Note 1—Basis of Presentation
The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X
using the acquisition method of accounting in accordance with GAAP and are based on the historical consolidated financial statements of Ensco and Atwood, after giving effect to the merger as well as
pro forma adjustments.
The
unaudited pro forma condensed combined balance sheet combines the unaudited historical condensed consolidated balance sheets of Ensco and Atwood as of June 30, 2017, giving
effect to the merger as if it had occurred on June 30, 2017.
The
unaudited pro forma condensed combined statements of operations for the fiscal year ended December 31, 2016 and the six months ended June 30, 2017 assume the merger
took place on January 1, 2016, the beginning of Ensco's most recently completed fiscal year. Ensco's audited consolidated statement of operations for the fiscal year ended December 31,
2016 has been combined with Atwood's audited consolidated statement of operations for the fiscal year ended September 30, 2016. The unaudited pro forma condensed combined statement of
operations for the six months ended June 30, 2017 combines the unaudited consolidated statement of operations of Ensco and Atwood for the six months ended June 30, 2017. The unaudited
consolidated statement of operations of Atwood for the six months ended June 30, 2017 was prepared by combining the unaudited consolidated statements of operations for the three month periods
ended March 31, 2017 and June 30, 2017.
The
unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not intended to represent the consolidated results of operations or
financial position of the combined company that would have been recorded had the merger been completed as of the dates presented and should not be taken as representative of future results of
operations or financial position of the combined company. The unaudited pro forma condensed combined financial statements do not reflect the impacts of any potential operational efficiencies, cost
savings or economies of scale that Ensco may achieve with respect to the combined operations of Ensco and Atwood. Additionally, the pro forma statements of operations do not include non-recurring
charges or credits and the related tax effects that result directly from the merger.
The
unaudited pro forma condensed combined financial statements reflect the estimated merger consideration, which does not represent what the actual merger consideration transferred will
be at the Effective Time. In accordance with GAAP, the fair value of equity securities issued as the consideration transferred will be measured on the closing date of the merger at the then-current
market price. Ensco has estimated the total consideration to be $608 million, which will be paid through the conversion of approximately 83.5 million shares of Atwood common stock,
inclusive of 2.9 million unvested restricted stock and performance unit awards that vest upon change of control, to 133.6 million Ensco Class A
ordinary shares using the exchange ratio of 1.60 and valued at $7.28 per share of Atwood common stock based on the closing price of $4.55 per Ensco Class A ordinary share on August 14,
2017.
Under
GAAP, acquisition-related transaction costs (e.g., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred but
are accounted for as expenses in the periods in which the costs are incurred. Ensco estimates that advisory, legal, valuation and other professional fees and expenses will be $18 million and
change of control severance for certain executive and other key Atwood employees will total $8 million. Transaction costs incurred by Atwood related to the merger are estimated to total
$25 million. Following the completion of the merger, Ensco expects to incur additional charges and expenses relating to restructuring and integrating the operations of Ensco and Atwood, the
amount of which has not yet been determined. Certain
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transaction
costs related to the merger are not included in the pro forma financial statements in this joint proxy statement/prospectus.
The
unaudited pro forma condensed combined financial statements illustrate the assets and liabilities of Atwood recorded at their preliminary estimated fair values at the assumed closing
date of the merger. The preliminary fair value estimates are subject to change based on the final valuations that will be determined as of the closing date of the merger. Actual results will differ
from this unaudited pro forma condensed combined financial information once Ensco has determined the final merger consideration and completed the valuation analysis and computations necessary to
finalize the required purchase price allocations. Accordingly, the final allocations of merger consideration and their effects on results of operations may differ materially from the preliminary
allocations and unaudited pro forma combined amounts included herein. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable
judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
The
unaudited pro forma condensed combined financial statements do not constitute statutory accounts required by the Companies Act 2006, which for the year ended December 31, 2016
were prepared in accordance with generally accepted accounting principles in the U.K. and were delivered to the Registrar of Companies in the United Kingdom. The U.K. statutory accounts included an
unqualified auditor's report, which did not contain any reference to matters to which the auditors drew attention by way of emphasis without qualifying the report or any statements under
Section 498(2) or 498(3) of the Companies Act 2006.
The
unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in
the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q of Ensco and Atwood.
Note 2—Accounting Policies
The unaudited pro forma financial information has been compiled in a manner consistent with the accounting policies of Ensco and Atwood.
Note 3—Estimated Merger Consideration and Allocation
Under the terms of the merger agreement, Atwood stockholders will receive 1.60 Ensco Class A ordinary shares for each share of Atwood
common stock for a total value of $7.28 per share of Atwood common stock based on the closing share price of $4.55 per Ensco Class A ordinary share on August 14, 2017. The estimated
merger consideration of $608 million is comprised of 83.5 million shares of Atwood common stock, inclusive of 2.9 million unvested restricted stock and performance unit awards
that vest upon change of control, converted to 133.6 million Ensco Class A ordinary shares using the exchange ratio of 1.60 and valued at $7.28 per share. The value of the merger
consideration will fluctuate based upon changes in Ensco's share price and the number of Atwood common shares and equity awards outstanding at the closing date.
The
table below illustrates the potential impact of the estimated merger consideration resulting from a 10% increase or decrease in the price of $4.55 per Ensco Class A ordinary
share as of August 14, 2017. For purposes of this computation, the total number of Ensco Class A ordinary shares issued was assumed to be 133.6 million, as described above (in
millions):
|
|
|
|
|
|
|
|
|
|
10% Increase in
Ensco share price
|
|
10% Decrease in
Ensco share price
|
|
Merger consideration
|
|
|
669
|
|
|
547
|
|
Bargain purchase gain
|
|
|
355
|
|
|
477
|
|
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Under
GAAP, when the fair value assigned to acquired assets and liabilities exceeds the consideration transferred in an acquisition, the difference is reflected as a bargain purchase
gain. The following table summarizes our estimated bargain purchase gain computation as of June 30, 2017 (in millions):
|
|
|
|
|
Current assets
|
|
$
|
717
|
|
Non-current assets
|
|
|
1,913
|
|
|
|
|
|
|
Total assets acquired
|
|
|
2,630
|
|
Liabilities assumed
|
|
|
(1,606
|
)
|
|
|
|
|
|
Net assets acquired
|
|
|
1,024
|
|
Less: Estimated merger consideration
|
|
|
(608
|
)
|
|
|
|
|
|
Estimated bargain purchase gain
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
estimated fair value assigned to assets acquired and liabilities assumed exceeded the estimated consideration transferred resulting in a bargain purchase gain primarily due to
(1) depressed offshore drilling company valuations resulting in Atwood market capitalization that was lower than the Net
Asset Value calculated by Ensco Management and (2) the treatment of corporate overhead costs in purchase accounting under GAAP.
Market
capitalizations across the offshore drilling industry have declined significantly since mid-2014 due to the decline in commodity prices and the related imbalance of supply and
demand for drilling rigs. This imbalance has led to significantly depressed market capitalizations across the offshore drilling industry.
Ensco
and Atwood's stock prices declined 88% and 85% from highs of $55.62 and $53.79 per share in mid-2014 to $6.70 and $8.08 per share on the last trading day prior to announcement of
the merger, respectively. Ensco and Atwood are both trading below the Net Asset Values estimated by Ensco Management.
The
industry downturn and corresponding decline in offshore drilling company market capitalizations have resulted in corporate overhead costs that are disproportionately high when
compared to their respective enterprise values. This relationship could catalyze industry consolidation activity due to the high potential for transactions that are value accretive to shareholders
through realized synergies, which is a key driver for this transaction. Ensco Management estimates that ongoing corporate overhead costs burdened Atwood's market capitalization by over
$700 million.
Corporate
overhead cost is not included in the purchase price allocation under GAAP when not directly attributable to the cash flows of the acquired assets and assumed liabilities.
Accordingly, the fair values assigned to assets acquired and liabilities assumed in purchase accounting significantly exceeds Atwood's Net Asset Value estimated by Ensco Management, and the
consideration to be transferred, resulting in a bargain purchase gain.
Note 4—Pro Forma Adjustments
-
(a)
-
Short-term investments
Represents
the pro forma adjustments to short-term investments as follows (in millions):
|
|
|
|
|
Repayment of Atwood revolving credit facility
|
|
$
|
(851
|
)
|
Repayment of Atwood 6.5% senior notes due 2020
|
|
|
(465
|
)
|
|
|
|
|
|
|
|
$
|
(1,316
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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The
pro forma adjustments relate to the assumed utilization of short-term investments to repay Atwood's revolving credit facility and 6.5% senior notes due 2020, inclusive of accrued and
unpaid interest. Upon the closing of the merger, a change of control will occur under the indenture governing Atwood's 6.5% senior notes due 2020, and Atwood will be required to offer to repurchase
all of the outstanding senior notes at 101% of their outstanding principal amount, plus accrued and unpaid interest. As of June 30, 2017, Atwood had $449 million in aggregate principal
amount of senior notes outstanding.
-
(b)
-
Other current assets
Represents
the pro forma adjustments to record the estimated fair value of other current assets as follows (in millions):
|
|
|
|
|
Estimated fair value of Atwood drilling contracts
|
|
$
|
71
|
|
Income tax receivable impact of certain pro forma adjustments
|
|
|
6
|
|
Adjustment to record Atwood inventory at estimated fair value
|
|
|
(25
|
)
|
Elimination of Atwood historical debt issuance costs
|
|
|
(4
|
)
|
Elimination of Atwood historical deferred expenses related to contract drilling
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
pro forma adjustment to record the estimated fair value of Atwood drilling contracts represents the intangible assets recognized for firm drilling contracts in place at the pro forma
balance sheet date that have favorable contract terms as compared to current market day rates for comparable drilling rigs. Contracts that are expected to expire within 12 months of the pro
forma balance sheet date are classified as current. The various factors considered in the pro forma adjustment are (1) the contracted day rate for each contract, (2) the remaining term
of each contract, (3) the rig class and (4) the market conditions for each respective rig class at the pro forma balance sheet date. The intangible assets are computed based on the
present value of the difference in cash inflows over the remaining contract term as compared to a hypothetical contract with the same remaining term at an estimated current market day rate using a
risk-adjusted discount rate and an estimated effective income tax rate. The computed amount is subject to change based on contract positions and market conditions at the closing date of the merger.
This balance will be amortized to operating revenues over the respective remaining contract terms on a straight-line basis.
The
pro forma adjustment to Atwood's inventory adjusts the historical amounts to record the estimated fair value of consumable parts and supplies.
The
pro forma adjustment for the elimination of Atwood's historical deferred expenses associated with contract drilling primarily relates to deferred mobilization costs. Costs incurred
for mobilization of equipment and personnel prior to the commencement of drilling services are deferred and subsequently amortized by Atwood over the term of the related drilling contract. These
deferred costs have no future economic benefit to Ensco and are eliminated from the pro forma financial statements.
-
(c)
-
Property and equipment, net
Represents
the pro forma adjustments to historical amounts to record the estimated fair value of property and equipment.
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Table of Contents
-
(d)
-
Other assets
Represents
the pro forma adjustments to record the estimated fair value of other assets as follows (in millions):
|
|
|
|
|
Estimated fair value of Atwood drilling contracts
|
|
$
|
15
|
|
Deferred tax impact of certain pro forma adjustments
|
|
|
13
|
|
Elimination of Atwood historical deferred expenses related to contract drilling
|
|
|
(4
|
)
|
Elimination of Atwood historical debt issuance costs
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
pro forma adjustment to record the estimated fair value of Atwood drilling contracts represents the intangible assets recognized for firm long-term drilling contracts in place at the
pro forma balance sheet date that have favorable contract terms as compared to current market day rates for comparable drilling rigs. Contracts that are expected to expire beyond 12 months from
the pro forma balance sheet date are classified as non-current. The various factors considered in the pro forma adjustment are (1) the contracted day rate for each contract, (2) the
remaining term of each contract, (3) the rig class and (4) the market conditions for each respective rig class at the pro forma balance sheet date. The
intangible assets are computed based on the present value of the difference in cash inflows over the remaining contract term as compared to a hypothetical contract with the same remaining term at an
estimated current market day rate using a risk-adjusted discount rate and an estimated effective income tax rate. The computed amount is subject to change based on contract positions and market
conditions at the closing date of the merger. This balance will be amortized to operating revenues over the respective remaining contract terms on a straight-line basis.
The
pro forma adjustment for the elimination of Atwood's historical deferred expenses associated with contract drilling primarily relates to deferred mobilization costs. Costs incurred
for mobilization of equipment and personnel prior to the commencement of drilling services are deferred and subsequently amortized by Atwood over the term of the related drilling contract. These
deferred costs have no future economic benefit to Ensco and are eliminated from the pro forma financial statements.
-
(e)
-
Accounts payable and accrued liabilities and other
Represents
the pro forma adjustments to record the estimated fair value of current liabilities as follows (in millions):
|
|
|
|
|
Estimated Atwood transaction costs
|
|
$
|
25
|
|
Estimated Ensco transaction costs
|
|
|
18
|
|
Change in control provisions on Atwood benefit plans
|
|
|
8
|
|
Elimination of accrued interest from repayment of Atwood debt
|
|
|
(13
|
)
|
Elimination of Atwood historical deferred revenues and deferred rent
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
pro forma adjustment for change in control provisions on Atwood benefit plans relates to the additional liability that will be incurred for estimated cash severance payments upon a
change in control for benefits payable to executives and other key Atwood employees as a result of pre-existing employee arrangements.
The
pro forma adjustment to eliminate Atwood's historical deferred revenues are primarily related to mobilization revenues that were previously paid by a customer as compensation to
mobilize a rig to the drilling location. Such payments are deferred and subsequently amortized by Atwood over the term
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of
the related drilling contract. The deferred revenue does not represent contractual obligations of Atwood and are eliminated from the pro forma financial statements.
-
(f)
-
Long-term debt
Represents
the pro forma adjustments related to the repayment of Atwood's historical debt as follows (in millions):
|
|
|
|
|
Repayment of Atwood revolving credit facility
|
|
$
|
(850
|
)
|
Repayment of Atwood 6.5% senior notes due 2020
|
|
|
(448
|
)
|
|
|
|
|
|
|
|
$
|
(1,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
pro forma adjustments relate to the assumed repayment of Atwood's revolving credit facility and 6.5% senior notes due 2020 upon closing of the merger as a result of certain change of
control provisions in each debt agreement.
-
(g)
-
Other liabilities
Represents
the pro forma adjustments to record the estimated fair value of other liabilities as follows (in millions):
|
|
|
|
|
Estimated fair value of Atwood drillship construction contracts
|
|
$
|
160
|
|
Deferred tax impact of certain pro forma adjustments
|
|
|
7
|
|
Elimination of Atwood historical deferred revenues and deferred rent
|
|
|
(15
|
)
|
Elimination of Atwood historical amounts accrued for retention awards
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
$
|
148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
pro forma adjustment for the estimated fair value of Atwood drillship construction contracts relates to an unfavorable construction contract liability recorded as a result of
comparing the firm obligations for the remaining construction contracts to estimated current market rates for the construction of a similar design drilling rig. The unfavorable construction contract
liability is computed based on the present value of the difference of the cash outflows for the remaining contractual payments as compared to a hypothetical contract with the same remaining
contractual payments at current market rates using a risk-adjusted discount rate and estimated effective income tax rate.
The
pro forma adjustment to record the estimated fair value of Atwood drilling contracts represents the intangible liabilities recognized for firm long-term drilling contracts in place
at the pro forma balance sheet date that have unfavorable contract terms as compared to current market day rates for comparable drilling rigs. The various factors considered in the pro forma
adjustment are (1) the contracted day rate for each contract, (2) the remaining term of each contract, (3) the rig class and (4) the market conditions for each respective
rig class at the pro forma balance sheet date. The intangible liabilities are computed based on the present value of the difference in cash inflows over the remaining contract term as compared to a
hypothetical contract with the same remaining term at an estimated current market day rate using a risk-adjusted discount rate and an estimated effective income
tax rate. The computed amount is subject to change based on contract positions and market conditions at the closing date of the merger. This balance will be amortized to operating revenues over the
remaining contract terms on a straight-line basis.
The
pro forma adjustment to eliminate Atwood's historical deferred revenues are primarily related to mobilization revenues that were previously paid by a customer as compensation to
mobilize a rig to the drilling location. Such payments are deferred and subsequently amortized by Atwood over the term
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of
the related drilling contract. The deferred revenue does not represent contractual obligations of Atwood and are eliminated from the pro forma financial statements.
The
pro forma adjustment for the accrued retention bonus eliminates the historical accrued liability associated with the time-vested component of cash-based retention awards granted to
executives and other key Atwood employees. The retention awards become fully vested upon a change of control and are therefore reflected in the pro forma adjustments to accounts payable and accrued
liabilities and other.
-
(h)
-
Total equity
Represents
the pro forma adjustments to total equity as follows (in millions):
|
|
|
|
|
Elimination of Atwood's historical stockholders' equity
|
|
$
|
(3,400
|
)
|
Ensco share consideration recorded as capital in excess of par value
|
|
|
595
|
|
Estimated bargain purchase gain(1)
|
|
|
416
|
|
Ensco shares issued as merger consideration, par value
|
|
|
13
|
|
Estimated Ensco transaction costs
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
$
|
(2,394
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
estimated bargain purchase gain is inclusive of Atwood's estimated transaction costs of $25 million and $5 million loss on the repayment of
Atwood's 6.5% senior notes due 2020 as these charges are included in the preliminary estimated fair value of the net assets acquired.
-
(i)
-
Operating revenues
Represents
the pro forma adjustments for the amortization of intangible assets and liabilities associated with the estimated fair value of Atwood drilling contracts.
-
(j)
-
Depreciation
Represents
the pro forma adjustments for depreciation of Atwood's property and equipment. Atwood's property and equipment consists primarily of drilling rigs and related equipment. The
pro forma depreciation adjustments relate to the pro forma adjustment to record the estimated fair value of Atwood's drilling rigs and related equipment after conforming depreciable lives and salvage
values and computing depreciation using the straight-line method. Ensco estimated remaining useful lives for Atwood's drilling rigs ranged from 16 to 35 years based on original estimated useful
lives of 30 years to 35 years.
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Table of Contents
-
(k)
-
Other income (expense), net
Represents
the pro forma adjustments related to the elimination of Atwood's historical debt for the six months ended June 30, 2017 and year ended December 31, 2016 as
follows (in millions):
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
2017
|
|
Year Ended
December 31,
2016
|
|
Elimination of interest expense for repayment of Atwood outstanding debt
|
|
$
|
27
|
|
$
|
69
|
|
Additional Ensco interest capitalized from acquiring rigs under construction
|
|
|
17
|
|
|
33
|
|
Elimination of interest income earned by Ensco on short-term investments used to redeem Atwood outstanding debt
|
|
$
|
(3
|
)
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
41
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(l)
-
Weighted-average shares outstanding
Represents
the pro forma adjustment for Ensco shares to be issued to Atwood shareholders. Under the merger agreement, 83.5 million shares of Atwood common stock, inclusive of
2.9 million unvested restricted stock and performance unit awards that vest upon change of control, will be converted to 133.6 million Ensco Class A ordinary shares using the
exchange ratio of 1.60 Ensco Class A ordinary shares for each share of Atwood common stock.
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Table of Contents
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is a summary of the material U.S. federal income tax consequences of the merger to U.S. holders and non-U.S. holders
(each as defined below) of shares of Atwood common stock and of the ownership and disposition of the Ensco Class A ordinary shares received by such holders upon the consummation of the merger.
The discussion is based on and subject to the Internal Revenue Code, the U.S. Treasury Regulations promulgated thereunder, administrative guidance and court decisions as of the date hereof, all of
which are subject to change, possibly with retroactive effect, and to differing interpretations. The discussion assumes that Atwood shareholders hold their shares of Atwood common stock, and will hold
their Ensco Class A ordinary shares, as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code (generally, property held for investment). The discussion does
not constitute tax advice and does not address local or foreign tax consequences of the merger; nor does it address all aspects of U.S. federal income taxation that may be relevant to particular
Atwood shareholders or Ensco shareholders in light of their personal circumstances, including any tax consequences arising under the Medicare contribution tax on net
investment income, or to such shareholders subject to special treatment under the Internal Revenue Code, such as:
-
•
-
banks, thrifts, mutual funds, insurance companies and other financial institutions;
-
•
-
real estate investment trusts and regulated investment companies;
-
•
-
traders in securities who elect to apply a mark-to-market method of tax accounting;
-
•
-
brokers or dealers in securities or foreign currency;
-
•
-
tax-exempt organizations, pension funds or governmental organizations;
-
•
-
individual retirement and other deferred accounts;
-
•
-
U.S. holders whose functional currency is not the U.S. dollar;
-
•
-
U.S. expatriates and former citizens or long-term residents of the United States;
-
•
-
"passive foreign investment companies" ("PFICs") or "controlled foreign corporations," and corporations that accumulate earnings to avoid U.S.
federal income tax;
-
•
-
persons subject to the alternative minimum tax;
-
•
-
stockholders who hold their shares as part of a straddle, hedging, conversion, constructive sale or other risk reduction transaction;
-
•
-
"S corporations," partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes or other
pass-through entities (and investors therein);
-
•
-
grantor trusts;
-
•
-
stockholders who received their shares through the exercise of employee stock options, as compensation, through a tax-qualified retirement plan
or in connection with the performance of services; and
-
•
-
persons who own (directly or through attribution) 10% or more (by vote or value) of the outstanding Ensco Class A ordinary shares.
No
rulings are intended to be sought from the IRS with respect to the merger and there can be no assurance that the IRS or a court will not take a contrary position regarding the tax
consequences described herein.
For
purposes of this discussion, a "U.S. holder" is a beneficial owner of shares of Atwood common stock who is, for US federal income tax purposes: (i) an individual who is a
citizen or resident of the United States; (ii) a corporation or other entity taxable as a corporation created or organized under the
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Table of Contents
laws
of the United States or any of its political subdivisions; (iii) an estate that is subject to US federal income tax on its income regardless of its source; or (iv) a trust
(A) if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or
(B) that has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes.
A
"non-U.S. holder" means a beneficial owner of shares of Atwood common stock or Ensco Class A ordinary shares, as the case may be, who is neither a U.S. holder nor a partnership
(or other entity treated as a partnership for U.S. federal income tax purposes).
This
discussion does not address the tax treatment of partnerships (or entities or arrangements that are treated as partnerships for U.S. federal income tax purposes) or persons that
hold their shares of Atwood common stock through partnerships or other pass-through entities for U.S. federal income tax purposes. If a partnership, including any entity or arrangement treated as a
partnership for U.S. federal income tax purposes, holds shares of Atwood common stock, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of
the partner and the activities of the partnership. Such partners and partnerships should consult their own tax advisors regarding the particular tax consequences of the merger to them.
Each Atwood shareholder should consult its tax advisor with respect to the particular tax consequences of the merger to such holder.
Tax Consequences of the Merger to Atwood and Ensco
Neither Atwood nor Ensco is expected to be subject to U.S. federal income tax as a result of the merger. In conjunction with the merger, Atwood,
Ensco and their respective affiliates will engage in certain additional intercompany transactions. The discussion herein does not address the U.S. federal income tax treatment of such transactions.
After
the merger, Ensco is expected to continue to be treated as a foreign corporation for U.S. federal income tax purposes. However, as described further below, it is possible that the
IRS will disagree with this conclusion. Should the IRS conclude that Ensco is properly treated as a U.S. "domestic" corporation for U.S. federal income tax purposes as a result of the merger (and such
conclusion is not overturned), Ensco would be subject to tax on its worldwide income at U.S. tax rates, and would be subject to other provisions of the U.S. tax regime, including with respect to Ensco
subsidiaries that would be treated as "controlled foreign corporations" for U.S. tax purposes. Also, certain payments made by Ensco to foreign shareholders, including dividend payments, would be
subject to U.S. withholding tax at a statutory rate of 30% unless reduced or eliminated by applicable treaty.
For
U.S. federal income tax purposes, a corporation is generally considered a "domestic" corporation (or U.S. tax resident) if it is organized in the United States or under the laws of
the United States or of any state or political subdivision therein, and is generally considered a "foreign" corporation (or non-U.S. resident) if it is not considered a domestic corporation. Because
Ensco is an entity incorporated in England and Wales, it would generally be considered a foreign corporation (and, therefore, a non-U.S. tax resident) under these rules.
Under
Section 7874 of the Internal Revenue Code, unless the Substantial Business Activities Exception is satisfied, 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 if 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
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Ensco
is a tax resident after the merger. The Substantial Business Activities Exception is not expected to be satisfied.
In
addition, following the merger, Section 7874 of the Internal Revenue Code could limit the ability of Atwood and its U.S. affiliates to use U.S. tax attributes (including net
operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions if the Section 7874 Percentage is at least 60% (but less than 80%).
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 is subject to factual uncertainties. Further, the rules for determining
the Section 7874 Percentage are subject to change, possibly with retroactive effect.
For
example, the Section 7874 Percentage may be affected by the amount of any "non-ordinary course distributions" paid by Atwood to its shareholders in each of the three 12-month
periods prior to the Effective Time. As defined by applicable Treasury Regulations, the "non-ordinary course distributions" paid by Atwood would be equal to the excess of all distributions, including
dividends and stock repurchases, made during a particular 12-month period by Atwood with respect to the Atwood stock over 110% of the average of such distributions during the 36-month period
immediately preceding such 12-month period. The amount of any such excess would then increase the value of Atwood for purposes of calculating the Section 7874 Percentage.
Fluctuations
in the value of shares of Atwood common stock and Ensco Class A ordinary shares and assets between the time of the execution of the merger agreement and the Effective
Time may also affect the Section 7874 Percentage.
After
taking into account the adjustments described above, the Section 7874 Percentage is currently expected to be less than 60% (as measured by vote and value). As discussed
above, if the Section 7874 Percentage were 80% or more, 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.
Accordingly, following the merger, Ensco is expected to be treated as a foreign corporation for U.S. federal income tax purposes, and the remainder of this disclosure assumes such treatment.
Tax Consequences of the Merger to Atwood Shareholders
Tax Consequences to U.S. Holders
Subject to the discussion below relating to Section 304 of the Internal Revenue Code, the receipt 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 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 U.S. holder's adjusted tax basis in
its shares of Atwood common stock surrendered in the merger. A U.S. holder's adjusted basis in its shares of Atwood common stock will generally 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.
A
U.S. holder's gain or loss on the exchange of shares of Atwood common stock for Ensco Class A ordinary shares in the merger generally will be a capital gain or loss and will
generally be long-term capital gain or loss if the U.S. holder has held the shares of Atwood common stock surrendered in the exchange for more than one year as of the date of the merger. Long-term
capital gain of a non-corporate U.S. holder currently is subject to a maximum U.S. federal income tax rate of 20%. If a non-corporate U.S. holder does not qualify for long-term capital gain treatment,
any gain
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currently
is subject to a maximum U.S. federal income tax rate of 39.6%. The deductibility of capital losses is subject to limitations.
Any
such gain or loss recognized by a U.S. holder will be treated as U.S. source gain or loss. If a U.S. holder acquired different blocks of shares of Atwood common stock at different
times and different
prices, such holder must determine its adjusted tax basis and holding period separately with respect to each block of shares of Atwood common stock.
U.S.
holders are urged to consult their advisors as to the particular consequences of the receipt of Ensco Class A ordinary shares for shares of Atwood common stock pursuant to
the merger.
Potential Application of Section 304 of the Internal Revenue Code to U.S. Holders
Notwithstanding the discussion above, the receipt of Ensco Class A ordinary shares by Atwood shareholders in the merger may be subject to
Section 304 of the Internal Revenue Code. Section 304 could cause the entire amount of the Ensco Class A ordinary shares received by a holder to be treated as a dividend
regardless of the gain realized on the merger. If Section 304 applies, the merger consideration received by a U.S. holder will be treated as the proceeds of a redemption of stock deemed issued
by Atwood. This deemed redemption will be treated as a distribution, unless the deemed redemption is "substantially disproportionate" or "not essentially equivalent to a dividend" with respect to a
particular holder, in which case the deemed redemption will be treated as a sale or exchange of shares. As a result, instead of recognizing taxable gain or loss as described above, a holder of shares
of Atwood common stock whose percentage ownership interest in Ensco immediately after the merger is not lower than its percentage ownership interest in Atwood prior to the merger by an amount that
satisfies the "substantially disproportionate" or "not essentially equivalent to a dividend" test described below, would recognize dividend income in an amount up to the fair market value of the Ensco
Class A ordinary shares received in the merger.
The
deemed redemption generally will be "substantially disproportionate" with respect to a holder if the percentage described in (2) below is less than 80% of the percentage
described in (1) below. Whether the deemed redemption is "not essentially equivalent to a dividend" with respect to a holder will depend upon the holder's particular circumstances. At a
minimum, however, for the deemed redemption to be "not essentially equivalent to a dividend," the deemed redemption must result in a "meaningful reduction" in the holder's deemed percentage stock
ownership of Atwood. In general, that determination requires a comparison of (1) the percentage of the outstanding shares of Atwood stock that the holder is deemed actually and constructively
to have owned immediately before the deemed redemption and (2) the percentage of the outstanding shares of Atwood stock that is constructively owned (through actual and constructive ownership
of Ensco after the merger) by the holder immediately after the deemed redemption. The IRS has indicated in a revenue ruling that a minority stockholder in a publicly traded corporation will experience
a "meaningful reduction" if the minority stockholder (i) has a minimal percentage stock interest, (ii) exercises no control over corporate affairs and (iii) experiences any
reduction in its percentage stock interest. In applying the above tests, a holder may, under the constructive ownership rules, be deemed to own stock that is owned by other persons or stock underlying
a holder's option to purchase stock in addition to the stock actually owned by the holder. Provided that an Atwood shareholder owns a minimal percentage of the outstanding shares of Atwood common
stock and exercises no control over Atwood's corporate affairs, it is expected that any reduction in the percentage of outstanding shares of Atwood common stock treated as owned (including under the
attribution rules) by a shareholder will cause the merger to be taxable as a sale or
exchange. We strongly encourage all U.S. holders to consult their own tax advisors with respect to the application of Section 304 in light of their particular circumstances.
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A
distribution subject to Section 304 of the Internal Revenue Code will be taxable as a dividend to a U.S. holder to the extent of such U.S. holder's allocable share of the
relevant current or accumulated earnings and profits.
While
there is no controlling authority, assuming certain holding period requirements are satisfied, a reduced U.S. federal income tax rate should be available for a dividend that a
non-corporate U.S. holder is deemed to receive under Section 304. To the extent that a corporate U.S. holder of shares of Atwood common stock is treated as having received a dividend as a
result of Section 304, such dividend may be eligible for a dividends received deduction (subject to certain requirements and limitations) and may be subject to the "extraordinary dividend"
provisions of the Internal Revenue Code.
The
portion of the deemed distribution not paid out of the relevant current or accumulated earnings and profits will be applied against such U.S. holder's adjusted tax basis in its
shares of Atwood common stock immediately before the merger and thereafter will be treated as gain from the sale of such U.S. holder's shares of Atwood common stock.
If
the distribution under Section 304 is taxable as a sale or exchange to a U.S. holder, the results for such U.S. holder should be similar to those described under
"—Tax Consequences to U.S. Holders" above.
Section 304
and the U.S. Treasury Regulations and guidance thereunder are complex, and their application to the merger is unclear. U.S. holders that actually or constructively own
both shares of Atwood common stock and Ensco Class A ordinary shares, or that purchase or sell Ensco Class A ordinary shares in connection with the merger, should consult their tax
advisors with respect to the application of Section 304 in light of their particular circumstances (including as to their tax basis in the shares subject to Section 304). U.S. holders of
shares of Atwood common stock that also own Ensco Class A ordinary shares should consult their tax advisors regarding the possible desirability of selling their shares in either Atwood or Ensco
prior to completion of the merger or in Ensco after the merger.
Tax Consequences to Non-U.S. Holders
Subject to the discussions below relating to backup withholding and the potential application of Section 304 of the Internal Revenue
Code, a non-U.S. holder generally should not be subject to U.S. federal income tax on any gain recognized in the merger, unless:
-
•
-
the gain is effectively connected with the non-U.S. holder's conduct of a trade or business within the United States (and, if required by an
applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable);
-
•
-
the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the
disposition and certain other requirements are met; or
-
•
-
shares of Atwood common stock constitute U.S. real property interests ("USRPIs") by reason of Atwood's status as a U.S. real property holding
corporation ("USRPHC") for U.S. federal income tax purposes.
Gain
described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular graduated rates. A non-U.S. holder that is a
treated as a corporation for U.S. federal income tax purposes also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such
effectively connected gain, as adjusted for certain items.
Gain
described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may
be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of
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the
United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
With
respect to the third bullet point above, we believe Atwood currently is not, and do not anticipate it becoming, a USRPHC prior to the Effective Time. Because the determination of
whether Atwood is a USRPHC depends on the fair market value of its USRPIs relative to the fair market value of its non-U.S. real property interests and other business assets, there can be no assurance
that Atwood is currently not a USRPHC or will not become one prior to the Effective Time. Even if Atwood is or were to become a USRPHC prior to the Effective Time, a non-U.S. holder's gain arising
from the merger should not be subject to U.S. federal income tax if shares of Atwood common stock are "regularly traded," as defined by applicable Treasury Regulations, on an established securities
market, and such non-U.S. holder owned, actually and constructively, 5% or less of the outstanding shares of Atwood common stock throughout the shorter of the five-year period ending on the date of
the merger or the non-U.S. holder's holding period.
Potential Application of Section 304 of the Internal Revenue Code to Non-U.S. Holders
As discussed above under "—Potential Application of Section 304 of the Internal Revenue Code to U.S. Holders," receipt of
Ensco Class A ordinary shares may be treated as a distribution to a non-U.S. holder and a dividend to a non-U.S. holder to the extent of such non-U.S. holder's allocable share of the relevant
current or accumulated earnings and profits. Any such consideration treated as a dividend that is paid to or for the account of a non-U.S. holder generally will be subject to U.S. federal withholding
tax at the rate of 30% (or such lower rate specified by an applicable tax treaty if the non-U.S. holder provides the documentation required to claim benefits under such tax treaty to the applicable
withholding agent).
Notwithstanding
the above, if a dividend is effectively connected with the conduct of a trade or business in the United States by a non-U.S. holder (and, if required by an applicable
income tax treaty, is attributable to a U.S. "permanent establishment" of such non-U.S. holder), such dividend generally will not be subject to U.S. federal withholding tax if such non-U.S. holder
provides the appropriate documentation to the applicable withholding agent. Instead, such non-U.S. holder generally will be subject to U.S. federal income tax on such dividend in substantially the
same manner as a U.S. holder (except as otherwise provided by an applicable tax treaty). A non-U.S. holder that is a corporation also may be subject to a branch profits tax equal to 30% (or such lower
rate specified by an applicable tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items.
Given
the uncertainty surrounding the application of Section 304 to the merger and the treatment of any particular non-U.S. holder, a broker or other applicable withholding agent
may treat the Ensco Class A ordinary shares received by a non-U.S. holder as subject to U.S. federal withholding tax at the rate of 30% in its entirety (regardless of the amount of earnings and
profits), unless such non-U.S. holder can establish that a reduced rate for such withholding or an exemption applies. Depending on the circumstances, the broker (or other applicable withholding agent)
may obtain the funds necessary to remit any such withholding tax by asking the non-U.S. holder to provide the funds, by using funds in the non-U.S. holder's account with the broker or by selling (on
the non-U.S. holder's behalf) all or a portion of the Ensco Class A ordinary shares. Such a withholding tax would not apply if a non-U.S. holder sold its shares of Atwood common stock prior to
the merger. We strongly encourage all non-U.S. holders to consult their tax advisors with respect to the advisability of selling their shares of Atwood common stock.
The
rules of Section 304 are complex, and all non-U.S. holders should consult their tax advisors with respect to the applicability of Section 304 to the merger.
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Tax Consequences of Holding Ensco Class A Ordinary Shares to U.S. Holders
Taxation of Distributions to U.S. Holders
Distributions with respect to Ensco Class A ordinary shares will be treated as a dividend to U.S. holders to the extent that they are
paid out of Ensco's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The dividend income will be treated as foreign source, passive income for
foreign tax credit limitation purposes. Subject to the following discussion of special rules applicable to PFICs, the gross amount of the dividends paid by Ensco to U.S. holders may be eligible for
taxation at lower rates. The maximum U.S. federal income tax rate imposed on dividends received by non-corporate U.S. holders from certain "qualified foreign corporations" is currently 20%, provided
that certain holding period requirements are satisfied and
certain other requirements are met. Dividends paid with respect to stock of a foreign corporation which is readily tradable on an established securities market in the United States will be treated as
having been received from a "qualified foreign corporation." The U.S. Treasury and the IRS have determined that common stock is considered readily tradable on an established securities market if it is
listed on an established securities market in the United States, such as the NYSE. Accordingly, dividends received by non-corporate U.S. holders should be eligible for favorable treatment as dividends
received with respect to stock of a "qualified foreign corporation." Dividends paid by Ensco will not qualify for the dividends received deduction otherwise available to corporate stockholders.
To
the extent that the amount of any distribution exceeds Ensco's current and accumulated earnings and profits for a taxable year, the excess will first be treated as a tax-free return
of capital, causing a reduction in the U.S. holder's adjusted tax basis in U.S. holder's Ensco Class A ordinary shares. The balance of the excess, if any, will be treated as gain from the sale
of such U.S. holder's Ensco Class A ordinary shares, as described below under "—Sale, Exchange or Other Taxable Disposition by U.S. Holders."
It
is possible that Ensco is, or at some future time will be, at least 50% owned by U.S. persons. Dividends paid by a foreign corporation that is at least 50% owned by U.S. persons may
be treated as U.S. source income (rather than foreign source income) for foreign tax credit purposes to the extent the foreign corporation has more than an insignificant amount of U.S. source income.
The effect of this rule may be to treat a portion of any dividends paid by Ensco as U.S. source income. Treatment of the dividends as U.S. source income in whole or in part may limit a U.S. holder's
ability to claim a foreign tax credit with respect to foreign taxes payable or deemed payable in respect of the dividends or other items of foreign source, passive income for U.S. federal foreign tax
credit limitation purposes. The Internal Revenue Code permits a U.S. holder entitled to benefits under the U.K.-U.S. Income Tax Treaty to elect to treat any company dividends as foreign source income
for foreign tax credit purposes if the dividend income is separated from other income items for purposes of calculating the U.S. holder's foreign tax credit. U.S. holders should consult their own tax
advisors about the desirability and method of making such an election.
Sale, Exchange or Other Taxable Disposition by U.S. Holders
Subject to the following discussion of special rules applicable to PFICs, a U.S. holder will recognize taxable gain or loss on the sale,
exchange or other taxable disposition of Ensco Class A ordinary shares in an amount equal to the difference between the amount realized on such taxable disposition and the U.S. holder's
adjusted tax basis in the Ensco Class A ordinary shares, in each case as determined in U.S. dollars.
In
general, any such gain or loss recognized by a U.S. holder will be treated as U.S. source gain or loss. Gain or loss realized on the sale, exchange or other taxable disposition of
Ensco Class A ordinary
shares will be capital gain or loss and will generally be long-term capital gain or loss if the Ensco Class A ordinary shares have been held for more than one year. Long-term capital gain of a
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non-corporate
U.S. holder currently is subject to a maximum U.S. federal income tax rate of 20%. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company Considerations
A foreign corporation is a PFIC if, after the application of certain "look-through" rules, (i) at least 75% of its gross income is
"passive income" as that term is defined in the relevant provisions of the Internal Revenue Code and IRS rules, or (ii) at least 50% of the average value of its assets produce "passive income"
or are held for the production of "passive income." Ensco is not expected to be a PFIC for the current tax year, and is not expected to become a PFIC in the future. However, this conclusion is a
factual determination made annually and is subject to change. There can be no assurance that the IRS will not successfully challenge this position or that Ensco will not be or become a PFIC at some
future time.
If
a U.S. holder is treated as owning stock in a PFIC, the U.S. holder will be subject to special rules intended to reduce or eliminate the benefit of the deferral of U.S. federal income
tax that results from investing in a foreign corporation that does not distribute all of its earnings on a current basis. These rules may adversely affect the tax treatment to a U.S. holder of
dividends paid by Ensco and of sales, exchanges and other dispositions of Ensco Class A ordinary shares, and may result in other U.S. federal income tax consequences. U.S. holders should
consult their own tax advisors about the determination of Ensco's PFIC status and the U.S. federal income tax consequences of holding Ensco Class A ordinary shares if Ensco is considered a PFIC
in any taxable year.
Tax Consequences of Holding Ensco Class A Ordinary Shares to Non-U.S. Holders
In general, a non-U.S. holder of Ensco Class A ordinary shares will not be subject to U.S. federal income tax or, subject to the
discussion below under "—Information Reporting and Backup Withholding," U.S. federal withholding tax on any dividends received on Ensco Class A ordinary shares or any gain
recognized on a sale or other disposition of Ensco Class A ordinary shares unless:
-
•
-
the dividend or gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States, and if required
by an applicable tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; or
-
•
-
in the case of gain only, the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during
the taxable year of the sale or disposition, and certain other requirements are met.
A
non-U.S. holder that is a corporation may also be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable tax treaty) on the repatriation from
the United States of its effectively connected earnings and profits for the taxable year, as adjusted for certain items.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to (i) cash received by U.S.-holders of shares of Atwood common stock in lieu
of fractional Ensco Class A ordinary shares and (ii) dividends received by U.S. holders of Ensco Class A ordinary shares and the proceeds received on the disposition of Ensco
Class A ordinary shares effected within the United States (and, in certain cases, outside the United States), if paid to U.S. holders other than certain exempt recipients (such as
corporations). Backup withholding may apply to such amounts if the U.S. holder fails to provide an
accurate taxpayer identification number (on an IRS Form W-9 provided to the paying agent or the U.S. holder's broker) or is otherwise subject to backup withholding. The amount of any backup
withholding from a payment
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to
a U.S. holder will be allowed as a refund or credit against the U.S. holder's U.S. federal income tax liability, provided that the required information is furnished to the IRS in a timely manner.
Individuals
that own "specified foreign financial assets" with an aggregate value of more than $50,000 (or higher threshold for some married individuals and individuals living abroad)
may be required to file an information report (IRS Form 8938) with respect to such assets with their tax returns. Ensco Class A ordinary shares generally will constitute specified
foreign financial assets subject to these reporting requirements, unless the Ensco Class A ordinary shares are held in an account at a financial institution (which, in the case of a foreign
financial account, may also be subject to reporting). Additionally, under recently finalized regulations, a domestic corporation, domestic partnership, or trust (as described in
Section 7701(a)(30)(E) of the Internal Revenue Code) which is formed or availed of for purposes of holding, directly or indirectly, specified foreign financial assets may be subject to these
rules. U.S. holders should consult their own tax advisors regarding information reporting requirements relating to their ownership of Ensco Class A ordinary shares and the significant penalties
to which they may be subject for failure to comply.
A
non-U.S. holder will not be subject to U.S. backup withholding if it provides a certification of exempt status (on an appropriate IRS Form W-8 or an applicable substitute form).
Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the non-U.S. holder's U.S. federal income tax liability, provided the required information is
furnished to the IRS in a timely manner.
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ATWOOD PROPOSAL 2—COMPENSATORY PROPOSAL
Atwood is required pursuant to Section 14A of the Exchange Act and the applicable SEC rules issued thereunder that were enacted pursuant
to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to include in this proxy statement a non-binding, advisory vote on the compensation payable to each of its "named executive
officers," as determined in accordance with Item 402(t) of Regulation S-K, in connection with the proposed merger pursuant the agreements and understandings pursuant to which such
compensation may be paid or has become payable in connection with the merger. This non-binding advisory proposal relates only to the contractual obligations of Atwood that exist as of the completion
of the merger that may result in a payment to Atwood's named executive officers in connection with the consummation of the merger (regardless of the timing of payment) and does not relate to any new
compensation or other arrangements following the merger. The proposal gives Atwood shareholders the opportunity to express their views on the merger-related compensation of Atwood's named executive
officers. Accordingly, Atwood is therefore asking its shareholders to approve the following resolution:
"
RESOLVED, that the compensation that may be paid or become payable to Atwood's named executive officers in connection with the merger, and the agreements or
understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in "The Merger—Atwood's
Directors and Officers Have Financial Interests in the Merger," is hereby APPROVED
."
The
vote regarding this proposal on merger-related compensation is a vote separate and apart from the vote on the Atwood Merger Proposal. Accordingly, Atwood shareholders may vote to
approve the Atwood Merger Proposal and vote not to approve the Atwood Compensatory Proposal and vice versa. Because the Atwood Compensatory Proposal is advisory only, it will not be binding on either
Atwood or Ensco. Accordingly, if the Atwood Merger Proposal is approved and the merger is completed, the named executive officers will be eligible to receive the specified compensation that may become
payable in connection with the consummation of the merger, subject only to the conditions applicable thereto, regardless of the outcome of the Atwood Compensatory Proposal.
The
Atwood Board unanimously recommends that Atwood shareholders vote "
FOR
" the Atwood Compensatory Proposal.
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ATWOOD PROPOSAL 3—ADJOURNMENT PROPOSAL
Atwood shareholders are being asked to approve a proposal that will give Atwood authority to adjourn the Atwood special meeting for the purpose
of soliciting additional proxies in favor of the Atwood Merger Proposal if there are not sufficient votes at the time of the Atwood special meeting to approve the Atwood Merger Proposal. If this
adjournment proposal is approved, the Atwood special meeting could be adjourned to any date. If the Atwood special meeting is adjourned, Atwood shareholders who have already submitted their proxies
will be able to revoke them at any time prior to their use. If you return a proxy and do not indicate how you wish to vote on any proposal, or if you indicate that you wish to vote in favor of the
approval of the merger agreement but do not indicate a choice on the adjournment proposal, your shares will be voted in favor of the adjournment proposal. But if you indicate that you wish to vote
against the approval of the merger agreement, your shares will only be voted in favor of the adjournment proposal if you indicate that you wish to vote in favor of that proposal.
The
Atwood Board unanimously recommends that Atwood shareholders vote
"FOR"
the Atwood Adjournment Proposal.
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INFORMATION ABOUT THE COMPANIES
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."
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.
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."
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DESCRIPTION OF ENSCO CLASS A ORDINARY SHARES
The following information is a summary of the material terms of the Ensco Class A ordinary shares, as specified in the Ensco Articles of
Association. This summary is not complete and is subject to the complete text of the Ensco Articles of Association. You are encouraged to carefully read the Ensco Articles of Association.
Share Capital
As of May 26, 2017, Ensco had (i) 303,488,494 Ensco Class A ordinary shares, in issue, excluding Ensco Class A
ordinary shares held in treasury, and (ii) 50,000 Ensco Class B ordinary shares, nominal value £1.00 per share (the "Ensco Class B ordinary shares"), in issue and held
by one of Ensco's subsidiaries.
All
of the issued Ensco Class A ordinary shares are fully paid and are not subject to any further calls by Ensco. There are no conversion rights, redemption provisions or sinking
fund provisions relating to any Ensco Class A ordinary shares; however, subject to the Company Act 2006, Ensco may purchase or contract to purchase any of its ordinary shares off-market.
Under
English law, persons who are neither residents nor nationals of the United Kingdom may freely hold, vote and transfer Ensco's shares in the same manner and under the same terms as
United Kingdom residents or nationals.
The
Ensco Class A ordinary shares and the Ensco Class B ordinary shares have the same rights and privileges in all respects. While the Ensco Class B ordinary shares
remain in issue, such shares have no voting rights or rights to dividends or distributions, to the extent that Ensco or any of Ensco's subsidiaries hold such shares.
Dividends
Subject to the Companies Act 2006, the Ensco Board may declare a dividend to be paid to Ensco's shareholders according to their respective
rights and interests in Ensco, and may fix the time for payment of such dividend. The Ensco Board may from time to time declare and pay (on any class of shares of any amounts) such dividends as appear
to them to be justified by Ensco's profits that are available for distribution. When evaluating dividend payment timing and amounts, the Ensco Board considers several factors, including Ensco's
profitability, liquidity, financial condition, market outlook, reinvestment opportunities, capital requirements and other factors and restrictions the Ensco Board deems relevant. There can be no
assurance that Ensco will pay a dividend in the future.
There
are no fixed dates on which entitlement to dividends arise on any of Ensco's ordinary shares. The Ensco Board may direct the payment of all or any part of a dividend to be
satisfied by distributing specific assets, in particular paid up shares or debentures of any other company. The Ensco Articles of Association permit a scrip dividend scheme under which shareholders
may be given the opportunity to elect to receive fully paid Class A ordinary shares instead of cash, with respect to all or part of future dividends. Any ordinary shares Ensco or any of Ensco's
subsidiaries hold will not be entitled to any dividends or distributions, including any scrip dividends, bonus shares or dividends or distributions of property or debentures of any other company.
Further, the trustees of an employee benefit trust established in connection with Ensco's equity incentive plans are not entitled to any dividends or distributions, including any scrip dividends,
bonus shares or dividends or distributions of property or debentures of any other company.
If
a shareholder owes any money to Ensco relating in any way to any class of Ensco shares, the Ensco Board may deduct any of this money from any dividend on any shares held by the
shareholder, or from other money payable by Ensco in respect of the shares. Money deducted in this way may be used to pay the amount owed to Ensco.
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Unclaimed
dividends and other amounts payable in respect of Ensco's ordinary shares can be invested or otherwise used by the directors for Ensco's benefit until they are claimed under
English law. A dividend or other money remaining unclaimed for a period of twelve years after it first became due for payment will be forfeited and cease to remain owed by Ensco.
Voting Rights
At a general meeting of Ensco shareholders, any resolution put to a vote must be decided on a poll rather than by a show of hands.
Each
Ensco shareholder (other than any of its subsidiaries who hold Ensco shares) who (being an individual) is present in person or (being a corporation) is present by a duly authorized
corporate representative at Ensco's general meeting will have one vote for every share held, and every person present who has been appointed as a proxy has one vote for every share in respect of which
he or she is the proxy, except that any proxy who has been appointed by DTC or its proxies have such number of votes as equals the number of shares in relation to which such proxy has been appointed,
subject to any
rights or restrictions as to voting attached to any class of shares in accordance with the Ensco Articles of Association or by agreement and subject to the disenfranchisement (i) in the event
of non-payment of any call or other sum due and payable in respect of any shares not fully paid, (ii) in the event of any non-compliance with any statutory notice requiring disclosure of an
interest in shares, (iii) with respect to any shares held by the trustees of an employee benefit trust established in connection with Ensco's equity incentive plans in which a beneficial
interest has not yet vested in a beneficiary of such trust.
In
the case of joint holders, the vote of the person whose name stands first in the register of shareholders and who tenders a vote, whether in person or by proxy, is accepted to the
exclusion of any votes tendered by any other joint holders.
The
necessary quorum for a general meeting is the shareholders who together represent at least the majority of the voting rights of all the shareholders entitled to vote present in
person or by proxy (that is, any shares whose voting rights have been disenfranchised (whether pursuant to the Companies Act 2006 and/or under the Ensco Articles of Association) are disregarded for
the purposes of determining a quorum).
An
annual general meeting of Ensco shareholders must be called by not less than 21 clear days' notice and no more than 60 days' notice. For all other general meetings except
general meetings properly requisitioned by shareholders, such meetings may be called by not less than 14 clear days' notice and no more than 60 days' notice. The notice of meeting also must
specify a time (which may not be more than 60 days nor less than 10 days before the date of the meeting) by which a person must be entered on the register in order to have the right to
attend or vote at the meeting. The number of shares then registered in their respective names will determine the number of votes a person is entitled to cast at that meeting.
Ensco
must receive an appointment of proxy (whether in hard copy form or electronic form) before the time for holding the meeting or adjourned meeting at which the person named in the
appointment of proxy proposes to vote; in the case of a poll taken more than 48 hours after the meeting at which the relevant vote was to be taken, an appointment of proxy must be received
after such meeting and not less than 24 hours (or such shorter time as the Ensco Board may determine) before the time appointed for taking the poll; or in the case of a poll not taken
immediately but taken not more than 48 hours after the meeting, the appointment of proxy must be delivered at the meeting at which the poll is to be taken. An appointment of proxy not received
or delivered in accordance with the Ensco Articles of Association is invalid under English law.
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Return of Capital
In the event of a voluntary winding-up, the liquidator may, on obtaining any sanction required by law, divide among Ensco shareholders the whole
or any part of Ensco's assets, whether or not the assets consist of property of one kind or of different kinds.
The
liquidator also may, with the same authority, transfer the whole or any part of the assets to trustees upon any trusts for the benefit of the shareholders as the liquidator decides.
No past or present shareholder can be compelled to accept any asset that could subject him or her to a liability.
Pre-emptive Rights and New Issues of Shares
Under Section 549 of the Companies Act 2006, directors are, with certain exceptions, unable to allot securities without being authorized
either by the shareholders in a general meeting or by the Ensco Articles of Association pursuant to Section 551 of the Companies Act 2006. In addition, under the Companies Act 2006, the
issuance of equity securities that are to be paid for wholly in cash (except shares held under an employees' share scheme) must be offered first to the existing equity shareholders in proportion to
the respective nominal values of their holdings on the same or more favorable terms, unless a special resolution to the contrary has been passed in a general meeting of shareholders or the Articles of
Association otherwise provide an exclusion from this requirement (which exclusion can be for a maximum of five years after which shareholders' approval would be required to renew the exclusion). In
this context, equity securities generally means in relation to ordinary shares (being shares other than shares that, with respect to dividends or capital, carry a right to participate only up to a
specified amount in a distribution) and all rights to subscribe for or convert securities into such shares.
On
May 22, 2017, shareholder resolutions were adopted which authorized the directors (generally and unconditionally), for a period up to the conclusion of the next annual general
meeting of shareholders (or, if earlier, at the close of business on August 22, 2018), to allot Ensco Class A ordinary shares and to grant rights to subscribe for or convert any security
into Ensco Class A ordinary shares: (i) up to an aggregate nominal amount of $10,109,804, and (ii) up to a nominal amount of $20,219,607 in connection with a rights issue or other
similar issue (such amount to be reduced by the nominal amount of Ensco Class A ordinary shares allotted pursuant to (i)). Additional shareholder resolutions were adopted which authorized the
directors to: (i) allot equity securities for cash free of pre-emption rights up to an aggregate nominal amount of $1,517,989, and (ii) to further allot equity securities for cash free
of
pre-emption rights up to an aggregate nominal amount of $1,517,989 for the purposes of financing (or refinancing if the authority is to be used within six months after the original transaction) a
transaction which the Ensco Board deems to be an acquisition or other capital investment, such authority to be effective until the conclusion of Ensco's next annual general meeting of shareholders
(or, if earlier, at the close of business on August 22, 2018). Ensco may, before the expiration of any authority to allot shares or disapply pre-emption rights granted pursuant to the
shareholder resolutions adopted on May 22, 2017, make an offer or agreement that would or might require the Ensco Class A ordinary shares to be allotted (or rights to be granted) after
such expiration, and the directors may allot shares or grant rights in pursuance of such an offer or agreement as if the authority to allot had not expired.
Subject
to the provisions of the Companies Act 2006 and to any rights attached to any existing shares, the Ensco Class A ordinary shares may be issued with, or have attached to
them, such rights or restrictions as Ensco's shareholders may by ordinary resolution determine, or, where the above authorizations are in place, the Ensco Board may determine such rights or
restrictions.
The
Companies Act 2006 prohibits an English company from issuing shares for no consideration, including with respect to grants of restricted shares made pursuant to equity incentive
plans. Accordingly, the nominal value of the shares issued upon the lapse of restrictions or the vesting of any restricted share award or any other share-based grant must be paid pursuant to the
Companies Act 2006.
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Disclosure of Interests in Shares
Section 793 of the Companies Act 2006 provides Ensco the power to require a person whom Ensco knows has, or whom Ensco has reasonable
cause to believe has, or within the previous three years has had, any ownership interest in any shares (the "default shares") to disclose prescribed particulars of those shares. For this purpose
default shares includes any shares allotted or issued after the date of the Section 793 notice in respect of those shares. Failure to provide the information requested within the prescribed
period after the date of sending the notice will result in sanctions being imposed against the holder of the "default shares" as provided within the Companies Act 2006.
Under
the Ensco Articles of Association, Ensco may also withdraw voting and certain other rights, place restrictions on the rights to receive dividends and transfer "default shares" if
the relevant holder of "default shares" has failed to provide the information requested within 14 days after the date of sending the notice, depending on the level of the relevant shareholding
(and unless the Ensco Board decides otherwise).
Alteration of Share Capital/Repurchase of Shares
Ensco may from time to time:
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•
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increase its share capital by allotting new shares in accordance with any unused portion of any authority to allot shares approved by Ensco
shareholders and in accordance with the Ensco Articles of Association;
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•
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by ordinary resolution of Ensco's shareholders, consolidate and divided all or any of its share capital into shares of a larger nominal amount
than the existing shares; and
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•
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by ordinary resolutions of Ensco's shareholders, subdivide any of its shares into shares of a smaller nominal amount than its existing shares.
Subject
to the Companies Act 2006 and to any rights the Ensco shareholders may have, Ensco may purchase any of Ensco's shares of any class (including any redeemable shares, if the Ensco
Board should decide to issue any) by way of "off-market purchases" up to an aggregate of $2.0 billion of Class A ordinary shares subject to certain restrictions following the approval of
the shareholders by special resolution on May 20, 2013. Such approval lasts for up to five years from the date of the special resolution, and renewal of such approval for additional five year
terms may be sought. Shares may only be repurchased out of distributable profits or the proceeds of a fresh issue of shares made for that purpose, and, if a premium is paid, it must be paid out of
distributable profits.
Transfer of Shares
The Ensco Articles of Association allow Ensco's shareholders to transfer all or any of their shares in any form that is approved by the Ensco
Board.
The
Ensco Board may refuse to register a transfer:
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•
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if the shares in question are not fully paid;
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•
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if it is with respect to more than one class of shares;
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•
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if it is with respect to shares on which Ensco has a lien;
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•
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if it is in favor of more than four persons jointly;
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•
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if, where an instrument of transfer is required to effect the transfer, and that instrument is required to be stamped, Her Majesty's Revenue
and Customs has not duly stamped it;
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•
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if it is not presented for registration together with the share certificate and evidence of title as the Ensco Board reasonably requires; or
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•
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in certain circumstances, if the holder has failed to provide Ensco with the required particulars as described under "—Disclosure
of Interests of Shares" above.
The
Ensco Class A ordinary shares to be allotted and issued in connection with the merger will be allotted and issued to Atwood shareholders through the facilities of DTC.
If
the Ensco Board refuses to register a transfer of a share, it must, within two months after the date on which the transfer was lodged, send to the transferee notice of the refusal
together with its reasons for refusal. An instrument of transfer which the Ensco Board refuses to register must (except in the case of suspected fraud) be returned to the person depositing it.
General Meetings and Notices
The notice of a general meeting of shareholders must be given to the shareholders of record (other than any who, under the provisions of the
Ensco Articles of Association or the terms of allotment or issue of shares, are not entitled to receive notice), to the Ensco Board and to its auditors.
Under
English law, Ensco is required to hold an annual general meeting of shareholders within six months from the day following the end of Ensco's fiscal year and, subject to the
foregoing, the meeting may be held at a time and place determined by the Ensco Board.
Liability of Ensco's Directors and Officers
The Ensco Articles of Association provide that English courts have exclusive jurisdiction with respect to any suits brought by shareholders
against Ensco or its directors. English law does not permit a company to exempt any director or certain officers from any liability arising from negligence, default, breach of duty or breach of trust
against the company. However, despite this prohibition, an English company is permitted to purchase and maintain insurance for a director or executive officer of the company against any such
liability. Ensco has entered into deeds of indemnity with each of its current directors and executive officers and purchased insurance on their behalf. In addition, directors and executive officers
may be covered by indemnification agreements and indemnification rights granted under the charter documents of Ensco's subsidiaries. Shareholders can ratify by ordinary resolution a director's or
certain officer's conduct amounting to negligence, default, breach of duty or breach of trust in relation to the company.
Takeover Code
Takeover offers and certain other transactions in respect of certain public companies are regulated by the Takeover Code, which is administered
by the Takeover Panel, a body consisting of representatives of the City of London financial and professional institutions that oversees the conduct of takeovers. An English public limited company
potentially will potentially be subject to the Takeover Code if, among other factors, its central place of management and control is within the U.K., the Channel Islands or the Isle of Man. The
Takeover Panel generally will look to the residency of a company's directors to determine where it is centrally managed and controlled.
The
Takeover Panel has previously confirmed that on the basis of Ensco's current directors and management the Takeover Code would not apply to Ensco. It is possible that if the
characteristics of Ensco's directors or management were to change in the future, the Takeover Panel may take a different position and the Takeover Code may apply to Ensco.
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Anti-Takeover Provisions
The provisions of Ensco's Articles of Association summarized below may have the effect of discouraging, delaying or preventing hostile
takeovers, including those that might result in a premium being paid over the market price of Ensco Class A ordinary shares and discouraging, delaying or preventing changes of control or
management of Ensco.
Issuance of Additional Shares
The Ensco Board has the authority, without further action of Ensco's shareholders, but subject to its statutory and fiduciary duties, to allot
shares, or to grant rights to subscribe for or to convert or exchange any security into shares, up to: (i) an aggregate nominal amount of $10,109,804, and (ii) up to a nominal amount of
$20,219,607 in connection with a rights issue or other similar issue (such amount to be reduced by the nominal amount of Ensco shares allotted pursuant to (i)), to allot equity securities for cash
free of pre-emption rights up to an aggregate nominal amount of $1,517,989, and to further allot equity securities for cash free of pre-emption rights up to an aggregate nominal amount of $1,517,989
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 Ensco Board deems to be an acquisition or other
capital investment. Such authority will continue until the conclusion of Ensco's next annual general meeting of shareholders (or, if earlier, the close of business on August 22, 2018) and
thereafter it must be renewed. The issuance of further shares on various terms could adversely affect the Ensco shareholders. The potential issuance of further shares may discourage bids for Ensco
Class A ordinary shares at a premium over the market price, may adversely affect the
market price of Ensco Class A ordinary shares and may discourage, delay or prevent a change of control.
Shareholder Rights Plan
The Ensco Board has the necessary corporate authority to exercise any power of the company to establish a shareholders rights plan. Any
shareholders rights plan may be in such form as the Ensco Board may in its absolute discretion decide. Such a plan could make it more difficult for another party to obtain control of Ensco by
threatening to dilute a potential acquirer's ownership interest under certain circumstances. The Ensco Board may adopt a shareholder rights plan at any time.
The
anti-takeover and other provisions of the Ensco Articles of Association, as well as the adoption of a shareholder rights plan, could discourage potential acquisition proposals and
could delay or prevent a change of control. These provisions are intended to enhance shareholder value by discouraging certain types of abusive takeover tactics. However, these provisions could have
the effect of discouraging others from making tender offers for Ensco Class A ordinary shares and, as a consequence, also may inhibit fluctuations in the market price of Ensco Class A
ordinary shares that could result from actual or rumored takeover attempts.
Board of Directors
At every annual general meeting all Ensco directors must retire from office and each director may offer himself for re-appointment by the
members. Under English law, shareholders have no cumulative voting rights. In addition, Ensco's Articles of Association incorporate provisions that regulate shareholders' ability to nominate directors
for election. Although Ensco's shareholders have the ability to remove a director without cause under English law, the lack of cumulative voting and the limitations on shareholders' powers to nominate
directors will have the effect of making it more difficult not only for any party to obtain control over Ensco by replacing the majority of the Ensco Board but also to force an immediate change in the
composition of the Ensco Board. However, under Ensco's Articles of Association, if Ensco shareholders remove the entire Ensco Board, a shareholder may then convene a general meeting for the purpose of
appointing directors.
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COMPARISON OF RIGHTS OF ATWOOD SHAREHOLDERS AND ENSCO SHAREHOLDERS
The rights of Atwood shareholders are governed by the TBOC and Atwood's certificate of formation and bylaws. The rights of Ensco shareholders
are governed by the laws of England and Wales and the Ensco Articles of Association. After the merger, the former Atwood shareholders, through ownership of Ensco Class A ordinary shares, will
have the rights of Ensco shareholders, and their rights will generally be governed by English law and the Ensco Articles of Association.
There
are differences between shareholder rights under the TBOC and shareholder rights under applicable English law. In addition, there are differences between Atwood's certificate of
formation and bylaws and the Ensco Articles of Association. The following discussion is a summary of the material differences between the current rights of Atwood shareholders and the current rights
of Ensco shareholders. This summary does not cover all the differences between applicable English law and the
TBOC affecting corporations and their shareholders or all of the differences between Atwood's certificate of formation and bylaws and the Ensco Articles of Association. While Ensco and Atwood believe
this summary is accurate in all material respects, the following descriptions are qualified in their entirety by reference to the complete text of the relevant provisions of applicable English law,
the TBOC, Atwood's certificate of formation and bylaws and the Ensco Articles of Association. Ensco and Atwood encourage you to read those laws and documents. For information as to how you can obtain
a copy of Atwood's certificate of formation and bylaws or the Ensco Articles of Association, see "Where You Can Find More Information."
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Rights of Atwood Shareholders
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Rights of Ensco Shareholders
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Share Capital
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The authorized capital stock of Atwood consists of (i) 180,000,000 shares of Atwood common stock and (ii) 1,000,000 shares of preferred stock.
The Atwood Board
has the authority to issue one or more series of preferred stock, having terms designated by the Atwood Board.
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As of May 26, 2017, the share capital of Ensco consists of (i) 50,000 Class B ordinary shares in issue, which are held by a subsidiary of Ensco, and (ii) 303,488,494 Class A ordinary shares in issue.
Preference shares can be issued by English companies, giving the holders rights of priority over ordinary shareholders.
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Subject to there being an unexpired authority to allot shares, the Ensco Articles of Association permit the directors to allot and issue shares with rights to be determined by the directors at the time of issuance, which may include preferred
rights. The Ensco Board is currently authorized to allot and issue shares in Ensco up to a nominal amount of:
(i) up to $10,109,804; and
(ii) in connection with a pre-emptive offer, up to $20,219,607 (such amount to be reduced by the nominal amount of any issuances made under (i)),
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Rights of Atwood Shareholders
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Rights of Ensco Shareholders
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which may be Ensco Class A ordinary shares, Ensco Class B ordinary shares or a class of shares with such rights as the Ensco Board shall determine at the time of allotment and issuance
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Voting Rights
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Generally
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Each Atwood shareholder is entitled to one vote for each share of capital stock held by the shareholder.
If issued, the voting rights of holders of preferred stock will
be determined by the Atwood Board.
Atwood's bylaws provide that, as a general matter, when a quorum is present, action on a matter will be approved by a majority of shares
present in person or represented by proxy at the meeting.
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Each Ensco shareholder is entitled to one vote for each Ensco Class A ordinary share held by such shareholder.
The voting rights of holders of any additional shares
that may be issued will be determined by the Ensco Board in accordance with the Ensco Articles of Association.
Under English law and the Ensco Articles of Association,
certain matters require "ordinary resolutions," which must be approved by at least a majority of the votes cast by shareholders in a general meeting, and certain other matters require "special resolutions," which require the affirmative vote of at
least 75% of the votes cast at a general meeting.
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An ordinary resolution is needed to (among other matters): remove a director; provide, vary or renew a director's authority to allot shares; and appoint directors (where appointment is by shareholders).
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A special resolution is needed to (among other matters): alter a company's articles of association, exclude statutory preemptive rights on allotment of securities for cash; reduce a company's share capital; re-
register a public company as a private company (or vice versa); approve a scheme of arrangement.
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Quorum
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Holders of at least a majority of the stock issued and outstanding and entitled to vote, present at a meeting or represented by proxy, constitutes a quorum.
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Holders of at least a majority of the shares issued and outstanding and entitled to vote, present at a general meeting (whether in person or by proxy), constitutes a quorum.
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Rights of Atwood Shareholders
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Rights of Ensco Shareholders
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Cumulative Voting
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Texas law does not permit shareholders to cumulate their votes for the election of directors unless permitted by the articles of incorporation. Atwood's certificate of formation expressly authorizes the right to
cumulate votes in the election of directors by any shareholder.
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Cumulative voting is not recognized under English law or permitted under the Ensco Articles of Association.
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Atwood's bylaws provide that at any election for directors, each shareholder entitled to vote may cumulate his votes and give one candidate a number of votes equal to the number of directors to be
elected, multiplied by the number of votes to which his shares are entitled; or each shareholder may distribute his votes on the same principle among as many candidates for directors as the shareholder thinks fit. Any shareholder who intends to
cumulate his votes must give written notice of this intention to the Atwood Corporate Secretary on or before the day preceding the election at which the shareholder intends to cumulate his votes.
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Action by Written Consent
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Atwood's certificate of formation authorizes shareholder action without holding a meeting, providing notice or taking a vote if each shareholder entitled to vote on the action signs a written consent or consents
stating the action taken.
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Under English law, a public limited company's shareholders cannot pass a resolution by written consent.
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Rights of Atwood Shareholders
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Rights of Ensco Shareholders
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Shareholder Proposals; Director Nominations
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Under Atwood's bylaws, at an annual meeting of shareholders of Atwood, only such business may be conducted, and only such proposals may be acted upon, as have been properly brought before such annual meeting. To be properly brought before an annual
meeting, business or proposals (other than any nomination of directors of the Atwood Board, which is governed by a separate provision of Atwood's bylaws) must:
(i) be specified in the notice relating to the meeting (or any supplement thereto) given by or at the direction of the Atwood Board in accordance with the applicable provisions regarding notice of shareholder meetings under
Atwood's bylaws;
(ii) otherwise be properly brought before the annual meeting by or at the direction of the Atwood Board; or
(iii) be properly brought before the meeting by an Atwood shareholder who (A) is a shareholder of record at the time of the giving of such shareholder's notice and on the
record date for the determination of shareholders entitled to vote at such annual meeting, (B) is entitled to vote at the annual meeting and (C) complies with the requirements of the shareholder proposal provisions under Atwood's bylaws,
and otherwise be proper subjects for shareholder action and be properly introduced at the annual meeting. Clause (iii) is the exclusive means for a shareholder to submit business or proposals (other than matters properly brought under
Rule 14a-8 under the Exchange Act and included in the notice relating to the meeting (or any supplement thereto) given by or at the direction of the Atwood Board in accordance with applicable notice requirements under Atwood's bylaws) before an
annual meeting of Atwood shareholders.
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Shareholders meeting either of the following criteria can require resolutions to be put before the annual general meeting:
(i) one or more shareholders holding at least 5% of the paid-up capital of Ensco carrying voting rights; or
(ii) at least 100 members who have a right to vote on the resolution at the annual general meeting to which a request relates and who hold shares on which there has been paid up an average sum, per shareholder, of at
least £100. The request must be received at least 6 weeks before the relevant annual general meeting (or, if later, the time at which notice is given of that meeting). If so requested, Ensco is required to give notice of a resolution in
the same manner and at the same time (or as soon as reasonably practical thereafter) as the notice of the annual general meeting.
Shareholders, whether individually or
collectively, who do not meet either of the thresholds set out at (i) or (ii) above will not be entitled to nominate a director or propose a shareholder resolution for consideration at a meeting of the shareholders except for shareholder
proposals required by SEC Rule 14a-8 under the Exchange Act.
Directors of Ensco that are proposed to be elected at a shareholder meeting generally must be elected
individually pursuant to separate proposals at the meeting; more than one director cannot be elected under the same shareholder proposal.
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Rights of Atwood Shareholders
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Rights of Ensco Shareholders
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For a proposal to be properly brought before an annual meeting by an Atwood shareholder in accordance with the provisions of Atwood's bylaws, in addition to any other applicable requirements, such shareholder must have given timely advance notice
thereof in writing to the Atwood Corporate Secretary. To be timely, such shareholder's notice must be delivered to, or mailed and received at, the principal executive offices of Atwood not earlier than the close of business on the 120th day and
not later than the close of business on the 90th day prior to the first anniversary of the annual meeting date of the immediately preceding annual meeting; provided, however, that if the scheduled annual meeting date is called for a date that is
not within 30 days before or after such anniversary date, notice by such shareholder, to be timely, must be so delivered or received no earlier than the close of business on the 120th day and not later than the close of business on the
later of the 90th day prior to the date of such annual meeting or, if less than 100 days' prior notice or public disclosure of the scheduled meeting date is given or made, the 10th day following the earlier of the day on which the
notice of such meeting was mailed to Atwood shareholders or the day on which such public disclosure was made. In no event will any adjournment, postponement or deferral of an annual meeting or the announcement thereof commence a new time period for
the giving of a timely notice as described above.
Any such shareholder's notice to the Atwood Corporate Secretary must set forth as to each matter such shareholder proposes
to bring before the annual meeting:
(i) a description of the proposal desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting, together with the text of the proposal or business (including the text of any resolutions proposed for consideration);
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Under the Ensco Articles of Association, shareholders holding at least 5% of the paid-up capital of Ensco carrying voting rights have an express right to nominate candidates for election to the Ensco Board and bring other business before an annual
general meeting, provided the shareholder was a shareholder of record at the time notice was given of the meeting and is a shareholder at the time of the meeting, is entitled to vote at the meeting and complies with the notice procedures set forth
below as to such business or nomination. The shareholder must give timely notice and the notice must:
(i) set forth, as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (a) the name and address of such shareholder, (b) the class or series and number of shares of the corporation owned, any option or convertible
security and certain other information regarding shareholder ownership of shares and (c) any other information relating to such shareholder and beneficial owner that would be required to be disclosed in a proxy;
(ii) if the notice relates to any business other than a nomination of a director(s), set forth (a) a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any material interest of such shareholder and beneficial owner in such business and (b) a description of all agreements between such shareholder and beneficial owner and any
other person in connection with the proposal of such business by such shareholder;
(iii) set forth, for each nominee (a) information relating to such person
that would be required to be disclosed in a proxy statement and (b) a description of all direct and indirect compensation during the past three years, and any other material relationships, between or among such shareholder and beneficial owner
on the one hand, and each proposed nominee, on the other hand; and
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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.
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Ensco SEC Filings
(SEC File No. 001-08097; CIK No. 0000314808)
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Period or Date Filed
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Annual Report on Form 10-K
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Year ended December 31, 2016 (the "Ensco Form 10-K")
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Quarterly Reports on Form 10-Q
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Quarters ended March 31, 2017 and June 30, 2017
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Current Reports on Form 8-K
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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)
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Definitive Proxy Statement on Schedule 14A to the extent incorporated by reference into the Ensco
Form 10-K
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Filed on March 31, 2017
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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
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Filed on May 15, 2012
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Atwood SEC Filings
(SEC File No. 001-13167; CIK No. 0000008411)
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Period or Date Filed
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Annual Report on Form 10-K
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Fiscal Year ended September 30, 2016 (the "Atwood Form 10-K")
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Quarterly Reports on Form 10-Q
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Quarters ended December 31, 2016, March 31, 2017 and June 30, 2017
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Current Reports on Form 8-K
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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)
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Definitive Proxy Statement on Schedule 14A to the extent incorporated by reference into the Atwood
Form 10-K
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Filed on January 9, 2017
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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
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Filed on July 2, 1997
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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
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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:
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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.
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(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 President—General 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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"
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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Table of Contents
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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Table of Contents
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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Table of Contents
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
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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)
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Certificate of Merger
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Section 1.3
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Certificates
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Section 2.1(a)
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Closing
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Section 1.2
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Closing Date
|
|
Section 1.2
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Code
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|
Section 8.15
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Collective Bargaining Agreement
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|
Section 8.15
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Companies Act
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Section 8.15
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Company
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Preamble
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Company Approvals
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|
Section 3.2(b)
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Company Benefit Plan
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Section 3.16(a)
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Company Board
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Recitals
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Company Board Recommendation
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Section 3.2(a)
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Company Bylaws
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|
Section 8.15
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Company Charter
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Section 8.15
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Company Common Stock
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Section 3.1(c)
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Company Disclosure Schedule
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Article III
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Company Employee
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|
Section 3.15
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Company Equity Awards
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|
Section 3.1(c)
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Company Financial Statements
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|
Section 8.15
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Company Fleet Report
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|
Section 3.13(a)
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Company Intellectual Property
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|
Section 3.11(a)
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Company Intervening Event
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Section 8.15
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Company IT Assets
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Section 8.15
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Company Leased Real Property
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Section 3.12(a)
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Company Material Adverse Effect
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|
Section 8.15
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Company Material Contracts
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Section 3.19(a)
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Company Material Subsidiaries
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Section 3.1(b)
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Company Notes
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Section 5.21
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Company Organizational Documents
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|
Section 3.1(b)
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Company Permits
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|
Section 3.6(b)
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Company Permitted Liens
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|
Section 8.15
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Company Preferred Stock
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Section 3.1(c)
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Company SEC Documents
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|
Section 3.3(a)
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Company Share
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|
Section 2.1(a)(iii)
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Exhibit A-A-1
Table of Contents
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|
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Company Stock Awards
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Section 2.3(c)
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Company Stock Plans
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Section 8.15
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Company Shareholder
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|
Section 8.15
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Company Shareholder Approval
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|
Section 8.15
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Company Shareholder Meeting
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Section 5.5(b)
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Company Superior Proposal
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|
Section 8.15
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Company Termination Fee
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Section 7.3(b)
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Company Transaction Documents
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Section 3.2(a)
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Confidentiality Agreement
|
|
Section 5.3(b)
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Contract
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Section 3.19(a)
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control
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Section 8.15
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Converted Option
|
|
Section 2.3(b)
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Effective Time
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Section 1.3
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End Date
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Section 7.1(b)
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Environmental Law
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Section 8.15
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ERISA
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Section 8.15
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ERISA Affiliate
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|
Section 8.15
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Exchange Act
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|
Section 3.2(b)
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Exchange Agent
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Section 2.2(a)
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Exchange Fund
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Section 2.2(b)
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Exchange Ratio
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Section 2.1(a)(iii)
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Existing Option
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Section 2.3(b)
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Expatriated Entity Rules
|
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Section 5.14
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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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Section 2.1(d)
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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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Section 3.2(c)
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Maximum Amount
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Section 5.9(c)
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Merger
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Recitals
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Merger Consideration
|
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Section 2.1(a)(iii)
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Merger Sub
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Preamble
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Noteholders
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Section 5.21
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NYSE
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Section 3.2(b)
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OFAC
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|
Section 3.22(a)
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Order
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Section 8.15
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Parent
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Preamble
|
Parent Approvals
|
|
Section 4.2(b)
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Parent Benefit Plan
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Section 4.16(a)
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Parent Board
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Recitals
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Parent Board Recommendation
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Section 4.2(a)
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Exhibit A-A-2
Table of Contents
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Parent Class A Ordinary Shares
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Section 8.15
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Parent Class B Ordinary Shares
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Section 8.15
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Parent Closing Price
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Section 8.15
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Parent Disclosure Schedule
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Article IV
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Parent Employee
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Section 4.15
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Parent Financial Statements
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|
Section 8.15
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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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Section 4.11(a)
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Parent Intervening Event
|
|
Section 8.15
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Parent IT Assets
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Section 8.15
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Parent Leased Real Property
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Section 4.12(a)
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Parent Material Adverse Effect
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Section 8.15
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Parent Material Contracts
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Section 4.19(a)
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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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Section 4.1(b)
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Parent Permits
|
|
Section 4.6(b)
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Parent Permitted Lien
|
|
Section 8.15
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Parent SEC Documents
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Section 4.3(a)
|
Parent Shareholder
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|
Section 8.15
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Parent Shareholder Approval
|
|
Section 8.15
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Parent Shareholder Meeting
|
|
Section 5.5(c)
|
Parent Shareholder Resolutions
|
|
Section 8.15
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Parent Stock Awards
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|
Section 4.1(c)
|
Parent Stock Plans
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|
Section 8.15
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Parent Superior Proposal
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Section 8.15
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Parent Termination Fee
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Section 7.3(b)
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Parent Transaction Documents
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Section 4.2(a)
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Parties
|
|
Preamble
|
Permits
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|
Section 4.6(b)
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person
|
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Section 8.15
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Proxy Statement/Prospectus
|
|
Section 3.25
|
Qualified Plan
|
|
Section 3.16(b)
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Release
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|
Section 8.15
|
Relevant Authority
|
|
Section 8.15
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Remaining Stock Plan Shares
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Section 2.3(d)
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Remedies Exceptions
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|
Section 3.2(a)
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Representatives
|
|
Section 5.4(a)
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Sarbanes-Oxley Act
|
|
Section 3.3(a)
|
SEC
|
|
Section 3.3(a)
|
Securities Act
|
|
Section 3.2(b)
|
Shareholder Meetings
|
|
Section 8.15
|
Subsidiaries
|
|
Section 8.15
|
Surviving Company
|
|
Recitals
|
Takeover Code
|
|
Section 8.15
|
Takeover Proposal
|
|
Section 8.15
|
Tax or Taxes
|
|
Section 8.15
|
Tax Return
|
|
Section 8.15
|
TBOC
|
|
Recitals
|
Termination Date
|
|
Section 5.1(a)
|
Third Party
|
|
Section 8.13(b)
|
Exhibit A-A-3
Table of Contents
|
|
|
Third Party Rights Clause
|
|
Section 8.13(a)
|
Trade Sanctions
|
|
Section 8.15
|
Transfer Taxes
|
|
Section 8.2
|
Treasury Regulations
|
|
Section 8.15
|
Trustee
|
|
Section 5.21
|
VAT
|
|
Section 8.15
|
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;
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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
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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;
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10)
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Reviewed
the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
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11)
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Participated
in certain discussions and negotiations among representatives of the Company and the Buyer and certain parties and their financial and legal advisors;
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12)
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Reviewed
the Merger Agreement and certain related documents; and
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13)
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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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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
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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.
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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
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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