ensco's shareholders did not
approve the merger. The Revised Ensco Indication of Interest requested exclusivity through May 29, 2017 to complete due diligence and negotiate definitive agreements.
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Following
Atwood's receipt of the Revised Ensco Indication of Interest, members of Atwood's management, including Messrs. Saltiel and Baker, held a teleconference on
May 24, 2017 with representatives of Goldman Sachs and Gibson Dunn to discuss the receipt of the proposal and to prepare for the meeting of the Atwood Board which was to be held the following
day.
On
May 25, 2017, the Atwood Board held a meeting at which members of Atwood's management, including Mr. Saltiel and Mr. Baker, acting as Secretary of the meeting,
and representatives of Gibson Dunn and Goldman Sachs were present. Mr. Saltiel and representatives of Goldman Sachs updated the Atwood Board on the Revised Ensco Indication of Interest and
discussions with Messrs. Trowell and
Baksht. Mr. Saltiel noted that Mr. Trowell informed him that the Ensco proposal represented its best and final proposal for a strategic transaction. Mr. Saltiel described the
terms of the Revised Ensco Indication of Interest including the fact that (i) the proposal was for an all-stock transaction, (ii) Ensco had increased the exchange ratio of the merger
consideration from 1.278 Ensco Class A ordinary shares per Atwood share to 1.60 Ensco Class A ordinary shares per Atwood share, (iii) Ensco had committed to a $50 million
reverse termination fee in the event that Ensco shareholders failed to approve the transaction, (iv) Ensco had committed to a short timeline to negotiate definitive agreements by May 29,
2017 and (v) Ensco's proposal would expire the next day, May 26, 2017 at 12:00 p.m. (Houston time). Representatives of Goldman Sachs recounted their conversations with
Mr. Baksht and representatives of Morgan Stanley who stated that the Revised Ensco Indication of Interest represented Ensco's best and final proposal and that if Atwood did not engage in
negotiations with Ensco on the terms included in the Revised Ensco Indication of Interest before the proposal expired, Ensco was likely to pursue other alternatives. Representatives of Gibson Dunn
indicated that Latham had informed them that the Ensco Board had determined that the $50 million reverse termination fee was reasonable under the circumstances but that the Ensco Board was not
prepared to support a higher fee. The Atwood Board discussed the continuing viability of a transaction with Company D. Mr. Saltiel stated that Company D had ceased engaging in discussions since
its proposal of April 25, 2017, that Atwood risked losing the Ensco proposal if it reinitiated contact with Company D and that Ensco's most recent proposal represented a substantially
higher premium than the Company D Proposal. The Atwood Board concurred. The Atwood Board also discussed the comparative financial performances and balance sheets of Ensco and Atwood.
Mr. Saltiel suggested that a combination with Ensco could be more advantageous to the Atwood shareholders than the Company D Proposal but would need to be confirmed through due diligence.
Mr. Saltiel proposed engaging in discussions and due diligence with Ensco and agreeing to a customary exclusivity agreement with Ensco through May 29, 2017 with the intent to negotiate
definitive agreements in the timeframe proposed by Ensco. Mr. Saltiel recommended that Atwood propose representation on the Ensco Board of at least two current Atwood directors. The Atwood
Board concurred with Mr. Saltiel's proposals.
After
the Atwood Board meeting on May 25, 2017, Mr. Saltiel called Mr. Trowell to discuss entering into a confidentiality agreement.
On
May 25, 2017, Ensco, Atwood and their respective legal counsels, Latham and Gibson Dunn, negotiated a confidentiality agreement. On May 25, 2017, Ensco and Atwood
entered into a confidentiality agreement that did not contain standstill or employee non-solicitation provisions. The parties agreed that they would execute an addendum to the confidentiality
agreement containing customary standstill and employee non-solicitation provisions before the parties commenced negotiations of a definitive merger agreement.
On
May 25, 2017, Mr. Saltiel, Mr. Trowell and representatives of their respective financial advisors at Goldman Sachs and Morgan Stanley participated in a
teleconference to conduct preliminary due diligence and Mr. Saltiel and Mr. Trowell discussed Ensco's vision and strategy for the combined company.
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On
May 26, 2017, Mr. Saltiel called Mr. Trowell and indicated that Atwood would be willing to proceed with diligence and the negotiation of a definitive merger
agreement on the basis of the terms in the Revised Indication of Interest if Ensco would appoint two Atwood directors to the Ensco Board to reflect Atwood's pro forma ownership of the combined
company.
On
May 26, 2017, Atwood formally engaged Goldman Sachs to act as Atwood's financial advisor in connection with the prospective transaction.
On
May 26, 2017, following discussions with members of the Ensco Board, Mr. Trowell sent a final indication of interest (the "Final Ensco Indication of Interest") to
Mr. Saltiel, which the parties executed on that day. The Final Ensco Indication of Interest maintained Ensco's non-binding proposal (i) to acquire Atwood in all-stock transaction in
which each share of Atwood common stock would be exchange for 1.60 Ensco Class A ordinary shares and (ii) to pay a reverse termination fee of $50 million in the event the Ensco
shareholders did not approve the merger. The Final Ensco Indication of Interest also stated that Ensco would appoint two Atwood directors, to be agreed by the parties, as non-executive directors to
the Ensco Board upon consummation of the merger. The Final Ensco Indication of Interest contained binding customary exclusivity provisions, and Atwood agreed to negotiate exclusively with Ensco
through May 29, 2017.
On
May 26, 2017, Ensco and Atwood entered into an addendum to the confidentiality agreement containing customary standstill and employee non-solicitation provisions.
On
the evening of May 26, 2017, Latham sent Gibson Dunn a draft of the merger agreement that proposed, among other provisions: (i) to expand the Ensco Board to include two
Atwood non-employee directors; (ii) that the parties make substantially reciprocal representations and warranties; (iii) limited restrictions on Ensco's conduct of business prior to
closing, which were not reciprocal, and more expansive restrictions to which Atwood would be subject; (iv) a no-shop covenant only applicable to Atwood; (v) a $50 million
termination fee payable by Ensco under certain circumstances including if the Ensco shareholders did not approve the merger; and (vi) a termination fee payable by Atwood equal to 4% of implied
equity value payable under certain circumstances, including if Atwood breached its no-shop covenants.
On
May 27, 2017, Mr. Saltiel and Mr. Trowell discussed open issues in the merger agreement, including the lack of reciprocal no-shop provisions and reciprocal
restrictions on Ensco's conduct of business and the size of the termination fee payable by Atwood. Mr. Saltiel indicated that Gibson Dunn would be
sending a revised merger agreement to Latham reflecting Atwood's positions later that evening. Mr. Trowell advised that he would work with his team to resolve the open issues.
Following
the call between Messrs. Saltiel and Trowell, overnight on May 27, 2017, Gibson Dunn sent Latham a revised draft of the merger agreement that proposed, among
other provisions: (i) substantially reciprocal restrictions on Ensco's conduct of business prior to closing to those to which Atwood would be subject; (ii) mutual no-shop covenants; and
(iii) that the size of the Atwood termination fee was left open to discussion.
On
May 27, 2017, Ensco retained DNB Capital LLC and HSBC Securities (USA) Inc. as co-financial advisors to provide financial advisory services to Ensco's
management related to the potential transaction with Atwood and to assist Ensco in structuring the combined company's anticipated capitalization following such transaction.
From
May 27, 2017 through May 29, 2017, representatives of Ensco and Atwood, along with their respective legal advisors, exchanged due diligence materials and conducted
various due diligence calls relating to, among other things, financial and accounting, compliance, environmental, legal and human resources matters. Over the same period representatives of Ensco,
Atwood and their respective legal advisors also conducted multiple teleconference calls to discuss tax diligence and the tax consequences of the proposed transaction to Atwood shareholders.
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During
the course of the day on May 28, 2017, Atwood, Ensco and their respective advisors also held discussions regarding the merger agreement.
On
the evening of May 28, 2017, Latham sent Gibson Dunn a revised draft of the merger agreement that proposed, among other provisions: (i) reduced restrictions on Ensco's
conduct of business prior to closing as compared to those contained in the Gibson Dunn draft merger agreement of May 27, 2017; and (ii) that the size of the Atwood termination fee was
left open to discussion.
On
May 29, 2017, Mr. Saltiel called Mr. Trowell to discuss open issues in the merger agreement, including those matters described above. During the course of the day
on May 29, 2017, Atwood, Ensco and their respective advisors engaged in negotiations regarding, and Latham and Gibson Dunn exchanged revised drafts of, the merger agreement and continued to
engage in due diligence.
Following
the foregoing negotiations and resolution of the points at issue, in the early evening of May 29, 2017, Latham delivered to Gibson Dunn a substantially final draft of
the merger agreement, a copy of which both Ensco and Atwood provided to their respective boards of directors. The draft reflected an agreement in principle among the parties on all material points
including the size of the Atwood termination fee.
On
May 29, 2017, the Atwood Board held a meeting at which members of Atwood's management, including Messrs. Saltiel and Smith and Mr. Baker, acting as Secretary of
the meeting, and representatives of Gibson Dunn and Goldman Sachs were present. Messrs. Saltiel, Baker and Smith and Gibson Dunn provided the Atwood Board with information on the material terms of the
merger agreement with Ensco. During the meeting, representatives of Goldman Sachs reviewed its financial analysis of the proposed transaction and delivered to the Atwood Board its oral opinion, which
representatives of Goldman Sachs confirmed by delivery of a written opinion dated May 29, 2017, that, as of that date and based upon and subject to the factors and assumptions set forth
therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Ensco and its affiliates) of shares of Atwood common stock, as more
fully described below in the section entitled "Opinion of Financial Advisor to Atwood." Gibson Dunn reviewed with the Atwood Board its fiduciary duties and the key provisions of the
merger agreement. The Atwood Board asked questions and discussed its duties, the merger agreement provisions and related matters. After discussion in which the Atwood Board considered the factors
discussed further in the section entitled "Atwood's Reasons for the Merger; Recommendation of the Atwood Board of Directors," the members of the Atwood Board unanimously approved the
merger agreement and the transactions contemplated by the merger agreement. The Atwood Board also deemed it advisable to consummate the merger on the terms and subject to the conditions set forth in
the merger agreement, and to recommend that Atwood shareholders vote to approve the merger and the other transactions contemplated by the merger agreement.
On
May 29, 2017, the Ensco Board held a meeting, together with its legal and financial advisors, to discuss the proposed transaction. At this meeting, among other matters, Messrs.
Trowell, Lowe, Baksht and McGuinty discussed with the Ensco Board the diligence conducted with respect to Atwood and Latham reviewed with the Ensco Board the terms of the merger agreement.
Representatives of Morgan Stanley rendered its oral opinion to the Ensco Board, subsequently confirmed by delivery of a written opinion, dated May 29, 2017, that, as of the date of such
opinion, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken as set forth in its
written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Ensco. Following a discussion regarding the proposed transaction by the Ensco Board, the
Ensco Board unanimously determined that the form, terms and provisions of the merger agreement and the transactions contemplated thereby, including the merger and the allotment and issuance of the
Ensco Class A ordinary shares, were advisable, fair and reasonable to and in the best interests of Ensco and its shareholders. The Ensco Board unanimously determined to recommend that Ensco
shareholders vote to approve the Ensco Merger Consideration Proposal.
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Atwood and Ensco then executed the merger agreement later that evening.
Prior
to the opening of markets in the United States on May 30, 2017, Atwood and Ensco jointly announced the merger and held a joint investor conference call.
Ensco's Reasons for the Merger; Recommendation of the Ensco Board of Directors
By vote at a meeting held on May 29, 2017, the Ensco Board unanimously determined that the form, terms and provisions of the merger
agreement and the transactions
contemplated thereby, including the merger and the allotment and issuance of the Ensco Class A ordinary shares, are advisable, fair and reasonable to and in the best interests of Ensco and its
shareholders.
The Ensco Board unanimously recommends that Ensco shareholders vote "FOR" the Ensco Merger Consideration Proposal.
In
deciding to approve the merger agreement and to recommend that Ensco shareholders vote to approve the Ensco Merger Consideration Proposal, the Ensco Board consulted with Ensco's
management and financial and legal advisors and considered several factors.
The
Ensco Board considered a number of factors when evaluating the merger, many of which support the Ensco Board's determination that the merger is advisable, fair and reasonable to and
in the best interest of Ensco and its shareholders. The Ensco Board considered these factors as a whole and without assigning relative weights to each such factor, and overall considered the relevant
factors to be favorable to, and in support of, its determinations and recommendations. These factors included:
-
-
that the merger would enhance Ensco's asset base through the addition of high-specification drillships, semisubmersibles and jackups, creating
a combined fleet that would be among the most technologically advanced in the industry and meet the deep- and shallow-water drilling requirements of clients around the world;
-
-
that the merger would bolster Ensco's fleet through the addition of high quality assets, resulting in a combined fleet that features
(i) 26 floaters, including 21 ultra-deepwater drilling rigs, and (ii) the world's largest jackup fleet, comprised of 37 rigs equipped with many advanced features requested by clients for
shallow-water drilling programs;
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-
that the merger would enhance Ensco's geographic scope and customer base;
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-
that the merger would lead to future business opportunities with a geographically diversified client base and operating area, with operations
spanning six continents in every major deep and shallow-water basin around the world, positioning the combined company to capitalize on increased client demand for offshore drilling rigs in the
future;
-
-
that Ensco management expects the merger to result in meaningful cost savings and operational synergies, including anticipated cost synergies
of more than $45 million in 2018 and anticipated cost synergies of $65 million beginning in 2019 and beyond;
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-
that the merger would result in a well-capitalized pro forma company with a strong liquidity position;
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-
that the merger would provide a combined estimated revenue backlog of approximately $3.7 billion;
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-
the terms of the merger agreement, the structure of the transaction, including the conditions to each party's obligation to complete the merger
and the ability of the Ensco Board to terminate the agreement under certain circumstances; and
-
-
Morgan Stanley's oral opinion rendered to the Ensco Board on May 29, 2017 and its written opinion dated the same date, to the effect
that, as of the date thereof and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken as
set forth in its written
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opinion,
the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Ensco. The full text of the written opinion of Morgan Stanley to the Ensco Board, dated as of
May 29,
2017, is attached as Annex B to this joint proxy statement/prospectus. See "Opinion of Financial Advisor to Ensco."
The
Ensco Board considered additional information concerning the merger as a whole and without assigning relative weights to each such item, and overall considered the relevant factors
to be favorable to, and in support of, its determinations and recommendations. This information included:
-
-
information concerning the financial condition, results of operations, prospects and businesses of Ensco and Atwood provided by management of
Ensco, including the respective companies' cash flows from operations, expected accretion to discounted cash flows, the recent performance of the Ensco Class A ordinary shares and the Atwood
common stock and the ratio of the Ensco Class A ordinary share price to the Atwood common stock price over various periods, as well as current industry, economic and market conditions;
-
-
the share price versus the present value of estimated future cash flows of both Ensco and Atwood;
-
-
the implied asset prices versus alternative transactions, new asset pricing and precedent transactions;
-
-
other market factors of both Ensco and Atwood; and
-
-
the results of Ensco's business, legal and financial due diligence review of Atwood.
The
Ensco Board also considered a variety of risks and other potentially negative factors concerning the merger agreement and the transactions contemplated thereby, including the merger.
These factors included:
-
-
that there are significant risks inherent in combining and integrating two companies, including that the companies may not be successfully
integrated or that the expected synergies from combining the two companies may not be realized, and that successful integration of the companies will require the dedication of significant management
resources, which will temporarily detract attention from the day-to-day businesses of the combined company;
-
-
the effects on cash flows from operations and other financial measures under various modeling assumptions, and the uncertainties in timing and
execution with respect to the anticipated benefits of the merger;
-
-
the potential financing to repay Atwood debt obligations and the lack of a financing condition in the merger agreement;
-
-
that the merger agreement provides that, in certain circumstances, Ensco could be required to pay a termination fee of $50 million to
Atwood and reimburse Atwood for reasonable out-of-pocket expenses up to $10 million;
-
-
that the merger might not be completed as a result of a failure to satisfy the conditions contained in the merger agreement, including failure
to receive necessary regulatory approvals such as under the HSR Act;
-
-
that Atwood's obligation to close the merger is conditioned on a two-thirds vote of its shareholders with respect to the Atwood Merger
Proposal;
-
-
Atwood's ability, under certain circumstances, to terminate the merger agreement in order to enter into an agreement providing for a superior
proposal, provided that Atwood concurrently with such termination pays to Ensco a termination fee of $30 million;
-
-
the restrictions on the conduct of Ensco's business prior to the consummation of the merger, which may delay or prevent Ensco from undertaking
business opportunities that may arise or
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This
discussion of the information and factors considered by the Ensco Board in reaching its conclusion and recommendations includes all of the material factors considered by the Ensco
Board but is not intended to be exhaustive and is not provided in any specific order or ranking. In view of the wide variety of factors considered by the Ensco Board in evaluating the merger agreement
and the transactions contemplated thereby, including the merger, and the complexity of these matters, the Ensco Board did not find it practicable to, and did not attempt to, quantify, rank or
otherwise assign relative weight to those factors. In addition, different members of the Ensco Board may have given different weight to different factors. The Ensco Board did not reach any specific
conclusion with respect to any of the factors considered and instead conducted an overall analysis of such factors and determined that, in the aggregate, the potential benefits considered outweighed
the potential risks or possible negative consequences of approving the merger agreement and the allotment and issuance of Ensco Class A ordinary shares pursuant to the merger agreement.
It
should be noted that this explanation of the reasoning of the Ensco Board and all other information presented in this section is forward-looking in nature and, therefore, should be
read in light of the factors discussed under the heading "Cautionary Statement Regarding Forward-Looking Statements."
Atwood's Reasons for the Merger; Recommendation of the Atwood Board of Directors
By a vote at a meeting held on May 29, 2017, the Atwood Board unanimously: (1) determined that the execution, delivery and
performance of the merger agreement and the consummation of the transactions contemplated by the merger agreement were advisable and in the best interests of Atwood and its shareholders;
(2) approved the merger agreement and the transactions
contemplated thereby, including the merger; (3) recommended that Atwood shareholders vote their shares in favor of the merger; and (4) directed that the merger agreement be submitted to
a vote at a meeting of Atwood shareholders.
The Atwood Board unanimously recommends that the Atwood shareholders vote "FOR" the Atwood Merger Proposal at the Atwood special meeting and vote "FOR" all other
proposals.
In
evaluating the merger, the Atwood Board consulted with and received the advice of Atwood's management and legal and financial advisors and, in reaching its determination and
recommendation to enter into the merger agreement, the Atwood Board considered a number of factors, including, but not limited to, the following:
-
-
That the merger consideration will be paid in Ensco Class A ordinary shares, giving Atwood shareholders an opportunity to participate in
any recovery in the offshore drilling industry, any
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that
any of them or any other potential acquirer would offer a transaction more advantageous to Atwood shareholders than the merger, the execution risk associated with pursuing such an alternative
transaction and the possible detrimental effects of public disclosure of Atwood's exploring possible business combination transactions.
-
-
The review by the Atwood Board with its legal and financial advisors of the structure of the merger and the financial and other terms of the
merger agreement, including the parties' representations, warranties and covenants, the conditions to their respective obligations and the termination provisions, as well as the likelihood of
consummation of the merger and the Atwood Board's evaluation of the likely time period necessary to close the merger. The Atwood Board also considered the following specific aspects of the merger
agreement:
-
-
Atwood's right to designate two current non-employee directors to the Ensco Board to be mutually agreed between the parties.
-
-
The nature of the closing conditions included in the merger agreement, including the absence of any financing contingency, the
market, industry-related and other exceptions to the events that would constitute a material adverse effect on either Atwood or Ensco for purposes of the agreement, as well as the likelihood of
satisfaction of all conditions to the consummation of the merger.
-
-
Ensco's and Atwood's agreement to use reasonable best efforts to obtain approvals of applicable antitrust and competition
authorities, including disposing of assets and other similar actions, except if such divestiture or action would cause a loss of more than $175 million in annual revenues of the combined
company.
-
-
Atwood's ability, at any time prior to obtaining Atwood shareholder approval of the Atwood Merger Proposal and under certain
circumstances, to consider and respond to an unsolicited acquisition proposal and to engage in discussions or negotiations with the person making such a proposal if required to satisfy its fiduciary
duties.
-
-
Atwood's right to change its recommendation that Atwood shareholders vote in favor of the Atwood Merger Proposal to the extent it
determines that the failure to take such action would be inconsistent with its fiduciary duties if (1) Atwood receives an unsolicited superior proposal or (2) a previously unknown
material event occurs, subject to certain conditions (including payment to Ensco of a $30 million termination fee if Ensco subsequently terminates the merger agreement under circumstances
specified in the merger agreement).
-
-
Atwood's right to terminate the merger agreement in order to accept a superior proposal, subject to certain conditions (including
considering any adjustments to the merger agreement proposed by Ensco and payment to Ensco of a $30 million termination fee).
-
-
That the termination fee of $30 million payable by Atwood to Ensco under the circumstances specified in the merger
agreement was reasonable in the judgment of the Atwood Board after consultation with its advisors.
-
-
The obligation of Ensco to pay to Atwood a $50 million termination fee under the circumstances specified in the merger
agreement.
-
-
To help mitigate the risk to Atwood of Ensco's requirement to obtain shareholder approval of the Ensco Merger Consideration
Proposal, the obligation of Ensco to pay Atwood the termination fee if Ensco fails to obtain such approval and the representation in the merger agreement that the Ensco Board had received, prior to
the signing of the merger agreement, the opinion of Morgan Stanley to the effect that, as of the date of such opinion, and based upon and subject to the various assumptions made, procedures followed,
matters considered and qualifications and limitations on the scope of review undertaken as set forth
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In
the course of its deliberations, the Atwood Board also considered a variety of risks and other countervailing factors related to entering into the merger agreement, including, but not
limited to, the following:
-
-
That Ensco's obligation to close the merger is conditioned on a majority vote of its shareholders with respect to the Ensco Merger
Consideration Proposal, provided that Ensco agrees to pay Atwood a $50 million termination fee in the event that it fails to obtain such shareholder approval.
-
-
The fact that the exchange ratio included in the merger agreement provides for a fixed number of Ensco Class A ordinary shares, meaning
that Atwood shareholders cannot be sure at the time they vote on the merger of the market value of the merger consideration they will receive, and the possibility that Atwood shareholders could be
adversely affected by a decrease in the trading price of Ensco Class A ordinary shares before the closing of the merger.
-
-
That, while the merger is expected to be completed, there is no assurance that all conditions to the parties' obligations to complete the
merger will be satisfied or waived, and as a result, it is possible that the merger might not be completed even if approved by Atwood shareholders and Ensco shareholders.
-
-
Ensco's ability, under certain circumstances, to terminate the merger agreement in order to enter into an agreement providing for a superior
proposal, provided that Ensco concurrently with such termination pays to Atwood a termination fee of $50 million.
-
-
The limitations imposed on Atwood's ability to solicit alternative transactions prior to closing or termination of the merger agreement,
including the requirement to pay a $30 million termination fee in the event (1) Atwood accepts a superior proposal, or (2) the merger agreement is terminated, a third party has
made a public takeover proposal for Atwood and Atwood enters into a definitive agreement with respect to that takeover proposal within 12 months of the termination date, which, although within
the range of such fees normally seen in similar transactions, could have the effect of discouraging an alternative proposal for Atwood.
-
-
The restrictions on the conduct of Atwood's business prior to the consummation of the merger, which may delay or prevent Atwood from
undertaking business opportunities that may arise or other actions it would otherwise take with respect to the operations of Atwood pending consummation of the merger.
-
-
The risks and costs to Atwood if the merger is delayed or does not occur at all, including the potential negative impact on Atwood's ability to
retain key employees, the diversion of Atwood management and employee attention and the potential disruptive effectives on Atwood's day-to-day operations and Atwood's relationships with third parties,
including its customers and suppliers.
-
-
The substantial costs to be incurred in connection with the merger, including the costs of integrating the businesses of Atwood and Ensco and
the transaction costs to be incurred in connection with the merger.
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-
-
The possibility that the $10 million expense reimbursement that Ensco would be required to pay under the merger agreement upon
termination of the merger agreement under certain circumstances would be insufficient to compensate Atwood for its costs incurred in connection with the merger agreement.
-
-
The fact that the Ensco Class A ordinary shares received as the per share merger consideration would be taxable to Atwood's shareholders
that are U.S. holders for U.S. federal income tax purposes.
-
-
Risks of the type and nature described under "Risk Factors."
The
Atwood Board considered all of these factors as a whole and, on balance, concluded that they supported a determination to approve the merger agreement. The foregoing discussion of
the information and factors considered by the Atwood Board is not exhaustive, but rather is meant to include the material factors that the Atwood Board considered. In view of the wide variety of
factors, both positive and negative, considered by the Atwood Board in connection with its evaluation of the proposed merger and the complexity of these matters, the Atwood Board did not consider it
practical
to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. The Atwood Board evaluated the factors described
above, among others, and collectively reached a consensus that the proposed merger was advisable and in the best interests of Atwood and its shareholders. In considering the factors described above
and any other factors that are not presented, individual members of the Atwood Board may have viewed factors differently or given different weight or merit to different factors. In addition, the
factors described above are not presented in any order of priority.
In
considering the recommendation of the Atwood Board to approve the Atwood Merger Proposal, Atwood shareholders should be aware that the executive officers and directors of Atwood have
certain interests in the merger that may be different from, or in addition to, the interests of Atwood shareholders generally. The Atwood Board was aware of these interests and considered them when
approving the merger agreement and recommending that Atwood shareholders vote to approve the Atwood Merger Proposal. See "Atwood's Directors and Officers Have Financial Interests in the
Merger."
It
should be noted that this explanation of the reasoning of the Atwood Board and all other information presented in this section is forward-looking in nature and, therefore, should be
read in light of the factors discussed under the heading "Cautionary Statement Regarding Forward-Looking Statements."
Opinion of Financial Advisor to Ensco
The Ensco Board retained Morgan Stanley to provide it with financial advisory services in connection with the proposed merger and to provide a
financial opinion. The Ensco Board selected Morgan Stanley to act as its financial advisor based on Morgan Stanley's qualifications, expertise and reputation and its knowledge of the business and
affairs of Ensco. On May 29, 2017, at a meeting of the Ensco Board, Morgan Stanley rendered its oral opinion, subsequently confirmed by delivery of a written opinion, dated May 29, 2017,
that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan
Stanley as set forth in the written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Ensco.
The full text of the written opinion of Morgan Stanley delivered to the Ensco Board, dated as of May 29, 2017, is attached to this joint proxy
statement/prospectus as Annex B and is incorporated herein by reference in its entirety. You should read Morgan Stanley's opinion and this summary of Morgan Stanley's opinion carefully and in
their entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering
its opinion. This summary is qualified in its entirety by
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reference to the full text of such opinion. Morgan Stanley's opinion was directed to the Ensco Board, in its capacity as such, and addressed only the fairness from a financial point of view to Ensco
of the exchange ratio pursuant to the merger agreement as of the date of such opinion. Morgan Stanley's opinion did not address any other aspects or implications of the merger. Morgan Stanley's
opinion did not in any manner address the price at which the Ensco Class A ordinary shares would trade following the merger or at any time, and Morgan Stanley expressed no opinion or
recommendation to any holder of Ensco Class A ordinary shares or Atwood common stock as to how such holder should vote at the Ensco general meeting or the Atwood special meeting, respectively,
or whether to take any other action with respect to the merger.
For
purposes of rendering its opinion, Morgan Stanley, among other things:
-
(1)
-
reviewed
certain publicly available financial statements and other publicly available business and financial information of Atwood and Ensco, respectively;
-
(2)
-
reviewed
certain internal financial statements and other financial and operating data concerning Atwood and Ensco, respectively;
-
(3)
-
reviewed
(i) certain financial projections prepared by the managements of Atwood and Ensco, respectively, and (ii) certain financial projections
relating to Atwood prepared by the management of Ensco;
-
(4)
-
reviewed
information relating to certain strategic, financial and operational benefits anticipated from the merger, prepared by the management of Ensco;
-
(5)
-
discussed
the past and current operations and financial condition and the prospects of Atwood with senior executives of Atwood;
-
(6)
-
discussed
the past and current operations and financial condition and the prospects of Ensco, including information relating to certain strategic, financial and
operational benefits anticipated from the merger, with senior executives of Ensco;
-
(7)
-
reviewed
the pro forma impact of the merger on Ensco's earnings per share, cash flow, consolidated capitalization and certain financial ratios;
-
(8)
-
reviewed
the reported prices and trading activity for Atwood common stock and Ensco Class A ordinary shares;
-
(9)
-
compared
the financial performance of Atwood and Ensco and the prices and trading activity of Atwood common stock and Ensco Class A ordinary shares with that
of certain other publicly-traded companies comparable with Atwood and Ensco, respectively, and their securities;
-
(10)
-
reviewed
the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
-
(11)
-
participated
in certain discussions and negotiations among representatives of Atwood and Ensco and certain parties and their financial and legal advisors;
-
(12)
-
reviewed
the merger agreement and certain related documents; and
-
(13)
-
performed
such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
Morgan
Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made
available to it by Atwood and Ensco, and formed a substantial basis for its opinion. With respect to the financial projections, including information relating to certain strategic, financial and
operational benefits
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anticipated
from the merger, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of
Atwood and Ensco of the future financial performance of Atwood and Ensco. For purposes of its analysis, Morgan Stanley, at the direction of Ensco, relied on financial projections relating to Atwood
and Ensco, in each case prepared by the management of Ensco. Morgan Stanley was advised by Ensco and assumed, with Ensco's consent, that the projections prepared by the management of Ensco were a
reasonable basis upon which to evaluate the business and financial prospects of Ensco and Atwood. Morgan Stanley expressed no view as to such projections or the assumptions on which they were based.
Morgan Stanley relied upon, without independent verification, the assessment by the management of Ensco of: (i) the strategic, financial and other benefits expected to result from the merger;
(ii) the timing and risks associated with the integration of Atwood and Ensco; and (iii) Ensco's ability to retain key employees of Atwood and Ensco, respectively. In addition, Morgan
Stanley assumed that the merger would be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, including, among
other things, that the definitive merger agreement would not differ in any material respect from the draft thereof furnished to it. Morgan Stanley assumed that in connection with the receipt of all
the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions would be imposed that would have a material
adverse effect on the contemplated benefits expected to be derived in the proposed merger. Morgan Stanley is not a legal, tax, or regulatory advisor. Morgan Stanley is a financial advisor only and
relied upon, without independent verification, the assessment of Ensco and Atwood and their legal, tax or regulatory advisors with respect to legal, tax, or regulatory matters. Morgan Stanley did not
perform any tax assessment in connection with the merger. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Atwood's officers,
directors or employees, or any class of such persons, relative to the consideration to be paid to the holders of shares of Atwood common stock in the transaction. Morgan Stanley did not make any
independent valuation or appraisal of the assets or liabilities of Atwood or Ensco, nor was it furnished with any such valuations or appraisals. Morgan Stanley's opinion did not address the relative
merits of the merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Morgan Stanley's opinion
was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events occurring after such date may
affect Morgan Stanley's opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.
Summary of Financial Analyses of Morgan Stanley
The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the
preparation of its written opinion to the Ensco Board, each dated as of May 29, 2017. The following summary is not a complete description of the financial analyses performed and factors
considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Except as otherwise noted,
the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 26, 2017, the most recent trading day prior to
Morgan Stanley's presentation to the Ensco Board of its financial analysis on May 29, 2017. Some of these summaries of financial analyses include information presented in tabular format. In
order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of
the financial analyses. The analyses listed in the tables and described below must be considered as a whole. Assessing any portion of such analyses and of the factors reviewed, without considering all
analyses and factors, could create a misleading or incomplete view of the process underlying Morgan
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Stanley's
opinion. Furthermore, mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using the data referred to below.
In
performing the financial analyses summarized below and in arriving at its opinion, at the direction of the Ensco Board, Morgan Stanley utilized and relied upon certain financial
projections relating to Atwood and Ensco, each provided by the management of Ensco and which are described below. In addition, Morgan Stanley utilized and relied upon the number of issued and
outstanding shares of Atwood provided by management of Atwood.
As
part of the financial projections, Ensco management provided, and Morgan Stanley relied upon with the consent of the Ensco Board, Ensco Management Case A and Ensco Management Case B
(the "Ensco financial forecasts"). Ensco management informed Morgan Stanley that Ensco Management Case B was more reflective of the then-current market outlook than Ensco Management Case A, and Morgan
Stanley relied upon such information with the consent of the Ensco Board. The Ensco financial forecasts are more fully described in the section entitled "Certain Unaudited Financial
Forecasts Prepared by the Management of Ensco."
Useful Life Discounted Cash Flow Analysis
Morgan Stanley performed a discounted cash flow analysis, which is designed to provide an implied value of a company by calculating the present
value of the estimated future cash flows and terminal value of that company. In the "useful life" discounted cash flow analysis, Morgan Stanley performed a discounted cash flow analysis on each of
Atwood and Ensco, respectively, based on the unlevered cash flows generated by Atwood's and Ensco's fleet of rigs through the estimated end of their useful lives as estimated by the management of
Ensco (which are estimated to extend through 2055 for Atwood and through 2050 for Ensco).
Atwood Useful Life Discounted Cash Flow Analysis
With respect to Atwood, Morgan Stanley calculated a range of implied total equity values of Atwood and values per share of Atwood common stock
based on estimates of future cash flows from April 1, 2017 through June 30, 2055. Morgan Stanley performed this analysis on the estimated future cash flows of Atwood contained in Ensco
Management Case A and Ensco Management Case B. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as earnings before interest, taxes, and depreciation and
amortization, which is referred to in this section as EBITDA, less capital expenditures and unlevered taxes, and adjusted for any changes in working capital). The projected unlevered free cash flows
were discounted to March 31, 2017 using discount rates ranging from 8.1% to 9.3% for the period between April 1, 2017 through December 31, 2020 based on Morgan Stanley's estimate
of Atwood's weighted average cost of capital ("WACC") for such period, and the projected unlevered cash flows for the period from January 1, 2021 through June 30, 2055 were discounted to
March 31, 2017 using discount rates ranging from 8.4% to 9.6% based on Morgan Stanley's estimate of Atwood's WACC for such period. The range of discount rates used for such period differed from
that used for the period ending December 31, 2020 as a result of an assumed increase in the cost of debt. Morgan Stanley then deducted from the implied aggregate value ranges Atwood's estimated
gross debt and minority interest and added Atwood's cash and cash equivalents as of March 31, 2017. Aggregate values also included the then-current estimate of the value of capital spare parts
of Atwood as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per share for Atwood as of March 31, 2017 for each of Ensco Management Case A and Ensco
Management Case B of $25.68 to $30.90 and $13.33 to $17.09, respectively.
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Ensco Useful Life Discounted Cash Flow Analysis
With respect to Ensco, Morgan Stanley calculated a range of implied total equity values of Ensco and values per Ensco Class A ordinary
share based on estimates of future cash flows of Ensco from April 1, 2017 through December 31, 2050. Morgan Stanley performed this analysis on the estimated future cash flows contained
in Ensco Management Case A and Ensco Management Case B. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as EBITDA less capital expenditures and unlevered taxes, and
adjusted for any changes in working capital). The projected unlevered free cash flows were discounted to March 31, 2017 using discount rates ranging from 7.5% to 8.5% for the period between
April 1, 2017 through December 31, 2020 based on Morgan Stanley's estimate of Ensco's WACC for such period, and the projected unlevered cash flows for the period from January 1,
2021 through December 31, 2050 were discounted to present value using discount rates ranging from 7.7% to 8.8% based on Morgan Stanley's estimate of Ensco's WACC for such period. The range of
discount rates used for such period differed from that used for the period ending December 31, 2020 as a result of an assumed redemption of notes. With the cost of debt lower than the cost of
equity, the assumed redemption lowered the debt-to-capitalization ratio, therefore increasing the weighted average cost of capital. Morgan Stanley then deducted from the implied aggregate value ranges
Ensco's estimated gross debt and minority interest and added Ensco's cash and cash equivalents as of March 31, 2017 (adjusted for open market repurchases of debt in April 2017). Aggregate
values also included the then-current estimate of the value of capital spare parts of Ensco as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per Ensco Class A ordinary share as of March 31, 2017 for each of Ensco Management
Case A and Ensco Management Case B of $19.07 to $22.57 and $10.12 to $12.63, respectively.
Exchange Ratio Implied by Useful Life Discounted Cash Flow Analysis
Morgan Stanley calculated the exchange ratio ranges implied by the useful life discounted cash flow analyses. Morgan Stanley compared the lowest
implied per share value for Atwood common stock to the highest implied per share value for Ensco Class A ordinary shares to derive the lowest exchange ratio implied by the analyses. Similarly,
Morgan Stanley compared the
highest implied per share value for Atwood common stock to the lowest implied per share value for Ensco Class A ordinary shares to derive the highest exchange ratio implied by the analyses. The
implied exchange ratio ranges resulting from the analysis, which Morgan Stanley noted did not include synergies, was 1.14x to 1.62x for Ensco Management Case A and 1.06x to 1.69x for Ensco Management
Case B. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.
10-Year Discounted Cash Flow Analysis
Morgan Stanley also performed a discounted cash flow analysis on both Atwood and Ensco based on estimates of future cash flows from
April 1, 2017 through March 31, 2027 and calculated a terminal value at the end of such projection period. Management of Ensco informed Morgan Stanley that Ensco Management Case B was
more reflective of the then-current market outlook than Ensco Management Case A, and as a result, Morgan Stanley conducted the discounted cash flow analysis using only Ensco Management Case B.
Atwood 10-Year Discounted Cash Flow Analysis
With respect to Atwood, Morgan Stanley calculated a range of implied total equity values of Atwood and values per share of Atwood common stock
based on estimates of future cash flows for Atwood from April 1, 2017 to March 31, 2027. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as EBITDA,
less capital expenditures and unlevered taxes and adjusted for
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any
changes in working capital) of Atwood based on estimates by the management of Ensco. Morgan Stanley then calculated a terminal value range for Atwood by applying a multiple of aggregate value
(defined as market capitalization plus total debt and minority interests and less cash and cash equivalents) to estimated EBITDA for the twelve months ending March 31, 2028 of 5.0x to 8.0x.
This range was derived based on Morgan Stanley's professional judgment after calculating the aggregate value to EBITDA multiples for the twelve months following the date of measurement (the "NTM
EBITDA") that Atwood common shares had traded at from May 2012 to May 2017, which resulted in an average aggregate value to NTM EBITDA (based on publicly available estimates) of 6.9x for such period.
The projected unlevered free cash flows were discounted to March 31, 2017 using discount rates
ranging from 8.1% to 9.3% for the period from April 1, 2017 through December 31, 2020 based on Morgan Stanley's estimate of Atwood's WACC for such period, and the projected unlevered
cash flows for the period from January 1, 2021 through March 31, 2027 and terminal value were discounted to March 31, 2017 using discount rates ranging from 8.4% to 9.6% based on
Morgan Stanley's estimate of Atwood's WACC for such period. The range of discount rates used for such period differed from that used for the period ending December 31, 2020 as a result of an
assumed increase in the cost of debt. Morgan Stanley then deducted from the implied aggregate value ranges Atwood's estimated gross debt and minority interest and added Atwood's cash and cash
equivalents as of March 31, 2017. Aggregate values also included the then-current estimate of the value of capital spare parts of Atwood as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per share for Atwood as of March 31, 2017 for Ensco Management Case B of $9.21 to $17.68.
Ensco 10-Year Discounted Cash Flow Analysis
With respect to Ensco, Morgan Stanley calculated a range of implied total equity values of Ensco and values per Ensco Class A ordinary
share based on estimates of future cash flows for Ensco from April 1, 2017 to March 31, 2027. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as
EBITDA, less capital expenditures and unlevered taxes and adjusted for any changes in working capital) of Ensco based on estimates by the management of Ensco. Morgan Stanley then calculated a terminal
value range for Ensco by applying a multiple of aggregate value to estimated EBITDA for the twelve months ending March 31, 2028 of 5.0x to 8.0x. This range was derived based on Morgan Stanley's
professional judgment after calculating the NTM EBITDA that Ensco common shares had traded at from May 2012 to May 2017, which resulted in an average aggregate value to NTM EBITDA (based on publicly
available estimates) of 6.6x for such period. The projected unlevered free cash flows were discounted to March 31, 2017 using discount rates ranging from 7.5% to 8.5% for the period from
April 1, 2017 through December 31, 2020 based on Morgan Stanley's estimate of Ensco's WACC for such period, and the projected unlevered cash flows for the period from January 1,
2021 through March 31, 2027 and terminal value were discounted to March 31, 2017 using discount rates ranging from 7.7% to 8.8% based on Morgan Stanley's estimate of Ensco's WACC for
such period. The range of discount rates used for such period differed from that used for the period ending December 31, 2020 as a result of an assumed redemption of notes. With the cost of
debt lower than the cost of equity, the assumed redemption lowered the debt-to-capitalization ratio, therefore increasing the weighted average cost of capital. Morgan Stanley then deducted from the
implied aggregate value ranges Ensco's estimated gross debt and minority interest and added Ensco's cash and cash equivalents as of March 31, 2017 (adjusted for open market repurchases of debt
in April 2017). Aggregate values also included the then-current estimate of the value of capital spare parts of Ensco as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per Ensco Class A ordinary share as of March 31, 2017 for Ensco Management Case B of
$8.58 to $15.43.
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Exchange Ratio Implied by 10-Year Discounted Cash Flow Analysis
Morgan Stanley calculated the exchange ratio ranges implied by the discounted cash flow analyses. Morgan Stanley compared the lowest implied per
share value for Atwood common stock to the highest implied per share value for Ensco Class A ordinary shares to derive the lowest exchange ratio implied by the analyses. Similarly, Morgan
Stanley compared the highest implied per share value for Atwood common stock to the lowest implied per share value for Ensco Class A ordinary shares to derive the highest exchange ratio implied
by the analyses. The implied exchange ratio ranges resulting from the analysis, which Morgan Stanley noted did not include synergies, was 0.60x to 2.06x for Ensco Management Case B. Morgan Stanley
noted that the merger agreement provided for an exchange ratio of 1.60x.
Discounted Equity Value Analysis
For each of Atwood and Ensco, Morgan Stanley performed a discounted equity value analysis, which is designed to provide an indication of the
present value of a theoretical future value of a company's equity as a function of such company's estimated future EBITDA.
Management
of Ensco informed Morgan Stanley that Ensco Management Case B was more reflective of the then-current market outlook than Ensco Management Case A, and as a result, Morgan
Stanley conducted the discounted equity value analysis using only Ensco Management Case B.
Atwood Discounted Equity Value
Morgan Stanley calculated the discounted equity value per share of Atwood common stock as of March 31, 2017. To calculate the discounted
equity value per share of Atwood common stock, Morgan Stanley utilized calendar year 2022 EBITDA based on the financial forecasts provided by Ensco. Morgan Stanley calculated the future equity value
per share of Atwood common stock at January 1, 2022 by applying an aggregate value to EBITDA multiple of 5.0x to 8.0x to the estimated calendar year 2022 EBITDA based on the financial forecasts
provided by Ensco. This reference range was based on Morgan Stanley's professional judgment and derived in the manner described under "Atwood 10-Year Discounted Cash Flow Analysis." The
resulting per share equity values were then discounted to March 31, 2017 using a cost of equity for Atwood of 17.0% based on Morgan Stanley's estimate of Atwood's then-current cost of equity.
Morgan Stanley added the then-current estimate of the per share value of capital spare parts of Atwood as estimated by Ensco management to Atwood's implied share price. This analysis resulted in a
range of implied values per share for Atwood of $6.84 to $13.95.
Ensco Discounted Equity Value
Morgan Stanley calculated the discounted equity value per Ensco Class A ordinary share as of March 31, 2017. To calculate the
discounted equity value per Ensco Class A ordinary share, Morgan Stanley utilized calendar year 2022 EBITDA based on the financial forecasts provided by Ensco. Morgan Stanley calculated the
future equity value per Ensco Class A ordinary share at January 1, 2022 by applying an aggregate value to EBITDA multiple of 5.0x to 8.0x to the estimated calendar year
2022 EBITDA based on the financial forecasts provided by Ensco. This reference range was based on Morgan Stanley's professional judgment and derived in the manner described under "Ensco
10-Year Discounted Cash Flow Analysis." The resulting per share equity values were then discounted to March 31, 2017 using cost of equity for Ensco of 15.6% based on Morgan Stanley's estimate
of Ensco's then-current cost of equity. Morgan Stanley added the then-current estimate of the per share value of capital spare parts of Ensco and estimated present value of dividends on each Ensco
common share, each as estimated by Ensco management to Ensco's implied share price. This analysis resulted in a range of implied values per Ensco Class A ordinary share of $4.76 to $10.20.
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Exchange Ratio Implied by Discounted Equity Value Analysis
Morgan Stanley then calculated the exchange ratio range implied by the discounted equity value analysis. Morgan Stanley compared the lowest
implied equity value per share for Atwood common stock to the highest implied equity value per Ensco Class A ordinary share to derive the lowest exchange ratio implied by the discounted equity
value analyses. Similarly, Morgan Stanley compared the highest implied equity value per share for Atwood common stock to the lowest implied equity value per Ensco Class A ordinary share to
derive the highest exchange ratio implied by the discounted equity value analyses. The implied exchange ratio range resulting from this analysis, which Morgan Stanley noted did not include synergies,
was 0.67x to 2.93x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.
Trading Multiple Analysis
Morgan Stanley performed a trading multiple analysis to determine the ratio of the closing stock price per share of Atwood common stock and per
Ensco Class A ordinary share, in each case as of May 26, 2017, to Atwood's and Ensco's respective then current net asset value per share ("NAV"). Morgan Stanley refers to this statistic
as "Price/NAV." The Price/NAVs of Atwood and Ensco were also compared against the Price/NAVs of four comparable public companies: Diamond Offshore Drilling, Inc., Transocean Ltd., Rowan
Companies plc, and Noble Corporation plc. These companies were chosen based on Morgan Stanley's knowledge of the industry and because they have businesses that may be considered similar to that
of Atwood and Ensco. The NAVs utilized were based on an average
of publicly available analyst research reports disclosing discounted cash flow, sum-of-the-parts or net asset value-based valuations. The Price/NAVs were as follows:
|
|
|
|
|
Company
|
|
Price / NAV (as of May 26, 2017)
|
|
Atwood
|
|
|
0.66x
|
|
Ensco
|
|
|
0.63x
|
|
Diamond Offshore Drilling, Inc.
|
|
|
0.82x
|
|
Transocean Ltd.
|
|
|
0.79x
|
|
Rowan Companies plc
|
|
|
0.72x
|
|
Noble Corporation plc
|
|
|
0.55x
|
|
Based
on this analysis and its professional judgment, Morgan Stanley selected a reference range of Price/NAV of 0.6x to 1.0x, and applied the reference range to the NAVs of Atwood and
Ensco, respectively. Based on an average of publicly available analyst reports disclosing discounted cash flow, sum-of-the-parts or net asset value-based valuations, the NAV of Atwood was calculated
to be $12.20 and the NAV of Ensco was calculated to be $10.57. Morgan Stanley also included the then-current estimate of the per share value of capital spare parts of Atwood and Ensco as estimated by
Ensco management to Atwood and Ensco's implied share price, respectively. This analysis resulted in an implied share price range of $8.49 to $13.37 per share of Atwood common stock and $7.22 to $11.45
per Ensco Class A ordinary share.
Morgan
Stanley then calculated the exchange ratio implied by the trading multiple analysis. Morgan Stanley compared the lowest implied equity value per share for Atwood common stock to
the highest implied equity value per Ensco Class A ordinary share to derive the lowest exchange ratio implied by the trading multiple analysis. Similarly, Morgan Stanley compared the highest
implied equity value per share for Atwood common stock to the lowest implied equity value per Ensco Class A ordinary share to
derive the highest exchange ratio implied by the trading multiple analysis. The implied exchange ratio reference range resulting from this analysis, which Morgan Stanley noted did not include
synergies, was 0.74x to 1.85x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.
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No
company utilized in the trading multiple analysis is identical to Atwood or Ensco and hence the foregoing summary and underlying financial analyses involved complex considerations and
judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Atwood and Ensco were
compared, respectively. In evaluating comparable companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Atwood and Ensco.
Pro Forma Discounted Cash Flow Accretion Analysis
Morgan Stanley performed a pro forma discounted cash flow accretion analysis, which is designed to compare a range of pro forma useful life
discounted cash flow values per share based on the 1.60x exchange ratio provided for in the merger agreement to the range of Ensco useful life discounted cash flow values per share calculated on a
standalone basis (see "Ensco Useful Life Discounted Cash Flow Analysis").
Morgan
Stanley calculated a range of pro forma implied aggregate values by summing the present values of the useful life unlevered free cash flows of Atwood, Ensco and synergies (based
on assumed run-rate synergies of $65 million, as directed by Ensco management). For the purposes of the pro forma discounted cash flow accretion analysis, the unlevered free cash flows of
Ensco, Atwood and synergies were discounted to March 31, 2017 using discount rates ranging from 7.5% to 8.5% for the period between April 1, 2017 through December 31, 2020 based
on Morgan Stanley's estimate of Ensco's WACC for such period, and the projected unlevered cash flows for the forecast period thereafter were discounted to present value using discount rates ranging
from 7.7% to 8.8% based on Morgan Stanley's estimate of Ensco's WACC for such period. Morgan Stanley then adjusted the total pro forma implied aggregate value ranges by Ensco's and Atwood's estimated
gross debt, minority interest and cash and cash equivalents as of March 31, 2017 (with Ensco's gross debt and cash and cash equivalents adjusted for open market repurchases of debt in April
2017). Aggregate values also included the then-current estimate of the value of capital spare parts of Atwood and Ensco as estimated by Ensco management. To derive a range of pro forma useful life
discounted cash flow values per share, such amount was then divided by the number of fully diluted shares expected to be outstanding by Ensco management
following completion of the merger based on the 1.60x exchange ratio provided for in the merger agreement. This analysis resulted in a range of per Ensco Class A ordinary share values of $19.93 to
$23.59 for Ensco Management Case A and $11.17 to $13.84 for Ensco Management Case B. These ranges compared with ranges of implied values per Ensco Class A ordinary share on a standalone basis for each
of Ensco Management Case A and Ensco Management Case B of $19.07 to $22.57 and $10.12 to $12.63, respectively.
Illustrative Floater Value Analysis
Morgan Stanley performed an illustrative floater value analysis of Atwood, which is designed to provide an illustrative value per floater that
is implied by the value of the transaction and comparing such value to the replacement cost of a floater (i.e., by building a new rig, called a "newbuild"). Morgan Stanley first calculated the
implied transaction value of Atwood based on the 1.60x exchange ratio provided for in the merger agreement. The implied transaction value was calculated using an assumed equity offer price of $10.72
per Atwood share as of May 26, 2017. In order to isolate the implied value of Atwood's floaters, Morgan Stanley then deducted from the implied transaction value an assumed jackup rig value of
Atwood (such value was the product of the jackup rig count of Atwood as of March 31, 2017 based on publicly available information multiplied by a per rig value assumption based on public equity
research estimates and as reviewed by Ensco management, plus the jackup contract backlog value (which was assumed as 40% of the reported jackup rig backlog value of Atwood as of March 31, 2017
based on publicly available information)). In order to account for construction
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costs
associated with the floaters captured in the analysis, Morgan Stanley then added unfunded capital expenditures for certain newbuild floaters. In order to calculate an implied value per floater
on an uncontracted basis, Morgan Stanley then deducted the backlog order of floaters (which was assumed as 40% of the reported floater contract backlog value of Atwood as of March 31, 2017),
which resulted in an implied floater fleet value of $1,349 million. This value was divided by the number of floaters of Atwood as of March 31, 2017 based on publicly available
information (including newbuilds and excluding cold-stacked rigs) to determine the implied purchase price per floater.
Based
on the above-described analysis, Morgan Stanley derived an implied price of $225 million per floater of Atwood and compared it to the estimated cost of constructing a new
floater of $600 million, as estimated by Ensco management, which indicated a discount of 63%.
The
illustrative floater value analysis was presented for reference purposes only, and was not relied upon for valuation purposes.
ENSCO 2018 ANNUAL SHAREHOLDER MEETING AND SHAREHOLDER PROPOSALS
Any of Ensco's shareholders intending to present a proposal at the 2018 Annual General Meeting of Shareholders must deliver such proposal to
Ensco's principal executive office, in writing and in accordance with SEC Rule 14a-8, no later than December 11, 2017 for inclusion in the proxy statement related to that meeting. The
proposal should be delivered to Ensco's secretary by certified mail, return receipt requested.
In
addition, apart from the SEC Rule 14a-8 process described above, a shareholder whose proposal is not included in the proxy statement related to the 2018 Annual General Meeting
of Shareholders, but who still intends to submit a proposal at that meeting, is required by the Ensco Articles of Association to deliver such proposal, in proper form, in writing, to Ensco's secretary
at Ensco's principal executive offices and to provide certain other information, not earlier than the close of business on the 75th day and not later than the close of business on the
50th day prior to the first anniversary of the preceding year's Annual General Meeting of Shareholders, subject to any other requirements of law; provided, however, that in the event that the
date of the Annual General Meeting of Shareholders is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 75th day prior to the date of such Annual General Meeting of Shareholders and not later than the close of business on the later of the
50th day prior to the date of such Annual General Meeting of Shareholders or, if the first public announcement of the date of such Annual General Meeting of Shareholders is less than
65 days prior to the date of such Annual General Meeting of Shareholders, the 15th day following the day on which public announcement of the date of such meeting is first made. In the
case of the 2018 Annual General Meeting of Shareholders, references to the anniversary date of the preceding year's Annual General Meeting of Shareholders shall mean the first anniversary of
May 22, 2017.
Any
such proposal must also comply with the other provisions contained in the Ensco Articles of Association relating to shareholder proposals, including provision of the information
specified in the Ensco Articles of Association, such as information concerning the nominee of the proposal, if any, and the shareholder and the beneficial owner, as the case may be. Any proposals that
do not meet the requirements set forth in the Ensco Articles of Association, other than proposals submitted in
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compliance
with SEC Rule 14a-8 under the Exchange Act, will be declared out of order and will not be considered at the 2018 Annual General Meeting of Shareholders.
In
addition to the SEC and the Ensco Articles of Association processes described above, under the Companies Act 2006, shareholders representing at least 5% of the total voting rights of
all shareholders who have a right to vote at the 2018 Annual General Meeting of Shareholders can require Ensco to give shareholders notice of a resolution which may be and is intended to be moved at
the Annual General Meeting of Shareholders unless (a) the resolution would, if passed, be ineffective (whether by reason of inconsistency with any enactment or Ensco's constitution or
otherwise); (b) it is defamatory of any person; or (c) it is frivolous or vexatious. Such a request, made by the requisite number of shareholders, must be received by Ensco not later
than six weeks before the Annual General Meeting of Shareholders. For information as to how you can obtain a copy of the Ensco Articles of Association, see "Where You Can Find More Information."
ATWOOD 2018 ANNUAL SHAREHOLDER MEETING AND SHAREHOLDER PROPOSALS
In light of the Atwood special meeting, Atwood does not intend to hold a 2018 annual meeting of shareholders. If the merger agreement is
terminated or the proposal to adopt the merger agreement is not approved by Atwood shareholders at the Atwood special meeting, Atwood intends to call an annual meeting of shareholders in the normal
course.
Proposals
from Atwood shareholders intended to be included in Atwood's proxy statement for the 2018 Annual Meeting of Shareholders must be received at Atwood's principal executive
offices (directed to Atwood's corporate secretary at the address indicated in this joint proxy/prospectus) no later than September 11, 2017 and must comply with the requirements of the proxy
rules promulgated by the SEC in order to be included in the proxy statement and form of proxy related to that meeting.
Atwood's
bylaws permit shareholders to propose business to be considered or to nominate directors for election by the shareholders at its annual meeting. To propose business or to
nominate a director, the shareholder must deliver a notice to Atwood's corporate secretary not earlier than October 18, 2017 and not later than November 17, 2017 and must comply with the
advance notice requirements set forth in Atwood's bylaws and with the requirements of the proxy rules promulgated by the SEC.
For
information as to how you can obtain a copy of Atwood's certificate of formation and bylaws, see "Where You Can Find More Information."
SHAREHOLDERS SHARING AN ADDRESS
Only one copy of this joint proxy statement/prospectus is being delivered to multiple shareholders of Ensco or Atwood sharing an address unless
Ensco or Atwood, as applicable, has previously received contrary instructions from one or more of such shareholders. On written or oral request to the Secretary of Ensco at Ensco, 6 Chesterfield
Gardens, London, W1J 5BQ, United Kingdom, 44 (0) 207 659 4660, Ensco will deliver promptly a separate copy of this joint proxy statement/prospectus to an Ensco
shareholder at a shared address to which a single copy of the documents was delivered. On written or oral request to the Corporate Secretary of Atwood at 15011 Katy Freeway, Suite 800, Houston,
Texas 77094, (281) 749-7800, Atwood will deliver promptly a separate copy of this joint proxy statement/prospectus to an Atwood shareholder at a shared address to which a single copy of the
documents was delivered. Shareholders sharing an address who wish, in the future, to receive separate copies or a single copy of Ensco's or Atwood's proxy statements and annual reports should provide
written or oral notice to the Secretary of Ensco or the Corporate Secretary of Atwood, as applicable, at the address and telephone number set forth above.
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COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Ensco Articles of Association and Atwood bylaws provide for indemnification for current and former directors, officers, employees, or agents
serving at the request of the corporation to the fullest extent permitted by English law or Texas law, as applicable. Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to Ensco's or Atwood's directors, officers and persons controlling Ensco or Atwood, as applicable, Ensco and Atwood have been advised that it is the SEC's opinion that such indemnification
is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
Ensco has filed with the SEC a registration statement under the Securities Act that registers the issuance to Atwood shareholders of the Ensco
Class A ordinary shares to be issued in connection with the merger. The registration statement, including the attached exhibits and schedules, contains additional relevant information about
Ensco and Ensco Class A ordinary shares. The rules and regulations of the SEC allow Ensco to omit certain information included in the registration statement from this joint proxy
statement/prospectus.
You
may read and copy this information at the Public Reference Room of the SEC at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on
the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website that contains reports, proxy statements and other information about
issuers, like Ensco and Atwood, who file electronically with the SEC. The address of the site is www.sec.gov. The reports and other information filed by Ensco with the SEC, including a copy of the
Ensco Articles of Association, are also available at Ensco's internet website (www.enscoplc.com). The reports and other information filed by Atwood with the SEC, including a copy of Atwood's
certificate of formation and bylaws, are also available at Atwood's internet website (www.atwd.com). We have included the web addresses of the SEC, Ensco, and Atwood as inactive textual references
only. Except as specifically incorporated by reference into this joint proxy statement/prospectus, information on those websites is not part of this joint proxy statement/prospectus.
The
SEC allows Ensco and Atwood to incorporate by reference information in this joint proxy statement/prospectus. This means that Ensco and Atwood can disclose important information to
you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this joint proxy statement/prospectus, except for any
information that is superseded by information that is included directly in this joint proxy statement/prospectus.
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This
joint proxy statement/prospectus incorporates by reference the documents listed below that Ensco and Atwood previously filed with the SEC. They contain important information about
the companies and their financial condition.
|
|
|
Ensco SEC Filings
(SEC File No. 001-08097; CIK No. 0000314808)
|
|
Period or Date Filed
|
Annual Report on Form 10-K
|
|
Year ended December 31, 2016 (the "Ensco Form 10-K")
|
Quarterly Reports on Form 10-Q
|
|
Quarters ended March 31, 2017 and June 30, 2017
|
Current Reports on Form 8-K
|
|
Filed on January 11, 2017, January 23, 2017, March 10, 2017, May 23, 2017 and May 30, 2017 (other
than the portions of those documents not deemed to be filed)
|
Definitive Proxy Statement on Schedule 14A to the extent incorporated by reference into the Ensco
Form 10-K
|
|
Filed on March 31, 2017
|
The description of Ensco Class A ordinary shares contained in its Current Report on Form 8-K, as that description
may be updated from time to time
|
|
Filed on May 15, 2012
|
|
|
|
Atwood SEC Filings
(SEC File No. 001-13167; CIK No. 0000008411)
|
|
Period or Date Filed
|
Annual Report on Form 10-K
|
|
Fiscal Year ended September 30, 2016 (the "Atwood Form 10-K")
|
Quarterly Reports on Form 10-Q
|
|
Quarters ended December 31, 2016, March 31, 2017 and June 30, 2017
|
Current Reports on Form 8-K
|
|
Filed on November 22, 2016, December 6, 2016, December 22, 2016, January 13, 2017, February 16,
2017, May 8, 2017, May 22, 2017 and May 30, 2017 (other than the portions of those documents not deemed to be filed)
|
Definitive Proxy Statement on Schedule 14A to the extent incorporated by reference into the Atwood
Form 10-K
|
|
Filed on January 9, 2017
|
The description of Atwood common stock contained in its Registration Statement on Form 8-A, as that description may be
updated from time to time
|
|
Filed on July 2, 1997
|
In
addition, Ensco and Atwood also incorporate by reference additional documents that either company files with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act after the date of the initial registration statement (of which this joint proxy statement/prospectus forms a part) and prior to the date of the Ensco general meeting and the Atwood special
meeting, as applicable. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements.
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Annex A
AGREEMENT AND PLAN OF MERGER
by and among
ENSCO PLC,
ECHO MERGER SUB LLC
and
ATWOOD OCEANICS, INC.
Dated as of May 29, 2017
Table of Contents
TABLE OF CONTENTS
A-i
Table of Contents
A-ii
Table of Contents
A-iii
Table of Contents
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "
Agreement
"), dated as of May 29, 2017, is by and
among Ensco plc, a public limited company organized under the Laws of England and Wales ("
Parent
"), Echo Merger Sub LLC, a Texas limited
liability company and wholly owned subsidiary of Parent ("
Merger Sub
"), and Atwood Oceanics, Inc., a Texas corporation (the
"
Company
" and, together with Parent and Merger Sub, the "
Parties
").
WITNESSETH:
WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the Texas Business Organizations Code
("
TBOC
"), the Parties intend that Merger Sub will merge with and into the Company (the "
Merger
"), with
the Company continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Parent (sometimes referred to in such capacity as the "
Surviving
Company
");
WHEREAS,
the Board of Directors of the Company (the "
Company Board
") has (i) unanimously determined that it is in the best
interests of the Company and the Company Shareholders to enter into this Agreement and the transactions contemplated hereby, including the Merger, (ii) approved the execution, delivery and
performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to submit this Agreement to a vote of the Company
Shareholders and recommend approval of this Agreement by the Company Shareholders;
WHEREAS,
the Board of Directors of Parent (the "
Parent Board
") has (i) unanimously determined that it is in the best interests of
Parent and the Parent Shareholders to enter into, and has declared advisable, this Agreement and the transactions contemplated hereby, including the Merger, (ii) approved the execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend the passing of the Parent
Shareholder Resolutions by the Parent Shareholders;
WHEREAS,
Parent, as the sole member of Merger Sub, has approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby,
including the Merger, and approved this Agreement; and
WHEREAS,
Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements specified herein in connection with this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger
Sub and the Company agree as follows:
A-1
Table of Contents
ARTICLE I.
THE MERGER
Section 1.1
The Merger.
At the Effective Time, upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the applicable provisions of the TBOC,
Merger Sub shall be merged with and into the Company, whereupon the separate existence of Merger Sub shall cease, and the Company shall continue its existence under Texas Law as the Surviving Company
in the Merger and a wholly owned subsidiary of Parent.
Section 1.2
Closing.
The closing of the Merger (the "
Closing
") shall take place at the offices of Latham & Watkins LLP,
811 Main Street, 37th Floor, Houston, Texas as soon as practicable (and in any event within five business days) after the satisfaction or waiver (to the extent permitted by applicable Law) of
the conditions set forth in
Article VI
(other than those conditions that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of such conditions), or at such other place, date and time as the Company and Parent may agree in writing. The date on which the Closing actually occurs is referred to as the
"
Closing Date
."
Section 1.3
Effective Time.
On the Closing Date, the Company and Merger Sub shall file with the
Secretary of State of the State of Texas a certificate of merger (the
"
Certificate of Merger
"), executed in accordance with, and containing such information as is required by, the relevant provisions of the TBOC in order
to effect the Merger. The Merger shall become effective at such time as the Certificate of Merger has been filed with the Secretary of State of the State of Texas or at such other, later date and time
as is agreed between the Parties and specified in the Certificate of Merger in accordance with the relevant provisions of the TBOC (such date and time is hereinafter referred to as the
"
Effective Time
").
Section 1.4
Effects of the Merger.
The effects of the Merger shall be as provided in this
Agreement and in the applicable provisions of the TBOC. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Company, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Company, all as provided under the TBOC.
Section 1.5
Organizational Documents of the Surviving Company.
At the Effective Time, the
Company Charter and Company Bylaws as in effect immediately prior to the Effective Time will remain unchanged and will be the articles
of incorporation and bylaws of the Surviving Company until duly amended in accordance with the terms thereof and applicable Law.
Section 1.6
Directors and Officers.
Subject to applicable Law, the officers of Merger Sub
immediately prior to the Effective Time shall be the initial directors and officers of the Surviving Company
and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.
Section 1.7
Parent Board.
(a) Parent
shall take such actions as are necessary for the Parent Board to expand the size of the Parent Board and to appoint two persons designated by the Company (the
"
Alpha Director Nominees
") to fill such vacancies, effective as of the Effective Time, to serve until such person's successor is elected by the Parent
Shareholders or until such person's death, retirement, resignation or removal by the Parent Shareholders. Each designee shall be a current non-employee director of the Company as agreed between Parent
and the Company and shall qualify as an independent director of Parent under the listing rules of the NYSE.
A-2
Table of Contents
(b) Except
as provided in
Article II
, the Parties shall ensure that the remuneration (including any share or stock
awards) to be paid to the Alpha Director Nominees after the Effective Time shall be compatible with Parent's directors' remuneration policy.
ARTICLE II.
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1
Effect on Capital Stock.
(a) At
the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company, Merger Sub or the holder of any shares of Company Common Stock
or limited liability company interests of Merger Sub:
(i)
Limited Liability Company Interest of Merger Sub.
The sole limited liability company interest of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and nonassessable share of common stock, par value $1.00 per share, of the Surviving
Company and shall constitute the only outstanding shares of capital stock of the Surviving Company.
(ii)
Cancellation of Certain Stock.
Each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time that is owned or held in treasury by the Company and each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is owned by Parent or
Merger Sub or any of their respective Subsidiaries shall no longer be outstanding and shall automatically be cancelled and shall cease to exist (the "
Cancelled
Shares
"), and no consideration shall be delivered in exchange therefor.
(iii)
Conversion of Company Common Stock.
Subject to the other provisions of
Article II
, each share of Company Common
Stock issued and outstanding immediately prior to or upon the Effective Time, excluding any Cancelled
Shares (each, a "
Company Share
"), shall be converted automatically into and shall thereafter represent the right to receive 1.60 (the
"
Exchange Ratio
") Parent Class A Ordinary Shares (the "
Merger Consideration
"), credited as fully
paid and free from all Liens.
All
Company Shares converted into the right to receive the Merger Consideration pursuant to this
Article II
shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the Effective Time, and uncertificated Company Shares represented by book-entry form
("
Book-Entry Shares
") and each certificate that, immediately prior to the Effective Time, represented any such Company Shares (each, a
"
Certificate
") shall thereafter represent only the right to receive the Merger Consideration and the Fractional Share Cash Amount into which the Company
Shares represented by such Book-Entry Share or Certificate have been converted pursuant to this
Section 2.1
, as well as any amounts to which
holders of Company Shares become entitled in accordance with
Section 2.2(e)
.
(b)
No Dissenters' Rights.
No dissenters' or appraisal rights shall be available with respect to the
Merger and the other transactions contemplated hereby.
(c)
Certain Adjustments.
If, between the date of this Agreement and the Effective Time (and as
permitted by
Article V
), the
outstanding Company Shares or Parent Class A Ordinary Shares shall have been changed into, or exchanged for, a different number of shares or a different class of shares by reason of any stock
dividend, subdivision, reorganization, reclassification, recapitalization, share split, reverse share split, combination or exchange of shares, or a stock dividend shall be declared with a record date
within such period, or any similar event shall have occurred, then the Exchange Ratio shall be equitably adjusted, without duplication, to proportionally reflect such change;
provided
, that nothing
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in
this
Section 2.1(c)
shall be construed to permit the Company or Parent to take any action with respect to its securities that is prohibited by
Section 5.1
or the other terms of this Agreement.
(d)
No Fractional Shares.
No fractional Parent Class A Ordinary Shares shall be issued in
connection with the Merger, no certificates or scrip representing fractional Parent
Class A Ordinary Shares shall be delivered upon the conversion of Company Shares pursuant to
Section 2.1(a)(iii)
, and such fractional
share interests shall not entitle the owner thereof to vote or to any other rights of a holder of Parent Class A Ordinary Shares. Notwithstanding any other provision of this Agreement, each
holder of Company Shares converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a Parent Class A Ordinary Share (after aggregating all shares
represented by the Certificates and Book-Entry Shares delivered by such holder) shall receive, in lieu thereof and upon surrender thereof, cash (without interest) in an amount determined by
multiplying (i) the Parent Closing Price by (ii) the fraction of a Parent Class A Ordinary Share (after taking into account all Company Shares held by such holder at the Effective
Time and rounded to the nearest one thousandth when expressed in decimal form) to which such holder would otherwise be entitled (the "
Fractional Share Cash
Amount
"). No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional Parent Class A Ordinary Shares.
Section 2.2
Exchange of Certificates.
(a)
Exchange Agent.
Prior to the Closing Date, Parent shall appoint a bank or trust company that is
reasonably acceptable to the Company to act as exchange agent (the
"
Exchange Agent
") for the payment of the Merger Consideration and shall enter into an agreement relating to the Exchange Agent's responsibilities under
this Agreement.
(b)
Exchange Fund.
As of the Effective Time, Parent shall (i) allot to each holder of record of
Company Shares such whole number of Parent Class A Ordinary Shares as
such holder is entitled to receive under
Section 2.1(a)(iii)
, which allotment shall be conditional only upon (and such Parent Class A
Ordinary Shares shall be issuable upon) compliance with
Section 2.2(d)
, and (ii) make available to the Exchange Agent cash sufficient to
pay the aggregate Fractional Share Cash Amounts payable (such Parent Class A Ordinary Shares as are allotted to the holders of record of Company Shares, together with any dividends or
distributions with respect thereto, and the cash sufficient to pay the aggregate Fractional Share Cash Amount, the "
Exchange Fund
").
(c)
Exchange Procedures.
As soon as reasonably practicable after the Effective Time and in any event
within five business days of the Closing Date, Parent shall cause the Exchange Agent
to mail to each holder of record of Company Shares (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass
(as applicable), only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably agree upon prior to the
Effective Time) (the "
Letter of Transmittal
") and (ii) instructions for use in effecting the surrender of Certificates or Book-Entry Shares (as
applicable) in exchange for the Merger Consideration, any Fractional Share Cash Amount and any amounts to which such Certificates or Book-Entry Shares become entitled in accordance
with
Section 2.2(e)
.
(d)
Surrender of Certificates or Book-Entry Shares.
Upon surrender of Certificates or Book-Entry
Shares to the Exchange Agent, if applicable, together with a Letter of Transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Exchange Agent, the holder of such Certificates or Book-Entry Shares shall be
entitled to receive in exchange therefor the Merger Consideration deliverable in respect of the shares represented by such Certificates or Book-Entry Shares pursuant to this Agreement, together with
any Fractional Share Cash Amount and amounts to which such Certificates or Book-Entry Shares become entitled in accordance with
Section 2.2(e)
.
In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer or stock records of the Company, any
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Parent
Class A Ordinary Shares to be issued upon due surrender of the Certificate or Book-Entry Share formerly representing such shares of Company Common Stock may be issued to a transferee if
such Certificate or Book-Entry Share is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer
or other similar Taxes have been paid or are not applicable. Until surrendered as contemplated by this
Section 2.2
, each Certificate and
Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive, upon such surrender, the Merger Consideration deliverable in respect of the shares
represented by such Certificates or Book-Entry Shares pursuant to this Agreement, together with any Fractional Share Cash Amount and any amounts to which such Certificates or Book-Entry Shares become
entitled in accordance with
Section 2.2(e)
.
(e)
Treatment of Unexchanged Shares.
No dividends or other distributions, if any, with a record date
after the Effective Time with respect to Parent Class A Ordinary Shares (or amounts in
respect thereof), shall be paid to the holder of any unsurrendered Company Share to be converted into Parent Class A Ordinary Shares pursuant to
Section 2.1(a)(iii)
until such holder shall
surrender such share in accordance with this
Section 2.2
. After the surrender in accordance with this
Section 2.2
of a Company Share to
be converted into Parent Class A Ordinary Shares pursuant to
Section 2.1(a)(iii)
, the holder thereof shall be entitled to receive (in
addition to the Merger Consideration and any Fractional Share Cash Amount) an amount equal to any such dividends or other distributions, without any interest thereon, which had been paid upon a Parent
Class A Ordinary Share prior to such time (or had been declared prior to such time but are unpaid at such time) multiplied by the number of Parent Class A Ordinary Shares being issued to
such holder.
(f)
No Further Ownership Rights in Company Common Stock.
The Merger Consideration delivered in
accordance with the terms of this
Article II
upon conversion of any
Company Shares, together with the Fractional Share Cash Amount and any amounts to which such Company Shares become entitled in accordance with
Section 2.2(e)
, shall be deemed to have been delivered
and paid in full satisfaction of all rights pertaining to such Company Shares. From and after the Effective Time,
(i) all holders of Certificates and Book-Entry Shares shall cease to have any rights as shareholders of the Company other than the right to receive the Merger Consideration into which the
shares represented by such Certificates or Book-Entry Shares have been converted pursuant to this Agreement upon the surrender of such Certificate or Book-Entry Share in accordance
with
Section 2.2(d)
(together with any Fractional Share Cash Amount and any amounts to which such Certificates or Book-Entry Shares become
entitled in accordance with
Section 2.2(e)
), without interest, and (ii) the stock transfer books of the Company shall be closed with
respect to all Company Shares outstanding immediately prior to the Effective Time and there shall be no further registration of transfers on the stock transfer books of the Surviving Company of
Company Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates or Book-Entry Shares formerly representing Company Shares are presented to
the Surviving Company, Parent or the Exchange Agent for any reason, such Certificates or Book-Entry Shares shall be cancelled and exchanged as provided in this
Article II
.
(g)
Investment of Exchange Fund.
The Exchange Agent shall invest any cash included in the Exchange
Fund as directed by Parent;
provided
,
however
, that no such investment or loss thereon shall affect the amounts payable to holders of Certificates or Book-
Entry Shares pursuant to this
Article II
, and following any losses from any such investment, Parent shall promptly provide additional funds to the Exchange Agent for the
benefit of the holders of shares of Company Common Stock at the Effective Time in the amount of such losses, which additional funds will be deemed to be part of the Exchange Fund. Any interest or
other income resulting from such investments shall be paid to Parent, upon demand.
(h)
Termination of Exchange Fund.
Any portion of the Exchange Fund (including any interest or other
amounts received with respect thereto) that remains unclaimed by, or otherwise undistributed to,
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the
holders of Certificates and Book-Entry Shares for 180 days after the Effective Time shall be delivered to Parent, upon demand, and any holder of Certificates or Book-Entry Shares who has
not theretofore complied with this
Article II
shall thereafter look only to Parent or the Surviving Company (subject to abandoned property,
escheat or other similar Laws), as general creditors thereof, for satisfaction of its claim for Merger Consideration, the Fractional Share Cash Amount and any dividends and distributions which such
holder has the right to receive pursuant to this
Article II
without any interest thereon.
(i)
No Liability.
None of Parent, the Company, Merger Sub or the Exchange Agent shall be liable to
any person in respect of any portion of the Exchange Fund or the Merger
Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Notwithstanding any other provision of this Agreement, any portion of the Merger
Consideration or any cash to be paid in accordance with this
Article II
that remains undistributed to the holders of Certificates and Book-Entry
Shares as of the second anniversary of the Effective Time (or immediately prior to such earlier date on which the Merger Consideration or such cash would otherwise escheat to or become the property of
any Governmental Entity), shall, to the extent permitted by applicable Law, become the property of the Parent, free and clear of all claims or interest of any person previously entitled thereto.
(j)
Withholding Rights.
Each of the Surviving Company, Parent, Merger Sub and the Exchange Agent, and
their respective affiliates (without duplication), shall be entitled to deduct and
withhold from any consideration payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under applicable Law. To the extent
that amounts are so withheld and paid over to the appropriate Tax authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the
Certificate or Book-Entry Share in respect of which such deduction and withholding was made.
(k)
Lost Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent or the Exchange Agent, the posting by such person of a bond in such amount as Parent or the Exchange Agent may determine is reasonably necessary as
indemnity against any claim that may be made against it or the Surviving Company with respect to such Certificate, the Exchange Agent (or, if subsequent to the termination of the Exchange Fund and
subject to
Section 2.2(h)
, Parent) shall deliver, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration and any
dividends and distributions deliverable in respect thereof pursuant to this Agreement.
Section 2.3
Stock Awards.
(a)
Company Restricted Stock Units.
As of the Effective Time, each award of Company restricted stock
units other than any Company restricted stock units that are required to be settled in cash
("
Company RSUs
") that is outstanding as of immediately prior to the Effective Time, shall, in accordance with the terms of such awards, become fully
vested as of the Effective Time, with such awards that are subject to performance-based vesting terms or conditions becoming earned and vested at the target level or such higher level as determined by
the compensation committee of the Company Board in its sole discretion (but not to exceed 200% of the target level). As soon as practicable after the Effective Time, such Company RSUs will be settled
through the issuance to the holders thereof of Parent Class A Ordinary Shares in an amount equal to the number of shares of Company Common Stock originally subject to such award of Company
RSUs, multiplied by the Exchange Ratio (rounded down to the nearest whole share), and otherwise in accordance with the terms of such awards and subject to the holder's obligations to satisfy any tax
withholding obligations in connection with the settlement of such awards. Each award of Company restricted stock units that is required to be settled in cash shall be treated in accordance with the
terms of such award.
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(b)
Company Stock Options.
Each award of stock options that has been granted under the Company Stock
Plans (each, an "
Existing Option
") and
that remains outstanding and unexercised immediately prior to the Effective Time, shall, as of the Effective Time, automatically and without any further action being required, become fully vested and
exercisable and converted into a stock option relating to Parent Class A Ordinary Shares, on the same terms and conditions (including expiration terms) as were applicable to such Existing
Option immediately prior to the Effective Time (each, a "
Converted Option
"), except that (A) the number of Parent Class A Ordinary Shares
subject to such Converted Option shall be determined by multiplying the number of shares of Company Common Stock subject to the corresponding Existing Option immediately prior to the Effective Time by
the Exchange Ratio, and then rounded down to the nearest whole share, and (B) the exercise price per share of the Converted Option shall equal the per share exercise or strike price of the
Existing Option immediately prior to the Effective Time divided by the Exchange Ratio, rounded up to the nearest whole cent.
(c)
Company Actions.
The Company shall take, or procure the taking of, all action necessary, as
applicable, to provide for the treatment of the Company RSUs and Existing Options
(collectively, the "
Company Stock Awards
") as set forth in the foregoing provisions of this
Section 2.3
.
(d)
Parent Actions.
As of the Effective Time, Parent shall assume all of the Company Stock Plans,
including (i) all of the obligations of the Company with respect to the
Company Stock Awards and (ii) with respect to any amount of shares (as adjusted pursuant to the Exchange Ratio) that remain (or may again become) available for future issuance thereunder
("
Remaining Stock Plan Shares
"), subject to any limitations under applicable Law or any applicable securities exchange listing requirements. In
addition, Parent shall promptly file with the SEC one or more appropriate registration statements with respect to all Converted Options held by individuals who are actively employed or in service with
the Company as of the Effective Time and all Parent Class A Ordinary Shares that may be issued in connection with the Company RSUs and Remaining Stock Plan Shares.
Section 2.4
Further Assurances.
If at any time before or after the Effective Time, Parent or the
Company reasonably believes or is advised that any further instruments, deeds, assignments or
assurances are reasonably necessary or desirable to consummate the Merger or to carry out the purposes and intent of this Agreement at or after the Effective Time, then Parent, Merger Sub and the
Company and their respective officers and directors shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to
consummate the Merger and to carry out the intent and purposes of this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed (a) in the Company SEC Documents filed prior to the date hereof (without giving effect to any amendment to any such
Company SEC Document filed on or after the date hereof and excluding any disclosures set forth in any such Company SEC Document in any risk factor section, any disclosure in any section relating to
forward-looking statements or any other statements that are non-specific, predictive or primarily cautionary in nature other than historical facts included therein), where the relevance of the
information as an exception to (or disclosure for purposes of) a particular representation is reasonably apparent on the face of such disclosure, or (b) in the disclosure schedule delivered by
the Company to Parent immediately prior to the execution of this Agreement (the "
Company Disclosure Schedule
") (each section of which qualifies the
correspondingly
numbered representation, warranty or covenant if specified therein and such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such
other
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representation,
warranty or covenant is reasonably apparent), the Company represents and warrants to Parent as follows:
Section 3.1
Qualification, Organization, Subsidiaries, Capitalization.
(a) The
Company is a corporation duly incorporated and validly existing under the Laws of the State of Texas. The Company has the requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as presently conducted except for any such failures to have such power and authority as would not, individually or in the
aggregate, have a Company Material Adverse Effect. Each of the Company's Subsidiaries is a legal entity duly organized, validly existing and in good standing (where such concept is recognized under
applicable Law) under the Laws of its jurisdiction of organization and has the requisite entity capacity, power and authority to own, lease and operate its properties and assets and to carry on its
business as presently conducted, except where the failure to be in good standing or to have such power or authority would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed, and has all necessary governmental approvals, to do business and is in good standing as a
foreign entity (where such concept is recognized under applicable Law) in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes
such approvals, qualification or licensing necessary, except where the failure to be so duly approved, qualified or licensed and in good standing would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
(b) The
Company has made available to Parent, prior to the date hereof, true and complete copies of the Company Charter, Company Bylaws and the certificate of incorporation,
certificate of limited partnership, certificate of formation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or organizational documents for each
of its material Subsidiaries as identified in Section 3.1(b) of the Company Disclosure Schedule (the "
Company Material Subsidiaries
"), in each
case as amended to and in effect as of the date hereof (collectively, the "
Company Organizational Documents
"). The Company is not in violation, and none
of the Company's Subsidiaries is in material violation, of any of the Company Organizational Documents.
(c) The
authorized capital stock of the Company consists of 180,000,000 shares of common stock, par value $1.00 per share (the "
Company Common
Stock
"), and 1,000,000 shares of preferred stock, no par value (the "
Company Preferred Stock
"). As of the close of business on
May 26, 2017 (i) 80,519,422 shares of Company Common Stock were issued and outstanding, (ii) no shares of Company Preferred Stock were issued and outstanding, (iii) no
shares of Company Common Stock were held in treasury and (iv) up to 760,135 shares of Company Common Stock were available for issuance under the Company Stock Plans, of which amount
(A) 647,656 shares of Company Common Stock may be issued upon the exercise of Existing Options, and (B) 2,988,083 shares of Company Common Stock were subject to awards of Company RSU
Awards, with performance-based awards reflected in such number at the "target" level. The Company has made available to Parent a complete and correct list of the Company Stock Awards outstanding as of
the close of business on May 26, 2017, which includes, with respect to each such Company Stock Award, as applicable, the: (x) exercise price, if applicable, and (y) number of
shares of Company Common Stock underlying such award (which number represents, for outstanding Company RSUs that were subject to performance-based vesting under the Company Stock Plans, the "target"
level). All outstanding shares of Company Common Stock are, and all such shares of Company Common Stock that may be issued prior to the Effective Time, when issued in accordance with the respective
terms thereof, will be, duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Except as set forth in this
Section 3.1(c)
, there are no outstanding
subscriptions, options, warrants, calls, convertible securities, exchangeable securities or other
similar rights, agreements or commitments to which the Company or any of its Subsidiaries is a party (A) obligating the Company or any of its Subsidiaries to (1) issue, transfer,
exchange, sell or register
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for
sale any equity interests of the Company or any Subsidiary of the Company or securities convertible into or exchangeable for such equity interests, (2) grant, extend or enter into any such
subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (3) redeem or otherwise acquire any such equity interests, (4) provide a
material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary or (5) make any payment to any person the value of
which is derived from or calculated based on the value of any equity security issued by the Company or any of its Subsidiaries or (B) granting any preemptive or antidilutive or similar rights
with respect to any publicly traded security issued by the Company or its Subsidiaries. With respect to each grant of the Company Stock Awards, each such grant was made in accordance with the terms of
the applicable Company Stock Plan, the Exchange Act, the Securities Act and all other applicable Laws, including the rules of the NYSE.
(d) Neither
the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are
convertible or exchangeable into or exercisable for securities having the right to vote) with the Company Shareholders on any matter.
(e) There
are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting or registration of
the equity interests of the Company or any of its Subsidiaries.
(f) Except
as set forth on Section 3.1(f) of the Company Disclosure Schedule, (i) no Subsidiary of the Company owns any equity interests of the Company and
(ii) the Company or a Subsidiary of the Company owns, directly or indirectly, all of the issued and outstanding equity interests of each Subsidiary of the Company, free and clear of any
preemptive rights and any Liens other than the Company Permitted Liens, and all of such equity interests are duly authorized, validly issued, fully paid and nonassessable (where such concept is
applicable and recognized under applicable Law) and free of preemptive rights. Except for equity interests in the Company's Subsidiaries, neither the Company nor any of its Subsidiaries owns, directly
or indirectly, any equity interest in any person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable for, any equity interest in any person).
Except for any obligations pursuant to this Agreement, neither the Company nor any of its Subsidiaries has any obligation to acquire any equity interest, security, right, agreement or commitment or to
provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any person. Neither the Company nor any of its Subsidiaries has any obligation, other than
pursuant to the Company Stock Plans, to repurchase, redeem or otherwise acquire any equity interests of the Company or any such Subsidiary.
Section 3.2
Company Authority Relative to this Agreement; No Violation.
(a) The
Company has the requisite corporate power and authority to execute and deliver this Agreement and each other document to be entered into by the Company in connection
with the transactions contemplated hereby (together with this Agreement, the "
Company Transaction Documents
") and, subject to receipt of the Company
Shareholder Approval, to consummate the transactions contemplated hereby and thereby, including the Merger. The execution, delivery and performance of this Agreement and the other Company Transaction
Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Company Board and, except for the Company Shareholder Approval, no other
corporate action on the part of the Company or vote of the Company Shareholders is necessary to authorize the execution and delivery by the Company of this Agreement and the other Company Transaction
Documents and the consummation of the Merger and the other transactions contemplated hereby and thereby. The Company Board has unanimously duly and validly adopted resolutions (i) approving
this Agreement and the other Company Transaction Documents, including the Merger and the other transactions contemplated hereby and thereby and (ii) declaring that it is in the best interests
of the Company
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Shareholders
that the Company enter into this Agreement and the other Company Transaction Documents and consummate the Merger and the other transactions contemplated hereby and thereby on the terms
and subject to the conditions set forth herein and therein. The Company Board has further resolved that it will recommend that the Company Shareholders approve this Agreement (such recommendation
referred to herein as the "
Company Board Recommendation
"). None of the
aforementioned resolutions, as of the date hereof, have been rescinded, modified or withdrawn in any way. Each of the Company Transaction Documents has been duly and validly executed and delivered by
the Company and, assuming each such Company Transaction Document has been duly authorized, executed and delivered by each other counterparty thereto, each of the Company Transaction Documents
constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be subject to (A) the effect of
bankruptcy, insolvency, reorganization, receivership, administration, arrangement, moratorium or other Laws affecting or relating to creditors' rights generally or (B) the rules governing the
availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law (the
"
Remedies Exceptions
").
(b) Other
than in connection with or in compliance with (i) the filing of the Certificate of Merger with the Secretary of State of the State of Texas, (ii) the
U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "
Exchange Act
"), (iii) the U.S.
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "
Securities Act
"), (iv) the rules and regulations
of the New York Stock Exchange ("
NYSE
"), (v) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "
HSR Act
"), and any antitrust, competition, foreign investment or similar Laws outside of the United States and
(vi) the approvals set forth in Section 3.2(b) of the Company Disclosure Schedule (collectively, the "
Company Approvals
"), and, subject to
the accuracy of the representations and warranties of Parent and Merger Sub in
Section 4.2(b)
, no authorization, consent, Order, license, permit
or approval of, or registration, declaration, notice or filing with, or notice to, any United States, state of the United States or non-United States governmental or regulatory agency, commission,
court, body, entity or authority, independent system operator, regional transmission organization, other market administrator, international treaty or standards organization, or national, regional or
state reliability organization (each, a "
Governmental Entity
") is necessary, under applicable Law, for the execution, delivery and performance of this
Agreement or the consummation by the Company of the transactions contemplated hereby, except for such authorizations, consents, Orders, licenses, permits, approvals or filings that, if not obtained or
made, would not reasonably be expected to materially impede or delay the consummation of the Merger and the other transactions contemplated by this Agreement or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) The
execution, delivery and performance by the Company of this Agreement do not, and (assuming the Company Approvals are obtained) the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not (i) result in any loss, suspension, limitation or impairment of any right of the Company or any of its Subsidiaries to own
or use any assets required for the conduct of their business or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to any right of
termination, cancellation, first offer, first refusal, modification or acceleration of any material obligation or to the loss of a benefit under any loan, guarantee of indebtedness or credit
agreement, note, bond, mortgage, indenture, lease, agreement, contract, instrument, permit, concession, franchise, right or license binding upon the Company or any of its Subsidiaries or by which or
to which any of their respective properties, rights or assets are bound or subject, or result in the creation of any liens, claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind (each, a "
Lien
") (other than the Company Permitted Liens and any Liens created in connection with any action taken by Parent or its
affiliates), in each case, upon any of the properties or assets of the Company or any of its Subsidiaries or any
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contract
to which the Company or any of its Subsidiaries is a party or by which any of their respective properties or assets are bound, (ii) conflict with or result in any violation of any
provision of the Company Organizational Documents or (iii) conflict with or violate any applicable Laws, except in the case of clauses (i) and (iii) for such losses, suspensions,
limitations, impairments, conflicts, violations, defaults, terminations, cancellations, accelerations, or Liens as would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.3
Reports and Financial Statements.
(a) The
Company and each of its Subsidiaries has filed with or furnished to the U.S. Securities and Exchange Commission
("
SEC
") all reports, schedules, forms, statements and other documents required to be filed or furnished by it since September 30, 2015 (all such
documents and reports filed or furnished by the Company or any of its Subsidiaries, the "
Company SEC Documents
"). As of their respective dates of filing
or, in the case of the Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act, their respective dates of effectiveness, or, if amended prior to
the date hereof, as of the date of the last such amendment, the Company SEC Documents complied, as to form, in all material respects with the requirements of the Securities Act, the Exchange Act and
the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the "
Sarbanes-Oxley Act
"), as the case may be, and none of the
Company SEC Documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that information set forth in the Company SEC Documents as of a later date (but before the date hereof) will be deemed to modify
information as of an earlier date.
(b) The
consolidated financial statements (including all related notes and schedules thereto) of the Company included in the Company SEC Documents (i) fairly present
in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and
their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and any other adjustments described
therein), (ii) were prepared in conformity with U.S. generally accepted accounting principles ("
GAAP
") (except, in the case of the unaudited
statements, as permitted by applicable rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto),
(iii) have been prepared from, and are in accordance with, the books and records of the Company and its consolidated Subsidiaries and (iv) comply, as to form, in all material respects
with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act.
(c) There
are no outstanding or unresolved comments from, or unresolved issues raised by, the staff of the SEC relating to the Company SEC Documents. The Company has
heretofore made available to Parent true, correct and complete copies of all written correspondence between the Company and the SEC occurring since January 1, 2016. None of the Company SEC
Documents is, to the knowledge of the Company, the subject of ongoing SEC review, and no enforcement action has been initiated against the Company relating to disclosures contained in or omitted from
any Company SEC Document.
(d) Neither
the Company nor any of its Subsidiaries is a party to, nor does it have any commitment to become a party to, any joint venture, off-balance sheet partnership or
any similar contract (including any contract relating to any transaction or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate,
including any structured finance, special purpose or limited purpose entity or person, on the other hand) or any "off-balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K of the SEC), where the result, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or
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material
liabilities of, the Company or any of its Subsidiaries in the Company's financial statements or other Company SEC Documents.
Section 3.4
Internal Controls and Procedures.
The Company has established and maintains
disclosure controls and procedures and internal control over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company's disclosure controls and procedures
are reasonably designed to ensure that all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. The Company's management
has completed an assessment of the effectiveness of the Company's internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the
year ended September 30, 2016, and such assessment concluded that such controls were effective. Based on its most recent evaluation of internal controls over financial reporting prior to the
date hereof, which has been provided to Parent, management of the Company has disclosed to the Company's auditors and the audit committee of the Company Board (i) any significant deficiencies
and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company's ability to record,
process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's
internal control over financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any, has been disclosed to Parent prior to the date hereof.
Section 3.5
No Undisclosed Liabilities.
There are no liabilities or obligations of the Company
or any of its Subsidiaries, whether known or unknown and whether accrued, absolute, determined or
contingent, that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its consolidated Subsidiaries (including the notes thereto), except for
(i) liabilities or obligations disclosed and provided for in the most recent balance sheets included in the Company Financial Statements (or in the notes thereto) filed and publicly available
prior to the date of this Agreement, (ii) liabilities or obligations incurred in accordance with or in connection with this Agreement, (iii) liabilities or obligations incurred since
September 30, 2016 in the ordinary course of business consistent with past practice since the date of such balance sheet, (iv) liabilities or obligations that have been discharged or
paid in full, and (v) liabilities or obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.6
Compliance with Law; Permits.
(a) The
Company and its Subsidiaries are in compliance with, and are not in default under or in violation of, any applicable international, federal, state, local or foreign
law, statute, ordinance, rule, regulation (including the non-applicability of the Takeover Code), convention, treaty, judgment, Order, injunction, decree or agency requirement of any Governmental
Entity (collectively, "
Laws
" and each, a "
Law
"), except where such non-compliance, default or violation
would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2015, neither the Company nor any of its Subsidiaries has
received any written notice or, to the Company's knowledge, other communication from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law, except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
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(b) The
Company and its Subsidiaries are in possession of all franchises, grants, authorizations, licenses, concessions, permits, easements, variances, exceptions, consents,
certificates, approvals, clearances, permissions, financial assurance instruments, qualifications and registrations and Orders of all applicable Governmental Entities, and all rights under any Company
Material Contract with all Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for the Company and its Subsidiaries to own,
lease and operate their properties and assets and to carry on their businesses as they are now being conducted (the "
Company Permits
"), except where the
failure to have or to have filed such Company Permits would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. All the Company Permits are valid
and in full force and effect and are not subject to any administrative or judicial proceeding that could result in modification, termination or revocation thereof, except where the failure to be in
full force and effect or any modification, termination or revocation thereof would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company
and each of its Subsidiaries is in compliance with the terms and requirements of all material Company Permits, except where the failure to be in compliance would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) Except
as set forth in Section 3.6 of the Company Disclosure Schedule, each drilling unit owned or leased by the Company or any of its Subsidiaries which is
subject to classification (other than cold stacked rigs) is in class and free of suspension or cancellation to class, and is registered under the flag of its flag jurisdiction.
Section 3.7
Absence of Certain Changes or Events.
(a) From
October 1, 2016 through the date of this Agreement, except in connection with the negotiation and execution of this Agreement, the businesses of the Company
and its Subsidiaries have been conducted in all material respects in the ordinary course of business.
(b) Since
October 1, 2016, there has not been any event, change, effect, development, occurrence or state of facts that has had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.8
Environmental Laws and Regulations.
Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect (i) there are no investigations, actions, suits or
proceedings (whether administrative or judicial) pending, alleging non-compliance with or other liability under any Environmental Law, (ii) the Company and its Subsidiaries are, and except for
matters that have been fully resolved with the applicable Governmental Entity, since January 1, 2016 have been, in compliance with all Environmental Laws (which compliance includes the
possession by the Company and each of its Subsidiaries of all Permits required under applicable Environmental Laws to conduct their respective business and operations, and compliance with the terms
and conditions thereof), (iii) none of the Company and its Subsidiaries is subject to any Order or has created any obligations or liabilities under applicable Environmental Laws or concerning
Hazardous Materials or Releases, and (iv) none of the Company and its Subsidiaries has received any unresolved claim, notice, complaint or request for information from a Governmental Entity or
any other person relating to actual or alleged noncompliance with or liability under applicable Environmental Laws (including any such liability or obligation arising under, retained or assumed by
contract or by operation of law).
Section 3.9
Investigations; Litigation.
Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or would not reasonably be expected to
prevent, impede or materially delay consummation of the Merger, (i) there is no investigation or review pending (or, to the Company's knowledge, threatened) by any Governmental Entity with
respect to the Company or any of its Subsidiaries, (ii) there are no claims, actions, suits, inquiries, investigations, arbitrations or administrative or other proceedings, or any subpoenas,
civil investigative demands or other requests for information, relating to potential violations of Law pending
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(or,
to the Company's knowledge, threatened) against or affecting the Company or any of its Subsidiaries, or any of their respective properties and (iii) there are no Orders, injunctions,
judgments or decrees of, or before, any Governmental Entity pending (or, to the Company's knowledge, threatened to be imposed) against the Company or any of its Subsidiaries.
Section 3.10
Investment Company.
None of the Company or any of its Subsidiaries is an
"investment company" or a company "controlled" by an "investment company" within the meaning of the U.S.
Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
Section 3.11
Intellectual Property.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, either the Company or a Subsidiary of the
Company owns, or is licensed or otherwise possesses valid rights to use, free and clear of Liens other than the Company Permitted Liens, all trademarks, trade names, service marks, service names, mark
registrations, logos, assumed names, domain names, registered and unregistered copyrights, patents or applications and registrations, trade secrets and other intellectual property rights necessary to
their respective businesses as currently conducted (collectively, the "
Company Intellectual Property
"), and no third party has ownership rights or
license rights to improvements made by the Company in the Company Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (i) there are no pending or, to the Company's knowledge, threatened claims by any person alleging infringement, misappropriation or other violation by the Company or any of its
Subsidiaries of any intellectual property rights of any person, (ii) to the Company's knowledge, the conduct of the business of the Company and its Subsidiaries does not infringe,
misappropriate or otherwise violate any intellectual property rights of any person, (iii) neither the Company nor any of its Subsidiaries has made any claim of a violation, infringement or
misappropriation by others of the Company's or any its Subsidiaries' rights to or in connection with the Company Intellectual Property and (iv) to the Company's knowledge, no person is
infringing, misappropriating or otherwise violating any Company Intellectual Property.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have
implemented (i) commercially reasonable measures to protect the confidentiality, integrity and security of the Company IT Assets (and all information and transactions stored or contained
therein or transmitted thereby); and (ii) commercially reasonable data backup, data storage, system redundancy and disaster avoidance and recovery procedures, as well as a commercially
reasonable business continuity plan, in each case consistent with customary industry practices.
Section 3.12
Properties.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have good and
marketable title to all real property owned by the Company or any of its Subsidiaries and good and valid leasehold interest to all real property which is leased, subleased, licensed or otherwise
occupied by the Company or any of its Subsidiaries (the "
Company Leased Real Property
"), in each case free and clear of all Liens (other than the
Company Permitted Liens).
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have good and
marketable title to, or have valid rights to lease or otherwise use, all items of personal property that are material to the respective businesses of the Company and its Subsidiaries, in each case
free and clear of all Liens (other than the Company Permitted Liens).
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Section 3.13
Ownership and Maintenance of Drilling Units.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, either the Company or a Subsidiary of the
Company has good and marketable title to the drilling units listed in the Company's most recent fleet status report, a true and complete copy of which has been furnished as an exhibit to a Current
Report on Form 8-K filed by the Company with the SEC or otherwise provided to Parent (the "
Company Fleet Report
"), in each case free and clear of
all Liens except for the Company Permitted Liens and no such drilling unit or any related asset is leased under an operating lease from a lessor that, to the Company's knowledge, has incurred
non-recourse indebtedness to finance the acquisition or construction of such asset.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the drilling units listed in the Company Fleet
Report (other than such drilling units that are noted therein as "cold stacked" or are being prepared to be "cold stacked") have been maintained consistent with general practice in the offshore
drilling industry and are in good operating condition and repair, subject to ordinary wear and tear.
Section 3.14
Tax Matters.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:
(i) The
Company and each of its Subsidiaries and each affiliated, consolidated, combined, unitary or similar group that includes the Company or any of its Subsidiaries have
duly and timely filed or caused to be filed (taking into account any valid extension of time within which to file) all Tax Returns required to be filed by any of them and all such Tax Returns are
true, complete and accurate.
(ii) The
Company and each of its Subsidiaries have timely paid all Taxes that are required to be paid by any of them or that the Company or any of its Subsidiaries are
obligated to withhold from amounts owing to any employee, creditor, shareholder or third party (in each case, whether or not shown on any Tax Return), except with respect to matters contested in good
faith through appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.
(iii) No
Tax Return of the Company or any of its Subsidiaries is the subject of an audit, examination investigation or other proceeding, and there are no audits,
examinations, investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of the Company or any of its Subsidiaries.
(iv) Neither
the Company nor any of its Subsidiaries is currently the beneficiary of any waivers of any limitation periods or agreements providing for an extension of time
for the filing of any Tax Return, the assessment or collection thereof by any relevant Tax authority or the payment of any Tax by the Company or any of its Subsidiaries.
(v) Neither
the Company nor any of its Subsidiaries has any liability for the Taxes of any person (other than Taxes of the Company or its Subsidiaries) (A) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Tax Law), (B) as a transferee or successor or (C) by Contract (other than Contracts
exclusively between or among one or more of the Company and its Subsidiaries
and other than as customary Tax indemnifications contained in ordinary course commercial agreements or arrangements that are not primarily related to Taxes).
(vi) Neither
the Company nor any of its Subsidiaries has any liability pursuant to any Tax sharing, allocation or indemnification agreement or arrangement (other than such
an agreement or arrangement exclusively between or among one or more of the Company and its
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Subsidiaries
and other than as customary Tax indemnifications contained in ordinary course commercial agreements or arrangements that are not primarily related to Taxes).
(vii) Neither
the Company nor any of its Subsidiaries has been a party to a transaction that is a "listed transaction," as such term is defined in Treasury Regulations
Section 1.6011-4(b)(2), or any other transaction requiring disclosure under analogous provisions of state, local or non-U.S. Tax Law.
(viii) Neither
the Company nor any of its Subsidiaries is a party to any closing agreement described in Section 7121 of the Code or any predecessor provision thereof
or any similar agreement under state, local or non-U.S. Tax Law, and neither the Company nor any of its Subsidiaries is subject to any private ruling issued by any Governmental Entity in respect of
Taxes.
(ix) There
are no Liens for Taxes on any asset of the Company or its Subsidiaries, except for Liens for Taxes not yet due or delinquent.
(x) No
written claim has been received by the Company or any of its Subsidiaries from a Governmental Entity in a jurisdiction where such entity does not file Tax Returns
that it is or may be subject to taxation by such jurisdiction.
(xi) Neither
the Company nor any of its Subsidiaries has been a "United States real property holding corporation" as that term is defined in Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code.
(b) Neither
the Company nor any of its Subsidiaries is or was a "surrogate foreign corporation" within the meaning of Section 7874(a)(2)(B) of the Code.
(c) Neither
the Company nor any of its Subsidiaries beneficially owns shares or other equity interests of Parent or any of Parent's affiliates.
(d) As
of the date hereof, the Company has no knowledge of any facts or of any reason that (when taken together with the Company's understanding of other relevant facts)
would reasonably be expected to cause Parent to be treated, following the completion of the transactions contemplated by this Agreement, as a domestic corporation for U.S. federal income tax purposes
under Section 7874 of the Code.
(e) Within
the past three years, neither the Company nor any of its Subsidiaries has been a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution intended to qualify for tax-free treatment under Section 355 of the Code (or a similar provision of state, local or non-U.S. Tax Law).
Section 3.15
Employment and Labor Matters.
Neither the Company nor any of its Subsidiaries is a
party to any Collective Bargaining Agreement with respect to employees of the Company or any of its
Subsidiaries (each, a "
Company Employee
") that has had or could reasonably be expected to have a Company Material Adverse Effect, other than those that
the Company or any of its Subsidiaries may be deemed to be a party to or bound by as a result of doing business in a particular jurisdiction. To the Company's knowledge, as of the date hereof, there
are no activities or proceedings of any labor or trade union, staff association or other body to organize any Company Employee where such activities or proceedings could reasonably be expected to have
a Company Material Adverse Effect. No material Collective Bargaining Agreement is being negotiated by the Company or, to the Company's knowledge, any of its Subsidiaries with respect to any Company
Employees. Since January 1, 2015, there has been no actual, or to the Company's knowledge, threatened unfair labor practice charges, grievances, arbitrations, strikes, lockouts, work stoppages,
slowdowns, picketing, hand billing or other labor disputes against or affecting the Company or any of its Subsidiaries involving the Company Employees that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
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Effect
and there are no circumstances which could or might give rise to any such dispute that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
The Company is, and has been, in compliance with all Laws regarding employment and employment
practices, terms and conditions of employment and wages and hours (including classification of employees) and other Laws in respect of any reduction in force, including notice, information and
consultation requirements, except where any such noncompliance would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect. There are no material
outstanding assessments, penalties, fines, Liens, charges, surcharges, or other amounts due or owing by the Company pursuant to any workplace safety and insurance/workers' compensation Laws, the
Company has not been reassessed in any material respect under such Laws during the past three years and the Company has not received any claims under such Laws, in each case, that could reasonably be
expected to have a Company Material Adverse Effect.
Section 3.16
Employee Benefit Plans.
(a) For
purposes of this Agreement, "
Company Benefit Plan
" means any employee benefit plan, program, agreement or
arrangement, including pension, retirement, profit-sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock
ownership, severance pay, long service award, vacation, bonus, any benefits received otherwise than in cash or related to sales, profits, turnover or performance, or which are otherwise variable
(other than normal overtime) or other incentive plans, medical, retiree medical, vision, dental or other health plans, life insurance plans, and each other employee benefit plan or fringe benefit
plan, including any "employee benefit plan" as that term is defined in Section 3(3) of ERISA, in each case, (i) whether oral or written, funded or unfunded, insured or self-insured, tax
approved or non-tax approved and (ii) (A) sponsored or maintained by the Company or any Subsidiary, or (B) to which the Company or any Subsidiary contributes or is obligated to
contribute for the benefit of any current or former employees, directors, consultants or independent contractors or otherwise has any obligation or liability, contingent or otherwise.
(b) Except
as would not, individually or in the aggregate, have a Company Material Adverse Effect, each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code (a "
Qualified Plan
") is so qualified and each trust maintained thereunder is exempt from taxation under
Section 501(a) of the Code and, to the Company's knowledge, there is no reason why tax approval under any local Law in any part of the world might be withdrawn or might cease to apply.
(c) No
Company Benefit Plan is, and in the last six years, none of the Company and its Subsidiaries nor any of their respective ERISA Affiliates has maintained, established,
contributed to or been obligated to contribute to (i) any benefit plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code or (in each
case) equivalent local Law, or (ii) any material defined benefit pension plan. None of the Company and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the
last six years, maintained, established, contributed to or been obligated to contribute to any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
(d) (i)
There are no existing, pending or, to the Company's knowledge, threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations
which have been asserted or instituted; and (ii) to the Company's knowledge, no set of circumstances exists which may reasonably give rise to a claim or lawsuit against the Company with respect
to any Company Benefit Plan, any fiduciaries thereof with respect to their duties to the Company Benefits Plans or the assets of any of the trusts under any of the Company Benefit Plans, which, in the
case of clause (i) and (ii), could reasonably be expected to have a Company Material Adverse Effect.
(e) Neither
the Company nor any of its Subsidiaries has any obligation or liability, contingent or otherwise, with respect to any pension or other employee benefit plan that
is currently maintained or
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sponsored
by a person other than the Company or its Subsidiaries that could reasonably be expected to have a Company Material Adverse Effect.
(f) No
material Company Benefit Plan provides for any post-employment or post-retirement medical or life insurance benefits for retired, former or current employees or
beneficiaries or dependents thereof, except as required by Section 4980B of the Code or any applicable Law.
(g) The
Company is not party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of Taxes imposed by
Section 409A(a)(1)(B) of the Code or equivalent local Law.
(h) Except
as otherwise provided in this Agreement, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another
event (i) entitle any current or former employee, director, consultant or officer of the Company or any of its Subsidiaries to severance pay, unemployment compensation or other compensatory
payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee, director, consultant or officer, or (iii) trigger any funding
obligation under any Company Benefit Plan or impose any restrictions or limitations on the Company's rights to administer, amend or terminate any Company Benefit Plan.
(i) The
consummation of the Merger and the other transactions contemplated by this Agreement will not, either alone or in combination with another event, result in any
payment (whether in cash or property or the vesting of property) to any "disqualified individual" (as such term is defined in Treasury Regulation Section 1.280G-1) of the Company that could,
individually or in combination with any other such payment, constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code).
(j) No
individual is entitled under any Company Benefit Plan or otherwise to any gross-up or reimbursement of Taxes under Section 4999 of the Code.
(k) Except
as would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries
has any liability to make any payment to any Company Benefit Plan which is due at the date of this Agreement, but remains unpaid.
(l) The
Company and its Subsidiaries have, in relation to the Company Benefit Plans, at all times complied with all applicable Laws, regulations and requirements and the
trusts, powers and provisions of the Company Benefit Plan documentation, except where any such noncompliance would not, individually or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect.
Section 3.17
Insurance.
Except as would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect, (i) all insurance policies
maintained by or on behalf of the Company or any of its Subsidiaries as of the date of this Agreement are in full force and effect and are valid and enforceable, and all premiums due on such policies
have been paid by the Company or its Subsidiaries, as applicable, and (ii) the Company and its Subsidiaries are in compliance with the terms and provisions of all insurance policies maintained
by or on behalf of the Company or any of its Subsidiaries as of the date of this Agreement, and neither the Company nor any of its Subsidiaries is in breach or default under, or has taken any action
that could permit termination or material modification of, any material insurance policies.
Section 3.18
Opinion of Financial Advisor.
The Company Board has received the opinion of Goldman,
Sachs & Co. LLC to the effect that, as of the date thereof and based upon and subject
to the factors and assumptions set forth therein, the Exchange Ratio is fair, from a financial point of view, to the Company Shareholders (other than Parent and its affiliates). The Company shall,
promptly
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following
the execution of this Agreement by all Parties, furnish an accurate and complete copy of said opinion to Parent solely for informational purposes.
Section 3.19
Material Contracts.
(a) Except
for this Agreement, the Company Benefit Plans, agreements with customers for the provision of drilling and related services, agreements filed as exhibits to the
Company SEC Documents or as set forth on the applicable subsection of Section 3.19(a) of the Company Disclosure Schedule, as of the date hereof, neither the Company nor any of its Subsidiaries
is a party to or bound by:
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);
(ii) any
Contract that (A) imposes any restriction on the right or ability of the Company or any of its Subsidiaries to compete with any other person or acquire or
dispose of the securities of another person (other than any agreement related to a potential Takeover Proposal) or (B) contains an exclusivity or "most favored nation" clause that restricts the
business of the Company or any of its Subsidiaries in a material manner;
(iii) any
joint venture, partnership or limited liability company agreement or other similar Contract relating to the formation, creation, operation, management or control
of any joint venture, partnership or limited liability company, other than any such Contract solely between the Company and its Subsidiaries or among the Company's Subsidiaries;
(iv) any
Contract expressly limiting or restricting the ability of the Company or any of its Subsidiaries to make distributions or declare or pay dividends in respect of
their capital stock, partnership interests, membership interests or other equity interests, as the case may be;
(v) any
Contract that by its terms calls for aggregate payments by or to the Company or any of its Subsidiaries of more than $50.0 million in the aggregate over the
remaining term of such Contract, except for (A) Contracts with a customer and (B) any such Contract that may be cancelled by the Company or any of its Subsidiaries with a penalty or
other liability of less than $10.0 million to the Company or any of its Subsidiaries, upon notice of 60 days or less; and
(vi) any
Contract that contains "earn out" or other contingent payment obligations, or remaining indemnity or similar obligations, that could reasonably be expected to
result in payments after the date hereof by the Company or any of its Subsidiaries in excess of $50.0 million.
All
Contracts of the types referred to in clauses (i) through (vi) above are referred to herein as "
Company Material Contracts
." As used
herein, "
Contract
" shall mean any agreement, contract, license, obligation, promise, understanding or undertaking (whether written or oral) that is
legally binding.
(b) The
Company has delivered or made available to Parent true and complete copies of all the Company Material Contracts, subject to certain redactions made in order to
comply with legal requirements.
(c) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) neither the Company nor any
Subsidiary of the Company is in breach of or default under the terms of any Company Material Contract, (ii) to the Company's knowledge, no other party to any Company Material Contract is in
breach of or default under the terms of any Company Material Contract and (iii) each Company Material Contract is a valid and binding obligation of the Company or the Subsidiary of the Company
that is party thereto and, to the
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Company's
knowledge, of each other party thereto, and is in full force and effect, subject to the Remedies Exceptions.
Section 3.20
Finders or Brokers.
Except for Goldman, Sachs & Co. LLC, neither
the Company nor any of the Company's Subsidiaries has employed any investment banker, broker or
finder in connection with the transactions contemplated by this Agreement who would be entitled to or may receive any fee or any commission in connection with or upon consummation of the Merger.
Section 3.21
Anti-Bribery.
Within the past 5 years, neither (a) the Company, nor any
of its Subsidiaries, nor, to the Company's knowledge, any director, officer, or employee
of the Company or any of its Subsidiaries nor (b) to the Company's knowledge, any Representative while acting on behalf of any of the foregoing, on behalf of the Company or any of its
Subsidiaries has directly or indirectly (i) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns or
violated any provisions of any applicable anti-bribery Laws, including the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the
"
FCPA
") or the UK Bribery Act 2010 (the "
Bribery Act
"), or (ii) taken any action on behalf of the
Company or any of its Subsidiaries that would constitute a violation of any applicable anti-bribery Laws, including the FCPA and the Bribery Act, including making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any "foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA. The Company maintains policies and procedures that are reasonably designed to ensure, and that are reasonably expected to continue to ensure, continued
compliance with anti-bribery Laws. Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any director, officer or employee of the Company or any Subsidiary of the
Company, are, or in the past 5 years have been, subject to any actual, pending, or, to the Company's knowledge, threatened civil, criminal, or administrative actions or governmental
investigations, inquiries or enforcement actions, or made any voluntary disclosures to any governmental authority, involving the Company or any Subsidiary of the Company relating to alleged violations
of applicable anti-bribery Laws, including the FCPA and the Bribery Act.
Section 3.22
Export Controls and Sanctions.
(a) Neither
(i) the Company, any of its Subsidiaries, nor to the Company's knowledge any employee, officer, or director of the Company or any of its Subsidiaries nor
(ii) to the Company's knowledge, any Representative of any of the foregoing, (A) is currently or has been within the past 5 years the target of Trade Sanctions (including by being
designated on the list of Specially Designated Nationals and Blocked Persons or on any other sanctions list maintained by the U.S. Department of Treasury's Office of Foreign Assets Control
("
OFAC
"), the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty's Treasury), or is or has been within the
past 5 years operating, organized or resident in a country or territory that itself is the target of Trade Sanctions (currently, Crimea, Cuba, Iran, North Korea, Sudan and Syria); or
(B) has, directly or, to the knowledge of the Company, indirectly, participated in the past 5 years in any prohibited or unlawful transaction or dealing involving a person or entity that
is the target of Trade Sanctions, or with any person or entity operating, organized, or resident in a country or territory that is the target of Trade Sanctions.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect on such party, in the past 5 years, each
of the Company, the Company's Subsidiaries and, to the Company's knowledge, any Representatives of the foregoing (i) has conducted its business in compliance with all applicable Trade Sanctions
and Export Control Laws; (ii) have obtained, and are in compliance with, all required export and import licenses, license
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exceptions
and other consents, notices, approvals, orders, permits, authorizations, declarations, classifications and filings with any Governmental Entity required for the import, export and re-export
of products, software and technology; and (iii) has maintained policies and procedures that are reasonably designed to ensure, and that are reasonably expected to continue to ensure, continued
compliance therewith.
Section 3.23
Takeover Statutes.
Assuming the accuracy of the representations set forth in
Section 4.23
of this Agreement, the Company Board
has taken all action necessary to render inapplicable to this Agreement and the transactions contemplated by this Agreement all potentially applicable state anti-takeover statutes or regulations,
including Section 21-606 of the TBOC, and any similar provisions in the Company Organizational Documents.
Section 3.24
Information Supplied.
The information supplied or to be supplied by the Company for
inclusion in the registration statement on Form S-4 to be filed by Parent in connection with
the issuance of the Parent Class A Ordinary Shares in the Merger (the "
Form S-4
") shall not, at the time the Form S-4 is declared
effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based
on information supplied by Parent or Merger Sub in writing expressly for inclusion therein. The information supplied or to be supplied by the Company for inclusion in the proxy statement relating to
the Company Shareholder Meeting and Parent Shareholder Meeting included in the Form S-4 (the "
Proxy Statement/Prospectus
") will not, at the time
the Proxy Statement/Prospectus is first mailed to the Company Shareholders and at the time of each Shareholder Meeting to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Merger Sub
in writing expressly for inclusion therein. The Form S-4 and the Proxy Statement/Prospectus (solely with respect to the portion thereof relating to the Company Shareholder Meeting but excluding
any portion thereof based on information supplied by Parent or Merger Sub in writing expressly for inclusion therein, with respect to which no representation or warranty is made by the Company) will
comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder.
Section 3.25
No Additional Representations.
(a) The
Company acknowledges that Parent and Merger Sub do not make any representation or warranty as to any matter whatsoever except as expressly set forth in
Article IV
or in any certificate delivered by
Parent or Merger Sub to the Company in accordance with the terms hereof, and specifically (but
without limiting the generality of the foregoing) that Parent and Merger Sub make no representation or warranty with respect to (i) any projections, estimates or budgets delivered or made
available to the Company, any of its affiliates or any of their respective officers, directors, employees or Representatives of future revenues, results of operations (or any component thereof), cash
flows or financial condition (or any component thereof) of Parent and its Subsidiaries or (ii) the future business and operations of Parent and its Subsidiaries, and the Company has not relied
on such information or any other representations or warranties not set forth in
Article IV
.
(b) The
Company has conducted its own independent review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and
prospects of Parent and its Subsidiaries and acknowledges that the Company has been provided access for such purposes. Except for the representations and warranties expressly set forth in
Article IV
or in any certificate delivered to
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the
Company by Parent or Merger Sub in accordance with the terms hereof, in entering into this Agreement, the Company has relied solely upon its independent investigation and analysis of Parent and
Parent's Subsidiaries, and the Company acknowledges and agrees that it has not been induced by and has not relied upon any representations, warranties or statements, whether express or implied, made
by Parent or Merger Sub, their Subsidiaries, or any of their respective affiliates, shareholders, controlling persons or Representatives that are not expressly set forth in
Article IV
or in any
certificate delivered to the Company by Parent or Merger Sub, whether or not such representations, warranties or statements
were made in writing or orally. The Company acknowledges and agrees that, except for the representations and warranties expressly set forth in
Article IV
or in any certificate delivered by Parent
or Merger Sub to the Company (i) Parent and Merger Sub do not make, and have not
made, any representations or warranties relating to themselves or their business or otherwise in connection with the transactions contemplated hereby and the Company is not relying on any
representation or warranty except for those expressly set forth in this Agreement, (ii) no person has been authorized by Parent or Merger Sub to make any representation or warranty relating to
themselves or their business or otherwise in connection with the transactions contemplated hereby, and if made, such representation or warranty may not be relied upon by the Company as having been
authorized by Parent or Merger Sub and (iii) any estimates, projections, predictions, data, financial information, memoranda, presentations or any other materials or information provided or
addressed to the Company, any of its affiliates or any of their respective officers, directors, employees or Representatives are not and shall not be deemed to be or include representations or
warranties of Parent or Merger Sub unless any such materials or information is the subject of any express representation or warranty set forth in
Article IV
.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed (a) in the Parent SEC Documents filed prior to the date hereof (without giving effect to any amendment to any such
Parent SEC Document filed on or after the date hereof and excluding any disclosures set forth in any such Parent SEC Document in any risk factor section, any disclosure in any section relating to
forward-looking statements or any other statements that are non-specific, predictive or primarily cautionary in nature other than historical facts included therein), where the relevance of the
information as an exception to (or disclosure for purposes of) a particular representation is reasonably apparent on the face of such disclosure, or (b) in the disclosure schedule delivered by
Parent to the Company immediately prior to the execution of this Agreement (the "
Parent Disclosure Schedule
") (each section of which qualifies the
correspondingly numbered representation, warranty or covenant if specified therein and such other representations, warranties or covenants where its relevance as an exception to (or disclosure for
purposes of) such other representation, warranty or covenant is reasonably apparent), Parent and Merger Sub represent and warrant to the Company as follows:
Section 4.1
Qualification, Organization, Subsidiaries, Capitalization.
(a) Parent
is a public limited company duly organized and validly existing under the Laws of England and Wales and Merger Sub is a limited liability company duly organized,
validly existing and in good standing under the Laws of the State of Texas. Each of Parent and Merger Sub has the requisite entity capacity, power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted except for any such failures to have such power and authority as would not, individually or in the aggregate, have a Parent
Material Adverse Effect. Each of Parent's Subsidiaries is a legal entity duly organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the Laws of
its respective jurisdiction of organization and has the requisite capacity, power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted,
except where the failure to be in good standing or to have such power or authority would not reasonably be expected to have, individually or in the aggregate, a
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Parent
Material Adverse Effect. Each of Parent and its Subsidiaries is duly qualified or licensed, and has all necessary governmental approvals, to do business and is in good standing as a foreign
entity (where such concept is recognized under applicable Law) in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such
approvals, qualification or licensing necessary, except where the failure to be so duly approved, qualified or licensed and in good standing would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
(b) Parent
has made available to the Company, prior to the date hereof, true and complete copies of Parent's articles of association and the articles of association,
certificate of incorporation, certificate of limited partnership, certificate of formation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or
organizational documents for each of its material Subsidiaries as identified in Section 4.1(b) of the Parent Disclosure Schedule (the "
Parent Material
Subsidiaries
"), in each case as amended to and in effect as of the date hereof (collectively, the "
Parent Organizational
Documents
"). Parent is not in violation, and none of Parent's Subsidiaries is in material violation, of any of the Parent Organizational Documents.
(c) As
of the close of business on May 25, 2017 (i) 303,748,617 Parent Class A Ordinary Shares (excluding non-vested share awards granted under the
Parent Stock Plans) and 50,000 Parent Class B Ordinary Shares were issued and outstanding, (ii) 6,789,632 Parent Class A Ordinary Shares were held in treasury,
(iii) 2,739,877 non-vested Parent Class A Ordinary Shares were outstanding and subject to potential forfeiture under the Parent Stock Plans, (iv) $700 million in aggregate
principal amount of 3.00% Exchangeable Senior Notes due 2024 issued by Ensco Jersey Finance Limited were outstanding, and (v) up to 22,417,095 Parent Class A Ordinary Shares were
available for future issuance under the Parent Stock Plans, of which amount (A) 248,914 Parent Class A Ordinary Shares were subject to outstanding option awards under the Parent Stock
Plans, (B) 649,616 Parent Class A Ordinary Shares were subject to outstanding non-vested share unit awards under the Parent Stock Plans, and (C) 822,225 Parent Class A
Ordinary Shares (at the "target level") were subject to outstanding performance unit awards under the Parent Stock Plans. All outstanding Parent Ordinary Shares are, and all such Parent Ordinary
Shares that may be issued prior to the Effective Time and the Parent Class A Ordinary Shares, when issued in accordance with the respective terms thereof, will be, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. Except as set forth in this
Section 4.1(c)
(and other than the Parent
Ordinary Shares issuable pursuant to the terms of awards issued under the Parent Stock Plans (collectively, "
Parent Stock Awards
")), there are no
outstanding subscriptions, options, warrants, calls, convertible securities, exchangeable securities or other similar rights, agreements or commitments to which Parent or any of its Subsidiaries is a
party (A) obligating Parent or any of its Subsidiaries to (1) issue, transfer, exchange, sell or register for sale any equity interests of Parent or any Subsidiary of Parent or
securities convertible into or exchangeable for such equity interests, (2) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar
right, agreement or arrangement, (3) redeem or otherwise acquire any such equity interests, (4) provide a material amount of funds to, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary or (5) make any payment to any person the value of which is derived from or calculated based on the value of any equity security
issued by Parent or any of its Subsidiaries or (B) granting any preemptive or antidilutive or similar rights with respect to any publicly traded security issued by Parent or its Subsidiaries.
With respect to each grant of Parent Stock Awards, each such grant was made in accordance with the terms of the applicable Parent Stock Plan, the Exchange Act, the Securities Act and all other
applicable Laws, including the rules of the NYSE.
(d) Neither
Parent nor any of its Subsidiaries has outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are
convertible or exchangeable into or exercisable for securities having the right to vote) with the Parent Shareholders on any matter.
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(e) There
are no voting trusts or other agreements or understandings to which Parent or any of its Subsidiaries is a party with respect to the voting or registration of the
equity interests of Parent or any of its Subsidiaries.
(f) No
Subsidiary of Parent owns any equity interests of Parent, and Parent or a Subsidiary of Parent owns, directly or indirectly, all of the issued and outstanding equity
interests of each Subsidiary of Parent, free and clear of any preemptive rights and any Liens other than Parent Permitted Liens, and all of such equity interests are duly authorized, validly issued,
fully paid and nonassessable (where such concept is applicable and recognized under applicable Law) and free of preemptive rights. Except for equity interests in Parent's Subsidiaries, neither Parent
nor any of its Subsidiaries owns, directly or indirectly, any equity interest in any person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable
for, any equity interest in any person). Except for any obligations pursuant to this Agreement, neither Parent nor any of its Subsidiaries has any obligation to acquire any equity interest, security,
right, agreement or commitment or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any person. Neither Parent nor any of its Subsidiaries has
any obligation, other than pursuant to the Parent Stock Plans, to repurchase, redeem or otherwise acquire any equity interests of Parent or any such Subsidiary.
(g) Since
the date of its formation, Merger Sub has not engaged in any activities other than in connection with this Agreement.
Section 4.2
Company Authority Relative to this Agreement; No Violation.
(a) Each
of Parent and Merger Sub has the requisite corporate and limited liability company power and authority, as applicable, to execute and deliver this Agreement and
each other document to be entered into by Parent and Merger Sub in connection with the transactions contemplated hereby (together with this Agreement, the "
Parent Transaction
Documents
") and, subject to the passing of the resolution referred to in clause (a) of the definition of Parent Shareholder Resolutions, to consummate the transactions
contemplated hereby and thereby, including the Merger. The execution, delivery and performance of this Agreement and the other Parent Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the Parent Board and, except for the passing of the resolution referred to in clause (a) of the definition of Parent
Shareholder Resolutions, no other company action on the part of Parent or Merger Sub or vote of the Parent Shareholders and members of Merger Sub is necessary to authorize the execution and delivery
by Parent and Merger Sub of this Agreement and the other Parent Transaction Documents and the consummation of the Merger. The Parent Board has duly and validly adopted resolutions (i) approving
and declaring advisable this Agreement and the other Parent Transaction Documents, including the Merger and the other transactions contemplated hereby and thereby, (ii) declaring that it is in
the best interests of the Parent Shareholders that Parent enter into this Agreement and the other Parent Transaction Documents and consummate the Merger and the other transactions contemplated hereby
and thereby on the terms and subject to the conditions set forth herein, and (iii) appointing, conditional upon the closing of the Merger and with effect from the Effective Time, the Alpha
Director Nominees to the Parent Board in accordance with
Section 1.7
(a). The Parent Board has further resolved that, unless it has made a Parent
Adverse Recommendation Change in accordance with
Section 5.5
, it will unanimously and unqualifiedly recommend that the Parent Shareholders vote
in favor of the Parent Shareholder Resolutions at duly held meetings of such shareholders for such purposes (the "
Parent Board Recommendation
"). None of
the aforementioned resolutions, as of the date hereof, have been rescinded, modified or withdrawn in any way. Each of the Parent Transaction Documents has been duly and validly executed and delivered
by Parent and, assuming each such Parent Transaction Document has been duly authorized, executed and delivered by each other counterparty thereto, each of the Parent Transaction Documents constitutes
the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as such enforcement may be subject to (A) the effect of bankruptcy,
insolvency, reorganization, receivership, administration, arrangement,
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moratorium
or other Laws affecting or relating to creditors' rights generally or (B) the Remedies Exceptions.
(b) Other
than in connection with or in compliance with (i) the Companies Act (ii) the filing of the Certificate of Merger with the Secretary of State of the
State of Texas, (iii) the Exchange Act, (iv) the Securities Act, (v) the NYSE, (vi) the HSR Act and any antitrust, competition, foreign investment or similar Laws outside
of the United States and (vii) the approvals set forth in Section 4.2(b) of the Parent Disclosure Schedule (collectively, the "
Parent
Approvals
"), and, subject to the accuracy of the representations and warranties of the Company in
Section 3.2(b)
, no
authorization, consent, Order, license, permit or approval of, or registration, declaration, notice or filing with, or notice to, any Governmental Entity is necessary, under applicable Law, for the
execution, delivery and performance of this Agreement or the consummation by Parent and Merger Sub of the transactions contemplated hereby, except for such authorizations, consents, Orders, licenses,
permits, approvals or filings that, if not obtained or made, would not reasonably be expected to materially impede or delay the consummation of the Merger and the other transactions contemplated by
this Agreement or reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(c) The
execution, delivery and performance by Parent and Merger Sub of this Agreement do not, and (assuming the Parent Approvals are obtained) the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will not (i) result in any loss, suspension, limitation or impairment of any right of Parent or any of its
Subsidiaries to own or use any assets required for the conduct of their business or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to any
right of termination, cancellation, first offer, first refusal, modification or acceleration of any material obligation or to the loss of a benefit under any loan, guarantee of indebtedness or credit
agreement, note, bond, mortgage, indenture, lease, agreement, contract, instrument, permit, concession, franchise, right or license binding upon Parent or any of its Subsidiaries or by which or to
which any of their respective properties, rights or assets are bound or subject, or result in the creation of any Lien (other than Parent Permitted Liens and any Liens created in connection with any
action taken by the Company or its affiliates), in each case, upon any of the properties or assets of Parent or any of its Subsidiaries or any contract to which Parent or any of its Subsidiaries is a
party or by which any of their respective properties or assets are bound, (ii) conflict with or result in any violation of any provision of the Parent Organizational Documents or
(iii) conflict with or violate any applicable Laws, except in the case of clauses (i) and (iii) for such losses, suspensions, limitations, impairments, conflicts, violations,
defaults, terminations, cancellations, accelerations, or Liens as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.3
Reports and Financial Statements.
(a) Parent
and each of its Subsidiaries has filed with or furnished to the SEC all reports, schedules, forms, statements and other documents required to be filed or
furnished by it since January 1, 2016 (all such documents and reports filed or furnished by Parent or any of its Subsidiaries, the "
Parent SEC
Documents
") and Parent has filed prior to the date hereof all material returns, particulars, resolutions and documents required to be filed or to be delivered on behalf of
Parent with the Registrar of Companies in England and Wales. As of their respective dates of filing or, in the case of Parent SEC Documents that are registration statements filed pursuant to the
requirements of the Securities Act, their respective dates of effectiveness, or, if amended prior to the date hereof, as of the date of the last such amendment, the Parent SEC Documents complied, as
to form, in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and none of the Parent SEC Documents contained any
untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, except
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that
information set forth in the Parent SEC Documents as of a later date (but before the date hereof) will be deemed to modify information as of an earlier date.
(b) The
consolidated financial statements (including all related notes and schedules thereto) of Parent included in the Parent SEC Documents (i) fairly present in all
material respects the consolidated financial position of Parent and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and any other adjustments described therein),
(ii) were prepared in conformity with GAAP (except, in the case of the unaudited statements, as permitted by applicable rules and regulations of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes thereto), (iii) have been prepared from, and are in accordance with, the books and records of Parent and its
consolidated Subsidiaries and (iv) comply, as to form, in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and
the Securities Act.
(c) There
are no outstanding or unresolved comments from, or unresolved issues raised by, the staff of the SEC relating to the Parent SEC Documents. Parent has heretofore
made available to the Company true, correct and complete copies of all written correspondence between Parent and the SEC occurring since January 1, 2016. None of the Parent SEC Documents is, to
the knowledge of Parent, the subject of ongoing SEC review, and no enforcement action has been initiated against Parent relating to disclosures contained in or omitted from any Parent SEC Document.
(d) Neither
Parent nor any of its Subsidiaries is a party to, nor does it have any commitment to become a party to, any joint venture, off-balance sheet partnership or any
similar contract (including any contract relating to any transaction or relationship between or among Parent or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including
any structured finance, special purpose or limited purpose entity or person, on the other hand) or any "off-balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K of
the SEC), where the result, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, Parent or any of its Subsidiaries in Parent's
financial statements or other Parent SEC Documents.
Section 4.4
Internal Controls and Procedures.
Parent has established and maintains disclosure
controls and procedures and internal control over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Parent's disclosure controls and procedures are
reasonably designed to ensure that all material information required to be disclosed by Parent in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to Parent's management as appropriate to allow
timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Parent's management has completed an
assessment of the effectiveness of Parent's internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended
December 31, 2016, and such assessment concluded that such controls were effective. Based on its most recent evaluation of internal controls over financial reporting prior to the date hereof,
which has been provided to the Company, management of Parent has disclosed to Parent's auditors and the audit committee of the Parent Board (i) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect Parent's ability to record, process,
summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Parent's internal control over
financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any, has been disclosed to the Company prior to the date hereof.
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Section 4.5
No Undisclosed Liabilities.
There are no liabilities or obligations of Parent or any
of its Subsidiaries, whether known or unknown and whether accrued, absolute, determined or contingent,
that would be required by GAAP to be reflected on a consolidated balance sheet of Parent and its consolidated Subsidiaries (including the notes thereto), except for (i) liabilities or
obligations disclosed and provided for in the most recent balance sheets included in the Parent Financial Statements (or in the notes thereto) filed and publicly available prior to the date of this
Agreement, (ii) liabilities or obligations incurred in accordance with or in connection with this Agreement, (iii) liabilities or obligations incurred since December 31, 2016 in
the ordinary course of business consistent with past practice since the date of such balance sheet, (iv) liabilities or obligations that have been discharged or paid in full, and
(v) liabilities or obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.6
Compliance with Law; Permits.
(a) Parent
and its Subsidiaries are in compliance with, and are not in default under or in violation of, any applicable Law, except where such non-compliance, default or
violation would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Since January 1, 2015, neither Parent nor any of its Subsidiaries has
received any written notice or, to Parent's knowledge, other communication from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law, except as
would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) Neither
Parent, nor the Merger, is subject to the Takeover Code.
(c) Parent
and its Subsidiaries are in possession of all franchises, grants, authorizations, licenses, concessions, permits, easements, variances, exceptions, consents,
certificates, approvals, clearances, permissions, financial assurance instruments, qualifications and registrations and Orders of all applicable Governmental Entities, and all rights under any Parent
Material Contract with all Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for Parent and its Subsidiaries to own,
lease and operate their properties and assets and to carry on their businesses as they are now being conducted (the "
Parent Permits
" and, together with
the Company Permits, the "
Permits
"), except where the failure to have or to have filed such Parent Permits would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. All Parent Permits are valid and in full force and effect and are not subject to any administrative or judicial proceeding that
could result in modification, termination or revocation thereof, except where the failure to be in full force and effect or any modification, termination or revocation thereof would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Parent and each of its Subsidiaries is in compliance with the terms and requirements of all material Parent
Permits, except where the failure to be in compliance would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(d) Except
as set forth in Section 4.6 of the Parent Disclosure Schedule, each drilling unit owned or leased by Parent or any of its Subsidiaries which is subject to
classification (other than cold stacked rigs) is in class and free of suspension or cancellation to class, and is registered under the flag of its flag jurisdiction.
Section 4.7
Absence of Certain Changes or Events.
(a) From
January 1, 2017 through the date of this Agreement, except in connection with the negotiation and execution of this Agreement the businesses of Parent and
its Subsidiaries have been conducted in all material respects in the ordinary course of business.
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(b) Since
January 1, 2017, there has not been any event, change, effect, development, occurrence or state of facts that has had or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.8
Environmental Laws and Regulations.
Except as would not have, individually or in the
aggregate, a Parent Material Adverse Effect (i) there are no investigations, actions, suits or proceedings
(whether administrative or judicial) pending, alleging non-compliance with or other liability under any Environmental Law, (ii) Parent and its Subsidiaries are, and except for matters that have
been fully resolved with the applicable Governmental Entity, since January 1, 2016 have been, in compliance with all Environmental Laws (which compliance includes the possession by Parent and
each of its Subsidiaries of all Permits required under applicable Environmental Laws to conduct their respective business and operations, and compliance with the terms and conditions thereof),
(iii) none of Parent and its Subsidiaries is subject to any Order or has created any obligations or liabilities under applicable Environmental Laws or concerning Hazardous Materials or
Releases, and (iv) none of Parent and its Subsidiaries has received any unresolved claim, notice, complaint or request for information from a Governmental Entity or any other person relating to
actual or alleged noncompliance with or liability under applicable Environmental Laws (including any such liability or obligation arising under, retained or assumed by contract or by operation of
law).
Section 4.9
Investigations; Litigation.
Except as would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect or would not reasonably be expected to
prevent, impede or materially delay consummation of the Merger, (i) there is no investigation or review pending (or, to Parent's knowledge, threatened) by any Governmental Entity with respect
to Parent or any of its Subsidiaries, (ii) there are no claims, actions, suits, inquiries, investigations, arbitrations or administrative or other proceedings, or any subpoenas, civil
investigative demands or other requests for information, relating to potential violations of Law pending (or, to Parent's knowledge, threatened) against or affecting Parent or any of its Subsidiaries,
or any of their respective properties and (iii) there are no Orders, injunctions, judgments or decrees of, or before, any Governmental Entity pending (or, to Parent's knowledge, threatened to
be imposed) against Parent or any of its Subsidiaries.
Section 4.10
Investment Company.
None of Parent or any of its Subsidiaries is an "investment
company" or a company "controlled" by an "investment company" within the meaning of the U.S.
Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
Section 4.11
Intellectual Property.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, either Parent or a Subsidiary of Parent owns, or
is licensed or otherwise possesses valid rights to use, free and clear of Liens other than Parent Permitted Liens, all trademarks, trade names, service marks, service names, mark registrations, logos,
assumed names, domain names, registered and unregistered copyrights, patents or applications and registrations, trade secrets and other intellectual property rights necessary to their respective
businesses as currently conducted (collectively, the "
Parent Intellectual Property
"), and no third party has ownership rights or license rights to
improvements made by Parent in the Parent Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect,
(i) there are no pending or, to Parent's knowledge, threatened claims by any person alleging infringement, misappropriation or other violation by Parent or any of its Subsidiaries of any
intellectual property rights of any person, (ii) to Parent's knowledge, the conduct of the business of Parent and its Subsidiaries does not infringe, misappropriate or otherwise violate any
intellectual property rights of any person, (iii) neither Parent nor any of its Subsidiaries has made any claim of a violation, infringement or misappropriation by others of Parent's or any its
Subsidiaries' rights to or in connection
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with
Parent Intellectual Property and (iv) to Parent's knowledge, no person is infringing, misappropriating or otherwise violating any Parent Intellectual Property.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent and its Subsidiaries have implemented
(i) commercially reasonable measures to protect the confidentiality, integrity and security of the Parent IT Assets (and all information and transactions stored or contained therein or
transmitted thereby); and (ii) commercially reasonable data backup, data storage, system redundancy and disaster avoidance and recovery procedures, as well as a commercially reasonable business
continuity plan, in each case consistent with customary industry practices.
Section 4.12
Properties.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent and its Subsidiaries have good and
marketable title to all real property owned by Parent or any of its Subsidiaries and good and valid leasehold interest to all real property which is leased, subleased, licensed or otherwise occupied
by Parent or any of its Subsidiaries (the "
Parent Leased Real Property
"), in each case free and clear of all Liens (other than Parent Permitted Liens).
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent and its Subsidiaries have good and
marketable title to, or have valid rights to lease or otherwise use, all items of personal property that are material to the respective businesses of Parent and its Subsidiaries, in each case free and
clear of all Liens (other than Parent Permitted Liens).
Section 4.13
Ownership and Maintenance of Drilling Units.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, either Parent or a Subsidiary of Parent has good
and marketable title to the drilling units listed in Parent's most recent fleet status report, a true and complete copy of which has been furnished as an exhibit to a Current Report on Form 8-K
filed by Parent with the SEC or otherwise provided to the Company (the "
Parent Fleet Report
"), in each case free and clear of all Liens except for
Parent Permitted Liens and no such drilling unit or any related asset is leased under an operating lease from a lessor that, to Parent's knowledge, has incurred non-recourse indebtedness to finance
the acquisition or construction of such asset.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, the drilling units listed in the Parent Fleet
Report (other than such drilling units that are noted therein as "cold stacked" or are being prepared to be "cold stacked") have been maintained consistent with general practice in the offshore
drilling industry and are in good operating condition and repair, subject to ordinary wear and tear.
Section 4.14
Tax Matters.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect:
(i) Parent
and each of its Subsidiaries and each affiliated, consolidated, combined, unitary or similar group that includes Parent or any of its Subsidiaries have duly and
timely filed or caused to be filed (taking into account any valid extension of time within which to file) all Tax Returns required to be filed by any of them and all such Tax Returns are true,
complete and accurate.
(ii) Parent
and each of its Subsidiaries have timely paid all Taxes that are required to be paid by any of them or that Parent or any of its Subsidiaries are obligated to
withhold from
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amounts
owing to any employee, creditor, shareholder or third party (in each case, whether or not shown on any Tax Return), except with respect to matters contested in good faith through appropriate
proceedings and for which adequate reserves have been established in accordance with GAAP.
(iii) No
Tax Return of Parent or any of its Subsidiaries is the subject of an audit, examination investigation or other proceeding, and there are no audits, examinations,
investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of Parent or any of its Subsidiaries.
(iv) Neither
Parent nor any of its Subsidiaries is currently the beneficiary of any waivers of any limitation periods or agreements providing for an extension of time for
the filing of any Tax Return, the assessment or collection thereof by any relevant Tax authority or the payment of any Tax by Parent or any of its Subsidiaries.
(v) Neither
Parent nor any of its Subsidiaries has any liability for the Taxes of any person (other than Taxes of Parent or its Subsidiaries) (A) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Tax Law), (B) as a transferee or successor or (C) by Contract (other than Contracts exclusively
between or among one or more of the Parent and its Subsidiaries and other than as customary Tax indemnifications contained in ordinary course commercial agreements or arrangements that are not
primarily related to Taxes).
(vi) Neither
Parent nor any of its Subsidiaries has any liability pursuant to any Tax sharing, allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among one or more of the Parent and its Subsidiaries and other than as customary Tax indemnifications contained in ordinary course commercial agreements
or arrangements that are not primarily related to Taxes).
(vii) Neither
Parent nor any of its Subsidiaries is a party to any closing agreement described in Section 7121 of the Code or any predecessor provision thereof or any
similar agreement under state, local or non-U.S. Tax Law, and neither Parent nor any of its Subsidiaries is subject to any private ruling issued by any Governmental Entity in respect of Taxes.
(viii) There
are no Liens for Taxes on any asset of Parent or its Subsidiaries, except for Liens for Taxes not yet due or delinquent.
(ix) Neither
Parent nor any of its Subsidiaries has been a party to a transaction that is a "listed transaction," as such term is defined in Treasury Regulations
Section 1.6011-4(b)(2), or any other transaction requiring disclosure under analogous provisions of state, local or non-U.S. Tax Law.
(x) No
written claim has been received by Parent or any of its Subsidiaries from a Governmental Entity in a jurisdiction where such entity does not file Tax Returns that it
is or may be subject to taxation by such jurisdiction.
(b) Neither
the Parent nor any of its Subsidiaries is or was a "surrogate foreign corporation" within the meaning of Section 7874(a)(2)(B) of the Code.
(c) As
of the date hereof, Parent has no knowledge of any facts or of any reason that (when taken together with Parent's understanding of other relevant facts) would
reasonably be expected to cause Parent to be treated, following the completion of the transactions contemplated by this Agreement, as a domestic corporation for U.S. federal income tax purposes under
Section 7874 of the Code.
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(d) Neither
Parent nor any of its Subsidiaries beneficially owns shares or other equity interests of the Company or any of the Company's affiliates.
(e) Within
the past three years, neither Parent nor any of its Subsidiaries has been a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution intended to qualify for tax-free treatment under Section 355 of the Code (or a similar provision of state, local or non-U.S. Tax Law).
Section 4.15
Employment and Labor Matters.
Neither Parent nor any of its
Subsidiaries is a party to any Collective Bargaining Agreement with respect to employees of Parent or any of its Subsidiaries (each,
an "
Parent Employee
") that has had or could reasonably be expected to have a Parent Material Adverse Effect, other than those that Parent or any of its
Subsidiaries may be deemed to be a party to or bound by as a result of doing business in a particular jurisdiction. To Parent's knowledge, as of the date hereof, there are no activities or proceedings
of any labor or trade union, staff association or other body to organize any Parent Employee where such activities or proceedings could reasonably be expected to have a Parent Material Adverse Effect.
No material Collective Bargaining Agreement is being negotiated by Parent or, to Parent's knowledge, any of its Subsidiaries with respect to any Parent Employees. Since January 1, 2015, there
has been no actual, or to Parent's knowledge, threatened unfair labor practice charges, grievances, arbitrations, strikes, lockouts, work stoppages, slowdowns, picketing, hand billing or other labor
disputes against or affecting Parent or any of its Subsidiaries involving Parent Employees that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect
and there are no circumstances which could or might give rise to any such dispute that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Parent
is, and has been, in compliance with all Laws regarding employment and employment practices, terms and conditions of employment and wages and hours (including classification of employees) and other
Laws in respect of any reduction in force, including notice, information and consultation requirements, except where any such noncompliance would not, individually or in the aggregate, be reasonably
expected to have a Parent Material Adverse Effect. There are no material outstanding assessments, penalties, fines, Liens, charges, surcharges, or other amounts due or owing by Parent pursuant to any
workplace safety and insurance/workers' compensation Laws, Parent has not been reassessed in any material respect under such Laws during the past three years, and Parent has not received any claims
under such Laws, in each case, that could reasonably be expected to have a Parent Material Adverse Effect.
Section 4.16
Employee Benefit Plans.
(a) For
purposes of this Agreement, "
Parent Benefit Plan
" means any employee benefit plan, program, agreement or arrangement,
including pension, retirement, profit-sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership,
severance pay, long service award, vacation, bonus, any benefits received otherwise than in cash or related to sales, profits, turnover or performance, or which are otherwise variable (other than
normal overtime) or other incentive plans, medical, retiree medical, vision, dental or other health plans, life insurance plans, and each other employee benefit plan or fringe benefit plan, including
any "employee benefit plan" as that term is defined in Section 3(3) of ERISA, in each case, (i) whether oral or written, funded or unfunded, or insured or self-insured, tax approved or
non-tax approved and (ii) (A) sponsored or maintained by Parent or any Subsidiary, or (B) to which Parent or any Subsidiary contributes or is obligated to contribute for the
benefit of any current or former employees, directors, consultants or independent contractors or otherwise has any obligation or liability, contingent or otherwise.
(b) Except
as would not, individually or in the aggregate, have a Parent Material Adverse Effect, each Parent Benefit Plan that is intended to be a Qualified Plan is so
qualified and each trust maintained thereunder is exempt from taxation under Section 501(a) of the Code and, to Parent's
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knowledge,
there is no reason why tax approval under any local Law in any part of the world might be withdrawn or might cease to apply.
(c) No
Parent Benefit Plan is, and in the last six years, none of Parent and its Subsidiaries nor any of their respective ERISA Affiliates has maintained, established,
contributed to or been obligated to contribute to (i) any benefit plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code or (in each
case) equivalent local Law, or (ii) any material defined benefit pension plan. None of Parent and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last
six years, maintained, established, contributed to or been obligated to contribute to any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
(d) (i)
There are no existing, pending or, to Parent's knowledge, threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted; and (ii) to Parent's knowledge, no set of circumstances exists which may reasonably give rise to a claim or lawsuit against Parent with respect to any Parent
Benefit Plan, any fiduciaries thereof with respect to their duties to the Parent Benefits Plans or the assets of any of the trusts under any of the Parent Benefit Plans, which, in the case of
clause (i) and (ii), could reasonably be expected to have a Parent Material Adverse Effect.
(e) Neither
Parent nor any of its Subsidiaries has any obligation or liability, contingent or otherwise, with respect to any pension or other employee benefit plan that is
currently maintained or sponsored by a person other than Parent or its Subsidiaries that could reasonably be expected to have a Parent Material Adverse Effect.
(f) No
material Parent Benefit Plan provides for any post-employment or post-retirement medical or life insurance benefits for retired, former or current employees or
beneficiaries or dependents thereof, except as required by Section 4980B of the Code or any applicable Law.
(g) Parent
is not party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of Taxes imposed by
Section 409A(a)(1)(B) of the Code or equivalent local Law.
(h) Except
as otherwise provided in this Agreement, the consummation of the Merger and the transactions contemplated by this Agreement will not, either alone or in
combination with another event (i) entitle any current or former employee, director, consultant or officer of Parent or any of its Subsidiaries to severance pay, unemployment compensation or
other compensatory payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee, director, consultant or officer, or
(iii) trigger any funding obligation under any Parent Benefit Plan or impose any restrictions or limitations on Parent's rights to administer, amend or terminate any Parent Benefit Plan.
(i) No
individual is entitled under any Parent Benefit Plan or otherwise to any gross-up or reimbursement of Taxes under Section 4999 of the Code.
(j) Except
as would not, individually or in the aggregate, be reasonably expected to have a Parent Material Adverse Effect, neither Parent nor any of its Subsidiaries has
any liability to make any payment to any Parent Benefit Plan which is due at the date of this Agreement, but remains unpaid.
(k) Parent
and its Subsidiaries have, in relation to the Parent Benefit Plans, at all times complied with all applicable Laws, regulations and requirements and the trusts,
powers and provisions of the Parent Benefit Plan documentation, except where any such noncompliance would not, individually or in the aggregate, be reasonably expected to have a Parent Material
Adverse Effect.
Section 4.17
Insurance
.
Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) all insurance policies maintained by or on behalf of
Parent or any of its Subsidiaries as of the date of this Agreement are in full force and effect and are
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valid
and enforceable, and all premiums due on such policies have been paid by Parent or its Subsidiaries, as applicable, and (ii) Parent and its Subsidiaries are in compliance with the terms
and provisions of all insurance policies maintained by or on behalf of Parent or any of its Subsidiaries as of the date of this Agreement, and neither Parent nor any of its Subsidiaries is in breach
or default under, or has taken any action that could permit termination or material modification of, any material insurance policies.
Section 4.18
Opinion of Financial Advisor
.
The Parent Board has received the opinion of Morgan Stanley & Co. LLC to the effect that, as of the date thereof and subject to the assumptions, limitations,
qualifications and other matters set forth therein, the Exchange Ratio is fair, from a financial point of view, to Parent. Parent shall, promptly following the execution of this Agreement by all
Parties, furnish an accurate and complete copy of said opinion to the Company solely for informational purposes.
Section 4.19
Material Contracts
.
(a) Except
for this Agreement, the Parent Benefit Plans, agreements with customers for the provision of drilling and related services, agreements filed as exhibits to the
Parent SEC Documents or as set forth on the applicable subsection of Section 4.19(a) of the Parent Disclosure Schedule, as of the date hereof, neither Parent nor any of its Subsidiaries is a
party to or bound by:
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);
(ii) any
Contract that (A) imposes any restriction on the right or ability of Parent or any of its Subsidiaries to compete with any other person or acquire or dispose
of the securities of another person (other than any agreement related to a potential Takeover Proposal) or (B) contains an exclusivity or "most favored nation" clause that restricts the
business of Parent or any of its Subsidiaries in a material manner;
(iii) any
joint venture, partnership or limited liability company agreement or other similar Contract relating to the formation, creation, operation, management or control
of any joint venture, partnership or limited liability company, other than any such Contract solely between Parent and its Subsidiaries or among Parent's Subsidiaries;
(iv) any
Contract expressly limiting or restricting the ability of Parent or any of its Subsidiaries to make distributions or declare or pay dividends in respect of their
capital stock, partnership interests, membership interests or other equity interests, as the case may be;
(v) any
Contract that by its terms calls for aggregate payments by or to Parent or any of its Subsidiaries of more than $50.0 million in the aggregate over the
remaining term of such Contract, except for (A) Contracts with a customer and (B) any such Contract that may be cancelled by Parent or any of its Subsidiaries with a penalty or other
liability of less than $10.0 million to Parent or any of its Subsidiaries, upon notice of 60 days or less; and
(vi) any
Contract that contains "earn out" or other contingent payment obligations, or remaining indemnity or similar obligations, that could reasonably be expected to
result in payments after the date hereof by Parent or any of its Subsidiaries in excess of $50.0 million.
All
Contracts of the types referred to in clauses (i) through (vi) above are referred to herein as ("
Parent Material Contracts
").
(b) Parent
has delivered or made available to the Company true and complete copies of all Parent Material Contracts, subject to certain redactions made in order to comply
with legal requirements.
(c) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) neither Parent nor any Subsidiary of
Parent is in breach of or default
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under
the terms of any Parent Material Contract, (ii) to Parent's knowledge, no other party to any Parent Material Contract is in breach of or default under the terms of any Parent Material
Contract and (iii) each Parent Material Contract is a valid and binding obligation of Parent or the Subsidiary of Parent that is party thereto and, to Parent's knowledge, of each other party
thereto, and is in full force and effect, subject to the Remedies Exceptions.
Section 4.20
Finders or Brokers
.
Except for Morgan Stanley & Co. LLC, DNB Capital LLC and HSBC Securities (USA) Inc., neither Parent nor any of Parent's Subsidiaries has
employed any investment banker, broker or finder in connection with the transactions contemplated by this Agreement who would be entitled to or may receive any fee or any commission in connection with
or upon consummation of the Merger.
Section 4.21
Anti-Bribery
.
Within the past 5 years, neither (a) Parent, nor any of its Subsidiaries, nor, to Parent's knowledge, any director, officer, or employee of Parent or any of its
Subsidiaries nor (b) to Parent's knowledge, any Representative while acting on behalf of any of the foregoing, on behalf of Parent or any of its Subsidiaries has directly or indirectly
(i) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns or violated any provisions of any applicable
anti-bribery Laws, including the FCPA or the Bribery Act, or (ii) taken any action on behalf of Parent or any of its Subsidiaries that would constitute a violation of any applicable
anti-bribery Laws, including the FCPA and the Bribery Act, including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment,
promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any "foreign official" (as such term is
defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. Parent maintains policies and procedures that are
reasonably designed to ensure, and that are reasonably expected to continue to ensure, continued compliance with anti-bribery Laws. Neither Parent nor any of its Subsidiaries, nor, to the knowledge of
Parent, any director, officer or employee of Parent or any Subsidiary of Parent, are, or in the past 5 years have been, subject to any actual, pending, or, to Parent's knowledge, threatened
civil, criminal, or administrative actions or governmental investigations, inquiries or enforcement actions, or made any voluntary disclosures to any governmental authority, involving Parent or any
Subsidiary of Parent relating to alleged violations of applicable anti-bribery Laws, including the FCPA and the Bribery Act.
Section 4.22
Export Controls and Sanctions
.
(a) Neither
(i) Parent, any of its Subsidiaries, nor to Parent's knowledge any employee, officer, or director of Parent or any of its Subsidiaries nor (ii) to
Parent's knowledge, any Representative of any of the foregoing, (A) is currently or has been within the past 5 years the target of Trade Sanctions (including by being designated on the
list of Specially Designated Nationals and Blocked Persons or on any other sanctions list maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or
Her Majesty's Treasury), or is or has been within the past 5 years operating, organized or resident in a country or territory that itself is the target of Trade Sanctions (currently, Crimea,
Cuba, Iran, North Korea, Sudan and Syria); or (B) has, directly or, to the knowledge of Parent, indirectly, participated in the past 5 years in any prohibited or unlawful transaction or
dealing involving a person or entity that is the target of Trade Sanctions, or with any person or entity operating, organized, or resident in a country or territory that is the target of Trade
Sanctions.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect on such party, in the past 5 years, each of
Parent, Parent's Subsidiaries and, to Parent's knowledge, any Representative of any of the foregoing (i) has conducted its business in compliance with all applicable Trade Sanctions and Export
Control Laws; (ii) have obtained, and are in
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compliance
with, all required export and import licenses, license exceptions and other consents, notices, approvals, orders, permits, authorizations, declarations, classifications and filings with any
Governmental Entity required for the import, export and re-export of products, software and technology; and (iii) has maintained policies and procedures that are reasonably designed to ensure,
and that are reasonably expected to continue to ensure, continued compliance therewith.
Section 4.23
Information Supplied
.
The information supplied or to be supplied by Parent or Merger Sub for inclusion in the Form S-4 shall not, at the time the Form S-4 is declared effective by the SEC,
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference therein based on
information supplied by the Company in writing expressly for inclusion therein. The information supplied or to be supplied by Parent or Merger Sub for inclusion in the Proxy Statement/Prospectus will
not, at the time the Proxy Statement/Prospectus is first mailed to Parent Shareholders and at the time of any meeting of Parent Shareholders to be held in connection with the issuance of the Parent
Class A Ordinary Shares, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by Parent and Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company in writing expressly for inclusion therein. The Form S-4 and the Proxy Statement/Prospectus (solely with respect to the portion
thereof relating to the Parent Shareholder Meeting but excluding any portion thereof based on information supplied by the Company in writing expressly for inclusion therein, with respect to which no
representation or warranty is made by Parent or Merger Sub) will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
Section 4.24
Ownership of Company Common Stock
.
Neither Parent, Merger Sub nor any of their respective affiliates is, nor at any time during the last three (3) years has been, an "affiliated shareholder" of the Company as
defined in Section 21.606 of the TBOC.
Section 4.25
No Additional Representations
.
(a) Each
of Parent and Merger Sub acknowledges that the Company does not make any representation or warranty as to any matter whatsoever except as expressly set forth in
Article III
or in any certificate
delivered by the Company to Parent and Merger Sub in accordance with the terms hereof, and specifically (but
without limiting the generality of the foregoing) that the Company makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered or made available to
Parent, any of its affiliates or any of their respective officers, directors, employees or Representatives of future revenues, results of operations (or any component thereof), cash flows or financial
condition (or any component thereof) of the Company and its Subsidiaries or (ii) the future business and operations of the Company and its Subsidiaries, and neither Parent nor Merger Sub has
relied on such information or any other representations or warranties not set forth in
Article III
.
(b) Each
of Parent and Merger Sub has conducted its own independent review and analysis of the business, operations, assets, liabilities, results of operations, financial
condition and prospects of the Company and its Subsidiaries and acknowledges that Parent and Merger Sub have been provided access for such purposes. Except for the representations and warranties
expressly set forth in
Article III
or in any certificate delivered to Parent and Merger Sub by the Company in accordance with the terms hereof,
in entering into this Agreement, each of Parent and Merger Sub has relied solely upon its independent investigation and analysis of the Company and the Company's Subsidiaries, and each of Parent and
Merger Sub acknowledges and agrees that it has not been induced by and has not relied upon any representations, warranties or statements, whether express or implied, made by the Company,
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its
Subsidiaries, or any of their respective affiliates, shareholders, controlling persons or Representatives that are not expressly set forth in
Article III
or in any certificate delivered to Parent
and Merger Sub by the Company, whether or not such representations, warranties or
statements were made in writing or orally. Each of Parent and Merger Sub acknowledges and agrees that, except for the representations and warranties expressly set forth in
Article III
or in any
certificate delivered by the Company to Parent and Merger Sub (i) the Company does not make, and has not made, any
representations or warranties relating to itself or its business or otherwise in connection with the transactions contemplated hereby and neither Parent nor Merger Sub is relying on any representation
or warranty except for those expressly set forth in this Agreement, (ii) no person has been authorized by the Company to make any representation or warranty relating to itself or its business
or otherwise in connection with the transactions contemplated hereby, and if made, such representation or warranty may not be relied upon by Parent and Merger Sub as having been authorized by the
Company and (iii) any estimates, projections, predictions, data, financial information, memoranda, presentations or any other materials or information provided or addressed to Parent or Merger
Sub, any of their affiliates or any of their respective officers, directors, employees or Representatives are not and shall not be deemed to be or include representations or warranties of the Company
unless any such materials or information is the subject of any express representation or warranty set forth in
Article III
.
ARTICLE V.
COVENANTS AND AGREEMENTS
Section 5.1
Conduct of Business by the Company
.
(a) From
and after the date hereof until the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant to
Section 7.1
(the "
Termination
Date
"), and except (i) as may be required by applicable Law
or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company and its Subsidiaries, (ii) with the prior written consent of Parent (such consent
not to be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or required by this Agreement or (iv) as set forth in Section 5.1(a) of the
Company Disclosure Schedule, the Company covenants and agrees that the business of the Company and its Subsidiaries shall be conducted in the ordinary course of business in all material respects, and
the Company and its Subsidiaries shall use commercially reasonable efforts to preserve substantially intact their respective present lines of business, maintain their respective material rights,
franchises and Permits and preserve their respective relationships with key customers and suppliers;
provided
,
however
, that no action by the Company and
its Subsidiaries with respect to matters specifically addressed by any provision of
Section 5.1(b)
shall be deemed a breach of this sentence unless such action would constitute a breach of such
provision of
Section 5.1(b)
.
(b) The
Company agrees with Parent and Merger Sub, on behalf of itself and its Subsidiaries, that from the date hereof and prior to the earlier of the Effective Time and the
Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company or its
Subsidiaries, (ii) with the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or required by
this Agreement or (iv) as set forth in Section 5.1(b) of the Company Disclosure Schedule, the Company:
(i) shall
not amend the Company Charter and the Company Bylaws, and shall not permit any of its Subsidiaries to adopt any amendments to its certificate of incorporation or
bylaws or similar applicable organizational documents;
(ii) shall
not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a
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wholly
owned Subsidiary which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) shall
not, and shall not permit any of its Subsidiaries that is not directly or indirectly wholly owned to, authorize, make, declare or pay any dividends on or make
any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except (A) dividends or
distributions by any Subsidiaries only to the Company or to any wholly owned Subsidiary of the Company in the ordinary course of business consistent with past practice, and (B) dividends or
distributions by any non-wholly owned Subsidiary or joint venture that are consistent with past practice or required under such entity's organizational documents in effect on the date of this
Agreement;
(iv) shall
not, and shall not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization, other than the Merger and other than any liquidations, dissolutions, mergers, consolidations, restructurings or reorganizations solely among the Company and
its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company;
(v) shall
not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business, or make any loans, advances or capital contributions
to, or investments in, any other person, with a value in excess of $25.0 million in the aggregate, except (A) any loan, advance or capital contribution to or investment in a joint
venture, partnership or similar entity in which the Company or any of its Subsidiaries acquires an equity interest in connection with the contemplation or initiation of operations of a particular rig
or rigs or in a particular jurisdiction where the Company and its Subsidiaries do not currently operate, provided that such loan, advance, capital contribution or investment shall not exceed
$10 million in the aggregate and be related to a single investment opportunity, or (B) as made in connection with any transaction among the Company and its wholly owned Subsidiaries or
the Company's wholly owned Subsidiaries;
provided
,
however
, that the Company shall not, and shall not
permit any of its Subsidiaries to, make any acquisition of any other person or business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably
be expected to prevent, materially impede or materially delay the consummation of the Merger;
(vi) shall
not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, or otherwise dispose of or encumber (other than with a
Company Permitted Lien) any properties
or non-cash assets with a value in excess of $25.0 million in the aggregate, except (A) sales, transfers and dispositions of obsolete, surplus or worthless equipment, (B) sales,
transfers and dispositions of assets in the ordinary course of business, or (C) sales, leases, transfers or other dispositions made in connection with any transaction among the Company and its
wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries;
(vii) shall
not, and shall not permit any of its Subsidiaries to, authorize any capital expenditures in excess of $50.0 million individually or $100.0 million
in the aggregate, except for (A) expenditures made in the ordinary course of business and consistent with past practice, or (B) expenditures made in response to any emergency, whether
caused by war, terrorism, weather events, public health events, outages, operational incidents or otherwise;
(viii) except
in the ordinary course of business and consistent with past practice, or as provided under the terms of any Benefit Plan or other contract entered into prior
to the date of this Agreement, shall not, and shall not permit any of its Subsidiaries to, (A) establish, adopt, materially amend or modify, or terminate any Collective Bargaining Agreement or
material Benefit Plan, (B) materially increase the compensation or severance entitlements of
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any
of the current or former directors or officers of the Company, (C) pay or award, or commit to pay or award, any bonuses or incentive compensation to any officer or director of the Company,
(D) enter into any new or modify any existing employment, severance, termination, retention or change in control agreement with any current or former directors or officers of the Company,
(E) accelerate the time of payment or vesting of any material rights or benefits under any material Benefit Plan, (F) fund any rabbi trust or similar arrangement with respect to any
material Benefit Plan, (G) grant or materially amend any equity awards under the Company Stock Plans (provided, however, that the Company shall not, even if done in the ordinary course of
business consistent with past practice, grant or materially amend any equity awards under the Company Stock Plans (I) to any current or former executive officer of Company, (II) to any
person who could be a "disqualified individual" within the meaning of Code Section 280G, or (III) that will vest, be settled or become exercisable on an accelerated basis as a result of
the transactions contemplated by this Agreement), (H) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Benefit Plan or change the
manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or applicable Law, (I) hire any executive officer
or director of the Company, or (J) waive any post-employment restrictive covenant with any of the current or former directors or officers of the Company;
(ix) shall
not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income,
deductions or other material items for financial accounting purposes, except as required by GAAP or other applicable accounting standards, SEC rule or policy or applicable Law;
(x) shall
not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition,
grant or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or
ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership interest or convertible or exchangeable securities, other than (A) issuances of
Company Common Stock under the Company Stock Plans to the extent not prohibited by
subsection (vii)
above or in respect of the exercise, vesting
or settlement of any Company Stock Awards outstanding on the date of this Agreement, (B) the vesting of shares of Company Common Stock or for withholding of Taxes with respect to any Company
Stock Awards to the extent provided by the terms of such awards or (C) for transactions among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries;
(xi) shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of the capital stock of any of them
or any rights, warrants or options to acquire any such shares, except for transactions among the Company and its Subsidiaries or among the Company's wholly owned Subsidiaries or pursuant to any
Company Benefit Plan;
(xii) shall
not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee or otherwise become liable for any indebtedness for borrowed money or any
guarantee of such indebtedness, except for (A) any indebtedness under the Company's revolving credit facility described in the Company SEC Documents, (B) any indebtedness incurred in the
ordinary course of business, (C) any indebtedness among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries, (D) any indebtedness incurred to
replace, renew, extend, refinance or refund any existing indebtedness on substantially the same or more favorable terms to the Company than such existing
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indebtedness,
and (E) any guarantees by the Company of indebtedness of its Subsidiaries or guarantees by such Subsidiaries of indebtedness of the Company or any Subsidiary of the Company, which
indebtedness is incurred in compliance with this
Section 5.1(b)
;
provided
,
however
, that in the case of
each of clauses (A) through (E) such indebtedness does not impose or result in any additional restrictions or
limitations that would be material to the Company and its Subsidiaries other than any obligation to make payments on such indebtedness and other than any restrictions or limitations to
which the Company or any Subsidiary is currently subject under the terms of any indebtedness outstanding as of the date hereof;
(xiii) shall
not, and shall not permit any of its Subsidiaries to, (A) other than in the ordinary course of business, enter into, or modify or amend in any material
respect, terminate or waive any material rights under any Company Material Contract or any newbuilding contract, (B) other than in the ordinary course of business, modify or amend in any
material respect, or terminate or waive any material rights under any material Permit, or (C) other than in the ordinary course of business, enter into any new contract which would reasonably
be expected to, after the Effective Time, restrict or limit in any material respect Parent or any of its affiliates from engaging in any business or competing in any geographic location with any
person;
(xiv) shall
not, and shall not permit any of its Subsidiaries to, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases,
assignments, settlements or compromises (A) that are equal to or less than the amounts specifically reserved with respect thereto on the balance sheet as of March 31, 2017 included in
the Company SEC Documents or (B) that do not exceed $15.0 million in the aggregate and, in all cases, do not obligate it or any of its Subsidiaries to take any material action (other
than make a payment) or impose any material restrictions on its business or the business of any of its Subsidiaries;
(xv) shall
not, and shall not permit any of its Subsidiaries to, make, change or revoke any material Tax election; change any material Tax accounting method; file any
material amended Tax Return; enter into any material Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement, advance pricing agreement or closing agreement; request any material Tax
ruling; settle or compromise any material Tax proceeding; consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment; change its
jurisdiction of Tax residence; or surrender any claim for a material refund of Taxes;
(xvi) except
as otherwise permitted by this Agreement, any refinancing permitted by
sub-clause (xii)
above or for
transactions between the Company and its Subsidiaries or among the Company's Subsidiaries, shall not and shall not permit any of its Subsidiaries, to prepay, redeem, repurchase, defease, cancel or
otherwise acquire any indebtedness for borrowed money or guarantees thereof of the Company or its Subsidiaries, other than (1) at or below par value, (2) at stated maturity or
(3) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to which holders of such indebtedness or
guarantees thereof may be entitled), in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof; and
(xvii) shall
not, and shall not permit any of its Subsidiaries to, agree, consent, resolve or propose, in writing or otherwise, to take any of the foregoing actions that are
prohibited pursuant to sub-clauses (i) through (xvi) of this
Section 5.1
.
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Section 5.2
Conduct of Business by Parent and Merger Sub.
(a) From
and after the date hereof until the earlier of the Effective Time or the Termination Date, and except (i) as may be required by applicable Law or the
regulations or requirements of any stock exchange or regulatory organization applicable to Parent and its Subsidiaries, (ii) with the prior written consent of the Company (such consent not to
be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or required by this Agreement or (iv) as set forth in Section 5.2(a) of the Parent
Disclosure Schedule, Parent and Merger Sub covenant and agree that the business of Parent and its Subsidiaries shall be conducted in the ordinary course of business in all material respects, and
Parent and its Subsidiaries shall use commercially reasonable efforts to preserve substantially intact their respective material present lines of business, maintain their respective rights, franchises
and Permits and preserve their respective relationships with key customers and suppliers;
provided
,
however
, that no action by Parent and its Subsidiaries
with respect to matters specifically addressed by any provision of
Section 5.2(b)
shall be deemed a breach of this sentence unless such action would constitute a breach of such provision of
Section 5.2(b)
.
(b) Parent
and Merger Sub agree with the Company, on behalf of themselves and Parent's Subsidiaries, that from the date hereof and prior to the earlier of the Effective Time
and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to Parent and its
Subsidiaries, (ii) with the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or
required by this Agreement or (iv) as set forth in Section 5.2(b) of the Parent Disclosure Schedule, Parent and Merger Sub:
(i) shall
not amend its articles of association, and shall not permit any of its Subsidiaries to adopt any amendments to its certificate of incorporation or bylaws or
similar applicable organizational documents, other than, in the case of Subsidiaries, in connection with internal restructurings among the Subsidiaries;
(ii) shall
not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its capital stock, except (A) for any such transaction by a wholly owned Subsidiary which remains a wholly owned Subsidiary
after consummation of such transaction or (B) with respect to Subsidiaries only, as would not reasonably be expected to prevent, materially impede or materially delay the consummation of the
Merger;
(iii) shall
not, and shall not permit any of its Subsidiaries that is not directly or indirectly wholly owned to, authorize, make, declare or pay any dividends on or make
any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of Parent or its Subsidiaries), except (A) dividends or
distributions by any Subsidiaries only to Parent or to any wholly owned Subsidiary of Parent in the ordinary course of business consistent with past practice, (B) dividends or distributions by
any non-wholly owned Subsidiary or joint venture that are consistent with past practice or required under such entity's organizational documents in effect on the date of this Agreement and
(C) dividends on Parent Ordinary Shares not to exceed $0.01 per share per quarter;
(iv) shall
not, and shall not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization, other than the Merger and other than any liquidations, dissolutions, mergers, consolidations, restructurings or reorganizations solely among Parent and its
wholly owned Subsidiaries or among wholly owned Subsidiaries of Parent;
(v) shall
not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business, or make any loans, advances or capital contributions
to, or
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investments
in, any other person, with a value in excess of $50.0 million in the aggregate, except (A) any loan, advance or capital contribution to or investment in a joint venture,
partnership or similar entity in which Parent or any of its Subsidiaries acquires an equity interest in connection with the initiation of operations of a particular rig or rigs or in a particular
jurisdiction where Parent and its Subsidiaries do not currently operate, or (B) as made in connection with any transaction among Parent and its wholly owned Subsidiaries or Parent's wholly
owned Subsidiaries;
provided
,
however
, that Parent shall not, and shall not permit any of its
Subsidiaries to, make any acquisition of any other person or business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to
prevent, materially impede or materially delay the consummation of the Merger;
(vi) shall
not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income,
deductions or other material items for financial accounting purposes, except as required by GAAP or other applicable accounting standards, SEC rule or policy or applicable Law;
(vii) shall
not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition,
grant or encumbrance of, any shares of its capital stock or other ownership interest in Parent or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or
ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership interest or convertible or exchangeable securities, other than (A) issuances of
Parent Ordinary Shares under the Parent Stock Plans, including in respect of the exercise, vesting or settlement of any Parent Stock Awards outstanding on the date of this Agreement, (B) the
vesting of Parent Ordinary Shares or for withholding of Taxes with respect to any Parent Stock Awards to the extent provided by the terms of such awards or (C) for transactions among Parent and
its wholly owned Subsidiaries or among Parent's wholly owned Subsidiaries;
(viii) shall
not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee or otherwise become liable for any indebtedness for borrowed money in excess of
the amount of available borrowing capacity existing from time to time under Parent's revolving credit facility described in the Parent SEC Documents or any guarantee of such indebtedness, except for
(A) any indebtedness incurred in the ordinary course of business, (B) any indebtedness among Parent and its wholly owned Subsidiaries or among Parent's wholly owned Subsidiaries,
(C) any indebtedness incurred to replace, renew, extend, refinance or refund any existing indebtedness on substantially the same or more favorable terms to Parent than such existing
indebtedness, and (D) any guarantees by Parent of indebtedness of its Subsidiaries or guarantees by such Subsidiaries of indebtedness of Parent or any Subsidiary of Parent, which indebtedness
is incurred in compliance with this
Section 5.1(b)
;
provided
,
however
, that in the case of each of
clauses (A) through (D) such indebtedness does not impose or result in any additional restrictions or
limitations that would be material to Parent and its Subsidiaries other than any
obligation to make payments on such indebtedness and other than any restrictions or limitations to which Parent or any Subsidiary is currently subject under the terms of any indebtedness outstanding
as of the date hereof;
(ix) shall
not, and shall not permit any of its Subsidiaries to, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases,
assignments, settlements or compromises (A) that are equal to or less than the amounts specifically reserved with respect thereto on the balance sheet as of March 31, 2017 included in
the Parent SEC Documents or (B) that do not exceed $50.0 million in the aggregate and, in all cases, do not obligate it or any of its Subsidiaries to take any material action (other than
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make
a payment) or impose any material restrictions on its business or the business of any of its Subsidiaries;
(x) shall
not, and shall not permit any of its Subsidiaries to, (A) make, change or revoke any Tax election; (B) change any Tax accounting method;
(C) file any amended Tax Return; (D) enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement, advance pricing agreement or closing agreement;
(E) request any Tax ruling; (F) settle or compromise any Tax proceeding; (G) consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or
assessment; (H) change its jurisdiction of Tax residence; or (I) surrender any claim for a material refund of Taxes, if, in the case of clauses (A) through (G), such action would
have a Parent Material Adverse Effect;
(xi) shall
not, and shall not permit any of their respective Subsidiaries to, acquire shares of Company Common Stock; and
(xii) shall
not agree, in writing or otherwise, to take any of the foregoing actions that are prohibited pursuant to sub-clauses (i) through (xi) of this
Section 5.2(b)
.
Section 5.3
Access.
(a) For
purposes of furthering the transactions contemplated hereby, each Party shall afford the other Party and (i) the officers and employees and (ii) the
accountants, consultants, legal counsel, financial advisors and agents and other representatives of such other Party reasonable access during normal business hours, throughout the period prior to the
earlier of the Effective Time and the Termination Date, to its and its Subsidiaries' personnel and properties, contracts, commitments, books and records and any report, schedule or other document
filed or received by it pursuant to the requirements of applicable Laws and with such additional accounting, financing, operating, environmental and other data and information regarding such Party as
the other Party may reasonably request. Notwithstanding the foregoing, neither Party shall be required to afford such access if it would unreasonably disrupt the operations of such Party or any of its
Subsidiaries, would cause a material violation of any agreement to which such Party or any of its Subsidiaries is a party, would cause a risk of a loss of privilege to such Party or any of its
Subsidiaries or would constitute a violation of any applicable Law. Neither Party, nor any of their respective officers, employees or Representatives, shall be permitted to perform any onsite
procedures (including an onsite study or any invasive testing or sampling) with respect to any property of either Party or any of their respective Subsidiaries without the prior written consent of the
other Party (which shall not be unreasonably withheld, conditioned or delayed).
(b) The
Parties hereto hereby agree that all information provided to them or their respective officers, directors, employees or Representatives in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be governed in accordance with the confidentiality and non-disclosure agreement, dated as of May 25, 2017, between
the Parent and the Company, as amended on May 26, 2017 (the "
Confidentiality Agreement
").
Section 5.4
No Solicitation by the Company.
(a) Except
as expressly permitted by this
Section 5.4
, the Company shall, shall cause each of its affiliates and its
and their respective officers, directors and employees to, and shall use its reasonable best efforts to cause its and their respective agents, financial advisors, investment bankers, attorneys,
accountants and other representatives (a person's officers, directors, employees, agents, financial advisors, investment bankers, attorneys, accountants and other representatives being collectively
its "
Representatives
") to: (i) immediately cease any solicitation, knowing encouragement, discussions or negotiations with any persons that may
be ongoing with respect to or may reasonably be expected to lead to a Takeover Proposal, and promptly instruct (to the extent it has contractual authority to do so and has not already done so prior to
the date of this Agreement) or otherwise request, any person that
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has
executed a confidentiality or non-disclosure agreement within the 24-month period prior to the date of this Agreement in connection with any actual or potential Takeover Proposal to return or
destroy all such information or documents or material incorporating confidential information in the possession of such person or its Representatives and (ii) until the Effective Time or, if
earlier, the termination of this Agreement in accordance with
Article VII
, not, directly or indirectly, (1) solicit, initiate or knowingly
facilitate or knowingly encourage (including by way of furnishing non-public information) any inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, a Takeover Proposal, (2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public
information in connection with or for the purpose of encouraging or facilitating, a Takeover Proposal (other than, solely in response to an unsolicited inquiry, to refer the inquiring person to this
Section 5.4
and to limit its conversation or other communication exclusively to such referral), or (3) approve, recommend or enter into,
or propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment or agreement in principle (whether written or oral, binding or nonbinding) with respect
to a Takeover Proposal (other than (x) an Acceptable Confidentiality Agreement in accordance with
Section 5.4(b)
or (y) in
accordance with
Section 7.1(j)
). Except to the extent necessary to take any actions that the Company or any third party would otherwise be
permitted to take pursuant to this
Section 5.4
(and in such case only in accordance with the terms hereof), (A) the Company and its
Subsidiaries shall not release any third party from, or waive, amend or modify any provision of, or grant permission under, (x) any standstill provision in any agreement to which the Company or
any of its Subsidiaries is a party or (y) any confidentiality provision in any agreement to which the Company or any of its Subsidiaries is a party other than, with respect to this
clause (y), any confidentiality provision, the waiver, amendment, modification or permission of which does not, and would not be reasonably likely to, facilitate, encourage or relate in any way
to a Takeover Proposal or a potential the Takeover Proposal and (B) the Company shall, and shall cause its Subsidiaries to, enforce such confidentiality and standstill provisions of any such
agreement, and the Company shall, and shall cause its Subsidiaries to, immediately take all steps within their power necessary to terminate any waiver that may have been heretofore granted, to any
person other than Parent or any of Parent's affiliates, under any such provisions.
(b) Notwithstanding
anything to the contrary contained in
Section 5.4(a)
, if at any time from and after the date of
this Agreement and prior to obtaining the Company Shareholder Approval, the Company or any of its Subsidiaries, or any of its or their Representatives, directly or indirectly receives a bona fide,
unsolicited written Takeover Proposal from any person that did not result from the Company's, its affiliates' or the Company's or its affiliates' Representatives' failure to comply with the provisions
of
Section 5.4(a)
and if the Company Board determines in good faith, after consultation with its outside financial advisors and outside legal
counsel, that such Takeover Proposal constitutes or is reasonably likely to lead to a Company Superior Proposal, then the Company and any of its Subsidiaries, and any of its or their Representatives,
may, directly or indirectly, (i) furnish, pursuant to an Acceptable Confidentiality Agreement, information (including non-public information) with respect to the Company and its Subsidiaries,
and afford access to the business, properties, assets, employees, officers, contracts, books and records of the Company and its Subsidiaries, to the person who has made such Takeover Proposal and its
Representatives and potential sources of financing;
provided
that the Company shall substantially concurrently with the delivery to such person provide
to Parent any non-public information concerning the Company or any of its Subsidiaries that is provided or made available to such person or its Representatives unless such non-public information has
been previously provided or made available to Parent and (ii) engage in or otherwise participate in discussions or negotiations with the person making such Takeover Proposal and its
Representatives and potential sources of financing regarding such Takeover Proposal. As used this
Section 5.4
,
"
Acceptable Confidentiality Agreement
" means any customary confidentiality agreement that contains provisions that are no less restrictive to the third
party executing such agreement in the aggregate than those
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applicable
to Parent that are contained in the Confidentiality Agreement;
provided
that such confidentiality agreement shall not prohibit compliance by
the Company with any of the provisions of this
Section 5.4
.
(c) The
Company shall promptly (and in no event later than 24 hours after receipt) notify, orally and in writing, Parent after receipt by the Company or any of its
Subsidiaries, or any of its or their Representatives, of any Takeover Proposal, including of the identity of the person making the Takeover Proposal and the material terms and conditions thereof, and
shall promptly (and in no event later than 24 hours after receipt) provide unredacted copies to Parent of any written proposals, indications of interest, and/or draft agreements received from
the person making the Takeover Proposal (or its Representatives) relating to such Takeover Proposal. The Company shall keep Parent reasonably informed, on a prompt basis, as to the status of
(including changes to any material terms of, and any other material developments with respect to) such Takeover Proposal (including by promptly (and in no event later than 24 hours after
receipt) providing to Parent unredacted copies of any additional or revised written proposals, indications of interest, and/or draft agreements relating to such Takeover Proposal). The Company agrees
that it and its Subsidiaries will not enter into any agreement with any person subsequent to the date of this Agreement which prohibits the Company from providing any information to Parent in
accordance with this
Section 5.4
.
(d) Except
as expressly permitted by this
Section 5.4(d)
or
Section 5.4(e)
, neither the Company Board nor any committee thereof shall (i) (A) fail to
include the Company Board Recommendation in the
Proxy Statement/Prospectus, (B) change, qualify, withhold, withdraw or modify, or authorize or publicly propose to change, qualify, withhold, withdraw or modify, in a manner adverse to Parent
the Company Board Recommendation, (C) take any formal action or make any recommendation or public statement in connection with a tender offer or exchange offer (other than a recommendation
against such offer or a customary "stop, look and listen" communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) (it being understood that the Company Board may refrain
from taking a position with respect to such tender offer or exchange offer until the close of business as of the tenth business day after the commencement of such tender offer or exchange offer
pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered a Company Adverse Recommendation Change), or (D) adopt, approve or recommend, or publicly propose to
adopt, approve or recommend, to the Company Shareholders a Takeover Proposal (any action described in this clause (i) being referred to as a "
Company Adverse
Recommendation Change
"), or (ii) authorize, cause or permit the Company or any of its Subsidiaries to enter into any letter of intent, agreement, commitment or agreement
in principle with respect to any Takeover Proposal (other than (x) an Acceptable Confidentiality Agreement entered into in accordance with
Section 5.4(b)
or (y) in accordance with
Section 7.1(j)
). Notwithstanding anything
to the contrary set forth in this Agreement, at any time prior to receipt of the Company Shareholder Approval, the Company Board may make a Company Adverse Recommendation Change (i) in response
to a Company Intervening Event, or (ii) after receipt of a bona fide, unsolicited Takeover Proposal, which the Company Board determines in good faith, after consultation with its outside
financial advisors and outside legal counsel is a Company Superior Proposal, if and only if, (x) in the case of clause (ii), such Takeover Proposal was received after the date hereof and
did not result from a breach of the provisions of this
Section 5.4
and (y) in the case of clauses (i) and (ii), the Company Board
has determined in good faith after consultation with the Company's outside financial advisors and outside legal counsel that the failure to take such action would be inconsistent with the fiduciary
duties of the Company Board under applicable Law and the Company complies with
Section 5.4(e)
.
(e) Prior
to making such Company Adverse Recommendation Change (i) in response to a Company Intervening Event, the Company shall provide Parent with at least four
business days' prior written notice of its intention to effect a Company Adverse Recommendation Change and specifying, in reasonable detail, the reasons therefor (including the material facts and
circumstances related to the
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applicable
Company Intervening Event), and during such four business day period, the Company has negotiated, and has caused its Representatives to negotiate, in good faith with Parent during such
notice period, to the extent Parent wishes to negotiate, to enable Parent to propose revisions to the terms of this Agreement in a manner that would obviate the need to effect a Company Adverse
Recommendation Change or (ii) in connection with a Company Superior Proposal, (1) the Company shall provide Parent with at least four business days' prior written notice of its intention
to take such action (which notice shall specify the material terms and conditions of any such Company Superior Proposal) and specifying, in reasonable detail, the material terms and conditions of the
Takeover Proposal, (2) the Company has negotiated, and has caused its Representatives to negotiate, in good faith with Parent during such notice period, to the extent Parent wishes to
negotiate, to enable Parent to propose revisions to the terms of this Agreement such that it would cause such Company Superior
Proposal to no longer constitute a Company Superior Proposal, (3) following the end of such notice period, the Company Board shall have considered in good faith any revisions to the terms of
this Agreement proposed in writing by Parent, and shall have determined, after consultation with its outside financial advisors and outside legal counsel, that the Company Superior Proposal would
nevertheless continue to constitute a Company Superior Proposal if the revisions proposed by Parent were to be given effect, and (4) in the event of any change to any of the material financial
terms (including the form, amount and timing of payment of consideration) or any other material terms of such Company Superior Proposal, the Company shall, in each case, have delivered to Parent an
additional notice consistent with that described in clause (1) of this
Section 5.4(e)
and a new notice period under clause (1) of
this
Section 5.4(e)
shall commence (except that the four business day notice period referred to in clause (1) of this
Section 5.4(e)
shall
instead be equal to the longer of (x) two business days and (y) the period remaining under the notice period
under clause (1) of this
Section 5.4(e)
immediately prior to the delivery of such additional notice under this clause (4)) during
which time the Company shall be required to comply with the requirements of this
Section 5.4(e)
anew with respect to such additional notice,
including clauses (1) through (4) above of this
Section 5.4(e)
.
(f) Nothing
contained in this
Section 5.4
shall prohibit the Company or the Company Board from taking and disclosing
to the Company Shareholders a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making any "stop, look and listen" communication or any
other similar disclosure to the Company Shareholders pursuant to Rule 14d-9(f) under the Exchange Act if, in the determination in good faith of the Company Board, after consultation with
outside counsel, the failure so to disclose would be inconsistent with its fiduciary duties under applicable Law or obligations under applicable federal securities Law of the Company Board;
provided
that this
Section 5.4(f)
shall not permit the Company Board to make a Company Adverse
Recommendation Change except to the extent permitted by this
Section 5.4
.
Section 5.5
No Solicitation by Parent
.
(a) Except
as expressly permitted by this
Section 5.5
, Parent shall, shall cause each of its affiliates and its and
their respective officers, directors and employees to, and shall use its reasonable best efforts to cause its and their other Representatives to: (i) immediately cease any solicitation, knowing
encouragement, discussions or negotiations with any persons that may be ongoing with respect to or may reasonably be expected to lead to a Takeover Proposal, and promptly instruct (to the extent it
has contractual authority to do so and has not already done so prior to the date of this Agreement) or otherwise request, any person that has executed a confidentiality or non-disclosure agreement
within the 24-month period prior to the date of this Agreement in connection with any actual or potential Takeover Proposal to return or destroy all such information or documents or material
incorporating confidential information in the possession of such person or its Representatives, and (ii) until the Effective Time or, if earlier, the termination of this Agreement in accordance
with
Article VII
, not, directly or indirectly, (1) solicit, initiate or knowingly facilitate or knowingly encourage (including by way of
furnishing non-public information) any inquiries regarding, or the making of any proposal or
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offer
that constitutes, or could reasonably be expected to lead to, a Takeover Proposal, (2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or
furnish to any other person any non-public information in connection with or for the purpose of encouraging or facilitating, a Takeover Proposal (other than, solely in response to an unsolicited
inquiry, to refer the inquiring person to this
Section 5.5
and to limit its conversation or other communication exclusively to such referral), or
(3) approve, recommend or enter into, or propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment or agreement in principle (whether written
or oral, binding or nonbinding) with respect to a Takeover Proposal (other than (x) an Acceptable Confidentiality Agreement in accordance with
Section 5.5(b)
or (y) in accordance with
Section 7.1(k)
). Except to the extent
necessary to take any actions that Parent or any third party would otherwise be permitted to take pursuant to this
Section 5.5
(and in such case
only in accordance with the terms hereof), (A) Parent and its Subsidiaries shall not release any third party from, or waive, amend or modify any provision of, or grant permission under,
(x) any standstill provision in any agreement to which Parent or any of its Subsidiaries is a party or (y) any confidentiality provision in any agreement to which Parent or any of its
Subsidiaries is a party other than, with respect to this clause (y), any confidentiality provision, the waiver, amendment, modification or permission thereof does not, and would not be
reasonably likely to, facilitate, encourage or relate in any way to a Takeover Proposal or a potential the Takeover Proposal and (B) Parent shall, and shall cause its Subsidiaries to, enforce
such confidentiality and standstill provisions of any such agreement, and Parent shall, and shall cause its Subsidiaries to, immediately take all steps within their power necessary to terminate any
waiver that may have been heretofore granted, to any person other than the Company or any of the Company's affiliates, under any such provisions.
(b) Notwithstanding
anything to the contrary contained in
Section 5.5(a)
, if at any time from and after the date of
this Agreement and prior to obtaining the Parent Shareholder Approval, Parent or any of its Subsidiaries, or any of its or their Representatives, directly or indirectly receives a bona fide,
unsolicited written Takeover Proposal from any person that did not result from Parent's, its affiliates' or Parent's or its affiliates' Representatives' failure to comply with the provisions of
Section 5.5(a)
and if the Parent Board determines in good faith, after consultation with its outside financial advisors and outside legal
counsel, that such Takeover Proposal constitutes or is reasonably likely to lead to a Parent Superior Proposal, then Parent and any of its Subsidiaries, and any of its or their Representatives, may,
directly or indirectly, (i) furnish, pursuant to an Acceptable Confidentiality Agreement, information (including non-public information) with respect to Parent and its Subsidiaries, and afford
access to the business, properties, assets, employees, officers, contracts, books and records of Parent and its Subsidiaries, to the person who has made such Takeover Proposal and its Representatives
and potential sources of financing;
provided
that Parent shall substantially concurrently with the delivery to such person provide to the Company any
non-public information concerning Parent or any of its Subsidiaries that is provided or made available to such person or its Representatives unless such non-public information has been previously
provided or made available to the Company and (ii) engage in or otherwise participate in discussions or negotiations with the person making such Takeover Proposal and its Representatives and
potential sources of financing regarding such Takeover Proposal. As used in this
Section 5.5
, "
Acceptable Confidentiality
Agreement
" means any customary confidentiality agreement that contains provisions that are no less restrictive to the third party executing such agreement in the aggregate than
those applicable to the Company that are contained in the Confidentiality Agreement;
provided
that such confidentiality agreement shall not prohibit
compliance by Parent with any of the provisions of this
Section 5.5
.
(c) Parent
shall promptly (and in no event later than 24 hours after receipt) notify, orally and in writing, the Company after receipt by Parent or any of its
Subsidiaries, or any of its or their Representatives, of any Takeover Proposal, including of the identity of the person making the Takeover Proposal and the material terms and conditions thereof, and
shall promptly (and in no event later than 24 hours after receipt) provide unredacted copies to the Company of any written proposals, indications
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of
interest, and/or draft agreements received from the person making the Takeover Proposal (or its Representatives) relating to such Takeover Proposal. Parent shall keep the Company reasonably
informed, on a prompt basis, as to the status of (including changes to any material terms of, and any other material developments with respect to) such Takeover Proposal (including by promptly (and in
no event later than 24 hours after receipt) providing to the Company unredacted copies of any additional or revised written proposals, indications of interest, and/or draft agreements relating
to such Takeover Proposal). Parent agrees that it and its Subsidiaries will not enter into any agreement with any person subsequent to the date of this Agreement which prohibits Parent from providing
any information to the Company in accordance with this
Section 5.5
.
(d) Except
as expressly permitted by this
Section 5.5(d)
or
Section 5.5(e)
, neither the Parent Board nor any committee thereof shall (i) (A) fail to
include the Parent Board Recommendation in the
Proxy Statement/Prospectus, (B) change, qualify, withhold, withdraw or modify, or authorize or publicly propose to change, qualify, withhold, withdraw or modify, in a manner adverse to the
Company the Parent Board Recommendation, (C) take any formal action or make any recommendation or public statement in connection with a tender offer or exchange offer (other than a
recommendation against such offer or a customary "stop, look and listen" communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) (it being understood that the Parent
Board may refrain from taking a position with respect to such tender offer or exchange offer until the close of business as of the tenth business day after the commencement of such tender offer or
exchange offer pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered a Parent Adverse Recommendation Change), or (D) adopt, approve or recommend, or
publicly propose to adopt, approve or recommend, to the Parent Shareholders a Takeover Proposal (any action described in this clause (i) being referred to as a "
Parent
Adverse Recommendation Change
"), or (ii) authorize, cause or permit Parent or any of its Subsidiaries to enter into any letter of intent, agreement, commitment or
agreement in principle with respect to any Takeover Proposal (other than (x) an Acceptable Confidentiality Agreement entered into in accordance with
Section 5.5(b)
or (y) in accordance
with
Section 7.1(k)
). Notwithstanding anything
to the contrary set forth in this Agreement, at any time prior to receipt of the Parent Shareholder Approval, the Parent Board may make a Parent Adverse Recommendation Change (i) in response to
a Parent Intervening Event, or (ii) after receipt of a bona fide, unsolicited Takeover Proposal, which the Parent Board determines in good faith, after consultation with its outside financial
advisors and outside legal counsel is a Parent Superior Proposal, if and only if, (x) in the case of clause (ii), such Takeover Proposal was received after the date hereof and did not
result from a breach of the provisions of this
Section 5.5
and (y) in the case of clauses (i) and (ii), the Parent Board has
determined in good faith after consultation with Parent's outside financial advisors and outside legal counsel that the failure to take such action would be inconsistent with the fiduciary duties of
the Parent Board under applicable Law and Parent complies with
Section 5.5(e)
.
(e) Prior
to making such Parent Adverse Recommendation Change (i) in response to a Parent Intervening Event, Parent shall provide the Company with at least four
business days' prior written notice of its intention to effect a Parent Adverse Recommendation Change and specifying, in reasonable detail, the reasons therefor (including the material facts and
circumstances related to the applicable Parent Intervening Event), and during such four business day period, Parent has negotiated, and has caused its Representatives to negotiate, in good faith with
the Company during such notice period, to the extent the Company wishes to negotiate, to enable the Company to propose revisions to the terms of this Agreement in a manner that would obviate the need
to effect a Parent Adverse Recommendation Change or (ii) in connection with a Parent Superior Proposal, (1) Parent shall provide the Company with at least four business days' prior
written notice of its intention to take such action (which notice shall specify the material terms and conditions of any such Parent Superior Proposal) and specifying, in reasonable detail, the
material terms and conditions of the Takeover Proposal, (2) Parent has negotiated, and has caused its Representatives to negotiate, in good faith with the Company during such notice period, to
the extent the Company wishes to negotiate, to enable the
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Company
to propose revisions to the terms of this Agreement such that it would cause such Parent Superior Proposal to no longer constitute a Parent Superior Proposal, (3) following the end of
such notice period, the Parent Board shall have considered in good faith any revisions to the terms of this Agreement proposed in writing by the Company, and shall have determined, after consultation
with its outside financial advisors and outside legal counsel, that the Parent Superior Proposal would nevertheless continue to constitute a Parent Superior Proposal if the revisions proposed by the
Company were to be given effect, and (4) in the event of any change to any of the material financial terms (including the form, amount and timing of payment of consideration) or any other
material terms of such Parent Superior Proposal, Parent shall, in each case, have delivered to the Company an additional notice consistent with that described in clause (1) of this
Section 5.5(e)
and a new notice period under clause (1) of this
Section 5.5(e)
shall commence (except that the four business day notice period referred to in clause (1) of this
Section 5.5(e)
shall instead be equal to
the longer of (x) two business days and (y) the period remaining under the notice period under clause (1) of this
Section 5.5(e)
immediately prior to the delivery of such additional
notice under this clause (4)) during which time Parent shall be
required to comply with the requirements of this
Section 5.5(e)
anew with respect to such additional notice, including clauses (1) through
(4) above of this
Section 5.5(e)
.
(f) Nothing
contained in this
Section 5.5
shall prohibit Parent or the Parent Board from taking and disclosing to the
Parent Shareholders a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making any "stop, look and listen" communication or any other
similar disclosure to the Parent Shareholders pursuant to Rule 14d-9(f) under the Exchange Act if, in the determination in good faith of the Parent Board, after consultation with outside
counsel, the failure so to disclose would be inconsistent with its fiduciary duties under applicable Law or obligations under applicable federal securities Law of the Parent Board;
provided
that this
Section 5.5(f)
shall not permit the Parent Board to make a Parent Adverse
Recommendation Change except to the extent permitted by this
Section 5.5
.
Section 5.6
Filings; Other Actions
.
(a) As
promptly as reasonably practicable following the date of this Agreement, Parent and the Company shall prepare and file with the SEC the Form S-4, which will
include the Proxy Statement/Prospectus. Each of Parent and the Company shall use commercially reasonable efforts to have the Form S-4 declared effective under the Securities Act as promptly as
reasonably practicable after such filing and to keep the Form S-4 effective as long as necessary to consummate the Merger and the other transactions contemplated hereby. Each of Parent and the
Company will cause the Proxy Statement/Prospectus to be mailed to the Parent Shareholders and Company Shareholders, as applicable, as soon as reasonably practicable after the Form S-4 is
declared effective under the Securities Act. Parent shall also take any action required to be taken under any applicable state or provincial securities laws in connection with the issuance and
reservation of the Parent Class A Ordinary Shares in the Merger, and the Company shall furnish all information concerning the Company and the holders of Company Common Stock, or holders of a
beneficial interest therein, as may be reasonably requested in connection with any such action. No filing of, or amendment or supplement to, the Form S-4 or the Proxy Statement/Prospectus will
be made by Parent or the Company, as applicable, without the other's prior consent (which shall not be unreasonably withheld, conditioned or delayed) and without providing the other Party a reasonable
opportunity to review and comment thereon. Parent or the Company, as applicable, will advise the other promptly after it receives oral or written notice of the time when the Form S-4 has become
effective or any supplement or amendment thereto has been filed, the issuance of any stop order, the suspension of the qualification of the Parent Class A Ordinary Shares for offering or sale
in any jurisdiction, or any oral or written request by the SEC for amendment of the Proxy Statement/Prospectus or the Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information, and will promptly provide the other with copies of any written communication from the SEC or any state securities commission. If at any time prior to the Effective
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Time
any information relating to Parent or the Company, or any of their respective affiliates, officers or directors, is discovered by Parent or the Company which should be set forth in an amendment
or supplement to any of the Form S-4 or the Proxy Statement/Prospectus, so that any of such documents would not include a misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party that discovers such information shall promptly notify the other Parties
hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by law, disseminated to the Parent Shareholders and
Company Shareholders, as applicable.
(b) The
Company, acting through the Company Board, shall, in accordance with applicable Law and the Company Charter and Company Bylaws, duly call, give notice of, convene
and hold an annual or special meeting of its shareholders (the "
Company Shareholder Meeting
") as soon as reasonably practicable following execution of
this Agreement for the purpose of approving by requisite vote this Agreement. The Company Board shall, subject to
Section 5.4(d)
, include the
Company Board Recommendation in the Proxy Statement/Prospectus and use its reasonable best efforts to obtain the Company Shareholder Approval. Notwithstanding anything in this Agreement to the
contrary, unless this Agreement is terminated in accordance with
Section 7.1
and subject to compliance with
Section 5.4
, the Company, regardless
of whether the Company Board has approved, endorsed or recommended a Takeover Proposal or has withdrawn,
modified or amended the Company Board Recommendation, will submit this Agreement for approval by the Company Shareholders at such meeting.
(c) Parent,
acting through the Parent Board, shall, in accordance with applicable Law and Parent's articles of association, duly call, give notice of, convene and hold a
general meeting of its shareholders (the "
Parent Shareholder Meeting
") as soon as reasonably practicable following execution of this Agreement for the
purpose of approving by requisite vote the Parent Shareholder Resolutions. The Parent Board shall, subject to
Section 5.5(d)
, include the Parent
Board Recommendation in the Proxy Statement/Prospectus and use its reasonable best efforts to obtain approval of the Parent Shareholder Resolutions. Notwithstanding anything in this Agreement to the
contrary, unless this Agreement is terminated in accordance with
Section 7.1
and subject to compliance with
Section 5.5
, Parent, regardless of
whether the Parent Board has approved, endorsed or recommended a Takeover Proposal or has withdrawn, modified
or amended the Parent Board Recommendation, will submit the Parent Shareholder Resolutions for approval by the Parent Shareholders at such meeting.
(d) Notwithstanding
anything to the contrary contained in this Agreement, Parent or the Company, after consultation with the other Party hereto and subject to such other
Party's approval (which shall not be unreasonably withheld, conditioned or delayed), may adjourn or postpone the Parent Shareholder Meeting or the Company Shareholder Meeting, as applicable, to the
extent it believes in good faith that such adjournment or postponement is necessary to ensure that any required supplement or amendment to the Proxy Statement/Prospectus is provided to its
shareholders or, if as of the time for which the Parent Shareholder Meeting or the Company Shareholder Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are
insufficient Parent Class A Ordinary Shares or shares of Company Common Stock, as applicable, represented (either in person or by proxy) to constitute a quorum necessary to conduct business at
such meeting.
(e) Parent
and the Company will use their respective reasonable best efforts to hold the Parent Shareholder Meeting and the Company Shareholder Meeting simultaneously and as
soon as reasonably practicable after the date of this Agreement and shall cooperate in good faith to coordinate the timing of the Parent Shareholder Meeting and the Company Shareholder Meeting with
the Parties' anticipated Closing Date.
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Section 5.7
Efforts; Regulatory Approvals
.
(a) Prior
to the Closing, Parent, Merger Sub and the Company shall use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under any applicable Laws to consummate and make effective the Merger, including (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the Merger and the provision of information in connection therewith, (ii) the satisfaction of the conditions to consummating the
Merger, (iii) taking all reasonable actions necessary to obtain (and cooperating with each other in obtaining) any consent, authorization, Order or approval of, or any exemption by, any third
party, including any Governmental Entity (which actions shall include furnishing all information and documentary material required under the HSR Act or other antitrust, competition, foreign investment
or similar Laws outside of the United States) required to be obtained or made by the Parent, Merger Sub, the Company or any of their respective Subsidiaries in connection with the Merger or the taking
of any action contemplated by this Agreement, and (iv) the execution and delivery of any additional instruments necessary to consummate the Merger and to fully carry out the purposes of this
Agreement. Additionally, Parent, Merger Sub and the Company shall use reasonable best efforts to fulfill all conditions precedent to the Merger and shall not take any action after the date of this
Agreement that would reasonably be expected to materially delay the obtaining of, or result in not obtaining, any consent, authorization, Order or approval of, or any exemption by, any such
Governmental Entity necessary to be obtained prior to Closing. To the extent that transfers of any Permits issued by any Governmental Entity are required as a result of the execution of this Agreement
or the consummation of the Merger (including Permits required pursuant to Environmental Laws), the Parties hereto shall use reasonable best efforts to effect such transfers.
(b) In
furtherance and not in limitation of the other covenants contained in this
Section 5.7
, each of the Parent,
Merger Sub, and the Company shall use its reasonable best efforts to take, or cause to be taken, any and all steps and to make, or cause to be made any and all undertakings necessary to resolve
objections, if any, that any Relevant Authority may assert under the HSR Act and any other federal, state or foreign law designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade or reduction of competition (collectively, "
Antitrust Laws
") or that regulates foreign investment
("
Foreign Investment Laws
"), with respect to this Agreement, and to avoid or eliminate each and every impediment under any Antitrust Law or Foreign
Investment Laws that may be asserted by any Relevant Authority with respect to this Agreement, in each case, so as to enable the Closing to occur as promptly as practicable including
(i) proposing, negotiating, committing to and effecting, by consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of any businesses, assets, equity interests,
product lines or properties of the Parent, Merger Sub and the Company (or any of their respective subsidiaries) or any equity interest in any joint venture held by Parent, Merger Sub and the Company
(or any of their respective subsidiaries), (ii) creating, terminating, or divesting relationships, ventures, contractual rights or obligations of the Parent, Merger Sub and the Company or their
respective Subsidiaries and (iii) otherwise taking or committing to take any action that would limit the Parent's or the Merger Sub's freedom of action with respect to, or its ability to retain
or hold, directly or indirectly, any businesses, assets, equity interests, product lines or properties of the Parent, Merger Sub and the Company (including any of their respective Subsidiaries) or any
equity interest in any joint venture held by the Parent, Merger Sub and the Company (or any of their respective Subsidiaries), in each case as may be required in order to obtain all approvals and
consents required directly or indirectly under any Antitrust Law or Foreign Investment Laws, or to avoid the commencement of any action to prohibit the Closing of the Agreement under any Antitrust Law
or Foreign Investment Laws, or to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any action or proceeding seeking to prohibit the
Closing of the Agreement or delay the Closing of the Agreement beyond the End Date,
provided
,
however
,
that Parent shall not be required to take any actions under this
Section 5.7
that would reasonably be expected to, individually or in the
aggregate, result in a
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one-year
loss of revenues determined in accordance with GAAP (as measured by the four full fiscal quarters for which financial statements are available immediately preceding the relevant measurement
period) of more than $175.0 million on a combined basis for both the Company and its Subsidiaries and Parent and its Subsidiaries. Nothing in this
Section 5.7(b)
shall require by the Parent,
Merger Sub and the Company to take or agree to take any action with respect to its business or
operations unless the effectiveness of such agreement or action is conditioned upon the Closing.
(c) The
Company and Parent shall each keep the other apprised of the status of matters relating to the completion of the Merger and work cooperatively in connection with
obtaining all required consents, authorizations, Orders or approvals of, or any exemptions by, any Governmental Entity undertaken pursuant to the provisions of this
Section 5.7
. In that regard,
prior to the Closing, each Party shall promptly consult with one another with respect to, and provide any necessary
information with respect to (and, in the case of correspondence, provide the other Parties (or their counsel) copies of), all filings made by such Party with any Governmental Entity or any other
information supplied by such Party to, or correspondence with, a Governmental Entity in connection with this Agreement and the Merger. Each Party to this Agreement shall promptly inform the other
Parties to this Agreement, and if in writing, furnish the other Party (or their counsel) with copies of (or, in the case of oral communications, advise the other Party (or their counsel) orally of)
any communication from any Governmental Entity regarding the Merger, and permit the other Party to review and discuss in advance, and consider in good faith the views of the other Party in connection
with, any proposed communication with any such Governmental Entity. If any Party or any Representative of such Party receives a request for additional information or documentary material, or other
request for information, from any Governmental Entity with respect to the Merger, then such Party will use reasonable best efforts to make, or cause to be made, promptly and after consultation with
the other Party, an appropriate response in substantial compliance with such request. Neither Party shall participate in any meeting or teleconference with any Governmental Entity where material
issues would likely be discussed in connection with this Agreement and the Merger unless, so long as reasonably practicable, it consults with the other Party in advance and, to the extent permitted by
such Governmental Entity, gives the other Party the opportunity to attend and participate thereat. Each Party shall furnish the other Party with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it and any such Governmental Entity with respect to this Agreement and the Merger, and furnish the other Party with such
necessary information and reasonable assistance as the other Party may reasonably request in connection with its preparation of necessary filings or submissions of information to any such Governmental
Entity;
provided
,
however
, that materials provided pursuant to this
Section 5.7
may be redacted
(i) to remove references concerning the valuation of the Company and the Merger or other confidential
information, (ii) as necessary to comply with contractual arrangements, and (iii) as necessary to address reasonable privilege concerns.
(d) The
Company and Parent shall use reasonable best efforts to (i) file, as promptly as practicable, but in any event no later than ten (10) business days
after the date of this Agreement, all notifications required under the HSR Act; and (ii) make any other required or advisable filings (as determined by Parent) under any antitrust, competition,
foreign investment or similar Laws as promptly as practicable. In the event that the Parties receive a request for information or documentary material pursuant to the HSR Act or other request for
information from any Governmental Entity, the Parties will use their respective reasonable best efforts to respond to such request as promptly as practicable, and counsel for both Parties will closely
cooperate during the entirety of any such response process.
(e) Notwithstanding
anything to the contrary contained herein, the Parties agree that it is Parent's sole right to control, direct and devise the strategy for all filings,
notifications, submissions, communications and other dealings and decision-making in connection with the HSR Act and other antitrust, competition, foreign investment and similar Laws. Notwithstanding
the foregoing, nothing in this
Section 5.7(e)
shall limit Parent's obligations under
Section 5.7(a)
,
(b)
,
(c)
and
(d)
.
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Section 5.8
Takeover Statutes
.
If any "moratorium," "control share acquisition," "fair price," "supermajority," "affiliate transactions," or "business combination statute or regulation" or other similar state or other
anti-takeover Laws and regulations may become, or may purport to be, applicable to the Merger or any other transactions contemplated hereby, each of the Company and Parent shall grant such approvals
and take such actions as are reasonably necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise
act to eliminate or minimize the effects of such statute or regulation on the transactions contemplated hereby.
Section 5.9
Public Announcements
.
Parent and the Company shall use commercially reasonable efforts to develop a joint communications plan and each Party shall use commercially reasonable efforts to ensure that all press
releases and other public statements with respect to the transactions contemplated hereby, to the extent they have not been previously issued or disclosed, shall be consistent with such joint
communications plan. Unless otherwise required by applicable Law or by obligations pursuant to any listing agreement with or rules of any securities exchange, each Party shall consult with each other
before issuing any press release or public statement with respect to the Merger and, subject to the requirements of applicable Law or the rules of any securities exchange, shall not issue any such
press release or public statement prior to such consultation. Parent and the Company agree to issue a mutually acceptable initial joint press release announcing this Agreement.
Section 5.10
Indemnification and Insurance
.
(a) Parent
agrees that, to the fullest extent permitted under applicable Law, all rights to exculpation, indemnification and advancement of expenses for acts or omissions
occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, existing as at the date of this Agreement in favor of the current or former
directors, officers or employees, as the case may be, of the Company or its Subsidiaries as provided in their respective certificate of formation or bylaws or other organizational documents or in any
agreement shall survive the Merger and shall continue in full force and effect in accordance with their terms. For a period of six years from the Effective Time, to the fullest extent permitted under
applicable Law, Parent shall, and shall cause the Surviving Company to, maintain in effect any and all exculpation, indemnification and advancement of expenses provisions of the certificate of
formation, bylaws or similar organizational documents of the Company and its Subsidiaries in effect as at the date of this Agreement or in any indemnification agreements of the Company or its
Subsidiaries with any of their respective current or former directors, officers or employees in effect as at the date of this Agreement, and to the fullest extent permitted under applicable Law shall
not amend, repeal or otherwise modify any such provisions or the exculpation, indemnification or advancement of expenses provisions of the organizational documents of the Company or its Subsidiaries
in any manner that would adversely affect the rights thereunder of any individuals who immediately before the Effective Time were current or former directors, officers or employees of the Company or
any of its Subsidiaries;
provided
,
however
, that all rights to exculpation, indemnification and
advancement of expenses in respect of any Action pending or asserted or any claim made within such period shall continue until the disposition of such Action or resolution of such claim.
(b) Parent
shall, and shall cause the Surviving Company to, to the fullest extent permitted under applicable Law, indemnify and hold harmless (and advance funds in respect
of each of the foregoing) each current and former director, officer or employee of the Company or any of its Subsidiaries and each person who served as a director, officer, member, trustee or
fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such service was at the request or for the benefit of the Company or any of
its Subsidiaries (each, together with such person's heirs, executors or administrators, an "
Indemnified Party
"), in each case against any costs or
expenses (including advancing attorneys' fees and expenses in advance of the final disposition of any claim, suit, proceeding or investigation to each Indemnified Party to the fullest extent permitted
by applicable Law;
provided
,
however
, that the Indemnified Party to whom expenses are advanced provides
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an
undertaking consistent with applicable Law and the Company Organizational Documents to repay such amounts if it is ultimately determined that such person is not entitled to indemnification),
judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (an "
Action
"), arising out of, relating to or in connection with any action or omission by them in their
capacities as such occurring or alleged to have occurred whether before or
after the Effective Time (including acts or omissions in connection with such Indemnified Party serving as an officer, director, employee or other fiduciary of any entity if such service was at the
request or for the benefit of the Company). In the event of any such Action, Parent and the Surviving Company shall cooperate with the Indemnified Party in the defense of any such Action.
(c) For
a period of six years from the Effective Time, Parent and the Surviving Company shall cause to be maintained in effect the coverage provided by the policies of
directors' and officers' liability insurance and fiduciary liability insurance in effect as of the date hereof by the Company and its Subsidiaries with respect to matters existing or arising on or
before the Effective Time (provided that Parent may substitute these for policies with a carrier with reasonably comparable credit ratings to the existing carrier of at least the same coverage and
amounts and containing terms and conditions that it reasonably considers are no less favorable to the insured or, if insurance coverage that is no less favorable is unavailable, the best available
coverage);
provided
,
however
, that Parent shall not be required to pay an annual premium in excess of
300% of the last annual premium paid by the Company prior to the date hereof in respect of the coverages (the "
Maximum Amount
") required to be obtained
pursuant hereto, but in such case shall purchase as much coverage as reasonably practicable for such amount. If the Company or Parent elects, then the Company or Parent, as applicable, may, prior to
the Effective Time, purchase a "tail policy" with respect to acts or omissions occurring or alleged to have occurred prior to the Effective Time that were committed or alleged to have been committed
by such Indemnified Parties in their capacity as such;
provided
that in no event shall the cost of such policy, if purchased by the Company, exceed six
(6) times the Maximum Amount and, if such a "tail policy" is purchased, Parent shall have no further obligations under this
Section 5.10(c)
.
(d) Parent
shall, to the fullest extent permitted under applicable Law, pay all reasonable expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided in this
Section 5.10
.
(e) The
rights of each Indemnified Party under this
Section 5.10
shall be in addition to, and not in limitation of,
any other rights such Indemnified Party may have under the certificate of incorporation or bylaws or other organizational documents of the Company or any of its Subsidiaries or the Surviving Company,
any other indemnification arrangement, the TBOC or otherwise.
(f) In
the event that Parent, the Surviving Company or any of its successors or assigns shall (i) consolidate with or merge into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer all or substantially all its properties and assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successor and assign of Parent or the Surviving Company assumes the obligations set forth in this
Section 5.10
.
(g) The
obligations of Parent under this
Section 5.10
shall not be terminated, amended or modified in any manner so as
to adversely affect any Indemnified Party (including their successors, heirs and legal representatives) to whom this
Section 5.10
applies without
the consent of such Indemnified Party. It is expressly agreed that, notwithstanding any other provision of this Agreement that may be to the contrary, (i) the Indemnified Parties to whom this
Section 5.10
applies shall be third-party beneficiaries of this
Section 5.10
, and
(ii) this
Section 5.10
shall survive consummation of the Merger and shall be enforceable by such Indemnified Parties and their respective
successors, heirs and legal representatives against Parent and its successors and assigns.
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Section 5.11
Control of Operations
.
Without in any way limiting any Party's rights or obligations under this Agreement, the Parties understand and agree that (a) nothing contained in this Agreement shall give Parent
or the Company, directly or indirectly, the right to control or direct the other Party's operations prior to the Effective Time and (b) prior to the Effective Time, each of Parent and the
Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations.
Section 5.12
Section 16 Matters
.
Prior to the Effective Time, Parent and the Company shall take all such steps as may be required to cause any dispositions of Company Common Stock (including derivative securities with
respect to Company Common Stock) or acquisitions of Parent Ordinary Shares (including derivative securities with respect to Parent Ordinary Shares) resulting from the transactions contemplated by this
Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company or will become subject to such reporting requirements
with respect to Parent, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 5.13
Transaction Litigation
.
Each Party shall provide the other Party prompt written notice of any litigation brought by any shareholder of that Party against such Party, any of its Subsidiaries and/or any of their
respective directors relating to the Merger, this Agreement or any of the transactions contemplated hereby. Unless, in the case of such litigation with respect to the Company, the Company Board has
made or is considering making a Company Adverse Recommendation Change, the Company shall give Parent the opportunity to participate (at Parent's expense) in the defense or settlement of any
shareholder litigation against the Company and/or its directors or executive officers relating to the transactions contemplated by this Agreement, including the Merger. The Company agrees that it
shall not settle or offer to settle any litigation commenced prior to or after the date of this Agreement against the Company or its directors, executive officers or similar persons by any shareholder
of the Company relating to this Agreement, the Merger or any other transaction contemplated hereby without the prior written consent of Parent (which consent shall not be unreasonably withheld,
conditioned or delayed).
Section 5.14
NYSE Listing
.
Parent shall use its best efforts to cause the Parent Class A Ordinary Shares to be issued in the Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date.
Section 5.15
Tax Matters
.
The Parties shall (and shall cause their respective affiliates to) use commercially reasonable efforts to ensure that Section 7874 of the Code, the regulations promulgated
thereunder, or official interpretation thereof as set forth in published guidance by the IRS (the "
Expatriated Entity Rules
"), should not apply in such
a manner so as to cause Parent to be treated as a "domestic corporation" for U.S. federal income Tax purposes as a result of the Merger, including by (i) not taking any action that such Party
knows (or not failing to take any action which failure such Party knows) is reasonably likely to result in such "domestic corporation" treatment, and (ii) negotiating in good faith such
amendments to this Agreement as may be reasonably required in order to prevent such "domestic corporation" treatment (it being understood that no Party will be required to agree to any such
amendment). If any Party is, or should reasonably become, aware of any fact or circumstance that such Party may reasonably expect would cause the representations in any of
Section 3.14(d)
or
Section 4.14(c)
to be untrue, then such Party shall promptly notify the
other Parties. The Parties agree to execute certificates, at such time or times as may be reasonably requested by any Party, in form and substance reasonably acceptable to the requesting Party,
containing appropriate representations establishing that the Expatriated Entity Rules should not apply in such a manner so as to cause Parent to be treated as a "domestic corporation" for U.S. federal
income Tax purposes as a result of the Merger.
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Section 5.16
Certificate of Non-USRPHC Status
.
The Company shall deliver to Parent at the Closing a certification by the Company that meets the requirements of Treasury Regulations Section 1.1445-2(c)(3) and Treasury
Regulations Section 1.897-2(h)(1)(i), dated within 30 days prior to the Closing Date and in form and substance reasonably acceptable to Parent along with written authorization for Parent
to deliver such certification to the IRS on behalf of the Company upon Closing.
Section 5.17
Consent to Use of Financial Statements; Financing Cooperation
.
The Company hereby consents to Parent's inclusion of any audited or unaudited financial statements, including those contained in any Company SEC Documents, relating to and prepared by
the Company reasonably requested by Parent to be used in any financing or any filings that Parent desires to make with the SEC. In addition, the Company will use commercially reasonable efforts, at
Parent's sole cost and expense, to obtain customary comfort letters from PricewaterhouseCoopers LLP regarding financial statements of the Company as reasonably requested by the lead
underwriter(s) or initial purchaser(s) in connection with any registered or private offering or otherwise and to obtain the consent of PricewaterhouseCoopers LLP to the inclusion of the
financial statements referenced above in appropriate filings with the SEC. Prior to the Closing, the Company will use commercially reasonable efforts to provide Parent such information regarding the
Company's business, and make available such personnel, as Parent may reasonably request in order to assist Parent in connection with any financing activities, including any public offerings to be
registered under the Securities Act or private offerings, if permitted under
Section 5.2(b)
. Parent shall indemnify, defend, and hold harmless
the Company, its Subsidiaries and their respective Representatives from and against any and all losses suffered or incurred by them in connection with (a) any action taken by them at the
request of Parent or Merger Sub pursuant to this
Section 5.17
or in connection with any registered or private offering of Parent or
(b) any information utilized in connection therewith (other than information provided by the Company and its Subsidiaries specifically for inclusion or incorporation by reference therein).
Section 5.18
Employee Matters
.
(a) At
the Effective Time, Parent and its Subsidiaries will continue the employment of all of the employees who are employed by the Company or any of its Subsidiaries as of
the day immediately prior to the Effective Time (the "
Affected Employees
") initially at the same salaries and wages of such employees immediately prior
to the Effective Time. During the period from the Effective Time to and including the one year anniversary of the Closing Date, Parent and its Subsidiaries (i) shall provide each Affected
Employee with an annual salary rate or hourly wage rate, as applicable, that is no less favorable to such Affected Employee than the salary rate or wage rate provided to such Affected Employee
immediately prior to the Effective Time, and (ii) shall provide Affected Employees who are so employed by the Company or its Subsidiaries as of the day immediately prior to the Effective Time,
in the aggregate, with employee compensation and benefits (excluding equity compensation and long-term incentives) that are no less favorable in the aggregate than those provided by the Company or its
Subsidiaries immediately prior to the Effective Time;
provided
,
however
, that Parent may transition
Affected Employees to Parent's bonus and incentive compensation plans at any time in Parent's discretion and, following the end of the fiscal year or benefit plan year, as applicable, in which the
Closing Date occurs, Parent may transition Affected Employees to other compensation and benefit plans providing compensation and benefits that are substantially comparable in the aggregate to those
provided to Parent's other similarly situated employees. Nothing in this Agreement shall be considered a contract between Parent and its Subsidiaries and any Affected Employee or consideration for, or
inducement with respect to, any such employee's continued employment and, without limitation, all such employees are and will continue to be considered to be employees at will pursuant to the
applicable employment at will laws or doctrines, subject to any express written agreement to the contrary with such employee. From and after the Effective Time, Parent shall honor, and shall cause its
Subsidiaries to honor, each change in control or severance agreement between the Company and its
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Subsidiaries
and any employee thereof and to perform the obligations of the Company thereunder, and Parent shall provide, or cause its Subsidiaries to provide, relocation benefits in accordance with
Company policy as in effect on the date of this Agreement to any Affected Employee who becomes entitled to severance benefits following the Effective Time pursuant to any Company Benefit Plan.
(b) With
respect to each Affected Employee, Parent shall credit, or cause its Subsidiaries to credit, the period of employment and service recognized by the applicable
employer immediately prior to the Effective Time (for purposes of its corresponding plans, programs, policies or similar employment-related arrangements) to have been employment and service with
Parent for purposes of determining the Affected Employee's eligibility to join (subject to satisfaction of all non-service related eligibility criteria) and vesting (but not benefit accrual for any
purpose other than vacation pay, severance and termination pay and sick leave) under all employee benefit plans, programs, policies or similar employment related arrangements of Parent and its
Subsidiaries in which the Affected Employee is eligible to participate;
provided
,
however
, that no such
credit shall be provided to the extent that it would result in a duplication of credit or benefits. Parent shall waive, and to the extent necessary to effect the terms hereof, shall use commercially
reasonable efforts to cause the relevant insurance carriers and other third parties to waive, any restrictions and limitations for medical conditions existing as of the Effective Time of those
Affected Employees and their dependents who were covered immediately prior to the Effective Time under a group health plan maintained by the Company, Parent or their Subsidiaries, but only to the
extent that such medical condition would be covered by Parent's group health plan if it were not a pre-existing condition and only to the extent that such limitations would not have applied under the
applicable group health plan covering the Affected Employee prior to the Effective Time. Further, Parent shall offer, or cause its Subsidiaries to offer, at the Effective Time to each Affected
Employee coverage under a group health plan (as defined in Section 5000(b)(1) of the Code) which credits such Affected Employee towards the deductibles, coinsurance and maximum out-of-pocket
provisions imposed under such group health plan, for the plan year during which the Effective Time (or such later date as the Affected Employees participate in such group health plan) occurs, with any
applicable expenses already incurred during such year under the Company's or Parent's group health plan.
(c) The
Company and Parent agree to cooperate in good faith to establish a process to promptly integrate the Company Benefit Plans and the Parent Benefit Plans following the
Effective Time.
(d) Promptly
following the Effective Time, Parent shall pay, or shall cause its Subsidiaries to pay, to each Affected Employee who was employed by the Company or its
Subsidiaries immediately prior to the Effective Time an amount, to the extent then unpaid, equal to the unpaid portion of any annual incentive bonus to which the Affected Employee were be entitled
under the applicable Company annual bonus plan for the year prior to the year in which the Effective Time occurs.
(e) Except
with respect to offers of employment to prospective new employees in the ordinary course of business consistent with past practices, the Company and Parent agree
that they shall not make, and shall cause their respective Subsidiaries not to make, any representations or promises, oral or written, to any of their employees concerning continued employment
following the Effective Time, or the terms and conditions of that employment, except in writing with the prior written consent of the other party.
(f) Notwithstanding
the foregoing, nothing in this Agreement, whether express or implied, shall be treated as an amendment or other modification of any Company Benefit Plan,
Parent Benefit Plan or other compensation or benefit plan, program or arrangement of the Company, Parent or their Subsidiaries, or shall limit the right of the Company, Parent or any of their
Subsidiaries, to amend, terminate or otherwise modify any such plan or arrangement or to terminate the employment of any Affected Employee at any time. No Affected Employee or other individual is an
intended third party of this
Section 5.18
and no such person shall have any right to enforce any provision of this
Section 5.18
.
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(g) For
the avoidance of doubt, upon the Effective Time, a "change in control" shall be deemed to have occurred for purposes of all Company Benefit Plans and other employee
plans, programs and arrangements of the Company that use "change in control" or a similar term.
Section 5.19
Obligations of Merger Sub and the Surviving Company
.
Parent shall take all action necessary to cause Merger Sub and the Surviving Company to perform their respective obligations under this Agreement and to consummate the transactions
contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth in this Agreement.
Section 5.20
Intercompany Structure
.
Within 30 days after the date hereof, Parent shall deliver to the Company, for the Company's review and approval (which approval shall not be unreasonably conditioned, withheld or
delayed), a plan by which Parent can effect, prior to the Effective Time, certain intercompany transfers of equity and debt among Parent, Merger Sub and any other affiliates of Parent, including any
newly-formed or to-be-formed entities, in accordance with the principles set forth in
Schedule 5.20
. The consummation of the transactions
contemplated hereby shall be effected in accordance with such plan, which shall not be modified without the Company's approval (which approval shall not be unreasonably conditioned, withheld or
delayed). Parent and the Company shall work together in good faith in order to achieve an efficient intercompany structure among Parent, such affiliates and Merger Sub in connection with the
consummation of the transactions contemplated hereby.
Section 5.21
Company Bond Redemption
.
At least 45 but not more than 75 days prior to the Closing Date, if requested by Parent, the Company shall deliver a redemption notice to the holders (the
"
Noteholders
") of the Company's 6.50% Senior Notes due 2020 (the "
Company Notes
") providing for the
redemption of such Company Notes by the Company substantially concurrently with the Closing. The redemption of such Company Notes, if any, shall be made pursuant to Section 4.07 of that certain
Indenture dated as of January 18, 2012 among the Company, the subsidiary guarantors of the Company party thereto and Wells Fargo Bank, National Association, as trustee (the
"
Trustee
"), as supplemented by the First Supplemental Indenture thereto dated January 18, 2012 (as so supplemented, the
"
Indenture
"), and shall be conditioned upon the Closing. The Company shall comply with the provisions in Article IV of the Indenture relating to
the redemption of the Company Notes and shall provide Parent a reasonable opportunity to review and comment on any documents delivered by the Company to the Noteholders or the Trustee in connection
with the redemption.
ARTICLE VI.
CONDITIONS TO THE MERGER
Section 6.1
Conditions to Each Party's Obligation to Effect the Merger
.
The respective obligations of each Party to effect the Merger shall be subject to the fulfillment (or waiver by all Parties, to the extent permissible under applicable Law) at or prior
to the Effective Time of the following conditions:
(a) The
Company Shareholder Approval shall have been obtained.
(b) The
resolution referred to in clause (a) of the definition of Parent Shareholder Resolutions shall have been passed.
(c) The
Parent Class A Ordinary Shares to be issued in the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance.
(d) The
Form S-4 shall have become effective under the Securities Act, no stop order suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
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(e) No
injunction by any court or other tribunal of competent jurisdiction shall have been entered and shall continue to be in effect and no Law shall have been adopted or
be effective, in each case that prohibits the consummation of the Merger.
(f) All
waiting periods applicable to the Merger under the HSR Act, including any secondary acquisition notifications pursuant to 16 C.F.R. § 801.4, shall
have expired or been terminated.
(g) Since
the date of this Agreement, there shall have been no Adverse 7874 Tax Law Change.
Section 6.2
Conditions to Obligation of the Company to Effect the Merger
.
The obligation of the Company to effect the Merger is further subject to the fulfillment (or waiver by the Company) at or prior to the Effective Time of the following conditions:
(a) The
representations and warranties of Parent and Merger Sub set forth in (i) this Agreement (other than in
Sections 4.1(c)
,
4.1(d)
and
4.7(b)
) shall be true
and correct both at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date, except where such failures to be so true and correct (without
regard to "materiality," Parent Material Adverse Effect and similar qualifiers contained in such representations and warranties) would not, individually or in the aggregate, have a Parent Material
Adverse Effect, (ii)
Sections 4.1(c)
and
4.1(d)
shall be true and correct at and as of the
date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date, except for any
de minimis
inaccuracies, and
(iii)
Section 4.7(b)
shall be true and correct both at and as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date;
provided
,
however
, that representations and warranties that are made
as of a particular date or period need be true and correct (in the manner set forth in clauses (i), (ii) and (iii), as applicable) only as of such date or period.
(b) Each
of Parent and Merger Sub shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time.
(c) Parent
shall have delivered to the Company a certificate, dated the Closing Date and signed by the Chief Executive Officer or another senior officer, certifying to the
effect that the conditions set forth in
Section 6.2(a)
and
Section 6.2(b)
have been
satisfied.
Section 6.3
Conditions to Obligation of Parent and Merger Sub to Effect the Merger.
The
obligation of Parent and Merger Sub to effect the Merger is further subject to the fulfillment (or the waiver by Parent) at or prior to the Effective Time of
the following conditions:
(a) The
representations and warranties of the Company set forth in (i) this Agreement (other than in
Sections 3.1(c)
,
3.1(d)
and
3.7(b)
) shall be true
and correct both at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date, except where such failures to be so true and correct (without
regard to "materiality," the Company Material Adverse Effect and similar qualifiers contained in such representations and warranties) would not, individually or in the aggregate, have a Company
Material Adverse Effect, (ii)
Sections 3.1(c)
and
3.1(d)
shall be true and correct at and
as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date, except for any
de minimis
inaccuracies,
and (iii)
Section 3.7(b)
shall be true and correct both at and as of the date of this Agreement and at and as of the Closing Date as
though made at and as of the Closing Date;
provided
,
however
, that representations and warranties that
are made as of a particular date or period need be true and correct (in the manner set forth in clauses (i), (ii) and (iii), as applicable) only as of such date or period.
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(b) The
Company shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by
it prior to the Effective Time.
(c) The
Company shall have delivered to Parent a certificate, dated the Closing Date and signed by its Chief Executive Officer or another senior officer, certifying to the
effect that the conditions set forth in
Section 6.3(a)
and
Section 6.3(b)
have been
satisfied.
(d) All
consents of, or filings with, the Governmental Entities set forth in Schedule 6.3(d) shall have been obtained and any applicable waiting period with respect
thereto shall have expired or been terminated, as the case may be.
Section 6.4
Frustration of Closing Conditions.
Neither the Company nor Parent or Merger Sub may
rely, either as a basis for not consummating the Merger or terminating this Agreement and abandoning the Merger,
on the failure of any condition set forth in
Section 6.1
,
Section 6.2
or
Section 6.3
, as the
case may be, to be satisfied if such failure was caused by such Party's willful and intentional material breach of any
material provision of this Agreement.
ARTICLE VII.
TERMINATION
Section 7.1
Termination or Abandonment.
Notwithstanding anything in this Agreement to the contrary,
this Agreement may be terminated and abandoned at any time prior to the Effective Time:
(a) by
the mutual written consent of the Company, Parent and Merger Sub;
(b) by
either the Company or Parent, if the Merger shall not have been consummated on or prior to February 28, 2018 (the "
End
Date
");
provided
,
however
, that if all of the conditions to Closing, other than
the conditions set forth in
Section 6.1(f)
or
Section 6.3(d)
, shall have been satisfied or
shall be capable of being satisfied at such time, the End Date may be extended by either the Company or Parent from time to time by written notice to the other Party up to a date not beyond
May 29, 2018, the latest of any of which dates shall thereafter be deemed to be the End Date; and
provided
,
further
, that the right to terminate this
Agreement pursuant to this
Section 7.1(b)
shall not be
available to a Party if the failure of the Closing to occur by such date shall be due to the material breach by such Party of any representation, warranty, covenant or other agreement of such Party
set forth in this Agreement;
(c) by
either the Company or Parent, if an injunction shall have been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and
such injunction shall have become final and nonappealable;
provided
,
however
, that the right to
terminate this Agreement under this
Section 7.1(c)
shall not be available to a Party if such injunction was primarily due to the failure of such
Party to perform any of its obligations under this Agreement;
(d) by
either the Company or Parent, if the Company Shareholder Meeting (including any adjournments or postponements thereof) shall have concluded and the Company
Shareholder Approval shall not have been obtained;
provided
,
however
, that the right to terminate this
Agreement under this
Section 7.1(d)
shall not be available to the Company where the failure to obtain the Company Shareholder Approval is
proximately caused by a breach by the Company of
Section 5.4
;
(e) by
either the Company or Parent, if the Parent Shareholder Meeting (including any adjournments or postponements thereof) shall have concluded and the resolution referred
to in clause (a) of the definition of Parent Shareholder Resolutions shall not have been passed;
provided
,
however
, that the right to terminate this
Agreement under this
Section 7.1(e)
shall not be
available
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to
Parent where the failure to pass the resolution referred to in clause (a) of the definition of Parent Shareholder Resolutions is proximately caused by a breach by Parent of
Section 5.5
;
(f) by
the Company, if either Parent or Merger Sub shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained
in this Agreement, which breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition set forth in
Section 6.2(a)
or
Section 6.2(b)
and (ii) by its nature, cannot be cured prior to
the End Date or, if such breach or failure is capable of being cured by the End Date, has not been cured within the earlier of (x) 30 calendar days after receipt of notice thereof from the
Company describing such breach or failure in reasonable detail or (y) three business days before the End Date (
provided
that the Company is not
then in breach of any representation, warranty, covenant or other agreement contained herein such that the conditions set forth in
Section 6.3(a)
and
Section 6.3(b)
shall not be satisfied);
(g) by
Parent, if the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition set forth in
Section 6.3(a)
or
Section 6.3(b)
and (ii) by its nature, cannot be cured prior to
the End Date or, if such breach or failure is capable of being cured by the End Date, has not been cured within the earlier of (x) 30 calendar days after receipt of notice thereof from Parent
describing such breach or failure in reasonable detail or (y) three business days before the End Date (
provided
that neither Parent nor Merger
Sub is then in breach of any representation, warranty, covenant or other agreement contained herein such that the conditions set forth in
Section 6.2(a)
and
Section 6.2
(b)
shall not be satisfied);
(h) by
the Company, (i) in the event of a Parent Adverse Recommendation Change or (ii) upon any uncured material breach by Parent of its obligations under
Section 5.5
;
(i) by
Parent, (i) in the event of a Company Adverse Recommendation Change or (ii) upon any uncured material breach by the Company of its obligations under
Section 5.4
;
(j) by
the Company, if, at any time prior to the receipt of the Company Shareholder Approval, the Company shall have (i) effected a Company Adverse Recommendation
Change in accordance with
Section 5.4
in order to accept a Company Superior Proposal, (ii) entered into a definitive agreement with
respect to such Company Superior Proposal concurrently with the termination of this Agreement in accordance with this
Section 7.1(j)
and
(iii) paid the Company Termination Fee to Parent in accordance with
Section 7.3(a)(vii)
; and
(k) by
Parent, if, at any time prior to the receipt of the Parent Shareholder Approval, Parent Board shall have (i) effected a Parent Adverse Recommendation Change in
accordance with
Section 5.5
in order to accept a Parent Superior Proposal, (ii) entered into a definitive agreement with respect to such
Parent Superior Proposal concurrently with the termination of this Agreement in accordance with this
Section 7.1(k)
and (iii) paid the
Parent Termination Fee to the Company in accordance with
Section 7.3(a)(viii)
.
Any
termination pursuant to this
Section 7.1
(other than pursuant to
Section 7.1(a)
) shall be effected by written notice from the terminating Party
to the other Parties.
Section 7.2
Effect of Termination.
In the event of the valid termination of this Agreement
pursuant to
Section 7.1
, this Agreement shall
terminate (except for the provisions of this
Section 7.2
,
Section 7.3
and
Article VIII
), and
there shall be no other liability on the part of any Party to the other except as provided in
Section 7.3
and liability arising out of, or the result of, fraud or any willful or intentional breach
of any covenant or agreement or willful or
intentional breach of any representation or warranty in this Agreement occurring prior to termination or as provided for in the Confidentiality
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Agreement,
in which case the aggrieved Party shall be entitled to all rights and remedies available at Law or in equity.
Section 7.3
Termination Fees.
(a) If,
but only if, this Agreement is terminated:
(i) (A)
by Parent or the Company pursuant to
Section 7.1(b)
[End Date] or
Section 7.1(d)
[No Company Shareholder Approval] or by Parent pursuant to
Section 7.1(i)(ii)
[Breach of No Shop] and (B) (x) a Takeover Proposal has been made to the Company or the Company
Shareholders after the date hereof or any person shall have publicly announced an intention (whether or not conditional) to make a Takeover Proposal, (y) such Takeover Proposal or intention to
make a Takeover Proposal was publicly disclosed prior to the time of such termination and a Takeover Proposal remained pending as of the date of such termination, and (z) within twelve months
after the termination of this Agreement, (1) the Company enters into a definitive agreement for the consummation of a Takeover Proposal or (2) a Takeover Proposal is consummated, then
the Company shall pay, or cause to be paid, to Parent the Company Termination Fee within two business days after the consummation of the Takeover Proposal
(
provided
,
however
, that for purposes of this
Section 7.3(a)(i)
, the references to "20% or more" in the
definition of Takeover Proposal shall be deemed to be references to "more than 50%");
(ii) (A)
by Parent or the Company pursuant to
Section 7.1(b)
[End Date] or by the Company
pursuant to
Section 7.1(h)(ii)
[Breach of No Shop] and (B) (x) a Takeover Proposal has been made to Parent or the
Parent Shareholders after the date hereof or any person shall have publicly announced an intention (whether or not conditional) to make a Takeover Proposal, (y) such Takeover Proposal or
intention to make a Takeover Proposal was publicly disclosed prior to the time of such termination and a Takeover Proposal remained pending as of the date of such termination, and (z) within
twelve months after the termination of this Agreement, (1) Parent enters into a definitive agreement for the consummation of a Takeover Proposal or (2) a Takeover Proposal is
consummated, then Parent shall pay, or cause to be paid, to the Company the Parent Termination Fee within two business days after the consummation of the Takeover Proposal
(
provided
,
however
, that for purposes of this
Section 7.3(a)(ii)
, the references to "20% or more" in
the definition of Takeover Proposal shall be deemed to be references to "more than 50%");
(iii) by
the Company or Parent pursuant to
Section 7.1(e)
[No Parent Shareholder Approval] or
by the Company pursuant to
Section 7.1(h)(i)
[Parent Recommendation Change] in response to a Parent Intervening Event,
then Parent shall pay, or cause to be paid, to the Company the Parent Termination Fee promptly, and in any event not more than two business days following such termination;
(iv) by
Parent pursuant to
Section 7.1(i)(i)
[Company Recommendation Change] in response to a
Company Intervening Event, then the Company shall pay, or cause to be paid, to Parent the Company Termination Fee promptly, and in any event not more than two business days following such termination;
(v) by
the Company or Parent pursuant to
Section 7.1(d)
[No Company Shareholder Approval], or
by Parent pursuant to
Section 7.1(g)
[Company Breach of Representations and Covenants], then the Company shall pay, or
cause to be paid, to Parent the Expense Reimbursement Amount promptly, and in any event not more than two business days following such termination;
provided
that the payment by the Company of the
Expense Reimbursement Amount pursuant to this
Section 7.3(a)(v)
shall not relieve the Company of any subsequent obligation to pay the Company Termination Fee under
Section 7.3
except to
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the
extent indicated in such section;
provided further
that, to the extent a Company Termination Fee becomes payable, any payment previously made
pursuant to this
Section 7.3(a)(v)
shall be credited against such obligation of the Company to pay the Company Termination Fee;
(vi) by
the Company pursuant to
Section 7.1(f)
[Parent/Merger Sub Breach of Representations and
Covenants], then Parent shall pay, or cause to be paid, to the Company the Expense Reimbursement Amount promptly, and in any event not more than two business days following such
termination;
provided
that the payment by Parent of the Expense Reimbursement Amount pursuant to this
Section 7.3(a)(vi)
shall not relieve the Company
of any subsequent obligation to pay the Parent Termination Fee under
Section 7.3
except to the extent indicated in such section;
provided further
that,
to the extent
a Parent Termination Fee becomes payable, any payment previously made pursuant to this
Section 7.3(a)(vi)
shall be credited against such
obligation of the Parent to pay the Parent Termination Fee;
(vii) by
the Company pursuant to
Section 7.1(j)
[Company Superior Proposal], concurrently
with, and as a condition to, such termination, the Company shall pay or cause to be paid to Parent the Company Termination Fee; or
(viii) by
Parent pursuant to
Section 7.1(k)
[Parent Superior Proposal], concurrently with, and
as a condition to, such termination, Parent shall pay or cause to be paid to the Company the Parent Termination Fee.
(b) "
Company Termination Fee
" shall mean a cash amount equal to $30,000,000. "
Parent Termination
Fee
" shall mean a cash amount equal to $50,000,000. Notwithstanding anything to the contrary in this Agreement, if the Company Termination Fee or Parent Termination Fee shall
become due and payable in accordance with this
Section 7.3
, from and after such termination and payment thereof pursuant to and in accordance
with this
Section 7.3
, the Party paying the Company Termination Fee or Parent Termination Fee shall have no further liability of any kind for any
reason in connection with this Agreement or the termination contemplated hereby other than as provided under this
Section 7.3
. Payment by the
Company of the Company Termination Fee or payment by Parent of the Parent Termination Fee, as applicable, shall not relieve the Company or Parent, as applicable, from any liability or damage resulting
from fraud or a willful and material breach by such Party of this Agreement;
provided
that, notwithstanding the foregoing, (A) if Parent accepts
payment of the Company Termination Fee in connection with a termination pursuant to
Section 7.1(i)(ii)
, none of the Company, any of its
Subsidiaries or any of their respective former, current or future officers, directors, partners, shareholders, managers, members, affiliates or agents shall have any further liability or obligation
relating to or arising out of this Agreement or the transactions contemplated hereby, and (B) if the Company accepts payment of the Parent Termination Fee in connection with a termination
pursuant to
Section 7.1(h)(ii)
, none of Parent, any of its Subsidiaries or any of their respective former, current or future officers, directors,
partners, shareholders, managers, members, affiliates or agents shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby.
Each of the Parties hereto acknowledges that neither the Company Termination Fee nor the Parent Termination Fee is intended to be a penalty, but rather liquidated damages in a reasonable amount that
will compensate a Party in the circumstances in which such fee is due and payable and which do not involve fraud or willful and material breach, for the efforts and resources expended and
opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would
otherwise be impossible to calculate with precision. In no event shall the Company or Parent be entitled to more than one payment of the Company Termination Fee or Parent Termination Fee, as the case
may be, in connection with a termination of this Agreement pursuant to which the Company Termination Fee or Parent Termination Fee is payable. "
Expense Reimbursement
Amount
" means an amount, not to exceed $10,000,000, equal to the reasonable out-of-pocket fees and
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expenses,
incurred by or on behalf of the person entitled to payment, in connection with the preparation, negotiation, execution and performance of this Agreement and the transactions contemplated
hereby, but excluding any VAT for which Parent (or any member of a VAT grouping arrangement of which Parent is a member) is entitled to a refund, repayment or credit from any relevant tax authority.
(c) Each
of the Company and Parent acknowledges that the agreements contained in this
Section 7.3
are an integral part
of the transactions contemplated hereby, and that, without these agreements, the Company and Parent would not enter into this Agreement. Accordingly, if the Company or Parent fails to pay in a timely
manner any amount due pursuant to this
Section 7.3
, then (i) the Company or Parent, as applicable, shall reimburse the Party entitled to
the Company Termination Fee or Parent Termination Fee for all costs and expenses (including disbursements and reasonable fees of counsel) incurred in the collection of such overdue amount, including
in connection with any related Actions commenced and (ii) the Company or Parent, as applicable, shall pay to the Party entitled to the Company Termination Fee or Parent Termination Fee interest
on such amount from and including the date payment of such amount was due to but excluding the date of actual payment at the prime rate set forth in The Wall Street Journal in effect on the date such
payment was required to be made plus 2%.
(d) The
Company confirms that it is established outside of the European Union for VAT purposes.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1
No Survival.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall survive the
Merger, except for: (a) the covenants and agreements of the Parties in
Section 5.3(b)
,
Section 7.2
,
Section 7.3
and this
Article VIII
; (b) the covenants and agreements of Parent in
Section 5.10
; and
(c) any covenants and agreements which contemplate performance after the Effective Time or otherwise expressly by their terms survive the Effective Time.
Section 8.2
Expenses.
Except as set forth in
Section 7.3
, whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger, this Agreement and the transactions contemplated hereby shall be paid by the Party incurring or required to incur such expenses;
provided
,
however
, that each of the Company and Parent shall pay and bear one-half of all filing fees
required under the HSR Act or other antitrust, competition, foreign investment or similar Laws outside of the United States. Except as otherwise provided in this Agreement, all transfer, documentary,
sales, use, stamp (including any liability to any UK stamp duty or UK stamp duty reserve tax in respect of the Merger Consideration), registration and other substantially similar Taxes and fees
(including any penalties and interest) incurred in connection with the issue and delivery of the Merger Consideration to holders of Company Shares in accordance with this Agreement but not, for the
avoidance of doubt, in respect of any subsequent transfers or dealings in the Parent Ordinary Shares comprising the Merger Consideration (collectively, "
Transfer
Taxes
") shall be paid by Parent when due, and Parent shall, at its own expense, file all necessary documentation with respect to all such Transfer Taxes.
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Section 8.3
Counterparts; Effectiveness.
This Agreement may be executed in two
or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by telecopy, electronic delivery or otherwise) to the other
Parties. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in "portable document format" (".pdf") form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 8.4
Governing Law.
This Agreement, and all claims or causes of action (whether at Law,
in contract or in tort or otherwise) that may be based upon, arise out of or relate to this
Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice or conflict of
law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.
Section 8.5
Jurisdiction; Specific Performance.
The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed, or were threatened to be not
performed, in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages,
each of the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in any
Texas State or federal court sitting in Houston, Texas (or, if such court lacks subject matter jurisdiction, in any appropriate Texas State or federal court) and all such rights and remedies at law or
in equity shall be cumulative, except as may be limited by
Section 7.3
. The Parties further agree that no Party to this Agreement shall be
required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this
Section 8.5
and each Party waives any objection
to the imposition of such relief or any right it may have to require the obtaining, furnishing or
posting of any such bond or similar instrument. In addition, each of the Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other Party hereto or its
successors or assigns, shall be brought and determined exclusively in any Texas State or federal court sitting in Houston, Texas (or, if such court lacks subject matter jurisdiction, in any
appropriate Texas State or federal court). Each of the Parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement
in any court other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts, (b) any claim that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in
an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. To
the fullest extent permitted by applicable Law, each of the Parties hereto hereby consents to the service of process in accordance with
Section 8.7
;
provided
,
however
, that nothing
herein shall affect the right of any party to serve legal process in any other manner permitted by Law.
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Section 8.6
WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING, DIRECTLY OR INDIRECTLY, OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE COMPANY OR PARENT IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.
Section 8.7
Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given (a) upon personal delivery to the Party to be notified;
(b) when received when sent by email or facsimile by the Party to be notified;
provided
,
however
,
that notice given by email or facsimile shall not be effective unless either (i) a duplicate copy of such email or fax notice is promptly given by one of the other methods described in this
Section 8.7
or (ii) the receiving Party delivers a written confirmation of receipt for such notice either by email or fax or any other
method described in this
Section 8.7
; or (c) when delivered by a courier (with confirmation of delivery); in each case to the Party to be
notified at the following address:
To
the Company:
Atwood Oceanics, Inc.
15011 Katy Freeway
Suite 800
Houston, Texas 77094
Facsimile: (832) 201-7093
Attention: Walter A. Baker
Senior Vice President, General Counsel and Corporate Secretary
with
copies (which shall not constitute notice) to:
Gibson,
Dunn & Crutcher
1221 McKinney Street
Houston, Texas 77010
Facsimile: (346) 718-6901
Attention: Tull R. Florey
Email: tflorey@gibsondunn.com
To
Parent or Merger Sub:
Ensco plc
6 Chesterfield Gardens
London, England W1J 5BQ
Facsimile: 44 0 207 409 0399
Attention: Michael T. McGuinty
Senior Vice PresidentGeneral Counsel and Secretary
with
copies (which shall not constitute notice) to:
Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
Facsimile: (713) 546-5401
Attention: Sean T. Wheeler
Debbie P. Yee
Email: sean.wheeler@lw.com
debbie.yee@lw.com
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or
to such other address as any Party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated or personally delivered. Any
Party may notify any other Party of any changes to the address or any of the other details specified in this paragraph;
provided
,
however
, that such
notification shall only be effective on the date specified in such notice or five business days after the notice is given, whichever
is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
Section 8.8
Assignment; Binding Effect.
Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned or delegated by a Party hereto without the prior written
consent of the other Party. Subject to the first sentence of this
Section 8.8
, this Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective successors and assigns. Any purported assignment not permitted under this Section shall be null and void.
Section 8.9
Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad
as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.
Section 8.10
Entire Agreement.
This Agreement together with the exhibits hereto, schedules
hereto and the Confidentiality Agreement constitute the entire agreement, and supersede all other
prior agreements and understandings, both written and oral, between the Parties, or any of them, with respect to the subject matter hereof and thereof, and, subject to
Section 5.10
, this Agreement
is not intended to grant standing to any person other than the Parties hereto.
Section 8.11
Amendments; Waivers.
At any time prior to the Effective Time, whether before or
after receipt of the Company Shareholder Approval or the passing of the Parent Shareholder Resolutions,
any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company, Parent and Merger Sub;
provided
,
however
, that after receipt of the Company Shareholder Approval or the passing of the Parent
Shareholder Resolutions, if any such amendment or waiver shall by applicable Law or in accordance with the rules and regulations of the NYSE require further approval of the Company Shareholders or the
Parent Shareholders, as the case may be, the effectiveness of such amendment or waiver shall be subject to the approval of the Company Shareholders or the Parent Shareholders, as the case may be.
Notwithstanding the foregoing, no failure or delay by any Party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any other right hereunder.
Section 8.12
Headings.
Headings of the Articles and Sections of this Agreement are for
convenience of the Parties only and shall be given no substantive or interpretive effect
whatsoever. The table of contents to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
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Section 8.13
No Third-Party Beneficiaries.
(a) Each
of the Company, Parent and Merger Sub agrees that (i) their respective representations, warranties, covenants and agreements set forth herein are solely for
the benefit of the other Party hereto, in accordance with and subject to the terms of this Agreement, and (ii) except for the provisions of
Section 5.10
(the "
Third
Party Rights Clause
"), this Agreement is not intended to, and does not,
confer upon any person other than the Parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
(b) The
Third Party Rights Clause confers a benefit on certain persons named in
Section 5.10
who are not a Party (each
for the purposes of this clause a "
Third Party
") and, subject to the remaining provisions of this clause, is intended to be enforceable by the
Third Party by virtue of the Contracts (Rights of Third Parties) Act 1999.
(c) The
Parties do not intend that any term of this Agreement, apart from the Third Party Rights Clause, should be enforceable, by virtue of the Contracts (Rights of Third
Parties) Act 1999, by any person who is not a Party.
(d) Notwithstanding
the provisions of clauses (a) and (b) above, this Agreement may be rescinded or varied in any way and at any time by the Parties without
the consent of any Third Party.
Section 8.14
Interpretation.
When a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context otherwise
requires. If this Agreement requires the Parties to "agree" or requires an "agreement" between the Parties, such "agreements" must be in writing, unless specifically indicated otherwise. All terms
defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. The definitions contained
in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References in this Agreement
to specific Laws or to specific provisions of Laws shall include all rules and regulations promulgated thereunder, and any statute defined or referred to herein or in any agreement or instrument
referred to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. Each of the Parties has participated in the
drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the Parties, and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue of authorship of any of the provisions of this Agreement.
Section 8.15
Definitions.
As used in this Agreement, the following terms have the meanings set
forth below:
"
Adverse 7874 Tax Law Change
" means any change in applicable Law (whether or not such change in Law is yet effective) with respect to
Section 7874 of the Code (or any other U.S. Tax Law), or official interpretation thereof as set forth in published guidance by the IRS (other than IRS News Releases) (whether or not such change
in official interpretation is yet effective), or any bill that would implement such a change which has been passed in identical (or substantially identical such that a conference committee is not
required prior to submission of such legislation for the President's approval or veto) form by both the United States House of Representatives and the United States Senate and for which the time
period for the President of the United States to sign or veto such bill has not yet elapsed, in each case, that, once effective, more likely than not, as a result of the Merger,
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causes
Parent to be treated as a United States domestic corporation for U.S. federal income tax purposes.
"
affiliates
" means, as to any person, any other person which, directly or indirectly, controls, or is controlled by, or is under common
control with, such person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or
otherwise.
"
Benefit Plan
" means a Parent Benefit Plan or a Company Benefit Plan, as applicable.
"
business day
" means any day other than a Saturday, Sunday or other day on which the banks in the State of New York are authorized by Law
or executive order to remain closed.
"
Code
" means the United States Internal Revenue Code of 1986, as amended.
"
Collective Bargaining Agreement
" means any collective bargaining agreement, labor union contract, trade union agreement, or agreements,
customs, practices or arrangements (whether legally binding or not) for collective bargaining or recognition with any trade union, works council, staff association or other representative body.
"
Companies Act
" means the Companies Act 2006, as amended.
"
Company Bylaws
" means the By-Laws of Atwood Oceanics, Inc., effective March 7, 2013.
"
Company Charter
" means the Amended and Restated Certificate of Formation of Atwood Oceanics, Inc. effective as of
February 14, 2013, as amended by Amendment No. 1 thereto dated February 19, 2014.
"
Company Financial Statements
" means the consolidated financial statements (including all related notes and schedules thereto) of the
Company included in the Company SEC Documents.
"
Company Intervening Event
" means a material event or circumstance that (a) was not known to the Company Board, or the material
consequences of which (based on facts known to members of the Company Board as of the date of this Agreement) were not reasonably foreseeable, as of the date of this Agreement, (b) becomes
known by the Company Board prior to the receipt of the Company Shareholder Approval and (c) does not relate to the receipt, existence or terms of a Takeover Proposal involving the Company.
"
Company IT Assets
" means the computers, software, servers, routers, hubs, switches, circuits, networks, data communications lines and all
other information technology infrastructure and equipment of the Company and its Subsidiaries that are required in connection with the current operation of the business of the Company and its
Subsidiaries.
"
Company Material Adverse Effect
" means an event, state of facts, circumstance, change, effect, development, occurrence or combination of
the foregoing that has had, or would be reasonably expected to have, a material adverse effect on (A) the ability of the Company to consummate the Merger and the other transactions contemplated
by this Agreement or (B) the business, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, excluding for purposes of this
clause (B) any effect resulting from or arising out of: (1) changes in general economic, financial or other capital market conditions (including prevailing interest rates and access to
capital markets), (2) any changes or developments generally in the industries in which the Company or any of its Subsidiaries conducts its business, (3) the announcement or the existence
of, compliance with or performance under, this Agreement or the transactions contemplated hereby (including, subject to the following proviso, the impact thereof on the relationships, contractual or
otherwise, of the Company or any of its Subsidiaries with employees, labor unions, customers, suppliers
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or
partners, and including any lawsuit, action or other proceeding by shareholders or otherwise with respect to the Merger or any of the other transactions contemplated by this Agreement)
(
provided
,
however
, that the exceptions in this clause (3) shall not apply to any representation
or warranty contained in
Section 3.2
or
Section 3.19
(or any portion thereof) to the
extent that the purpose of such representation or warranty (or portion thereof) is to address the consequences resulting from the execution and delivery of this Agreement or the performance of
obligations or satisfaction of conditions under this Agreement), (4) any taking of any action at the request of Parent, (5) any changes or developments in prices for oil, natural gas or
other commodities, (6) any adoption, implementation, promulgation, repeal or modification, or announced intention to do any of the foregoing, following the date of this Agreement of any rule,
regulation, ordinance, Order, protocol or any other Law of or by any national, regional, state or local Governmental Entity, or market administrator, (7) any changes in GAAP or accounting
standards following the date of this Agreement, (8) earthquakes, any
weather-related event, natural disasters or outbreak or escalation of hostilities or acts of war or terrorism, (9) any failure by the Company in and of itself to meet any financial projections
or forecasts or estimates of revenues, earnings or other financial metrics for any period (
provided
that the exception in this clause (9) shall
not prevent or otherwise affect a determination that any event, change, effect, development or occurrence underlying such failure has resulted in, or contributed to, a Company Material Adverse Effect
so long as it is not otherwise excluded by this definition), or (10) any changes in the share price or trading volume of the Company Common Stock
(
provided
that the exception in this clause (10) shall not prevent or otherwise affect a determination that any event, change, effect,
development or occurrence underlying such change has resulted in, or contributed to, a Company Material Adverse Effect so long as it is not otherwise excluded by this definition);
except
, in each case
with respect to clauses (1), (2), (6), (7) and (8) to the extent disproportionately affecting the Company and
its Subsidiaries, taken as a whole, relative to other similarly situated companies in the industries in which the Company and its Subsidiaries operate;
provided
that, for the avoidance of doubt,
notwithstanding anything to the contrary above, any blowout, spill, explosion, or similar occurrence with
respect to any equipment operated by the Company may be taken into account in determining whether there has been a Company Material Adverse Effect.
"
Company Permitted Liens
" means (A) any Lien for Taxes not yet due or delinquent or which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in the applicable financial statements in accordance with GAAP, (B) vendors', mechanics', materialmens', carriers',
workers', landlords', repairmen's, warehousemen's, construction and other similar Liens arising or incurred in the ordinary and usual course of business and consistent with past practice or with
respect to liabilities that are not yet due and payable or, if due, are not delinquent or are being contested in good faith by appropriate proceedings and for which adequate reserves (based on good
faith estimates of management) have been set aside for the payment thereof, (C) Liens imposed or promulgated by applicable Law or any Governmental Entity with respect to real property,
including zoning, building or similar restrictions, (D) pledges or deposits in connection with workers' compensation, unemployment insurance, and other social security legislation,
(E) Liens relating to intercompany borrowings among the Company and its wholly owned Subsidiaries, (F) Liens securing interest rate protection agreements or currency rate protection
agreements incurred in the ordinary course of business and not for speculative purposes, (G) banker's Liens and customary rights of set-off or similar rights and remedies as to deposit accounts
or other funds maintained with a depository institution, (H) Liens securing obligations under the Company's revolving credit facility, or (I) other non-monetary Liens that do not,
individually or in the aggregate, materially interfere with the present use, or materially detract from the value of, the property encumbered thereby.
"
Company Shareholder
" means a holder of a share of Company Common Stock from time to time.
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Table of Contents
"
Company Shareholder Approval
" means the approval of this Agreement and the transactions contemplated hereby,
including the Merger, by the affirmative vote of Company Shareholders holding at least two-thirds of the outstanding shares of Company Common Stock.
"
Company Stock Plans
" means, collectively, the Company Amended and Restated 2001 Stock Incentive Plan, the Amended and Restated Company
2007 Long-Term Incentive Plan, the Company 2013 Long-Term Incentive Plan and any other plans or arrangements of the Company providing for the compensatory grant of awards of shares of Company Common
Stock or awards denominated, in whole or in part, in shares of Company Common Stock or options, share appreciation rights or similar awards relating to the Company Common Stock, including any and all
such plans of predecessor or acquired entities that have been assumed by the Company.
"
Company Superior Proposal
" means a bona fide, unsolicited, written the Takeover Proposal (A) that if consummated would result in a
third party acquiring, directly or indirectly, more than 50% of the outstanding shares of Company Common Stock or more than 50% of the assets of the Company and its Subsidiaries, taken as a whole, for
consideration consisting of cash and/or securities, (B) that the Company Board determines in good faith, after consultation with its outside financial advisor and
outside legal counsel, is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained therein and
the person making such Takeover Proposal and (C) that the Company Board determines in good faith after consultation with its outside financial advisor and outside legal counsel (taking into
account any changes to this Agreement proposed by Parent in response to such Takeover Proposal, and all financial, legal, regulatory and other aspects of such Takeover Proposal, including all
conditions contained therein and the person making such proposal, and this Agreement), is more favorable from a financial point of view to the Company Shareholders than the Merger.
"
Environmental Law
" means any Law relating to the protection, preservation or restoration of the environment (including air, surface
water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or any exposure to or release of, or the management of (including the
use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production or disposal of any Hazardous Materials).
"
ERISA
" means the Employee Retirement Income Security Act of 1974, as amended.
"
ERISA Affiliate
" means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the
relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade
or business, or that is, or was at the relevant time, a member of the same "controlled group" as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
"
Export Control Laws
" means all Laws and regulations related to the regulation of imports, exports, re-exports, transfers, releases,
shipments, transmissions or any other provision or receipt of goods, technology, software or services, including (a) the United States International Traffic in Arms Regulations administered by
the United States State Department's Directorate of Defense Trade Controls; (b) the Export Administration Regulations administered by the United States Commerce Department (including the
antiboycott regulations administered by the Office of Antiboycott Compliance); (c) nuclear export regulations administered by the United States Nuclear Regulatory Commission and the United
States Department of Energy; (d) United States customs regulations administered by the United States Customs and Border Protection; (e) the EU Dual-Use Regulation, Council Regulation
(EC) No 428/2009 (and associated amendments); and (f) all other applicable import and export controls in the countries in which the party conducts business.
"
Hazardous Materials
" means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the U.S. National Oil and
Hazardous Substances Pollution Contingency Plan,
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40 C.F.R.
§ 300.5, or defined as such by, or regulated by any Governmental Entity as such under, any Environmental Law, including any regulated pollutant or contaminant
(including any constituent, raw material, product or by-product thereof), petroleum or natural gas hydrocarbons or any liquid or fraction thereof, asbestos or asbestos-containing material,
polychlorinated biphenyls, lead paint, any hazardous, industrial or solid waste, biological material, and any toxic, radioactive or hazardous substance, material or agent.
"
knowledge
" means (i) with respect to the Company and its Subsidiaries, the actual knowledge of the individuals listed on
Section 8.15 of the Company Disclosure Schedule and (ii) with respect to Parent and its Subsidiaries, the actual knowledge of the individuals listed in Section 8.15 of the Parent
Disclosure Schedule.
"
Order
" means any charge, order, writ, injunction, judgment, decree, ruling, determination, directive, award or settlement, whether civil,
criminal or administrative and whether formal or informal.
"
Parent Class A Ordinary Shares
" means the Class A Ordinary Shares in the share capital of Parent, each with a nominal value
of $0.10 per share.
"
Parent Class B Ordinary Shares
" means the Class B Ordinary Shares in the share capital of Parent, each with a nominal value
of £1.00 per share.
"
Parent Closing Price
" means the average, rounded to the nearest one tenth of a cent, of the closing sales prices of Parent Class A
Ordinary Shares on the NYSE as reported by The Wall Street Journal for the ten trading days immediately preceding the date which is five trading days immediately prior to the date on which the
Effective Time occurs.
"
Parent Financial Statements
" means the consolidated financial statements (including all related notes and schedules thereto) of Parent
included in the Parent SEC Documents.
"
Parent Intervening Event
" means a material event or circumstance that (a) was not known to the Parent Board, or the material
consequences of which (based on facts known to members of the Parent Board as of the date of this Agreement) were not reasonably foreseeable, as of the date of this Agreement, (b) becomes known
by the Parent Board prior to the receipt of the Parent Shareholder Approval and (c) does not relate to the receipt, existence or terms of a Takeover Proposal involving Parent.
"
Parent IT Assets
" means the computers, software, servers, routers, hubs, switches, circuits, networks, data communications lines and all
other information technology infrastructure and equipment of Parent and its Subsidiaries that are required in connection with the current operation of the business of Parent and its Subsidiaries.
"
Parent Material Adverse Effect
" means an event, state of facts, circumstance, change, effect, development, occurrence or combination of
the foregoing that has had, or would be reasonably expected to have, a material adverse effect on (A) the ability of Parent to consummate the Merger and the other transactions contemplated by
this Agreement or (B) the business, condition (financial or otherwise) or results of operations of Parent and its Subsidiaries, taken as a whole, excluding for purposes of this
clause (B) any effect resulting from or arising out of: (1) changes in general economic, financial or other capital market conditions (including prevailing interest rates and access to
capital markets), (2) any changes or developments generally in the industries in which Parent or any of its Subsidiaries conducts its business, (3) the announcement or the existence of,
compliance with or performance under, this Agreement or the transactions contemplated hereby (including, subject to the following proviso, the impact thereof on the relationships, contractual or
otherwise, of Parent or any of its Subsidiaries with employees, labor unions, customers, suppliers or partners, and including any lawsuit, action or other proceeding by shareholders or otherwise with
respect to the Merger or any of the other transactions contemplated by this Agreement) (
provided
,
however
, that the exceptions in this
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clause (3)
shall not apply to any representation or warranty contained in
Section 4.2
or
Section 4.19
(or any portion thereof) to the extent that the
purpose of such representation or warranty (or portion thereof) is to address the
consequences resulting from the execution and delivery of this Agreement or the performance of obligations or satisfaction of conditions under this Agreement), (4) any taking of any action at
the request of the Company, (5) any changes or developments in prices for oil, natural gas or other commodities, (6) any adoption, implementation, promulgation, repeal or modification,
or announced intention to do any of the foregoing, following the date of this Agreement of any rule, regulation, ordinance, Order, protocol or any other Law of or by any national, regional, state or
local Governmental Entity, or market administrator, (7) any changes in GAAP or accounting standards following the date of this Agreement, (8) earthquakes, any weather-related event,
natural disasters or outbreak or escalation of hostilities or acts of war or terrorism, (9) any failure by Parent in and of itself to meet any financial projections or forecasts or estimates of
revenues, earnings or other financial metrics for any period (
provided
that the exception in this clause (9) shall not prevent or otherwise
affect a determination that any event, change, effect, development or occurrence underlying such failure has resulted in, or contributed to, a Parent Material Adverse Effect so long as it is not
otherwise excluded by this definition), or (10) any changes in the share price or trading volume of Parent Ordinary Shares (
provided
that the
exception in this clause (10) shall not prevent or otherwise affect a determination that any event, change, effect, development or occurrence underlying such change has resulted in, or
contributed to, a Parent Material Adverse Effect so long as it is not otherwise excluded by this definition);
except
, in each case with respect to
clauses (1), (2), (6), (7) and (8) to the extent disproportionately affecting Parent and its Subsidiaries, taken as a whole, relative to other similarly situated companies in the
industries in which Parent and its Subsidiaries operate;
provided that
, for the avoidance of doubt, notwithstanding anything to the contrary above, any
blowout, spill, explosion, or
similar occurrence with respect to any equipment operated by Parent may be taken into account in determining whether there has been a Parent Material Adverse Effect.
"
Parent Ordinary Shares
" means the Parent Class A Ordinary Shares and the Parent Class B Ordinary Shares.
"
Parent Permitted Lien
" means (A) any Lien for Taxes not yet due or delinquent or which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in the applicable financial statements in accordance with GAAP, (B) vendors', mechanics', materialmens', carriers',
workers', landlords', repairmen's, warehousemen's, construction and other similar Liens arising or incurred in the ordinary and usual course of business and consistent with past practice or with
respect to liabilities that are not yet due and payable or, if due, are not delinquent or are being contested in good faith by appropriate proceedings and for which adequate reserves (based on good
faith estimates of management) have been set aside for the payment thereof, (C) Liens imposed or promulgated by applicable Law or any Governmental Entity with respect to real property,
including zoning, building or similar restrictions, (D) pledges or deposits in connection with workers' compensation, unemployment insurance, and other social security legislation,
(E) Liens relating to intercompany borrowings among Parent and its wholly owned Subsidiaries, (F) Liens securing interest rate protection agreements or currency rate protection
agreements incurred in the ordinary course of business and not for speculative purposes, (G) banker's Liens and customary rights of set-off or similar rights and remedies as to deposit accounts
or other funds maintained with a depository institution, or (H) other non-monetary Liens that do not, individually or in the aggregate, materially interfere with the present use, or materially
detract from the value of, the property encumbered thereby.
"
Parent Shareholder
" means a holder of Parent Class A Ordinary Shares from time to time.
"
Parent Shareholder Approval
" means the passing of the resolution referred to in clause (a) of the definition of Parent Shareholder
Resolutions.
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Table of Contents
"
Parent Shareholder Resolutions
" means the resolutions included in the Proxy Statement/Prospectus to: (a) authorize the Parent
Board to allot and issue the Parent Class A Ordinary Shares to be issued in the Merger pursuant to
Article II
, and (b) if Parent so
determines, (i) authorize the Parent Board to allot and issue up to a nominal amount of Parent Ordinary Shares representing approximately 33% of the enlarged share capital of Parent immediately
following Closing, and up to a further same nominal amount of Parent Ordinary Shares in connection with a pre-emptive offering of shares, (ii) authorize the Parent Board to allot and issue up
to a nominal amount of Parent Ordinary Shares representing approximately 5% of the enlarged share capital of Parent immediately following Closing for cash on a
non-pre-emptive basis, and (iii) authorize the Parent Board to further allot and issue up to a nominal amount of Parent Ordinary Shares representing approximately 5% of the enlarged share
capital of Parent immediately following Closing for cash on a non-pre-emptive basis, such authority to be used only for the purposes of financing (or refinancing, if the power is to be used within six
months after the original transaction) a transaction which the Parent Board deems to be an acquisition or other capital investment.
"
Parent Stock Plans
" means, collectively, the Parent 2012 Long-Term Incentive Plan, the Parent International Incorporated 2005 Long-Term
Incentive Plan the Pride International, Inc. 1998 Long-Term Incentive Plan and the Pride International, Inc. 2007 Long-Term Incentive Plan and any other plans or arrangements of Parent
providing for the compensatory grant of awards of Parent Ordinary Shares or awards denominated, in whole or in part, in Parent Ordinary Shares or options, share appreciation rights or similar awards
relating to Parent Ordinary Shares, including any and all such plans of predecessor or acquired entities that have been assumed by Parent.
"
Parent Superior Proposal
" means a bona fide, unsolicited, written Takeover Proposal (A) that if consummated would result in a
third party acquiring, directly or indirectly, more than 50% of the outstanding shares of Parent Ordinary Shares or more than 50% of the assets of Parent and its Subsidiaries, taken as a whole, for
consideration consisting of cash and/or securities, (B) that the Parent Board determines in good faith, after consultation with its outside financial advisor and outside legal counsel, is
reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained therein and the person making such
Takeover Proposal and (C) that the Parent Board determines in good faith after consultation with its outside financial advisor and outside legal counsel (taking into account any changes to this
Agreement proposed by the Company in response to such Takeover Proposal, and all financial, legal, regulatory and other aspects of such Takeover Proposal, including all conditions contained therein
and the person making such proposal, and this Agreement), is more favorable from a financial point of view to the Parent Shareholders than the Merger.
"
person
" means an individual, a public limited company, a corporation, a partnership, a limited liability company, an association, a trust
or any other entity, group (as such term is used in Section 13 of the Exchange Act) or organization, including a Governmental Entity, and any permitted successors and assigns of such person.
"
Release
" means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property.
"
Relevant Authority
" means the United States Department of Justice, the U.S. Federal Trade Commission, and any United States, foreign or
supranational, federal, state or local governmental commission, board, body, bureau, or other regulatory authority, agency, including courts and other judicial bodies, or any competition, antitrust or
supervisory body, central bank or other governmental, trade or regulatory agency or body, securities exchange or any self-regulatory body or authority,
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including
any instrumentality or entity designed to act for or on behalf of the foregoing, in each case, in any jurisdiction.
"
Shareholder Meetings
" means the Company Shareholder Meeting and the Parent Shareholder Meeting.
"
Subsidiaries
" of any Party means any corporation, partnership, limited liability company, association, trust or other form of legal
entity of which (i) fifty percent (50%) or more of the voting power of the outstanding voting securities are on the date hereof directly or indirectly owned by such Party or (ii) such
Party or any Subsidiary of such Party is a general partner on the date hereof.
"
Takeover Code
" means the City Code on Takeovers and Mergers.
"
Takeover Proposal
" means, with respect to the Company or Parent, (A) any inquiry, proposal or offer for or with respect to (or
expression by any person that it is considering or may engage in) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution, joint venture,
scheme of arrangement or other similar transaction involving such Party or any of its Subsidiaries whose assets, taken together, constitute 20% or more of such Party's consolidated assets,
(B) any inquiry, proposal or offer (including tender or exchange offers) to (or expression by any person that it is considering or may seek to) acquire in any manner, directly or indirectly, in
one or more transactions, more than 20% of the outstanding shares of securities of such Party representing more than 20% of the voting power of such Party or (C) any inquiry, proposal or offer
to (or expression by any person that it is considering or may seek to) acquire in any manner (including the acquisition of equity securities in any Subsidiary of such Party), directly or indirectly,
in one or more transactions, assets or businesses of such Party or its Subsidiaries, including pursuant to a joint venture, representing more than 20% of the consolidated assets, revenues or net
income of such Party, in each case, other than the Merger.
"
Tax
" or "
Taxes
" means any and all federal, state, local or foreign taxes, imposts,
levies, duties, fees or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, and other taxes of any kind whatsoever, including
any and all interest, penalties, additions to tax or additional amounts imposed by any Governmental Entity with respect thereto.
"
Tax Return
" means any return, report or similar filing (including any attached schedules, supplements and additional or supporting
material) filed or required to be filed with respect to Taxes, including any information return, claim for refund, or declaration of estimated Taxes (and including any amendments with respect
thereto).
"
Trade Sanctions
" means economic or trade sanctions administered by OFAC, the U.S. Department of State, the United Nations Security
Council, the European Union, or Her Majesty's Treasury.
"
Treasury Regulations
" means the regulations (including temporary regulations) promulgated by the U.S. Department of Treasury with respect
to the Code.
"
VAT
" means any Tax imposed in compliance with Directive 2006/112/EEC and any similar Tax which may be imposed in substitution for or in
addition to such tax.
[SIGNATURE
PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
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ENSCO plc
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By:
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/s/ CARL G. TROWELL
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Name:
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Carl G. Trowell
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Title:
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President and Chief Executive Officer
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ECHO MERGER SUB LLC
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By:
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/s/ MELISSA COUGLE
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Name:
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Melissa Cougle
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Title:
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Vice President and Treasurer
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ATWOOD OCEANICS, INC.
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By:
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/s/ ROBERT J. SALTIEL
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Name:
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Robert J. Saltiel
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Title:
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President and Chief Executive Officer
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[Signature
Page to Agreement and Plan of Merger]
Table of Contents
ANNEX I
INDEX OF DEFINED TERMS
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Acceptable Confidentiality Agreement
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Section 5.4(b)
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Action
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Section 5.9(b)
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Adverse 7874 Tax Law Change
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Section 8.15
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Adverse Recommendation Change
|
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Section 5.4(d)
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Affected Employee
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Section 5.18(a)
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affiliates
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Section 8.15
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Agreement
|
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Preamble
|
Alpha Director Nominees
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Section 1.7(a)
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Antitrust Laws
|
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Section 5.7(b)
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Benefit Plan
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Section 8.15
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Book-Entry Shares
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Section 2.1(a)
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Bribery Act
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Section 3.21
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business day
|
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Section 8.15
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Cancelled Shares
|
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Section 2.1(a)(ii)
|
Certificate of Merger
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Section 1.3
|
Certificates
|
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Section 2.1(a)
|
Closing
|
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Section 1.2
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Closing Date
|
|
Section 1.2
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Code
|
|
Section 8.15
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Collective Bargaining Agreement
|
|
Section 8.15
|
Companies Act
|
|
Section 8.15
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Company
|
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Preamble
|
Company Approvals
|
|
Section 3.2(b)
|
Company Benefit Plan
|
|
Section 3.16(a)
|
Company Board
|
|
Recitals
|
Company Board Recommendation
|
|
Section 3.2(a)
|
Company Bylaws
|
|
Section 8.15
|
Company Charter
|
|
Section 8.15
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Company Common Stock
|
|
Section 3.1(c)
|
Company Disclosure Schedule
|
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Article III
|
Company Employee
|
|
Section 3.15
|
Company Equity Awards
|
|
Section 3.1(c)
|
Company Financial Statements
|
|
Section 8.15
|
Company Fleet Report
|
|
Section 3.13(a)
|
Company Intellectual Property
|
|
Section 3.11(a)
|
Company Intervening Event
|
|
Section 8.15
|
Company IT Assets
|
|
Section 8.15
|
Company Leased Real Property
|
|
Section 3.12(a)
|
Company Material Adverse Effect
|
|
Section 8.15
|
Company Material Contracts
|
|
Section 3.19(a)
|
Company Material Subsidiaries
|
|
Section 3.1(b)
|
Company Notes
|
|
Section 5.21
|
Company Organizational Documents
|
|
Section 3.1(b)
|
Company Permits
|
|
Section 3.6(b)
|
Company Permitted Liens
|
|
Section 8.15
|
Company Preferred Stock
|
|
Section 3.1(c)
|
Company SEC Documents
|
|
Section 3.3(a)
|
Company Share
|
|
Section 2.1(a)(iii)
|
Exhibit A-A-1
Table of Contents
|
|
|
Company Stock Awards
|
|
Section 2.3(c)
|
Company Stock Plans
|
|
Section 8.15
|
Company Shareholder
|
|
Section 8.15
|
Company Shareholder Approval
|
|
Section 8.15
|
Company Shareholder Meeting
|
|
Section 5.5(b)
|
Company Superior Proposal
|
|
Section 8.15
|
Company Termination Fee
|
|
Section 7.3(b)
|
Company Transaction Documents
|
|
Section 3.2(a)
|
Confidentiality Agreement
|
|
Section 5.3(b)
|
Contract
|
|
Section 3.19(a)
|
control
|
|
Section 8.15
|
Converted Option
|
|
Section 2.3(b)
|
Effective Time
|
|
Section 1.3
|
End Date
|
|
Section 7.1(b)
|
Environmental Law
|
|
Section 8.15
|
ERISA
|
|
Section 8.15
|
ERISA Affiliate
|
|
Section 8.15
|
Exchange Act
|
|
Section 3.2(b)
|
Exchange Agent
|
|
Section 2.2(a)
|
Exchange Fund
|
|
Section 2.2(b)
|
Exchange Ratio
|
|
Section 2.1(a)(iii)
|
Existing Option
|
|
Section 2.3(b)
|
Expatriated Entity Rules
|
|
Section 5.14
|
Export Control Laws
|
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Section 8.15
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FCPA
|
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Section 3.21
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Foreign Investment Laws
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Section 5.7(b)
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Form S-4
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Section 3.25
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Fractional Share Cash Amount
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GAAP
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Section 3.3(b)
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Governmental Entity
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Section 3.2(b)
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Hazardous Materials
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Section 8.15
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HSR Act
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Section 3.2(b)
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Indemnified Party
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Section 5.9(b)
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Indenture
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Section 5.21
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knowledge
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Section 8.15
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Law or Laws
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Section 3.6(a)
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Letter of Transmittal
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Section 2.2(c)
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Lien
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Maximum Amount
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Merger
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Merger Consideration
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Merger Sub
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Preamble
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Noteholders
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NYSE
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OFAC
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Order
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Parent
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Exhibit A-A-2
Table of Contents
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Parent Fleet Report
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Section 4.13(a)
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Parent Intellectual Property
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Parent Leased Real Property
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Section 4.12(a)
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Parent Material Contracts
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Parent Material Subsidiaries
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Section 4.1(b)
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Parent Ordinary Shares
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Section 8.15
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Parent Organizational Documents
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Parent Permits
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Parties
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person
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Qualified Plan
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Release
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SEC
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Tax or Taxes
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Exhibit A-A-4
Table of Contents
Annex B
Opinion of Morgan Stanley & Co. LLC
Execution
Version
May 29,
2017
Board
of Directors
Ensco plc
6 Chesterfield Gardens
London, England W1J 5BQ
Members
of the Board:
We
understand that Atwood Oceanics, Inc., a Texas corporation ("Target" or the "Company"), Ensco plc, a public limited company organized under the Laws of England and Wales
(the "Buyer"), and Echo Merger Sub LLC, a Texas limited liability company and wholly owned subsidiary of the Buyer ("Acquisition Sub"), propose to enter into an Agreement and Plan of Merger,
substantially in the form of the draft dated May 28, 2017 (the "Merger Agreement"), which provides, among other things, for the merger (the "Merger") of Acquisition Sub with and into the
Company, with the Company surviving the Merger as a wholly owned subsidiary of the Buyer. Pursuant to the Merger, each outstanding share of common stock, par value $1.00 per share, of the Company (the
"Company Common Stock"), other than shares owned or held in treasury by the Company or owned by the Buyer or Acquisition Sub or any of their respective subsidiaries, will be converted into the right
to receive 1.60 shares (the "Exchange Ratio") of Class A ordinary shares, nominal value $0.10 per share, of the Buyer (the "Buyer Common Stock"), subject to adjustment in certain circumstances.
The terms and conditions of the Merger are more fully set forth in the Merger Agreement.
You
have asked for our opinion as to whether the Exchange Ratio pursuant to the Merger Agreement is fair from a financial point of view to the Buyer.
For
purposes of the opinion set forth herein, we have:
-
1)
-
Reviewed
certain publicly available financial statements and other publicly available business and financial information of the Company and the Buyer, respectively;
-
2)
-
Reviewed
certain internal financial statements and other financial and operating data concerning the Company and the Buyer, respectively;
-
3)
-
Reviewed
(i) certain financial projections prepared by the managements of the Company and the Buyer, respectively and (ii) certain financial projections
relating to the Company prepared by the management of the Buyer;
-
4)
-
Reviewed
information relating to certain strategic, financial and operational benefits anticipated from the Merger, prepared by the management of the Buyer;
-
5)
-
Discussed
the past and current operations and financial condition and the prospects of the Company with senior executives of the Company;
-
6)
-
Discussed
the past and current operations and financial condition and the prospects of the Buyer, including information relating to certain strategic, financial and
operational benefits anticipated from the Merger, with senior executives of the Buyer;
B-1
Table of Contents
-
7)
-
Reviewed
the pro forma impact of the Merger on the Buyer's earnings per share, cash flow, consolidated capitalization and certain financial ratios;
-
8)
-
Reviewed
the reported prices and trading activity for the Company Common Stock and the Buyer Common Stock;
-
9)
-
Compared
the financial performance of the Company and the Buyer and the prices and trading activity of the Company Common Stock and the Buyer Common Stock with that
of certain other publicly-traded companies comparable with the Company and the Buyer, respectively, and their securities;
-
10)
-
Reviewed
the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
-
11)
-
Participated
in certain discussions and negotiations among representatives of the Company and the Buyer and certain parties and their financial and legal advisors;
-
12)
-
Reviewed
the Merger Agreement and certain related documents; and
-
13)
-
Performed
such other analyses, reviewed such other information and considered such other factors as we have deemed appropriate.
We
have assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to
us by the Company and the Buyer, and formed a substantial basis for this opinion. With respect to the financial projections, including information relating to certain strategic, financial and
operational benefits anticipated from the Merger, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective
managements of the Company and the Buyer of the future financial performance of the Company and the Buyer. For purposes of our analysis, we have, at the direction of the Buyer, relied on financial
projections relating to the Company and the Buyer, in each case prepared by the management of the Buyer. We have been
advised by the Buyer and have assumed, with the Buyer's consent, that the projections prepared by the management of the Buyer are a reasonable basis upon which to evaluate the business and financial
prospects of the Buyer and the Company. We express no view as to such projections or the assumptions on which they were based. We have relied upon, without independent verification, the assessment by
the management of the Buyer of: (i) the strategic, financial and other benefits expected to result from the Merger; (ii) the timing and risks associated with the integration of the
Company and the Buyer; and (iii) the Buyer's ability to retain key employees of the Company and the Buyer, respectively. In addition, we have assumed that the Merger will be consummated in
accordance with the terms set forth in the Merger Agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that the definitive Merger Agreement will
not differ in any material respect from the draft thereof furnished to us. Morgan Stanley has assumed that in connection with the receipt of all the necessary governmental, regulatory or other
approvals and consents required for the proposed Merger, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits
expected to be derived in the proposed Merger. We are not legal, tax, or regulatory advisors. We are financial advisors only and have relied upon, without independent verification, the assessment of
the Buyer and the Company and their legal, tax or regulatory advisors with respect to legal, tax, or regulatory matters. We have not performed any tax assessment in connection with the Merger. We
express no opinion with respect to the fairness of the amount or nature of the compensation to any of the Company's officers, directors or employees, or any class of such persons, relative to the
consideration to be paid to the holders of shares of the Company Common Stock in the transaction. We have not made any independent valuation or appraisal of the assets or liabilities of the Company or
the Buyer, nor have we been furnished with any such valuations or appraisals. Our opinion does not address the relative merits of the Merger as compared to any other
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Table of Contents
alternative
business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof may affect this opinion and the assumptions used in preparing
it, and we do not assume any obligation to update, revise or reaffirm this opinion.
We
have acted as financial advisor to the Board of Directors of the Buyer in connection with this transaction and will receive a fee for our services, a portion of which is contingent
upon the rendering of this financial opinion, and the remainder of which is contingent upon the closing of the Merger. In the two years prior to the date hereof, we have provided financing services
for the Buyer and have received fees in connection with such services. As of the date hereof, Morgan Stanley is a lender under the Buyer's revolving credit facility. Morgan Stanley may also seek to
provide financial advisory and financing services to the Buyer and the Company and their respective affiliates in the future and would expect to receive fees for the rendering of these services.
Please
note that Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Our securities business
is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives
trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a
principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of its
customers, in debt or equity securities or loans of the Buyer, the Company, or any other company, or any currency or commodity, that may be involved in this transaction, or any related derivative
instrument.
This
opinion has been approved by a committee of Morgan Stanley investment banking and other professionals in accordance with our customary practice. This opinion is for the information
of the Board of Directors of the Buyer and may not be used for any other purpose or disclosed without our prior written consent, except that a copy of this opinion may be included in its entirety, and
a summary of this opinion, which is acceptable to Morgan Stanley, may be disclosed, in any filing the Buyer is required to make with the Securities and Exchange Commission in connection with this
transaction if such inclusion or summary is required by applicable law. In addition, this opinion does not in any manner address the prices at which the Buyer Common Stock will trade following
consummation of the Merger or at any time and Morgan Stanley expresses no opinion or recommendation as to how the shareholders of the Buyer and the Company should vote at the shareholders' meetings to
be held in connection with the Merger.
Based
on and subject to the foregoing, we are of the opinion on the date hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a financial point of view to the
Buyer.
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Very truly yours,
|
|
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MORGAN STANLEY & CO. LLC
|
|
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By:
|
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/s/ Michael Harris
|
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Name: Michael Harris
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Title: Managing Director
|
B-3
Table of Contents
Annex C
PERSONAL AND CONFIDENTIAL
May 29,
2017
Board
of Directors
Atwood Oceanics, Inc.
15011 Katy Freeway,
Suite 800
Houston, TX 77094
Gentlemen:
You
have requested our opinion as to the fairness from a financial point of view to the holders (other than Ensco plc ("Ensco") and its affiliates) of the outstanding ordinary shares,
par value $1.00 per share (the "Shares"), of Atwood Oceanics, Inc. (the "Company") of the exchange ratio of 1.60 shares of Class A ordinary shares, par value $0.10 per share ("Ensco
Ordinary Shares"), of Ensco to be paid for each Share (the "Exchange Ratio") pursuant to the Agreement and Plan of Merger, dated as of May 29, 2017 (the "Agreement"), by and among Ensco, Echo
Merger Sub LLC, a wholly owned subsidiary of Ensco, and the Company.
Goldman
Sachs & Co. LLC and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment
management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs & Co. LLC and its affiliates and employees, and funds or
other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments
in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Ensco, any of their respective affiliates and third parties, or any
currency or commodity that may be involved in the transactions contemplated by the Agreement (the "Transaction"). We have acted as financial advisor to the Company in connection with, and have
participated in certain of the negotiations leading to, the Transaction. We expect to
receive fees for our services in connection with the Transaction, the principal portion of which is contingent upon consummation of the Transaction, and the Company has agreed to reimburse certain of
our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. We have provided certain financial advisory and/or underwriting services to the Company and/or
its affiliates from time to time for which our Investment Banking Division has received, and may receive, compensation, including having acted as lead bookrunner in connection with the public offering
of 15,525,000 Shares in January 2017. We also have provided certain financial advisory and/or underwriting services to Ensco and/or its affiliates from time to time for which our Investment Banking
Division has received, and may receive, compensation, including having acted as lead bookrunner in connection with the public offering of 57,000,000 Ensco Ordinary Shares in April 2016 and dealer
manager in connection with a tender offer by Ensco for its 8.50% Senior Notes due 2019, 4.70% Senior Notes due 2021, 6.875% Senior Notes due 2020, 4.50% Senior Notes due 2024 and 5.20% Senior Notes
due 2025 (aggregate principal amount $750,000,000) in April 2016. We may also in the future provide
Securities
and Investment Services Provided by Goldman, Sachs & Co.
C-1
Table of Contents
financial
advisory and/or underwriting services to the Company, Ensco and their respective affiliates for which our Investment Banking Division may receive compensation.
In
connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to shareholders and Annual Reports on Form 10-K of the Company and Ensco for
the five fiscal years ended September 30, 2016 and five years ended December 31, 2016, respectively; certain interim reports to shareholders and Quarterly Reports on Form 10-Q of
the Company and Ensco; certain other communications from the Company and Ensco to their respective shareholders; certain publicly available research analyst reports for the Company and Ensco; certain
internal financial analyses and
forecasts for Ensco prepared by its management; and certain internal financial analyses and forecasts for the Company prepared by its management and certain financial analyses and forecasts for Ensco
prepared by the management of the Company, in each case, as approved for our use by the Company (collectively, the "Forecasts"), including certain operating synergies projected by the management of
the Company to result from the Transaction, as approved for our use by the Company (the "Synergies"). We have also held discussions with members of the senior management of the Company regarding their
assessment of the strategic rationale for, and the potential benefits of, the Transaction and the past and current business operations, financial condition and future prospects of the Company and with
members of the senior managements of the Company and Ensco regarding their assessment of the past and current business operations, financial condition and future prospects of Ensco; reviewed the
reported price and trading activity for the Shares and Ensco Ordinary Shares; compared certain financial and stock market information for the Company and Ensco with similar information for certain
other companies the securities of which are publicly traded; and performed such other studies and analyses, and considered such other factors, as we deemed appropriate.
For
purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and
other information provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the
Forecasts, including the Synergies, have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. We have not made an
independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or Ensco or any of their
respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We were not requested to solicit, and did not solicit, interest from other parties with respect to an
acquisition of, or other business combination with, the Company or any alternative transaction. We have assumed that all governmental, regulatory or other consents and approvals necessary for the
consummation of the Transaction will be obtained without any adverse effect on the Company or Ensco or on the expected benefits of the Transaction in any way meaningful to our analysis. We have
assumed that the Transaction will be consummated on the terms set forth in the Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful
to our analysis.
Our
opinion does not address the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic
alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. This opinion addresses only the fairness from a financial point of view to the
holders (other than Ensco and its affiliates) of Shares, as of the date hereof, of the Exchange Ratio pursuant to the Agreement. We do not express any view on, and our opinion does not address, any
other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into or amended in connection with the
Transaction, including, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies
of the Company; nor as to the fairness of
C-2
Table of Contents
the
amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company or Ensco, or class of such persons, in connection with the Transaction,
whether relative to the Exchange Ratio pursuant to the Agreement or otherwise. We are not expressing any opinion as to the prices at which Ensco Ordinary Shares will trade at any time or as to the
impact of the Transaction on the solvency or viability of the Company or Ensco or the ability of the Company or Ensco to pay their respective obligations when they come due. Our opinion is necessarily
based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we assume no responsibility for updating, revising or
reaffirming this opinion based on circumstances, developments or events occurring after the date hereof. Our advisory services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of the Company in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of Shares should
vote with respect to such Transaction or any other matter. This opinion has been approved by a fairness committee of Goldman Sachs & Co. LLC.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio pursuant to the Agreement is fair from a financial point of view to the holders
(other than Ensco and its affiliates) of Shares.
|
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Very truly yours,
|
|
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/s/ GOLDMAN SACHS & CO. LLC
(GOLDMAN SACHS & CO. LLC)
|
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C-3
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Continental Stock Transfer 17 Battery Place New York, NY 10004 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR proposals 1, 2 and 3. For 0 Against 0 Abstain 0 1. To approve the Agreement and Plan of Merger, dated as of May 29, 2017, by and among Ensco plc ("Ensco"), Echo Merger Sub LLC, a wholly owned subsidiary of Ensco ("Merger Sub"),and Atwood, as such agreement may be amended from time to time (the "merger agreement"),and the transactions contemplated thereby, including the merger of Merger Sub with and into Atwood (the "merger"), with Atwood surviving the merger as a wholly owned subsidiary of Ensco. To approve an advisory (non-binding) vote on the specified compensation that may be received by Atwood's named executive officers in connection with the transactions contemplated by the merger agreement, including the merger. 0 0 0 2 0 0 0 3 To approve the adjournment of the special meeting of shareholders of Atwood, if necessary or advisable, to solicit additional proxies in favor of proposal 1 or take any other action in connection with the merger agreement. 0 For address change/comments, mark here. (see reverse for instructions) Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000343167_1 R1.0.1.15
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Notice & Proxy Statement is/are available at www.proxyvote.com ATWOOD OCEANICS, INC. Annual Meeting of Shareholders October 5, 2017 9:00 AM This proxy is solicited by the Board of Directors The undersigned hereby appoints Robert J. Saltiel and Walter A. Baker, and each of them, as proxies with the power of substitution to represent and to vote, as designated below, all the shares of common stock, par value $1.00 per share, of Atwood Oceanics, Inc. (Atwood), held of record by the undersigned as of the close of business on August 23, 2017, at the special meeting of shareholders of Atwood to be held on October 5, 2017 or any adjournment or postponement thereof. If no direction is made, the proxy will be voted FOR proposals 1, 2 and 3. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000343167_2 R1.0.1.15