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UsetheselinkstorapidlyreviewthedocumentTABLEOFCONTENTSTABLEOFCONTENTS
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AsfiledwiththeSecuritiesandExchangeCommissiononJuly20,2017
RegistrationNo.333-218808
UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549
AmendmentNo.1to
FORMS-4REGISTRATIONSTATEMENT
UNDERTHESECURITIESACTOF1933
Enscoplc(Exactnameofregistrantasspecifiedinitscharter)
EnglandandWales(StateorOtherJurisdictionof
Incorporation)
1381(PrimaryStandardIndustrialClassificationCodeNumber)
98-0635229(I.R.S.Employer
IdentificationNumber)
6ChesterfieldGardensLondonW1J5BQUnitedKingdom44(0)2076594660
(Address,includingZipCode,andTelephoneNumber,includingAreaCode,ofRegistrant'sPrincipalExecutiveOffices)
MichaelT.McGuintySeniorVicePresident,GeneralCounselandSecretary
Enscoplc6ChesterfieldGardensLondonW1J5BQUnitedKingdom44(0)2076594660
(Name,Address,includingZipCode,andTelephoneNumber,includingAreaCode,ofAgentforService)
Withcopiesto:
SeanT.WheelerDebbieP.Yee
Latham&WatkinsLLP811MainStreet,Suite3700
Houston,TX77002(713)546-5400
WalterA.BakerSeniorVicePresident,GeneralCounsel
andCorporateSecretaryAtwoodOceanics,Inc.
15011KatyFreeway,Suite800Houston,TX77094(281)749-7800
TullR.FloreyGibson,Dunn&CrutcherLLP
1221McKinneyStreetHouston,TX77010(346)718-6600
Approximatedateofcommencementofproposedsaleofthesecuritiestothepublic:Assoonaspracticableafterthisregistrationstatementisdeclaredeffectiveanduponcompletionofthemergerdescribedintheencloseddocument.
IfthesecuritiesbeingregisteredonthisformarebeingofferedinconnectionwiththeformationofaholdingcompanyandthereiscompliancewithGeneralInstructionG,pleasecheckthefollowingbox.o
IfthisformisfiledtoregisteradditionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesActof1933,asamended(the"Securities
Act"),checkthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.o
Ifthisformisapost-effectiveamendmentfiledpursuanttoRule462(d)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.o
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompanyoremerginggrowthcompany.Seethedefinitionsof"largeacceleratedfiler,""acceleratedfiler,""smallerreportingcompany"and"emerginggrowthcompany"inRule12b-2oftheSecuritiesExchangeActof1934,asamended(the"ExchangeAct").(Checkone):
Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection7(a)(2)(B)oftheSecuritiesAct.o
Ifapplicable,placeanXintheboxtodesignatetheappropriateruleprovisionrelieduponinconductingthistransaction:
ExchangeActRule13e-4(i)(Cross-BorderIssuerTenderOffer)o
ExchangeActRule14d-1(d)(Cross-BorderThird-PartyTenderOffer)o
TheRegistrantherebyamendsthisRegistrationStatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheRegistrantshallfileafurtheramendmentwhichspecificallystatesthatthisRegistrationStatementshallthereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesActof1933,asamended,oruntiltheRegistrationStatementshallbecomeeffectiveonsuchdatesastheCommission,actingpursuanttosaidSection8(a),maydetermine.
Largeacceleratedfilerý Acceleratedfilero Non-acceleratedfilero(Donotcheckifa
smallerreportingcompany)
SmallerreportingcompanyoEmerginggrowthcompanyo
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Theinformationinthisjointproxystatement/prospectusisnotcompleteandmaybechanged.Enscomaynotissuethesecuritiesofferedbythisjointproxystatement/prospectusuntiltheregistrationstatementcontainingthisjointproxystatement/prospectushasbeendeclaredeffectivebytheSecuritiesandExchangeCommission.Thisjointproxystatement/prospectusdoesnotconstituteanoffertosellorasolicitationofanoffertobuyanysecuritiesinanyjurisdictionwhereanofferorsolicitationisnotpermitted.
SUBJECTTOCOMPLETION,DATEDJULY20,2017
MERGERPROPOSED—YOURVOTEISVERYIMPORTANT
OnMay29,2017,EchoMergerSubLLC("MergerSub"),awhollyownedsubsidiaryofEnscoplc("Ensco"),agreedtomergewithandintoAtwoodOceanics,Inc.("Atwood"),withAtwoodsurvivingthemergerasawhollyownedsubsidiaryofEnsco.Wearesendingyouthisjointproxystatement/prospectustoaskyoutovoteinfavorofthismergerandothermatters.
Ifthemergeriscompleted,eachAtwoodshareholderwillbeentitledtoreceive1.60ClassAordinaryshares,nominalvalue$0.10pershare,ofEnsco(the"EnscoClassAordinaryshares")foreachshareofcommonstock,parvalue$1.00pershare,ofAtwood(the"Atwoodcommonstock")ownedbysuchAtwoodshareholder.Followingthecompletionofthemerger,itisanticipatedthatpersonswhowereshareholdersofEnscoandAtwoodimmediatelypriortothemergerwillownapproximately69%and31%ofthecombinedcompany,respectively.
EnscoClassAordinarysharesarequotedontheNewYorkStockExchange("NYSE")underthesymbol"ESV,"andAtwoodcommonstockisquotedontheNYSEunderthesymbol"ATW."ThemarketpricesofbothEnscoClassAordinarysharesandAtwoodcommonstockwillfluctuatebeforethemerger,andyoushouldobtaincurrentstockpricequotationsfortheEnscoClassAordinarysharesandtheAtwoodcommonstock.
Yourvoteisveryimportant.WecannotcompletethemergerunlesstheEnscoshareholdersvotetoapprovetheissuanceofEnscoClassAordinarysharespursuanttothemergeragreementandtheAtwoodshareholdersvotetoapprovethemergeragreementandthetransactionscontemplatedthereby,includingthemerger.
ThisdocumentisaprospectusrelatingtotheEnscoClassAordinarysharestobeissuedtoAtwoodshareholderspursuanttothemergerandajointproxystatementforEnscoandAtwoodtosolicitproxiesfortheirrespectivemeetingsofshareholders.Itcontainsanswerstofrequentlyaskedquestionsandasummaryoftheimportanttermsofthemerger,themergeragreementandrelatedtransactions,followedbyamoredetaileddiscussion.
Pleasecarefullyreadthisentiredocument,including"RiskFactors"beginningonpage20,foradiscussionoftherisksrelatingtothemergerandthecombinedcompanyfollowingthemerger.
NoneoftheSecuritiesandExchangeCommission,anystatesecuritiesregulatoryauthorityortheU.K.FinancialConductAuthority(the"FCA")hasapprovedordisapprovedofthemergerorthesecuritiestobeissuedunderthisjointproxystatement/prospectusorhaspassedupontheadequacyoraccuracyofthedisclosureinthisjointproxystatement/prospectus.Anyrepresentationtothecontraryisacriminaloffense.
Fortheavoidanceofdoubt,thisjointproxystatement/prospectusisnotintendedtobe,andisnot,aprospectusforthepurposesoftheProspectusRulesmadeunderPart6oftheU.K.FinancialServicesandMarketsAct2000(assetoutintheU.K.FCA'sHandbook).
Thedateofthisjointproxystatement/prospectusis,2017,anditisfirstbeingmailedorotherwisedeliveredtoEnscoshareholdersandAtwoodshareholdersonorabout,2017.
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Enscoplc6ChesterfieldGardens
London,W1J5BQ,UnitedKingdom44(0)2076594660
NOTICEOFGENERALMEETINGOFSHAREHOLDERSTOBEHELDON,2017
TotheShareholdersofEnscoplc:
AgeneralmeetingoftheshareholdersofEnscoplc("Ensco")willbeheldat,at(Londontime)on,2017(the"Enscogeneralmeeting").
Youwillbeaskedtoconsiderandpasstheresolutionsbelow.Thefulltextofeachresolutionissetoutinthejointproxystatement/prospectusaccompanyingthisnotice.
ORDINARYRESOLUTIONS
1. Ensco Merger Consideration Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceofEnscoClassAordinaryshares,nominalvalue$0.10pershare(the"EnscoClassAordinaryshares"),toshareholdersofAtwoodOceanics,Inc.("Atwood"),pursuanttotheAgreementandPlanofMerger,datedasofMay29,2017,byandamongEnsco,EchoMergerSubLLC,awhollyownedsubsidiaryofEnsco("MergerSub"),andAtwood,assuchagreementmaybeamendedfromtimetotime(the"mergeragreement"),whichprovidesfor,amongotherthings,themergerofMergerSubwithandintoAtwood(the"merger"),withAtwoodsurvivingthemergerasawhollyownedsubsidiaryofEnsco.
2. Ensco General Allotment Authority Increase Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceuptoanominalamountofEnscoClassAordinaryshares,which,togetherwiththenominalamountofsharesofEnscoauthorizedtobeallottedandissuedpursuanttoparagraph(A)ofresolution11passedattheannualgeneralmeetingofEnscoshareholdersheldonMay22,2017(the"Ensco2017AnnualGeneralMeeting"),representsapproximately33%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger,anduptoafurthersamenominalamountofEnscoClassAordinarysharesinconnectionwithapre-emptiveofferingofshares.
SPECIALRESOLUTIONS
3. Ensco General Disapplication of Pre-emptive Rights Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceuptoanominalamountofEnscoClassAordinarysharesforcashonanon-pre-emptivebasis,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedforcashonanon-pre-emptivebasispursuanttoresolution12passedattheEnsco2017AnnualGeneralMeeting,representsapproximately5%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger.
4. Ensco Specified Disapplication of Pre-emptive Rights Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceuptoanominalamountofEnscoClassAordinarysharesforcashonanon-pre-emptivebasis,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedforcashonanon-pre-emptivebasispursuanttoresolution13passedattheEnsco2017AnnualGeneralMeeting,representsapproximately5%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthe
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merger,suchauthoritytobeusedonlyforthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsafterthemerger)atransactionwhichtheboardofdirectorsofEnscodeemstobeanacquisitionorothercapitalinvestment.
AsaU.K.companypubliclytradedontheNewYorkStockExchange(the"NYSE"),EnscoshareholderapprovaloftheEnscoMergerConsiderationProposalissubjecttoboththeshareholderapprovalrequirementsundertheU.K.CompaniesAct2006(the"CompaniesAct2006")andNYSErules.TheEnscoMergerConsiderationProposalisbeingproposedasanordinaryresolution.Assumingaquorumispresent,suchproposalwillbeapprovedforthepurposesoftheCompaniesAct2006andNYSErulesifamajorityofthevotescastarecastinfavorthereof.Inaddition,theEnscoGeneralAllotmentAuthorityIncreaseProposalwillbeproposedasanordinaryresolutionand,assumingaquorumispresent,willbeapprovedifamajorityofthevotescastarecastinfavorthereof.EachoftheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwillbeproposedasaspecialresolution,whichmeans,assumingaquorumispresent,eachsuchproposalwillbeapprovedifatleast75%ofthevotescastarecastinfavorthereof.
ApprovaloftheEnscoMergerConsiderationProposalisrequiredforcompletionofthemerger.ApprovaloftheotherEnscoproposalssetforthaboveisnotrequiredinordertocompletethemerger.
TheboardofdirectorsofEnscorecommendsthattheEnscoshareholdersvote:
• "FOR"theEnscoMergerConsiderationProposal;
• "FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal;
• "FOR"theEnscoGeneralDisapplicationofPre-emptiveRightsProposal;and
• "FOR"theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
OnlyEnscoshareholdersofrecordatthecloseofbusinessinLondonon,2017,therecorddatefortheEnscogeneralmeeting,areentitledtoreceivenoticeof,attendandvoteattheEnscogeneralmeetingor,subjecttotheEnscoArticlesofAssociation,anyadjournmentsorpostponementsoftheEnscogeneralmeeting.
Pleasereviewthejointproxystatement/prospectusaccompanyingthisnoticeformorecompleteinformationregardingthemergerandtheEnscogeneralmeeting,aswellasthefulltextofalloftheresolutionstobeproposedattheEnscogeneralmeeting.
InaccordancewithprovisionsintheCompaniesAct2006andtheEnscoArticlesofAssociation,ashareholderofrecordisentitledtoappointanotherpersonashisorherproxytoexercisealloranyofhisorherrightstoattend,speakandvoteattheEnscogeneralmeetingandtoappointmorethanoneproxyinrelationtotheEnscogeneralmeeting(providedthateachproxyisappointedtoexercisetherightsattachedtoadifferentshareorsharesheldbyhimorher).Suchproxyneednotbeashareholderofrecord.
Ifyoureceivedaproxycardbymail,youmaysubmityourproxybycompleting,signing,datingandreturningyourproxycardintheenvelopeprovided.Submittingaproxywillassurethatyourvoteiscountedatthemeetingifyoudonotattendinperson.IfyourEnscoClassAordinarysharesareheldin"streetname"byyourbroker,bank,trustorothernominee,onlythatholdercanvoteyourEnscoClassAordinarysharesandthevotecannotbecastunlessyouprovideinstructionstoyourbroker,bank,trustorothernomineeorobtainalegalproxyfromyourbroker,bank,trustorothernominee.Youshouldfollowthedirectionsprovidedbyyourbroker,bank,trustorothernomineeregardinghowtoinstructsuchpersontovoteyourEnscoClassAordinaryshares.Ifyouhavereturnedaproxycardorotherwisevoted,youmayrevokepriorinstructionsandcastyourvotebyfollowingtheproceduresdescribedinthejointproxystatement/prospectus.
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YOURVOTEISIMPORTANT
Whetherornotyouplantoattendthegeneralmeeting,pleasesubmitaproxyorvotinginstructioncardassoonaspossible.Forspecificinstructionsonvoting,pleaserefertothejointproxystatement/prospectusaccompanyingthisnoticeofmeetingortheproxycardincludedwiththeproxyvotingmaterials.
BYORDEROFTHEBOARDOFDIRECTORS,
MichaelT.McGuinty Senior Vice President, General Counsel and Secretary
, 2017
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AtwoodOceanics,Inc.15011KatyFreeway,Suite800
Houston,Texas77094(281)749-7800
NOTICEOFSPECIALMEETINGOFSHAREHOLDERSTOBEHELDON,2017
TotheShareholdersofAtwoodOceanics,Inc.:
AspecialmeetingoftheshareholdersofAtwoodOceanics,Inc.("Atwood")willbeheldat15011KatyFreeway,FirstFloor,Houston,Texas77094,at(Houstontime)on,2017(the"Atwoodspecialmeeting")toconsiderandvoteuponthefollowingproposals:
1. Atwood Merger Proposal :ToapprovetheAgreementandPlanofMerger,datedasofMay29,2017,byandamongEnscoplc("Ensco"),EchoMergerSubLLC,awhollyownedsubsidiaryofEnsco("MergerSub"),andAtwood,assuchagreementmaybeamendedfromtimetotime(the"mergeragreement"),andthetransactionscontemplatedthereby,includingthemergerofMergerSubwithandintoAtwood(the"merger"),withAtwoodsurvivingthemergerasawhollyownedsubsidiaryofEnsco;
2. Atwood Compensatory Proposal :Toapproveanadvisory(non-binding)voteonthespecifiedcompensationthatmaybereceivedbyAtwood'snamedexecutiveofficersinconnectionwiththetransactionscontemplatedbythemergeragreement,includingthemerger;and
3. Atwood Adjournment Proposal :ToapprovetheadjournmentoftheAtwoodspecialmeeting,ifnecessaryoradvisable,tosolicitadditionalproxiesinfavoroftheAtwoodMergerProposalortakeanyotheractioninconnectionwiththemergeragreement.
TheAtwoodMergerProposalrequirestheapprovalofAtwoodshareholdersholdingatleasttwo-thirdsoftheAtwoodcommonstockentitledtovotethereonpursuanttotherequirementsoftheTexasBusinessOrganizationsCode.Assumingaquorumispresent,theAtwoodCompensatoryProposalrequirestheapprovalofamajorityofvotescastbytheAtwoodshareholderspresent,inpersonorbyproxy,attheAtwoodspecialmeeting.ThevotetoapprovetheAtwoodCompensatoryProposalisnotaconditiontothecompletionofthemerger,andthevoteofAtwood'sshareholdersonsuchproposalisadvisoryinnatureandwillnotbebindingonEnscoorAtwood.Accordingly,regardlessoftheoutcomeoftheAtwoodCompensatoryProposal,iftheAtwoodMergerProposalisapprovedandthemergeriscompleted,specifiedcompensationmaybepaidtoAtwood'snamedexecutiveofficers.Whetherornotaquorumispresent,theAtwoodAdjournmentProposalrequirestheapprovalofamajorityofvotescastbytheAtwoodshareholderspresent,inpersonorbyproxy,attheAtwoodspecialmeeting.
ApprovaloftheAtwoodMergerProposalisrequiredforcompletionofthemerger.ApprovaloftheotherAtwoodproposalssetforthaboveisnotrequiredinordertocompletethemerger.
TheboardofdirectorsofAtwoodrecommendsthattheAtwoodshareholdersvote:
• "FOR"theAtwoodMergerProposal;
• "FOR"theAtwoodCompensatoryProposal;and
• "FOR"theAtwoodAdjournmentProposal.
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OnlyAtwoodshareholdersofrecordatthecloseofbusinesson,2017,therecorddatefortheAtwoodspecialmeeting,areentitledtonoticeof,andtovoteat,theAtwoodspecialmeetingandanyadjournmentsorpostponementsoftheAtwoodspecialmeeting.
Pleasereviewthejointproxystatement/prospectusaccompanyingthisnoticeformorecompleteinformationregardingthemergerandtheAtwoodspecialmeeting.
Ifyoureceivedaproxycardbymail,youmaysubmityourproxybycompleting,signing,datingandreturningyourproxycardintheenvelopeprovided.Submittingaproxywillassurethatyourvoteiscountedatthemeetingifyoudonotattendinperson.IfyoursharesofAtwoodcommonstockareheldin"streetname"byyourbrokerorothernominee,onlythatholdercanvoteyoursharesofAtwoodcommonstockandthevotecannotbecastunlessyouprovideinstructionstoyourbrokerorobtainalegalproxyfromyourbroker.YoushouldfollowthedirectionsprovidedbyyourbrokerregardinghowtoinstructyourbrokertovoteyoursharesofAtwoodcommonstock.Ifyouhavereturnedaproxycardorotherwisevoted,youmayrevokepriorinstructionsandcastyourvotebyfollowingtheproceduresdescribedinthejointproxystatement/prospectus.
YOURVOTEISIMPORTANT
WhetherornotyouplantoattendtheAtwoodspecialmeeting,pleasesubmitaproxyorvoteinstructioncardassoonaspossible.Forspecificinstructionsonvoting,pleaserefertothejointproxystatement/prospectusaccompanyingthisnoticeofmeetingortheproxycardincludedwiththeproxyvotingmaterials.
BYORDEROFTHEBOARDOFDIRECTORS,
WalterA.BakerSenior Vice President, General Counsel and Corporate Secretary
, 2017
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REFERENCESTOADDITIONALINFORMATION
Thisjointproxystatement/prospectusincorporatesbyreferenceimportantbusinessandfinancialinformationaboutEnscoplc("Ensco")andAtwoodOceanics,Inc.("Atwood")fromdocumentsthatarenotincludedinordeliveredwiththisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
Youcanobtaindocumentsincorporatedbyreferenceinthisjointproxystatement/prospectus,otherthancertainexhibitstothosedocuments,byrequestingtheminwritingorbytelephonefromtheappropriatecompanyatthefollowingaddresses:
Youwillnotbechargedforanyofthesedocumentsthatyourequest.ToreceivetimelydeliveryoftherequesteddocumentsinadvanceofthegeneralmeetingofEnscoshareholders(the"Enscogeneralmeeting")orthespecialmeetingofAtwoodshareholders(the"Atwoodspecialmeeting"),youshouldmakeyourrequestnolaterthan,2017.
ABOUTTHISJOINTPROXYSTATEMENT/PROSPECTUS
Thisjointproxystatement/prospectus,whichformspartofaregistrationstatementonFormS-4filedwiththeSecuritiesandExchangeCommission(the"SEC")byEnsco(FileNo.333-218808),constitutesaprospectusofEnscounderSection5oftheSecuritiesActof1933,asamended(the"SecuritiesAct"),withrespecttotheEnscoClassAordinaryshares,nominalvalue$0.10pershare(the"EnscoClassAordinaryshares"),tobeissuedtoholdersofAtwoodcommonstock,parvalue$1.00pershare(the"Atwoodcommonstock"),pursuanttothemergeragreement.
Thisjointproxystatement/prospectusalsoconstitutesajointproxystatementunderSection14(a)oftheSecuritiesExchangeActof1934,asamended(the"ExchangeAct").ItalsoincludesanoticeofmeetingwithrespecttotheEnscogeneralmeeting,atwhichEnscoshareholderswillbeaskedtoconsiderandvoteupon,amongothermatters,aproposaltoapprovetheallotmentandissuanceofEnscoClassAordinarysharestoAtwoodshareholderspursuanttothemergeragreement,andanoticeoftheAtwoodspecialmeeting,atwhichAtwoodshareholderswillbeaskedtoconsiderandvoteupon,amongothermatters,aproposaltoapprovethemergeragreementandthetransactionscontemplatedthereby,includingthemerger.
Youshouldrelyonlyontheinformationcontainedinorincorporatedbyreferenceintothisjointproxystatement/prospectus.Noonehasbeenauthorizedtoprovideyouwithinformationthatisdifferentfromthatcontainedin,orincorporatedbyreferenceinto,thisjointproxystatement/prospectus.Thisjointproxystatement/prospectusisdated,2017.Theinformationcontainedinthisjointproxystatement/prospectusisaccurateonlyasofthatdateor,inthecaseofinformationinadocumentincorporatedbyreference,asofthedateofsuchdocument,unlesstheinformationspecificallyindicatesthatanotherdateapplies.Neitherthemailingofthisjointproxystatement/prospectustoEnscoshareholdersorAtwoodshareholdersnortheissuanceofEnscoClassAordinarysharestoAtwoodshareholderspursuanttothemergeragreementwillcreateanyimplicationtothecontrary.
Thisjointproxystatement/prospectusdoesnotconstituteanoffertosell,orasolicitationofanoffertobuy,anysecurities,orthesolicitationofaproxy,inanyjurisdictioninwhichorfromanypersontowhomitisunlawfultomakeanysuchofferorsolicitationinsuchjurisdiction.
TheinformationconcerningEnscocontainedorincorporatedbyreferenceinthisjointproxystatement/prospectushasbeenprovidedbyEnsco,andtheinformationconcerningAtwoodcontainedorincorporatedbyreferenceinthisjointproxystatement/prospectushasbeenprovidedbyAtwood.
EnscoplcAttn:InvestorRelations
5847SanFelipe,Suite3300Houston,Texas77057
(713)789-1400
AtwoodOceanics,Inc.Attn:InvestorRelations
15011KatyFreeway,Suite800Houston,Texas77094
(281)749-7800
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Thisjointproxystatement/prospectuscontainsadescriptionoftherepresentationsandwarrantiesthateachofEnscoandAtwoodmadetotheotherinthemergeragreement.RepresentationsandwarrantiesmadebyEnsco,Atwoodandotherapplicablepartiesarealsosetforthincontractsandotherdocuments(includingthemergeragreement)thatareattachedorfiledasexhibitstothisjointproxystatement/prospectusorareincorporatedbyreferenceintothisjointproxystatement/prospectus.Theserepresentationsandwarrantiesweremadeasofspecificdates,maybesubjecttoimportantqualificationsandlimitationsagreedtobetweenthepartiesinconnectionwithnegotiatingthetermsoftheagreement,andmayhavebeenincludedintheagreementforthepurposeofallocatingriskbetweenthepartiesratherthantoestablishmattersasfacts.Thesematerialsareincludedorincorporatedbyreferenceonlytoprovideyouwithinformationregardingthetermsandconditionsoftheagreements,andnottoprovideanyotherfactualinformationregardingEnsco,Atwoodortheirrespectivebusinesses.Accordingly,therepresentationsandwarrantiesandotherprovisionsofthemergeragreementandtheotheragreementsincorporatedbyreferencehereinshouldnotbereadalone,butinsteadshouldbereadonlyinconjunctionwiththeotherinformationprovidedelsewhereinthisjointproxystatement/prospectusorincorporatedbyreferenceherein,asapplicable.
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i
QUESTIONSANDANSWERSABOUTTHEMEETINGS iiiSUMMARY 1SELECTEDHISTORICALCONSOLIDATEDFINANCIALDATAOFENSCO 14SELECTEDHISTORICALCONSOLIDATEDFINANCIALDATAOFATWOOD 16UNAUDITEDCOMPARATIVEPERSHAREDATA 17COMPARATIVEMARKETPRICESANDDIVIDENDS 19RISKFACTORS 20RISKSRELATINGTOTHEMERGER 20RISKSRELATINGTOTHECOMBINEDCOMPANYFOLLOWINGTHEMERGER 25RISKSINHERENTINANINVESTMENTINENSCO 28
CAUTIONARYSTATEMENTREGARDINGFORWARD-LOOKINGSTATEMENTS 31THEENSCOGENERALMEETING 34ENSCOPROPOSAL1—MERGERCONSIDERATIONPROPOSAL 38ENSCOPROPOSAL2—GENERALALLOTMENTAUTHORITYINCREASEPROPOSAL 39ENSCOPROPOSALS3AND4—DISAPPLICATIONOFPRE-EMPTIVERIGHTSPROPOSALS 42
THEATWOODSPECIALMEETING 45THEMERGER 49BACKGROUNDOFTHEMERGER 49ENSCO'SREASONSFORTHEMERGER;RECOMMENDATIONOFTHEENSCOBOARDOFDIRECTORS 57ATWOOD'SREASONSFORTHEMERGER;RECOMMENDATIONOFTHEATWOODBOARDOFDIRECTORS
59
OPINIONOFFINANCIALADVISORTOENSCO 63OPINIONOFFINANCIALADVISORTOATWOOD 75CERTAINUNAUDITEDFINANCIALFORECASTSPREPAREDBYTHEMANAGEMENTOFENSCO 84CERTAINUNAUDITEDFINANCIALFORECASTSPREPAREDBYTHEMANAGEMENTOFATWOOD 87BOARDOFDIRECTORSANDEXECUTIVEOFFICERSOFENSCOFOLLOWINGTHEMERGER 91PUBLICTRADINGMARKETS 91NOAPPRAISALORDISSENTERS'RIGHTS 91ACCOUNTINGTREATMENTOFTHEMERGER 92REGULATORYAPPROVALSREQUIREDFORTHEMERGER 92LITIGATIONRELATINGTOTHEMERGER 92ATWOOD'SDIRECTORSANDOFFICERSHAVEFINANCIALINTERESTSINTHEMERGER 93
THEMERGERAGREEMENT 99TERMSOFTHEMERGER 99CLOSINGANDEFFECTIVETIMEOFTHEMERGER 99CONSIDERATIONTOBERECEIVEDINTHEMERGER 99TREATMENTOFATWOODEQUITY-BASEDAWARDS 100CONVERSIONOFSHARES;EXCHANGEOFCERTIFICATES 100REPRESENTATIONSANDWARRANTIES 101DEFINITIONOFMATERIALADVERSEEFFECT 102COVENANTSANDAGREEMENTS 103AGREEMENTNOTTOSOLICITOTHEROFFERS 109EXPENSESANDFEES 112
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ii
EMPLOYEEMATTERS 112INDEMNIFICATIONANDINSURANCE 113CONDITIONSTOCOMPLETETHEMERGER 114TERMINATIONOFTHEMERGERAGREEMENT 114TERMINATIONFEESANDEXPENSEREIMBURSEMENT 116AMENDMENT,WAIVER,EXTENSIONANDSPECIFICPERFORMANCEOFTHEMERGERAGREEMENT 117
UNAUDITEDPROFORMACONDENSEDCOMBINEDFINANCIALSTATEMENTSOFENSCO 118MATERIALUNITEDSTATESFEDERALINCOMETAXCONSEQUENCESOFTHEMERGER 130TAXCONSEQUENCESOFTHEMERGERTOATWOODANDENSCO 131TAXCONSEQUENCESOFTHEMERGERTOATWOODSHAREHOLDERS 132TAXCONSEQUENCESOFHOLDINGENSCOCLASSAORDINARYSHARESTOU.S.HOLDERS 136TAXCONSEQUENCESOFHOLDINGENSCOCLASSAORDINARYSHARESTONON-U.S.HOLDERS 137
ATWOODPROPOSAL2—COMPENSATORYPROPOSAL 139ATWOODPROPOSAL3—ADJOURNMENTPROPOSAL 140INFORMATIONABOUTTHECOMPANIES 141ENSCOPLC 141ECHOMERGERSUBLLC 141ATWOODOCEANICS,INC. 141
DESCRIPTIONOFENSCOCLASSAORDINARYSHARES 142COMPARISONOFRIGHTSOFATWOODSHAREHOLDERSANDENSCOSHAREHOLDERS 148LEGALMATTERS 177EXPERTS 177ENSCO2018ANNUALSHAREHOLDERMEETINGANDSHAREHOLDERPROPOSALS 177ATWOOD2018ANNUALSHAREHOLDERMEETINGANDSHAREHOLDERPROPOSALS 178SHAREHOLDERSSHARINGANADDRESS 178COMMISSIONPOSITIONONINDEMNIFICATIONFORSECURITIESACTLIABILITIES 179WHEREYOUCANFINDMOREINFORMATION 179
ANNEXA:AGREEMENTANDPLANOFMERGER A-1
ANNEXB:OPINIONOFMORGANSTANLEY&CO.LLC B-1ANNEXC:OPINIONOFGOLDMANSACHS&CO.LLC C-1
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QUESTIONSANDANSWERSABOUTTHEMEETINGS
The following are some questions that Ensco shareholders and Atwood shareholders may have regarding the proposals being considered at the Enscogeneral meeting and the Atwood special meeting and brief answers to those questions. Ensco and Atwood urge you to read carefully this entire joint proxystatement/prospectus, including the annexes, and the other documents to which this joint proxy statement/prospectus refers or incorporates by reference becausethe information in this section does not provide all the information that might be important to you.
Q: WhatisthemergerforwhichIambeingaskedtovote?
A: Ensco,EchoMergerSubLLC,awhollyownedsubsidiaryofEnsco("MergerSub"),andAtwoodhaveenteredintoanAgreementandPlanofMerger,datedasofMay29,2017(the"mergeragreement"),pursuanttowhichMergerSubwillmergewithandintoAtwood(the"merger"),withAtwoodsurvivingthemergerasawhollyownedsubsidiaryofEnsco.EachissuedandoutstandingshareofAtwoodcommonstock,parvalue$1.00pershare(the"Atwoodcommonstock"),willbeconvertedintotherighttoreceive1.60(the"exchangeratio")EnscoClassAordinaryshares,nominalvalue$0.10pershare(the"EnscoClassAordinaryshares"),asdescribedunder"TheMergerAgreement—ConsiderationToBeReceivedintheMerger."AcopyofthemergeragreementisattachedasAnnexAtothisjointproxystatement/prospectus.
Q: WhyareEnscoandAtwoodproposingthemerger?
A: TheboardofdirectorsofEnsco(the"EnscoBoard")andtheboardofdirectorsofAtwood(the"AtwoodBoard")believethatthemergerwillbenefitEnscoshareholdersandAtwoodshareholders,respectively,bycreatingaleadingglobaloffshoredrillingcompanygiventhecomplementaryfleetcomposition,geographicscopeandcustomerbasesofthetwocompanies.Toreviewthereasonsforthemergeringreaterdetail,see"TheMerger—Ensco'sReasonsfortheMerger;RecommendationoftheEnscoBoardofDirectors"beginningonpage57and"TheMerger—Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors"beginningonpage59.
Q: WhataretheEnscoshareholdersbeingaskedtoapprove?
A: Enscoshareholdersarebeingaskedtoapprovetheauthorizationof,inadditiontoallsubsistingauthorities:
1. Ensco Merger Consideration Proposal :TheallotmentandissuanceofEnscoClassAordinarysharestoAtwoodshareholderspursuanttothemergeragreement;
2. Ensco General Allotment Authority Increase Proposal :TheallotmentandissuanceuptoanominalamountofEnscoClassAordinaryshares,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedpursuanttoparagraph(A)ofresolution11passedattheannualgeneralmeetingofEnscoshareholdersheldonMay22,2017(the"Ensco2017AnnualGeneralMeeting"),representsapproximately33%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger,anduptoafurthersamenominalamountofEnscoClassAordinarysharesinconnectionwithapre-emptiveofferingofshares;
3. Ensco General Disapplication of Pre-emptive Rights Proposal :TheallotmentandissuanceuptoanominalamountofEnscoClassAordinarysharesforcashonanon-pre-emptivebasis,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedforcashonanon-pre-emptivebasispursuanttoresolution12passedattheEnsco2017Annual
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GeneralMeeting,representsapproximately5%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger;and
4. Ensco Specified Disapplication of Pre-emptive Rights Proposal :TheallotmentandissuanceuptoanominalamountofEnscoClassAordinarysharesforcashonanon-pre-emptivebasis,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedforcashonanon-pre-emptivebasispursuanttoresolution13passedattheEnsco2017AnnualGeneralMeeting,representsapproximately5%oftheenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger,suchauthoritytobeusedonlyforthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsafterthemerger)atransactionwhichtheEnscoBoarddeemstobeanacquisitionorothercapitalinvestment.
AsaU.K.companypubliclytradedontheNewYorkStockExchange(the"NYSE"),EnscoshareholderapprovaloftheEnscoMergerConsiderationissubjecttoboththeshareholderapprovalrequirementsunderboththeU.K.CompaniesAct2006(the"CompaniesAct2006")andNYSErules.TheEnscoMergerConsiderationProposalisbeingproposedasanordinaryresolution.Assumingaquorumispresent,suchproposalwillbeapprovedforthepurposesoftheCompaniesAct2006andNYSErulesifamajorityofthevotescastarecastinfavorthereof.TheEnscoGeneralAllotmentAuthorityIncreaseProposalwillbeproposedasanordinaryresolutionand,assumingaquorumispresent,willbeapprovedifamajorityofthevotescastarecastinfavorthereof.EachoftheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwillbeproposedasaspecialresolution,whichmeans,assumingaquorumispresent,eachsuchproposalwillbeapprovedifatleast75%ofthevotescastarecastinfavorthereof.
ApprovaloftheEnscoMergerConsiderationProposalisrequiredforcompletionofthemerger.ApprovaloftheotherEnscoproposalssetforthaboveisnotrequiredinordertocompletethemerger.
Yourvoteisveryimportant.Youareencouragedtosubmitaproxyorvotinginstructioncardassoonaspossible.
Q: HowdoestheEnscoBoardrecommendthatEnscoshareholdersvote?
A: TheEnscoBoardhasunanimouslydeterminedthattheform,termsandprovisionsofthemergeragreementandthetransactionscontemplatedthereby,includingthemergerandtheallotmentandissuanceoftheEnscoClassAordinaryshares,areadvisable,fairandreasonabletoandinthebestinterestsofEnscoanditsshareholdersandunanimouslyrecommendsthatEnscoshareholdersvote:
• "FOR"theEnscoMergerConsiderationProposal;
• "FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal;
• "FOR"theEnscoGeneralDisapplicationofPre-EmptiveRightsProposal;and
• "FOR"theEnscoSpecifiedDisapplicationofPre-EmptiveRightsProposal.
ForamorecompletedescriptionoftherecommendationoftheEnscoBoardwithrespecttotheEnscoMergerConsiderationProposal,see"TheMerger—Ensco'sReasonsfortheMerger;RecommendationoftheEnscoBoardofDirectors"beginningonpage57.
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Q: WhatareAtwoodshareholdersbeingaskedtoconsiderandapprove?
A: Atwoodshareholdersarebeingaskedtoconsiderandapprove:
1. Atwood Merger Proposal :Themergeragreementandthetransactionscontemplatedthereby,includingthemerger;
2. Atwood Compensatory Proposal :Anadvisory(non-binding)voteonthespecifiedcompensationthatmaybereceivedbyAtwood'snamedexecutiveofficersinconnectionwiththetransactionscontemplatedbythemergeragreement,includingthemerger;and
3. Atwood Adjournment Proposal :TheadjournmentoftheAtwoodspecialmeeting,ifnecessaryoradvisable,tosolicitadditionalproxiesinfavoroftheAtwoodMergerProposalortakeanyotheractioninconnectionwiththemergeragreement.
TheAtwoodMergerProposalrequirestheapprovalofAtwoodshareholdersholdingatleasttwo-thirdsoftheAtwoodcommonstockentitledtovotethereonpursuanttotherequirementsoftheTexasBusinessOrganizationsCode(the"TBOC").Assumingaquorumispresent,theAtwoodCompensatoryProposalrequirestheapprovalofamajorityofvotescastbytheAtwoodshareholderspresent,inpersonorbyproxy,attheAtwoodspecialmeeting.ThevotetoapprovetheAtwoodCompensatoryProposalisnotaconditiontothecompletionofthemerger,andthevoteofAtwood'sshareholdersonsuchproposalisadvisoryinnatureandwillnotbebindingonEnscoorAtwood.Accordingly,regardlessoftheoutcomeoftheAtwoodCompensatoryProposal,iftheAtwoodMergerProposalisapprovedandthemergeriscompleted,specifiedcompensationmaybepaidtoAtwood'snamedexecutiveofficers.Whetherornotaquorumispresent,theAtwoodAdjournmentProposalrequirestheapprovalofamajorityofvotescastbytheAtwoodshareholderspresent,inpersonorbyproxy,attheAtwoodspecialmeeting.
ApprovaloftheAtwoodMergerProposalisrequiredforcompletionofthemerger.ApprovaloftheotherAtwoodproposalssetforthaboveisnotrequiredinordertocompletethemerger.
Yourvoteisveryimportant.Youareencouragedtosubmitaproxyorvotinginstructioncardassoonaspossible.
Q: HowdoestheAtwoodBoardrecommendthatAtwoodshareholdersvote?
A: TheAtwoodBoardhasunanimouslydeterminedthatthemergeragreementandthetransactionscontemplatedthereby,includingthemerger,areadvisableandinthebestinterestsofAtwoodanditsshareholdersandunanimouslyrecommendsthatAtwoodshareholdersvote:
• "FOR"theAtwoodMergerProposal;
• "FOR"theAtwoodCompensatoryProposal;and
• "FOR"theAtwoodAdjournmentProposal.
ForamorecompletedescriptionoftherecommendationoftheAtwoodBoardwithrespecttotheAtwoodMergerProposal,see"TheMerger—Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors"beginningonpage59.
Q: WhenandwhereistheEnscogeneralmeeting?
A: TheEnscogeneralmeetingwillbeheldat,at(Londontime)on,2017.
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Q: WhenandwhereistheAtwoodspecialmeeting?
A: TheAtwoodspecialmeetingwillbeheldat15011KatyFreeway,FirstFloor,Houston,Texas77094,at(Houstontime)on,2017.
Q: WhocanattendandvoteattheEnscogeneralmeeting?
A: AllEnscoshareholdersofrecordasofthecloseofbusinesson,2017(the"Enscorecorddate")areentitledtoreceivenoticeof,attendandvoteattheEnscogeneralmeeting.IfyouareanEnscoshareholderofrecordasofthecloseofbusinessontheEnscorecorddatefortheEnscogeneralmeetingandplantoattendtheEnscogeneralmeeting,pleasebringthenoticeofmeetingasyourproofofownershipofEnscoClassAordinaryshares.Ifyouarea"streetname"holderofEnscoClassAordinarysharesandwishtoattendtheEnscogeneralmeeting,youwillneedtobringevidenceofyourshareownershipintheformofarecentlydatedletterfromyourbroker,bank,trustorothernomineeasoftheEnscorecorddateandproofofyouridentity.Onverificationofsuchevidence,youwillbeadmittedtotheEnscogeneralmeeting,butmaynotvoteattheEnscogeneralmeetingunlessyouholdaproxyfromtheshareholderofrecord.EachshareisentitledtoonevoteattheEnscogeneralmeeting,andthereisnocumulativevoting.InaccordancewiththeEnscoArticlesofAssociation,votingonallresolutionswillbeconductedonapollandnotonashowofhands.
Pleasenotethatnocameras,recordingequipment,laptops,tablets,cellulartelephones,smartphonesorothersimilarequipment,electronicdevices,largebags,briefcasesorpackageswillbepermittedintheEnscogeneralmeeting,andsecuritymeasureswillbeineffecttoensurethesafetyofallattendees.Inallcases,youwillneedaphotoIDtogainadmission.
Q: WhocanattendandvoteattheAtwoodspecialmeeting?
A: AllAtwoodshareholdersofrecordasofthecloseofbusinesson,2017(the"Atwoodrecorddate")areentitledtoreceivenoticeof,attendandvoteattheAtwoodspecialmeeting.Ifyouarea"streetname"holderofsharesofAtwoodcommonstockandwishtoattendtheAtwoodspecialmeeting,youwillneedtobringevidenceofyourshareownershipintheformofacurrentlydatedletterfromyourbroker,bank,trustorothernomineeandproofofyouridentity.Onverificationofsuchevidence,youwillbeadmittedtotheAtwoodspecialmeeting,butmaynotvoteattheAtwoodspecialmeetingunlessyouareashareholderofrecordorholdaproxyfromashareholderofrecord.
Q: IfmyEnscoClassAordinarysharesorAtwoodcommonstockareheldin"streetname"bymybroker,bank,trustorothernominee,willmybroker,bank,trustorothernomineevotemyEnscoClassAordinarysharesorAtwoodcommonstockforme?
A: Ifyoursharesareheldinthenameofabroker,bank,trustorothernomineeasacustodian,youarea"streetname"holder.Pleasefollowthevotinginstructionsprovidedbyyourbroker,bank,trustorothernominee.PleasenotethatyoumaynotvotesharesheldinstreetnamebyreturningaproxycardorvotinginstructiondirectlytoEnscoorAtwoodorbyvotinginpersonattherespectivegeneralorspecialmeetingsunlessyouprovidea"legalproxy,"whichyoumustobtainfromyourbroker,bank,trustorothernominee.
Unlessyouinstructyourbroker,bank,trustorothernomineehowtovoteyourEnscoClassAordinarysharesorAtwoodcommonstock,asapplicable,yourshareswillNOTbevotedonanyoftheproposalspresentedattheEnscogeneralmeetingortheAtwoodspecialmeeting,asapplicable.
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Q: Whataretheeffectsofabstentionsandbrokernon-votesatthemeetings?
A: Anabstentionoccurswhenashareholderabstainsfromvoting(eitherinpersonorbyproxy)ononeormoreoftheproposals.Brokernon-votesoccurwhenabroker,bank,trustorothernomineereturnsaproxybutdoesnothaveauthoritytovoteonaparticularproposal.Youshouldthereforeprovideyourbroker,bank,trustorothernomineewithinstructionsastohowtovoteyourEnscoClassAordinarysharesorAtwoodcommonstock,asapplicable.
InconnectionwiththeEnscogeneralmeeting,abstentionsandbrokernon-voteswillbeconsideredindeterminingthepresenceofaquorum.Whileabstentionsandbrokernon-votesarenotconsideredvotescastundertheCompaniesAct2006,underNYSErulesabstentions,butnotbrokernon-votes,willbeconsideredasvotescastfordeterminingwhetherasufficientnumberofvoteshavebeencastonaparticularproposal.Asaresult,forpurposesofdeterminingwhethertheEnscoMergerConsiderationProposalhasbeenapprovedinaccordancewiththeCompaniesAct2006,abstentionsandbrokernon-voteswillnothaveanyeffectontheoutcomeofthevote.WithrespecttoNYSErules,abstentionswillhavethesameeffectasvotescast"AGAINST"theEnscoMergerConsiderationProposalandbrokernon-voteswillnothaveanyeffectontheoutcomeofthevote.Abstentionsandbrokernon-voteswillhavenoeffectontheoutcomeoftheEnscoGeneralAllotmentAuthorityIncreaseProposal,theEnscoGeneralDisapplicationofPre-emptiveRightsProposalortheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
InconnectionwiththeAtwoodspecialmeeting,abstentionsandbrokernon-voteswillbeconsideredindeterminingthepresenceofaquorum.Abstentionsandbrokernon-voteswillhavethesameeffectasvotescast"AGAINST"theAtwoodMergerProposal,butwillhavenoeffectontheoutcomeoftheAtwoodCompensatoryProposalortheAtwoodAdjournmentProposal.
Q: Whathappensifthemergerisnotcompleted?
A: IftheEnscoMergerConsiderationProposalisnotapprovedbytheEnscoshareholders,iftheAtwoodMergerProposalisnotapprovedbytheAtwoodshareholdersorifthemergerisnotcompletedforanyotherreason,AtwoodshareholderswillnotreceiveanyEnscoClassAordinarysharesinconsiderationfortheirsharesofAtwoodcommonstock.Instead,AtwoodwillremainanindependentpubliccompanyandAtwoodcommonstockwillcontinuetobelistedandtradedontheNYSE.Underthemergeragreement,EnscomayberequiredtopayAtwoodaterminationfeeof$50million(lessanyexpensespreviouslyreimbursedbyEnsco)ifthemergeragreementisterminatedundercertaincircumstances,andAtwoodmayberequiredtopayEnscoaterminationfeeof$30million(lessanyexpensespreviouslyreimbursedbyAtwood)ifthemergeragreementisterminatedundercertaincircumstances.See"TheMergerAgreement—TerminationFeesandExpenseReimbursement"beginningonpage116.
Q: ArethererisksassociatedwiththemergerthatIshouldconsiderindecidinghowtovote?
A: Yes.Thereareanumberofrisksrelatedtothemergerthatarediscussedinthisjointproxystatement/prospectusandinotherdocumentsincorporatedbyreference.YoushouldreadcarefullythedetaileddescriptionoftherisksassociatedwiththemergerandtheoperationsofEnscoafterthemergerdescribedin"RiskFactors"beginningonpage20.
Q: AreAtwoodshareholdersentitledtoappraisalordissenters'rights?
A: No.Atwoodshareholderswhodissenttothemergerwillnothaverightstoanappraisalofthefairvalueoftheirshares.UndertheTBOC,shareholdersgenerallyhaveappraisalrightsintheeventofamergerorconsolidation.However,theseappraisalrightsarenotavailableif(i)thesharesheldbytheshareholderarepartofaclassofshareslistedonanationalsecuritiesexchangeorheldofrecordbyatleast2,000holders,(ii)theshareholderisnotrequiredtoacceptforhisorher
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sharesanyconsiderationthatisdifferentthantheconsiderationtobeprovidedtoanyotherholderofsharesofthesameclassheldbytheshareholder,and(iii)theshareholderisnotrequiredtoacceptanyconsiderationotherthansharesofacorporationthatsatisfytherequirementsinclause(i)above.BecauseEnscoClassAordinarysharesarelistedontheNYSE,anationalsecuritiesexchange,andareexpectedtocontinuetobesolistedfollowingthemerger,andbecausethemergerotherwisesatisfiestheforegoingrequirements,Atwoodshareholderswillnotbeentitledtoappraisalordissenters'rightsinthemergerwithrespecttotheirsharesofAtwoodcommonstock.
Q: WhatdoIneedtodonow?
A: Afteryouhavecarefullyreadthisjointproxystatement/prospectus,pleaserespondbycompleting,signinganddatingyourproxycardorvotinginstructioncard,asapplicable,andreturningitintheenclosedpostage-paidenvelopeor,ifavailable,bysubmittingyourproxyorvotinginstructionsbytelephoneorthroughtheInternetassoonaspossiblesothatyourEnscoClassAordinarysharesoryoursharesofAtwoodcommonstock,asapplicable,willberepresentedandvotedattheEnscogeneralmeetingorAtwoodspecialmeeting,asapplicable.
Ifyouareashareholderofrecord,pleasesigntheproxycardexactlyasyournameappearsonthecard.Ifsharesareownedjointly,eachjointownershouldsigntheproxycard.Ifashareholderisacorporation,limitedliabilitycompanyorpartnership,theproxycardshouldbesignedinthefullcorporate,limitedliabilitycompanyorpartnershipnamebyadulyauthorizedperson.Iftheproxycardissignedpursuanttoapowerofattorneyorbyanexecutor,administrator,trusteeorguardian,pleasestatethesignatory'sfulltitleandprovideacertificateorotherproofofappointment.
Pleaserefertoyourproxycard,votinginstructioncardortheinformationforwardedbyyourbroker,bank,trustorothernomineetoseewhichvotingoptionsareavailabletoyou.
TheInternetandtelephoneproxysubmissionproceduresaredesignedtoverifyyourholdingsandtoallowyoutoconfirmthatyourinstructionshavebeenproperlyrecorded.
Neitherthesubmissionofaproxyorvotinginstructions,northemethodbywhichyousubmitaproxyorvotinginstructionswillinanywaylimityourrighttovoteattheEnscogeneralmeetingortheAtwoodspecialmeeting,asapplicable,ifyoulaterdecidetoattendthemeetinginperson.IfyourEnscoClassAordinarysharesareheldinthenameofabroker,bank,trustorothernominee,youmustobtainaproxy,executedinyourfavor,fromtheholderofrecordtobeabletoappearandvoteattheEnscogeneralmeeting,although"streetname"holdersofEnscoClassAordinarysharesarepermittedtoattendtheEnscogeneralmeetingattheinvitationoftheChairmanoftheEnscogeneralmeeting(the"Chairman").IfyoursharesofAtwoodcommonstockareheldinthenameofabroker,bank,trustorothernominee,youmustobtainaproxy,executedinyourfavor,fromtheholderofrecord,tobeabletovoteattheAtwoodspecialmeeting.
Q: HowwillmyEnscoClassAordinarysharesbevoted?
A: AllEnscoClassAordinarysharesentitledtovoteandrepresentedbyproperlycompletedproxiesreceivedpriortotheEnscogeneralmeeting,andnotrevoked,willbevotedattheEnscogeneralmeetingasinstructedontheproxies.Ifyouproperlycomplete,signandreturnaproxycard,butdonotindicatehowyourEnscoClassAordinarysharesshouldbevotedonamatter,theEnscoClassAordinarysharesrepresentedbyyourproxywillbevotedastheEnscoBoardrecommendsand,therefore:
• "FOR"theEnscoMergerConsiderationProposal;
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• "FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal;
• "FOR"theEnscoGeneralDisapplicationofPre-emptiveRightsProposal;and
• "FOR"theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
Q: HowwillmysharesofAtwoodcommonstockbevoted?
A: AllsharesofAtwoodcommonstockentitledtovoteandrepresentedbyproperlycompletedproxiesreceivedpriortotheAtwoodspecialmeeting,andnotrevoked,willbevotedattheAtwoodspecialmeetingasinstructedontheproxies.Ifyouproperlycomplete,signandreturnaproxycard,butdonotindicatehowyoursharesofAtwoodcommonstockshouldbevotedonamatter,thesharesofAtwoodcommonstockrepresentedbyyourproxywillbevotedastheAtwoodBoardrecommendsand,therefore,
• "FOR"theAtwoodMergerProposal;
• "FOR"theAtwoodCompensatoryProposal;and
• "FOR"theAtwoodAdjournmentProposal.
Q: CanIrevokemyproxyorvotinginstructionsorchangemyvoteafterIhavedeliveredmyproxyorvotinginstructions?
A: Yes.IfyouareashareholderofrecordofEnscoClassAordinarysharesorAtwoodcommonstock,youcandothisinanyofthethreefollowingways:
• bysendingawrittennoticetotheSecretaryofEnscoortheCorporateSecretaryofAtwood,asapplicable,attheaddresssetforthintheEnsconoticeofgeneralmeetingorAtwoodnoticeofspecialmeeting,asapplicable,intimetobereceivedbeforesuchmeeting,statingthatyouwouldliketorevokeyourproxy;
• bycompleting,signinganddatinganotherproxycardandreturningitbymailintimetobereceivedbeforetheEnscogeneralmeetingortheAtwoodspecialmeeting,asapplicable,orbysubmittingalaterdatedproxyviatheInternetortelephone,inwhichcaseyourlater-submittedproxywillberecordedandyourearlierproxyrevoked;or
• byattendingthemeetingandvotinginperson(simplyattendingtheEnscogeneralmeetingorAtwoodspecialmeeting,asapplicable,withoutvotingwillnotrevokeyourproxyorchangeyourvote).
IfyourEnscoClassAordinarysharesorsharesofAtwoodcommonstockareheldinanaccountbyabroker,bank,trustorothernomineeandyoudesiretochangeyourvote,youshouldcontactyourbroker,bank,trustorothernomineeforinstructionsonhowtodoso.
Q: WhathappensifIholdbothEnscoClassAordinarysharesandsharesofAtwoodcommonstock?
A: Youwillreceiveseparateproxyorvotinginstructioncardsforeachcompanyandmustcomplete,signanddateeachproxyorvotinginstructioncardandreturneachproxyorvotinginstructioncardintheappropriatepostage-paidenvelopeor,ifavailable,bysubmittingaproxyorvotinginstructionsbytelephoneorthroughtheInternetforeachcompany.
Q: WhataretheU.S.federalincometaxconsequencesofthemergertoAtwoodshareholders?
A: Ingeneral,subjecttothediscussionbelowrelatingtothepotentialapplicationofSection304oftheU.S.InternalRevenueCodeof1986,asamended(the"InternalRevenueCode")underthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncome
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TaxConsequencesoftheMerger—TaxConsequencesoftheMergertoAtwoodShareholders,"thereceiptbyU.S.holders(asdefinedinthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger")ofEnscoClassAordinarysharespursuanttothemergershouldbeataxableexchangeforU.S.federalincometaxpurposes.Assumingsuchtreatment,aU.S.holdergenerallywillrecognizecapitalgainorlossequaltothedifferencebetween(i)thefairmarketvalueoftheEnscoClassAordinarysharesreceivedasconsiderationinthemergeronthedateoftheexchangeand(ii)suchU.S.holder'sadjustedtaxbasisinthesharesofAtwoodcommonstocksurrenderedintheexchange.AU.S.holder'sadjustedbasisinitssharesofAtwoodcommonstockwillgenerallyequalsuchU.S.holder'spurchasepriceforsuchshares,asadjustedtotakeintoaccountstockdividends,certainnon-dividenddistributions,stocksplitsandsimilartransactions.Forfurtherinformation,pleasereferto"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger."
Anon-U.S.holder(asdefinedinthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger")generallyshouldnotbesubjecttoU.S.federalincometaxonanygainrecognizedinthemergerotherthanincertainspecificcircumstances(includingasaresultofthepotentialapplicationofSection304oftheInternalRevenueCode),asfurtherdescribedunderthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger—TaxConsequencesoftheMergertoAtwoodShareholders."
TheU.S.federalincometaxconsequencesdescribedabovemaynotapplytoallAtwoodshareholders.Yourtaxconsequenceswilldependonyourindividualsituation.Accordingly,westronglyurgeyoutoconsultyourtaxadvisorforafullunderstandingoftheparticulartaxconsequencesofthemergertoyou.
Q: Whocananswermyquestions?
A: Ifyouhaveanyquestionsaboutthemergerorhowtosubmityourproxyorvotinginstructions,orifyouneedadditionalcopiesofthisjointproxystatement/prospectus,theenclosedproxyorvotinginstructionscard,youshouldcontact:
Noothermethodsofcommunicationwillbeaccepted.Youmaynotuseanyelectronicaddressprovidedinthisjointproxystatement/prospectusoranyrelateddocumentstocommunicatewithEnscoorAtwoodforanypurposesotherthanthoseexpresslystated.
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IfyouareanEnscoshareholder: IfyouareanAtwoodshareholder:
ProxySolicitor:D.F.King&Co.,Inc.
ProxySolicitor:InnisfreeM&AIncorporated
ShareholdersCallToll-Freeat:(888)626-0988
ShareholdersCallToll-Freeat:(888)750-5834
BanksandBrokersCallCollectat:(212)269-5550
BanksandBrokersCallCollectat:(212)750-5833
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SUMMARY
This summary highlights information contained elsewhere in this joint proxy statement/prospectus. Ensco and Atwood urge you to read carefully theremainder of this joint proxy statement/prospectus, including the attached annexes and the other documents to which we refer to herein and documentsincorporated by reference into this joint proxy statement/prospectus, as this section does not provide all the information that might be important to you withrespect to the merger and the other matters being considered at the Ensco general meeting or Atwood special meeting, as applicable. See also the sectionentitled "Where You Can Find More Information" beginning on page 179. We have included page references to direct you to a more complete description ofthe topics presented in this summary.
TheCompanies(Seepage141)
Ensco plc
Enscoisaglobaloffshorecontractdrillingcompanyandoneoftheleadingprovidersofoffshorecontractdrillingservicestotheinternationaloilandgasindustry.Enscoownsandoperatesanoffshoredrillingrigfleetof53rigs,withdrillingoperationsinmostofthestrategicmarketsaroundtheglobe.Enscoalsohastworigsunderconstruction.ForthethreemonthsendedMarch31,2017,Ensco'soperatingrevenuetotaledapproximately$471.1million.FortheyearendedDecember31,2016,Enscohadannualrevenueofapproximately$2.8billionandemployedapproximately4,900personnel.
TheEnscoClassAordinarysharesarelistedontheNYSEunderthesymbol"ESV."EnscoisapubliclimitedcompanyorganizedunderthelawsofEnglandandWales.Ensco'sprincipalexecutiveofficesarelocatedat6ChesterfieldGardens,London,W1J5BQ,UnitedKingdomanditstelephonenumberis44(0)2076594660.
AdditionalinformationaboutEnscoanditssubsidiariesisincludedindocumentsincorporatedbyreferenceinthisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation"beginningonpage179.
Echo Merger Sub LLC
MergerSub,awhollyownedsubsidiaryofEnsco,isaTexaslimitedliabilitycompanyformedonMay26,2017forthepurposeofeffectingthemerger.Underthemergeragreement,MergerSubwillmergewithandintoAtwood,withAtwoodcontinuingasthesurvivingcompanyandawhollyownedsubsidiaryofEnsco.MergerSubhasnotconductedanyactivitiesotherthanthoseincidentaltoitsformationandthematterscontemplatedbythemergeragreement,includingthepreparationofapplicableregulatoryfilingsinconnectionwiththemerger.
Atwood Oceanics, Inc.
Atwoodisaglobaloffshoredrillingcontractorengagedinthedrillingandcompletionofexploratoryanddevelopmentaloilandgaswells.Atwoodcurrentlyownsadiversifiedfleetof10mobileoffshoredrillingunitslocatedintheU.S.GulfofMexico,theMediterraneanSea,offshoreWestAfrica,offshoreSoutheastAsiaandoffshoreAustralia.Atwoodrecentlyexecutedasaleandrecyclingagreementwithrespecttooneofthedrillingunits.ForthethreeandsixmonthsendedMarch31,2017,Atwood'soperatingrevenuetotaled$168millionand$325million,respectively.FortheyearendedSeptember30,2016,Atwood'soperatingrevenuestotaled$1.0billionandAtwoodemployed938personnel.
TheAtwoodcommonstockislistedontheNYSEunderthesymbol"ATW."Atwood'sregisteredofficeandprincipalexecutiveofficesarelocatedat15011KatyFreeway,Suite800,Houston,Texas77094anditstelephonenumberis(281)749-7800.
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AdditionalinformationaboutAtwoodanditssubsidiariesisincludedindocumentsincorporatedbyreferenceinthisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation"beginningonpage179.
TheMerger(Seepage49)
ThemergeragreementprovidesthatMergerSubwillmergewithandintoAtwood,withAtwoodcontinuingasthesurvivingcompanyandawhollyownedsubsidiaryofEnsco.Thetermsandconditionsofthemergerarecontainedinthemergeragreement,whichisattachedasAnnexAtothisjointproxystatement/prospectus.Pleasecarefullyreadthemergeragreementasitisthelegaldocumentthatgovernsthemerger.
MergerConsideration(Seepage99)
Subjecttothetermsandconditionssetforthinthemergeragreement,attheeffectivetimeofthemerger(the"EffectiveTime"),eachshareofAtwoodcommonstockissuedandoutstandingimmediatelypriortotheEffectiveTimewillbeconvertedintotherighttoreceive1.60EnscoClassAordinaryshares.ThemergeragreementdoesnotcontainanyprovisionthatwouldadjusttheexchangeratiobasedonthefluctuationsinthemarketvalueofeithertheAtwoodcommonstockorEnscoClassAordinaryshares.Becauseofthis,theimpliedvalueofthemergerconsiderationtotheAtwoodshareholderswillfluctuatebetweennowandthecompletionofthemerger.
ComparativeMarketPricesandShareInformation(Seepage19)
TheEnscoClassAordinarysharesarequotedontheNYSEunderthesymbol"ESV,"andtheAtwoodcommonstockisquotedontheNYSEunderthesymbol"ATW."ThefollowingtableshowstheclosingsalepricesofEnscoClassAordinarysharesandAtwoodcommonstockasreportedontheNYSEonMay26,2017,thelasttradingdaypriortotheannouncementofthemerger,andon,2017,thelastpracticabletradingdaypriortothedateofthisjointproxystatement/prospectus.
ThemarketpriceoftheEnscoClassAordinarysharesandtheAtwoodcommonstockwillfluctuatepriortothecompletionofthemerger.YoushouldobtaincurrentstockpricequotationsforEnscoClassAordinarysharesandAtwoodcommonstock.
TreatmentofAtwoodEquity-BasedAwards(Seepage100)
Pursuanttothetermsofthemergeragreement,eachawardofAtwoodrestrictedstockunitsotherthananyAtwoodrestrictedstockunitsthatarerequiredtobesettledincash("AtwoodRSUs")thatisoutstandingasofimmediatelypriortotheEffectiveTimeshallvestupontheEffectiveTime.AssoonaspracticableaftertheEffectiveTime,theAtwoodRSUswillbesettledthroughtheissuancetotheholdersthereofofEnscoClassAordinarysharesinanamountequaltothenumberofsharesofAtwoodcommonstockoriginallysubjecttosuchawardmultipliedbytheexchangeratio(roundeddowntothenearestwholeshare).EachawardofAtwoodrestrictedstockunitsthatisrequiredtobesettledincash("AtwoodCashUnits")willbetreatedinaccordancewiththetermsofsuchaward.
EachawardofAtwoodstockoptionsthatremainsoutstandingandunexercisedimmediatelypriortotheEffectiveTime(an"ExistingOption"),will,asoftheEffectiveTime,automaticallyandwithout
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PriceperEnscoClassA
OrdinaryShares
PriceperShareofAtwoodCommonStock
EquivalentperShareValue
May26,2017 $ 6.70 $ 8.08 $ 10.72,2017 $ $ $
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anyfurtheractionbeingrequired,beconvertedintoastockoptionrelatingtotheEnscoClassAordinaryshares,onthesametermsandconditions(includingthesameexpirationrestrictions)aswereapplicabletosuchExistingOptionimmediatelypriortotheEffectiveTime(a"ConvertedOption"),exceptthat(i)thenumberofEnscoClassAordinarysharessubjecttotheConvertedOptionwillbedeterminedbymultiplyingthenumberofsharesofAtwoodcommonstocksubjecttothecorrespondingExistingOptionimmediatelypriortotheEffectiveTimebytheexchangeratio,andthenroundeddowntothenearestwholeshare,and(ii)theexercisepricepershareoftheConvertedOptionwillequalthepershareexerciseorstrikepriceoftheExistingOptionimmediatelypriortotheEffectiveTimedividedbytheexchangeratio,roundeduptothenearestwholecent.
MaterialU.S.FederalIncomeTaxConsequences(Seepage130)
Ingeneral,subjecttothediscussionrelatingtothepotentialapplicationofSection304oftheInternalRevenueCodeunderthesectionentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger—TaxConsequencesoftheMergertoAtwoodShareholders,"thereceiptbyU.S.holders(asdefinedinthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger")ofEnscoClassAordinarysharespursuanttothemergershouldbeataxableexchangeforU.S.federalincometaxpurposes.Assumingsuchtreatment,aU.S.holdergenerallywillrecognizecapitalgainorlossequaltothedifferencebetween(i)thefairmarketvalueoftheEnscoClassAordinarysharesreceivedasconsiderationinthemergeronthedateoftheexchangeand(ii)theholder'sadjustedtaxbasisinthesharesofAtwoodcommonstocksurrenderedintheexchange.AU.S.holder'sadjustedbasisinitssharesofAtwoodcommonstockgenerallywillequalsuchholder'spurchasepriceforsuchshares,asadjustedtotakeintoaccountstockdividends,certainnon-dividenddistributions,stocksplitsandsimilartransactions.Forfurtherinformation,pleasereferto"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger."
Anon-U.S.holder(asdefinedinthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger")generallyshouldnotbesubjecttoU.S.federalincometaxonanygainrecognizedinthemergerotherthanincertainspecificcircumstances(includingasaresultofthepotentialapplicationofSection304oftheInternalRevenueCode),asfurtherdescribedunderthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger—TaxConsequencesoftheMergertoAtwoodShareholders."
The United States federal income tax consequences described above may not apply to all Atwood shareholders. Your tax consequences will depend onyour individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of themerger to you.
EnscoGeneralMeeting(Seepage34)
TheEnscogeneralmeetingwillbeheldat,at(Londontime)on,2017.
OnlyEnscoshareholdersofrecordatthecloseofbusinessinLondonon,2017,theEnscorecorddate,areentitledtonoticeof,andtovoteat,theEnscogeneralmeetingor,subjecttotheEnscoArticlesofAssociation,anyadjournmentsorpostponementsoftheEnscogeneralmeeting.
AttheEnscogeneralmeeting,Enscoshareholderswillbeaskedtoapprove,inadditiontoallsubsistingauthorities:
1. theEnscoMergerConsiderationProposal(seepage38);
2. theEnscoGeneralAllotmentAuthorityIncreaseProposal(seepage39);
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3. theEnscoGeneralDisapplicationofPre-emptiveRightsProposal(seepage42);and
4. theEnscoSpecifiedDisapplicationofPre-EmptiveRightsProposal(seepage42).
AsaU.K.companypubliclytradedontheNYSE,EnscoshareholderapprovaloftheEnscoMergerConsiderationProposalissubjecttotheshareholderapprovalrequirementsunderboththeCompaniesAct2006andNYSErules.TheEnscoMergerConsiderationProposalisbeingproposedasanordinaryresolution.Assumingaquorumispresent,suchproposalwillbeapprovedforpurposesoftheCompaniesAct2006andNYSErulesifamajorityofthevotescastarecastinfavorthereof.TheEnscoGeneralAllotmentAuthorityIncreaseProposalwillbeproposedasanordinaryresolutionand,assumingaquorumispresent,willbeapprovedifamajorityofthevotescastarecastinfavorthereof.EachoftheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwillbeproposedasaspecialresolution,whichmeans,assumingaquorumispresent,eachsuchproposalwillbeapprovedifatleast75%ofthevotescastarecastinfavorthereof.
ApprovaloftheEnscoMergerConsiderationProposalisrequiredforcompletionofthemerger.ApprovaloftheotherEnscoproposalssetforthaboveisnotrequiredinordertocompletethemerger.
InconnectionwiththeEnscogeneralmeeting,abstentionsandbrokernon-voteswillbeconsideredindeterminingthepresenceofaquorum.Whileabstentionsandbrokernon-votesarenotconsideredvotescastundertheCompaniesAct2006,underNYSErulesabstentions,butnotbrokernon-votes,willbeconsideredasvotescastfordeterminingwhetherasufficientnumberofvoteshavebeencastonaparticularproposal.Asaresult,forpurposesofdeterminingwhethertheEnscoMergerConsiderationProposalhasbeenapprovedinaccordancewiththeCompaniesAct2006,abstentionsandbrokernon-voteswillnothaveanyeffectontheoutcomeofthevote.WithrespecttoNYSErules,abstentionswillhavethesameeffectasvotescast"AGAINST"theEnscoMergerConsiderationProposalandbrokernon-voteswillnothaveanyeffectontheoutcomeofthevote.Abstentionsandbrokernon-voteswillhavenoeffectontheoutcomeoftheEnscoGeneralAllotmentAuthorityIncreaseProposal,theEnscoGeneralDisapplicationofPre-emptiveRightsProposalortheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
AsoftheEnscorecorddate,directorsandexecutiveofficersofEnscoanditsaffiliateshadtherighttovoteapproximatelyEnscoClassAordinaryshares,orapproximately%oftheoutstandingEnscoClassAordinarysharesonthatdate.
Aftercarefulconsideration,onMay29,2017,theEnscoBoardunanimouslydeterminedthattheform,termsandprovisionsofthemergeragreementandthetransactionscontemplatedthereby,includingthemergerandtheallotmentandissuanceoftheEnscoClassAordinaryshares,areadvisable,fairandreasonabletoandinthebestinterestsofEnscoanditsshareholders.TheEnscoBoardunanimouslyrecommendsthatEnscoshareholdersvote"FOR"theEnscoMergerConsiderationProposal.ForamorecompletedescriptionoftherecommendationoftheEnscoBoardwithrespecttotheEnscoMergerConsiderationProposal,see"TheMerger—Ensco'sReasonsfortheMerger;RecommendationoftheEnscoBoardofDirectors"beginningonpage57.
Inaddition,theEnscoBoardrecommendsthatEnscoshareholdersvote"FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal,"FOR"theEnscoGeneralDisapplicationofPre-EmptiveRightsProposaland"FOR"theEnscoSpecifiedDisapplicationofPre-EmptiveRightsProposal.
AtwoodSpecialMeeting(Seepage45)
TheAtwoodspecialmeetingwillbeheldat15011KatyFreeway,FirstFloor,Houston,Texas77094,at(Houstontime)on,2017.OnlyAtwoodshareholdersofrecordatthe
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closeofbusinesson,2017,theAtwoodrecorddate,areentitledtonoticeof,andtovoteat,theAtwoodspecialmeetingandanyadjournmentsorpostponementsoftheAtwoodspecialmeeting.
AttheAtwoodspecialmeeting,Atwoodshareholderswillbeaskedtoconsiderandapprove:
1. theAtwoodMergerProposal(seepage45);
2. theAtwoodCompensatoryProposal(seepage139);and
3. theAtwoodAdjournmentProposal(seepage140).
TheAtwoodMergerProposalrequirestheapprovalofAtwoodshareholdersholdingatleasttwo-thirdsoftheAtwoodcommonstockentitledtovotethereonpursuanttotherequirementsoftheTBOC.Assumingaquorumispresent,theAtwoodCompensatoryProposalrequirestheapprovalofamajorityofvotescastbytheAtwoodshareholderspresent,inpersonorbyproxy,attheAtwoodspecialmeeting.Whetherornotaquorumispresent,theAtwoodAdjournmentProposalrequirestheapprovalofamajorityofvotescastbytheAtwoodshareholderspresent,inpersonorbyproxy,attheAtwoodspecialmeeting.
ApprovaloftheAtwoodMergerProposalisrequiredforcompletionofthemerger.ApprovaloftheotherAtwoodproposalssetforthaboveisnotrequiredinordertocompletethemerger.
InconnectionwiththeAtwoodspecialmeeting,abstentionsandbrokernon-voteswillbeconsideredindeterminingthepresenceofaquorum.Abstentionsandbrokernon-voteswillhavethesameeffectasvotescast"AGAINST"theAtwoodMergerProposal,butwillhavenoeffectontheoutcomeoftheAtwoodCompensatoryProposalortheAtwoodAdjournmentProposal.
AsoftheAtwoodrecorddate,directorsandexecutiveofficersofAtwoodanditsaffiliates,hadtherighttovoteapproximatelysharesofAtwoodcommonstock,orapproximately%oftheoutstandingsharesofAtwoodcommonstockonthatdate.
Aftercarefulconsideration,onMay29,2017,theAtwoodBoardunanimouslydeterminedthatthemergeragreementandthetransactionscontemplatedbythemergeragreement,includingthemerger,areadvisableandinthebestinterestsofAtwoodanditsshareholders.TheAtwoodBoardunanimouslyrecommendsthatAtwoodshareholdersvote"FOR"theAtwoodMergerProposal.ForamorecompletedescriptionoftherecommendationoftheAtwoodBoardwithrespecttotheAtwoodMergerProposal,see"TheMerger—Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors"beginningonpage59.
Inaddition,theAtwoodBoardrecommendstheAtwoodshareholdersvote"FOR"theAtwoodCompensatoryProposaland"FOR"theAtwoodAdjournmentProposal.
OpinionofFinancialAdvisortoEnsco(Seepage63andAnnexB)
OnMay29,2017,atameetingoftheEnscoBoard,MorganStanley&Co.LLC("MorganStanley")rendereditsoralopiniontotheEnscoBoard,subsequentlyconfirmedbydeliveryofawrittenopinion,datedMay29,2017,that,asofthatdate,andbaseduponandsubjecttothevariousassumptionsmade,proceduresfollowed,mattersconsideredandqualificationsandlimitationsonthescopeofreviewundertakenassetforthinthewrittenopinion,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtoEnsco.
ThefulltextofthewrittenopinionofMorganStanleytotheEnscoBoard,datedasofMay29,2017,isattachedasAnnexBtothisjointproxystatement/prospectusandisincorporatedhereinbyreferenceinitsentirety.ThesummaryoftheopinionofMorganStanleyinthisjointproxystatement/prospectusisqualifiedinitsentiretybyreferencetothefulltextoftheopinion.YoushouldreadMorganStanley'sopinion,thissectionandthesummaryofMorganStanley'sopinioncarefullyandintheirentiretyforadiscussionoftheassumptionsmade,proceduresfollowed,mattersconsideredand
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qualificationsandlimitationsuponthereviewundertakenbyMorganStanleyinrenderingitsopinion.MorganStanley'sopinionwasdirectedtotheEnscoBoard,initscapacityassuch,andaddressedonlythefairnessfromafinancialpointofviewtoEnscooftheexchangeratiopursuanttothemergeragreementasofthedateofsuchopinion.
MorganStanley'sopiniondidnotaddressanyotheraspectsorimplicationsofthemerger.MorganStanley'sopiniondidnotinanymanneraddressthepriceatwhichtheEnscoClassAordinaryshareswouldtradefollowingthemergeroratanytime,andMorganStanleyexpressednoopinionorrecommendationtoanyholderofEnscoClassAordinarysharesorAtwoodcommonstockastohowsuchholdershouldvoteattheEnscogeneralmeetingortheAtwoodspecialmeeting,respectively,orwhethertotakeanyotheractionwithrespecttothemerger.
OpinionofFinancialAdvisortoAtwood(Seepage75andAnnexC)
GoldmanSachs&Co.LLC("GoldmanSachs")delivereditsopiniontotheAtwoodBoardthat,asofMay29,2017andbaseduponandsubjecttothefactorsandassumptionssetforththerein,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstock.
ThefulltextofthewrittenopinionofGoldmanSachs,datedMay29,2017,whichsetsforthassumptionsmade,proceduresfollowed,mattersconsideredandlimitationsonthereviewundertakeninconnectionwiththeopinion,isattachedasAnnexCtothisjointproxystatement/prospectus.GoldmanSachsprovideditsopinionfortheinformationandassistanceoftheAtwoodBoardinconnectionwithitsconsiderationofthetransaction.TheGoldmanSachsopinionisnotarecommendationastohowanyholderofsharesofAtwoodcommonstockshouldvotewithrespecttothetransactionoranyothermatter.PursuanttoanengagementletterbetweenAtwoodandGoldmanSachs,AtwoodhasagreedtopayGoldmanSachsatransactionfeethatisestimated,basedontheinformationavailableasofthedateofannouncementofthetransaction,atapproximately$21million,$3millionofwhichbecamepayableuponexecutionofthemergeragreement,andtheremainderofwhichiscontingentuponconsummationofthemerger.
InterestsofAtwoodDirectorsandExecutiveOfficersintheMerger(Seepage93)
Atwood'sdirectorsandexecutiveofficershavefinancialinterestsinthemergerthatmaybedifferentfrom,orinadditionto,thoseofAtwoodshareholdersgenerally.TheAtwoodBoardwasawareoftheseinterestsandconsideredthem,amongothermatters,inapprovingthemergeragreementandmakingitsrecommendationthatAtwoodshareholdersapprovetheAtwoodMergerProposal.Theseinterestsincludethefollowing:
• ThemergeragreementprovidesthatExistingOptionsoutstandingimmediatelypriortotheEffectiveTimewillbeexchangedforConvertedOptionstoacquireEnscoClassAordinaryshares.AllofAtwood'sExistingOptionspreviouslyvested.TheConvertedOptionswillotherwiseremainsubjecttothesametermsandconditionsasthecorrespondingAtwoodoptions.ThenumberofEnscoClassAordinarysharessubjecttotheConvertedOptionswillbedeterminedbymultiplyingthenumberofsharesofAtwoodcommonstocksubjecttotheExistingOptionsimmediatelypriortotheEffectiveTimebytheexchangeratio,roundeddowntothenearestwholeshare,andtheexercisepricepershareoftheConvertedOptionswillequalthepershareexercisepriceoftheExistingOptionsimmediatelypriortotheEffectiveTimedividedbytheexchangeratio,roundeduptothenearestwholecent.
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• PursuanttotheapplicableAtwoodincentiveplans,alltime-basedAtwoodRSUs("Time-BasedRSUs")andperformance-basedAtwoodRSUs("Performance-BasedRSUs")heldbyAtwood'sdirectorsandemployeesshallvestupontheEffectiveTime.Time-BasedRSUsthatsovestwillbesettledthroughtheissuanceofEnscoClassAordinarysharesequaltothenumberofvestedTime-BasedRSUsmultipliedbytheexchangeratio.Performance-BasedRSUswillvestattheEffectiveTimeatthehigheroftargetlevelofperformanceortheamountdeterminedbythecompensationcommitteeoftheAtwoodBoard(butnottoexceed200%oftargetlevel)andthenumberofPerformance-BasedRSUsthatvestwillbesettledthroughtheissuanceofanumberofEnscoClassAordinarysharesequaltothenumberofvestedPerformance-BasedRSUsmultipliedbytheexchangeratio.AccruedcashdividendequivalentsonTime-BasedRSUsandPerformance-BasedRSUswillalsovestandbecashedoutatthesametime.AtwoodCashUnitswillbetreatedasspecifiedintheapplicableawardagreement.TheAtwoodCashUnitsareperformancevestingawardsthatwillvestinfullupontheEffectiveTimeatthehigheroftargetlevelofperformanceortheamountdeterminedbythecompensationcommitteeoftheAtwoodBoard(upto200%oftargetlevel)andwillbepaidincashbasedontheclosingpriceofAtwoodcommonstockonthelasttradingdaypriortotheclosingdate.AccruedcashdividendequivalentsontheAtwoodCashUnitswillalsovestandbecashedoutatthesametime.
• EachofAtwood'sexecutiveofficersissubjecttoanon-competitionandnon-solicitationagreemententeredintoinMay2016pursuanttowhichspecifiedtime-vestingcashawardsandAtwoodRSUsweregranted.ThecashawardsandtheAtwoodRSUswillfullyvestandbecomepayableupontheEffectiveTime,andtheAtwoodRSUswillbetreatedasspecifiedabove.
• ExecutiveofficersarecoveredunderAtwood'sSalaryContinuationPlan,formerlynamedtheExecutiveLifeInsurancePlan,whichprovidesforsalarycontinuationtotheexecutive'sbeneficiaryupontheexecutive'sdeathwhileemployedbyAtwood.Paymentsequalto2.5timesannualsalaryarepayablein30installmentsor,intheeventofdeathduetoaccidentalcauses,paymentsequaltofivetimesannualsalaryarepayablein60installments.Iftheexecutiveofficerterminatesemploymentwithin30monthsfollowingachangeofcontrol,thedeathbenefitispayableiftheexecutivediesduringthat30-monthperiod.
• EachofAtwood'sexecutiveofficersissubjecttoachangeofcontrolagreementthatprovidesspecifiedseverancebenefitsiftheexecutiveofficerexperiencesaqualifyingterminationofemploymentwithin24monthsfollowingachangeofcontrol.Thebenefitsincludecashseverance,24monthsofcontinuedcoverageunderAtwood'swelfarebenefitplansandtherighttoexercisestockoptionsforuptooneyearfollowingtermination.
Atwood'sdirectorsandexecutiveofficersarealsoentitledtocontinuedindemnification/expenseadvancementanddirectors'andofficers'liabilityinsurancecoverageunderthemergeragreement.
BoardofDirectorsandExecutiveOfficersofEnscoFollowingtheMerger(Seepage91)
ThecurrentdirectorsofEnscoare:PaulE.Rowsey,III,CarlTrowell,J.RoderickClark,RoxanneJ.Decyk,MaryE.FrancisCBE,C.ChristopherGaut,GeraldW.Haddock,FrancisS.KalmanandKeithO.Rattie.AttheEffectiveTime,EnscowillcausetwodirectorscurrentlyservingontheAtwoodBoard,JackE.GoldenandPhilD.Wedemeyer,tobeappointedtotheEnscoBoardandwillexpandtheEnscoBoardtotheextentnecessaryinconnectionwithappointingsuchadditionaldirectors.ThetwoadditionaldirectorswereproposedbyAtwoodfollowingtheexecutionofthemergeragreementandhavebeenmutuallyagreeduponbyEnscoandAtwood.AllEnscodirectorsareelectedannuallytoserveuntilthenextannualmeetinganduntiltheirsuccessorsareelected.
Ensco'sexecutiveofficerswillremainthesamefollowingthemerger,andnoneofAtwood'sexecutiveofficersareexpectedtohaveanyexecutiveofficerpositionswiththecombinedcompany.
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PublicTradingMarkets(Seepage91)
TheEnscoClassAordinarysharesarequotedontheNYSEunderthesymbol"ESV,"andtheAtwoodcommonstockisquotedontheNYSEunderthesymbol"ATW."Uponcompletionofthemerger,theAtwoodcommonstockwillbedelistedfromtheNYSEandderegisteredundertheSecuritiesExchangeActof1934,asamended(the"ExchangeAct").TheEnscoClassAordinarysharesissuableinthemergerwillbelistedontheNYSEandwillbefreelytransferableundertheSecuritiesActof1933,asamended(the"SecuritiesAct").
RegulatoryApprovalsRequiredfortheMerger(Seepage92)
Tocompletethemerger,EnscoandAtwoodmustmakefilingswithandobtainauthorizations,approvalsorconsentsfromanumberofregulatoryauthorities.ThemergerissubjecttotherequirementsoftheHart-Scott-RodinoAntitrustImprovementsActof1976,asamended(the"HSRAct").OnJune9,2017,EnscoandAtwoodfiledaPremergerNotificationandReportFormpursuanttotheHSRActwiththeAntitrustDivisionoftheDepartmentofJustice(the"DOJ")andtheFederalTradeCommission(the"FTC").OnJune27,2017,theDOJandtheFTCgrantedearlyterminationofthewaitingperiodundertheHSRAct.Inaddition,thenewEnscoClassAordinarysharestobeissuedtoAtwoodshareholdersmustbeapprovedforlistingontheNYSE,subjecttoofficialnoticeofissuance.
ExpectedTimingoftheMerger(Seepage99)
UnlessEnscoandAtwoodagreeotherwise,completionofthemergerwilloccurassoonaspracticable,butnolaterthanwithinfivebusinessdaysafterthesatisfactionorwaiveroftheconditionssetforthinthemergeragreement,exceptforthoseconditionsthataretobesatisfiedattheclosing.Thepartiesexpectsuchconditionstobesatisfiedinthethirdcalendarquarterof2017.However,asthemergerissubjecttoregulatoryclearanceandthesatisfactionorwaiverofotherconditionsdescribedinthemergeragreement,itispossiblethatfactorsoutsidethecontrolofEnscoandAtwoodcouldresultinthemergerbeingcompletedatalatertimeornotatall.
AdverseRecommendationChanges(Seepage109)
Subjecttotheconditionsdescribedinthisjointproxystatement/prospectus,themergeragreementprovidesthatneithertheEnscoBoardnortheAtwoodBoardwill:
• change,qualify,withhold,withdrawormodify,orauthorizeorpubliclyproposetochange,qualify,withhold,withdrawormodify,inamanneradversetoAtwoodorEnscoitsrecommendationwithrespecttotheEnscoMergerConsiderationProposalortheAtwoodMergerProposal,asapplicable;
• takeanyformalactionormakeanyrecommendationorpublicstatementinconnectionwithatenderofferorexchangeoffer;
• adopt,approveorrecommend,orpubliclyproposetoadopt,approve,orrecommend,totheEnscoshareholdersorAtwoodshareholders,asapplicable,atakeoverproposal;or
• authorize,causeorpermitEnscoorAtwoodoranyofitssubsidiaries,asapplicable,toenterintoanyletterofintent,agreement,commitmentoragreementinprinciplewithrespecttoanytakeoverproposal.
Thetakingorfailuretotake,asapplicable,ofanyoftheactionsdescribedaboveisreferredtoasan"adverserecommendationchange."Subjecttotheconditionsdescribedinthisjointproxystatement/prospectus,priortoreceivingshareholderapprovaloftheEnscoMergerConsiderationProposalortheAtwoodMergerProposal,asapplicable,eithertheEnscoBoardortheAtwoodBoard
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maymakeanadverserecommendationchangeinresponsetoanevent(an"interveningevent")that(i)wasnotknowntosuchboardofdirectors(orthematerialconsequencesofwhich,basedonfactsknowntomembersofsuchboardofdirectorsasofthedateofthemergeragreement,werenotreasonablyforeseeableasofthedateofthemergeragreement);(ii)becomesknownbysuchboardofdirectorspriortothereceiptofshareholderapproval;and(iii)doesnotrelatetothereceipt,existenceortermsofatakeoverproposalinvolvingEnscoorAtwood,asapplicable.EithertheEnscoBoardortheAtwoodBoardmaymakeanadverserecommendationchangeinresponsetoaninterveningeventifsuchboardofdirectorshasdeterminedingoodfaithafterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounselthatthefailuretotakesuchactionwouldbeinconsistentwithitsfiduciarydutiesunderapplicablelaw,subjecttocertainconditionsdescribedinthisjointproxystatement/prospectus.
AgreementNottoSolicitOtherOffers(Seepage109)
Exceptasexpresslypermittedbythemergeragreement,eachpartywill,andwillcauseitsaffiliates,andofficers,directorsandemployeesto,andwillusereasonablebesteffortstocauseitsagents,financialadvisors,investmentbankers,attorneys,accountantsandotherrepresentativesto:
• immediatelyceaseanyongoingsolicitation,discussionsornegotiationswithanypersonwithrespecttoatakeoverproposal;
• promptlyinstruct(totheextentsuchpartyhasthecontractualauthoritytodoso)anypersonthathasexecutedaconfidentialityornon-disclosureagreementwithinthe24-monthperiodpriortothedateofthemergeragreementinconnectionwithanytakeoverproposaltoreturnordestroyallconfidentialinformationofsuchpartyinitspossession;and
• untiltheEffectiveTimeorterminationofthemergeragreement,not:
• solicit,initiateorknowinglyfacilitateorknowinglyencourage(includingbywayoffurnishingnon-publicinformation)anyinquiriesregarding,orthemakingofanyproposalorofferthatconstitutes,orcouldreasonablybeexpectedtoleadto,atakeoverproposal;
• engagein,continueorotherwiseparticipateinanydiscussionsornegotiationsregarding,orfurnishingtoanyotherpersonanynon-publicinformationinconnectionwithorforthepurposeofencouragingorfacilitating,atakeoverproposal;or
• approve,recommendorenterinto,orproposetoapprove,recommendorenterinto,anyletterofintentorsimilardocument,agreement,commitmentoragreementinprinciple(whetherwrittenororal,bindingornonbinding)withrespecttoatakeoverproposal,otherthanasexpresslypermittedbythemergeragreement.
Inaddition,neitherpartywillreleaseanythirdpartyfromorwaiveoramendanystandstillprovisionorconfidentialityprovisionotherthananyconfidentialityprovisionthewaiverofwhichwouldnotbereasonablylikelytoleadtoatakeoverproposal,andeachpartywillenforcesuchconfidentialityandstandstillprovisionsofanysuchagreementsandtakeallstepswithinitspowertoterminateanywaiverspreviouslygrantedunderanysuchprovisions.
ConditionstoCompletionoftheMerger(Seepage114)
Eachparty'sobligationtoconsummatethemergerisconditioneduponthesatisfaction(orwaiverbysuchparty)atorpriortothecompletionofthemergerofeachofthefollowing:
• theapprovaloftheAtwoodMergerProposalbyholdersofatleasttwo-thirdsoftheoutstandingAtwoodcommonstock;
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• theapprovaloftheEnscoMergerConsiderationProposalbyholdersofatleastamajorityofEnscoClassAordinarysharescastattheEnscogeneralmeeting;
• theapprovalforlistingbytheNYSE,subjecttoofficialnoticeofissuance,oftheEnscoClassAordinarysharesissuabletoAtwoodshareholdersinconnectionwiththemerger;
• theeffectivenessoftheregistrationstatementofwhichthisjointproxy/prospectusisapartundertheSecuritiesActandnostopordersuspendingtheeffectivenessoftheregistrationstatementhavingbeenissuedandnoproceedingsforthatpurposehavingbeeninitiatedorthreatenedbytheSEC;
• noinjunctionbyanycourtorothertribunalofcompetentjurisdictionshallhavebeenenteredandshallcontinuetobeineffectandnolawshallhavebeenadoptedorbeeffective,ineachcasethatprohibitsthecompletionofthemerger;
• theterminationorexpirationofanywaitingperiod(andanyextensionthereof)applicabletothemergerundertheHSRActaswellasanyotherapprovalsthatmayberequiredbyacompetitionlawauthorityinanyforeignjurisdiction;
• sincethedateofthemergeragreement,therehasnotbeenanychangeinU.S.taxlawthatwouldcauseEnscotobetreatedasadomesticcorporationforU.S.federalincometaxpurposes;
• (i)therepresentationsandwarrantiesoftheotherpartyshallbetrueandcorrectbothatandasofthedateofthemergeragreementandatandasofthecompletionofthemergerasthoughmadeatandasofsuchdate,exceptwheresuchfailurestobesotrueandcorrect(withoutregardto"materiality,""materialadverseeffect"andsimilarqualifierscontainedinsuchrepresentationsandwarranties)wouldnot,individuallyorintheaggregate,haveamaterialadverseeffectontheotherparty,(ii)therepresentationsandwarrantiesoftheotherpartywithrespecttocapitalizationshallbetrueandcorrectbothasofthedateofthemergeragreementandasoftheclosingdate,exceptforanyde minimisinaccuracies,(iii)therehavenotbeenanychangeswithrespecttoEnscothatwouldreasonablybeexpectedtohave,individuallyorintheaggregate,amaterialadverseeffectonEnscoand(iv)therehavenotbeenanychangeswithrespecttoAtwoodthatwouldreasonablybeexpectedtohave,individuallyorintheaggregate,amaterialadverseeffectonAtwood;
• theperformanceandcompliance,inallmaterialrespects,witheachandallofthecovenantsrequiredtobeperformedwithandcompliedwithbytheotherpartypursuanttothemergeragreement;and
• thereceiptofacertificatebythechiefexecutiveofficer,orotherseniorofficer,oftheotherparty,datedasoftheclosingdate,certifyingthatthetwoprecedingconditionshavebeensatisfied.
TerminationoftheMergerAgreement(Seepage114)
Generally,themergeragreementmaybeterminatedpriortothecompletionofthemerger,whetherbeforeoraftertheEnscoMergerConsiderationProposalortheAtwoodMergerProposalisapproved(asapplicableandexceptasotherwisespecifiedbelow),asfollows:
• bythemutualwrittenconsentofEnsco,MergerSubandAtwood;
• byeitherEnscoorAtwood,if:
• themergershallnothavebeenconsummatedonorpriortoFebruary28,2018(the"EndDate");provided,however,thatifallconditionsoftheclosinghavebeensatisfied,exceptfortherequirementtoreceiveapprovalundertheHSRActorcertainothergovernmental
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approvals,eitherEnscoorAtwoodmayextendtheEndDateupto,butnotbeyond,May29,2018;
• aninjunctionhasbeenenteredpermanentlyrestraining,enjoiningorotherwiseprohibitingtheconsummationofthemergerandsuchinjunctionhasbecomefinalandnon-appealable;provided,however,thatifsuchinjunctionwasprimarilyduetothefailureofapartytoperformitsobligationsunderthemergeragreement,thensuchpartymaynotterminatethemergeragreementunderthisprovision;
• theAtwoodshareholdershavenotapprovedtheAtwoodMergerProposal;
• theEnscoshareholdershavenotapprovedtheEnscoMergerConsiderationProposal;or
• theotherpartyhasbreachedorfailedtoperformanyofitsrepresentations,warranties,covenantsorotheragreementscontainedinthemergeragreement,ifsuchbreachorfailureofperformanceoccurredandcontinuedtooccurontheclosingdateandwouldresultinthebreachorfailureofcertainconditionssetforthinthemergeragreementand,byitsnature,suchbreachorfailurecannotbecuredpriortotheEndDate;
• byAtwood,if:
• theEnscoBoardmakesanadverserecommendationchangeorEnscomateriallybreachesitsnon-solicitationobligations;or
• AtwoodisterminatingthemergeragreementtoenterintoadefinitiveagreementrelatingtoasuperiorproposalinaccordancewiththetermsofthemergeragreementandAtwoodpaystheAtwoodTerminationFee(asdefinedbelow);
• byEnsco,if:
• theAtwoodBoardmakesanadverserecommendationchangeorAtwoodmateriallybreachesitsnon-solicitationobligations;or
• EnscoisterminatingthemergeragreementtoenterintoadefinitiveagreementrelatingtoasuperiorproposalinaccordancewiththetermsofthemergeragreementandEnscopaystheEnscoTerminationFee(asdefinedbelow).
TerminationFees(Seepage116)
AtwoodmustpayEnscoa$30millionterminationfee(the"AtwoodTerminationFee")if:
• (i)(A)AtwoodorEnscoterminatesthemergeragreementbecausetheEndDatehaspassedortheAtwoodshareholdershavenotapprovedtheAtwoodMergerProposalor(B)EnscoterminatesthemergeragreementbecauseAtwoodhasmateriallybreachedthenon-solicitationrestrictionand(ii)(A)atakeoverproposalhasbeenmadetoAtwoodortheAtwoodshareholdersoranypersonhaspubliclyannouncedanintentiontomakeatakeoverproposal,(B)suchtakeoverproposalortheintentiontomakeatakeoverproposalwaspubliclydisclosedpriortothetermination(andremainedpendingasofthetermination)and(C)withintwelvemonthsafterterminationofthemergeragreementAtwoodhasconsummated,orenteredintoadefinitiveagreementtoconsummate,atakeoverproposal;
• EnscoterminatesthemergeragreementbecausetheAtwoodBoardchangesitsrecommendationinresponsetoaninterveningevent;or
• Atwoodterminatesthemergeragreementtoacceptasuperiorproposalinaccordancewiththetermsofthemergeragreement.
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EnscomustpayAtwooda$50millionterminationfee(the"EnscoTerminationFee")if:
• (i)(A)AtwoodorEnscoterminatesthemergeragreementbecausetheEndDatehaspassedor(B)AtwoodterminatesthemergeragreementbecauseEnscohasmateriallybreachedthenon-solicitationrestrictionand(ii)(A)atakeoverproposalhasbeenmadetoEnscoortheEnscoshareholdersoranypersonhaspubliclyannouncedanintentiontomakeatakeoverproposal,(B)suchtakeoverproposalortheintentiontomakeatakeoverproposalwaspubliclydisclosedpriortothetermination(andremainedpendingasofthetermination)and(C)withintwelvemonthsafterterminationofthemergeragreementEnscohasconsummated,orenteredintoadefinitiveagreementtoconsummate,atakeoverproposal;
• AtwoodorEnscoterminatesthemergeragreementbecausetheEnscoshareholdersdonotapprovetheEnscoMergerConsiderationProposalortheEnscoBoardchangesitsrecommendationinresponsetoaninterveningevent;or
• Enscoterminatesthemergeragreementtoacceptasuperiorproposalinaccordancewiththetermsofthemergeragreement.
ExpenseReimbursement(Seepage116)
Ifthemergeragreementisterminatedbyeitherpartyduetothebreachbytheotherpartyofitsrepresentations,warrantiesandcovenantssetforthinthemergeragreement,thenthebreachingpartywillreimburseallreasonableout-of-pocketfeesandexpensesincurredbytheotherpartyinconnectionwiththemergerupto$10million.Inaddition,AtwoodwillreimburseEnscoupto$10millionofallreasonableout-of-pocketfeesandexpensesincurredinconnectionwiththemergerintheeventthatAtwooddoesnotobtainshareholderapprovaloftheAtwoodMergerProposal.
AccountingTreatmentoftheMerger(Seepage92)
EnscopreparesitsfinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates("GAAP").ThemergerwillbeaccountedforusingtheacquisitionmethodofaccountingwithEnscobeingconsideredtheacquirerofAtwoodforaccountingpurposes.ThismeansthatEnscowillallocatethepurchasepricetothefairvalueofAtwood'stangibleandintangibleassetsandliabilitiesattheacquisitiondate,withtheexcesspurchaseprice,ifany,beingrecordedasgoodwill,ortheexcessofthefairvalueofAtwood'stangibleandintangibleassetsandliabilitiesattheacquisitiondateoverthepurchaseprice,ifany,beingrecognizedinEnsco'searnings.Undertheacquisitionmethodofaccounting,goodwillisnotamortizedbutistestedforimpairmentatleastannually.
NoAppraisalorDissenters'Rights(Seepage91)
Atwoodshareholderswhodissenttothemergerwillnothaverightstoanappraisalofthefairvalueoftheirshares.UndertheTBOC,shareholdersgenerallyhaveappraisalrightsintheeventofamergerorconsolidation.However,theseappraisalrightsarenotavailableif(i)thesharesheldbytheshareholderarepartofaclassofshareslistedonanationalsecuritiesexchangeorheldofrecordbyatleast2,000holders,(ii)theshareholderisnotrequiredtoacceptforhisorhersharesanyconsiderationthatisdifferentthantheconsiderationtobeprovidedtoanyotherholderofsharesofthesameclassheldbytheshareholder,and(iii)theshareholderisnotrequiredtoacceptanyconsiderationotherthansharesofacorporationthatsatisfytherequirementsinclause(i)above.BecauseEnscoClassAordinarysharesarelistedontheNYSE,anationalsecuritiesexchange,andareexpectedtocontinuetobesolistedfollowingthemerger,andbecausethemergerotherwisesatisfiestheforegoingrequirements,Atwoodshareholderswillnotbeentitledtoappraisalordissenters'rightsinthemergerwithrespecttotheirsharesofAtwoodcommonstock.
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ComparisonofShareholderRights(Seepage148)
Uponcompletionofthemerger,AtwoodshareholderswillbecomeEnscoshareholdersandwillhavedifferentrightsoncetheybecomeEnscoshareholdersduetodifferencesbetweenthegoverningcorporatedocumentsofeachentity.Thesedifferencesaredescribedindetailinthesectionentitled"ComparisonofRightsofAtwoodShareholdersandEnscoShareholders"beginningonpage148.
LitigationRelatingtotheMerger(Seepage92)
OnJune23,2017,aputativeclassactionlawsuitwasfiledagainstAtwood,Atwood'sdirectors,EnscoandMergerSub.ThecomplaintgenerallyallegesthatthedirectorsandAtwooddisseminatedafalseormisleadingregistrationstatementwhichomittedmaterialinformationregardingtheproposedtransactionbetweenEnscoandAtwood,inviolationofSection14(a)oftheExchangeAct.Specifically,thecomplaintallegesthatAtwoodandthedirectorsomittedmaterialinformationregardingtheparties'financialprojections,theanalysisperformedbyGoldmanSachsinsupportofitsfairnessopinion,thetimingandnatureofcommunicationsregardingpost-transactionemploymentofAtwood'sdirectorsandofficers,potentialconflictsofinterestofGoldmanSachs,andwhethertherewerefurtherdiscussionswithanotherpotentialacquirerofAtwoodfollowingannouncementofthemerger.Thecomplaintseeksinjunctiverelief,includingtoenjointhemerger,rescissionorrescissorydamagesintheeventthemergerisconsummated,andanawardofattorneys'fees,inadditiontootherrelief.OnJune27,June29andJune30,2017,threeadditionalputativeclassactionlawsuitswerefiledagainstAtwoodandAtwood'sdirectors.TheseactionsallegeviolationsofSections14(a)and20(a)oftheExchangeActbyAtwoodandAtwood'sdirectorssimilartothoseallegedintheoriginalcomplaintdiscussedabove;however,neitherEnsconorMergerSubisnamedasadefendantintheseactions.
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SELECTEDHISTORICALCONSOLIDATEDFINANCIALDATAOFENSCO
ThefollowingselectedhistoricalconsolidatedfinancialdataforeachoftheyearsendedDecember31,2016,2015,2014,2013and2012arederivedfromEnsco'sauditedhistoricalconsolidatedfinancialstatements.FinancialdataforthethreemonthsendedMarch31,2017and2016arederivedfromEnsco'sunauditedconsolidatedfinancialstatements.ThesehistoricalresultsarenotnecessarilyindicativeofthefutureperformanceofEnscofollowingcompletionofthemerger.
Youshouldreadthefollowinghistoricalfinancialdatainconjunctionwith"Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations"andtheconsolidatedfinancialstatementsandtherelatednotestheretosetforthinEnsco'sAnnualReportonForm10-KfortheyearendedDecember31,2016andForm10-QforthequarterlyperiodendedMarch31,2017,whichareincorporatedbyreferenceintothisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
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YearEndedDecember31, ThreeMonthsEnded
March31, (inmillions,exceptpershareamounts) 2016 2015 2014 2013 2012 2017 2016 ConsolidatedStatementofOperationsData
Revenues $ 2,776.4 $ 4,063.4 $ 4,564.5 $ 4,323.4 $ 3,638.8 $ 471.1 $ 814.0Operatingexpenses Contractdrilling(exclusiveofdepreciation) 1,301.0 1,869.6 2,076.9 1,947.1 1,642.8 278.1 363.7
Lossonimpairment — 2,746.4 4,218.7 — — — —Depreciation 445.3 572.5 537.9 496.2 443.8 109.2 113.3Generalandadministrative 100.8 118.4 131.9 146.8 148.9 26.0 23.4
Operatingincome(loss) 929.3 (1,243.5) (2,400.9) 1,733.3 1,403.3 57.8 313.6Otherincome(expense),net 68.2 (227.7) (147.9) (100.1) (98.6) (57.7) (64.6)Incometaxexpense(benefit) 108.5 (13.9) 140.5 203.1 228.6 24.1 71.4Income(loss)fromcontinuingoperations 889.0 (1,457.3) (2,689.3) 1,430.1 1,076.1 (24.0) 177.6
Income(loss)fromdiscontinuedoperations,net 8.1 (128.6) (1,199.2) (2.2) 100.6 (0.6) (0.9)
Netincome(loss) 897.1 (1,585.9) (3,888.5) 1,427.9 1,176.7 (24.6) 176.7Netincomeattributabletononcontrollinginterests (6.9) (8.9) (14.1) (9.7) (7.0) (1.1) (1.4)
Netincome(loss)attributabletoEnsco $ 890.2 $ (1,594.8) $ (3,902.6) $ 1,418.2 $ 1,169.7 $ (25.7) $ 175.3
Earnings(loss)pershare—basic Continuingoperations $ 3.10 $ (6.33) $ (11.70) $ 6.09 $ 4.62 $ (0.09) $ 0.74Discontinuedoperations 0.03 (0.55) (5.18) (0.01) 0.43 — —
$ 3.13 $ (6.88) $ (16.88) $ 6.08 $ 5.05 $ (0.09) $ 0.74Earnings(loss)pershare—diluted Continuingoperations $ 3.10 $ (6.33) $ (11.70) $ 6.08 $ 4.61 $ (0.09) $ 0.74Discontinuedoperations 0.03 (0.55) (5.18) (0.01) 0.43 — —
$ 3.13 $ (6.88) $ (16.88) $ 6.07 $ 5.04 $ (0.09) $ 0.74Netincome(loss)attributabletoEnscoshares—BasicandDiluted $ 873.6 $ (1,596.8) $ (3,910.5) $ 1,403.1 $ 1,157.4 $ (25.8) $ 172.8
Weighted-averagesharesoutstanding Basic 279.1 232.2 231.6 230.9 229.4 300.6 232.5Diluted 279.1 232.2 231.6 231.1 229.7 300.6 232.5
Cashdividendspershare $ 0.04 $ 0.60 $ 3.00 $ 2.25 $ 1.50 $ 0.01 $ 0.01ConsolidatedBalanceSheetandCashFlowStatementData
Workingcapital $ 2,424.9 $ 1,509.6 $ 1,788.9 $ 466.9 $ 720.4 $ 2,167.5 $ 815.4Totalassets 14,374.5 13,610.5 16,023.3 19,446.8 18,554.7 13,972.3 13,610.0Long-termdebt,netofcurrentportion 4,942.6 5,868.6 5,868.1 4,709.3 4,797.7 4,905.9 4,991.0
Enscoshareholders'equity 8,250.6 6,512.9 8,215.0 12,791.6 11,846.4 8,221.2 6,700.7Cashflowsfromoperatingactivitiesofcontinuingoperations 1,077.4 1,697.9 2,057.9 1,811.2 1,954.6 104.6 233.1
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SELECTEDHISTORICALCONSOLIDATEDFINANCIALDATAOFATWOOD
ThefollowingselectedhistoricalconsolidatedfinancialdataforeachofthefiscalyearsendedSeptember30,2016,2015,2014,2013and2012arederivedfromAtwood'shistoricalconsolidatedfinancialstatements.FinancialdataforthesixmonthsendedMarch31,2017and2016arederivedfromAtwood'sunauditedcondensedconsolidatedfinancialstatementsalsoappearinghereinandwhich,intheopinionofmanagement,includealladjustments,consistingonlyofnormalrecurringadjustments,necessaryforafairstatementoftheresultsfortheunauditedinterimperiods.ThesehistoricalresultsarenotnecessarilyindicativeofthefutureperformanceofAtwood.
Youshouldreadthefollowinghistoricalfinancialdatainconjunctionwith"Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations"andtheconsolidatedfinancialstatementsandtherelatednotestheretosetforthinAtwood'sAnnualReportonForm10-KforthefiscalyearendedSeptember30,2016andQuarterlyReportsonForm10-QforthequarterlyperiodendedMarch31,2017and2016,respectively,whichareincorporatedbyreferenceintothisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
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AtorFortheFiscalYearsEndedSeptember30, SixMonthsEnded
March31, (Inthousands,exceptpershareamounts) 2016 2015 2014 2013 2012 2017 2016 Statement of Operations
Data: Totalrevenues $ 1,020,644 $ 1,395,851 $ 1,173,953 $ 1,063,663 $ 787,421 $ 325,262 $ 604,170Operatingincome(loss) 294,282 531,430 438,784 429,471 319,410 14,308 191,197Netincome(loss) 265,272 432,573 340,822 350,224 272,171 (19,191) 161,518Per Share Data: Earnings(loss)percommonshare(1) Basic 4.09 6.70 5.31 5.38 4.17 (0.27) 2.49Diluted 4.09 6.65 5.24 5.32 4.14 (0.27) 2.49
Averagecommonsharesoutstanding(1) Basic 64,789 64,581 64,240 65,073 65,267 71,504 64,739Diluted 64,839 65,030 65,074 65,845 65,781 71,504 64,870
Balance Sheet Data (asof end of period):
Totalassets 4,539,792 4,801,333 4,507,228 3,657,266 2,943,762 4,796,645 4,834,992Totaldebt 1,227,919 1,678,268 1,742,122 1,263,232 830,000 1,298,067 1,595,018Totalshareholder'sequity 3,230,386 2,947,170 2,555,524 2,207,371 1,939,422 3,401,022 3,105,107
Statements of CashFlow Data:
Netcashprovidedbyoperatingactivities 625,008 604,287 442,620 432,110 255,603 193,263 380,153
(1) PotentialdilutiveAtwoodcommonstockoutstandingstock-basedawardstotaling911,370and505,372shareswereconsideredinthecalculationofdilutedweighted-averagesharesforthethreemonthsendedMarch31,2017;however,duetoAtwood'snetlossposition,thoseshareshavenotbeenreflectedabovebecausetheywouldbeanti-dilutive.
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UNAUDITEDCOMPARATIVEPERSHAREDATA
Thefollowingtablesetsforth(i)selectedpershareinformationforEnscoonahistoricalbasisfortheyearendedDecember31,2016andthethreemonthsendedMarch31,2017,(ii)selectedpershareinformationforAtwoodonahistoricalbasisfortheyearendedSeptember30,2016andthethreemonthsendedMarch31,2017,(iii)unauditedselectedpershareinformationforEnscoonaproformabasisaftergivingeffecttothemergerfortheyearendedDecember31,2016andthethreemonthsendedMarch31,2017and(iv)unauditedselectedpershareinformationforAtwoodonanequivalentproformabasisbasedontheexchangeratioof1.60EnscoClassAordinarysharesforeachshareofAtwoodcommonstockfortheyearendedSeptember30,2106andthethreemonthsendedMarch31,2017.
Theproformainformationsetforthbelow,whilehelpfulinillustratingthefinancialcharacteristicsofthecombinedcompanyunderonesetofassumptions,doesnotreflectthepossibleimpactonthecombinedcompanythatmayresultasaconsequenceofthemergerand,accordingly,doesnotattempttopredictorsuggestfutureresults.Italsodoesnotnecessarilyreflectwhatthehistoricalresultsofthecombinedcompanywouldhavebeenhadourcompaniesbeencombinedduring2016.Uponcompletionofthemerger,theoperatingresultsofAtwoodwillbereflectedintheconsolidatedfinancialstatementsofEnscoonaprospectivebasis.YoushouldreadthedatawiththehistoricalconsolidatedfinancialstatementsandrelatednotesofEnscoandAtwoodcontainedintheirAnnualReportsonForm10-KfortheyearsendedDecember31,2016andSeptember30,2016,respectively,andtheirrespectiveQuarterlyReportsonForm10-QforthequarterendedMarch31,2017,allofwhichareincorporatedbyreferenceintothisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
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YearEndedDecember31,
2016
ThreeMonthsEnded
March31,2017
Ensco—Historical Bookvaluepershare $ 27.20 $ 27.10Cashdividendspershare 0.04 0.01Basicanddilutedearningspershare 3.10 (0.09)
YearEndedSeptember30,
2016
ThreeMonthsEnded
March31,2017
Atwood—Historical Bookvaluepershare $ 49.85 $ 42.25Cashdividendspershare 0.075 —Basicanddilutedearningspershare 4.09 (0.37)
YearEndedDecember31,
2016
ThreeMonthsEnded
March31,2017
Ensco—ProFormaCombined Bookvaluepershare $ 21.43 $ 21.35Cashdividendspershare 0.115 0.01Basicanddilutedearningspershare 2.85 (0.04)
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YearEndedSeptember30,
2016
ThreeMonthsEnded
March31,2017
EquivalentAtwood Bookvaluepershare $ 31.16 $ 26.41Cashdividendspershare 0.075 —Basicanddilutedearningspershare 2.55 (0.23)
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COMPARATIVEMARKETPRICESANDDIVIDENDS
EnscoClassAordinarysharesandAtwoodcommonstockarelistedontheNYSE.ThefollowingtablesetsforththehighandlowsalespricesofEnscoClassAordinarysharesandsharesofAtwoodcommonstockasreportedontheNYSE,andthequarterlycashdividendsdeclaredpersharefortheperiodsindicated.
OnMay26,2017,thelastfulltradingdaybeforethepublicannouncementofthemergeragreement,thehighandlowsalespricesofEnscoClassAordinarysharesasreportedontheNYSEwere$6.84and$6.68,respectively.On,2017,thelastfulltradingdaybeforethedateofthisjointproxystatement/prospectus,thehighandlowsalepricesofEnscoClassAordinarysharesasreportedontheNYSEwere$and$,respectively.
OnMay26,2017,thelastfulltradingdaybeforethepublicannouncementofthemergeragreement,thehighandlowsalespricesofsharesofAtwoodcommonstockasreportedonNYSEwere$8.23and$7.92,respectively.On,2017,thelastfulltradingdaybeforethedateofthisjointproxystatement/prospectus,thehighandlowsalepricesofsharesofAtwoodcommonstockasreportedontheNYSEwere$and$,respectively.
EnscoshareholdersandAtwoodshareholdersareadvisedtoobtaincurrentmarketquotationsforEnscoClassAordinarysharesandAtwoodcommonstock.ThemarketpriceofEnscoClassAordinarysharesandAtwoodcommonstockwillfluctuatebetweenthedateofthisjointproxystatement/prospectusandthecompletionofthemerger.NoassurancecanbegivenconcerningthemarketpriceofEnscoClassAordinarysharesorAtwoodcommonstockbeforeoraftertheEffectiveTime.
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EnscoClassAOrdinaryShares AtwoodCommonStock
High Low Dividend High Low Dividend(2) QuarterEnded: September30,2017(throughJuly19,2017) $ 5.77 $ 4.71 (1) $ 8.69 $ 7.36 N/A June30,2017 9.34 4.89 (1) 10.23 7.18 — March31,2017 12.04 8.15 $ 0.01 14.39 8.44 —
December31,2016 $ 12.03 $ 7.19 $ 0.01 $ 15.37 $ 6.86 $ — September30,2016 10.89 6.50 0.01 13.79 6.12 — June30,2016 12.36 9.00 0.01 13.33 7.52 — March31,2016 16.10 7.25 0.01 11.46 4.82 0.075
December31,2015 $ 18.93 $ 13.26 $ 0.15 $ 19.65 $ 9.98 $ 0.25 September30,2015 22.21 13.46 0.15 26.50 14.15 0.25 June30,2015 28.40 21.04 0.15 35.66 25.89 0.25 March31,2015 32.28 19.78 0.15 35.24 26.12 0.25
(1) DividendsinrespectofEnsco'squartersendedJune30,2017andSeptember30,2017havenotbeendeclaredorpaid.
(2) InMarch2016,Atwoodenteredintoanamendmenttoitsrevolvingcreditfacilitythat,amongotherthings,prohibitsAtwoodfrompayingdividendsduringtheremainingtermofitsrevolvingcreditfacility.
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RISKFACTORS
In addition to the other information included or incorporated by reference in this joint proxy statement/prospectus, including the matters addressed in"Cautionary Statement Regarding Forward-Looking Statements" beginning on page 31, you should carefully consider the following risks before deciding how tovote. In addition, you should read and carefully consider the risks associated with each of Ensco and Atwood and their respective businesses. These risks can befound in Ensco's and Atwood's Annual Reports on Form 10-K for the year ended December 31, 2016 and September 30, 2016, respectively, and subsequentQuarterly Reports on Form 10-Q, each of which is filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. For furtherinformation regarding the documents incorporated into this joint proxy statement/prospectus by reference, please see the section titled "Where You Can Find MoreInformation." Realization of any of the risks described below, any of the events described under "Cautionary Statement Regarding Forward-Looking Statements"or any of the risks or events described in the documents incorporated by reference could have a material adverse effect on Ensco's, Atwood's or the combinedcompany's businesses, financial condition, cash flows and results of operations and could result in a decline in the trading prices of Ensco's or Atwood's stock.
RisksRelatingtotheMerger
Because the exchange ratio will not be adjusted for stock price changes and the market price of Ensco Class A ordinary shares will fluctuate, Atwoodshareholders cannot be sure of the value of the merger consideration they will receive.
Uponcompletionofthemerger,eachshareofAtwoodcommonstockwillbeconvertedintotherighttoreceive1.60EnscoClassAordinaryshares.TheexchangeratiowillnotchangetoreflectchangesinthemarketpricesoftheEnscoClassAordinarysharesandAtwoodcommonstock.ThemarketpriceofEnscoClassAordinarysharesatthetimeofcompletionofthemergermayvarysignificantlyfromthemarketpriceofEnscoClassAordinarysharesonthedatethemergeragreementwasexecuted,thedateofthisjointproxystatement/prospectusandthedateoftheAtwoodspecialmeeting.Accordingly,AtwoodshareholderswillnotknoworbeabletocalculateatthetimeoftheAtwoodspecialmeetingthemarketvalueofthemergerconsiderationtheywillreceiveuponcompletionofthemerger.
Inaddition,themergermightnotbecompleteduntilasignificantperiodoftimehaspassedaftertheAtwoodspecialmeeting.BecausetheexchangeratiowillnotbeadjustedtoreflectanychangesinthemarketvaluesofEnscoClassAordinarysharesandAtwoodcommonstock,themarketvalueoftheEnscoClassAordinarysharesissued,andtheAtwoodcommonstocksurrendered,maybehigherorlowerthanthevaluesofthosesharesonearlierdates.Stockpricechangesmayresultfrom,amongotherthings,changesinthebusiness,operationsorprospectsofEnscoorAtwoodpriortoorfollowingthemerger,litigationorregulatoryconsiderations,generalbusiness,market,industryoreconomicconditionsandotherfactorsbothwithinandbeyondthecontrolofEnscoandAtwood.NeitherEnsconorAtwoodispermittedtoterminatethemergeragreementsolelybecauseofchangesinthemarketpriceofeithercompany'sstock.
The fairness opinions rendered by Ensco's and Atwood's financial advisors were based on the financial advisors' financial analysis and considered factorssuch as market and other conditions then in effect, and financial forecasts and other information made available to the financial advisors, as of the date of theopinions.
ThefairnessopinionsrenderedtotheEnscoBoardandtheAtwoodBoardbyMorganStanleyandGoldmanSachs,respectively,wereprovidedinconnectionwith,andatthetimeof,theevaluationofthemergerandthemergeragreementbytheEnscoBoardandtheAtwoodBoard.Theopinionswerebasedonthefinancial,economic,marketandotherconditionsasineffecton,andtheinformation
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madeavailableto,thefinancialadvisorsasofthedateoftheopinions.Eventsoccurringafterthedateofsuchopinionsmayaffectsuchopinionsandtheassumptionsusedinpreparingthem.NeithertheEnscoBoardnortheAtwoodBoardhaveobtainedanupdatedopinionasofthedateofthisjointproxystatement/prospectusfromtheirrespectivefinancialadvisors,andneithertheEnscoBoardnortheAtwoodBoardexpectstoobtainanupdatedopinionpriortocompletionofthemerger.NeitherMorganStanleynorGoldmanSachsassumedanyobligationtoupdate,reviseorreaffirmtheirrespectiveopinions.ChangesintheoperationsandprospectsofEnscoorAtwood,generalmarketandeconomicconditionsandotherfactorsthatmaybebeyondthecontrolofEnscoandAtwood,andonwhichthefairnessopinionswerebased,mayhavealteredthevalueofEnscoorAtwoodorthepricesofEnscoClassAordinarysharesorAtwoodcommonstocksincethedateofsuchopinion,ormayaltersuchvaluesandpricesbythetimethemergeriscompleted.Theopinionsdonotspeakasofanydateotherthanthedateofsuchopinion.ForadescriptionoftheopinionthatMorganStanleyrenderedtotheEnscoBoard,pleasereferto"TheMerger—OpinionofFinancialAdvisortoEnsco."ForadescriptionoftheopinionthatGoldmanSachsrenderedtotheAtwoodBoard,pleasereferto"TheMerger—OpinionofFinancialAdvisortoAtwood."
Current Atwood shareholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.
EnscowillissuenewEnscoClassAordinarysharestoAtwoodshareholdersinthemerger(includingEnscoClassAordinarysharestobeissuedinconnectionwiththevestingofcertainoutstandingAtwoodequityawards).Aftergivingeffecttotheseissuances,currentEnscoandAtwoodshareholdersareexpectedtoholdapproximately69%and31%,respectively,oftheoutstandingEnscoClassAordinarysharesimmediatelyfollowingcompletionofthemerger.
Atwoodshareholderscurrentlyhavetherighttovotefortheirdirectorsandonothermattersaffectingthecompany.Whenthemergeroccurs,theEnscoClassAordinarysharesthateachAtwoodshareholderreceivesinexchangeforitsAtwoodcommonstockwillrepresentapercentageownershipofEnscothatissignificantlysmallerthantheAtwoodshareholder'spercentageownershipofAtwood.Asaresultofthesereducedownershippercentages,formerAtwoodshareholderswillhavelessinfluenceonthemanagementandpoliciesofEnscothantheynowhavewithrespecttoAtwood.
The merger agreement contains provisions that limit Ensco's and Atwood's ability to pursue alternatives to the merger, which could discourage a potentialacquirer of Ensco or Atwood from making an alternative transaction proposal and, in certain circumstances, could require Ensco or Atwood to pay the otherparty a termination fee.
Underthemergeragreement,eachofEnscoandAtwoodisrestrictedfromenteringintoalternativetransactions.Unlessanduntilthemergeragreementisterminated,subjecttospecifiedexceptions(whicharediscussedinmoredetailin"TheMergerAgreement"),eachofEnsco,Atwoodandtheirrespectivesubsidiariesandrepresentativesareprohibitedfrom,directlyorindirectly,initiating,soliciting,knowinglyfacilitatingorknowinglyencouraging(includingbywayoffurnishingnon-publicinformation)anyinquiryinrespectof,orthemakingofanyproposalorofferthatconstitutesorcouldreasonablybeexpectedtoleadto,atakeoverproposal;engagingin,continuingorotherwiseparticipatinginanydiscussionsornegotiationsregarding,orfurnishingtoanyotherpersonanynon-publicinformationinconnectionwithorforthepurposeofencouragingorfacilitating,atakeoverproposal;orapproving,recommending,orenteringintoanyletterofintentorsimilardocument,agreement,commitmentoragreementinprinciplewithrespecttoatakeoverproposal.Underthemergeragreement,intheeventofapotentialchangebytheEnscoBoardofitsrecommendationwithrespecttotheEnscoMergerConsiderationProposalortheAtwoodBoardofitsrecommendationwithrespecttotheAtwoodMergerProposal,EnscoorAtwood,asthecasemaybe,mustprovidetheotherpartywithatleastfourbusinessdays'priorwrittennoticeofitsintentionto
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takesuchaction.Inaddition,eachpartyisgenerallyrequiredtonegotiateingoodfaithwiththeotherpartytomodifythetermsofthemergerinresponsetoanycompetingacquisitionproposalsbeforetheparty'sboardofdirectors,asthecasemaybe,maychange,qualify,withhold,withdrawormodifyitsrecommendationwithrespecttothemerger.
Ifthemergeragreementisterminatedunderspecifiedcircumstances,thenEnscoorAtwood,asapplicable,willberequiredtopaytheotherparty'sreasonableout-of-pocketfeesandexpensesuptoamaximumamountof$10.0million.Inaddition,ifthemergeragreementisterminatedunderspecifiedcircumstances,EnscoorAtwoodwillberequiredtopaytheotherpartyaterminationfeeof$50.0million(inthecaseofaterminationfeepaidbyEnsco)or$30.0million(inthecaseofaterminationfeepaidbyAtwood),ineachcaselessanyexpensereimbursementpreviouslypaidbyEnscoorAtwood.Followingpaymentofaterminationfee,neitherpartywillbeobligatedtopayanyadditionalexpensesincurredbytheotherpartyoritsaffiliates.Pleaseread"TheMergerAgreement."
Theseprovisionscoulddiscourageapotentialthird-partyacquirerthatmighthaveaninterestinacquiringallorasignificantportionofEnsco'sorAtwood'sstockorassetsfromconsideringorproposingthatacquisition,evenifitwerepreparedtopayconsiderationwithahigherpersharecashormarketvaluethanthemarketvalueproposedtobereceivedorrealizedinthemerger.Similarly,theseprovisionsmightresultinapotentialthird-partyacquirerproposingtopayalowerpricetoAtwoodshareholdersthanitmightotherwisehaveproposedtopaybecauseoftheaddedexpenseoftheterminationfeethatmaybecomepayableincertaincircumstances.IfthemergeragreementisterminatedandEnscoorAtwooddeterminestoseekanotherbusinesscombination,itmaynotbeabletonegotiateatransactionwithanotherpartyontermscomparableto,orbetterthan,thetermsofthemerger.
Ensco and Atwood will be subject to various uncertainties and contractual restrictions while the merger is pending that could adversely affect each party'sbusiness and operations.
Inconnectionwiththemerger,itispossiblethatsomecustomers,suppliersandotherpersonswithwhomEnscoorAtwoodhasbusinessrelationshipsmaydelayordefercertainbusinessdecisions,ormightdecidetoseektoterminate,changeorrenegotiatetheirrelationshipwithEnscoorAtwoodasaresultofthemerger,whichcouldnegativelyaffectEnsco'sandAtwood'srespectiverevenues,earningsandcashavailablefordistribution,aswellasthemarketpriceofEnscoClassAordinarysharesandAtwoodcommonstock,regardlessofwhetherthemergeriscompleted.
Underthetermsofthemergeragreement,eachofEnscoandAtwoodissubjecttocertainrestrictionsontheconductofitsbusinesspriortocompletingthemerger,whichmayadverselyaffectitsabilitytoexecutecertainofitsbusinessstrategies.Suchlimitationscouldnegativelyaffecteachparty'sbusinessesandoperationspriortothecompletionofthemerger.Furthermore,theprocessofplanningtointegratetwobusinessesandorganizationsforthepost-mergerperiodmaydivertmanagement'sattentionandresourcesandcouldultimatelyhaveanadverseeffectoneachparty.Theseuncertaintiescouldcausecustomers,suppliersandothersthatdealwithEnscoorAtwoodtoseektochangeexistingbusinessrelationshipswithsuchparty.Foradiscussionoftheserestrictions,see"TheMergerAgreement—CovenantsandAgreements."
Ensco or Atwood may have difficulty attracting, motivating and retaining executives and other employees in light of the merger.
UncertaintyabouttheeffectofthemergeronEnscoorAtwoodemployeesmayimpairthesecompanies'abilitytoattract,retainandmotivatepersonneluntilthemergeriscompleted.Employeeretentionmaybeparticularlychallengingduringthependencyofthemerger,asemployeesmayfeeluncertainabouttheirfutureroleswiththecombinedorganization.Inaddition,EnscoorAtwoodmayhavetoprovideadditionalcompensationinordertoretainemployees.IfemployeesofEnscoor
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Atwooddepartbecauseofissuesrelatingtotheuncertaintyanddifficultyofintegrationoradesirenottobecomeemployeesofthecombinedcompany,thecombinedcompany'sabilitytorealizetheanticipatedbenefitsofthemergercouldbeadverselyaffected.
The merger is subject to conditions, including certain conditions that may not be satisfied, and may not be completed on a timely basis, if at all. Failure tocomplete the merger, or significant delays in completing the merger, could negatively affect the trading prices of Ensco Class A ordinary shares and Atwoodcommon stock and the future business and financial results of Ensco and Atwood.
ThecompletionofthemergerissubjecttoanumberofconditionsbeyondEnsco'sandAtwood'scontrolthatmayprevent,delayorotherwisemateriallyadverselyaffectitscompletion,includingtheapprovalbyEnsco'sshareholdersoftheEnscoMergerConsiderationProposalandtheapprovalbyAtwood'sshareholdersoftheAtwoodMergerProposal.NeitherEnsconorAtwoodcanpredictwhetherandwhentheseotherconditionswillbesatisfied.Anydelayincompletingthemergercouldcausethecombinedcompanynottorealizesomeorallofthesynergiesexpectedtobeachievedifthemergerissuccessfullycompletedwithinitsexpectedtimeframe.See"TheMergerAgreement—ConditionstoCompletetheMerger."
Ifthemergerisnotcompleted,eachofEnscoandAtwoodwillbesubjecttoseveralrisksandconsequences,includingthefollowing:
• certaindamagesforwhichthepartiesmaybeliabletooneanotherunderthetermsandconditionsofthemergeragreement;
• negativereactionsfromthefinancialmarkets,includingdeclinesinthepriceofEnscoClassAordinarysharesorAtwoodcommonstockduetothefactthatcurrentpricesmayreflectamarketassumptionthatthemergerwillbecompleted;
• certainsignificantcostsrelatingtothemerger,including,incertaincircumstances,thereimbursementbyeitherEnscoorAtwoodofupto$10.0millionoftheotherparty'sexpensesandaterminationfeepayablebyEnscoof$50.0millionandpayablebyAtwoodof$30.0millionlessanypreviousexpensereimbursementsbyeachparty,asdescribedin"TheMergerAgreement—TerminationFeesandExpenseReimbursement";and
• divertedattentionofmanagementofEnscoandAtwoodtothemergerratherthaneachorganization'sownoperationsandpursuitofotheropportunitiesthatcouldhavebeenbeneficialtothatorganization.
Ensco and Atwood will incur substantial transaction fees and costs in connection with the merger.
EnscoandAtwoodexpecttoincuranumberofnon-recurringtransaction-relatedcostsassociatedwithcompletingthemerger,combiningtheoperationsofthetwoorganizationsandachievingdesiredsynergies.Thesefeesandcostswillbesubstantial.Non-recurringtransactioncostsinclude,butarenotlimitedto,feespaidtolegal,financialandaccountingadvisors,filingfeesandprintingcosts.AdditionalunanticipatedcostsmaybeincurredintheintegrationofthebusinessesofEnscoandAtwood.Therecanbenoassurancethattheeliminationofcertainduplicativecosts,aswellastherealizationofotherefficienciesrelatedtotheintegrationofthetwobusinesses,willoffsettheincrementaltransaction-relatedcostsovertime.Thus,anynetbenefitmaynotbeachievedinthenearterm,thelongtermoratall.
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Certain directors and executive officers of Atwood have interests in the merger that are different from, or in addition to, those of other Atwood shareholders,which could have influenced their decisions to support or approve the merger.
InconsideringwhethertoapprovetheproposalsattheAtwoodspecialmeeting,AtwoodshareholdersshouldrecognizethatcertaindirectorsandexecutiveofficersofAtwoodhaveinterestsinthemergerthatdifferfrom,orthatareinadditionto,theirinterestsasshareholdersofAtwood.Theseinterestsinclude,amongothers,ownershipinterestsinthecombinedcompanyandtheacceleratedvestingofcertainequityawardsand/orcertainseverancebenefits,inconnectionwiththemerger.Theseinterests,amongothers,mayinfluencethedirectorsandexecutiveofficersofAtwoodtosupportorapprovetheAtwoodMergerProposal.Pleaseread"TheAtwoodSpecialMeeting—Proposal2—CompensatoryProposal"and"TheMerger—Atwood'sDirectorsandOfficersHaveFinancialInterestsintheMerger."
Completion of the merger will trigger change of control or other provisions in certain agreements to which Atwood is a party.
ThecompletionofthemergerwilltriggerchangeofcontrolorotherprovisionsincertainagreementstowhichAtwoodisaparty.Inparticular,theindenturegoverningAtwood's6.50%seniornotesdue2020requiresAtwoodtomakeanoffertopurchaseallofeachholder'snotesatanamountequalto101%oftheaggregateprincipalamountofsuchholder'snotes,plusaccruedandunpaidinterest,ifany,within30daysfollowingachangeofcontrol.Asaresult,Enscocouldberequiredtorepayuptoanaggregate$449millionprincipalamountofseniornotesplusapproximately$4.5millioninassociatedpremiums.
Inaddition,thecompletionofthemergerwillconstituteachangeofcontrolunderAtwood'srevolvingcreditfacility.Asaresult,theoutstandingbalanceundertherevolvingcreditfacilitywillbeacceleratedandbecomedueandpayablebyEnscoinconnectionwiththecompletionofthemerger.AsofMarch31,2017,Atwoodhadoutstandingborrowingsunderitsrevolvingcreditfacilityofapproximately$850million.
If a governmental authority asserts objections to the merger, Ensco and Atwood may be unable to complete the merger or, in order to do so, Ensco and Atwoodmay be required to comply with material restrictions or satisfy material conditions.
Thecompletionofthemergerissubjecttotheconditionthatthereisnolaw,injunction,judgmentorrulingbyagovernmentalauthorityineffectenjoining,restraining,preventingorprohibitingthemergercontemplatedbythemergeragreement.Ifagovernmentalauthorityassertsobjectionstothemerger,EnscoorAtwoodmayberequiredtodivestassetsoracceptotherremediesinordertocompletethemerger.Therecanbenoassuranceastothecost,scopeorimpactoftheactionsthatmayberequiredtoaddressanygovernmentalauthorityobjectionstothemerger.IfEnscoorAtwoodtakessuchactions,itcouldbedetrimentaltoitortothecombinedcompanyfollowingtheconsummationofthemerger.Furthermore,theseactionscouldhavetheeffectofdelayingorpreventingcompletionofthemergerorimposingadditionalcostsonorlimitingtherevenuesorcashavailablefordistributionofthecombinedcompanyfollowingtheconsummationofthemerger.
Additionally,stateattorneysgeneralcouldseektoblockorchallengethemergerastheydeemnecessaryordesirableinthepublicinterestatanytime,includingaftercompletionofthetransaction.Inaddition,insomecircumstances,athirdpartycouldinitiateaprivateactionunderantitrustlawschallengingorseekingtoenjointhemerger,beforeorafteritiscompleted.EnscoorAtwoodmaynotprevailandmayincursignificantcostsindefendingorsettlinganyactionundertheantitrustlaws.
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RisksRelatingtotheCombinedCompanyFollowingtheMerger
If completed, the merger may not achieve its intended results, and Ensco and Atwood may be unable to successfully integrate their operations. Failure tosuccessfully combine the businesses of Ensco and Atwood in the expected time frame may adversely affect the future results of the combined organization, and,consequently, the value of the Ensco Class A ordinary shares that Atwood shareholders receive as the merger consideration.
EnscoandAtwoodenteredintothemergeragreementwiththeexpectationthatthemergerwillresultinvariousbenefits,including,amongotherthings,expandingEnsco'sassetbaseandcreatingsynergies.Achievingtheanticipatedbenefitsofthemergerissubjecttoanumberofuncertainties,includingwhetherthebusinessesofEnscoandAtwoodcanbeintegratedinanefficientandeffectivemanner.
Itispossiblethattheintegrationprocesscouldtakelongerthananticipatedandcouldresultinthelossofvaluableemployees,thedisruptionofeachcompany'songoingbusinesses,processesandsystemsorinconsistenciesinstandards,controls,procedures,practices,policiesandcompensationarrangements,anyofwhichcouldadverselyaffectthecombinedcompany'sabilitytoachievetheanticipatedbenefitsofthemerger.Thecombinedcompany'sresultsofoperationscouldalsobeadverselyaffectedbyanyissuesattributabletoeithercompany'soperationsthatariseorarebasedoneventsoractionsthatoccurpriortothecompletionofthemerger.Thecompaniesmayhavedifficultyaddressingpossibledifferencesincorporateculturesandmanagementphilosophies.Theintegrationprocessissubjecttoanumberofuncertainties,andnoassurancecanbegiventhattheanticipatedbenefitswillberealizedor,ifrealized,thetimingoftheirrealization.Failuretoachievetheseanticipatedbenefitscouldresultinincreasedcostsordecreasesintheamountofexpectedrevenuesandcouldadverselyaffectthecombinedcompany'sfuturebusiness,financialcondition,operatingresultsandprospects.
The pro forma financial statements included in this joint proxy statement/prospectus are based on various assumptions that may not prove to be correct, andthey are presented for illustrative purposes only and may not be an indication of the combined company's financial condition or results of operations followingthe merger.
Theproformafinancialstatementscontainedinthisjointproxystatement/prospectusarebasedonvariousadjustments,assumptionsandpreliminaryestimatesandmaynotbeanindicationofthecombinedcompany'sfinancialconditionorresultsofoperationsfollowingthemergerforseveralreasons.See"UnauditedProFormaCondensedCombinedFinancialStatementsofEnsco."Theactualfinancialconditionandresultsofoperationsofthecombinedcompanyfollowingthemergermaynotbeconsistentwith,orevidentfrom,theseproformafinancialstatements.Inaddition,theassumptionsusedinpreparingtheproformafinancialinformationmaynotprovetobeaccurate,andotherfactorsmayaffectthecombinedcompany'sfinancialconditionorresultsofoperationsfollowingthemerger.Anypotentialdeclineinthecombinedcompany'sfinancialconditionorresultsofoperationsmaycausesignificantvariationsinthepriceofEnscoClassAordinaryshares.
A downgrade in Ensco's or its subsidiaries' credit ratings following the merger could impact the combined entity's access to capital and costs of doing business,and maintaining credit ratings is under the control of independent third parties.
Followingthemerger,ratingagenciesmayreevaluateEnsco'sanditssubsidiaries'ratings,andanyadditionalactualoranticipateddowngradesinsuchcreditratingscouldlimittheirabilitytoaccesscreditandcapitalmarkets,ortorestructureorrefinancetheirindebtedness.Asaresultofanysuchdowngrades,futurefinancingsorrefinancingsmayresultinhigherborrowingcostsandrequiremorerestrictivetermsandcovenants,includingobligationstopostcollateralwiththirdparties,whichmayfurtherrestrictoperationsandnegativelyimpactliquidity.
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Creditratingagenciesperformindependentanalysiswhenassigningcreditratings.Theanalysisincludesanumberofcriteriaincluding,butnotlimitedto,businesscomposition,marketandoperationalrisks,aswellasvariousfinancialtests.Creditratingagenciescontinuetoreviewthecriteriaforindustrysectorsandvariousdebtratingsandmaymakechangestothosecriteriafromtimetotime.Creditratingsarenotrecommendationstobuy,sellorholdinvestmentsintheratedentity.Ratingsaresubjecttorevisionorwithdrawalatanytimebytheratingagencies,andEnscocannotassureyouthatitwillmaintainitscurrentcreditratings.
Ensco Class A ordinary shares to be received by Atwood shareholders as a result of the merger have different rights from Atwood common stock.
Followingcompletionofthemerger,AtwoodshareholderswillnolongerholdAtwoodcommonstock,butwillinsteadbeClassAordinaryshareholdersofEnsco.ThereareimportantdifferencesbetweentherightsofAtwoodshareholdersandtherightsofEnscoClassAordinaryshareholders.See"ComparisonofRightsofAtwoodShareholdersandEnscoShareholders"foradiscussionofthedifferentrightsassociatedwithEnscoClassAordinarysharesandAtwoodcommonstock.
The IRS may not agree with the conclusion that Ensco should be treated as a foreign corporation for U.S. federal tax purposes following the merger.
AlthoughEnscoisincorporatedintheUnitedKingdom,theU.S.InternalRevenueService("IRS")mayassertthatEnscoshouldbetreatedasaU.S.corporation(and,therefore,aU.S.taxresident)forU.S.federalincometaxpurposesfollowingthemergerpursuanttoSection7874oftheInternalRevenueCode.ForU.S.federalincometaxpurposes,acorporationisgenerallyconsideredaU.S."domestic"corporation(orU.S.taxresident)ifitisorganizedintheUnitedStates,andacorporationisgenerallyconsidereda"foreign"corporation(ornon-U.S.taxresident)ifitisnotaU.S.domesticcorporation.BecauseEnscoisanentityincorporatedinEnglandandWales,itwouldgenerallybeclassifiedasaforeigncorporation(ornon-U.S.taxresident)undertheserules.Section7874oftheInternalRevenueCodeprovidesanexceptionunderwhichaforeignincorporatedentitymay,incertaincircumstances,betreatedasaU.S.domesticcorporationforU.S.federalincometaxpurposes.
UnlessEnscosatisfiesthesubstantialbusinessactivitiesexception,asdefinedinSection7874oftheInternalRevenueCodeanddescribedinmoredetailbelow(the"SubstantialBusinessActivitiesException"),EnscowouldbetreatedasaU.S.domesticcorporation(thatis,asaU.S.taxresident)forU.S.federalincometaxpurposesfollowingthemergerpursuanttoSection7874oftheInternalRevenueCodeifthepercentage(byvoteorvalue)ofEnscoClassAordinarysharesconsideredtobeheldbyformerholdersofsharesofAtwoodcommonstockafterthemergerbyreasonofholdingsharesofAtwoodcommonstockforpurposesofSection7874oftheInternalRevenueCode(the"Section7874Percentage")is80%ormore.InorderforEnscotosatisfytheSubstantialBusinessActivitiesException,atleast25%oftheemployees(byheadcountandcompensation),realandtangibleassetsandgrossincomeoftheEnscoexpandedaffiliatedgroupmustbebased,locatedandderived,respectively,inthecountryinwhichEnscoisataxresidentafterthemerger.TheSubstantialBusinessActivitiesExceptionisnotexpectedtobesatisfied.
TheSection7874Percentageiscurrentlyexpectedtobelessthan60%.ThecalculationoftheSection7874Percentage,however,iscomplex,iscalculatedbasedonthefactsasoftheEffectiveTime,issubjecttodetailedregulations(theapplicationofwhichisuncertaininvariousrespectsandwouldbeimpactedbychangesinsuchregulations)andissubjecttofactualuncertainties(includingfluctuationsinthevalueofsharesofAtwoodcommonstockandEnscoClassAordinaryshares).Asaresult,theIRScouldassertthattheSection7874Percentageisgreaterthan80%andthatEnscothereforeistreatedforU.S.federalincometaxpurposesasaU.S.domesticcorporation(thatis,asaU.S.taxresident)followingthemerger.IftheIRSsuccessfullychallengedEnsco'sstatusasaforeign
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corporation,significantadversetaxconsequenceswouldresultforEnscoandforcertainofEnsco'sshareholders.
Pleaseseethesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger—TaxConsequencesoftheMergertoAtwoodandEnsco"foradiscussionoftheapplicationofSection7874oftheInternalRevenueCodetothemerger.
It is uncertain whether Section 7874 of the Internal Revenue Code will impose an excise tax on gain recognized by certain individuals
IftheSection7874Percentageiscalculatedtobeatleast60%,Section7874oftheInternalRevenueCodeandtherulesrelatedtheretomayimposeanexcisetaxunderSection4985oftheInternalRevenueCode(the"Section4985ExciseTax")onthegainrecognizedbycertain"disqualifiedindividuals"(includingofficersanddirectorsofaU.S.company)oncertainstock-basedcompensationheldbythematarateequalto15%.
Basedontheguidanceavailable,aftertakingintoaccounttheadjustmentsdescribedinthesectionofthisjointproxystatement/prospectusentitled"MaterialUnitedStatesFederalIncomeTaxConsequencesoftheMerger—TaxConsequencesoftheMergertoAtwoodandEnsco,"andbasedonthefactsandcircumstancesasofthedatehereof,theSection7874Percentagefollowingthemergerisexpectedtobelessthan60%and,thus,theSection4985ExciseTaxisnotexpectedtoapplyto"disqualifiedindividuals"ofAtwoodorEnsco.
Future changes to U.S. and foreign tax laws could adversely affect Ensco.
TheU.S.Congress,theOrganisationforEconomicCo-operationandDevelopment,andothergovernmentagenciesinjurisdictionswhereEnscoanditsaffiliatesdobusinesshavehadanextendedfocusonissuesrelatedtothetaxationofmultinationalcorporations.Oneexampleisintheareaof"baseerosionandprofitshifting,"wherepaymentsaremadebetweenaffiliatesfromajurisdictionwithhightaxratestoajurisdictionwithlowertaxrates.Additionally,recentlegislativeproposalswouldtreatEnscoasaU.S.corporationifthemanagementandcontrolofEnscoanditsaffiliatesweredeterminedtobelocatedprimarilyintheUnitedStatesand/orwouldreducetheSection7874PercentagethresholdatorabovewhichEnscowouldbetreatedasaU.S.corporation.Thus,thetaxlawsintheUnitedStates,theUnitedKingdomandothercountriesinwhichEnscoanditsaffiliatesdobusinesscouldchangeonaprospectiveorretroactivebasis,andanysuchchangescouldadverselyaffectEnsco.Furthermore,theinterpretationandapplicationofdomesticorinternationaltaxlawsmadebyEnscoandEnsco'ssubsidiariescoulddifferfromthatoftherelevantgovernmentalauthority,whichcouldresultinadministrativeorjudicialprocedures,actionsorsanctions,whichcouldbematerial.
U.S. tax laws and IRS guidance could affect Ensco's ability to engage in certain acquisition strategies and certain internal restructurings.
EvenifEnscoistreatedasaforeigncorporationforU.S.federalincometaxpurposes,Section7874oftheInternalRevenueCodeandU.S.TreasuryRegulationspromulgatedthereunder,includingtemporaryTreasuryRegulations,mayadverselyaffecttheabilityofEnscotoengageincertainfutureacquisitionsofU.S.businessesinexchangeforEnscoequity,whichmayaffectthetaxefficienciesthatotherwisemightbeachievedinsuchpotentialfuturetransactions.
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RisksInherentinanInvestmentinEnsco
Transfers of Ensco Class A ordinary shares may be subject to stamp duty or stamp duty reserve tax ("SDRT") in the United Kingdom, which would increasethe cost of dealing in Ensco Class A ordinary shares.
Stampdutyand/orSDRTareimposedintheUnitedKingdomoncertaintransfersofchargeablesecurities(whichincludesharesincompaniesincorporatedintheUnitedKingdom)atarateof0.5%oftheconsiderationpaidforthetransfer.Certaintransfersofsharestodepositaryreceiptfacilitiesorclearancesystemsprovidersarechargedatahigherrateof1.5%.
PursuanttoarrangementsthatEnscoenteredintowiththeDepositoryTrustCompany("DTC"),theEnscoClassAordinarysharesareeligibletobeheldinbook-entryformthroughthefacilitiesofDTC.Transfersofsharesheldinbook-entryformthroughDTCwillnotattractachargetostampdutyorSDRTintheUnitedKingdom.AtransferofthesharesfromwithintheDTCsystemoutofDTCandanysubsequenttransfersthatoccurentirelyoutsidetheDTCsystemwillattractachargetostampdutyatarateof0.5%ofanyconsideration,whichispayablebythetransfereeoftheshares.Anysuchdutymustbepaid(andtherelevanttransferdocumentstampedbyHerMajesty'sRevenue&Customs("HMRC"))beforethetransfercanberegisteredintheshareregisterofEnsco.IfashareholderdecidestoredepositsharesintoDTC,theredepositwillattractSDRTatarateof1.5%ofthevalueoftheshares.
EnscohasputinplacearrangementswithitstransferagenttorequirethatsharesheldincertificatedformcannotbetransferredintotheDTCsystemuntilthetransferoroftheshareshasfirstdeliveredthesharestoadepositoryspecifiedbyEnscosothatSDRTmaybecollectedinconnectionwiththeinitialdeliverytothedepository.Anysuchshareswillbeevidencedbyareceiptissuedbythedepository.BeforethetransfercanberegisteredinEnsco'sshareregister,thetransferorwillalsoberequiredtoprovidethetransferagentsufficientfundstosettletheresultantliabilityforSDRT,whichwillbechargedatarateof1.5%ofthevalueoftheshares.
FollowingdecisionsoftheEuropeanCourtofJusticeandtheU.K.First-tierTaxTribunal,HMRChasannouncedthatitwillnotseektoapplyachargetostampdutyorSDRTontheissuanceofshares(or,whereitisintegraltotheraisingofnewcapital,thetransferofnewshares)intoadepositaryreceiptfacilityorclearancesystemprovider,suchasDTC.However,itispossiblethattheU.K.governmentmaychangeorenactlawsapplicabletostampdutyorSDRTinresponsetothisdecision,whichcouldhaveamaterialeffectonthecostoftradinginEnsco'sshares.
If the Ensco Class A ordinary shares are not eligible for continued deposit and clearing within the facilities of DTC, then transactions in Ensco's shares maybe disrupted.
ThefacilitiesofDTCarewidely-usedforrapidelectronictransfersofsecuritiesbetweenparticipantswithintheDTCsystem,whichincludenumerousmajorinternationalfinancialinstitutionsandbrokeragefirms.Currently,alltradesofEnscoClassAordinarysharesontheNYSEareclearedandsettledonthefacilitiesofDTC.TheEnscoClassAordinarysharesare,atpresent,eligiblefordepositandclearingwithintheDTCsystem,pursuanttoarrangementswithDTCwherebyDTCacceptedtheEnscoClassAordinarysharesfordeposit,clearingandsettlementservices,andEnscoagreedtoindemnifyDTCforanystampdutyand/orSDRTthatmaybeassesseduponitasaresultofitsserviceasaclearancesystemproviderfortheEnscoClassAordinaryshares.However,DTCretainssolediscretiontoceasetoactasaclearancesystemproviderfortheEnscoClassAordinarysharesatanytime.
IfDTCdeterminesatanytimethattheEnscoClassAordinarysharesarenolongereligiblefordeposit,clearingandsettlementserviceswithinitsfacilities,suchsharesmaybecomeineligibleforcontinuedlistingonaU.S.securitiesexchange,andtradinginsuchshareswouldbedisrupted.Inthis
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event,DTChasagreeditwillprovideEnscoadvancenoticeandassistEnsco,totheextentpossible,witheffortstomitigateadverseconsequences.WhileEnscowouldpursuealternativearrangementstopreserveitslistingandmaintaintrading,anysuchdisruptioncouldhaveamaterialadverseeffectonthetradingpriceoftheEnscoClassAordinaryshares.
Investor enforcement of civil judgments against Ensco may be more difficult.
BecauseEnscoisapubliclimitedcompanyincorporatedundertheLawsofEnglandandWales,investorscouldexperiencemoredifficultyenforcingjudgmentsobtainedagainstEnscoinU.S.courts.Inaddition,itmaybemoredifficult(orimpossible)tobringsometypesofclaimsagainstEnscoincourtsinEnglandthanitwouldbetobringsimilarclaimsagainstaU.S.companyinaU.S.court.
Ensco has less flexibility as a U.K. public limited company with respect to certain aspects of capital management than U.S. corporations due to increasedshareholder approval requirements.
DirectorsofTexasandotherU.S.corporationsmayissue,withoutfurthershareholderapproval,sharesofcommonstockauthorizedintheircertificatesofincorporationthatwerenotalreadyissuedorreserved.ThebusinesscorporationlawsofTexasandotherU.S.statesalsoprovidesubstantialflexibilityinestablishingthetermsofpreferredstock.However,Englishlawprovidesthataboardofdirectorsmayonlyallotshareswiththepriorauthorizationofanordinaryresolutionoftheshareholders,whichauthorizationmuststatethemaximumamountofsharesthatmaybeallottedunderitandspecifythedateonwhichitwillexpire,whichmustnotbemorethanfiveyearsfromthedateonwhichtheshareholderresolutionispassed.AnordinaryresolutionwaspassedbyshareholdersattheEnsco2017AnnualGeneralMeetingtoauthorizetheallotmentofadditionalsharesuntilthenextannualgeneralmeetingofshareholders(or,ifearlier,atthecloseofbusinessonAugust22,2018).ThisauthoritywillbeincreasediftheEnscoGeneralAllotmentAuthorityIncreaseProposalispassedatthismeeting,butinanyevent,thisauthoritywillexpirein2018.Assuch,anordinaryresolutionwillbeputtoEnscoshareholdersatEnsco'snextannualgeneralmeetingseekingshareholderapprovaltorenewtheauthorityoftheEnscoBoardtoallotsharesforanadditionaloneyearterm.
Englishlawalsogenerallyprovidesshareholderswithpre-emptionrightsovernewsharesthatareissuedforcash.However,itispossible,wheretheboardofdirectorsisgenerallyauthorizedtoallotshares,toexcludepre-emptionrightsbyaspecialresolutionoftheshareholdersorbyaprovisioninthearticlesofassociation.Suchexclusionofpre-emptionrightswillcommonlyceasetohaveeffectatthesametimeasthegeneralallotmentauthoritytowhichitrelatesisrevokedorexpires.Ifthegeneralallotmentauthorityisrenewed,theauthorityexcludingpre-emptionrightsmayalsoberenewedbyaspecialresolutionoftheshareholders.Specialresolutionswerepassed,inconjunctionwithanallotmentauthorityattheEnsco2017AnnualGeneralMeeting,todisapplypre-emptionrightsuntilthenextannualgeneralmeetingofshareholders(or,ifearlier,atthecloseofbusinessonAugust22,2018).TheseauthoritieswillbeincreasediftheEnscoGeneralDisapplicationofPre-emptiveRightsProposaland/ortheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalarepassedatthismeeting,butinanyevent,theseauthoritieswillexpirein2018.Assuch,specialresolutionswillbeputtoEnscoshareholdersatEnsco'snextannualgeneralmeetingseekingshareholderapprovaltorenewtheauthorityoftheEnscoBoardtodisapplypre-emptionrightsforanadditionaloneyearterm.
EnglishlawprohibitsEnscofromconducting"on-marketpurchases"asEnscoClassAordinaryshareswillnotbetradedonarecognizedinvestmentexchangeintheUnitedKingdom.Englishlawalsogenerallyprohibitsacompanyfromrepurchasingitsownsharesbywayof"off-marketpurchases"withouttheapprovalbyaspecialresolutionoftheshareholdersofthetermsofthecontractbywhichthepurchase(s)isaffected.Suchapprovalmayonlylastforamaximumperiodoffiveyearsafterthedateonwhichtheresolutionispassed.AspecialresolutionwaspassedatEnsco'sannualshareholdermeetinginMay2013topermitEnscotomake"off-market"purchasesofitsownsharespursuanttocertainpurchaseagreementsforafive-yearterm.
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Enscocannotprovideanyassurancesthatsituationswillnotarisewheresuchshareholderapprovalrequirementsforanyoftheseactionswoulddepriveitsshareholdersofsubstantialbenefits.
The Ensco Articles of Association contain anti-takeover provisions.
CertainprovisionsoftheEnscoArticlesofAssociationhaveanti-takeovereffects,suchastheabilitytoissuesharesundertheRightsPlan(asdefinedtherein).TheseprovisionsareintendedtoensurethatanytakeoverorchangeofcontrolofEnscoisconductedinanorderlymanner,allshareholdersofEnscoaretreatedequallyandfairlyandreceiveanoptimumpricefortheirsharesandthelong-termsuccessofEnscoissafeguarded.UnderEnglishlaw,itmaynotbepossibletoimplementtheseprovisionsinallcircumstances.
Ensco is not subject to the United Kingdom's Code on Takeovers and Mergers (the "Takeover Code").
TheTakeoverCodeonlyappliestoanofferforapubliccompanythatisregisteredintheUnitedKingdom(ortheChannelIslandsortheIsleofMan)andthesecuritiesofwhicharenotadmittedtotradingonaregulatedmarketintheUnitedKingdom(ortheChannelIslandsortheIsleofMan)ifthecompanyisconsideredbythetakeoverpanel(the"Panel")tohaveitsplaceofcentralmanagementandcontrolintheUnitedKingdom(ortheChannelIslandsortheIsleofMan).Thisisknownasthe"residencytest."ThetestforcentralmanagementandcontrolundertheTakeoverCodeisdifferentfromthatusedbytheU.K.taxauthorities.UndertheTakeoverCode,thePanelwilllooktowherethemajorityofthedirectorsofthecompanyareresidentsforthepurposesofdeterminingwherethecompanyhasitsplaceofcentralmanagementandcontrol.Accordingly,thePanelhaspreviouslyindicatedthattheTakeoverCodedoesnotapplytoEnscoandEnscoshareholdersthereforedonothavethebenefitoftheprotectionstheTakeoverCodeaffords,including,butnotlimitedto,therequirementthatapersonwhoacquiresaninterestinsharescarrying30%ormoreofthevotingrightsinEnscomustmakeacashoffertoallothershareholdersatthehighestpricepaidinthe12monthsbeforetheofferwasannounced.
English law requires that Ensco meet certain additional financial requirements before declaring dividends and returning funds to shareholders.
UnderEnglishlaw,Enscoisonlyabletodeclaredividendsandreturnfundstoitsshareholdersoutoftheaccumulateddistributablereservesonitsstatutorybalancesheet.Distributablereservesareacompany'saccumulated,realizedprofits,sofarasnotpreviouslyutilizedbydistributionorcapitalization,lessitsaccumulated,realizedlosses,sofarasnotpreviouslywrittenoffinareductionorreorganizationofcapitaldulymade.RealizedprofitsarecreatedthroughtheremittanceofprofitsofcertainsubsidiariestoEnscointheformofdividends.
Englishlawalsoprovidesthatapubliccompanycanonlymakeadistributionif,amongotherthings(a)theamountofitsnetassets(thatis,thetotalexcessofassetsoverliabilities)isnotlessthanthetotalofitscalledupsharecapitalandnon-distributablereservesand(b)if,andtotheextentthat,thedistributiondoesnotreducetheamountofitsnetassetstolessthanthattotal.
EnscomaybeunabletoremittheprofitsofEnsco'ssubsidiariesinatimelyortaxefficientmanner.IfatanytimeEnscodoesnothavesufficientdistributablereservestodeclareandpayquarterlydividends,Enscomayundertakeareductioninthecapital,inadditiontothereductionincapitaltakenin2014,toreducetheamountofsharecapitalandnon-distributablereservesandtocreateacorrespondingincreaseindistributablereservesoutofwhichfuturedistributionstoshareholderscanbemade.TocomplywithEnglishlaw,areductionofcapitalwouldbesubjectto(a)approvalofshareholdersatageneralmeetingbyspecialresolution;(b)confirmationbyanorderoftheEnglishCourtsand(c)theCourtorderbeingdeliveredtoandregisteredbytheRegistrarofCompaniesinEngland.IfEnscoweretopursueareductionofcapitalofEnscoasacourseofaction,andfailedtoobtainthenecessaryapprovalsfromshareholdersandtheEnglishCourts,EnscomayundertakeothereffortstoallowEnscotodeclaredividendsandreturnfundstoshareholders.
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CAUTIONARYSTATEMENTREGARDINGFORWARD-LOOKINGSTATEMENTS
Thisjointproxystatement/prospectusandthedocumentsincorporatedhereinbyreferencecontainforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActandSection21EoftheExchangeAct.Theseforward-lookingstatementsareidentifiedasanystatementthatdoesnotrelatestrictlytohistoricalorcurrentfacts.Theyusewordssuchas"anticipate,""believe,""intend,""plan,""projection,""forecast,""strategy,""position,""continue,""estimate,""expect,""may,"orthenegativeofthosetermsorothervariationsofthemorcomparableterminology.Inparticular,statements,expressorimplied,concerningexpectedfinancialperformance;expectedimpactofthemergerandanysynergiesorcost-savingsassociatedtherewith;dividends;expectedutilization,dayrates,revenues,revenueefficiency,operatingexpenses,contractterms,contractbacklog,capitalexpenditures,insurance,financingandfunding;thetimingofavailability,delivery,mobilization,contractcommencementorrelocationorothermovementofrigsandthetimingthereof;futurerigconstruction(includingconstructioninprogressandcompletionthereof),enhancement,upgradeorrepairandtimingandcostthereof,includingstartuppost-idlecosts;thesuitabilityofrigsforfuturecontracts;remainingrigusefullives;theoffshoredrillingmarket,includingsupplyanddemand,customerdrillingprograms,stackingofrigs,effectsofnewrigsonthemarketandeffectsofdeclinesincommodityprices;generalmarket,businessandindustryconditions,trendsandoutlook;futureoperations;theimpactofincreasingregulatorycomplexity;ourprogramtohigh-gradetherigfleetbyinvestinginnewequipmentanddivestingselectedassetsandunderutilizedrigs;expensemanagement;andthelikelyoutcomeoflitigation,legalproceedings,investigationsorinsuranceorotherclaimsorcontractdisputesandthetimingthereof.Forward-lookingstatementsarenotguaranteesofperformance.Theyinvolverisks,uncertaintiesandassumptions.Futureactions,conditionsoreventsandfutureresultsofoperationsmaydiffermateriallyfromthoseexpressedintheseforward-lookingstatements.ManyofthefactorsthatwilldetermineactualresultsarebeyondtheabilityofEnscoorAtwoodtocontrolorpredict.Specificfactorswhichcouldcauseactualresultstodifferfromthoseintheforward-lookingstatementsinclude:
• theabilitytocompletethemerger;
• failure,difficulties,anddelaysinmeetingconditionsrequiredforclosingsetforthinthemergeragreement;
• theabilitytoobtainrequisiteregulatoryandshareholderapprovalandthesatisfactionoftheotherconditionstotheconsummationofthemerger;
• thepotentialimpactoftheannouncementorconsummationofthemergeronrelationships,includingwithemployees,suppliers,customers,competitors,lendersandcreditratingagencies;
• Ensco'sabilitytosuccessfullyintegrateAtwood'soperationsandemployeesandtorealizesynergiesandcostsavings;
• Ensco'sandAtwood'sabilitytoattractandretainskilledpersonneloncommerciallyreasonableterms,whetherduetolaborregulations,unionizationorotherwise;
• Ensco'sandAtwood'sabilitytoobtainfinancingandpursueotherbusinessopportunitieswhichmaybelimitedbydebtlevels,debtagreementrestrictionsandthecreditratingsassignedtothedebtbyindependentcreditratingagencies;
• changesinworldwiderigsupplyanddemand,competitionortechnology,includingasaresultofdeliveryofnewbuilddrillingrigs;
• downtimeandotherrisksassociatedwithoffshorerigoperations,includingrigorequipmentfailure,damageandotherunplannedrepairs,thelimitedavailabilityoftransportvessels,hazards,self-imposeddrillinglimitationsandotherdelaysduetoseverestormsandhurricanes
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andthelimitedavailabilityorhighcostofinsurancecoverageforcertainoffshoreperils,suchashurricanesintheGulfofMexicoorassociatedremovalofwreckageordebris;
• risksinherenttoshipyardrigconstruction,repair,modificationorupgrades,unexpecteddelaysinequipmentdelivery,engineering,designorcommissioningissuesfollowingdelivery,orchangesinthecommencement,completionorservicedates;
• possiblecancellation,suspension,renegotiationortermination(withorwithoutcause)ofdrillingcontractsasaresultofgeneralandindustry-specificeconomicconditions,mechanicaldifficulties,performanceorotherreasons;
• potentiallong-livedassetimpairments;
• changesinfuturelevelsofdrillingactivityandexpendituresbyEnsco'sandAtwood'scustomers,whetherasaresultofglobalcapitalmarketsandliquidity,pricesofoilandnaturalgasorotherwise,whichmaycauseEnscoorAtwoodtoidleorstackadditionalrigs;
• delaysincontractcommencementdatesorthecancellationofdrillingprogramsbyoperators;
• Ensco'sandAtwood'sabilitytoenterinto,andthetermsof,futuredrillingcontracts,includingcontractsforthenewbuildunits,forrigscurrentlyidledandforrigswhosecontractsareexpiring;
• theoutcomeoflitigation,legalproceedings,investigationsorotherclaimsorcontractdisputes,includinganyinabilitytocollectreceivablesorresolvesignificantcontractualordayratedisputes,anyrenegotiation,nullification,cancellationorbreachofcontractswithcustomersorotherpartiesandanyfailuretoexecutedefinitivecontractsfollowingannouncementsoflettersofintentoraward;
• environmentalorotherliabilities,risks,damagesorlosses,whetherrelatedtostormsorhurricanes(includingwreckageordebrisremoval),collisions,groundings,blowouts,fires,explosions,otheraccidents,terrorismorotherwise,forwhichinsurancecoverageandcontractualindemnitiesmaybeinsufficient,unenforceableorotherwiseunavailable;
• governmentalaction,terrorism,piracy,militaryactionandpoliticalandeconomicuncertainties,includinguncertaintyorinstabilityresultingfromcivilunrest,politicaldemonstrations,massstrikes,oranescalationoradditionaloutbreakofarmedhostilitiesorothercrisesinoilornaturalgasproducingareasoftheMiddleEast,NorthAfrica,WestAfricaorothergeographicareas,whichmayresultinexpropriation,nationalization,confiscationordeprivationofEnsco'sorAtwood'sassetsorsuspensionand/orterminationofcontractsbasedonforcemajeureevents;
• governmentalregulatory,legislativeandpermittingrequirementsaffectingdrillingoperations,includinglimitationsondrillinglocations(suchastheGulfofMexicoduringhurricaneseason);
• newandfutureregulatory,legislativeorpermittingrequirements,futureleasesales,changesinlaws,rulesandregulationsthathaveormayimposeincreasedfinancialresponsibility,additionaloilspillabatementcontingencyplancapabilityrequirementsandothergovernmentalactionsthatmayresultinclaimsofforcemajeureorotherwiseadverselyaffectexistingdrillingcontracts,operationsorfinancialresults;
• taxmatters,includingEnsco'sandAtwood'seffectivetaxrates,taxpositions,resultsofaudits,changesintaxlaws,treatiesandregulations,taxassessmentsandliabilitiesfortaxes;
• adversechangesinforeigncurrencyexchangerates,includingtheireffectonthefairvaluemeasurementofourderivativeinstruments;and
• thosesetforthinorincorporatedbyreferenceintothisjointproxystatement/prospectusinthesectionentitled"RiskFactors."
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Unlessexpresslystatedotherwise,forward-lookingstatementsarebasedontheexpectationsandbeliefsoftherespectivemanagementsofEnscoandAtwood,basedoninformationcurrentlyavailable,concerningfutureeventsaffectingEnscoandAtwood.AlthoughEnscoandAtwoodbelievethattheseforward-lookingstatementsarebasedonreasonableassumptions,theyaresubjecttouncertaintiesandfactorsrelatedtoEnsco'sandAtwood'soperationsandbusinessenvironments,allofwhicharedifficulttopredictandmanyofwhicharebeyondEnsco'sandAtwood'scontrol.Anyoralloftheforward-lookingstatementsinthisjointproxystatement/prospectusmayturnouttobewrong.Theycanbeaffectedbyinaccurateassumptionsorbyknownorunknownrisksanduncertainties.Theforegoinglistoffactorsshouldnotbeconstruedtobeexhaustive.Manyfactorsmentionedinthisjointproxystatement/prospectus,includingtherisksoutlinedunderthecaption"RiskFactors"containedinEnsco'sandAtwood'sExchangeActreportsincorporatedhereinbyreference,willbeimportantindeterminingfutureresults,andactualfutureresultsmayvarymaterially.Thereisnoassurancethattheactions,eventsorresultsoftheforward-lookingstatementswilloccur,or,ifanyofthemdo,whentheywilloccurorwhateffecttheywillhaveonEnsco'sandAtwood'sresultsofoperations,financialcondition,cashflowsordistributions.Inviewoftheseuncertainties,EnscoandAtwoodcautionthatinvestorsshouldnotplaceunduerelianceonanyforward-lookingstatements.Further,anyforward-lookingstatementspeaksonlyasofthedateonwhichitismade,and,exceptasrequiredbylaw,EnscoandAtwoodundertakenoobligationtoupdateorreviseanyforward-lookingstatementtoreflecteventsorcircumstancesafterthedateonwhichitismadeortoreflectnewinformationortheoccurrenceofanticipatedorunanticipatedeventsorcircumstances.
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THEENSCOGENERALMEETING
Date,Time,PlaceandPurposeoftheEnscoGeneralMeeting
AgeneralmeetingoftheshareholdersofEnscowillbeheldat,at(Londontime)on,2017.
Youwillbeaskedtoconsiderandpassthefourproposalsbelow.
ORDINARYRESOLUTIONS
1. Ensco Merger Consideration Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceofEnscoClassAordinarysharestoAtwoodshareholderspursuanttothemergeragreement,whichprovidesfor,amongotherthings,themergerofMergerSubwithandintoAtwood,withAtwoodsurvivingthemergerasawhollyownedsubsidiaryofEnsco.
2. Ensco General Allotment Authority Increase Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceuptoanominalamountofEnscoClassAordinaryshares,which,togetherwiththenominalamountofsharesofEnscoauthorizedtobeallottedandissuedpursuanttoparagraph(A)ofresolution11passedattheEnsco2017AnnualGeneralMeeting,representsapproximately33%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger,anduptoafurthersamenominalamountofEnscoClassAordinarysharesinconnectionwithapre-emptiveofferingofshares.
SPECIALRESOLUTIONS
3. Ensco General Disapplication of Pre-emptive Rights Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceuptoanominalamountofEnscoClassAordinarysharesforcashonanon-pre-emptivebasis,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedforcashonanon-pre-emptivebasispursuanttoresolution12passedattheEnsco2017AnnualGeneralMeeting,representsapproximately5%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger.
4. Ensco Specified Disapplication of Pre-emptive Rights Proposal: Toauthorize,inadditiontoallsubsistingauthorities,theallotmentandissuanceuptoanominalamountofEnscoClassAordinarysharesforcashonanon-pre-emptivebasis,which,togetherwiththenominalamountofsharesinEnscoauthorizedtobeallottedandissuedforcashonanon-pre-emptivebasispursuanttoresolution13passedattheEnsco2017AnnualGeneralMeeting,representsapproximately5%oftheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingthecompletionofthemerger,suchauthoritytobeusedonlyforthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsafterthemerger)atransactionwhichtheEnscoBoarddeemstobeanacquisitionorothercapitalinvestment.
EnscoBoardRecommendation
TheEnscoBoardhasunanimouslydeterminedthattheform,termsandprovisionsofthemergeragreementandthetransactionscontemplatedthereby,includingthemergerandtheallotmentandissuanceoftheEnscoClassAordinaryshares,areadvisable,fairandreasonabletoandinthebestinterestsofEnscoanditsshareholders.TheEnscoBoardrecommendsthattheEnscoshareholdersvote:
• "FOR"theEnscoMergerConsiderationProposal;
• "FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal;
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• "FOR"theEnscoGeneralDisapplicationofPre-emptiveRightsProposal;and
• "FOR"theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
WhoCanVoteattheEnscoGeneralMeeting
EnscoshareholderswhoownedClassAordinarysharesatthecloseofbusinesson,2017,theEnscorecorddate,arequalifiedtoreceivenoticeof,attendandvoteattheEnscogeneralmeetingor,subjecttotheEnscoArticlesofAssociation,anyadjournmentsorpostponementsthereof.Foraperiodof10dayspriortotheEnscogeneralmeeting,alistofallshareholdersofrecordentitledtovoteattheEnscogeneralmeetingwillbeonfileatEnsco'sprincipalexecutiveoffices,6ChesterfieldGardens,London,W1J5BQ,UnitedKingdom,andwillbeavailableforinspectionattheEnscogeneralmeetingforanypurposerelevanttotheEnscogeneralmeeting.ChangestoentriesontheregisteraftertherecorddatewillbedisregardedindeterminingtherightsofanypersontoattendorvoteattheEnscogeneralmeeting.
OntheEnscorecorddate,therewereEnscoClassAordinarysharesoutstandingandentitledtovoteattheEnscogeneralmeeting.AsoftheEnscorecorddate,directorsandexecutiveofficersofEnscoanditsaffiliateshadtherighttovoteapproximatelyEnscoClassAcommonshares,or%oftheoutstandingEnscoClassAcommonsharesonthatdate.
EachEnscoClassAordinaryshareisentitledtoonevoteoneachmattertobevotedonattheEnscogeneralmeeting.
VoteRequiredforApproval;Quorum
AsaU.K.companypubliclytradedontheNYSE,EnscoshareholderapprovaloftheEnscoMergerConsiderationProposalissubjecttotheshareholderapprovalrequirementsunderboththeCompaniesAct2006andNYSErules.TheEnscoMergerConsiderationProposalisbeingproposedasanordinaryresolution.Assumingaquorumispresent,suchproposalwillbeapprovedforpurposesoftheCompaniesAct2006andNYSErulesifamajorityofthevotescastarecastinfavorthereof.TheEnscoGeneralAllotmentAuthorityIncreaseProposalwillbeproposedasanordinaryresolutionand,assumingaquorumispresent,willbeapprovedifamajorityofthevotescastarecastinfavorthereof.EachoftheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwillbeproposedasaspecialresolution,whichmeans,assumingaquorumispresent,eachsuchproposalwillbeapprovedifatleast75%ofthevotescastarecastinfavorthereof.
ApprovaloftheEnscoMergerConsiderationProposalisrequiredforcompletionofthemerger.ApprovaloftheEnscoGeneralAllotmentAuthorityIncreaseProposal,theEnscoGeneralDisapplicationofPre-emptiveRightsProposalortheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalisnotrequiredinordertocompletethemerger.
TheChairmanmayadjournorpostponethemeetingwithoutnoticeotherthanannouncementatthemeeting.AttheEnscogeneralmeeting,holdersofamajorityoftheoutstandingEnscoClassAordinarysharesentitledtovotemustbepresent,eitherinpersonorrepresentedbyproxy,toconstituteaquorum.Abstentionsandbrokernon-voteswillbeconsideredindeterminingthepresenceofaquorum.Whileabstentionsandbrokernon-votesarenotconsideredvotescastundertheCompaniesAct2006,underNYSErulesabstentions,butnotbrokernon-votes,willbeconsideredasvotescastfordeterminingwhetherasufficientnumberofvoteshavebeencastonaparticularproposal.Asaresult,forpurposesofdeterminingwhethertheEnscoMergerConsiderationProposalhasbeenapprovedinaccordancewiththeCompaniesAct2006,abstentionsandbrokernon-voteswillnothaveanyeffectontheoutcomeofthevote.WithrespecttoNYSErules,abstentionswillhavethesameeffectasvotescast"AGAINST"theEnscoMergerConsiderationProposalandbrokernon-voteswillnothaveany
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effectontheoutcomeofthevote.Abstentionsandbrokernon-voteswillhavenoeffectontheoutcomeoftheEnscoGeneralAllotmentAuthorityIncreaseProposal,theEnscoGeneralDisapplicationofPre-emptiveRightsProposalortheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
Yourvoteisveryimportant.Youareencouragedtovoteassoonaspossibleandinanyeventbeforethevotingcutofftime.
MannerofVoting
Ifyouarea"shareholderofrecord"ofEnscoClassAordinaryshares,youmayvoteyoursharesinpersonattheEnscogeneralmeeting(anyresolutionputtovoteatageneralmeetingshallbedecidedonapoll)or,inaccordancewithprovisionsintheCompaniesAct2006andinaccordancewiththeEnscoArticlesofAssociation,youareentitledtoappointanotherpersonasyourproxytoexercisealloranyofyourrightstoattend,speakandvoteattheEnscogeneralmeetingandtoappointmorethanoneproxyinrelationtotheEnscogeneralmeeting(providedthateachproxyisappointedtoexercisetherightsattachedtoadifferentshareorsharesheldbyyou).Suchproxyneednotbeashareholderofrecord.
Afteryouhavecarefullyreadthisjointproxystatement/prospectus,pleaserespondbycompleting,signinganddatingyourproxycardorvotinginstructioncard,asapplicable,andreturningitintheenclosedpostage-paidenvelopeor,ifavailable,bysubmittingyourproxyorvotinginstructionsbytelephoneorthroughtheInternetassoonaspossiblesothatyourClassAordinaryshareswillberepresentedandvotedattheEnscogeneralmeeting.
Ifyouareashareholderofrecord,pleasesigntheproxycardexactlyasyournameappearsonthecard.Ifsharesareownedjointly,eachjointownershouldsigntheproxycard.Ifashareholderisacorporation,limitedliabilitycompanyorpartnership,theproxycardshouldbesignedinthefullcorporate,limitedliabilitycompanyorpartnershipnamebyadulyauthorizedperson.Iftheproxycardissignedpursuanttoapowerofattorneyorbyanexecutor,administrator,trusteeorguardian,pleasestatethesignatory'sfulltitleandprovideacertificateorotherproofofappointment.
Pleaserefertoyourproxycard,votinginstructioncardortheinformationforwardedbyyourbroker,bank,trustorothernomineetoseewhichvotingoptionsareavailabletoyou.
TheInternetandtelephoneproxysubmissionproceduresaredesignedtoverifyyourholdingsandtoallowyoutoconfirmthatyourinstructionshavebeenproperlyrecorded.
Neitherthesubmissionofaproxyorvotinginstructions,northemethodbywhichyousubmitaproxyorvotinginstructionswillinanywaylimityourrighttovoteattheEnscogeneralmeetingifyoulaterdecidetoattendthemeetinginperson.IfyourEnscoClassAordinarysharesareheldinthenameofabroker,bank,trustorothernominee,youmusteithercauseyourEnscoClassAordinarysharestobewithdrawnorobtainaproxy,executedinyourfavor,fromtheholderofrecordofyourEnscoClassAordinarysharesandobtainaproxy,executedinyourfavor,tobeabletoattend,speakandvoteattheEnscogeneralmeeting,although"streetname"holdersofEnscoClassAordinarysharesarepermittedtoattendtheEnscogeneralmeetingattheinvitationoftheChairman.
VotinginstructionsforEnscoClassAordinarysharesmustbereceivedby,2017bythevotingcutofftime.
RevokingaProxy
Youmayrevokeyourproxyorvotinginstructionsorchangeyourvoteatanytimebeforethevotingcutoffdateinthecaseofholdersofrecordand"streetname"holdersofEnscoClassAordinarysharesandbeforeyourproxyisvotedattheEnscogeneralmeetinginthecaseof
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shareholdersofrecord.IfyourEnscoClassAordinarysharesareheldinanaccountatabroker,bank,trustorothernomineeandyoudesiretochangeyourvote,youshouldcontactyourbroker,bank,trustorothernomineeforinstructionsonhowtodosobeforethevotingcutoffdate.
IfyouareashareholderofrecordofEnscoClassAordinaryshares,youcanrevokeyourproxyorvotinginstructionsorchangeyourvoteafteryouhavedeliveredyourproxyorvotinginstructionsinanyofthethreefollowingways:
• bysendingawrittennoticetotheSecretaryofEnscoattheaddresssetforthinthisjointproxystatement/prospectus,intimetobereceivedbeforetheEnscogeneralmeeting,statingthatyouwouldliketorevokeyourproxy;
• bycompleting,signinganddatinganotherproxycardandreturningitbymailintimetobereceivedbeforetheEnscogeneralmeeting,orbysubmittingalaterdatedproxybytheInternetinwhichcaseyourlater-submittedproxywillberecordedandyourearlierproxyrevoked;or
• byattendingtheEnscogeneralmeetingandvotinginperson(simplyattendingtheEnscogeneralmeetingwithoutvotingwillnotrevokeyourproxyorchangeyourvote).
AllEnscoClassAordinarysharesrepresentedbyvalidproxiesthatEnscoreceivesthroughthissolicitation,andthatarenotrevoked,willbevotedinaccordancewithyourinstructionsontheproxycard.
Ifyoufailtomakeaspecificationonyourproxycardastohowyouwantyoursharesvotedbeforesigningandreturningit,yourproxywillbevoted"FOR"theEnscoMergerConsiderationProposal;"FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal;"FOR"theEnscoGeneralDisapplicationofPre-emptiveRightsProposal;and"FOR"theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
TabulationoftheVotes
EnscowillappointanInspectorofElectionfortheEnscogeneralmeetingtotabulateaffirmativeandnegativevotesandabstentions.
SolicitationofProxies
Enscowillbearitsowncostsandexpensesincurredinconnectionwiththefiling,printingandmailingofthisjointproxystatement/prospectusandtheretentionofanyinformationagentorotherserviceproviderinconnectionwiththemerger.ThisproxysolicitationisbeingmadebyEnscoonbehalfoftheEnscoBoard.EnscohashiredD.F.King&Co.,Inc.toassistinthesolicitationofproxies.EnscohasagreedtopayD.F.King&Co.,Inc.afeeof$20,000pluspaymentofcertainfeesandexpensesforitsservicestosolicitproxiesandvotinginstructions.Inadditiontothismailing,proxiesmaybesolicitedbydirectors,officersoremployeesofEnscooritsaffiliatesinpersonorbytelephoneorelectronictransmission.Noneofthedirectors,officersoremployeeswillbedirectlycompensatedforsuchservices.
InaccordancewiththeregulationsoftheSECandtheNYSE,Enscoalsowillreimbursebrokeragefirmsandothercustodians,nomineesandfiduciariesfortheirexpensesincurredinsendingproxiesandproxymaterialstobeneficialownersofEnscoClassAordinaryshares.
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ENSCOPROPOSAL1—MERGERCONSIDERATIONPROPOSAL
Asdiscussedthroughoutthisjointproxystatement/prospectus,EnscoisaskingitsshareholderstoapprovetheallotmentandissuanceofEnscoClassAordinarysharesrepresentingmergerconsideration.HoldersofEnscoClassAordinarysharesshouldreadcarefullythisjointproxystatement/prospectusinitsentirety,includingtheannexes,formoredetailedinformationconcerningthemergeragreementandthetransactionscontemplatedthereby.Inparticular,holdersofEnscoClassAordinarysharesaredirectedtothemergeragreement,acopyofwhichisattachedasAnnexAtothisjointproxystatement/prospectus.
Accordingly,Enscoisrequestingitsshareholdersadoptthefollowingresolution,whichisanordinaryresolution:
" THAT, subject to the rules and listing standards of the New York Stock Exchange and to applicable rules and regulations of the U.S. Securities andExchange Commission, pursuant to section 551 of the Companies Act 2006, and in addition to any subsisting authority conferred upon the Board of Directors ofEnsco under that section, the Board of Directors of Ensco be and are hereby authorised unconditionally to allot and issue shares in the company as contemplatedby the merger agreement, and to grant rights to subscribe for or convert any security into shares in the company, up to an aggregate nominal amount of $ ,and so that the board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares,fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter, such authority to applyuntil the close of business on August 22, 2018, provided that, during this period, the company may make offers and enter into agreements which would, or might,require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the authority ends and the board may allot shares orgrant rights to subscribe for or convert securities into shares under any such offer or agreement as if the authority had not ended."
Vote Required and Ensco Board Recommendation
Assumingaquorumispresent,theaffirmativevoteofholdersofatleastamajorityofthevotescast,eitherinpersonorbyproxy,attheEnscogeneralmeetingisrequiredtoapprovetheEnscoMergerConsiderationProposal.
Completionofthemergerisconditionedon,amongotherthings,approvaloftheEnscoMergerConsiderationProposal.TheallotmentandissuanceoftheEnscoClassAordinaryshareswillbecomeeffectiveonlyifthemergeriscompleted.Ifauthorizedbyourshareholders,thisresolutionwouldgivetheEnscoBoardtheauthoritytoallotsharesorgrantrightstosubscribefororconvertanysecuritiesintosharesuptoanaggregatenominalamountequalto$.Thisamountrepresentsapproximately%oftheissuedsharecapital(excludingtreasuryshares)ofEnscoasof,2017,thelatestpracticabledatepriortopublicationofthisjointproxystatement/prospectus.Allotmentsorissuancesofordinarysharesforcasharesubjecttorightsofpre-emptionoftheexistingshareholders.
See"DescriptionofEnscoClassAOrdinaryShares."
TheEnscoBoardhasunanimouslyapprovedthemergeragreementandthetransactionscontemplatedthereby,includingthemerger,andunanimouslyrecommendsthatyouvote"FOR"theEnscoMergerConsiderationProposal.IfnoindicationisgivenastohowyouwantyourEnscoClassAordinarysharestobevoted,thepersonsdesignatedasproxieswillvotetheproxiesreceived"FOR"theEnscoMergerConsiderationProposal.
See"TheMerger—Ensco'sReasonsfortheMerger;RecommendationoftheEnscoBoardofDirectors."
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ENSCOPROPOSAL2—GENERALALLOTMENTAUTHORITYINCREASEPROPOSAL
AsaU.K.companygovernedinpartbytheCompaniesAct2006,Enscocannotissuenewshares(otherthanincertainlimitedcircumstances)withoutfirstobtainingapprovalfromitsshareholders.TheCompaniesAct2006providesthatthisapprovalgrantsauthoritytotheEnscoBoardtoallotsharesinEnscoandtograntrightstosubscribefororconvertanysecurityofEnscointosharesinthecapitalofEnsco.
AttheannualgeneralmeetingofEnscoheldonMay22,2017,Enscoshareholdersapprovedaresolution(basedontheissuedsharecapitalofEnscoasatMarch27,2017,beingthelatestpracticabledatebeforethepublicationofthenoticeofEnsco'sannualgeneralmeeting),toauthorizetheEnscoBoardtoallotsharesandtograntrightstosubscribefororconvertanysecurityintoshares:
(A) uptoanominalamountof$10,109,804(representingonethirdoftheCompany'sissuedsharecapitalasatMarch27,2017)(the"AGMAllotmentAuthority");and
(B) comprisingequitysecurities(asdefinedintheCompaniesAct2006)uptoanominalamountof$20,219,607(representingtwo-thirdsofEnsco'sissuedsharecapitalasatMarch27,2017)inconnectionwithapre-emptiveissue(the"AGMPre-EmptiveAllotmentAuthority"),
suchauthoritytobeeffectiveuntiltheconclusionofEnsco'snextannualgeneralmeeting(or,ifearlier,atthecloseofbusinessonAugust22,2018).
EnscoexpectstohaveanaggregateissuedsharecapitalofuptoEnscoClassAordinarysharesimmediatelyfollowingcompletionofthemerger.SubjecttoapprovalofthemergerandthenewEnscoClassAordinarysharesbeingallottedasmergerconsideration,EnscoisseekingtoobtainadditionalauthorityfortheEnscoBoardtoallotsharestoreflecttheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingcompletionofthemerger.
Withoutthisadditionalgrantofauthorityfromshareholders,theEnscoBoardwillonlyhavetheauthoritytoissuesharesuptothelimitsspecifiedintheAGMAllotmentAuthorityandtheAGMPre-EmptiveAllotmentAuthority.ApprovaloftheEnscoGeneralAllotmentAuthorityIncreaseProposalwillnot,however,implicateanyshareholderapprovalrequirementsoftheNYSEforshareissuances,suchasforexecutivecompensationpurposes,certainfinancingtransactionsorinconnectionwithacquisitions,andEnscowouldcontinuetobesubjecttotherequirementstoobtainshareholderapprovalinthoseinstances.
Allotmentsorissuancesofordinarysharesforcasharesubjecttorightsofpre-emptionoftheexistingEnscoshareholders.IftheEnscoshareholdersapprovetheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposaldescribedelsewhereinthisjointproxystatement/prospectusatthemeeting,thosepre-emptionrightswillbedisappliedtoalimitedextentassetforthintheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalfornewissuesofsharessubjecttotheEnscoGeneralAllotmentAuthorityIncreaseProposal.
IfauthorizedbyEnscoshareholders,paragraph(A)oftheEnscoGeneralAllotmentAuthorityIncreaseProposalwouldgivetheEnscoBoard,inadditiontotheauthoritygrantedtotheEnscoBoardpursuanttotheAGMAllotmentAuthority,theauthoritytoallotsharesandgrantrightstosubscribefororconvertanysecuritiesintosharesuptoanaggregatenominalamountequalto$.Thisamount,togetherwiththenominalamountofsharesspecifiedintheAGMAllotmentAuthority,representsapproximately33.3%oftheexpectedenlargedissuedsharecapital(excludingtreasuryshares)ofEnscoimmediatelyfollowingthecompletionofthemerger.
Paragraph(B)oftheEnscoGeneralAllotmentAuthorityIncreaseProposalwouldgivetheEnscoBoard,inadditiontotheauthoritygrantedtotheEnscoBoardpursuanttotheAGMPre-EmptiveAllotmentAuthority,authoritytoallotsharesandgrantrightstosubscribefororconvertanysecurities
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intosharesinconnectionwitharightsissueorothersimilarissueinfavorofordinaryshareholdersuptoanaggregatenominalamountequalto$(asreducedbythenominalamountofanysharesissuedunderparagraph(A)oftheEnscoGeneralAllotmentAuthorityIncreaseProposal).Thisamount(beforeanyreduction),togetherwiththenominalamountofsharesspecifiedintheAGMPre-EmptiveAllotmentAuthority,representsapproximately66.6%oftheexpectedenlargedissuedsharecapital(excludingtreasuryshares)ofEnscoimmediatelyfollowingthecompletionofthemerger.
Together,theaggregatenominalamountofanyrelevantsecuritiesissuedundertheauthorityconferredbyparagraphs(A)and(B),whenaddedtotheauthorityconferredpursuanttotheAGMAllotmentAuthorityandtheAGMPre-EmptiveAllotmentAuthority,representanamountthatisequaltoapproximately66.6%oftheaggregatenominalvalueoftheexpectedenlargedissuedsharecapital(excludingtreasuryshares)ofEnscoimmediatelyfollowingthecompletionofthemerger.
TheEnscoBoardmayexercisetheauthoritytoallotsharesrepresentingupto33.3%(or66.6%inconnectionwitharightsissueorothersimilarissue)oftheexpectedenlargedissuedsharecapitalofEnsco(excludingtreasuryshares)immediatelyfollowingthecompletionofthemerger.SuchanallotmentcouldbecarriedoutincompliancewithapplicableU.K.lawforvariouspurposesincludingforexampletoraiseadditionalcapital,toreducedebtorincreaseliquidityasnecessary.Anydeterminationtoexercisetheauthoritytoallotshareswillbedependentuponmarketconditionsandourprofitability,liquidity,financialcondition,marketoutlook,capitalrequirementsandotherfactorstheEnscoBoarddeemsrelevant.
Accordingly,Enscoisrequestingitsshareholdersadoptthefollowingresolution,whichisanordinaryresolution:
" THAT , subject to and conditional on the Merger Consideration Proposal being passed and the Class A ordinary shares representing the mergerconsideration being allotted in connection with the merger, the board be generally and unconditionally authorised, in addition to all subsisting authorities, to allotshares in the company and to grant rights to subscribe for or convert any security into shares in the company:
(A) up to a nominal amount of $ (such amount to be reduced by any allotments or grants made under paragraph (B) below in excess of suchsum); and
(B) comprising equity securities (as defined in the Companies Act) up to a nominal amount of $ (such amount to be reduced by any allotments orgrants made under paragraph (A) above) in connection with an offer by way of a rights issue or other similar issue:
1. to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
2. to holders of other equity securities as required by the rights of those securities or as the board otherwise considers necessary, and so thatthe board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal withtreasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or anyother matter,
such authority to apply until the conclusion of the next annual general meeting of shareholders (or, if earlier, at the close of business on August 22, 2018), but, ineach case, during this period the company may make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribefor or convert securities into shares to be granted after the authority ends and the board may allot shares or grant rights to subscribe for or convert securities intoshares under any such offer or agreement as if the authority had not ended."
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VoteRequiredandEnscoBoardRecommendation
Assumingaquorumispresent,theEnscoGeneralAllotmentAuthorityIncreaseProposalwillbepassedifamajorityofthevotescastatthemeeting(inpersonorbyproxy)arecastinfavorofsuchproposal.
CompletionofthemergerisnotconditionedonapprovaloftheEnscoGeneralAllotmentAuthorityIncreaseProposal.
TheEnscoBoardunanimouslyrecommendsthatyouvote"FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal.IfnoindicationisgivenastohowyouwantyourEnscoClassAordinarysharestobevoted,thepersonsdesignatedasproxieswillvotetheproxiesreceived"FOR"theEnscoGeneralAllotmentAuthorityIncreaseProposal.
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ENSCOPROPOSALS3AND4—DISAPPLICATIONOFPRE-EMPTIVERIGHTSPROPOSALS
AsaU.K.companygovernedinpartbytheCompaniesAct2006,beforeEnscocanraiseadditionalcapitalthroughtheissuanceofordinarysharesofEnscoforcash,Enscoisrequiredfirsttoofferthosesharestoitscurrentshareholdersinproportiontotheirshareholdings.TheCompaniesAct2006permitsshareholderstowaive,ordisapply,thosepre-emptionrights.Inaddition,underU.K.lawsuchpre-emptionrightsdonotapplytoanyissuanceofsharesfornon-cashconsideration(includingwheresharesareissuedinexchangeforothersecurities).
AttheannualgeneralmeetingofEnscoheldonMay22,2017,Enscoshareholdersapprovedresolutions(basedontheissuedsharecapitalofEnscoasatMarch27,2017,beingthelatestpracticabledatebeforethepublicationofthenoticeofEnsco'sannualgeneralmeeting),toauthorizetheEnscoBoardto:
(A) allotequitysecuritiesforcash,freeofpre-emptionrightsuptoanominalamountof$1,517,989(representingapproximately5%ofEnsco'sissuedsharecapitalasatMarch27,2017)(the"AGMGeneralPre-EmptionDisapplication");and
(B) furtherallotequitysecuritiesforcash,freeofpre-emptionrightsuptoanominalamountof$1,517,989(representingapproximately5%ofEnsco'sissuedsharecapitalasatMarch27,2017),suchauthoritytobeusedonlyforthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsaftertheoriginaltransaction)atransactionwhichtheEnscoBoarddeemstobeanacquisitionorothercapitalinvestment(the"AGMSpecifiedPre-EmptionDisapplication"),
suchauthoritytobeeffectiveuntiltheconclusionofEnsco'snextannualgeneralmeeting(or,ifearlier,atthecloseofbusinessonAugust22,2018).
EnscoexpectstohaveanaggregateissuedsharecapitalofuptoEnscoClassAordinarysharesimmediatelyfollowingcompletionofthemerger.SubjecttoapprovalofthemergerandthenewEnscoClassAordinarysharesbeingallottedasmergerconsideration,EnscoisseekingtoobtainadditionalauthorityfortheEnscoBoardtoallotsharesforcashonanon-pre-emptivebasistoreflecttheexpectedenlargedsharecapitalofEnscoimmediatelyfollowingcompletionofthemerger.
IfEnscoshareholdersapprovetheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal,andprovidedtheyapprovetheauthorityfortheEnscoBoardtoallotsharespursuanttotheEnscoGeneralAllotmentAuthorityIncreaseProposal,theirapprovalforeachoftheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwouldbeeffectiveuntiltheconclusionofthenextannualgeneralmeetingofEnscoshareholders(or,ifearlier,atthecloseofbusinessonAugust22,2018).
TheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwouldgivetheEnscoBoard,inadditiontothepowersgrantedpursuanttotheAGMGeneralPre-EmptionDisapplicationandtheAGMSpecifiedPre-EmptionDisapplication,theabilitytoraiseadditionalcapitalbyissuingordinarysharesandsharesheldinEnsco'streasuryforcashfreeoftherestrictioninSection561oftheCompaniesAct2006.
ThepowersetoutintheEnscoGeneralDisapplicationofPre-emptiveRightsProposalwouldbelimitedto(a)allotmentsorsalesinconnectionwithpre-emptiveoffersandofferstoholdersofotherequitysecuritiesifrequiredbytherightsofthosesecuritiesorastheEnscoBoardotherwiseconsidersnecessary,or(b)otherwiseuptoanaggregatenominalamountof$(which,whenaddedtotheauthorityconferredpursuanttotheAGMGeneralPre-EmptionDisapplication,representsapproximately5%oftheexpectedenlargedissuedsharecapital(excludingtreasuryshares)ofEnscoimmediatelyfollowingthecompletionofthemerger).
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Inrespectofthepowerreferredtoin(b)above,theEnscoBoardconfirmsthatitdoesnotintendtoissuesharesinrelianceonsuchauthorityifthecumulativeusageofsuchauthoritywithinarollingthree-yearperiodwouldbeinexcessof7.5%oftheissuedsharecapitalofEnsco(excludingtreasuryshares)withoutpriorconsultationwithEnscoshareholders,exceptinconnectionwithanacquisitionorspecifiedcapitalinvestmentasdescribedbelowintheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
TheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalisintendedtogiveEnsco,inadditiontothepowersgrantedpursuanttotheAGMSpecifiedPre-EmptionDisapplication,additionalflexibilitytomakenon-pre-emptiveissuesofsharesinconnectionwithanacquisitionorspecifiedcapitalinvestmentwhichisannouncedcontemporaneouslywiththecorrespondingallotment,orwhichhastakenplaceintheprecedingsix-monthperiodandisdisclosedintheannouncementofthecorrespondingallotment.Aspecifiedcapitalinvestmentmeansoneormorespecificcapitalinvestmentrelatedusesfortheproceedsofanissuanceofequitysecurities,inrespectofwhichsufficientinformationregardingtheeffectofthetransactiononEnsco,theassetswhicharethesubjectofthetransactionand(whereappropriate)theprofitsattributabletothemismadeavailabletoEnscoshareholderstoenablethemtoreachanassessmentofthepotentialreturn.
ThepowerundertheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalisinadditiontothatproposedbytheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandwouldbelimitedtoanaggregatenominalamountof$(which,whenaddedtotheauthorityconferredpursuanttotheAGMSpecifiedPre-EmptionDisapplication,representsapproximately5%oftheexpectedenlargedissuedsharecapital(excludingtreasuryshares)ofEnscoimmediatelyfollowingthecompletionofthemerger).
ThepowersundertheEnscoGeneralDisapplicationofPre-emptiveRightsProposalandtheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwouldprovidetheEnscoBoardwithadditionalflexibilitytopursuestrategictransactions,raisecapitalandfinancegrowthwithequity.
EnscoProposal3—GeneralDisapplicationofPre-emptiveRightsProposal
Forthereasonsdescribedabove,Enscoisrequestingitsshareholdersadoptthefollowingresolution,whichisaspecialresolution:
" THAT , subject to and conditional on Proposals 1 and 2 being passed and the Class A ordinary shares representing the merger consideration being allottedin connection with the merger, the board shall be given power, in addition to all subsisting powers, to allot equity securities (as defined in the Companies Act) forcash under the authority given by Proposal 2 and/or to sell ordinary shares held by the company as treasury shares for cash as if Section 561 of Companies Act didnot apply to any such allotment or sale, such power to be limited:
(A) to the allotment of equity securities and sale of treasury shares in connection with an offer of, or invitation to apply for, equity securities (but in thecase of the authority granted under paragraph (B) of Proposal 2, by way of a rights issue or other similar issue only):
1. to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
2. to holders of other equity securities, as required by the rights of those securities, or as the board otherwise considers necessary,
and so that the board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal withtreasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any othermatter; and
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(B) in the case of the authority granted under paragraph (A) of Proposal 2 and/or in the case of any sale of treasury shares, to the allotment of equitysecurities or sale of treasury shares (otherwise than under paragraph (A) above) up to a nominal amount of $ ,
such power to apply until the conclusion of the next annual general meeting of shareholders (or, if earlier, at the close of business on August 22, 2018); however, ineach case, during this period the company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasuryshares to be sold) after the power ends and the board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power hadnot ended."
Assumingaquorumispresent,theEnscoGeneralDisapplicationofPre-emptiveRightsProposalwillbepassedifatleast75%ofthevotescastatthemeeting(inpersonorbyproxy)arecastinfavorofthisproposal.
CompletionofthemergerisnotconditionedonapprovaloftheEnscoGeneralDisapplicationofPre-emptiveRightsProposal.
TheEnscoBoardunanimouslyrecommendsthatyouvote"FOR"theEnscoGeneralDisapplicationofPre-emptiveRightsProposal.IfnoindicationisgivenastohowyouwantyourEnscoClassAordinarysharestobevoted,thepersonsdesignatedasproxieswillvotetheproxiesreceived"FOR"theEnscoGeneralDisapplicationofPre-emptiveRightsProposal.
EnscoProposal4—SpecifiedDisapplicationofPre-emptiveRightsProposal
Forthereasonsdescribedabove,Enscoisrequestingitsshareholdersadoptthefollowingresolution,whichisaspecialresolution:
" THAT , subject to and conditional on Proposals 1 and 2 being passed and the Class A ordinary shares representing the merger consideration being allottedin connection with the merger, the board shall be given power, in addition to all subsisting powers and in addition to any power granted under Proposal 3 to allotequity securities (as defined in the Companies Act) for cash under the authority given pursuant to paragraph (A) of Proposal 2 and/or to sell ordinary shares heldby the company as treasury shares for cash as if Section 561 of the Companies Act did not apply to any such allotment or sale, such power to be:
(A) limited to the allotment of equity securities and/or sale of treasury shares up to a nominal amount of $ ; and
(B) used only for the purposes of financing (or refinancing, if the power is to be used within six months after the original transaction) a transactionwhich the board determines to be an acquisition or other capital investment,
such power to apply until the conclusion of the next annual general meeting of shareholders (or, if earlier, at the close of business on August 22, 2018); however, ineach case, during this period the company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasuryshares to be sold) after the power ends and the board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power hadnot ended."
Assumingaquorumispresent,theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposalwillbepassedifatleast75%ofthevotescastatthemeeting(inpersonorbyproxy)arecastinfavorofthisproposal.
CompletionofthemergerisnotconditionedonapprovaloftheEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
TheEnscoBoardunanimouslyrecommendsthatyouvote"FOR"theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.IfnoindicationisgivenastohowyouwantyourEnscoClassAordinarysharestobevoted,thepersonsdesignatedasproxieswillvotetheproxiesreceived"FOR"theEnscoSpecifiedDisapplicationofPre-emptiveRightsProposal.
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THEATWOODSPECIALMEETING
Date,Time,PlaceandPurposeoftheAtwoodSpecialMeeting
TheAtwoodspecialmeetingwillbeheldat15011KatyFreeway,FirstFloor,Houston,Texas77094,at(Houstontime)on,2017toconsiderandvoteuponthefollowingproposals:
1. Atwood Merger Proposal: Toapprovethemergeragreementandthetransactionscontemplatedthereby,includingthemerger;
2. Atwood Compensatory Proposal: Toapproveanadvisory(non-binding)voteonthespecifiedcompensationthatmaybereceivedbyAtwood'snamedexecutiveofficersinconnectionwiththetransactionscontemplatedbythemergeragreement,includingthemerger;and
3. Atwood Adjournment Proposal: ToapprovetheadjournmentoftheAtwoodspecialmeeting,ifnecessaryoradvisable,tosolicitadditionalproxiesinfavoroftheAtwoodMergerProposalortakeanyotheractioninconnectionwiththemergeragreement.
RecommendationoftheAtwoodBoard
TheAtwoodBoardhasunanimouslyapprovedthemergeragreementandthetransactionscontemplatedthereby,includingthemerger.TheAtwoodBoarddeterminedthatthemerger,theexecution,deliveryandperformanceofthemergeragreementandthetransactionscontemplatedtherebyareadvisableandinthebestinterestsofAtwoodanditsshareholders.TheAtwoodBoardunanimouslyrecommendsthatAtwoodshareholdersvote"FOR"theAtwoodMergerProposal.See"TheMerger—Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors"foramoredetaileddiscussionoftheAtwoodBoard'srecommendationwithrespecttotheAtwoodMergerProposal.
Inaddition,theAtwoodBoardrecommendstheAtwoodshareholdersvote"FOR"theAtwoodCompensatoryProposaland"FOR"theAtwoodAdjournmentProposal.
WhoCanVoteattheAtwoodSpecialMeeting
AtwoodshareholderswhoownedAtwoodcommonstockatthecloseofbusinesson,2017,theAtwoodrecorddate,arequalifiedtoreceivenoticeof,attendandvoteattheAtwoodspecialmeetingandanyadjournmentorpostponementthereof.OntheAtwoodrecorddate,thereweresharesofAtwoodcommonstockoutstandingandentitledtovoteattheAtwoodspecialmeeting.
EachshareofAtwoodcommonstockisentitledtoonevoteoneachmattertobevotedonattheAtwoodspecialmeeting.
VoteRequiredforApproval;Quorum
ThepresenceattheAtwoodspecialmeetingoftheholders,presentinpersonorrepresentedbyproxy,ofamajorityoftheoutstandingsharesofAtwoodcommonstockentitledtovoteatthemeetingisnecessarytoconstituteaquorum.Abstentionsandbrokernon-voteswillbecountedforthepurposeofdeterminingwhetheraquorumispresent.
UndertheTBOC,theaffirmativevoteoftheholdersoftwo-thirdsoftheoutstandingsharesofAtwoodcommonstockentitledtovoteasoftheAtwoodrecorddateisrequiredtoapprovetheAtwoodMergerProposal.BecausetherequiredvotetoapprovetheAtwoodMergerProposalisbaseduponthenumberofsharesofAtwoodcommonstockissuedandoutstandingontheAtwoodrecorddateandentitledtovotethereon,abstentionsandbrokernon-votes,ifany,willhavethesameeffectasavotecast"AGAINST"theAtwoodMergerProposal.
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Assumingaquorumispresent,theaffirmativevoteofholdersofamajorityofthevotescastisrequiredtoapprove,onanadvisory(non-binding)basis,theAtwoodCompensatoryProposal.ThevotetoapprovetheAtwoodCompensatoryProposalisnotaconditiontothecompletionofthemerger,andthevoteofAtwood'sshareholdersonthisproposalisadvisoryinnatureandwillnotbebindingonEnscoorAtwood.Accordingly,regardlessoftheoutcomeoftheadvisoryvote,iftheAtwoodMergerProposalisapprovedandthemergeriscompleted,specifiedcompensationmaybepaid.Forpurposesofdeterminingthenumberofvotescastwithrespecttosuchmatter,abstentionsandanybrokernon-voteswillhavenoeffectontheoutcomeoftheAtwoodCompensatoryProposal.
AnyadjournmentoftheAtwoodspecialmeetingpursuanttotheAtwoodAdjournmentProposalrequirestheaffirmativevoteofamajorityofvotescastbytheholdersofsharesofAtwoodcommonstockpresentattheAtwoodspecialmeeting,inpersonorbyproxy,andentitledtovote,whetherornotaquorumexists.Abstentionsandanybrokernon-voteswillhavenoeffectontheoutcomeoftheAtwoodAdjournmentProposal.
AsoftheAtwoodrecorddate,directorsandexecutiveofficersofAtwoodanditsaffiliates,hadtherighttovoteapproximatelysharesofAtwoodcommonstock,or%oftheoutstandingAtwoodcommonstockonthatdate.OntheAtwoodrecorddate,thereweresharesofAtwoodcommonstockoutstandingandentitledtovoteattheAtwoodspecialmeeting.
ApprovaloftheAtwoodMergerProposalisrequiredforcompletionofthemerger.ApprovaloftheotherAtwoodproposalssetforthaboveisnotrequiredinordertocompletethemerger.
Proxies
EachcopyofthisdocumentmailedtoholdersofAtwoodcommonstockisaccompaniedbyaformofproxywithinstructionsforvoting.Ifyouholdstockinyournameasashareholderofrecord,youshouldcompleteandreturntheproxycardaccompanyingthisdocumenttoensurethatyourvoteiscountedattheAtwoodspecialmeeting,oratanyadjournmentorpostponementoftheAtwoodspecialmeeting,regardlessofwhetheryouplantoattendtheAtwoodspecialmeeting.YoumayalsoauthorizeaproxytovoteyoursharesbytelephoneorthroughtheInternetasinstructedontheproxycard.
Ifyouholdyourstockin"streetname"throughabroker,bank,trustorothernominee,youmustdirectyourbroker,bank,trustorothernomineetovoteinaccordancewiththeinstructionsyouhavereceivedfromyourbroker,bank,trustorothernominee.
IfyouareashareholderofrecordofAtwoodcommonstock,youcanrevokeyourproxyorvotinginstructionsorchangeyourvoteafteryouhavedeliveredyourproxyorvotinginstructionsinanyofthefollowingways:
• bysendingawrittennoticetotheCorporateSecretaryofAtwoodattheaddresssetforthinthisjointproxystatement/prospectus,intimetobereceivedbeforetheAtwoodspecialmeeting,statingthatyouwouldliketorevokeyourproxy;
• bycompleting,signinganddatinganotherproxycardandreturningitbymailintimetobereceivedbeforetheAtwoodspecialmeeting,orbysubmittingalaterdatedproxybytheInternetinwhichcaseyourlater-submittedproxywillberecordedandyourearlierproxyrevoked;or
• byattendingtheAtwoodspecialmeetingandvotinginperson(simplyattendingtheAtwoodspecialmeetingwithoutvotingwillnotrevokeyourproxyorchangeyourvote).
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Writtennoticesofrevocationandothercommunicationsaboutrevokingyourproxyshouldbeaddressedto:
AtwoodOceanics,Inc.15011KatyFreeway,Suite800
Houston,TX77094Attention:CorporateSecretary
AllsharesofAtwoodcommonstockrepresentedbyvalidproxiesthatAtwoodreceivesthroughthissolicitation,andthatarenotrevoked,willbevotedinaccordancewithyourinstructionsontheproxycard.
Ifyoufailtomakeaspecificationonyourproxycardastohowyouwantyoursharesvotedbeforesigningandreturningit,yourproxywillbevoted"FOR"theAtwoodMergerProposal;"FOR"theAtwoodCompensatoryProposal;and"FOR"theAtwoodAdjournmentProposal.
TheAtwoodBoardisnotcurrentlyawareofanybusinesstobeacteduponatthespecialmeetingotherthanthemattersdescribedinthisjointproxystatement/prospectus.If,however,othermattersareproperlybroughtbeforethespecialmeeting,thepersonsappointedasproxieswillhavediscretiontovoteoractonthosemattersasintheirjudgmentisinthebestinterestofAtwoodanditsshareholders.
SolicitationofProxies
Atwoodwillbearitsowncostsandexpensesincurredinconnectionwiththefiling,printingandmailingofthisjointproxystatement/prospectusandtheretentionofanyinformationagentorotherserviceproviderinconnectionwiththemerger.ThisproxysolicitationisbeingmadebyAtwoodonbehalfoftheAtwoodBoard.AtwoodhashiredInnisfreeM&AIncorporatedtoassistinthesolicitationofproxies.AtwoodhasagreedtopayInnisfreeM&AIncorporatedafeeof$25,000pluspaymentofcertainfeesandexpensesforitsservicestosolicitproxies.Inadditiontothismailing,proxiesmaybesolicitedbydirectors,officersoremployeesofAtwoodoritsaffiliatesinpersonorbytelephoneorelectronictransmission.Noneofthedirectors,officersoremployeeswillbedirectlycompensatedforsuchservices.
InaccordancewiththeregulationsoftheSECandtheNYSE,Atwoodalsowillreimbursebrokeragefirmsandothercustodians,nomineesandfiduciariesfortheirexpensesincurredinsendingproxiesandproxymaterialstobeneficialownersofsharesofAtwoodcommonstock.
AttendingtheMeeting;OtherMatters
AllholdersofAtwoodcommonstock,includingshareholdersofrecordandshareholderswhoholdtheirsharesthroughbrokers,banks,trusts,othernomineesoranyotherholderofrecord,areinvitedtoattendtheAtwoodspecialmeeting.ShareholdersofrecordcanvoteinpersonattheAtwoodspecialmeeting.Ifyouarenotashareholderofrecord,youmustobtainaproxyexecutedinyourfavorfromtherecordholderofyourshares,suchasabroker,bank,trustorothernominee,tobeabletovoteinpersonattheAtwoodspecialmeeting.IfyouplantoattendtheAtwoodspecialmeeting,youmustholdyoursharesinyourownnameorhavealetterfromtherecordholderofyoursharesconfirmingyourownershipandyoumustbringaformofpersonalphotoidentificationwithyouinordertobeadmitted.Atwoodreservestherighttorefuseadmittancetoanyonewithoutbothproperproofofshareownershipandproperphotoidentification.
AccordingtoAtwood'sbylaws,businesstobeconductedataspecialmeetingofAtwoodshareholdersmayonlybebroughtbeforethemeetingpursuanttoanoticeofmeeting,whichmustspecifythepurposesofthemeeting.Accordingly,nomattersotherthanthemattersdescribedinthisdocumentwillbepresentedforactionattheAtwoodspecialmeetingoratanyadjournmentorpostponementoftheAtwoodspecialmeeting.
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AdjournmentsandPostponements
TheAtwoodspecialmeetingmaybeadjournedpursuanttotheAtwoodAdjournmentProposalupontheaffirmativevoteofamajorityofvotescastbytheholdersofAtwoodcommonstockpresentattheAtwoodspecialmeeting,inpersonorbyproxy,andentitledtovote,whetherornotaquorumexists.Abstentionsandanybrokernon-voteswillhavenoeffectontheoutcomeoftheAtwoodAdjournmentProposalundertheAtwoodbylaws.TheAtwoodspecialmeetingmaybeadjournedwithoutnoticeotherthanannouncementatthemeeting,except,iftheadjournmentisformorethan30daysorifaftertheadjournmentanewrecorddateisfixedforthereconvenedmeeting,anoticeofthereconvenedmeetingmustbegiventoeachshareholderentitledtovoteatsuchmeeting.
Inaddition,atanytimepriortoconveningtheAtwoodspecialmeeting,theAtwoodBoardmaypostponetheAtwoodspecialmeetingwithouttheapprovalofAtwood'sshareholders.Ifpostponed,Atwoodwillpubliclyannouncethenewmeetingdate.Similartoadjournments,anypostponementoftheAtwoodspecialmeetingforthepurposeofsolicitingadditionalproxieswillallowAtwoodshareholderswhohavealreadysentintheirproxiestorevokethematanytimepriortotheiruse.
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THEMERGER
BackgroundoftheMerger
TheAtwoodBoard,togetherwithAtwood'smanagementandwiththeassistanceofAtwood'sadvisors,hasperiodicallyreviewedandconsideredvariousstrategicopportunitiesavailabletoAtwoodandwaystoenhanceshareholdervalueandtoenhanceAtwood'sperformanceandprospects,includinginlightofcompetitive,macroeconomicandindustrydevelopments.ThesereviewshaveincludeddiscussionsastowhetherthecontinuedexecutionofAtwood'sstrategyasastand-alonecompanyorthepossiblesaleofAtwoodorcertainofitsassetsto,orcombinationofAtwoodwith,athirdpartyofferedthebestavenuetoenhanceshareholdervalue,andthepotentialbenefitsandrisksofanysuchtransaction.ToassistAtwoodinconnectionwiththeforegoingandtohelpAtwoodrespondtoanyproposalsitmayreceive,AtwoodformallyengagedGoldmanSachstoactasAtwood'sfinancialadvisoronJune25,2015.
AtameetingonFebruary27,2015betweenRobertJ.Saltiel,adirectorandthePresidentandChiefExecutiveOfficerofAtwood,andtheCEOofCompanyA,theCEOofCompanyAindicatedthatcombiningAtwoodandCompanyAcouldpossiblymakestrategicsenseforthetwocompaniesandtheirrespectiveshareholdersandifAtwoodwaseverinterestedindoingatransaction,Mr.Saltielshouldcontacthim.Mr.SaltielrespondedthatAtwoodwasnotfocusedoncombinationtransactionsatthattime.Mr.SaltielsubsequentlydiscussedthesubstanceoftheconversationwithGeorgeS.Dotson,ChairmanoftheAtwoodBoard.
TheEnscoBoard,togetherwithEnsco'sexecutivemanagementteam,periodicallyreviewsstrategiestoimproveEnsco'scapitalstructureandoptimizeoperationalefficiencyandtoenhanceEnsco'sfuturegrowthopportunitiesandshareholdervalue.Thereviewoffuturegrowthopportunitiesencompassesarangeofpotentialstrategies,including:improvingEnsco'sexistingdrillingrigfleetthroughcapitalimprovementsandinvestmentsininnovation;expandingthemarketsinwhichEnscooperatesthroughjointventuresand/orstrategicpartnerships;acquisitionsofindividualorgroupsofdrillingrigs;andlargerscalebusinesscombinationsandstrategictransactions.
DuringanEnscoBoardmeetingheldonAugust22,2016,CarlG.Trowell,adirectorandtheChiefExecutiveOfficerandPresidentofEnsco,andPatrickCareyLowe,theExecutiveVicePresidentandChiefOperatingOfficerofEnsco,presentedAtwoodtotheEnscoBoardasoneofseveralpotentialfuturegrowthopportunitiesanddiscussedwiththeEnscoBoardAtwood'sfleetquality,potentialsynergies,backlog,capitalstructureandgeographicfootprint.GiventheattractivenessoftheAtwoodfleetanditscomplementarynaturetotheEnscofleet,itwasagreedthatexecutivemanagementwouldcontinuetoassessAtwoodalongwithotherpotentialacquisitiontargets.
DuringanexecutivesessionofanAtwoodBoardmeetingheldonAugust25,2016,theAtwoodBoarddiscussedthebenefitsofconsolidationintheoffshoredrillingindustrygiventhedownturnintheindustryandpotentialcostsynergiesthatcouldbeachievableinacombinationtransaction.Followingthediscussionofthemerits,theAtwoodBoardauthorizedMr.Saltieltoidentifyandexplorepotentialopportunitiesforconsolidation.
AtabreakfastmeetingonSeptember9,2016,Mr.SaltielindicatedtotheCEOofCompanyAthattheAtwoodBoardmightbeopentoconsideringacombinationbetweenCompanyAandAtwoodifitwouldbecompellingtoAtwood'sshareholders.TheCEOofCompanyAindicatedthathewoulddiscussthematterwiththeCompanyAboardofdirectors.
Atalunchmeetinglaterthatday,Mr.SaltielindicatedtotheCEOofCompanyBthattheAtwoodBoardmightbeopentoconsideringacombinationbetweenCompanyBandAtwoodifitwouldbecompellingtoAtwood'sshareholders.TheCEOofCompanyBindicatedthatCompanyBhadnotpreviouslyanalyzedacombinationwithAtwood,andonSeptember19,2016heemailed
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Mr.Saltieltostatethathisteamwasconductingpreliminaryanalysisofacombination.CompanyBneverfollowedupwithanyindicationofinterestincombiningwithAtwood.
AtanindustryeventonNovember1,2016,theCEOofCompanyCapproachedMr.SaltieltoindicatethatCompanyChadanalyzedapotentialcombinationwithAtwoodgiventhecomplementarynatureoftheirrespectivebusinesses,butthathedidnotbelievethemarketconditionsatthetimewereconduciveforCompanyCtopursueatransaction.CompanyCneverfollowedupwithanyindicationofinterestincombiningwithAtwood.
DuringanexecutivesessionofanAtwoodBoardmeetingheldonNovember17,2016,Mr.SaltieldiscussedhispreviousmeetingswiththeCEOsofCompanyA,CompanyBandCompanyC.TheAtwoodBoarddiscussedthosemeetingsandthepotentialforcontinuingtoexploreotherstrategicalternatives.
OnJanuary26,2017,MarkSmith,SeniorVicePresidentandChiefFinancialOfficerofAtwood,metforlunchwiththeCFOofCompanyD.TheCFOofCompanyDaskedMr.SmithifAtwoodwouldbeinterestedinapotentialcombinationwithCompanyDandifso,whattypeofconsiderationAtwoodwouldacceptinsuchatransaction.Mr.SmithstatedthatAtwoodandtheAtwoodBoardwereopentoexploringanystrategicalternativesthatwouldbecompellingtotheAtwoodshareholders.Mr.SmithandtheCFOofCompanyDagreedtoinformthechiefexecutiveofficersoftheirrespectivecompanies.Mr.SmithcalledMr.Saltielthateveningtoinformhimofthemeetingandwhatwasdiscussed.
DuringanEnscoBoardmeetingheldonFebruary21,2017,Mr.Trowell,Mr.LoweandJonathanBaksht,SeniorVicePresidentandChiefFinancialOfficer,againpresentedAtwoodalongwitharangeofotherstrategicalternativestotheEnscoBoardaspartofitscorporatestrategyreviewandnotedthatAtwoodhadundertakencertaincapitalrestructuringstepstoimproveitsbalancesheet.
AtaMarch1,2017breakfastmeeting,theCEOofCompanyDaskedMr.SaltielifAtwoodwouldbeopentoengaginginacorporatecombinationwithCompanyD.Mr.SaltielrespondedthatAtwoodandtheAtwoodBoardwereopentoconsideringanystrategicalternativesthatarecompellingtotheAtwoodshareholders.TheCEOofCompanyDstatedthathewouldfollowupwithMr.Saltielonthismatteratalaterdate.Mr.SaltielsubsequentlydiscussedthesubstanceoftheconversationwithMr.Dotson.
InconnectionwithachangeinpersonnelontheGoldmanSachsteam,AtwoodandGoldmanSachsenteredintoasecondengagementletterdatedMarch14,2017.
OnApril13,2017,Mr.SaltielandtheCEOofCompanyAhadatelephoneconversationinwhichMr.SaltielaskedtheCEOofCompanyAifCompanyAwouldhaveinterestinacquiringcertainofAtwood'sassetsifAtwooddeterminedtopursuesuchasale.TheCEOofCompanyAfollowedupthisphonecallbyleavingavoicemailwithMr.SaltielstatingthatCompanyAwouldnotbeinterestedinacquiringsolelythoseassetsbutwouldpotentiallybeinterestedinacorporatecombination.TheCEOofCompanyAindicatedthathewoulddiscussitwiththeCompanyAboardofdirectorsatitsnextmeeting.
AtanApril18,2017meetingbetweenMr.SaltielandtheCEOofCompanyD,theCEOofCompanyDstatedthatCompanyDwouldbepreparedtomakeanall-stockproposalforAtwoodrepresentinganapproximately30%premiumtoAtwood'sthencurrentshareprice,oranimpliedvalueofapproximately$10.40pershareofAtwoodcommonstockonthatdate.Mr.SaltielindicatedthathewoulddiscussanysuchproposalwiththeAtwoodBoardbutthat,givenrecenttradingpricesoftherespectivecompanies'shares,hedidnotbelievetheAtwoodBoardwouldfindtheproposedconsiderationsufficientlycompellingtotheAtwoodshareholders.Mr.SaltielsubsequentlydiscussedthesubstanceoftheconversationwithMr.Dotson.
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InlightofthepositivechangesintheAtwoodbalancesheet,improvingvaluationsandthebeliefthatAtwoodmaybepursuingstrategicoptionswithotherparties,Mr.TrowellcalledMr.SaltielonApril19,2017toexpressaninterestinapotentialacquisitionofAtwoodbyEnsco.Asaresultofitsperiodicstrategicreview,theEnscoBoardwasopentoconsideringastrategiccombinationwithapartnerthatwouldprovideagoodstrategicfitwithEnscoandenhanceshareholdervalue.TheEnscoBoardandEnsco'smanagementbelievedthatacombinationwithAtwoodcouldenhanceEnsco'sassetandcustomerbaseandgeographicscopeatanattractivevaluation.EnscoalsobelievedthatAtwoodmightconsidersuchacombinationinlightofitsdecliningbacklogandcontractingactivity.Mr.SaltielstatedthatAtwoodandtheAtwoodBoardwereopentoexploringanystrategicalternativesthatwouldbecompellingtotheAtwoodshareholders.
DuringthesecondhalfofApril2017andthefirstpartofMay2017,EnscoconductedadiligencereviewofAtwood'spublicfilingsandpubliclyavailablematerialsrelatedtoAtwoodanditsoperations.
OnApril20,2017,theCEOofCompanyAcalledMr.SaltieltoinquirewhetherAtwoodwouldpotentiallybeinterestedinacombinationwithCompanyA.Mr.SaltielstatedthatAtwoodandtheAtwoodBoardwereopentoexploringanystrategicalternativesthatwouldbecompellingtotheAtwoodshareholders.TherewerenofurtherdiscussionswithCompanyApriortotheannouncementofthemerger,nordidAtwoodenterintoaconfidentialityorstandstillagreementwithCompanyA.
OnApril25,2017,theCEOofCompanyDsentMr.Saltielanon-bindingindicationofinterestforCompanyDtocombinewithAtwoodinwhichtheAtwoodshareholderswouldreceivesharesofCompanyDstockatanexchangeratiowhichvaluedAtwoodatanimpliedequityvalueof$11.00pershareofAtwoodcommonstock,a40%premiumtoAtwood'sApril24closingstockprice(the"CompanyDProposal").TheCompanyDProposalindicatedthatthetransactionwouldnotbesubjecttoanyfinancingcontingencyandcontainedarequestfora30-dayexclusivityperiodforthepartiestoconductduediligenceandnegotiatedefinitiveagreements.TheCompanyDProposalrequestedaresponsefromAtwoodbyMay8,2017.
OnApril27,2017,AtwoodcontactedGibson,Dunn&CrutcherLLP("GibsonDunn")toassistAtwoodinconnectionwiththeevaluationoftheapproachesdescribedabove,includingtheCompanyDProposal,andonMay5,2017AtwoodformallyengagedGibsonDunntoactasAtwood'slegalcounsel.
OnMay2,2017,Mr.SaltielcalledtheCEOofCompanyDtoinformhimthat,givenAtwoodmanagement'sfocusonitsupcomingearningsreleaseandanindustryconference,AtwoodwouldneedmoretimetoanalyzetheCompanyDProposalandrespond.TheCEOofCompanyDacknowledgedMr.Saltiel'srequest.
TheAtwoodBoardheldameetingonMay10,2017atwhichmembersofAtwoodmanagement,includingMr.SaltielandWalterA.Baker,Atwood'sSeniorVicePresident,GeneralCounselandCorporateSecretary,werepresent,alongwithrepresentativesofGibsonDunnandGoldmanSachs.RepresentativesofGibsonDunnprovidedtheAtwoodBoardwithanoverviewofdirectorresponsibilitiesandfiduciarydutiesinthecircumstances.RepresentativesofGoldmanSachsrevieweditspreliminaryfinancialanalysesofAtwoodandtheCompanyDProposal.TheAtwoodBoarddiscussedthevariousalternativespresentedandthereasonablenessofdifferentapproaches.Theyalsodiscussedrelativevaluationsandviewsonthevaluesoftheconsiderationthatcouldbeofferedbytheotherpotentialparties.Mr.SaltielprovidedhisviewstotheAtwoodBoardthatatransactionwithCompanyDbasedonthetermsintheCompanyDProposalwouldallowAtwoodshareholderstoparticipateinanyrecoveryintheoffshoredrillingindustryandthepositivesynergiesthatacombinationwithCompanyDwouldcreate.Mr.SaltielrecommendedthatAtwoodprovideacounterproposaltoCompanyDinordertotrytoobtainincreasedvalueandforrepresentationonCompanyD'sboardofatleasttwocurrentAtwooddirectors.TheAtwoodBoardconcurredwithMr.Saltiel'srecommendationsandMr.SaltielinformedtheAtwoodBoardthathewouldkeepit
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apprisedofdiscussionswithCompanyD.TheAtwoodBoardalsodiscussedwhethertoapproachanyoftheotherpotentialparties,includingCompanyAandEnsco,andconcludedthatitwouldbedisadvantageoustodosoatthattimeduetopotentialrisksofjeopardizingtheCompanyDProposalandreputationalandoperationalrisksiftheinformationwasmadepublicthatAtwoodwasapproachingotherpartiesaboutpotentialbusinesscombinations.
OnMay10,2017,Mr.SaltielcalledtheCEOofCompanyDtoprovideacounterproposaltotheCompanyDProposal.Mr.SaltielstatedthatAtwoodwouldbeopentoconsideringanall-stockacquisitionbyCompanyDthatvaluedAtwoodata66.5%premiumtoAtwood'sMay10closingsharepriceandwhichprovidedfortwomembersoftheAtwoodBoardtobenominatedtotheCompanyDboardfollowingtheclosingofthetransaction.TheCEOofCompanyDindicatedthattheproposedvaluationwasnotinarangethatCompanyDfoundacceptable.
OnMay11,2017,EnscoretainedMorganStanleytoactasafinancialadvisortoEnscoinconnectionwithapotentialtransactionwithAtwood.Onthesamedate,EnscoengagedLatham&WatkinsLLP("Latham")asitsU.S.legaladvisorandSlaughterandMay("Slaughter")asitsU.K.legaladvisor.
FollowingitsdiligenceeffortsanddiscussionswithMorganStanley,EnscowaspreparedtosubmitaninitialoffertoAtwood.OnMay12,2017,Mr.TrowellandPaulE.Rowsey,III,ChairmanoftheEnscoBoard,sentanon-bindingindicationofinterest(the"InitialEnscoIndicationofInterest")fromEnscoaddressedtoMr.SaltielandMr.DotsonproposingthatEnscoandAtwoodcombineinanall-stocktransactioninwhichtheAtwoodshareholderswouldreceive1.278EnscoClassAordinarysharesforeachshareofAtwoodcommonstockheldbysuchholder,whichvaluedAtwoodatanimpliedequityvalueof$10.17perAtwoodshareandreflecteda20.0%premiumtoAtwood'sclosingstockpriceonMay11,2017.FollowingsubmissionoftheInitialEnscoIndicationofInterest,severalseparatediscussionswereheldamongMr.Rowsey,Mr.Trowell,Mr.BakshtandMichaelT.McGuinty,SeniorVicePresidentandGeneralCounsel.Messrs.RowseyandTrowellthenupdatedtheremainingEnscoBoardmembersregardingthesubmissionoftheInitialEnscoIndicationofInterest.
OnMay16,2017,atthedirectionoftheAtwoodBoard,representativesofGoldmanSachscalledrepresentativesofCompanyD'sfinancialadvisortodiscussAtwood'scounterproposalofMay10,2017.CompanyD'sfinancialadvisorreiteratedthattheproposedvaluationwasnotinarangethatCompanyDfoundacceptableandthatCompanyDdidnotplantoreviseitsproposalatthattime.TherewerenofurtherdiscussionswithCompanyDoritsrepresentativespriortotheannouncementofthemerger,nordidAtwoodenterintoaconfidentialityorstandstillagreementwithCompanyD.
OnMay17,2017,theAtwoodBoardheldanexecutivesessionatwhichrepresentativesofGibsonDunnandGoldmanSachswerepresent.Mr.SaltielandrepresentativesofGoldmanSachsreviewedwiththeAtwoodBoardtheInitialEnscoIndicationofInterest.TherepresentativesofGoldmanSachsrevieweditspreliminaryfinancialanalysesofAtwoodandtheproposalsfromEnscoandCompanyD.TheAtwoodBoardaskedquestionswithrespecttoanddiscussedtherespectivebusinessesandprospectsforeachofEnscoandCompanyDandpotentialstrategiesfornegotiatingwithbothparties.Mr.SaltielindicatedthatEnsco'sall-stockproposalwouldrequireEnscoshareholderapprovalandthatAtwoodfacedpossiblebusinessdisruptionrisksifEnscoshareholdersdidnotapproveatransaction.Mr.SaltielproposedthathewouldcontactMr.TrowelltoexplainthatEnsco'sproposalwasatalowervaluationthananotheropportunityandthatifEnscomadearevisedproposal,Atwood'spreferencewouldbefortheproposaltoincludebothstockandcash,withthestockportionbelowthethresholdrequiringanEnscoshareholdervote.TheAtwoodBoardconcurredwithMr.Saltiel'sproposal.
OnMay19,2017,Mr.SaltielinformedMr.TrowellonthetelephonethattheInitialEnscoIndicationofInterestrepresentedalowervaluationforAtwoodthananotheropportunitywhichAtwoodwasexploring.Mr.SaltielalsoindicatedthatAtwoodwouldprefertoengageinatransactionwithincreasedclosingcertaintywhichdidnotrequireashareholdervotefromEnscoandtherefore
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Mr.SaltielsuggestedthatanyrevisedproposalfromEnscoincludebothstockandcash,withthestockportionbelowthethresholdrequiringanEnscoshareholdervote.
OnMay20,2017,atthedirectionoftheAtwoodBoard,representativesofGoldmanSachshadacallwithrepresentativesofMorganStanleytodiscusstheEnscoproposal.RepresentativesofGoldmanSachsindicatedthatvalueanddealcertainty,particularlyaroundtheEnscoshareholdervote,wereimportantconsiderationsforAtwood.RepresentativesofGoldmanSachsalsodiscussedwithMorganStanleythattheInitialEnscoIndicationofInterestrepresentedalowervaluationforAtwoodthananotheropportunitywhichAtwoodwasexploring.RepresentativesofGoldmanSachsreiteratedAtwood'spreferencethatanyrevisedproposalfromEnscoincludebothstockandcash,withthestockportionbelowthethresholdrequiringanEnscoshareholdervote.
OnMay22,2017,theAtwoodBoardheldameetingatwhichmembersofAtwood'smanagement,includingMr.SaltielandMr.Baker,actingasSecretaryofthemeeting,andrepresentativesofGibsonDunnandGoldmanSachswerepresent.Mr.SaltielandrepresentativesofGoldmanSachsupdatedtheAtwoodBoardondiscussionswithMr.TrowellandMorganStanley.TheAtwoodBoarddiscussedwithrepresentativesofGibsonDunnthepossibilityofnegotiatingareverseterminationfeetobepaidbyEnscointheeventthattheEnscoshareholdersdidnotapprovethemerger,includingthefeasibilityofsuchafeecompensatingAtwoodforanylossinvalueintheeventthemergerdidnotclose.Mr.SaltielthendiscussedthestatusofdiscussionswithCompanyD.CompanyDhadnotrespondedtoAtwood'scounterproposalsinceMr.SaltielhadspokenwiththeCEOofCompanyDonMay10,2017andGoldmanSachs'followupcallwithCompanyD'sfinancialadvisoronMay16,2017,andatthencurrentstockprices,theCompanyDProposalrepresenteda14%premium,asubstantialdecreasecomparedtoa40%premiumatthetimeitwasmade.Mr.SaltielproposedtowaituntilAtwoodhadheardbackfromEnscobeforepotentiallyapproachingCompanyDagain,andtheAtwoodBoardconcurredwiththissuggestedapproach.
OnMay23,2017,inconnectionwitharegularlyscheduledmeetingoftheEnscoBoard,Messrs.TrowellandBakshtdiscussedthepotentialacquisitionofAtwoodwiththeEnscoBoardandthepotentialbenefitsofcombiningthecompanies.Mr.TrowellupdatedtheEnscoBoardonhisMay19,2017discussionwithMr.Saltiel.DuringtheEnscoBoardmeeting,representativesofMorganStanleyalsomadeapresentationtotheEnscoBoardregardingapossiblebusinesscombinationwithAtwood.FollowingdiscussionswithEnscomanagementandMorganStanley,theEnscoBoardauthorizedmanagementtosubmitarevisedindicationofinterest(the"RevisedEnscoIndicationofInterest").SubsequenttotheEnscoBoardmeeting,Mr.TrowellstatedtoMr.SaltielonatelephonecallthatEnscoplannedtosendarevisedindicationofinterestthatrepresentedEnsco'sbestandfinalproposal.
OnMay24,2017,Mr.TrowellandMr.RowseysenttheRevisedEnscoIndicationofInteresttoMr.SaltielandMr.Dotson.TheRevisedEnscoIndicationofInterestproposedanall-stocktransactioninwhichtheAtwoodshareholderswouldreceive1.60EnscoClassAordinarysharespershareofAtwoodcommonstock,whichvaluedAtwoodatanimpliedequityvalueof$12.19perAtwoodshareandreflecteda37%premiumtoAtwood'sclosingstockpriceonMay23,2017.TheRevisedEnscoIndicationofInterestindicatedthat,inordertoaddressAtwood'sdesiretomaximizedealcertainty,Enscoproposedtoincludea$50millionreverseterminationfeepayablebyEnscotoAtwoodintheeventthatEnsco'sshareholdersdidnotapprovethemerger.TheRevisedEnscoIndicationofInterestrequestedexclusivitythroughMay29,2017tocompleteduediligenceandnegotiatedefinitiveagreements.
FollowingAtwood'sreceiptoftheRevisedEnscoIndicationofInterest,membersofAtwood'smanagement,includingMessrs.SaltielandBaker,heldateleconferenceonMay24,2017withrepresentativesofGoldmanSachsandGibsonDunntodiscussthereceiptoftheproposalandtoprepareforthemeetingoftheAtwoodBoardwhichwastobeheldthefollowingday.
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OnMay25,2017,theAtwoodBoardheldameetingatwhichmembersofAtwood'smanagement,includingMr.SaltielandMr.Baker,actingasSecretaryofthemeeting,andrepresentativesofGibsonDunnandGoldmanSachswerepresent.Mr.SaltielandrepresentativesofGoldmanSachsupdatedtheAtwoodBoardontheRevisedEnscoIndicationofInterestanddiscussionswithMessrs.TrowellandBaksht.Mr.SaltielnotedthatMr.TrowellinformedhimthattheEnscoproposalrepresenteditsbestandfinalproposalforastrategictransaction.Mr.SaltieldescribedthetermsoftheRevisedEnscoIndicationofInterestincludingthefactthat(i)theproposalwasforanall-stocktransaction,(ii)Enscohadincreasedtheexchangeratioofthemergerconsiderationfrom1.278EnscoClassAordinarysharesperAtwoodshareto1.60EnscoClassAordinarysharesperAtwoodshare,(iii)Enscohadcommittedtoa$50millionreverseterminationfeeintheeventthatEnscoshareholdersfailedtoapprovethetransaction,(iv)EnscohadcommittedtoashorttimelinetonegotiatedefinitiveagreementsbyMay29,2017and(v)Ensco'sproposalwouldexpirethenextday,May26,2017at12:00p.m.(Houstontime).RepresentativesofGoldmanSachsrecountedtheirconversationswithMr.BakshtandrepresentativesofMorganStanleywhostatedthattheRevisedEnscoIndicationofInterestrepresentedEnsco'sbestandfinalproposalandthatifAtwooddidnotengageinnegotiationswithEnscoonthetermsincludedintheRevisedEnscoIndicationofInterestbeforetheproposalexpired,Enscowaslikelytopursueotheralternatives.RepresentativesofGibsonDunnindicatedthatLathamhadinformedthemthattheEnscoBoardhaddeterminedthatthe$50millionreverseterminationfeewasreasonableunderthecircumstancesbutthattheEnscoBoardwasnotpreparedtosupportahigherfee.TheAtwoodBoarddiscussedthecontinuingviabilityofatransactionwithCompanyD.Mr.SaltielstatedthatCompanyDhadceasedengagingindiscussionssinceitsproposalofApril25,2017,thatAtwoodriskedlosingtheEnscoproposalifitreinitiatedcontactwithCompanyDandthatEnsco'smostrecentproposalrepresentedasubstantiallyhigherpremiumthantheCompanyDProposal.TheAtwoodBoardconcurred.TheAtwoodBoardalsodiscussedthecomparativefinancialperformancesandbalancesheetsofEnscoandAtwood.Mr.SaltielsuggestedthatacombinationwithEnscocouldbemoreadvantageoustotheAtwoodshareholdersthantheCompanyDProposalbutwouldneedtobeconfirmedthroughduediligence.Mr.SaltielproposedengagingindiscussionsandduediligencewithEnscoandagreeingtoacustomaryexclusivityagreementwithEnscothroughMay29,2017withtheintenttonegotiatedefinitiveagreementsinthetimeframeproposedbyEnsco.Mr.SaltielrecommendedthatAtwoodproposerepresentationontheEnscoBoardofatleasttwocurrentAtwooddirectors.TheAtwoodBoardconcurredwithMr.Saltiel'sproposals.
AftertheAtwoodBoardmeetingonMay25,2017,Mr.SaltielcalledMr.Trowelltodiscussenteringintoaconfidentialityagreement.
OnMay25,2017,Ensco,Atwoodandtheirrespectivelegalcounsels,LathamandGibsonDunn,negotiatedaconfidentialityagreement.OnMay25,2017,EnscoandAtwoodenteredintoaconfidentialityagreementthatdidnotcontainstandstilloremployeenon-solicitationprovisions.Thepartiesagreedthattheywouldexecuteanaddendumtotheconfidentialityagreementcontainingcustomarystandstillandemployeenon-solicitationprovisionsbeforethepartiescommencednegotiationsofadefinitivemergeragreement.
OnMay25,2017,Mr.Saltiel,Mr.TrowellandrepresentativesoftheirrespectivefinancialadvisorsatGoldmanSachsandMorganStanleyparticipatedinateleconferencetoconductpreliminaryduediligenceandMr.SaltielandMr.TrowelldiscussedEnsco'svisionandstrategyforthecombinedcompany.
OnMay26,2017,Mr.SaltielcalledMr.TrowellandindicatedthatAtwoodwouldbewillingtoproceedwithdiligenceandthenegotiationofadefinitivemergeragreementonthebasisofthetermsintheRevisedIndicationofInterestifEnscowouldappointtwoAtwooddirectorstotheEnscoBoardtoreflectAtwood'sproformaownershipofthecombinedcompany.
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OnMay26,2017,AtwoodformallyengagedGoldmanSachstoactasAtwood'sfinancialadvisorinconnectionwiththeprospectivetransaction.
OnMay26,2017,followingdiscussionswithmembersoftheEnscoBoard,Mr.Trowellsentafinalindicationofinterest(the"FinalEnscoIndicationofInterest")toMr.Saltiel,whichthepartiesexecutedonthatday.TheFinalEnscoIndicationofInterestmaintainedEnsco'snon-bindingproposal(i)toacquireAtwoodinall-stocktransactioninwhicheachshareofAtwoodcommonstockwouldbeexchangefor1.60EnscoClassAordinarysharesand(ii)topayareverseterminationfeeof$50millionintheeventtheEnscoshareholdersdidnotapprovethemerger.TheFinalEnscoIndicationofInterestalsostatedthatEnscowouldappointtwoAtwooddirectors,tobeagreedbytheparties,asnon-executivedirectorstotheEnscoBoarduponconsummationofthemerger.TheFinalEnscoIndicationofInterestcontainedbindingcustomaryexclusivityprovisions,andAtwoodagreedtonegotiateexclusivelywithEnscothroughMay29,2017.
OnMay26,2017,EnscoandAtwoodenteredintoanaddendumtotheconfidentialityagreementcontainingcustomarystandstillandemployeenon-solicitationprovisions.
OntheeveningofMay26,2017,LathamsentGibsonDunnadraftofthemergeragreementthatproposed,amongotherprovisions:(i)toexpandtheEnscoBoardtoincludetwoAtwoodnon-employeedirectors;(ii)thatthepartiesmakesubstantiallyreciprocalrepresentationsandwarranties;(iii)limitedrestrictionsonEnsco'sconductofbusinesspriortoclosing,whichwerenotreciprocal,andmoreexpansiverestrictionstowhichAtwoodwouldbesubject;(iv)ano-shopcovenantonlyapplicabletoAtwood;(v)a$50millionterminationfeepayablebyEnscoundercertaincircumstancesincludingiftheEnscoshareholdersdidnotapprovethemerger;and(vi)aterminationfeepayablebyAtwoodequalto4%ofimpliedequityvaluepayableundercertaincircumstances,includingifAtwoodbreacheditsno-shopcovenants.
OnMay27,2017,Mr.SaltielandMr.Trowelldiscussedopenissuesinthemergeragreement,includingthelackofreciprocalno-shopprovisionsandreciprocalrestrictionsonEnsco'sconductofbusinessandthesizeoftheterminationfeepayablebyAtwood.Mr.SaltielindicatedthatGibsonDunnwouldbesendingarevisedmergeragreementtoLathamreflectingAtwood'spositionslaterthatevening.Mr.Trowelladvisedthathewouldworkwithhisteamtoresolvetheopenissues.
FollowingthecallbetweenMessrs.SaltielandTrowell,overnightonMay27,2017,GibsonDunnsentLathamareviseddraftofthemergeragreementthatproposed,amongotherprovisions:(i)substantiallyreciprocalrestrictionsonEnsco'sconductofbusinesspriortoclosingtothosetowhichAtwoodwouldbesubject;(ii)mutualno-shopcovenants;and(iii)thatthesizeoftheAtwoodterminationfeewasleftopentodiscussion.
OnMay27,2017,EnscoretainedDNBCapitalLLCandHSBCSecurities(USA)Inc.asco-financialadvisorstoprovidefinancialadvisoryservicestoEnsco'smanagementrelatedtothepotentialtransactionwithAtwoodandtoassistEnscoinstructuringthecombinedcompany'santicipatedcapitalizationfollowingsuchtransaction.
FromMay27,2017throughMay29,2017,representativesofEnscoandAtwood,alongwiththeirrespectivelegaladvisors,exchangedduediligencematerialsandconductedvariousduediligencecallsrelatingto,amongotherthings,financialandaccounting,compliance,environmental,legalandhumanresourcesmatters.OverthesameperiodrepresentativesofEnsco,AtwoodandtheirrespectivelegaladvisorsalsoconductedmultipleteleconferencecallstodiscusstaxdiligenceandthetaxconsequencesoftheproposedtransactiontoAtwoodshareholders.
DuringthecourseofthedayonMay28,2017,Atwood,Enscoandtheirrespectiveadvisorsalsohelddiscussionsregardingthemergeragreement.
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OntheeveningofMay28,2017,LathamsentGibsonDunnareviseddraftofthemergeragreementthatproposed,amongotherprovisions:(i)reducedrestrictionsonEnsco'sconductofbusinesspriortoclosingascomparedtothosecontainedintheGibsonDunndraftmergeragreementofMay27,2017;and(ii)thatthesizeoftheAtwoodterminationfeewasleftopentodiscussion.
OnMay29,2017,Mr.SaltielcalledMr.Trowelltodiscussopenissuesinthemergeragreement,includingthosemattersdescribedabove.DuringthecourseofthedayonMay29,2017,Atwood,Enscoandtheirrespectiveadvisorsengagedinnegotiationsregarding,andLathamandGibsonDunnexchangedreviseddraftsof,themergeragreementandcontinuedtoengageinduediligence.
Followingtheforegoingnegotiationsandresolutionofthepointsatissue,intheearlyeveningofMay29,2017,LathamdeliveredtoGibsonDunnasubstantiallyfinaldraftofthemergeragreement,acopyofwhichbothEnscoandAtwoodprovidedtotheirrespectiveboardsofdirectors.ThedraftreflectedanagreementinprincipleamongthepartiesonallmaterialpointsincludingthesizeoftheAtwoodterminationfee.
OnMay29,2017,theAtwoodBoardheldameetingatwhichmembersofAtwood'smanagement,includingMessrs.SaltielandSmithandMr.Baker,actingasSecretaryofthemeeting,andrepresentativesofGibsonDunnandGoldmanSachswerepresent.Messrs.Saltiel,BakerandSmithandGibsonDunnprovidedtheAtwoodBoardwithinformationonthematerialtermsofthemergeragreementwithEnsco.Duringthemeeting,representativesofGoldmanSachsrevieweditsfinancialanalysisoftheproposedtransactionanddeliveredtotheAtwoodBoarditsoralopinion,whichrepresentativesofGoldmanSachsconfirmedbydeliveryofawrittenopiniondatedMay29,2017,that,asofthatdateandbaseduponandsubjecttothefactorsandassumptionssetforththerein,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstock,asmorefullydescribedbelowinthesectionentitled"—OpinionofFinancialAdvisortoAtwood."GibsonDunnreviewedwiththeAtwoodBoarditsfiduciarydutiesandthekeyprovisionsofthemergeragreement.TheAtwoodBoardaskedquestionsanddiscusseditsduties,themergeragreementprovisionsandrelatedmatters.AfterdiscussioninwhichtheAtwoodBoardconsideredthefactorsdiscussedfurtherinthesectionentitled"—Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors,"themembersoftheAtwoodBoardunanimouslyapprovedthemergeragreementandthetransactionscontemplatedbythemergeragreement.TheAtwoodBoardalsodeemeditadvisabletoconsummatethemergeronthetermsandsubjecttotheconditionssetforthinthemergeragreement,andtorecommendthatAtwoodshareholdersvotetoapprovethemergerandtheothertransactionscontemplatedbythemergeragreement.
OnMay29,2017,theEnscoBoardheldameeting,togetherwithitslegalandfinancialadvisors,todiscusstheproposedtransaction.Atthismeeting,amongothermatters,Messrs.Trowell,Lowe,BakshtandMcGuintydiscussedwiththeEnscoBoardthediligenceconductedwithrespecttoAtwoodandLathamreviewedwiththeEnscoBoardthetermsofthemergeragreement.RepresentativesofMorganStanleyrendereditsoralopiniontotheEnscoBoard,subsequentlyconfirmedbydeliveryofawrittenopinion,datedMay29,2017,that,asofthedateofsuchopinion,andbaseduponandsubjecttothevariousassumptionsmade,proceduresfollowed,mattersconsideredandqualificationsandlimitationsonthescopeofreviewundertakenassetforthinitswrittenopinion,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtoEnsco.FollowingadiscussionregardingtheproposedtransactionbytheEnscoBoard,theEnscoBoardunanimouslydeterminedthattheform,termsandprovisionsofthemergeragreementandthetransactionscontemplatedthereby,includingthemergerandtheallotmentandissuanceoftheEnscoClassAordinaryshares,wereadvisable,fairandreasonabletoandinthebestinterestsofEnscoanditsshareholders.TheEnscoBoardunanimouslydeterminedtorecommendthatEnscoshareholdersvotetoapprovetheEnscoMergerConsiderationProposal.
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AtwoodandEnscothenexecutedthemergeragreementlaterthatevening.
PriortotheopeningofmarketsintheUnitedStatesonMay30,2017,AtwoodandEnscojointlyannouncedthemergerandheldajointinvestorconferencecall.
Ensco'sReasonsfortheMerger;RecommendationoftheEnscoBoardofDirectors
ByvoteatameetingheldonMay29,2017,theEnscoBoardunanimouslydeterminedthattheform,termsandprovisionsofthemergeragreementandthetransactionscontemplatedthereby,includingthemergerandtheallotmentandissuanceoftheEnscoClassAordinaryshares,areadvisable,fairandreasonabletoandinthebestinterestsofEnscoanditsshareholders.TheEnscoBoardunanimouslyrecommendsthatEnscoshareholdersvote"FOR"theEnscoMergerConsiderationProposal.
IndecidingtoapprovethemergeragreementandtorecommendthatEnscoshareholdersvotetoapprovetheEnscoMergerConsiderationProposal,theEnscoBoardconsultedwithEnsco'smanagementandfinancialandlegaladvisorsandconsideredseveralfactors.
TheEnscoBoardconsideredanumberoffactorswhenevaluatingthemerger,manyofwhichsupporttheEnscoBoard'sdeterminationthatthemergerisadvisable,fairandreasonabletoandinthebestinterestofEnscoanditsshareholders.TheEnscoBoardconsideredthesefactorsasawholeandwithoutassigningrelativeweightstoeachsuchfactor,andoverallconsideredtherelevantfactorstobefavorableto,andinsupportof,itsdeterminationsandrecommendations.Thesefactorsincluded:
• thatthemergerwouldenhanceEnsco'sassetbasethroughtheadditionofhigh-specificationdrillships,semisubmersiblesandjackups,creatingacombinedfleetthatwouldbeamongthemosttechnologicallyadvancedintheindustryandmeetthedeep-andshallow-waterdrillingrequirementsofclientsaroundtheworld;
• thatthemergerwouldbolsterEnsco'sfleetthroughtheadditionofhighqualityassets,resultinginacombinedfleetthatfeatures(i)26floaters,including21ultra-deepwaterdrillingrigs,and(ii)theworld'slargestjackupfleet,comprisedof37rigsequippedwithmanyadvancedfeaturesrequestedbyclientsforshallow-waterdrillingprograms;
• thatthemergerwouldenhanceEnsco'sgeographicscopeandcustomerbase;
• thatthemergerwouldleadtofuturebusinessopportunitieswithageographicallydiversifiedclientbaseandoperatingarea,withoperationsspanningsixcontinentsineverymajordeepandshallow-waterbasinaroundtheworld,positioningthecombinedcompanytocapitalizeonincreasedclientdemandforoffshoredrillingrigsinthefuture;
• thatEnscomanagementexpectsthemergertoresultinmeaningfulcostsavingsandoperationalsynergies,includinganticipatedcostsynergiesofmorethan$45millionin2018andanticipatedcostsynergiesof$65millionbeginningin2019andbeyond;
• thatthemergerwouldresultinawell-capitalizedproformacompanywithastrongliquidityposition;
• thatthemergerwouldprovideacombinedestimatedrevenuebacklogofapproximately$3.7billion;
• thetermsofthemergeragreement,thestructureofthetransaction,includingtheconditionstoeachparty'sobligationtocompletethemergerandtheabilityoftheEnscoBoardtoterminatetheagreementundercertaincircumstances;and
• MorganStanley'soralopinionrenderedtotheEnscoBoardonMay29,2017anditswrittenopiniondatedthesamedate,totheeffectthat,asofthedatethereofandbaseduponandsubjecttothevariousassumptionsmade,proceduresfollowed,mattersconsideredandqualificationsandlimitationsonthescopeofreviewundertakenassetforthinitswritten
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opinion,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtoEnsco.ThefulltextofthewrittenopinionofMorganStanleytotheEnscoBoard,datedasofMay29,2017,isattachedasAnnexBtothisjointproxystatement/prospectus.See"—OpinionofFinancialAdvisortoEnsco."
TheEnscoBoardconsideredadditionalinformationconcerningthemergerasawholeandwithoutassigningrelativeweightstoeachsuchitem,andoverallconsideredtherelevantfactorstobefavorableto,andinsupportof,itsdeterminationsandrecommendations.Thisinformationincluded:
• informationconcerningthefinancialcondition,resultsofoperations,prospectsandbusinessesofEnscoandAtwoodprovidedbymanagementofEnsco,includingtherespectivecompanies'cashflowsfromoperations,expectedaccretiontodiscountedcashflows,therecentperformanceoftheEnscoClassAordinarysharesandtheAtwoodcommonstockandtheratiooftheEnscoClassAordinarysharepricetotheAtwoodcommonstockpriceovervariousperiods,aswellascurrentindustry,economicandmarketconditions;
• thesharepriceversusthepresentvalueofestimatedfuturecashflowsofbothEnscoandAtwood;
• theimpliedassetpricesversusalternativetransactions,newassetpricingandprecedenttransactions;
• othermarketfactorsofbothEnscoandAtwood;and
• theresultsofEnsco'sbusiness,legalandfinancialduediligencereviewofAtwood.
TheEnscoBoardalsoconsideredavarietyofrisksandotherpotentiallynegativefactorsconcerningthemergeragreementandthetransactionscontemplatedthereby,includingthemerger.Thesefactorsincluded:
• thattherearesignificantrisksinherentincombiningandintegratingtwocompanies,includingthatthecompaniesmaynotbesuccessfullyintegratedorthattheexpectedsynergiesfromcombiningthetwocompaniesmaynotberealized,andthatsuccessfulintegrationofthecompanieswillrequirethededicationofsignificantmanagementresources,whichwilltemporarilydetractattentionfromtheday-to-daybusinessesofthecombinedcompany;
• theeffectsoncashflowsfromoperationsandotherfinancialmeasuresundervariousmodelingassumptions,andtheuncertaintiesintimingandexecutionwithrespecttotheanticipatedbenefitsofthemerger;
• thepotentialfinancingtorepayAtwooddebtobligationsandthelackofafinancingconditioninthemergeragreement;
• thatthemergeragreementprovidesthat,incertaincircumstances,Enscocouldberequiredtopayaterminationfeeof$50milliontoAtwoodandreimburseAtwoodforreasonableout-of-pocketexpensesupto$10million;
• thatthemergermightnotbecompletedasaresultofafailuretosatisfytheconditionscontainedinthemergeragreement,includingfailuretoreceivenecessaryregulatoryapprovalssuchasundertheHSRAct;
• thatAtwood'sobligationtoclosethemergerisconditionedonatwo-thirdsvoteofitsshareholderswithrespecttotheAtwoodMergerProposal;
• Atwood'sability,undercertaincircumstances,toterminatethemergeragreementinordertoenterintoanagreementprovidingforasuperiorproposal,providedthatAtwoodconcurrentlywithsuchterminationpaystoEnscoaterminationfeeof$30million;
• therestrictionsontheconductofEnsco'sbusinesspriortotheconsummationofthemerger,whichmaydelayorpreventEnscofromundertakingbusinessopportunitiesthatmayariseor
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otheractionsitwouldotherwisetakewithrespecttotheoperationsofEnscopendingconsummationofthemerger;
• thesubstantialcoststobeincurredinconnectionwiththemerger,includingthecostsofintegratingthebusinessesofEnscoandAtwoodandthetransactioncoststobeincurredinconnectionwiththemerger;
• thepossibilitythatthe$10millionexpensereimbursementthatAtwoodwouldberequiredtopayunderthemergeragreementuponterminationofthemergeragreementundercertaincircumstanceswouldbeinsufficienttocompensateEnscoforitscostsincurredinconnectionwiththemergeragreement;
• thepossibilityoflosingkeyemployeesandskilledworkersasaresultofthemergerandtheexpectedconsolidationofEnsco'sandAtwood'spersonnel;
• thepossibilityofcustomeroverlaporthatkeycustomersmaychoosenottodobusinesswiththecombinedcompany;and
• otherrisksofthetypeandnaturedescribedunder"RiskFactors."
ThisdiscussionoftheinformationandfactorsconsideredbytheEnscoBoardinreachingitsconclusionandrecommendationsincludesallofthematerialfactorsconsideredbytheEnscoBoardbutisnotintendedtobeexhaustiveandisnotprovidedinanyspecificorderorranking.InviewofthewidevarietyoffactorsconsideredbytheEnscoBoardinevaluatingthemergeragreementandthetransactionscontemplatedthereby,includingthemerger,andthecomplexityofthesematters,theEnscoBoarddidnotfinditpracticableto,anddidnotattemptto,quantify,rankorotherwiseassignrelativeweighttothosefactors.Inaddition,differentmembersoftheEnscoBoardmayhavegivendifferentweighttodifferentfactors.TheEnscoBoarddidnotreachanyspecificconclusionwithrespecttoanyofthefactorsconsideredandinsteadconductedanoverallanalysisofsuchfactorsanddeterminedthat,intheaggregate,thepotentialbenefitsconsideredoutweighedthepotentialrisksorpossiblenegativeconsequencesofapprovingthemergeragreementandtheallotmentandissuanceofEnscoClassAordinarysharespursuanttothemergeragreement.
ItshouldbenotedthatthisexplanationofthereasoningoftheEnscoBoardandallotherinformationpresentedinthissectionisforward-lookinginnatureand,therefore,shouldbereadinlightofthefactorsdiscussedundertheheading"CautionaryStatementRegardingForward-LookingStatements."
Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors
ByavoteatameetingheldonMay29,2017,theAtwoodBoardunanimously:(1)determinedthattheexecution,deliveryandperformanceofthemergeragreementandtheconsummationofthetransactionscontemplatedbythemergeragreementwereadvisableandinthebestinterestsofAtwoodanditsshareholders;(2)approvedthemergeragreementandthetransactionscontemplatedthereby,includingthemerger;(3)recommendedthatAtwoodshareholdersvotetheirsharesinfavorofthemerger;and(4)directedthatthemergeragreementbesubmittedtoavoteatameetingofAtwoodshareholders.
TheAtwoodBoardunanimouslyrecommendsthattheAtwoodshareholdersvote"FOR"theAtwoodMergerProposalattheAtwoodspecialmeetingandvote"FOR"allotherproposals.
Inevaluatingthemerger,theAtwoodBoardconsultedwithandreceivedtheadviceofAtwood'smanagementandlegalandfinancialadvisorsand,inreachingitsdeterminationandrecommendationtoenterintothemergeragreement,theAtwoodBoardconsideredanumberoffactors,including,butnotlimitedto,thefollowing:
• ThatthemergerconsiderationwillbepaidinEnscoClassAordinaryshares,givingAtwoodshareholdersanopportunitytoparticipateinanyrecoveryintheoffshoredrillingindustry,any
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futureearningsgrowthofthecombinedcompanyandanyfutureappreciationinthevalueoftheEnscoClassAordinarysharesfollowingthemerger.
• Thatthemergerconsiderationwithavalueof$10.72pershareofAtwoodcommonstock,basedupontheclosingpriceofEnscoClassAordinarysharesonMay26,2017(thelasttradingdatebeforethedateoftheAtwoodBoardmeeting),representedapremiumof:
• 33%totheclosingpriceofAtwoodcommonstockonthesamedate;and
• 33%,24%and12%tothe30-day,60-dayand90-dayvolume-weightedaveragepricesofAtwoodcommonstock,respectively.
• BasedontheimpliedvalueofthemergerconsiderationasofMay26,2017,Atwoodshareholderswillownapproximately31%ofthecombinedcompanyonaproformabasis.
• ThepotentialshareholdervaluethatmightresultfromotheralternativesavailabletoAtwood,includingthealternativeofremainingasanindependentpubliccompany,considering,inparticular,thepotentialforAtwoodshareholderstobenefitfromanyfutureearningsgrowthofAtwoodandcontinuedcosts,risksanduncertaintiesassociatedwithcontinuingtooperateasapubliccompanyandtomanageitsdebtserviceandcapitalexpenditurerequirements.
• ThebeliefoftheAtwoodBoardthatthesharedcorevaluesofthetwocompanies,includinginparticularthoseofsafety,operationalexcellenceandcustomersatisfaction,willassistinintegrationofthecompanies,enhancethereputationofthecombinedcompanyasan"offshoredrillerofchoice"andenhancecustomerservicegoingforward.
• Theestimated$65millioninannualexpensesynergiestocomefromthemergerestimatedtoberealizedinfullyear2019andbeyond.
• Thatthecombinedcompanywillhaveoneofthemostcapablefloaterfleetsintheindustryandthelargestjackupfleetintheworld,composedof37rigs,including27premiumunits,andwillhavebalancedexposurebywaterdepth,geographyandcustomerbase,positioningthecombinedcompanytoparticipateinallstagesofthemarketrecovery.
• ThefactthatthecombinedcompanywillhaveastrongerbalancesheetandhighercreditratingthanAtwoodonastand-alonebasis.
• TheAtwoodBoard'sfamiliaritywith,andunderstandingof,Ensco'sbusiness,assets,financialcondition,resultsofoperations,currentbusinessstrategyandprospects.
• ThefinancialanalysespresentedbyGoldmanSachsattheAtwoodBoardmeetingheldonMay29,2017,andtheoralopinionofthatfirmdeliveredtotheAtwoodBoardonthatdate,whichwasconfirmedbydeliveryofawrittenopiniondatedMay29,2017,that,asofsuchdateandbaseduponandsubjecttothelimitationsandassumptionssetforththerein,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstock,asmorefullydescribedbelowunder"—OpinionofFinancialAdvisortoAtwood."ThefulltextofthewrittenopinionofGoldmanSachs,datedMay29,2017,whichsetsforthassumptionsmade,proceduresfollowed,mattersconsideredandlimitationsonthereviewundertakeninconnectionwiththeopinion,isattachedasAnnexCtothisjointproxystatement/prospectus.
• ThefactthattheexchangeratioincludedinthemergeragreementprovidesforafixednumberofEnscoClassAordinaryshares,whichoffersAtwoodshareholderstheopportunitytobenefitfromanyincreaseinthetradingpriceofEnscoClassAordinarysharesbeforetheclosingofthemerger.
• ConsiderationoftheanalysespresentedtotheAtwoodBoardregardingotherindustryparticipantswithwhichAtwoodhashaddiscussionsandthepotentialforotherinterestedacquirers,thesubstanceofthediscussionswithsuchotherindustryparticipants,thelikelihood
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thatanyofthemoranyotherpotentialacquirerwouldofferatransactionmoreadvantageoustoAtwoodshareholdersthanthemerger,theexecutionriskassociatedwithpursuingsuchanalternativetransactionandthepossibledetrimentaleffectsofpublicdisclosureofAtwood'sexploringpossiblebusinesscombinationtransactions.
• ThereviewbytheAtwoodBoardwithitslegalandfinancialadvisorsofthestructureofthemergerandthefinancialandothertermsofthemergeragreement,includingtheparties'representations,warrantiesandcovenants,theconditionstotheirrespectiveobligationsandtheterminationprovisions,aswellasthelikelihoodofconsummationofthemergerandtheAtwoodBoard'sevaluationofthelikelytimeperiodnecessarytoclosethemerger.TheAtwoodBoardalsoconsideredthefollowingspecificaspectsofthemergeragreement:
• Atwood'srighttodesignatetwocurrentnon-employeedirectorstotheEnscoBoardtobemutuallyagreedbetweentheparties.
• Thenatureoftheclosingconditionsincludedinthemergeragreement,includingtheabsenceofanyfinancingcontingency,themarket,industry-relatedandotherexceptionstotheeventsthatwouldconstituteamaterialadverseeffectoneitherAtwoodorEnscoforpurposesoftheagreement,aswellasthelikelihoodofsatisfactionofallconditionstotheconsummationofthemerger.
• Ensco'sandAtwood'sagreementtousereasonablebesteffortstoobtainapprovalsofapplicableantitrustandcompetitionauthorities,includingdisposingofassetsandothersimilaractions,exceptifsuchdivestitureoractionwouldcausealossofmorethan$175millioninannualrevenuesofthecombinedcompany.
• Atwood'sability,atanytimepriortoobtainingAtwoodshareholderapprovaloftheAtwoodMergerProposalandundercertaincircumstances,toconsiderandrespondtoanunsolicitedacquisitionproposalandtoengageindiscussionsornegotiationswiththepersonmakingsuchaproposalifrequiredtosatisfyitsfiduciaryduties.
• Atwood'srighttochangeitsrecommendationthatAtwoodshareholdersvoteinfavoroftheAtwoodMergerProposaltotheextentitdeterminesthatthefailuretotakesuchactionwouldbeinconsistentwithitsfiduciarydutiesif(1)Atwoodreceivesanunsolicitedsuperiorproposalor(2)apreviouslyunknownmaterialeventoccurs,subjecttocertainconditions(includingpaymenttoEnscoofa$30millionterminationfeeifEnscosubsequentlyterminatesthemergeragreementundercircumstancesspecifiedinthemergeragreement).
• Atwood'srighttoterminatethemergeragreementinordertoacceptasuperiorproposal,subjecttocertainconditions(includingconsideringanyadjustmentstothemergeragreementproposedbyEnscoandpaymenttoEnscoofa$30millionterminationfee).
• Thattheterminationfeeof$30millionpayablebyAtwoodtoEnscounderthecircumstancesspecifiedinthemergeragreementwasreasonableinthejudgmentoftheAtwoodBoardafterconsultationwithitsadvisors.
• TheobligationofEnscotopaytoAtwooda$50millionterminationfeeunderthecircumstancesspecifiedinthemergeragreement.
• TohelpmitigatetherisktoAtwoodofEnsco'srequirementtoobtainshareholderapprovaloftheEnscoMergerConsiderationProposal,theobligationofEnscotopayAtwoodtheterminationfeeifEnscofailstoobtainsuchapprovalandtherepresentationinthemergeragreementthattheEnscoBoardhadreceived,priortothesigningofthemergeragreement,theopinionofMorganStanleytotheeffectthat,asofthedateofsuchopinion,andbaseduponandsubjecttothevariousassumptionsmade,proceduresfollowed,mattersconsideredandqualificationsandlimitationsonthescopeofreviewundertakenassetforth
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initswrittenopinion,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtoEnsco.
• TheobligationofEnscotoreimburseupto$10millionofAtwood'scostsifEnscomateriallybreachestheagreement.
• TheobligationsofAtwoodandEnscotoholdtheirrespectiveshareholdermeetingseveniftheirrespectiveboardschangetheirrecommendationwithrespecttotheEnscoMergerConsiderationProposalortheAtwoodMergerProposal,asapplicable.
• TherequirementthatAtwoodshareholderapprovalbeobtainedasaconditiontoconsummationofthemerger.
Inthecourseofitsdeliberations,theAtwoodBoardalsoconsideredavarietyofrisksandothercountervailingfactorsrelatedtoenteringintothemergeragreement,including,butnotlimitedto,thefollowing:
• ThatEnsco'sobligationtoclosethemergerisconditionedonamajorityvoteofitsshareholderswithrespecttotheEnscoMergerConsiderationProposal,providedthatEnscoagreestopayAtwooda$50millionterminationfeeintheeventthatitfailstoobtainsuchshareholderapproval.
• ThefactthattheexchangeratioincludedinthemergeragreementprovidesforafixednumberofEnscoClassAordinaryshares,meaningthatAtwoodshareholderscannotbesureatthetimetheyvoteonthemergerofthemarketvalueofthemergerconsiderationtheywillreceive,andthepossibilitythatAtwoodshareholderscouldbeadverselyaffectedbyadecreaseinthetradingpriceofEnscoClassAordinarysharesbeforetheclosingofthemerger.
• That,whilethemergerisexpectedtobecompleted,thereisnoassurancethatallconditionstotheparties'obligationstocompletethemergerwillbesatisfiedorwaived,andasaresult,itispossiblethatthemergermightnotbecompletedevenifapprovedbyAtwoodshareholdersandEnscoshareholders.
• Ensco'sability,undercertaincircumstances,toterminatethemergeragreementinordertoenterintoanagreementprovidingforasuperiorproposal,providedthatEnscoconcurrentlywithsuchterminationpaystoAtwoodaterminationfeeof$50million.
• ThelimitationsimposedonAtwood'sabilitytosolicitalternativetransactionspriortoclosingorterminationofthemergeragreement,includingtherequirementtopaya$30millionterminationfeeintheevent(1)Atwoodacceptsasuperiorproposal,or(2)themergeragreementisterminated,athirdpartyhasmadeapublictakeoverproposalforAtwoodandAtwoodentersintoadefinitiveagreementwithrespecttothattakeoverproposalwithin12monthsoftheterminationdate,which,althoughwithintherangeofsuchfeesnormallyseeninsimilartransactions,couldhavetheeffectofdiscouraginganalternativeproposalforAtwood.
• TherestrictionsontheconductofAtwood'sbusinesspriortotheconsummationofthemerger,whichmaydelayorpreventAtwoodfromundertakingbusinessopportunitiesthatmayariseorotheractionsitwouldotherwisetakewithrespecttotheoperationsofAtwoodpendingconsummationofthemerger.
• TherisksandcoststoAtwoodifthemergerisdelayedordoesnotoccuratall,includingthepotentialnegativeimpactonAtwood'sabilitytoretainkeyemployees,thediversionofAtwoodmanagementandemployeeattentionandthepotentialdisruptiveeffectivesonAtwood'sday-to-dayoperationsandAtwood'srelationshipswiththirdparties,includingitscustomersandsuppliers.
• Thesubstantialcoststobeincurredinconnectionwiththemerger,includingthecostsofintegratingthebusinessesofAtwoodandEnscoandthetransactioncoststobeincurredinconnectionwiththemerger.
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• Thepossibilitythatthe$10millionexpensereimbursementthatEnscowouldberequiredtopayunderthemergeragreementuponterminationofthemergeragreementundercertaincircumstanceswouldbeinsufficienttocompensateAtwoodforitscostsincurredinconnectionwiththemergeragreement.
• ThefactthattheEnscoClassAordinarysharesreceivedasthepersharemergerconsiderationwouldbetaxabletoAtwood'sshareholdersthatareU.S.holdersforU.S.federalincometaxpurposes.
• Risksofthetypeandnaturedescribedunder"RiskFactors."
TheAtwoodBoardconsideredallofthesefactorsasawholeand,onbalance,concludedthattheysupportedadeterminationtoapprovethemergeragreement.TheforegoingdiscussionoftheinformationandfactorsconsideredbytheAtwoodBoardisnotexhaustive,butratherismeanttoincludethematerialfactorsthattheAtwoodBoardconsidered.Inviewofthewidevarietyoffactors,bothpositiveandnegative,consideredbytheAtwoodBoardinconnectionwithitsevaluationoftheproposedmergerandthecomplexityofthesematters,theAtwoodBoarddidnotconsideritpracticalto,nordiditattemptto,quantify,rankorotherwiseassignrelativeweightstothespecificfactorsthatitconsideredinreachingitsdecision.TheAtwoodBoardevaluatedthefactorsdescribedabove,amongothers,andcollectivelyreachedaconsensusthattheproposedmergerwasadvisableandinthebestinterestsofAtwoodanditsshareholders.Inconsideringthefactorsdescribedaboveandanyotherfactorsthatarenotpresented,individualmembersoftheAtwoodBoardmayhaveviewedfactorsdifferentlyorgivendifferentweightormerittodifferentfactors.Inaddition,thefactorsdescribedabovearenotpresentedinanyorderofpriority.
InconsideringtherecommendationoftheAtwoodBoardtoapprovetheAtwoodMergerProposal,AtwoodshareholdersshouldbeawarethattheexecutiveofficersanddirectorsofAtwoodhavecertaininterestsinthemergerthatmaybedifferentfrom,orinadditionto,theinterestsofAtwoodshareholdersgenerally.TheAtwoodBoardwasawareoftheseinterestsandconsideredthemwhenapprovingthemergeragreementandrecommendingthatAtwoodshareholdersvotetoapprovetheAtwoodMergerProposal.See"—Atwood'sDirectorsandOfficersHaveFinancialInterestsintheMerger."
ItshouldbenotedthatthisexplanationofthereasoningoftheAtwoodBoardandallotherinformationpresentedinthissectionisforward-lookinginnatureand,therefore,shouldbereadinlightofthefactorsdiscussedundertheheading"CautionaryStatementRegardingForward-LookingStatements."
OpinionofFinancialAdvisortoEnsco
TheEnscoBoardretainedMorganStanleytoprovideitwithfinancialadvisoryservicesinconnectionwiththeproposedmergerandtoprovideafinancialopinion.TheEnscoBoardselectedMorganStanleytoactasitsfinancialadvisorbasedonMorganStanley'squalifications,expertiseandreputationanditsknowledgeofthebusinessandaffairsofEnsco.OnMay29,2017,atameetingoftheEnscoBoard,MorganStanleyrendereditsoralopinion,subsequentlyconfirmedbydeliveryofawrittenopinion,datedMay29,2017,that,asofthatdateandbaseduponandsubjecttothevariousassumptionsmade,proceduresfollowed,mattersconsideredandqualificationsandlimitationsonthescopeofreviewundertakenbyMorganStanleyassetforthinthewrittenopinion,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtoEnsco.
ThefulltextofthewrittenopinionofMorganStanleydeliveredtotheEnscoBoard,datedasofMay29,2017,isattachedtothisjointproxystatement/prospectusasAnnexBandisincorporatedhereinbyreferenceinitsentirety.YoushouldreadMorganStanley'sopinionandthissummaryofMorganStanley'sopinioncarefullyandintheirentiretyforadiscussionoftheassumptionsmade,proceduresfollowed,mattersconsideredandqualificationsandlimitationsonthescopeofthereviewundertakenbyMorganStanleyinrenderingitsopinion.Thissummaryisqualifiedinitsentiretyby
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referencetothefulltextofsuchopinion.MorganStanley'sopinionwasdirectedtotheEnscoBoard,initscapacityassuch,andaddressedonlythefairnessfromafinancialpointofviewtoEnscooftheexchangeratiopursuanttothemergeragreementasofthedateofsuchopinion.MorganStanley'sopiniondidnotaddressanyotheraspectsorimplicationsofthemerger.MorganStanley'sopiniondidnotinanymanneraddressthepriceatwhichtheEnscoClassAordinaryshareswouldtradefollowingthemergeroratanytime,andMorganStanleyexpressednoopinionorrecommendationtoanyholderofEnscoClassAordinarysharesorAtwoodcommonstockastohowsuchholdershouldvoteattheEnscogeneralmeetingortheAtwoodspecialmeeting,respectively,orwhethertotakeanyotheractionwithrespecttothemerger.
Forpurposesofrenderingitsopinion,MorganStanley,amongotherthings:
(1) reviewedcertainpubliclyavailablefinancialstatementsandotherpubliclyavailablebusinessandfinancialinformationofAtwoodandEnsco,respectively;
(2) reviewedcertaininternalfinancialstatementsandotherfinancialandoperatingdataconcerningAtwoodandEnsco,respectively;
(3) reviewed(i)certainfinancialprojectionspreparedbythemanagementsofAtwoodandEnsco,respectively,and(ii)certainfinancialprojectionsrelatingtoAtwoodpreparedbythemanagementofEnsco;
(4) reviewedinformationrelatingtocertainstrategic,financialandoperationalbenefitsanticipatedfromthemerger,preparedbythemanagementofEnsco;
(5) discussedthepastandcurrentoperationsandfinancialconditionandtheprospectsofAtwoodwithseniorexecutivesofAtwood;
(6) discussedthepastandcurrentoperationsandfinancialconditionandtheprospectsofEnsco,includinginformationrelatingtocertainstrategic,financialandoperationalbenefitsanticipatedfromthemerger,withseniorexecutivesofEnsco;
(7) reviewedtheproformaimpactofthemergeronEnsco'searningspershare,cashflow,consolidatedcapitalizationandcertainfinancialratios;
(8) reviewedthereportedpricesandtradingactivityforAtwoodcommonstockandEnscoClassAordinaryshares;
(9) comparedthefinancialperformanceofAtwoodandEnscoandthepricesandtradingactivityofAtwoodcommonstockandEnscoClassAordinaryshareswiththatofcertainotherpublicly-tradedcompaniescomparablewithAtwoodandEnsco,respectively,andtheirsecurities;
(10) reviewedthefinancialterms,totheextentpubliclyavailable,ofcertaincomparableacquisitiontransactions;
(11) participatedincertaindiscussionsandnegotiationsamongrepresentativesofAtwoodandEnscoandcertainpartiesandtheirfinancialandlegaladvisors;
(12) reviewedthemergeragreementandcertainrelateddocuments;and
(13) performedsuchotheranalyses,reviewedsuchotherinformationandconsideredsuchotherfactorsasMorganStanleydeemedappropriate.
MorganStanleyassumedandreliedupon,withoutindependentverification,theaccuracyandcompletenessoftheinformationthatwaspubliclyavailableorsuppliedorotherwisemadeavailabletoitbyAtwoodandEnsco,andformedasubstantialbasisforitsopinion.Withrespecttothefinancialprojections,includinginformationrelatingtocertainstrategic,financialandoperationalbenefits
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anticipatedfromthemerger,MorganStanleyassumedthattheyhadbeenreasonablypreparedonbasesreflectingthebestcurrentlyavailableestimatesandjudgmentsoftherespectivemanagementsofAtwoodandEnscoofthefuturefinancialperformanceofAtwoodandEnsco.Forpurposesofitsanalysis,MorganStanley,atthedirectionofEnsco,reliedonfinancialprojectionsrelatingtoAtwoodandEnsco,ineachcasepreparedbythemanagementofEnsco.MorganStanleywasadvisedbyEnscoandassumed,withEnsco'sconsent,thattheprojectionspreparedbythemanagementofEnscowereareasonablebasisuponwhichtoevaluatethebusinessandfinancialprospectsofEnscoandAtwood.MorganStanleyexpressednoviewastosuchprojectionsortheassumptionsonwhichtheywerebased.MorganStanleyreliedupon,withoutindependentverification,theassessmentbythemanagementofEnscoof:(i)thestrategic,financialandotherbenefitsexpectedtoresultfromthemerger;(ii)thetimingandrisksassociatedwiththeintegrationofAtwoodandEnsco;and(iii)Ensco'sabilitytoretainkeyemployeesofAtwoodandEnsco,respectively.Inaddition,MorganStanleyassumedthatthemergerwouldbeconsummatedinaccordancewiththetermssetforthinthemergeragreementwithoutanywaiver,amendmentordelayofanytermsorconditions,including,amongotherthings,thatthedefinitivemergeragreementwouldnotdifferinanymaterialrespectfromthedraftthereoffurnishedtoit.MorganStanleyassumedthatinconnectionwiththereceiptofallthenecessarygovernmental,regulatoryorotherapprovalsandconsentsrequiredfortheproposedmerger,nodelays,limitations,conditionsorrestrictionswouldbeimposedthatwouldhaveamaterialadverseeffectonthecontemplatedbenefitsexpectedtobederivedintheproposedmerger.MorganStanleyisnotalegal,tax,orregulatoryadvisor.MorganStanleyisafinancialadvisoronlyandreliedupon,withoutindependentverification,theassessmentofEnscoandAtwoodandtheirlegal,taxorregulatoryadvisorswithrespecttolegal,tax,orregulatorymatters.MorganStanleydidnotperformanytaxassessmentinconnectionwiththemerger.MorganStanleyexpressednoopinionwithrespecttothefairnessoftheamountornatureofthecompensationtoanyofAtwood'sofficers,directorsoremployees,oranyclassofsuchpersons,relativetotheconsiderationtobepaidtotheholdersofsharesofAtwoodcommonstockinthetransaction.MorganStanleydidnotmakeanyindependentvaluationorappraisaloftheassetsorliabilitiesofAtwoodorEnsco,norwasitfurnishedwithanysuchvaluationsorappraisals.MorganStanley'sopiniondidnotaddresstherelativemeritsofthemergerascomparedtoanyotheralternativebusinesstransaction,orotheralternatives,orwhetherornotsuchalternativescouldbeachievedorareavailable.MorganStanley'sopinionwasnecessarilybasedonfinancial,economic,marketandotherconditionsasineffecton,andtheinformationmadeavailabletoitasof,thedateoftheopinion.EventsoccurringaftersuchdatemayaffectMorganStanley'sopinionandtheassumptionsusedinpreparingit,andMorganStanleydidnotassumeanyobligationtoupdate,reviseorreaffirmitsopinion.
Summary of Financial Analyses of Morgan Stanley
ThefollowingisasummaryofthematerialfinancialanalysesperformedbyMorganStanleyinconnectionwithitsoralopinionandthepreparationofitswrittenopiniontotheEnscoBoard,eachdatedasofMay29,2017.ThefollowingsummaryisnotacompletedescriptionofthefinancialanalysesperformedandfactorsconsideredbyMorganStanleyinconnectionwithitsopinion,nordoestheorderofanalysesdescribedrepresenttherelativeimportanceorweightgiventothoseanalyses.Exceptasotherwisenoted,thefollowingquantitativeinformation,totheextentthatitisbasedonmarketdata,isbasedonmarketdataasitexistedonorbeforeMay26,2017,themostrecenttradingdaypriortoMorganStanley'spresentationtotheEnscoBoardofitsfinancialanalysisonMay29,2017.Someofthesesummariesoffinancialanalysesincludeinformationpresentedintabularformat.InordertofullyunderstandthefinancialanalysesusedbyMorganStanley,thetablesmustbereadtogetherwiththetextofeachsummary.Thetablesalonedonotconstituteacompletedescriptionofthefinancialanalyses.Theanalyseslistedinthetablesanddescribedbelowmustbeconsideredasawhole.Assessinganyportionofsuchanalysesandofthefactorsreviewed,withoutconsideringallanalysesandfactors,couldcreateamisleadingorincompleteviewoftheprocessunderlyingMorgan
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Stanley'sopinion.Furthermore,mathematicalanalysis(suchasdeterminingtheaverageormedian)isnotinitselfameaningfulmethodofusingthedatareferredtobelow.
Inperformingthefinancialanalysessummarizedbelowandinarrivingatitsopinion,atthedirectionoftheEnscoBoard,MorganStanleyutilizedandrelieduponcertainfinancialprojectionsrelatingtoAtwoodandEnsco,eachprovidedbythemanagementofEnscoandwhicharedescribedbelow.Inaddition,MorganStanleyutilizedandrelieduponthenumberofissuedandoutstandingsharesofAtwoodprovidedbymanagementofAtwood.
Aspartofthefinancialprojections,Enscomanagementprovided,andMorganStanleyrelieduponwiththeconsentoftheEnscoBoard,EnscoManagementCaseAandEnscoManagementCaseB(the"Enscofinancialforecasts").EnscomanagementinformedMorganStanleythatEnscoManagementCaseBwasmorereflectiveofthethen-currentmarketoutlookthanEnscoManagementCaseA,andMorganStanleyrelieduponsuchinformationwiththeconsentoftheEnscoBoard.TheEnscofinancialforecastsaremorefullydescribedinthesectionentitled"—CertainUnauditedFinancialForecastsPreparedbytheManagementofEnsco."
Useful Life Discounted Cash Flow Analysis
MorganStanleyperformedadiscountedcashflowanalysis,whichisdesignedtoprovideanimpliedvalueofacompanybycalculatingthepresentvalueoftheestimatedfuturecashflowsandterminalvalueofthatcompany.Inthe"usefullife"discountedcashflowanalysis,MorganStanleyperformedadiscountedcashflowanalysisoneachofAtwoodandEnsco,respectively,basedontheunleveredcashflowsgeneratedbyAtwood'sandEnsco'sfleetofrigsthroughtheestimatedendoftheirusefullivesasestimatedbythemanagementofEnsco(whichareestimatedtoextendthrough2055forAtwoodandthrough2050forEnsco).
Atwood Useful Life Discounted Cash Flow Analysis
WithrespecttoAtwood,MorganStanleycalculatedarangeofimpliedtotalequityvaluesofAtwoodandvaluespershareofAtwoodcommonstockbasedonestimatesoffuturecashflowsfromApril1,2017throughJune30,2055.MorganStanleyperformedthisanalysisontheestimatedfuturecashflowsofAtwoodcontainedinEnscoManagementCaseAandEnscoManagementCaseB.MorganStanleyfirstcalculatedtheestimatedunleveredfreecashflows(calculatedasearningsbeforeinterest,taxes,anddepreciationandamortization,whichisreferredtointhissectionasEBITDA,lesscapitalexpendituresandunleveredtaxes,andadjustedforanychangesinworkingcapital).TheprojectedunleveredfreecashflowswerediscountedtoMarch31,2017usingdiscountratesrangingfrom8.1%to9.3%fortheperiodbetweenApril1,2017throughDecember31,2020basedonMorganStanley'sestimateofAtwood'sweightedaveragecostofcapital("WACC")forsuchperiod,andtheprojectedunleveredcashflowsfortheperiodfromJanuary1,2021throughJune30,2055werediscountedtoMarch31,2017usingdiscountratesrangingfrom8.4%to9.6%basedonMorganStanley'sestimateofAtwood'sWACCforsuchperiod.TherangeofdiscountratesusedforsuchperioddifferedfromthatusedfortheperiodendingDecember31,2020asaresultofanassumedincreaseinthecostofdebt.MorganStanleythendeductedfromtheimpliedaggregatevaluerangesAtwood'sestimatedgrossdebtandminorityinterestandaddedAtwood'scashandcashequivalentsasofMarch31,2017.Aggregatevaluesalsoincludedthethen-currentestimateofthevalueofcapitalsparepartsofAtwoodasestimatedbyEnscomanagement.
Basedontheabove-describedanalysis,MorganStanleyderivedarangeofimpliedvaluespershareforAtwoodasofMarch31,2017foreachofEnscoManagementCaseAandEnscoManagementCaseBof$25.68to$30.90and$13.33to$17.09,respectively.
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Ensco Useful Life Discounted Cash Flow Analysis
WithrespecttoEnsco,MorganStanleycalculatedarangeofimpliedtotalequityvaluesofEnscoandvaluesperEnscoClassAordinarysharebasedonestimatesoffuturecashflowsofEnscofromApril1,2017throughDecember31,2050.MorganStanleyperformedthisanalysisontheestimatedfuturecashflowscontainedinEnscoManagementCaseAandEnscoManagementCaseB.MorganStanleyfirstcalculatedtheestimatedunleveredfreecashflows(calculatedasEBITDAlesscapitalexpendituresandunleveredtaxes,andadjustedforanychangesinworkingcapital).TheprojectedunleveredfreecashflowswerediscountedtoMarch31,2017usingdiscountratesrangingfrom7.5%to8.5%fortheperiodbetweenApril1,2017throughDecember31,2020basedonMorganStanley'sestimateofEnsco'sWACCforsuchperiod,andtheprojectedunleveredcashflowsfortheperiodfromJanuary1,2021throughDecember31,2050werediscountedtopresentvalueusingdiscountratesrangingfrom7.7%to8.8%basedonMorganStanley'sestimateofEnsco'sWACCforsuchperiod.TherangeofdiscountratesusedforsuchperioddifferedfromthatusedfortheperiodendingDecember31,2020asaresultofanassumedredemptionofnotes.Withthecostofdebtlowerthanthecostofequity,theassumedredemptionloweredthedebt-to-capitalizationratio,thereforeincreasingtheweightedaveragecostofcapital.MorganStanleythendeductedfromtheimpliedaggregatevaluerangesEnsco'sestimatedgrossdebtandminorityinterestandaddedEnsco'scashandcashequivalentsasofMarch31,2017(adjustedforopenmarketrepurchasesofdebtinApril2017).Aggregatevaluesalsoincludedthethen-currentestimateofthevalueofcapitalsparepartsofEnscoasestimatedbyEnscomanagement.
Basedontheabove-describedanalysis,MorganStanleyderivedarangeofimpliedvaluesperEnscoClassAordinaryshareasofMarch31,2017foreachofEnscoManagementCaseAandEnscoManagementCaseBof$19.07to$22.57and$10.12to$12.63,respectively.
Exchange Ratio Implied by Useful Life Discounted Cash Flow Analysis
MorganStanleycalculatedtheexchangeratiorangesimpliedbytheusefullifediscountedcashflowanalyses.MorganStanleycomparedthelowestimpliedpersharevalueforAtwoodcommonstocktothehighestimpliedpersharevalueforEnscoClassAordinarysharestoderivethelowestexchangeratioimpliedbytheanalyses.Similarly,MorganStanleycomparedthehighestimpliedpersharevalueforAtwoodcommonstocktothelowestimpliedpersharevalueforEnscoClassAordinarysharestoderivethehighestexchangeratioimpliedbytheanalyses.Theimpliedexchangeratiorangesresultingfromtheanalysis,whichMorganStanleynoteddidnotincludesynergies,was1.14xto1.62xforEnscoManagementCaseAand1.06xto1.69xforEnscoManagementCaseB.MorganStanleynotedthatthemergeragreementprovidedforanexchangeratioof1.60x.
10-Year Discounted Cash Flow Analysis
MorganStanleyalsoperformedadiscountedcashflowanalysisonbothAtwoodandEnscobasedonestimatesoffuturecashflowsfromApril1,2017throughMarch31,2027andcalculatedaterminalvalueattheendofsuchprojectionperiod.ManagementofEnscoinformedMorganStanleythatEnscoManagementCaseBwasmorereflectiveofthethen-currentmarketoutlookthanEnscoManagementCaseA,andasaresult,MorganStanleyconductedthediscountedcashflowanalysisusingonlyEnscoManagementCaseB.
Atwood 10-Year Discounted Cash Flow Analysis
WithrespecttoAtwood,MorganStanleycalculatedarangeofimpliedtotalequityvaluesofAtwoodandvaluespershareofAtwoodcommonstockbasedonestimatesoffuturecashflowsforAtwoodfromApril1,2017toMarch31,2027.MorganStanleyfirstcalculatedtheestimatedunleveredfreecashflows(calculatedasEBITDA,lesscapitalexpendituresandunleveredtaxesandadjustedfor
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anychangesinworkingcapital)ofAtwoodbasedonestimatesbythemanagementofEnsco.MorganStanleythencalculatedaterminalvaluerangeforAtwoodbyapplyingamultipleofaggregatevalue(definedasmarketcapitalizationplustotaldebtandminorityinterestsandlesscashandcashequivalents)toestimatedEBITDAforthetwelvemonthsendingMarch31,2028of5.0xto8.0x.ThisrangewasderivedbasedonMorganStanley'sprofessionaljudgmentaftercalculatingtheaggregatevaluetoEBITDAmultiplesforthetwelvemonthsfollowingthedateofmeasurement(the"NTMEBITDA")thatAtwoodcommonshareshadtradedatfromMay2012toMay2017,whichresultedinanaverageaggregatevaluetoNTMEBITDA(basedonpubliclyavailableestimates)of6.9xforsuchperiod.TheprojectedunleveredfreecashflowswerediscountedtoMarch31,2017usingdiscountratesrangingfrom8.1%to9.3%fortheperiodfromApril1,2017throughDecember31,2020basedonMorganStanley'sestimateofAtwood'sWACCforsuchperiod,andtheprojectedunleveredcashflowsfortheperiodfromJanuary1,2021throughMarch31,2027andterminalvaluewerediscountedtoMarch31,2017usingdiscountratesrangingfrom8.4%to9.6%basedonMorganStanley'sestimateofAtwood'sWACCforsuchperiod.TherangeofdiscountratesusedforsuchperioddifferedfromthatusedfortheperiodendingDecember31,2020asaresultofanassumedincreaseinthecostofdebt.MorganStanleythendeductedfromtheimpliedaggregatevaluerangesAtwood'sestimatedgrossdebtandminorityinterestandaddedAtwood'scashandcashequivalentsasofMarch31,2017.Aggregatevaluesalsoincludedthethen-currentestimateofthevalueofcapitalsparepartsofAtwoodasestimatedbyEnscomanagement.
Basedontheabove-describedanalysis,MorganStanleyderivedarangeofimpliedvaluespershareforAtwoodasofMarch31,2017forEnscoManagementCaseBof$9.21to$17.68.
Ensco 10-Year Discounted Cash Flow Analysis
WithrespecttoEnsco,MorganStanleycalculatedarangeofimpliedtotalequityvaluesofEnscoandvaluesperEnscoClassAordinarysharebasedonestimatesoffuturecashflowsforEnscofromApril1,2017toMarch31,2027.MorganStanleyfirstcalculatedtheestimatedunleveredfreecashflows(calculatedasEBITDA,lesscapitalexpendituresandunleveredtaxesandadjustedforanychangesinworkingcapital)ofEnscobasedonestimatesbythemanagementofEnsco.MorganStanleythencalculatedaterminalvaluerangeforEnscobyapplyingamultipleofaggregatevaluetoestimatedEBITDAforthetwelvemonthsendingMarch31,2028of5.0xto8.0x.ThisrangewasderivedbasedonMorganStanley'sprofessionaljudgmentaftercalculatingtheNTMEBITDAthatEnscocommonshareshadtradedatfromMay2012toMay2017,whichresultedinanaverageaggregatevaluetoNTMEBITDA(basedonpubliclyavailableestimates)of6.6xforsuchperiod.TheprojectedunleveredfreecashflowswerediscountedtoMarch31,2017usingdiscountratesrangingfrom7.5%to8.5%fortheperiodfromApril1,2017throughDecember31,2020basedonMorganStanley'sestimateofEnsco'sWACCforsuchperiod,andtheprojectedunleveredcashflowsfortheperiodfromJanuary1,2021throughMarch31,2027andterminalvaluewerediscountedtoMarch31,2017usingdiscountratesrangingfrom7.7%to8.8%basedonMorganStanley'sestimateofEnsco'sWACCforsuchperiod.TherangeofdiscountratesusedforsuchperioddifferedfromthatusedfortheperiodendingDecember31,2020asaresultofanassumedredemptionofnotes.Withthecostofdebtlowerthanthecostofequity,theassumedredemptionloweredthedebt-to-capitalizationratio,thereforeincreasingtheweightedaveragecostofcapital.MorganStanleythendeductedfromtheimpliedaggregatevaluerangesEnsco'sestimatedgrossdebtandminorityinterestandaddedEnsco'scashandcashequivalentsasofMarch31,2017(adjustedforopenmarketrepurchasesofdebtinApril2017).Aggregatevaluesalsoincludedthethen-currentestimateofthevalueofcapitalsparepartsofEnscoasestimatedbyEnscomanagement.
Basedontheabove-describedanalysis,MorganStanleyderivedarangeofimpliedvaluesperEnscoClassAordinaryshareasofMarch31,2017forEnscoManagementCaseBof$8.58to$15.43.
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Exchange Ratio Implied by 10-Year Discounted Cash Flow Analysis
MorganStanleycalculatedtheexchangeratiorangesimpliedbythediscountedcashflowanalyses.MorganStanleycomparedthelowestimpliedpersharevalueforAtwoodcommonstocktothehighestimpliedpersharevalueforEnscoClassAordinarysharestoderivethelowestexchangeratioimpliedbytheanalyses.Similarly,MorganStanleycomparedthehighestimpliedpersharevalueforAtwoodcommonstocktothelowestimpliedpersharevalueforEnscoClassAordinarysharestoderivethehighestexchangeratioimpliedbytheanalyses.Theimpliedexchangeratiorangesresultingfromtheanalysis,whichMorganStanleynoteddidnotincludesynergies,was0.60xto2.06xforEnscoManagementCaseB.MorganStanleynotedthatthemergeragreementprovidedforanexchangeratioof1.60x.
Discounted Equity Value Analysis
ForeachofAtwoodandEnsco,MorganStanleyperformedadiscountedequityvalueanalysis,whichisdesignedtoprovideanindicationofthepresentvalueofatheoreticalfuturevalueofacompany'sequityasafunctionofsuchcompany'sestimatedfutureEBITDA.
ManagementofEnscoinformedMorganStanleythatEnscoManagementCaseBwasmorereflectiveofthethen-currentmarketoutlookthanEnscoManagementCaseA,andasaresult,MorganStanleyconductedthediscountedequityvalueanalysisusingonlyEnscoManagementCaseB.
Atwood Discounted Equity Value
MorganStanleycalculatedthediscountedequityvaluepershareofAtwoodcommonstockasofMarch31,2017.TocalculatethediscountedequityvaluepershareofAtwoodcommonstock,MorganStanleyutilizedcalendaryear2022EBITDAbasedonthefinancialforecastsprovidedbyEnsco.MorganStanleycalculatedthefutureequityvaluepershareofAtwoodcommonstockatJanuary1,2022byapplyinganaggregatevaluetoEBITDAmultipleof5.0xto8.0xtotheestimatedcalendaryear2022EBITDAbasedonthefinancialforecastsprovidedbyEnsco.ThisreferencerangewasbasedonMorganStanley'sprofessionaljudgmentandderivedinthemannerdescribedunder"—Atwood10-YearDiscountedCashFlowAnalysis."TheresultingpershareequityvalueswerethendiscountedtoMarch31,2017usingacostofequityforAtwoodof17.0%basedonMorganStanley'sestimateofAtwood'sthen-currentcostofequity.MorganStanleyaddedthethen-currentestimateofthepersharevalueofcapitalsparepartsofAtwoodasestimatedbyEnscomanagementtoAtwood'simpliedshareprice.ThisanalysisresultedinarangeofimpliedvaluespershareforAtwoodof$6.84to$13.95.
Ensco Discounted Equity Value
MorganStanleycalculatedthediscountedequityvalueperEnscoClassAordinaryshareasofMarch31,2017.TocalculatethediscountedequityvalueperEnscoClassAordinaryshare,MorganStanleyutilizedcalendaryear2022EBITDAbasedonthefinancialforecastsprovidedbyEnsco.MorganStanleycalculatedthefutureequityvalueperEnscoClassAordinaryshareatJanuary1,2022byapplyinganaggregatevaluetoEBITDAmultipleof5.0xto8.0xtotheestimatedcalendaryear2022EBITDAbasedonthefinancialforecastsprovidedbyEnsco.ThisreferencerangewasbasedonMorganStanley'sprofessionaljudgmentandderivedinthemannerdescribedunder"—Ensco10-YearDiscountedCashFlowAnalysis."TheresultingpershareequityvalueswerethendiscountedtoMarch31,2017usingcostofequityforEnscoof15.6%basedonMorganStanley'sestimateofEnsco'sthen-currentcostofequity.MorganStanleyaddedthethen-currentestimateofthepersharevalueofcapitalsparepartsofEnscoandestimatedpresentvalueofdividendsoneachEnscocommonshare,eachasestimatedbyEnscomanagementtoEnsco'simpliedshareprice.ThisanalysisresultedinarangeofimpliedvaluesperEnscoClassAordinaryshareof$4.76to$10.20.
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Exchange Ratio Implied by Discounted Equity Value Analysis
MorganStanleythencalculatedtheexchangeratiorangeimpliedbythediscountedequityvalueanalysis.MorganStanleycomparedthelowestimpliedequityvaluepershareforAtwoodcommonstocktothehighestimpliedequityvalueperEnscoClassAordinarysharetoderivethelowestexchangeratioimpliedbythediscountedequityvalueanalyses.Similarly,MorganStanleycomparedthehighestimpliedequityvaluepershareforAtwoodcommonstocktothelowestimpliedequityvalueperEnscoClassAordinarysharetoderivethehighestexchangeratioimpliedbythediscountedequityvalueanalyses.Theimpliedexchangeratiorangeresultingfromthisanalysis,whichMorganStanleynoteddidnotincludesynergies,was0.67xto2.93x.MorganStanleynotedthatthemergeragreementprovidedforanexchangeratioof1.60x.
Trading Multiple Analysis
MorganStanleyperformedatradingmultipleanalysistodeterminetheratiooftheclosingstockpricepershareofAtwoodcommonstockandperEnscoClassAordinaryshare,ineachcaseasofMay26,2017,toAtwood'sandEnsco'srespectivethencurrentnetassetvaluepershare("NAV").MorganStanleyreferstothisstatisticas"Price/NAV."ThePrice/NAVsofAtwoodandEnscowerealsocomparedagainstthePrice/NAVsoffourcomparablepubliccompanies:DiamondOffshoreDrilling,Inc.,TransoceanLtd.,RowanCompaniesplc,andNobleCorporationplc.ThesecompanieswerechosenbasedonMorganStanley'sknowledgeoftheindustryandbecausetheyhavebusinessesthatmaybeconsideredsimilartothatofAtwoodandEnsco.TheNAVsutilizedwerebasedonanaverageofpubliclyavailableanalystresearchreportsdisclosingdiscountedcashflow,sum-of-the-partsornetassetvalue-basedvaluations.ThePrice/NAVswereasfollows:
Basedonthisanalysisanditsprofessionaljudgment,MorganStanleyselectedareferencerangeofPrice/NAVof0.6xto1.0x,andappliedthereferencerangetotheNAVsofAtwoodandEnsco,respectively.Basedonanaverageofpubliclyavailableanalystreportsdisclosingdiscountedcashflow,sum-of-the-partsornetassetvalue-basedvaluations,theNAVofAtwoodwascalculatedtobe$12.20andtheNAVofEnscowascalculatedtobe$10.57.MorganStanleyalsoincludedthethen-currentestimateofthepersharevalueofcapitalsparepartsofAtwoodandEnscoasestimatedbyEnscomanagementtoAtwoodandEnsco'simpliedshareprice,respectively.Thisanalysisresultedinanimpliedsharepricerangeof$8.49to$13.37pershareofAtwoodcommonstockand$7.22to$11.45perEnscoClassAordinaryshare.
MorganStanleythencalculatedtheexchangeratioimpliedbythetradingmultipleanalysis.MorganStanleycomparedthelowestimpliedequityvaluepershareforAtwoodcommonstocktothehighestimpliedequityvalueperEnscoClassAordinarysharetoderivethelowestexchangeratioimpliedbythetradingmultipleanalysis.Similarly,MorganStanleycomparedthehighestimpliedequityvaluepershareforAtwoodcommonstocktothelowestimpliedequityvalueperEnscoClassAordinarysharetoderivethehighestexchangeratioimpliedbythetradingmultipleanalysis.Theimpliedexchangeratioreferencerangeresultingfromthisanalysis,whichMorganStanleynoteddidnotincludesynergies,was0.74xto1.85x.MorganStanleynotedthatthemergeragreementprovidedforanexchangeratioof1.60x.
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Company Price/NAV(asofMay26,2017) Atwood 0.66xEnsco 0.63xDiamondOffshoreDrilling,Inc. 0.82xTransoceanLtd. 0.79xRowanCompaniesplc 0.72xNobleCorporationplc 0.55x
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NocompanyutilizedinthetradingmultipleanalysisisidenticaltoAtwoodorEnscoandhencetheforegoingsummaryandunderlyingfinancialanalysesinvolvedcomplexconsiderationsandjudgmentsconcerningdifferencesinfinancialandoperatingcharacteristicsandotherfactorsthatcouldaffectthepublictradingorothervaluesofthecompaniestowhichAtwoodandEnscowerecompared,respectively.Inevaluatingcomparablecompanies,MorganStanleymadejudgmentsandassumptionswithregardtoindustryperformance,generalbusiness,economic,marketandfinancialconditionsandothermatters,manyofwhicharebeyondthecontrolofAtwoodandEnsco.
Pro Forma Discounted Cash Flow Accretion Analysis
MorganStanleyperformedaproformadiscountedcashflowaccretionanalysis,whichisdesignedtocomparearangeofproformausefullifediscountedcashflowvaluespersharebasedonthe1.60xexchangeratioprovidedforinthemergeragreementtotherangeofEnscousefullifediscountedcashflowvaluespersharecalculatedonastandalonebasis(see"—EnscoUsefulLifeDiscountedCashFlowAnalysis").
MorganStanleycalculatedarangeofproformaimpliedaggregatevaluesbysummingthepresentvaluesoftheusefullifeunleveredfreecashflowsofAtwood,Enscoandsynergies(basedonassumedrun-ratesynergiesof$65million,asdirectedbyEnscomanagement).Forthepurposesoftheproformadiscountedcashflowaccretionanalysis,theunleveredfreecashflowsofEnsco,AtwoodandsynergieswerediscountedtoMarch31,2017usingdiscountratesrangingfrom7.5%to8.5%fortheperiodbetweenApril1,2017throughDecember31,2020basedonMorganStanley'sestimateofEnsco'sWACCforsuchperiod,andtheprojectedunleveredcashflowsfortheforecastperiodthereafterwerediscountedtopresentvalueusingdiscountratesrangingfrom7.7%to8.8%basedonMorganStanley'sestimateofEnsco'sWACCforsuchperiod.MorganStanleythenadjustedthetotalproformaimpliedaggregatevaluerangesbyEnsco'sandAtwood'sestimatedgrossdebt,minorityinterestandcashandcashequivalentsasofMarch31,2017(withEnsco'sgrossdebtandcashandcashequivalentsadjustedforopenmarketrepurchasesofdebtinApril2017).Aggregatevaluesalsoincludedthethen-currentestimateofthevalueofcapitalsparepartsofAtwoodandEnscoasestimatedbyEnscomanagement.Toderivearangeofproformausefullifediscountedcashflowvaluespershare,suchamountwasthendividedbythenumberoffullydilutedsharesexpectedtobeoutstandingbyEnscomanagementfollowingcompletionofthemergerbasedonthe1.60xexchangeratioprovidedforinthemergeragreement.ThisanalysisresultedinarangeofperEnscoClassAordinarysharevaluesof$19.93to$23.59forEnscoManagementCaseAand$11.17to$13.84forEnscoManagementCaseB.TheserangescomparedwithrangesofimpliedvaluesperEnscoClassAordinaryshareonastandalonebasisforeachofEnscoManagementCaseAandEnscoManagementCaseBof$19.07to$22.57and$10.12to$12.63,respectively.
Illustrative Floater Value Analysis
MorganStanleyperformedanillustrativefloatervalueanalysisofAtwood,whichisdesignedtoprovideanillustrativevalueperfloaterthatisimpliedbythevalueofthetransactionandcomparingsuchvaluetothereplacementcostofafloater(i.e.,bybuildinganewrig,calleda"newbuild").MorganStanleyfirstcalculatedtheimpliedtransactionvalueofAtwoodbasedonthe1.60xexchangeratioprovidedforinthemergeragreement.Theimpliedtransactionvaluewascalculatedusinganassumedequityofferpriceof$10.72perAtwoodshareasofMay26,2017.InordertoisolatetheimpliedvalueofAtwood'sfloaters,MorganStanleythendeductedfromtheimpliedtransactionvalueanassumedjackuprigvalueofAtwood(suchvaluewastheproductofthejackuprigcountofAtwoodasofMarch31,2017basedonpubliclyavailableinformationmultipliedbyaperrigvalueassumptionbasedonpublicequityresearchestimatesandasreviewedbyEnscomanagement,plusthejackupcontractbacklogvalue(whichwasassumedas40%ofthereportedjackuprigbacklogvalueofAtwoodasofMarch31,2017basedonpubliclyavailableinformation)).Inordertoaccountforconstruction
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costsassociatedwiththefloaterscapturedintheanalysis,MorganStanleythenaddedunfundedcapitalexpendituresforcertainnewbuildfloaters.Inordertocalculateanimpliedvalueperfloateronanuncontractedbasis,MorganStanleythendeductedthebacklogorderoffloaters(whichwasassumedas40%ofthereportedfloatercontractbacklogvalueofAtwoodasofMarch31,2017),whichresultedinanimpliedfloaterfleetvalueof$1,349million.ThisvaluewasdividedbythenumberoffloatersofAtwoodasofMarch31,2017basedonpubliclyavailableinformation(includingnewbuildsandexcludingcold-stackedrigs)todeterminetheimpliedpurchasepriceperfloater.
Basedontheabove-describedanalysis,MorganStanleyderivedanimpliedpriceof$225millionperfloaterofAtwoodandcomparedittotheestimatedcostofconstructinganewfloaterof$600million,asestimatedbyEnscomanagement,whichindicatedadiscountof63%.
Theillustrativefloatervalueanalysiswaspresentedforreferencepurposesonly,andwasnotrelieduponforvaluationpurposes.
Other Information
Broker Price Targets
MorganStanleyreviewedpubliclyavailableequityresearchanalysts'12-monthsharepricetargetsforAtwoodcommonstockandEnscoClassAordinaryshares.MorganStanleynotedthatthepricetargetsissuedbythoseresearchanalystswithpubliclyavailablepricetargetsrangedfrom$7.00to$18.00pershareofAtwoodcommonstockand$6.00to$15.00perEnscoClassAordinaryshare.
MorganStanleythencalculatedtheexchangeratiorangeimpliedbythebrokerpricetargets.MorganStanleycomparedthelowestresearchtargetpershareforAtwoodcommonstocktothehighestresearchtargetperEnscoClassAordinarysharetoderivethelowestexchangeratioimpliedbythebrokerpricetargets.Similarly,MorganStanleycomparedthehighestresearchtargetpershareforAtwoodcommonstocktothelowestresearchtargetperEnscoClassAordinarysharetoderivethehighestexchangeratioimpliedbythebrokerpricetargets.Theimpliedexchangeratioreferencerangeresultingfromthisanalysiswas0.47xto3.00x.MorganStanleynotedthatthemergeragreementprovidedforanexchangeratioof1.60x.
ThepublicmarkettradingpricetargetspublishedbysecuritiesresearchanalystsdonotnecessarilyreflectthecurrentmarkettradingpricesforsharesofAtwoodcommonstockorEnscoClassAordinaryshares,andtheseestimatesaresubjecttouncertainties,includingthefuturefinancialperformanceofAtwoodandEnscoaswellasfuturemarketconditions.
Theanalysts'pricetargetswerepresentedforreferencepurposesonly,andwerenotrelieduponforvaluationpurposes.
Historical Trading Prices
MorganStanleyreviewedthehistoricaltradingpricesofAtwoodcommonstockandEnscoClassAordinarysharesduringthe52-weekperiodendedMay26,2017,whichreflectedlowtohighclosingpricesforAtwoodcommonstockduringsuchperiodof$6.12to$15.37pershareandEnscoClassAordinarysharesof$6.50to$12.04pershareduringsuchperiod.MorganStanleythencalculatedtheexchangeratioimpliedbythesharepricerangeforAtwoodandEnscoduringthe52-weekperiod.MorganStanleycomparedthelowestclosingpriceforAtwoodcommonstocktothehighestclosingpriceforEnscoClassAordinarysharestoderivethelowestexchangeratioimpliedbythehistoricaltradingpricesduringthe52-weekperiodendedMay26,2017.Similarly,MorganStanleycomparedthehighestclosingpershareforAtwoodcommonstocktothelowestclosingpriceperEnscoClassAordinarysharetoderivethehighestexchangeratioimpliedbythehistoricaltradingpricesduringthe52-weekperiodendedMay26,2017.Theimpliedexchangeratioreferencerangeresultingfromthis
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analysiswas0.51xto2.37x.MorganStanleynotedthatthemergeragreementprovidedforanexchangeratioof1.60x.
Thehistoricaltradingpriceswerepresentedforreferencepurposesonly,andwerenotrelieduponforvaluationpurposes.
Illustrative Transaction Value Creation Analysis
MorganStanleyperformedanillustrativetransactionvaluecreationanalysis,thepurposeofwhichistoreviewtheimpliedincreaseinmarketvaluetotheEnscoshareholdersbasedonassumptionsregardingsynergiesandproformaownershipofthecombinedcompany.Theillustrativetransactionvaluecreationanalysiswasperformedforillustrativepurposesonlyandisnotindicativeofactualtradinglevelsanddoesnottakeintoaccountthetimingtoachieveanysynergiesorthetimingoftheclosingofthetransaction.
Initsillustrativeanalysis,MorganStanleyfirstcalculatedthethen-currentequitymarketvalueofEnscoasofthecloseoftradingonMay26,2017,whichresultedinavalueofapproximately$2.043billion.MorganStanleythencalculatedthethen-currentequitymarketvalueofAtwoodasofthecloseoftradingonMay26,2017,whichresultedinavalueofapproximately$0.671billion.MorganStanleythennotedthattheexchangeratiosetforthinthemergeragreementof1.60ximpliedaproformaownershipofapproximately30%ofthecombinedcompanybyAtwoodshareholdersandapproximately70%byEnscostockholders,usingmarketpricesonMay26,2017,andthus,Atwoodshareholderswouldhypotheticallyreceiveapproximately30%ofthethen-currentmarketvalueofEnscoandEnscoshareholderswouldhypotheticallyreceiveapproximately70%ofthethen-currentmarketvalueofAtwood.
MorganStanleyalsonotedthatbasedontheimpliedfully-dilutedproformaownership,Atwoodshareholderswouldhypotheticallyreceiveapproximately30%ofanyincreaseinmarketvaluefromsynergiesinconnectionwiththemergerwhileEnscoshareholderswouldhypotheticallyreceiveapproximately70%ofanyincreaseinmarketvaluefromsynergiesinconnectionwiththemerger.Forpurposesofthisanalysis,MorganStanleyassumedrun-ratesynergiesof$65million,asdirectedbyEnscomanagement.Thepresentvalueofthesesynergieswascalculatedbydiscountingtheestimatedfuturecashflowsfromsynergies,netofcoststoachieve,toMarch31,2017,usingadiscountrateof8.0%fortheperiodbetweenApril1,2017throughDecember31,2020basedonthemidpointofMorganStanley'sestimateofEnsco'srangeofWACCforsuchperiod,andadiscountrateof8.2%fortheperiodthereafterbasedonthemidpointofMorganStanley'sestimateofEnsco'srangeforWACCforsuchperiod.
Theillustrativeanalysisindicatedthefollowing:
MorganStanleynotedthattheillustrativeanalysisindicatedavaluetoEnscoshareholdersthatwasapproximately$212millionorapproximately10.4%higherthanEnscoequitymarketvalueasofthecloseoftradingonMay26,2017.
Theillustrativetransactionvaluecreationanalysiswaspresentedforreferencepurposesonly,andwasnotrelieduponforvaluationpurposes.
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TransactionValueCreationAnalysis $inmillions 100%ofstandalonemarketvalueofEnscoasofMay26,2017 $ 2,043less 30%ofstandalonemarketvalueofEnscoasofMay26,2017 (623)plus 70%ofstandalonemarketvalueofAtwoodasofMay26,2017 470plus 70%ofvalueofsynergies 366TotalValuetoEnscoShareholders $ 2,255
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General
InconnectionwiththereviewofthemergeragreementandthetransactionscontemplatedtherebybytheEnscoBoard,MorganStanleyperformedavarietyoffinancialandcomparativeanalysesforpurposesofrenderingitsopinion.Thepreparationofafinancialopinionisacomplexprocessandisnotnecessarilysusceptibletoapartialanalysisorsummarydescription.Inarrivingatitsopinion,MorganStanleyconsideredtheresultsofallofitsanalysesasawholeanddidnotattributeanyparticularweighttoanyanalysisorfactoritconsidered.However,giventhatmanagementofEnscoinformedMorganStanleythatEnscoManagementCaseBwasmorereflectiveofthethen-currentmarketoutlookthanEnscoManagementCaseA,MorganStanleyusedonlyEnscoManagementCaseBincertainanalyses.MorganStanleybelievesthatselectinganyportionofitsanalyses,withoutconsideringallanalysesasawhole,wouldcreateanincompleteviewoftheprocessunderlyingitsanalysesandopinion.Inaddition,MorganStanleymayhavegivenvariousanalysesandfactorsmoreorlessweightthanotheranalysesandfactors,andmayhavedeemedvariousassumptionsmoreorlessprobablethanotherassumptions.Asaresult,therangesofvaluationsresultingfromanyparticularanalysisdescribedaboveshouldnotbetakentobeMorganStanley'sviewoftheactualvalueofAtwoodorEnsco.Inperformingitsanalyses,MorganStanleymadenumerousassumptionswithregardtoindustryperformance,generalbusiness,economic,marketandfinancialconditionsandothermatters,manyofwhicharebeyondthecontrolofAtwoodorEnsco.Theseinclude,amongotherthings,theimpactofcompetitiononAtwood'sandEnsco'sbusinessesandtheindustrygenerally,industrygrowth,andtheabsenceofanyadversematerialchangeinthefinancialconditionandprospectsofAtwoodorEnsco,ortheindustry,orinthefinancialmarketsingeneral.AnyestimatescontainedinMorganStanley'sanalysesarenotnecessarilyindicativeoffutureresultsoractualvalues,whichmaybesignificantlymoreorlessfavorablethanthosesuggestedbysuchestimates.
MorganStanleyconductedtheanalysesdescribedabovesolelyaspartofitsanalysisofwhethertheexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtoEnscoandinconnectionwiththedeliveryofitsopinion,datedMay29,2017,totheEnscoBoard.TheseanalysesdonotpurporttobeappraisalsortoreflectthepricesatwhichsharesofAtwoodcommonstockorEnscoClassAordinarysharesmightactuallytrade.
Theexchangeratiowasdeterminedthrougharm's-lengthnegotiationsbetweenAtwoodandEnscoandwasapprovedbytheEnscoBoard.MorganStanleyprovidedadvicetoEnscoduringthesenegotiations.MorganStanleydidnot,however,recommendanyspecificexchangeratiotoEnsco,northatanyspecificexchangeratioconstitutedtheonlyappropriateexchangeratioforthemerger.MorganStanley'sopiniondidnotaddresstherelativemeritsofthemergerascomparedtoanyotheralternativebusinesstransaction,orotheralternatives,orwhetherornotsuchalternativescouldbeachievedorareavailable.Inaddition,MorganStanley'sopinionwasnotintendedto,anddidnot,inanymanner,addressthepriceatwhichtheEnscoClassAordinaryshareswouldtradefollowingthemergeroratanytime,andMorganStanleyexpressednoopinionorrecommendationtoanyholderofEnscoClassAordinarysharesorAtwoodcommonstockastohowsuchholdershouldvoteattheEnscogeneralmeetingortheAtwoodspecialmeeting,respectively,orwhethertotakeanyotheractionwithrespecttothemerger.
MorganStanley'sopinionanditsoralpresentationtotheEnscoBoardwasoneofmanyfactorstakenintoconsiderationbytheEnscoBoardindecidingtoapprovethemergeragreementandthetransactionscontemplatedthereby.Consequently,theanalysesasdescribedaboveshouldnotbeviewedasdeterminativeoftheopinionoftheEnscoBoardwithrespecttotheexchangeratiopursuanttothemergeragreementorofwhethertheEnscoBoardwouldhavebeenwillingtoagreetoadifferentexchangeratio.
MorganStanley'sopinionwasapprovedbyacommitteeofMorganStanleyinvestmentbankingandotherprofessionalsinaccordancewithMorganStanley'scustomarypractice.MorganStanleyisa
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globalfinancialservicesfirmengagedinthesecurities,investmentmanagementandindividualwealthmanagementbusinesses.Itssecuritiesbusinessisengagedinsecuritiesunderwriting,tradingandbrokerageactivities,foreignexchange,commoditiesandderivativestrading,primebrokerage,aswellasprovidinginvestmentbanking,financingandfinancialadvisoryservices.MorganStanley,itsaffiliates,directorsandofficersmayatanytimeinvestonaprincipalbasisormanagefundsthatinvest,holdlongorshortpositions,financepositions,andmaytradeorotherwisestructureandeffecttransactions,foritsownaccountortheaccountsofitscustomers,indebtorequitysecuritiesorloansofEnsco,Atwoodoranyothercompany,oranycurrencyorcommodity,thatmaybeinvolvedinthemerger,oranyrelatedderivativeinstrument.
Underthetermsofitsengagementletter,MorganStanleyprovidedtheEnscoBoardwithfinancialadvisoryservicesandafinancialopiniondescribedinthissectionandattachedasAnnexBtothisjointproxystatement/prospectusinconnectionwiththemerger,andEnscohasagreedtopayMorganStanleyafee,uponrenderingitsfairnessopinion,of$2millionpayableupontheearlieroftheclosingofthemergerortheterminationofthemergeragreement.Ifthemergerisconcluded,EnscohasagreedtopayMorganStanleyatransactionfeeof$8million(lessanyfeethathasbeenpreviouslypaid),whichispayableuponandiscontingentupontheconsummationofthemerger.EnscohasalsoagreedtoreimburseMorganStanleyforitsexpensesincurredinperformingitsservices.Inaddition,EnscohasagreedtoindemnifyMorganStanleyanditsaffiliates,theirrespectiveofficers,directors,employeesandagentsandeachperson,ifany,controllingMorganStanleyoranyofitsaffiliatesagainstcertainliabilitiesandexpenses,includingcertainliabilitiesunderthefederalsecuritieslaws,relatingtoorarisingoutofMorganStanley'sengagement.EnscoalsoretainedDNBCapitalLLCandHSBCSecurities(USA)Inc.asco-financialadvisorstoprovidefinancialadvisoryservicestoEnsco'smanagementrelatedtothepotentialtransactionwithAtwoodandtoassistinstructuringthecombinedcompany'santicipatedcapitalizationfollowingthemergerandagreedtopayeachsuchadvisor$2.5millionupontheconsummationofthemerger.
InthetwoyearspriortothedateofMorganStanley'sopinion,inadditiontotheservicesprovidedinconnectionwiththemergerandtheopinion,MorganStanleyprovidedfinancialadvisoryandfinancingservicestoEnscoanditsaffiliatesandreceivedaggregatefeesofbetween$4millionand$5millioninconnectionwithsuchservices.MorganStanleyisalsoalenderunderEnsco'srevolvingcreditfacility.Duringthesameperiod,MorganStanleydidnotprovideanyfinancialadvisoryorfinancingservicestoAtwoodoritsaffiliates,anddidnotreceiveanyfeesforfinancialadvisoryorfinancingservicesfromAtwoodoritsaffiliates.MorganStanleypreviouslymetwithAtwoodinMarch2017toreviewabroadarrayofpotentialstrategicalternativesforAtwoodwhichincludedpotentialfinancingandM&Atransactions.ThematerialspreparedbyMorganStanleyforsuchmeetingswerebasedsolelyonpubliclyavailableinformationandincludedanalysisofanillustrativecombinationofAtwoodwithanumberofotherpotentialparties,includingEnsco.MorganStanleymayseektoprovidefinancialadvisoryandfinancingservicestoAtwood,Enscoandtheirrespectiveaffiliatesinthefutureandwouldexpecttoreceivefeesfortherenderingofthoseservices.
OpinionofFinancialAdvisortoAtwood
GoldmanSachsrendereditsopiniontotheAtwoodBoardthat,asofMay29,2017andbaseduponandsubjecttothefactorsandassumptionssetforththerein,theexchangeratiopursuanttothemergeragreementwasfairfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstock.
ThefulltextofthewrittenopinionofGoldmanSachs,datedMay29,2017,whichsetsforthassumptionsmade,proceduresfollowed,mattersconsideredandlimitationsonthereviewundertakeninconnectionwiththeopinion,isattachedasAnnexCtothisjointproxystatement/prospectus.GoldmanSachsprovideditsopinionfortheinformationandassistanceoftheAtwoodBoardinconnectionwithitsconsiderationofthetransaction.TheGoldmanSachsopinionisnota
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recommendationastohowanyholderofsharesofAtwoodcommonstockshouldvotewithrespecttothetransactionoranyothermatter.
Inconnectionwithrenderingtheopiniondescribedaboveandperformingitsrelatedfinancialanalyses,GoldmanSachsreviewed,amongotherthings:
• themergeragreement;
• annualreportstoshareholdersandAnnualReportsonForm10-KofAtwoodandEnscoforthefivefiscalyearsendedSeptember30,2016andfiveyearsendedDecember31,2016,respectively;
• certaininterimreportstoshareholdersandQuarterlyReportsonForm10-QofAtwoodandEnsco;
• certainothercommunicationsfromAtwoodandEnscototheirrespectiveshareholders;
• certainpubliclyavailableresearchanalystreportsforAtwoodandEnsco;
• certaininternalfinancialanalysesandforecastsforEnscopreparedbyitsmanagementfortheyearsendingDecember31,2017,2018and2019;and
• certaininternalfinancialanalysesandforecastsforAtwoodpreparedbyitsmanagement(the"AtwoodForecasts")andcertainfinancialanalysesandforecastsforEnscopreparedbythemanagementofAtwood(the"AtwoodForecastsforEnsco"),ineachcase,asapprovedforGoldmanSachs'usebyAtwood,whicharecollectivelyreferredtointhissectionasthe"Forecasts,"includingcertainoperatingsynergiesprojectedbythemanagementofAtwoodtoresultfromthetransaction,asapprovedforGoldmanSachs'usebyAtwood,whicharereferredtointhissectionasthe"AtwoodSynergies."
GoldmanSachsalsohelddiscussionswithmembersoftheseniormanagementofAtwoodregardingtheirassessmentofthestrategicrationalefor,andthepotentialbenefitsof,thetransactionandthepastandcurrentbusinessoperations,financialcondition,andfutureprospectsofAtwoodandwithmembersoftheseniormanagementsofAtwoodandEnscoregardingtheirassessmentofthepastandcurrentbusinessoperations,financialconditionandfutureprospectsofEnsco;reviewedthereportedpriceandtradingactivityforthesharesofAtwoodcommonstockandtheEnscoClassAordinaryshares;comparedcertainfinancialandstockmarketinformationforAtwoodandEnscowithsimilarinformationforcertainothercompaniesthesecuritiesofwhicharepubliclytraded;andperformedsuchotherstudiesandanalyses,andconsideredsuchotherfactors,asitdeemedappropriate.
Forpurposesofrenderingthisopinion,GoldmanSachs,withAtwood'sconsent,relieduponandassumedtheaccuracyandcompletenessofallofthefinancial,legal,regulatory,tax,accountingandotherinformationprovidedto,discussedwithorreviewedby,it,withoutassuminganyresponsibilityforindependentverificationthereof.Inthatregard,GoldmanSachsassumedwithAtwood'sconsentthattheForecasts,includingtheAtwoodSynergieswerereasonablypreparedonabasisreflectingthebestcurrentlyavailableestimatesandjudgmentsofthemanagementofAtwood.GoldmanSachsdidnotmakeanindependentevaluationorappraisaloftheassetsandliabilities(includinganycontingent,derivativeorotheroff-balance-sheetassetsandliabilities)ofAtwoodorEnscooranyoftheirrespectivesubsidiariesanditwasnotfurnishedwithanysuchevaluationorappraisal.GoldmanSachswasnotrequestedtosolicit,anddidnotsolicit,interestfromotherpartieswithrespecttoanacquisitionof,orotherbusinesscombinationwith,Atwoodoranyalternativetransaction.GoldmanSachsassumedthatallgovernmental,regulatoryorotherconsentsandapprovalsnecessaryfortheconsummationofthemergerwillbeobtainedwithoutanyadverseeffectonAtwoodorEnscoorontheexpectedbenefitsofthetransactioninanywaymeaningfultoitsanalysis.GoldmanSachshasalsoassumedthatthetransactionwillbeconsummatedonthetermssetforthinthemergeragreement,withoutthewaiverormodificationofanytermorconditiontheeffectofwhichwouldbeinanywaymeaningfultoitsanalysis.
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GoldmanSachs'opiniondoesnotaddresstheunderlyingbusinessdecisionofAtwoodtoengageinthetransactionortherelativemeritsofthetransactionascomparedtoanystrategicalternativesthatmaybeavailabletoAtwood;nordoesitaddressanylegal,regulatory,taxoraccountingmatters.GoldmanSachs'opinionaddressesonlythefairnessfromafinancialpointofviewtoholdersofsharesofAtwoodcommonstock(otherthanEnscoanditsaffiliates),asofthedateoftheopinion,oftheexchangeratiopursuanttothemergeragreement.GoldmanSachs'opiniondoesnotexpressanyviewon,anddoesnotaddress,anyothertermoraspectofthemergeragreementorthetransactionoranytermoraspectofanyotheragreementorinstrumentcontemplatedbythemergeragreementorenteredintooramendedinconnectionwiththetransaction,includingthefairnessofthetransactionto,oranyconsiderationreceivedinconnectiontherewithby,theholdersofanyotherclassofsecurities,creditors,orotherconstituenciesofAtwood;norastothefairnessoftheamountornatureofanycompensationtobepaidorpayabletoanyoftheofficers,directorsoremployeesofAtwoodorEnsco,orclassofsuchpersons,inconnectionwiththetransaction,whetherrelativetotheexchangeratiopursuanttothemergeragreementorotherwise.GoldmanSachs'opinionwasnecessarilybasedoneconomic,monetary,marketandotherconditionsasineffecton,andtheinformationmadeavailabletoitasof,thedateoftheopinionandGoldmanSachsassumednoresponsibilityforupdating,revisingorreaffirmingitsopinionbasedoncircumstances,developmentsoreventsoccurringafterthedateofitsopinion.Inaddition,GoldmanSachsdoesnotexpressanyopinionastothepricesatwhichEnscoClassAordinaryshareswilltradeatanytimeorastotheimpactofthetransactiononthesolvencyorviabilityofAtwoodorEnscoortheabilityofAtwoodorEnscotopaytheirrespectiveobligationswhentheycomedue.GoldmanSachs'opinionwasapprovedbyafairnesscommitteeofGoldmanSachs.
ThefollowingisasummaryofthematerialfinancialanalysesdeliveredbyGoldmanSachstotheAtwoodBoardinconnectionwithrenderingtheopiniondescribedabove.Thefollowingsummary,however,doesnotpurporttobeacompletedescriptionofthefinancialanalysesperformedbyGoldmanSachs,nordoestheorderofanalysesdescribedrepresentrelativeimportanceorweightgiventothoseanalysesbyGoldmanSachs.Someofthesummariesofthefinancialanalysesincludeinformationpresentedintabularformat.ThetablesmustbereadtogetherwiththefulltextofeachsummaryandarealonenotacompletedescriptionofGoldmanSachs'financialanalyses.Exceptasotherwisenoted,thefollowingquantitativeinformation,totheextentthatitisbasedonmarketdata,isbasedonmarketdataasitexistedonorbeforeMay26,2017(thelasttradingdaypriortopublicannouncementofthetransaction),andisnotnecessarilyindicativeofcurrentmarketconditions.
Historical Stock Trading Analysis. GoldmanSachsanalyzedtheimplieddealpriceof$10.72persharetobepaidtoholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstockpursuanttothemergeragreementbasedontheexchangeratioof1.60xandtheclosingmarketpriceofEnscoClassAordinarysharesonMay26,2017,inrelationtotheclosingmarketpriceofsharesofAtwoodcommonstockonMay26,2017(thelasttradingdaypriortopublicannouncementofthetransaction),thevolume-weightedaverageclosingpricesofsharesofAtwoodcommonstockforthe30-day,60-dayand90-dayperiodsendedMay26,2017,andthe52-weekhighandlowmarketpricesofsharesofAtwoodcommonstockfortheperiodendedMay26,2017.GoldmanSachscalculatedtheexchangeratiosbydividingthevaluepershareofAtwoodcommonstockbythevalueperEnscoClassAordinaryshareusingtheclosingmarketpricesonMay26,2017(thelasttradingdaypriortopublicannouncementofthetransaction),andcalculatedtheaverageexchangeratiosforthe30-tradingday,60-tradingday,and90-tradingdayperiodsendedMay26,2017,andthe365-tradingdayhighandlowexchangeratiofortheperiodendedMay26,2017.Thisanalysisindicatedthattheimplieddealpricepersharetobepaidtoholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstockpursuanttothemergeragreementrepresented:
• apremiumof33%totheclosingmarketpriceonMay26,2017of$8.08pershareofAtwoodcommonstock;
• apremiumof33%tothevolume-weightedaverageclosingpriceof$8.07pershareofAtwoodcommonstockforthe30-dayperiodendedonMay26,2017;
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• apremiumof24%tothevolume-weightedaverageclosingpriceof$8.63pershareofAtwoodcommonstockforthe60-dayperiodendedonMay26,2017;
• apremiumof12%tothevolume-weightedaverageclosingpriceof$9.55pershareofAtwoodcommonstockforthe90-dayperiodendedonMay26,2017;
• adiscountof24%basedonthe52-weekclosinghighmarketpriceof$14.05pershareofAtwoodcommonstock;and
• apremiumof65%basedonthe52-weekclosinglowmarketpriceof$6.48pershareofAtwoodcommonstock.
Implied Multiples Analysis. GoldmanSachscalculatedvariousfinancialmultiplesandratiosforAtwoodusingtheimplieddealpriceof$10.72persharetobepaidtoholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstockpursuanttothemergeragreementbasedontheexchangeratioof1.60xandtheclosingmarketpriceofEnscoClassAordinarysharesonMay26,2017,themedianestimatesfromInstitutionalBrokers'EstimateSystem(referredtohereinas"IBES")forAtwood,andtheAtwoodForecasts.
Inparticular,GoldmanSachscalculatedtheenterprisevalue(referredtohereinas"EV")ofAtwood,whichisthemarketcapitalizationofAtwoodbasedontheimplieddealpriceof$10.72,multipliedbythenumberoffullydilutedsharesofAtwoodcommonstockoutstandingasofMay26,2017,asprovidedbythemanagementofAtwood,plusthetotaldebtamount,lesscashandequivalentsasofMarch31,2017,asobtainedfromAtwood'spublicfilings,asamultipleofestimatedearningsbeforeinterest,taxes,depreciationandamortization(referredtohereinas"EBITDA")forcalendaryears2017,2018and2019,respectively.
Thefollowingtablepresentstheresultsoftheseanalyses:
Selected Companies Analysis. GoldmanSachsreviewedandcomparedcertainfinancialinformationforAtwoodandEnscotocorrespondingfinancialinformation,ratiosandpublicmarketmultiplesforthefollowingpubliclytradedcorporationsintheoffshoredrillingindustry(collectivelyreferredtoasthe"SelectedCompanies"):
• TransoceanLtd.;
• DiamondOffshoreDrilling,Inc.;
• RowanCompaniesplc;
• NobleCorporationplc;and
• SeadrillLimited.
AlthoughnoneoftheSelectedCompaniesaredirectlycomparabletoAtwoodorEnsco,thecompaniesincludedwereselectedbecausetheyarepubliclytradedcompanieswithoperationsthatforpurposesofanalysismaybeconsideredsimilartocertainoperationsofAtwoodandEnsco.
GoldmanSachscalculatedandcomparedvariousfinancialmultiplesandratiosfortheSelectedCompanies,AtwoodandEnsco.ThefinancialmultiplesandratiosfortheSelectedCompanieswerebasedonclosingstockmarketpricesonMay26,2017,informationobtainedfrompublicfilings,BloombergandCapitalIQ,andestimatesfromIBES.ThefinancialmultiplesandratiosforAtwood
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RatioofEquivalentValuetoEstimatedEBITDA IBES Management EV/2017EEBITDA 10.1x 9.8xEV/2018EEBITDA 46.2 NMEV/2019EEBITDA 17.4 15.2
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andEnscowerebasedonclosingstockmarketpricesonMay26,2017,informationobtainedfrompublicfilings,BloombergandCapitalIQandthenumberoffullydilutedsharesofAtwoodcommonstockandEnscoClassAordinarysharesoutstandingasofMay26,2017,asprovidedbythemanagementofAtwood.
WithrespecttoeachoftheSelectedCompanies,AtwoodandEnsco,GoldmanSachscalculatedtheratiosofEVasofMay26,2017toeachestimatedcalendaryear2017to2019EBITDA,whichisreferredtobelowas"EV/EBITDA".
Theresultsofthisanalysisareshowninthetablebelow.
Historical Exchange Ratio Analysis. GoldmanSachscalculatedtheaveragehistoricalexchangeratiosofsharesofAtwoodcommonstocktoEnscoClassAordinarysharesbasedontheclosingpricesofsharesofAtwoodcommonstockandEnscoClassAordinarysharessinceAtwood'sequityofferingonJanuary9,2017,duringthe30-tradingday,60-tradingday,90-tradingday,six-month,one-year,three-yearandfive-yearperiodsendedMay26,2017,andonMay26,2017.GoldmanSachsalsocalculatedforeachperiodtheimpliedpremiumtobepaidtoholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstockpursuanttothemergeragreementbasedontheexchangeratioof1.60x.Thefollowingtablepresentstheresultsofthisanalysis:
Illustrative Discounted Cash Flow Analysis—5-year DCF Model.
Atwood Standalone
UsingtheAtwoodForecastsforthecalendaryears2017to2021,GoldmanSachsperformedafive-yearillustrativediscountedcashflowanalysisonAtwoodonastandalonebasistogeneraterangesfortheimpliedpresentvaluepershareofAtwoodcommonstock.Usingdiscountratesrangingfrom13.0%to15.0%,reflectingestimatesofAtwood'sweightedaveragecostofcapital,andassumingmid-yearconvention,GoldmanSachsdiscountedtopresentvalueasofMarch31,2017(i)estimatesof
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EV/EBITDA Company 2017E 2018E 2019E Atwood 8.9x 40.4x 15.2xEnsco 7.9 10.0 9.1TransoceanLtd. 7.2 9.3 9.1DiamondOffshoreDrilling,Inc. 6.0 7.5 8.2RowanCompaniesplc 7.1 14.3 15.2NobleCorporationplc 10.9 12.2 11.4SeadrillLimited 10.1 15.5 13.1Median 7.5x 11.1x 10.3x
TimePeriod(uptoMay26,2017)
ImpliedExchangeRatioofAtwoodcommonstocktoEnscoClassA
ordinaryshares ImpliedOffer(1.60x)
Premium May26,2017 1.21 33%SinceAtwood'sEquityOfferingonJanuary9,2017 1.07 50%30-dayAverage 1.04 54%60-dayAverage 1.04 53%90-dayAverage 1.05 52%6-monthAverage 1.10 45%1-yearAverage 1.09 46%3-yearAverage 1.04 54%5-yearAverage 0.98 63%
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Atwood'sunleveredfreecashflowsfortheperiodApril1,2017toDecember31,2021and(ii)arangeofillustrativeterminalvaluesforAtwood,whichwerecalculatedbyapplyingEV/EBITDAmultiplesrangingfrom5.5xto7.5xtoaterminalyearestimateofEBITDAtobegeneratedbyAtwood,asreflectedintheAtwoodForecasts.TherangeofEBITDAmultipleswereestimatedbyGoldmanSachsbasedontheEV/EBITDAmultiplesoftheSelectedCompaniesanalyzedforthepurposesofthe"SelectedCompaniesAnalysis"describedabovetakingintoaccountcurrentandhistoricaltradingdataandthecurrentandhistoricalenterprisevaluetoforwardyearEBITDAmultiplesforAtwood,EnscoandtheSelectedCompanies.GoldmanSachsderivedrangesofillustrativeenterprisevaluesforAtwoodbyaddingtherangesofpresentvaluesitderivedabove.GoldmanSachsthensubtractedAtwood'snetdebt,asobtainedfrompublicfilings,fromtherangeofillustrativeenterprisevaluesitderivedtodeterminearangeofillustrativeequityvaluesforAtwood.GoldmanSachsthencalculatedtheillustrativerangeofpresentvaluespershareofAtwoodcommonstockbydividingtherangeofillustrativeequityvaluesbythenumberoffullydilutedoutstandingsharesofAtwoodprovidedbythemanagementofAtwood.Thisanalysisindicatedanillustrativerangeofpresentvaluesof$4.67to$11.46pershareofAtwoodcommonstock.
Ensco Standalone
UsingtheAtwoodForecastsforEnscoforthecalendaryears2017to2021,GoldmanSachsperformedafive-yearillustrativediscountedcashflowanalysisonEnscoonastandalonebasistogeneraterangesfortheimpliedpresentvalueperEnscoClassAordinaryshare.Usingdiscountratesrangingfrom12.0%to14.0%,reflectingestimatesofEnsco'sweightedaveragecostofcapital,andassumingmid-yearconvention,GoldmanSachsdiscountedtopresentvalueasofMarch31,2017(i)estimatesofEnsco'sunleveredfreecashflowsfortheperiodApril1,2017toDecember31,2021and(ii)arangeofillustrativeterminalvaluesforEnsco,whichwerecalculatedbyapplyingEV/EBITDAmultiplesrangingfrom5.5xto7.5xtoaterminalyearestimateofEBITDAtobegeneratedbyEnsco,asreflectedintheAtwoodForecastsforEnsco.TherangeofEBITDAmultipleswereestimatedbyGoldmanSachsbasedontheEV/EBITDAmultiplesoftheSelectedCompaniesanalyzedforthepurposesofthe"SelectedCompaniesAnalysis"describedabovetakingintoaccountcurrentandhistoricaltradingdataandthecurrentandhistoricalenterprisevaluetoforwardyearEBITDAmultiplesforAtwood,EnscoandtheSelectedCompanies.GoldmanSachsderivedrangesofillustrativeenterprisevaluesforEnscobyaddingtherangesofpresentvaluesitderivedabove.GoldmanSachsthensubtractedEnsco'snetdebt,asprovidedbyEnscomanagementandprovidedtoGoldmanSachsbythemanagementofAtwood,fromtherangeofillustrativeenterprisevaluesitderivedtodeterminearangeofillustrativeequityvaluesforEnsco.GoldmanSachsthencalculatedtheillustrativerangeofpresentvaluesperEnscoClassAordinarysharebydividingtherangeofillustrativeequityvaluesbythenumberoffullydilutedoutstandingsharesofEnscoprovidedbythemanagementofAtwood.Thisanalysisindicatedanillustrativerangeofpresentvaluesof$3.79to$8.30perEnscoClassAordinaryshare.
Pro Forma
UsingtheAtwoodForecastsandAtwoodForecastsforEnscoforthecalendaryears2017to2021,respectively,andAtwoodSynergies,GoldmanSachsgeneratedreferencerangesfortheimpliedvalueperordinaryshareofthecombinedcompany.
Usingdiscountratesrangingfrom12.0%to14.0%,reflectingestimatesoftheproformaweightedaveragecostofcapitalofthecombinedcompany,andassumingmid-yearconvention,GoldmanSachsdiscountedtopresentvalueasofMarch31,2017(i)estimatesofthecombinedcompany'sunleveredfreecashflowsfortheperiodApril1,2017toDecember31,2021and(ii)arangeofillustrativeterminalvaluesforthecombinedcompany,whichwerecalculatedbyapplyingEV/EBITDAmultiplesrangingfrom5.5xto7.5xtoaterminalyearestimateofEBITDAtobegeneratedbythecombined
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company,calculatedusingtheAtwoodForecasts,AtwoodForecastsforEnscoandAtwoodSynergies.GoldmanSachsderivedrangesofillustrativeenterprisevaluesforthecombinedcompanybyaddingtherangesofpresentvaluesitderivedabove.GoldmanSachsthensubtractedthecombinedcompany'sproformanetdebt,asprovidedbythemanagementofAtwood,fromtherangeofillustrativeenterprisevaluesitderivedtodeterminearangeofillustrativeequityvaluesforthecombinedcompany.GoldmanSachsthencalculatedtheillustrativerangeofpresentvaluesperordinaryshareofthecombinedcompanybydividingtherangeofillustrativeequityvaluesbythenumberofestimatedproformafullydilutedoutstandingsharesofthecombinedcompanyfollowingclosing,asprovidedbythemanagementofAtwood.Thisanalysisindicatedanillustrativerangeofpresentvaluesof$5.54to$12.72perordinaryshareofthecombinedcompany.
Illustrative Discounted Cash Flow Analysis—Asset Life Model.
Atwood Standalone
UsingtheAtwoodForecasts,GoldmanSachscalculatedthepresentvalueoftheunleveredfreecashflowsthatAtwoodcouldbeexpectedtogeneratefromitsexistingassetsasofMarch31,2017fortheirestimatedremaininglives.GoldmanSachscalculatednetpresentvaluesoftheunleveredfreecashflowsusingdiscountratesrangingfrom13.0%to15.0%,reflectingestimatesoftheweightedaveragecostofcapitalofAtwood.GoldmanSachsderivedarangeofillustrativeenterprisevaluesforAtwoodbyaddingtherangesofpresentvaluesitderivedabove.GoldmanSachsthensubtractedAtwood'snetdebt,asobtainedfrompublicfilings,fromtherangeofillustrativeenterprisevaluesitderivedtodeterminearangeofillustrativeequityvaluesforAtwood.GoldmanSachsthencalculatedtheillustrativerangeofpresentvaluespershareofAtwoodcommonstockbydividingtherangeofillustrativeequityvaluesforAtwoodbythenumberoffullydilutedoutstandingsharesofAtwoodprovidedbythemanagementofAtwood.Thisanalysisimpliedanillustrativerangeofnetassetvaluesof$4.46to$7.24pershareofAtwoodcommonstock.
Ensco Standalone
UsingtheAtwoodForecastsforEnsco,GoldmanSachscalculatedthepresentvalueoftheunleveredfreecashflowsthatEnscocouldbeexpectedtogeneratefromitsexistingassetsasofMarch31,2017fortheirestimatedremaininglives.GoldmanSachscalculatednetpresentvaluesoftheunleveredfreecashflowsforEnscousingdiscountratesrangingfrom12.0%to14.0%,reflectingestimatesoftheweightedaveragecostofcapitalofEnsco.GoldmanSachsderivedarangeofillustrativeenterprisevaluesforEnscobyaddingtherangesofpresentvaluesitderivedabove.GoldmanSachsthensubtractedEnsco'snetdebt,asprovidedbyEnscomanagementandprovidedtoGoldmanSachsbythemanagementofAtwood,fromtherangeofillustrativeenterprisevaluesitderivedtodeterminearangeofillustrativeequityvaluesforEnsco.GoldmanSachsthencalculatedtheillustrativerangeofpresentvaluesperEnscoClassAordinarysharebydividingtherangeofillustrativeequityvaluesforEnscobythenumberoffullydilutedoutstandingordinarysharesofEnscoprovidedbythemanagementofAtwood.Thisanalysisimpliedanillustrativerangeofnetassetvaluesof$4.05to$6.02perEnscoClassAordinaryshare.
Pro Forma
UsingtheAtwoodForecasts,AtwoodForecastsforEnscoandAtwoodSynergies,GoldmanSachscalculatedthepresentvalueoftheunleveredfreecashflowsthatthecombinedcompanycouldbeexpectedtogeneratefromthecombinedcompany'sproformaassetsexistingasofMarch31,2017fortheirestimatedremaininglives.GoldmanSachscalculatednetpresentvaluesoftheunleveredfreecashflowsforthecombinedcompanyusingdiscountratesrangingfrom12.0%to14.0%,reflectingestimatesoftheweightedaveragecostofcapitalofthecombinedcompany.GoldmanSachsderivedarangeofillustrativeenterprisevaluesforthecombinedcompanybyaddingtherangesofpresentvaluesit
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derivedabove.GoldmanSachsthensubtractedthecombinedcompany'sproformanetdebt,asprovidedbythemanagementofAtwood,fromtherangeofillustrativeenterprisevaluesitderivedtodeterminearangeofillustrativeequityvalues.GoldmanSachsthencalculatedtheillustrativerangeofpresentvaluesperordinaryshareofthecombinedcompanybydividingtherangeofillustrativeequityvaluesforthecombinedcompanybythenumberofproformafullydilutedoutstandingsharesprovidedbythemanagementofAtwood.Thisanalysisimpliedanillustrativerangeofnetassetvaluesof$5.99to$9.14pershareofthecombinedcompany.
Relative Discounted Cash Flow Analysis
Five-year DCF Model
GoldmanSachsperformedanillustrativerelativediscountedcashflowanalysisbasedontheresultsofitsfive-yeardiscountedcashflowanalysesonAtwoodandEnscoonastandalonebasistodeterminetheimpliedexchangeratioofsharesofAtwoodcommonstocktoEnscoClassAordinaryshares.GoldmanSachscalculatedtheimpliedexchangeratiobydividingtheillustrativerangeofpresentvaluespershareofAtwoodcommonstockfromitsfive-yearillustrativediscountedcashflowanalysisonAtwoodonastandalonebasisbytheillustrativerangeofpresentvaluesperEnscoClassAordinarysharefromitsfive-yearillustrativediscountedcashflowanalysisonEnscoonastandalonebasis.Thisanalysisresultedinarangeofimpliedexchangeratiosof1.234xto1.381x.
Asset Life Model
GoldmanSachsperformedanillustrativerelativediscountedcashflowanalysisbasedontheresultsofitsAssetLifeModeldiscountedcashflowanalysesonAtwoodandEnscoonastandalonebasistodeterminetheimpliedexchangeratioofsharesofAtwoodcommonstocktoEnscoClassAordinaryshares.GoldmanSachscalculatedtheimpliedexchangeratiobydividingtheillustrativerangeofnetassetvaluespershareofAtwoodcommonstockfromitsAssetLifeModeldiscountedcashflowanalysisonAtwoodonastandalonebasisbytheillustrativerangeofnetassetvaluesperEnscoClassAordinarysharefromitsAssetLifeModeldiscountedcashflowanalysisonEnscoonastandalonebasis.Thisanalysisresultedinarangeofimpliedexchangeratiosof1.100xto1.203x.
Thepreparationofafairnessopinionisacomplexprocessandisnotnecessarilysusceptibletopartialanalysisorsummarydescription.Selectingportionsoftheanalysesorofthesummarysetforthabove,withoutconsideringtheanalysesasawhole,couldcreateanincompleteviewoftheprocessesunderlyingGoldmanSachs'opinion.Inarrivingatitsfairnessdetermination,GoldmanSachsconsideredtheresultsofallofitsanalysesanddidnotattributeanyparticularweighttoanyfactororanalysisconsideredbyit.Rather,GoldmanSachsmadeitsdeterminationastofairnessonthebasisofitsexperienceandprofessionaljudgmentafterconsideringtheresultsofallofitsanalyses.NocompanyortransactionusedintheaboveanalysesasacomparisonisdirectlycomparabletoAtwoodorEnscoorthecontemplatedtransaction.
GoldmanSachspreparedtheseanalysesforpurposesofGoldmanSachs'providingitsopiniontotheAtwoodBoardastothefairnessoftheexchangeratiopursuanttothemergeragreementfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofsharesofAtwoodcommonstock.Theseanalysesdonotpurporttobeappraisalsnordotheynecessarilyreflectthepricesatwhichbusinessesorsecuritiesactuallymaybesold.Analysesbaseduponforecastsoffutureresultsarenotnecessarilyindicativeofactualfutureresults,whichmaybesignificantlymoreorlessfavorablethansuggestedbytheseanalyses.Becausetheseanalysesareinherentlysubjecttouncertainty,beingbaseduponnumerousfactorsoreventsbeyondthecontrolofthepartiesortheirrespectiveadvisors,noneofAtwood,Ensco,GoldmanSachsoranyotherpersonassumesresponsibilityiffutureresultsaremateriallydifferentfromthoseforecast.
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Theexchangeratiowasdeterminedthrougharm's-lengthnegotiationsbetweenAtwoodandEnscoandwasapprovedbytheAtwoodBoard.GoldmanSachsprovidedadvicetoAtwoodduringthesenegotiations.GoldmanSachsdidnot,however,recommendanyspecificexchangeratiotoAtwoodortheAtwoodBoardorthatanyspecificexchangeratioconstitutedtheonlyappropriateexchangeratioforthetransaction.
Asdescribedabove,GoldmanSachs'opiniontotheAtwoodBoardwasoneofmanyfactorstakenintoconsiderationbytheAtwoodBoardinmakingitsdeterminationtoapprovethemergeragreement.TheforegoingsummarydoesnotpurporttobeacompletedescriptionoftheanalysesperformedbyGoldmanSachsinconnectionwiththefairnessopinionandisqualifiedinitsentiretybyreferencetothewrittenopinionofGoldmanSachsattachedasAnnexCtothisjointproxystatement/prospectus.
GoldmanSachsanditsaffiliatesareengagedinadvisory,underwritingandfinancing,principalinvesting,salesandtrading,research,investmentmanagementandotherfinancialandnon-financialactivitiesandservicesforvariouspersonsandentities.GoldmanSachsanditsaffiliatesandemployees,andfundsorotherentitiesinwhichtheyinvestorwithwhichtheyco-invest,mayatanytimepurchase,sell,holdorvotelongorshortpositionsandinvestmentsinsecurities,derivatives,loans,commodities,currencies,creditdefaultswapsandotherfinancialinstrumentsofAtwood,Ensco,anyoftheirrespectiveaffiliatesandthirdparties,oranycurrencyorcommoditythatmaybeinvolvedinthetransactioncontemplatedbythemergeragreementfortheaccountsofGoldmanSachsanditsaffiliatesandemployeesandtheircustomers.GoldmanSachsactedasfinancialadvisortoAtwoodinconnectionwith,andparticipatedincertainofthenegotiationsleadingto,thetransactioncontemplatedbytheagreement.GoldmanSachshasprovidedcertainfinancialadvisoryand/orunderwritingservicestoAtwoodanditsaffiliatesfromtimetotimeforwhichtheInvestmentBankingDivisionofGoldmanSachshasreceived,andmayreceive,compensation,includinghavingactedasleadbookrunnerinconnectionwiththepublicofferingof15,525,000sharesofAtwoodcommonstockinJanuary2017.GoldmanSachsalsohasprovidedcertainfinancialadvisoryand/orunderwritingservicestoEnscoanditsaffiliatesfromtimetotimeforwhichtheInvestmentBankingDivisionofGoldmanSachshasreceived,andmayreceive,compensation,includinghavingactedasleadbookrunnerinconnectionwiththepublicofferingof57,000,000EnscoClassAordinarysharesinApril2016anddealermanagerinconnectionwithatenderofferbyEnscoforits8.50%SeniorNotesdue2019,4.70%SeniorNotesdue2021,6.875%SeniorNotesdue2020,4.50%SeniorNotesdue2024and5.20%SeniorNotesdue2025(aggregateprincipalamount$750million)inApril2016.GoldmanSachsmayalsointhefutureprovideinvestmentbankingservicestoAtwood,EnscoandtheirrespectiveaffiliatesforwhichtheInvestmentBankingDivisionofGoldmanSachsmayreceivecompensation.DuringthetwoyearperiodendedMay29,2017,GoldmanSachshasreceivedcompensationforfinancialadvisoryand/orunderwritingservicesprovidedbyitsInvestmentBankingDivisiontoAtwoodand/oritsaffiliatesandEnscoand/oritsaffiliatesofapproximately$5.0millionandapproximately$4.5million,respectively.
TheAtwoodBoardselectedGoldmanSachsasitsfinancialadvisorbecauseitisaninternationallyrecognizedinvestmentbankingfirmthathassubstantialexperienceintransactionssimilartothetransaction.PursuanttoaletteragreementdatedMay26,2017,AtwoodengagedGoldmanSachstoactasitsfinancialadvisorinconnectionwiththecontemplatedtransaction.TheengagementletterbetweenAtwoodandGoldmanSachsprovidesforatransactionfeethatisestimated,basedontheinformationavailableasofthedateofannouncementofthetransaction,atapproximately$21million,$3millionofwhichbecamepayableuponexecutionofthemergeragreement,andtheremainderofwhichiscontingentuponconsummationofthemerger.Inaddition,AtwoodhasagreedtoreimburseGoldmanSachsforcertainofitsexpenses,includingattorneys'feesanddisbursements,andtoindemnifyGoldmanSachsandrelatedpersonsagainstvariousliabilities,includingcertainliabilitiesunderthefederalsecuritieslaws.
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CertainUnauditedFinancialForecastsPreparedbytheManagementofEnsco
Forinternalplanningpurposesandinconnectionwiththeproposedmerger,Ensco'smanagementpreparedforecastsofexpectedfuturefinancialandoperatingperformanceofEnscoandofAtwood(the"Enscofinancialforecasts"and"Atwoodfinancialforecasts,"respectively).Theseforecastswereformultipleyearsandconsistedoftwocases,EnscoManagementCaseAandEnscoManagementCaseB,withEnscoManagementCaseBbeingmorereflectiveofthethen-currentmarketoutlookthanEnscoManagementCaseA.SelectmateriallineitemsfortheforecastsforEnscofortheyearsendingDecember31,2017,2018,2019,2020,2021and2022,aswellasforAtwoodfortheninemonthsendingDecember31,2017andtheyearsendingDecember31,2018,2019,2020,2021and2022aresetforthbelow.
TheprimarymarketassumptionsunderlyingthediscountedcashflowanalysisforeachofEnscoManagementCaseAandEnscoManagementCaseBincludedtheanticipatedperiodduringwhichutilizationanddayratesassociatedwithEnsco's/Atwood'sjackuprigsandfloaterswouldimprove.ForEnscoManagementCaseA,Enscoassumed(i)withrespecttoEnsco's/Atwood'sjackuprigs,utilizationrecoverybeginningin2017followedbydayraterecoveryin2018,and(ii)withrespecttoEnsco's/Atwood'sfloaters,utilizationrecoverybeginningin2018followedbydayraterecoveryin2019.ForEnscoManagementCaseB,Enscoassumed(i)withrespecttoEnsco's/Atwood'sjackuprigs,utilizationrecoverybeginningin2018followedbydayraterecoveryin2019,and(ii)withrespecttoEnsco's/Atwood'sfloaters,utilizationrecoverybeginningin2019followedbydayraterecoveryin2020.EnscoManagementCaseAalsoincludedapost-recoverydayrateassumptionthatis10-15%higherthanEnscoManagementCaseBforbothjackuprigsandfloaters.
TheEnscofinancialforecastsandtheAtwoodfinancialforecastswerenecessarilybasedonavarietyofassumptionsandestimates.Theassumptionsandestimatesunderlyingsuchforecastsmaynotberealizedandareinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies,allofwhicharedifficulttopredictandmanyofwhicharebeyondEnsco'sandAtwood'scontrol.TheassumptionsandestimatesusedtocreatetheEnscofinancialforecastsandtheAtwoodfinancialforecastsinvolvejudgmentsmadewithrespectto,amongotherthings,growthofrevenue,drillingactivityintheoilandgassector,futuresupply,demandandpricesofcommoditiesincludingcrudeoilandnaturalgas,generaldomesticandforeigneconomic,regulatoryandpoliticalconditions,levelsofoperatingexpensesandmattersspecifictothebusinessesofEnscoandAtwood,allofwhicharedifficulttopredictandmanyofwhichareoutsideofEnsco'sandAtwood'scontrol.TheEnscofinancialforecastsandtheAtwoodfinancialforecastsalsoreflectassumptionsastocertainbusinessdecisionsthataresubjecttochangeandthatdonotreflectanyoftheeffectsofthemerger,oranyotherchangesthatmayinthefutureaffectEnsco,Atwoodortheirassets,business,operations,properties,policies,corporatestructure,capitalizationandmanagementasaresultofthemergerorotherwise.
TheinclusionoftheEnscofinancialforecastsandtheAtwoodfinancialforecastsinthisjointproxystatement/prospectusshouldnotberegardedasanindicationthatEnscooranyofitsadvisorsorrepresentativesconsideredorconsidersuchforecaststobeanaccuratepredictionoffutureeventsorthatsuchforecastswillbeachieved,andtheEnscofinancialforecastsandtheAtwoodfinancialforecastsshouldnotberelieduponassuch.NoneofEnsco,AtwoodortheirrespectiveadvisorsorrepresentativeshasmadeormakesanyrepresentationregardingtheinformationcontainedintheEnscofinancialforecastsortheAtwoodfinancialforecasts,and,exceptasmayberequiredofEnscoorofAtwoodbyapplicablesecuritieslaws,noneofthemintendstoupdateorotherwisereviseorreconcilesuchforecaststoreflectcircumstancesexistingafterthedatetheyweregeneratedortoreflecttheoccurrenceoffutureeventsevenintheeventthatanyoralloftheassumptionsunderlyingtheEnscofinancialforecastsortheAtwoodfinancialforecastsareshowntobeinerror.
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EnscoandAtwoodshareholdersarecautionednottoplaceunduerelianceontheEnscofinancialforecastsandtheAtwoodfinancialforecastsincludedinthisjointproxystatement/prospectus,andsuchprojectedfinancialinformationshouldnotberegardedasanindicationthatEnsco,theEnscoBoardoranyotherpersonconsidered,ornowconsiders,themtobereliablepredictionsoffutureresults,andtheyshouldnotberelieduponassuch.
Althoughpresentedwithnumericalspecificity,theEnscofinancialforecastsandtheAtwoodfinancialforecastsarenotfactandreflectnumerousassumptions,estimatesandjudgmentsastofutureeventsandtheprobabilityofsucheventsmadebyEnsco'smanagement,includingtheassumptions,estimatesandjudgmentsnotedbelow.SincetheEnscofinancialforecastsandtheAtwoodfinancialforecastscovermultipleyears,suchinformationbyitsnaturebecomeslesspredictivewitheachsuccessiveyear.Therecanbenoassurancethattheassumptions,estimatesandjudgmentsusedtopreparetheEnscofinancialforecastsandtheAtwoodfinancialforecastswillprovetobeaccurate,andactualresultsmaydiffermateriallyfromthosecontainedinsuchforecasts.TheEnscofinancialforecastsandtheAtwoodfinancialforecastsareforward-lookingstatements.Pleasesee"CautionaryStatementRegardingForward-LookingStatements."
TheEnscofinancialforecastsandtheAtwoodfinancialforecastsincludedinthisjointproxystatement/prospectushavebeenpreparedby,andaretheresponsibilityof,Ensco'smanagement.NeitherKPMGLLP,Ensco'sindependentregisteredpublicaccountingfirm,norPricewaterhouseCoopersLLP,Atwood'sindependentregisteredpublicaccountingfirm,hasexamined,compiledorperformedanyprocedureswithrespecttotheEnscofinancialforecastsortheAtwoodfinancialforecastsand,accordingly,KPMGLLPandPricewaterhouseCoopersLLPdonotexpressanopinionoranyotherformofassurancewithrespectthereto.ThereportofKPMGLLPandPricewaterhouseCoopersLLPincorporatedbyreferenceinthisjointproxystatement/prospectusrelatetoEnsco'sandAtwood'shistoricalfinancialinformation,respectively.TheforegoingreportdoesnotextendtotheEnscofinancialforecastsortheAtwoodfinancialforecastsandshouldnotbereadtodoso.
InadditiontobeingusedbytheEnscoBoardinconnectionwithitsdeliberationsregardingthemerger,theEnscoandAtwoodfinancialforecastswereprovidedtoMorganStanley.TheEnscofinancialforecastsforonlytheyearsendingDecember31,2017,2018and2019wereprovidedtoGoldmanSachsandAtwood.TheEnscofinancialforecastswerepreparedforuseonlybytheEnscoBoard,Ensco,MorganStanleyand,withrespecttotheEnscofinancialforecastsfortheyearsendingDecember31,2017,2018and2019,AtwoodandGoldmanSachs.TheAtwoodfinancialforecastswerepreparedforuseonlybytheEnscoBoard,EnscoandMorganStanley.
SummariesofselectmateriallineitemsincludedintheEnscofinancialforecastsandtheAtwoodfinancialforecastsaresetforthbelow.
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CaseA
CaseB
TheEnscofinancialforecastsandtheAtwoodfinancialforecastsshouldbereadtogetherwiththehistoricalfinancialstatementsofEnscoandAtwood,respectively,whichhavebeenfiledwiththeSEC,andtheotherinformationregardingEnscoandAtwoodcontainedelsewhereinthisjointproxystatement/prospectus.NoneoftheEnscofinancialforecastsorAtwoodfinancialforecastswerepreparedwithaviewtowardpublicdisclosure,norweretheypreparedwithaviewtowardcompliance
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EnscoFinancialForecasts (inmillions) 2017E 2018E 2019E 2020E 2021E 2022E Revenue $ 1,930 $ 2,135 $ 2,259 $ 2,483 $ 2,750 $ 2,834ContractDrillingExpense 1,210 1,404 1,479 1,454 1,422 1,266EBITDA(2) 537 512 589 884 1,210 1,465CapitalExpenditures 720 297 163 198 159 275UnleveredFreeCashFlow(3) (201) 184 370 553 867 981
AtwoodFinancialForecasts (inmillions) 2017E(1) 2018E 2019E 2020E 2021E 2022E Revenue $ 320 $ 384 $ 464 $ 677 $ 850 $ 1,014ContractDrillingExpense 250 319 337 398 413 412EBITDA(2) 31 13 75 227 385 550CapitalExpenditures(4) 32 41 29 47 52 328UnleveredFreeCashFlow(3) (6) (38) 34 162 300 178
EnscoFinancialForecasts (inmillions) 2017E 2018E 2019E 2020E 2021E 2022E Revenue $ 1,844 $ 1,863 $ 1,872 $ 2,041 $ 2,308 $ 2,483ContractDrillingExpense 1,144 1,258 1,360 1,411 1,435 1,279EBITDA(2) 511 389 318 485 756 1,099CapitalExpenditures 660 305 153 191 157 197UnleveredFreeCashFlow(3) (196) 92 164 223 479 735
AtwoodFinancialForecasts (inmillions) 2017E(1) 2018E 2019E 2020E 2021E 2022E Revenue $ 276 $ 331 $ 373 $ 555 $ 704 $ 881ContractDrillingExpense 215 326 337 398 413 410EBITDA(2) 22 (47) (16) 105 238 419CapitalExpenditures(4) 32 40 29 47 52 343UnleveredFreeCashFlow(3) (13) (98) (56) 41 162 42
(1) ReflectsestimatesfortheninemonthsendingDecember31,2017.
(2) EBITDAiscalculatedasnetincomeexcludinginterest,taxes,depreciationandnon-cashamortizationofdeferredrevenueandexpense.
(3) UnleveredfreecashflowiscalculatedasEBITDAlesscapitalexpendituresandunleveredtaxes,adjustedforanychangesinworkingcapital.
(4) Excludescapitalizedinterestandproceedsfromassetsale.
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withthepublishedguidelinesoftheSECortheguidelinesestablishedbytheAmericanInstituteofCertifiedPublicAccountantsforpreparationandpresentationofprospectivefinancialinformation.
CertainUnauditedFinancialForecastsPreparedbytheManagementofAtwood
Theforward-lookingfinancialinformationincludedinthissectionofthisjointproxystatement/prospectushasbeenpreparedby,andistheresponsibilityof,Atwood'smanagement.PricewaterhouseCoopersLLPhasneitherexamined,compilednorperformedanyprocedureswithrespecttosuchforward-lookingfinancialinformationand,accordingly,PricewaterhouseCoopersLLPdoesnotexpressanopinionoranyotherformofassurancewithrespectthereto.ThePricewaterhouseCoopersLLPreportincorporatedbyreferenceinthisjointproxystatement/prospectusrelatestoAtwood'shistoricalfinancialinformation.Itdoesnotextendtosuchforward-lookingfinancialinformationandshouldnotbereadtodoso.
Atwooddoesnotasamatterofcoursemakepublicprojectionsastofutureearningsorotherresultsofoperations,otherthanprovidingestimatesforcertainfinancialitemsonanear-termbasisonitsregularearningscalls.Forinternalpurposesandinconnectionwiththeprocessleadingtothemergeragreement,however,themanagementofAtwoodpreparedcertainprojectionsoffuturefinancialandoperatingperformanceofAtwoodfortheyears2017through2021(sometimesreferredtoasthe"AtwoodForecasts").ThemanagementofAtwoodalsopreparedcertainprojectionsoffuturefinancialandoperatingperformanceofEnscofortheyears2017through2021(sometimesreferredtoasthe"AtwoodForecastsforEnsco").
ThemanagementofAtwood,afterdiscussionswithEnsco,alsoestimatedthetimingandamountofprojectedrealizationofannualsavingsfrompre-taxcostsynergiesforthecombinedcompany(sometimesreferredtoasthe"AtwoodSynergies").TheAtwoodSynergiesarenotreflectedintheAtwoodForecastsortheAtwoodForecastsforEnsco.Inaddition,themanagementofAtwoodpreparedcertainprojectionsoffuturefinancialandoperatingperformanceofthecombinedcompanyfortheyears2017through2021bycombiningtheAtwoodForecasts,theAtwoodForecastsforEnscoandtheAtwoodSynergies,andmakingcertainadjustmentsforthecoststructureofthecombinedcompanyaswellasotheradjustmentscomparedtothestandaloneAtwoodForecastsforEnsco(suchprojections,assoadjusted,aresometimesreferredtoasthe"CombinedCompanyForecasts").Wesometimesrefertoalloftheforecastsandsynergiesdescribedaboveasthe"forward-lookingfinancialinformation."
Theforward-lookingfinancialinformationisincludedinthisjointproxystatement/prospectussolelybecauseitwasamongthefinancialinformationmadeavailable,inwholeorinpart,totheAtwoodBoard,Ensco(onlyinthecaseoftheAtwoodForecasts)andAtwood'sfinancialadvisor,GoldmanSachs,inconnectionwiththeirrespectiveevaluationsofthemerger.Theforward-lookingfinancialinformationwasnotpreparedwithaviewtowardpublicdisclosureorwithaviewtowardcomplyingwithGAAP,thepublishedguidelinesoftheSECregardingprojectionsandforward-lookingstatements,ortheguidelinesestablishedbytheAmericanInstituteofCertifiedPublicAccountantsforpreparationandpresentationofprospectivefinancialinformation.Thedevelopmentoftheforward-lookingfinancialinformationentailednumerousassumptionsaboutAtwoodandEnscoatapointintime,andtheforward-lookinginformationissubjectiveinmanyrespects.Althoughtheforward-lookingfinancialinformationispresentedwithnumericalspecificity,theinformationreflectsassumptions,estimatesandjudgmentsastofutureeventsmadebythemanagementofAtwood.IntheviewofthemanagementofAtwood,theforward-lookingfinancialinformationwaspreparedonareasonablebasisandreflectedthebestthen-currentlyavailableestimatesandjudgmentsatthetimeofitspreparation,andpresentedatthetimeofitspreparation,tothebestofAtwood'smanagement'sknowledgeandbelief,reasonableprojectionsofthefuturefinancialperformanceofAtwood,Enscoandthecombinedcompany.NeitherAtwood'snorEnsco'sindependentregisteredpublicaccountingfirms,noranyotherindependentregisteredpublicaccountingfirm,hascompiled,examined,orperformedanyprocedures
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withrespecttotheforward-lookingfinancialinformation,norhavetheyexpressedanyopinionoranyotherformofassuranceonsuchinformationoritsachievability,andassumenoresponsibilityfor,anddisclaimanyassociationwith,theforward-lookingfinancialinformation.
Importantfactorsthatmayaffectactualresultsandcausetheresultstobedifferentfromtheforward-lookingfinancialinformationinclude:theultimatetiming,outcomeandresultsofintegratingtheoperationsofEnscoandAtwood,generaleconomic,regulatoryandindustrialconditions,changesincustomerbehavior,accuracyofcertainaccountingassumptions,changesinactualorprojectedcashflows,competitivepressures,changesinthedemandfororpriceofoiland/ornaturalgas,changesintaxlawsoraccountingrules,changesingovernmentregulationsandregulatoryrequirements,particularlythoserelatedtooffshoreoilandnaturalgasexploration,structuralchangesintheoilandnaturalgasindustry,costsandavailabilityofresourcesandothermattersdescribedinthesection"RiskFactors"inthisjointproxystatement/prospectus.AstheAtwoodForecasts,theAtwoodForecastsforEnscoandtheAtwoodSynergiesareforward-lookingstatements,seealso"CautionaryStatementRegardingForward-LookingStatements"inthisjointproxystatement/prospectus.Inaddition,theforward-lookingfinancialinformationisnotfactanddoesnottakeintoaccountanycircumstancesoreventsoccurringafterthedatethatitwaspreparedand,accordingly,doesnotgiveeffecttoanychangestoEnsco'soperationsorstrategythatmaybeimplementedaftercompletionofthemergerand,fortheAtwoodForecastsandtheAtwoodForecastsforEnsco,doesnotgiveeffecttothemerger.Fortheaforementionedreasons,theinclusionoftheforward-lookinginformationinthisjointproxystatement/prospectusshouldnotberegardedasanindicationthattheforward-lookinginformationwillbenecessarilypredictiveofactualfutureevents,anditshouldnotbereliedonassuch.Actualresultsmaybemateriallydifferentfromthosecontainedintheforward-lookinginformation.
Noonehasmadeormakesanyrepresentationtoanyshareholderregardingtheforward-lookingfinancialinformationandAtwoodhasnotmadeanyrepresentationtoEnscoregardingtheinformationincludedintheforward-lookingfinancialinformation.Theforward-lookingfinancialinformationisnotincludedinthisjointproxystatement/prospectusinordertoinduceanyshareholdertovoteinfavorofthemergeroranyoftheotherproposalstobevotedonatthespecialmeetingortoinfluenceanyshareholdertomakeanyinvestmentdecisionwithrespecttothemerger.Excepttotheextentrequiredbyapplicablefederalsecuritieslaws,EnscoandAtwooddonotintend,andexpresslydisclaimanyresponsibility,toupdateorotherwiserevisetheforward-lookingfinancialinformationtoreflectcircumstancesexistingafterthedatewhenpreparedortoreflecttheoccurrenceoffutureeventsevenintheeventthatanyoftheassumptionsunderlyingtheforward-lookingfinancialinformationareshowntobeinerror.
Inlightoftheforegoingfactorsandtheuncertaintiesinherentintheforward-lookingfinancialinformation,Atwoodshareholdersarecautionednottoundulyrelyontheforward-lookingfinancialinformationincludedinthisjointproxystatement/prospectus.
Certainofthemeasuresincludedintheforward-lookingfinancialinformationmaybeconsiderednon-GAAPfinancialmeasures,asnotedbelow.Non-GAAPfinancialmeasuresshouldnotbeconsideredinisolationfrom,orasasubstitutefor,financialinformationpresentedincompliancewithGAAP,andnon-GAAPfinancialmeasuresasusedbyAtwoodarenotreportedbyallofAtwood'scompetitorsintheoffshoredrillingindustryandmaynotbecomparabletosimilarlytitledamountsusedbyothercompanies.Atwoodencouragesyoutoreviewthefinancialstatementsincludedinthesectionsentitled"SelectedHistoricalConsolidatedFinancialDataofEnsco,""SelectedHistoricalConsolidatedFinancialDataofAtwood"and"UnauditedProFormaCondensedCombinedFinancialStatementsofEnsco"inthisjointproxystatement/prospectusandAtwood'sandEnsco'spublicly-filedreportsintheirentiretyandtonotrelyonanysinglefinancialmeasure.
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ThefollowingtablepresentsasummaryoftheAtwoodForecasts.TheAtwoodForecastswerereviewedwiththeAtwoodBoard.TheAtwoodForecastswerealsoprovidedtoGoldmanSachsforuseinitsfinancialanalysesandopinion(summarizedaboveinthesectionentitled"—OpinionofFinancialAdvisortoAtwood"),andAtwoodalsoprovidedcertainoftheprojectionsincludedintheAtwoodForecastsforcalendaryears2017-2019toEnsco.
ThefollowingtablepresentsasummaryoftheAtwoodForecastsforEnsco.TheAtwoodForecastsforEnscowerereviewedwiththeAtwoodBoard.TheAtwoodForecastsforEnscowerealsoprovidedtoGoldmanSachsforuseinitsfinancialanalysesandopinion(summarizedaboveinthesectionentitled"—OpinionofFinancialAdvisortoAtwood").
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AtwoodForecasts
(Inmillions) YearEndingDecember31, 2017E(1) 2018E 2019E 2020E 2021E Revenue $ 282 $ 345 $ 543 $ 717 $ 863EBITDA(2) $ 93 $ 7 $ 116 $ 265 $ 408UnleveredFreeCashFlow(3) $ 65 $ (153) $ (145) $ 163 $ 309
(1) RepresentsestimatesfortheninemonthsendingDecember31,2017.
(2) EBITDAisdefinedasearningsbeforeinterest,incometaxes,depreciationandamortization.EBITDAisanon-GAAPfinancialmeasure,asitexcludesamounts,orissubjecttoadjustmentsthateffectivelyexcludeamounts,includedinthemostdirectlycomparablemeasurecalculatedandpresentedinaccordancewithGAAPinfinancialstatements.EBITDAwasusedbymanagementofAtwoodtoprovideadditionalinformationinordertoprovidethemwithanalternativemethodforassessingAtwood'sfinancialconditionandoperatingresults(includingincomparisontoothersimilarcompanies).Thesemeasuresarenotinaccordancewith,orasubstitutefor,GAAP,andmaybedifferentfromorinconsistentwithnon-GAAPfinancialmeasuresusedbyothercompanies.EBITDAshouldnotbeconsideredinisolationorasasubstitutefornetincome,operatingincome,cashflowsfromoperatingactivitiesoranyothermeasureoffinancialperformancepresentedinaccordancewithGAAPorasameasureofacompany'sprofitabilityorliquidity.
(3) AtwoodUnleveredFreeCashFlowisdefinedasEBITDAlesstaxeslesscapitalexpendituresplusproceedsfromdisposalofassets(ifany)pluschangesinnetworkingcapital.AtwoodUnleveredFreeCashFlowwasusedbyAtwood'smanagementtoprovideadditionalinformationwithrespecttoavailablecashandliquidity.Thesemeasuresarenotinaccordancewith,orasubstitutefor,GAAP,andmaybedifferentfromorinconsistentwithnon-GAAPfinancialmeasuresusedbyothercompanies.AtwoodUnleveredFreeCashFlowshouldnotbeconsideredinisolationorasasubstituteforcashflowsfromoperatingactivitiesoranyothermeasureoffinancialperformancepresentedinaccordancewithGAAPorasameasureofacompany'sprofitabilityorliquidity.
AtwoodForecastsforEnsco
(Inmillions) YearEndingDecember31, 2017E(1) 2018E 2019E 2020E 2021E Revenue $ 1,360 $ 1,841 $ 1,831 $ 1,982 $ 2,155EBITDA(2) $ 413 $ 548 $ 579 $ 763 $ 953UnleveredFreeCashFlow(3) $ 141 $ 171 $ 360 $ 685 $ 831
(1) RepresentsestimatesfortheninemonthsendingDecember31,2017.
(2) EBITDAisdefinedasearningsbeforeinterest,incometaxes,depreciationandamortization.EBITDAisanon-GAAPfinancialmeasure,asitexcludesamounts,orissubjecttoadjustments
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ThefollowingtablepresentsasummaryoftheCombinedCompanyForecasts.TheCombinedForecastswerereviewedwiththeAtwoodboardofdirectors.TheCombinedCompanyForecastswerealsoprovidedtoGoldmanSachsforuseinitsfinancialanalysesandopinion(summarizedaboveinthesectionentitled"—OpinionofFinancialAdvisortoAtwood").
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thateffectivelyexcludeamounts,includedinthemostdirectlycomparablemeasurecalculatedandpresentedinaccordancewithGAAPinfinancialstatements.EBITDAwasusedbymanagementtoprovideadditionalinformationinordertoprovidethemwithanalternativemethodforassessingfinancialconditionandoperatingresults(includingincomparisontoothersimilarcompanies).Thesemeasuresarenotinaccordancewith,orasubstitutefor,GAAP,andmaybedifferentfromorinconsistentwithnon-GAAPfinancialmeasuresusedbyothercompanies.EBITDAshouldnotbeconsideredinisolationorasasubstitutefornetincome,operatingincome,cashflowsfromoperatingactivitiesoranyothermeasureoffinancialperformancepresentedinaccordancewithGAAPorasameasureofacompany'sprofitabilityorliquidity.
(3) AtwoodforecastedEnscoUnleveredFreeCashFlowisdefinedasEBITDAlesstaxeslesscapitalexpenditureslessmobilizationcostsplusproceedsfromdisposalofassets(ifany)pluschangesinnetworkingcapital.Mobilizationcostsaredefinedasthecashcostsassociatedwithrigmobilization.AtwoodforecastedEnscoUnleveredFreeCashFlowwasusedbyAtwood'smanagementtoprovideadditionalinformationwithrespecttoavailablecashandliquidity.Thesemeasuresarenotinaccordancewith,orasubstitutefor,GAAP,andmaybedifferentfromorinconsistentwithnon-GAAPfinancialmeasuresusedbyothercompanies.AtwoodforecastedEnscoUnleveredFreeCashFlowshouldnotbeconsideredinisolationorasasubstituteforcashflowsfromoperatingactivitiesoranyothermeasureoffinancialperformancepresentedinaccordancewithGAAPorasameasureofacompany'sprofitabilityorliquidity.
CombinedCompanyForecasts
(Inmillions) YearEndingDecember31, 2017E(1) 2018E 2019E 2020E 2021E Revenue $ 1,642 $ 2,187 $ 2,374 $ 2,699 $ 3,018EBITDA(2) $ 451 $ 549 $ 721 $ 1,040 $ 1,361UnleveredFreeCashFlow(3) $ 150 $ 12 $ 241 $ 861 $ 1,140
(1) RepresentsestimatesfortheninemonthsendingDecember31,2017.
(2) EBITDAisdefinedasearningsbeforeinterest,incometaxes,depreciationandamortization.EBITDAisanon-GAAPfinancialmeasure,asitexcludesamounts,orissubjecttoadjustmentsthateffectivelyexcludeamounts,includedinthemostdirectlycomparablemeasurecalculatedandpresentedinaccordancewithGAAPinfinancialstatements.EBITDAwasusedbyAtwood'smanagementtoprovideadditionalinformationinordertoprovidethemwithanalternativemethodforassessingAtwood's,Ensco'sandthecombinedcompany'sfinancialconditionandoperatingresults(includingincomparisontoothersimilarcompanies).Thesemeasuresarenotinaccordancewith,orasubstitutefor,GAAP,andmaybedifferentfromorinconsistentwithnon-GAAPfinancialmeasuresusedbyothercompanies.EBITDAshouldnotbeconsideredinisolationorasasubstitutefornetincome,operatingincome,cashflowsfromoperatingactivitiesoranyothermeasureoffinancialperformancepresentedinaccordancewithGAAPorasameasureofacompany'sprofitabilityorliquidity.
(3) AtwoodforecastedCombinedCompanyUnleveredFreeCashFlowisdefinedasEBITDAlesstaxeslesscapitalexpenditureslessmobilizationcostsplusproceedsfromdisposalofassets(ifany)pluschangesinnetworkingcapital.Mobilizationcostsaredefinedasthecashcostsassociatedwithrigmobilization.AtwoodforecastedEnscoUnleveredFreeCashFlowwasusedbyAtwood's
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ThefollowingtablepresentsasummaryoftheAtwoodSynergies,whichwerereviewedwiththeAtwoodBoardandprovidedtoGoldmanSachsforuseinitsfinancialanalysesandopinion(summarizedaboveinthesectionentitled"—OpinionofFinancialAdvisortoAtwood").
BoardofDirectorsandExecutiveOfficersofEnscoFollowingtheMerger
ThecurrentdirectorsofEnscoare:PaulE.Rowsey,III,CarlTrowell,J.RoderickClark,RoxanneJ.Decyk,MaryE.FrancisCBE,C.ChristopherGaut,GeraldW.Haddock,FrancisS.KalmanandKeithO.Rattie.AttheEffectiveTime,EnscowillcausetwodirectorscurrentlyservingontheAtwoodBoard,JackE.GoldenandPhilD.Wedemeyer,tobeappointedtotheEnscoBoardandwillexpandtheEnscoBoardtotheextentnecessaryinconnectionwithappointingsuchadditionaldirectors.ThetwoadditionaldirectorswereproposedbyAtwoodfollowingtheexecutionofthemergeragreementandhavebeenmutuallyagreeduponbyEnscoandAtwood.AllEnscodirectorsareelectedannuallytoserveuntilthenextannualmeetinganduntiltheirsuccessorsareelected.
Ensco'sexecutiveofficerswillremainthesamefollowingthemerger,andnoneofAtwood'sexecutiveofficersareexpectedtohaveanyexecutiveofficerpositionswiththecombinedcompany.
PublicTradingMarkets
TheEnscoClassAordinarysharesarequotedontheNYSEunderthesymbol"ESV,"andtheAtwoodcommonstockisquotedontheNYSEunderthesymbol"ATW."Uponcompletionofthemerger,theAtwoodcommonstockwillbedelistedfromtheNYSEandderegisteredundertheExchangeAct.TheEnscoClassAordinarysharesissuableinthemergerwillbelistedontheNYSEandwillbefreelytransferableundertheSecuritiesAct.
NoAppraisalorDissenters'Rights
Atwoodshareholderswhodissenttothemergerwillnothaverightstoanappraisalofthefairvalueoftheirshares.UndertheTBOC,shareholdersgenerallyhaveappraisalrightsintheeventofamergerorconsolidation.However,theseappraisalrightsarenotavailableif(i)thesharesheldbytheshareholderarepartofaclassofshareslistedonanationalsecuritiesexchangeorheldofrecordbyatleast2,000holders(ii)theshareholderisnotrequiredtoacceptforhisorhersharesanyconsiderationthatisdifferentthantheconsiderationtobeprovidedtoanyotherholderofsharesofthesameclassheldbytheshareholder,and(iii)theshareholderisnotrequiredtoacceptanyconsiderationotherthansharesofacorporationthatsatisfytherequirementsinclause(i)above.BecauseEnscoClassAordinarysharesarelistedontheNYSE,anationalsecuritiesexchange,andareexpectedtocontinuetobesolistedfollowingthemerger,andbecausethemergerotherwisesatisfiestheforegoingrequirements,Atwoodshareholderswillnotbeentitledtoappraisalordissenters'rightsinthemergerwithrespecttotheirsharesofAtwoodcommonstock.
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managementtoprovideadditionalinformationwithrespecttoavailablecashandliquidity.Thesemeasuresarenotinaccordancewith,orasubstitutefor,GAAP,andmaybedifferentfromorinconsistentwithnon-GAAPfinancialmeasuresusedbyothercompanies.AtwoodforecastedEnscoUnleveredFreeCashFlowshouldnotbeconsideredinisolationorasasubstituteforcashflowsfromoperatingactivitiesoranyothermeasureoffinancialperformancepresentedinaccordancewithGAAPorasameasureofacompany'sprofitabilityorliquidity.
AtwoodSynergies
(Inmillions) YearEndingDecember31, 2017E 2018E 2019E 2020E 2021E Pre-TaxCostSynergies $ 4 $ 49 $ 65 $ 65 $ 65
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AccountingTreatmentoftheMerger
EnscopreparesitsfinancialstatementsinaccordancewithGAAP.ThemergerwillbeaccountedforusingtheacquisitionmethodofaccountingwithEnscobeingconsideredtheacquirerofAtwoodforaccountingpurposes.ThismeansthatEnscowillallocatethepurchasepricetothefairvalueofAtwood'stangibleandintangibleassetsandliabilitiesattheacquisitiondate,withtheexcesspurchaseprice,ifany,beingrecordedasgoodwill,ortheexcessofthefairvalueofAtwood'stangibleandintangibleassetsandliabilitiesattheacquisitiondateoverthepurchaseprice,ifany,beingrecognizedinEnsco'searnings.Undertheacquisitionmethodofaccounting,goodwillisnotamortizedbutistestedforimpairmentatleastannually.
RegulatoryApprovalsRequiredfortheMerger
Tocompletethemerger,EnscoandAtwoodmustmakefilingswithandobtainauthorizations,approvalsorconsentsfromanumberofregulatoryauthorities.TheseapprovalsincludeclearanceundertheHSRActaswellasapproval(subjecttoofficialnoticeofissuance)fromtheNYSEtolistthenewEnscoClassAordinarysharestobeissuedasmergerconsiderationtoAtwoodshareholders.
Antitrust Considerations. TheHSRAct,andtherulesandregulationsthereunder,providethatthetransactionmaynotbecompleteduntilpre-mergernotificationfilingshavebeenmadewiththeDOJandtheFTCandtheapplicablewaitingperiodhasexpiredoristerminated.Evenafterthewaitingperiodexpiresoristerminated,theDOJandtheFTCretaintheauthoritytochallengethetransactiononantitrustgroundsbeforeorafterthetransactioniscompleted.OnJune9,2017,EnscoandAtwoodfiledaPremergerNotificationandReportFormpursuanttotheHSRActwiththeDOJandtheFTC.OnJune27,2017,theDOJandtheFTCgrantedearlyterminationofthewaitingperiodundertheHSRAct.
Timing. EnscoandAtwoodcannotassureyouthatalloftheregulatoryapprovalsdescribedabovewillbeobtained,and,ifobtained,EnscoandAtwoodcannotassureyouastothedateofanyapprovalsortheabsenceofanylitigationchallengingsuchapprovals.Likewise,EnscoandAtwoodcannotassureyouthattheDOJ,theFTCoranystateattorneygeneralwillnotattempttochallengethemergeronantitrustgrounds,and,ifsuchachallengeismade,wecannotassureyouastoitsresult.
EnscoandAtwoodarenotawareofanymaterialgovernmentalapprovalsoractionsthatarerequiredforcompletionofthemergerotherthanthosedescribedabove.Itispresentlycontemplatedthatifanysuchadditionalgovernmentalapprovalsoractionsarerequired,thoseapprovalsoractionswillbesought.Therecanbenoassurance,however,thatanyadditionalapprovalsoractionswillbeobtained.
LitigationRelatingtotheMerger
OnJune23,2017,aputativeclassactioncaptionedBernard Stern v. Atwood Oceanics, Inc., et al ,wasfiledintheU.S.DistrictCourtfortheSouthernDistrictofTexasagainstAtwood,Atwood'sdirectors,EnscoandMergerSub.TheStern complaintgenerallyallegesthatthedirectorsandAtwooddisseminatedafalseormisleadingregistrationstatement,referringtothisregistrationstatementasfiledwiththeSEConJune16,2017,whichomittedmaterialinformationregardingtheproposedmergerinviolationofSection14(a)oftheExchangeAct.Specifically,thecomplaintallegesthatAtwoodandthedirectorsomittedmaterialinformationregardingtheparties'financialprojections,theanalysisperformedbyGoldmanSachsinsupportofitsfairnessopinion,thetimingandnatureofcommunicationsregardingpost-transactionemploymentofAtwood'sdirectorsandofficers,potentialconflictsofinterestofGoldmanSachs,andwhethertherewerefurtherdiscussionswithanotherpotentialacquirerofAtwoodfollowingtheMay30,2017announcementofthemerger.ThecomplaintfurtherallegesthattheAtwooddirectors,Ensco,andMergerSubareliablefortheseviolationsas"controlpersons"ofAtwoodunderSection20(a)oftheExchangeAct.WithrespecttoEnsco,the
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complaintallegesthatEnscohaddirectsupervisorycontroloverthecompositionoftheregistrationstatement.Thecomplaintseeksinjunctiverelief,includingtoenjointhemerger,rescissionorrescissorydamagesintheeventthemergerisconsummated,andanawardofattorneys'fees,inadditiontootherrelief.OnJune27,June29andJune30,2017,additionalputativeclassactionscaptionedJoseph Composto v. Atwood Oceanics, Inc., et al, Booth Family Trust v. AtwoodOceanics, Inc., et al ,andMary Carter v. Atwood Oceanics, Inc., et al ,respectively,werefiledintheU.S.DistrictCourtfortheSouthernDistrictofTexasagainstAtwoodandAtwood'sdirectors.TheseactionsallegeviolationsofSections14(a)and20(a)oftheExchangeActbyAtwoodandAtwood'sdirectorssimilartothoseallegedintheSterncomplaint;however,neitherEnsconorMergerSubisnamedasadefendantintheseactions.
Additionallawsuitsarisingoutofthemergermaybefiledinthefuture.Therecanbenoassurancethatanyofthedefendantswillbesuccessfulintheoutcomeofthependingoranypotentialfuturelawsuits.Apreliminaryinjunctioncoulddelayorjeopardizethecompletionofthemerger,andanadversejudgmentgrantingpermanentinjunctivereliefcouldindefinitelyenjointhecompletionofthemerger.EnscoandAtwoodbelievethatthelawsuitsarewithoutmeritandintendtodefendvigorouslyagainstthelawsuitsandanyotherfuturelawsuitschallengingthetransaction.
Atwood'sDirectorsandOfficersHaveFinancialInterestsintheMerger
InconsideringtherecommendationoftheAtwoodBoardthatAtwood'sshareholdersvote"FOR"theAtwoodMergerProposal,AtwoodshareholdersshouldbeawarethatAtwood'sdirectorsandexecutiveofficershavefinancialinterestsinthemergerthatmaybedifferentfrom,orinadditionto,thoseofAtwoodshareholdersgenerally.TheAtwoodBoardwasawareoftheseinterestsandconsideredthem,amongothermatters,inapprovingthemergeragreementandmakingitsrecommendationthatAtwoodshareholdersapprovetheAtwoodMergerProposal.ForpurposesofallofAtwood'sagreementsandplansdescribedbelow,thecompletionofthemergerwillconstituteachangeofcontrol.
Equity Compensation Awards
Pursuanttothemergeragreement,equitycompensationawardsheldbyAtwood'sdirectorsandexecutiveofficersasoftheEffectiveTimewillbetreatedasfollows:
Options. ThemergeragreementprovidesthatstockoptionawardsoutstandingimmediatelypriortotheEffectiveTimewillbeexchangedforConvertedOptions.AllofAtwood'soutstandingstockoptionspreviouslyvested.TheConvertedOptionswillotherwiseremainsubjecttothesametermsandconditionsasthecorrespondingExistingOptions.ThenumberofEnscoClassAordinarysharessubjecttotheConvertedOptionswillbedeterminedbymultiplyingthenumberofsharesofAtwoodcommonstocksubjecttotheExistingOptionsimmediatelypriortotheEffectiveTimebytheexchangeratio,roundeddowntothenearestwholeshare,andtheexercisepricepershareoftheConvertedOptionswillequalthepershareexercisepriceoftheExistingOptionsimmediatelypriortotheEffectiveTimedividedbytheexchangeratio,roundeduptothenearestwholecent.
Restricted Stock Units. PursuanttotheapplicableAtwoodincentiveplans,allAtwoodRSUsheldbyAtwood'sdirectorsandemployeesshallvestupontheEffectiveTime.Time-BasedRSUsthatsovestwillbesettledthroughtheissuanceofEnscoClassAordinarysharesequaltothenumberofvestedTime-BasedRSUsmultipliedbytheexchangeratio.Performance-BasedRSUswillvestattheEffectiveTimeatthehigheroftargetlevelofperformanceortheamountdeterminedbythecompensationcommitteeoftheAtwoodBoardinitssolediscretion(butcappedat200%oftargetlevel)andthenumberofPerformance-BasedRSUsthatvestwillbesettledthroughtheissuanceofEnscoClassAordinarysharesequaltothenumberofvestedPerformance-BasedRSUsmultipliedbytheexchangeratio.AccruedcashdividendequivalentsonAtwoodRSUswillalsovestandbecashedoutatthesame
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time.AtwoodCashUnitswillbetreatedasspecifiedintheapplicableawardagreement.TheAtwoodCashUnitsareperformancevestingawardsthatwillvestinfullupontheEffectiveTimeatthehigheroftargetlevelofperformanceortheamountdeterminedbythecompensationcommitteeoftheAtwoodBoard(upto200%oftargetlevel)andwillbepaidincashbasedontheclosingpriceofAtwoodcommonstockonthelasttradingdaypriortotheclosingdate.AccruedcashdividendequivalentsontheAtwoodCashUnitswillalsovestandbecashedoutatthesametime.AsofJuly19,2017,theAtwoodBoardhadmadenodeterminationregardingthelevelatwhichthePerformance-BasedRSUsorAtwoodCashUnitswillvestupontheEffectiveTime.
ThefollowingtablesetsforththenumberofTime-BasedRSUsandPerformance-BasedRSUs(attargetlevelofperformance)heldbyAtwood'sexecutiveofficersandnon-employeedirectorsasofJuly19,2017,alongwithaccrueddividendequivalents(attargetlevelofperformanceforPerformance-BasedRSUs)asofJuly19,2017:
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Name Time-BasedRSUs(1)
Performance-BasedRSUs(attarget)(1)
CashUnits(attarget)(1)
AccruedDividendEquivalents(2)
Executive Officers: RobertJ.Saltiel 494,638 242,061 120,184 $ 127,941.39MarkW.Smith 123,764 70,351 — $ 22,411.12ArthurM.Polhamus 121,883 75,102 — $ 27,002.61BarryM.Smith 118,636 73,180 — $ 26,321.16WalterA.Baker 115,059 70,309 — $ 25,287.33StuartAllen 76,702 45,174 — $ 18,236.18JohnGidley 56,971 31,601 — $ 12,963.19MarkMonroe 81,269 43,483 — $ 8,428.29EvelynNordin 52,338 25,692 — $ 6,135.56
Non-Employee Directors : GeorgeDotson 19,157 — — $ 0JackGolden 31,737 — — $ 3,445.38HansHelmerich 22,497 — — $ 3,590.50JeffreyA.Miller 28,532 — — $ 0JamesMontague 50,347 — — $ 22,376.63PhilD.Wedemeyer 36,035 — — $ 6,991.23
(1) TheAtwoodRSUsandAtwoodCashUnitsgrantedtoAtwood'sexecutiveofficersoriginallywerescheduledtovestthreeyearsaftertheapplicablegrantdate(or,withrespecttoTime-BasedRSUsgrantsinNovember2016,inthreeequalannualinstallmentsfollowingthegrantdate),providedthattheAtwoodRSUsgrantedinconnectionwiththenon-competitionandnon-solicitationagreements,asdescribedbelowweresubjecttoatwoyearvestingprovision.AtwoodRSUsgrantedtoAtwood'snon-employeedirectorswereoriginallyscheduledtovest13monthsaftertheapplicablegrantdate,butprovideforsettlementonadeferredbasispursuanttoAtwood'sdeferredcompensationplanfornon-employeedirectors.TheamountshownforAtwood'snon-employeedirectorsincludesamountsthathavepreviouslyvested.
(2) AssumestargetlevelvestingforPerformance-BasedRSUsandAtwoodCashUnits.ActualdividendequivalentpaymentswilldependontheactualvestinglevelforthePerformance-BasedRSUsandAtwoodCashUnitsandthereforemaybehigherthantheamountsshown.
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Executive Change of Control Agreements
EachofAtwood'sexecutiveofficersispartytoachangeofcontrolagreementthataddressesthetermsoftheexecutive'scompensationintheeventofaterminationofemploymentduetoachangeofcontrol.Eachagreementcontains"double-trigger"requirementsforpaymentsrelatingtoterminationofemploymentotherthanforcausewithintwoyearsfollowingachangeofcontrol.
Underthechangeofcontrolagreements,ifAtwoodterminatestheexecutive'semploymentwithout"cause"ortheexecutiveterminatestheexecutive'semploymentfor"goodreason"(eachasdefinedintheagreement)within24monthsafterachangeofcontrolofAtwood,Atwoodwillberequiredtopaytotheexecutiveinalumpsum(x)theexecutive'saccruedsalary,proratatargetbonusfortheyearofterminationandaccruedvacation(the"AccruedAmounts")and(y)anamountequalto2.0timesforeachvicepresidentor2.5timesforeachnamedexecutiveofficerandseniorvicepresident(3.0timesinthecaseofMr.Saltiel)todeterminethesumof(a)theexecutive'sannualsalaryplus(b)theexecutive'stargetannualbonus.
Inaddition,followingsuchtermination,theexecutiveandtheexecutive'sspouseand/orfamily,asapplicable,willbeentitledtocontinuedparticipationinAtwood'swelfarebenefitplans,policiesandprogramsforaperiodof24months(the"AtwoodWelfareContinuationBenefit")andanyoutstandingstockoptionsheldbytheexecutivewillremainexercisableforoneyearaftertermination;providedthatinnoeventwillanystockoptionsremainexercisablelaterthantheearlierof(i)theoriginalexpirationdateofsuchstockoptionsor(ii)thetenthanniversaryoftheoriginalgrantdateforsuchstockoptions.Iftheexecutive'semploymentisterminatedduetodisabilitywithin24monthsafterachangeofcontrolofAtwood,AtwoodwillberequiredtopaytotheexecutivetheAccruedAmountsandprovidetheAtwoodWelfareContinuationBenefit.Iftheexecutive'semploymentisterminatedduetodeathwithin24monthsafterachangeofcontrolofAtwood,Atwoodwillberequiredtopaytotheexecutive'sestatetheAccruedAmountsandprovidetoexecutive'sspouseand/orfamily,asapplicable,theAtwoodWelfareContinuationBenefit.Withrespecttoexcisetaxesonanyparachutepaymentunderthechangeofcontrolagreement,theagreementprovidesthattheexecutivewillbeliableforsuchexcisetaxes;provided ,however ,thatifreductionofthepaymentsundertheagreementtoavoidexcisetaxeswouldresultinalargernetafter-taxpaymenttotheexecutive,thepaymentsundertheagreementwillbereduced.
Non-Competition and Non-Solicitation Agreements
EachofAtwood'sexecutiveofficersissubjecttoanon-competitionandnon-solicitationagreementpursuanttowhichspecifiedtime-vestingcashawardsandAtwoodRSUsweregrantedin2016,whichawardswereoriginallyscheduledtovestinMay2018.ThecashawardwillfullyvestandbecomepayableupontheEffectiveTime,andtheAtwoodRSUswillfullyvestandbetreatedasspecifiedabove.
Benefit Equalization Plan
EachofAtwood'sexecutiveofficersparticipatesinAtwood'sBenefitEqualizationPlan,whichpermitstheexecutivetomaketaxdeferredcontributions,includingwithrespecttoamountsthatexceedcertainInternalRevenueCodelimits.TheBenefitEqualizationPlanwasfrozenasofJanuary1,2017andallamountsundertheplanarefullyvested.AmountsdeferredundertheBenefitEqualizationPlanwillgenerallybepaidfollowingtheEffectiveTimeortheexecutiveofficersseparationfromserviceinaccordancewiththeexecutiveofficer'soriginaldeferralelectionsundertheplan.
Salary Continuation Plan
ExecutiveofficersarecoveredunderAtwood'sSalaryContinuationPlan,formerlynamedtheExecutiveLifeInsurancePlan,whichprovidesforsalarycontinuationtotheexecutive'sbeneficiary
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upontheexecutive'sdeathwhileemployedbyAtwood.Paymentsequalto2.5timesannualsalaryarepayablein30installmentsor,intheeventofdeathduetoaccidentalcauses,paymentsequaltofivetimesannualsalaryarepayablein60installments.Iftheexecutiveofficerterminatesemploymentwithin30monthsfollowingachangeofcontrol,thedeathbenefitispayableiftheexecutivediesduringthat30-monthperiod.
Quantification of Payments and Benefits to Atwood's Named Executive Officers
ThefollowingtablesetsforththeinformationrequiredbyItem402(t)ofRegulationS-KregardingthecompensationthatisbasedonorotherwiserelatestothemergerandthatmaybepaidorbecomepayabletoAtwood'snamedexecutiveofficers,whichisreferredtoasthe"goldenparachute"compensation.TheinformationsetforthinthetablebelowisintendedtocomplywithItem402(t)ofRegulationS-K,whichrequiresdisclosureofinformationaboutcertaincompensationforeachofAtwood'snamedexecutiveofficersthatisbasedonorotherwiserelatestothemerger.
Theamountsindicatedbelowareestimatesbasedonthematerialassumptionsdescribedinthenotestothetablebelow,whichmayormaynotactuallyoccur.Someoftheseassumptionsarebasedoninformationnotcurrentlyavailableand,asaresult,theactualamounts,ifany,thatmaybepaidorbecomepayabletoanamedexecutiveofficermaydiffermateriallyfromtheamountssetforthbelow.Furthermore,forpurposesofcalculatingsuchamounts,Atwoodhasassumedthefollowing:
• therelevantpriceperEnscoClassAordinaryshareis$5.69,whichistheclosingmarketpriceperEnscoClassAordinaryshareasofJuly19,2017,thelastpracticabledatepriortothefilingofthisjointproxystatement/prospectus;
• therelevantpricepershareofAtwoodcommonstockis$10.09,whichistheaverageclosingmarketpricepershareofAtwoodcommonstockoverthefirstfivetradingdaysfollowingthepublicannouncementofthemerger;
• themergerwillcloseonJuly19,2017;
• nonamedexecutiveofficerdiesbetweenthedateofhisqualifyingterminationofemploymentand30monthsthereafter;and
• thenamedexecutiveofficersexperiencequalifyingterminationsimmediatelyfollowingthemergeronJuly19,2017,thelastpracticabledatepriortothefilingofthisjointproxystatement/prospectus.
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Cash($)
Equity($)
NC/NSCash(3)
AccruedDividend
Equivalents(4)
AtwoodCashUnits(5)
Perquisites/Benefits(6)
Name(1) Salary(1) Bonus(2) (7) (8) Total($) RobertJ.Saltiel 2,442,000 3,093,200 1,322,750 127,941 1,212,657 41,459 4,503,184 2,203,723 14,946,914MarkW.Smith 925,000 854,700 481,000 22,411 — 26,479 1,126,747 640,476 4,076,813ArthurM.Polhamus 960,000 887,040 499,200 27,003 — 13,190 1,109,623 683,729 4,179,785
BarryM.Smith 932,500 861,630 484,900 26,321 — 39,318 1,080,062 666,231 4,090,962WalterA.Baker 920,000 850,080 478,400 25,287 — 42,153 1,047,497 640,093 4,003,510
(1) Pursuanttothechangeofcontrolagreementswitheachofthenamedexecutiveofficers,double-triggercashseveranceamountsarepayableintheeventthenamedexecutiveofficeristerminatedwithoutcauseortheexecutiveresignsforgoodreasonwithintwoyearsfollowingthemerger.Thesalarycomponentconsistsofamultiple(2.5timesforeachnamedexecutiveofficerotherthanMr.Saltiel,forwhomitis3.0times)ofannualsalary.Thisamountispayable60daysafterterminationofemployment.Amountshowndoesnotincludesalarycontinuationpaymentsthatcouldbecomepayabletothenamedexecutiveofficer'sestateintheeventthenamedexecutiveofficerdieswithin30monthsaftertheEffectiveTime.Insuchevent,thefollowingadditionalsalarycontinuationamountswouldbepayabletothenamedexecutive'sestate:Mr.Saltiel:$2,035,000;Mr.M.Smith:$925,000;Mr.Polhamus:$960,000;Mr.B.Smith:$932,500;andMr.Baker:$920,000.Intheeventofanaccidentaldeath,theforegoingamountswouldbedouble.
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Composition of Ensco Board Following the Effective Time
ThecurrentdirectorsofEnscoare:PaulE.Rowsey,III,CarlTrowell,J.RoderickClark,RoxanneJ.Decyk,MaryE.FrancisCBE,C.ChristopherGaut,GeraldW.Haddock,FrancisS.KalmanandKeithO.Rattie.AttheEffectiveTime,EnscowillcausetwodirectorscurrentlyservingontheAtwoodBoard,JackE.GoldenandPhilD.Wedemeyer,tobeappointedtotheEnscoBoardandwillexpandtheEnscoBoardtotheextentnecessaryinconnectionwithappointingsuchadditionaldirectors.ThetwoadditionaldirectorswereproposedbyAtwoodfollowingtheexecutionofthemergeragreementandhavebeenmutuallyagreeduponbyEnscoandAtwood.AllEnscodirectorsareelectedannuallytoserveuntilthenextannualmeetinganduntiltheirsuccessorsareelected.
Indemnification; Directors' and Officers' Insurance
ThemergeragreementrequiresEnscotomaintainineffectforsixyearsaftercompletionofthemergerthecurrentrightsofAtwoodcurrentandformerdirectors,officersandemployeestoindemnificationundertheAtwoodcertificateofformationortheAtwoodbylawsorsimilarorganizationaldocumentsofAtwoodoranyindemnificationagreementsbetweenAtwoodanditsrespectivedirectors,officersandemployees.
Themergeragreementalsoprovidesthat,uponcompletionofthemerger,Enscowillindemnifyandholdharmless,andprovideadvancementofexpenseswitheachoftheforegoingto,allpastandpresentofficers,directorsandemployeesofAtwood,andeachpersonwhoservedasadirector,officer,member,trusteeorfiduciaryofanothercorporation,partnership,jointventure,trust,pensionorotheremployeebenefitplanorenterpriseifsuchservicewasattherequestorforthebenefitofAtwoodanditssubsidiaries,againstanycostsorexpenses(includingadvancingattorneys'feesandexpenses)inadvanceofthefinaldispositionofanyclaim,suit,proceedingorinvestigationtothefullestextentpermittedbyapplicablelaw.Theindemnifiedpartytowhomexpensesareadvancedmustagreetorepaysuchamountsifitisultimatelydeterminedthatsuchpersonisnotentitledtoindemnification.
ThemergeragreementprovidesthatEnscowillmaintainforaperiodofsixyearsaftertheEffectiveTimeAtwood'scurrentdirectors'andofficers'liabilityinsurancepolicies,orpoliciesofatleastthesamecoverageandamountandcontainingtermsandconditionsthatarenotless
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(2) Pursuanttothechangeofcontrolagreements,andsubjecttotheconditionsspecifiedinnote(1),thisconsistsof(a)amultiple(2.5timesforeachnamedexecutiveofficerotherthanMr.Saltiel,forwhomitis3.0times)oftargetannualbonus,plus(b)aproratatargetbonusfortheyearoftermination.
(3) Representstheacceleratedvestingofthecashawardunderthenon-competitionandnon-solicitationagreements.
(4) RepresentsaccrueddividendequivalentsonAtwoodRSUsandAtwoodCashUnitsasofJuly19,2017(withthevalueforPerformance-BasedRSUsandAtwoodCashUnitsassumingvestingatthetargetlevelofperformance).
(5) RepresentsthevalueofacceleratedvestingoftheAtwoodCashUnitsasdiscussedabove.TheseAtwoodCashUnitswillvestinfullupontheEffectiveTimeatthehigheroftargetlevelofperformanceortheamountdeterminedbythecompensationcommitteeoftheAtwoodBoard(upto200%oftargetlevel)andwillbepaidincashbasedontheclosingpriceofAtwoodcommonstockonthelasttradingdaypriortotheclosingdate.
(6) Consistsofthevalueofwelfareplanbenefitcontinuationfor24monthsfollowingaqualifyingtermination.
(7) RepresentsthevalueofEnscoClassAordinarysharestobereceivedinconnectionwiththevestingofTime-BasedRSUs,asdiscussedabove.ThisincludestheTime-BasedRSUsgrantedunderthenon-competitionandnon-solicitationagreements.TheseAtwoodRSUsvestinfullattheEffectiveTimeandwillbesettledthroughtheissuanceofanumberofEnscoClassAordinarysharesdeterminedusingtheexchangeratio.
(8) RepresentsthevalueofEnscoClassAordinarysharestobereceivedinconnectionwiththevestingofPerformance-BasedRSUs,asdiscussedabove.ThisamountassumesthatthePerformance-BasedRSUswillvestatthetargetlevelofperformancebut,asnotedabove,theAtwoodBoardhasthediscretiontoincreasethevestingleveltoupto200%ofthetargetlevel.ThenumberofPerformance-BasedRSUsthatsovestattheEffectiveTimeandwillbesettledthroughtheissuanceofanumberofEnscoClassAordinarysharesdeterminedusingtheexchangeratio.
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advantageousthanthecurrentpolicy,withrespecttoactsoromissionsoccurringpriortotheEffectiveTime,exceptthatEnscoisnotrequiredtoincurannualpremiumexpensegreaterthan300%ofthelastannualpremiumpaidbyAtwoodpriortothedateofthemergeragreementinrespectofthecoverages(the"MaximumAmount").
Eitherpartymaypurchasea"tailpolicy"withrespecttoactsoromissionsoccurringorallegedtohaveoccurredpriortotheEffectiveTimeofthemergerthatwerecommittedorallegedtohavebeencommittedbyapartytobeindemnifiedundertheagreement.InnoeventshallthecostofsuchpolicypurchasedbyAtwoodexceedsixtimestheMaximumAmount,andifa"tail"policyispurchased,Enscowillhavenofurtherobligationstomaintaintheinsurancepoliciesforcurrentdirectorsandofficersasdescribedabove.
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THEMERGERAGREEMENT
The following describes certain aspects of the merger, including material provisions of the merger agreement. The following description of the mergeragreement is subject to, and qualified in its entirety by reference to, the merger agreement, which is attached to this joint proxy statement/prospectus as Annex A tothis joint proxy statement/prospectus and is incorporated by reference in this joint proxy statement/prospectus. We urge you to read the merger agreement carefullyand in its entirety, as it is the legal document governing the merger.
TermsoftheMerger
Themergeragreementprovidesthat,subjecttothetermsandconditionsofthemergeragreement,attheEffectiveTime,(i)MergerSubwillmergewithandintoAtwood,withAtwoodcontinuingasthesurvivingcompanyandawhollyownedsubsidiaryofEnscoand(ii)eachshareofAtwoodcommonstockwillbeconvertedintotherighttoreceive1.60EnscoClassAordinaryshares(the"mergerconsideration"),whichisequivalenttototalconsiderationof$10.72pershareofAtwoodcommonstockbasedontheclosingpriceoftheEnscoClassAordinarysharesonMay26,2017,whichisthetradingdatepriortothedateofexecutionofthemergeragreement.See"—ConsiderationToBeReceivedintheMerger."
TherightsofEnscoshareholdersafterthecompletionofthemerger,includingtheformerAtwoodshareholderswhohavereceivedthemergerconsideration,willbegovernedbytheEnscoArticlesofAssociation.
ClosingandEffectiveTimeoftheMerger
Unlessthepartiesagreeotherwise,thecompletionofthemergerwilltakeplaceassoonaspracticable(andinanyeventwithinfivebusinessdays)afterallconditionstothecompletionofthemergerhavebeensatisfiedorwaived.ThemergerwillbeeffectivewhenthepartiesdulyfilethecertificateofmergerwiththeSecretaryofStateoftheStateofTexas,oratsuchlatertimeasEnscoandAtwoodshallagreeandspecifyinthecertificateofmerger.
EnscoandAtwoodcurrentlyexpectthecompletionofthemergertooccurinthethirdcalendarquarterof2017.However,asthemergerissubjecttoregulatoryclearanceandthesatisfactionorwaiverofotherconditionsdescribedinthemergeragreement,itispossiblethatfactorsoutsidethecontrolofEnscoandAtwoodcouldresultinthemergerbeingcompletedatalatertimeornotatall.
ConsiderationToBeReceivedintheMerger
Asaresultofthemerger,eachshareofAtwoodcommonstockwillbeconvertedintotherighttoreceive1.60EnscoClassAordinaryshares.EachshareofAtwoodcommonstockissuedandoutstandingimmediatelypriortotheEffectiveTimethatisownedorheldintreasurybyAtwood,andeachshareofAtwoodcommonstockissuedandoutstandingimmediatelypriortotheEffectiveTimethatisownedbyEnsco,MergerSuboranyoftheirrespectivesubsidiaries,willbeautomaticallycancelledfornoconsideration.Inaddition,thesolelimitedliabilitycompanyinterestofMergerSubissuedandoutstandingimmediatelypriortotheEffectiveTimewillbeconvertedintoandbecomeonefullypaidandnonassessableshareofAtwoodcommonstockandwillconstitutetheonlyoutstandingshareofcapitalstockofAtwood.
EnscowillnotissueanyfractionalEnscoClassAordinarysharesinthemerger.Instead,eachholderofAtwoodcommonstockconvertedintotherighttoreceivethemergerconsiderationpursuanttothemergerwhowouldotherwisehavebeenentitledtoreceiveafractionofanEnscoClassAordinarysharewillreceivecashinanamountdeterminedbymultiplying(i)theaverage,roundedtothenearesttenthofacent,oftheclosingpricesofEnscoClassAordinarysharesforthetentradingdays
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immediatelyprecedingthedatewhichisfivetradingdaysimmediatelypriortothecompletionofthemergerby(ii)thefractionofEnscoClassAordinarysharesuchholderwouldotherwisebeentitledtoreceive.Nosuchholderwillbeentitledtodividends,votingrightsoranyotherrightsinrespectofanyfractionalEnscoClassAordinaryshares.
TreatmentofAtwoodEquity-BasedAwards
Underthemergeragreement,equity-basedawardsthatareoutstandingasoftheEffectiveTime,includingawardsheldbyAtwood'sdirectorsandexecutiveofficers,willbetreatedattheEffectiveTimeasfollows:
Restricted Stock Units. Pursuanttothetermsofthemergeragreement,eachawardofAtwoodRSUsthatisoutstandingasofimmediatelypriortotheEffectiveTimewillbecomefullyvestedasoftheEffectiveTime,withsuchawardsthataresubjecttoperformance-basedvestingtermsorconditionsbecomingearnedandvestedatthetargetlevelorsuchhigherlevelasdeterminedbythecompensationcommitteeoftheAtwoodBoardinitssolediscretion(butnottoexceed200%ofthetargetlevel).AssoonaspracticableaftertheEffectiveTime,suchAtwoodRSUswillbesettledthroughtheissuancetotheholdersthereofofEnscoClassAordinarysharesinanamountequaltothenumberofsharesofAtwoodcommonstockoriginallysubjecttosuchaward,multipliedbytheexchangeratioof1.60(roundeddowntothenearestwholeshare).EachawardofAtwoodCashUnitswillbetreatedinaccordancewiththetermsofsuchaward.
Stock Options. EachExistingOptionwill,asoftheEffectiveTime,automaticallyandwithoutanyfurtheractionbeingrequired,beconvertedintoaConvertedOption,onthesametermsandconditions(includingthesameexpirationrestrictions)aswereapplicabletosuchExistingOptionimmediatelypriortotheEffectiveTime,exceptthat(i)thenumberofEnscoClassAordinarysharessubjecttotheConvertedOptionwillbedeterminedbymultiplyingthenumberofsharesofAtwoodcommonstocksubjecttothecorrespondingExistingOptionimmediatelypriortotheEffectiveTimebytheexchangeratioof1.60,andthenroundeddowntothenearestwholeshare,and(ii)theexerciseorstrikepricepershareoftheConvertedOptionwillequalthepershareexercisepriceoftheExistingOptionimmediatelypriortotheEffectiveTimedividedby1.60,roundeduptothenearestwholecent.
Pursuanttothemergeragreement,inconnectionwiththemerger,EnscowillassumeallofAtwood'sstockplans,includingallobligationsofAtwoodwithrespecttotheAtwoodstockawardsandwithrespecttoanyamountofAtwoodcommonstock(asadjustedpursuanttotheexchangeratio)thatremain(ormayagainbecome)availableforfutureissuance.
ConversionofShares;ExchangeofCertificates
TheconversionofAtwoodcommonstockintotherighttoreceivethemergerconsiderationwilloccurautomaticallyattheEffectiveTimeofthemerger.Assoonasreasonablypracticableaftercompletionofthemerger,theexchangeagentwillexchangecertificatesrepresentingsharesofAtwoodcommonstockformergerconsideration,withoutinterest,tobereceivedinthemergerpursuanttothetermsofthemergeragreement.ComputershareTrustCompanyN.A.willbetheexchangeagentinthemergerandwillexchangecertificatesforthemergerconsiderationandperformotherdutiesasprovidedinthemergeragreement.
Letter of Transmittal
Soonafterthecompletionofthemerger,theexchangeagentwillmailaletteroftransmittaltoeachholderofrecordofAtwoodcommonstock.Thismailingwillcontaininstructionsonhowtosurrendercertificatesorbook-entryshares,asapplicable,inexchangeforthemergerconsideration,anyfractionalsharecashamountandanyamountssuchcertificatesorbook-entrysharesotherwisebecomeentitledtoinaccordancewiththemergeragreement.
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IfacertificateforAtwoodcommonstockhasbeenlost,stolenordestroyed,theexchangeagentwilldelivertheconsiderationproperlypayableunderthemergeragreementuponreceiptofappropriateevidenceastothatloss,theftordestruction,appropriateevidenceastotheownershipofthatcertificatebytheclaimant,andappropriateandcustomaryindemnification.
Withholding
Theexchangeagentwillbeentitledtodeductandwithholdfromanyconsiderationpayablepursuanttothemergeragreementsuchamountsitisrequiredtodeductandwithholdwithrespecttomakingsuchpaymentunderapplicablelaw.Iftheexchangeagentwithholdsanyamounts,theseamountswillbetreatedforallpurposesofthemergeragreementashavingbeenpaidtotheshareholdersfromwhomtheywerewithheld.
Dividends and Distributions
UntilAtwoodcommonstockcertificatesorbook-entrysharesaresurrenderedforexchange,anydividendsorotherdistributionsdeclaredaftertheEffectiveTimeofthemergerwithrespecttoEnscoClassAordinarysharesintowhichsharesofAtwoodcommonstockmayhavebeenconvertedwillaccruebutwillnotbepaid.EnscowillpaytoformerAtwoodshareholdersanyunpaiddividendsorotherdistributions,withoutinterest,onlyaftertheyhavedulysurrenderedtheirAtwoodcommonstockcertificatesorbook-entryshares.
RepresentationsandWarranties
ThemergeragreementcontainscustomaryrepresentationsandwarrantiesofEnscoandAtwoodrelatingtotheirrespectivebusinesses.TherepresentationsandwarrantiesinthemergeragreementdonotsurvivetheEffectiveTimeofthemerger.
EachofEnscoandAtwoodhasmaderepresentationsandwarrantiestotheotherregarding,amongotherthings:
• corporatematters,includingqualification,dueorganization,equityinterestinsubsidiariesandcapitalization;
• authorityrelativetoexecutionanddeliveryofthemergeragreementandtheabsenceofconflictswith,orviolationsof,organizationaldocumentsorotherobligationsasaresultofthemerger;
• SECfilingsandfinancialstatementscontainedinthosefilings;
• internalcontrolsanddisclosurecontrolsandprocedures;
• theabsenceofundisclosedliabilities;
• compliancewithapplicablelawsandpermits;
• theabsenceofcertainchangesorevents;
• environmentallawsandregulations;
• investigationsandlitigation;
• investmentcompanystatus;
• intellectualproperty;
• properties;
• ownershipandmaintenanceofdrillingunits;
• taxmatters;
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• employmentandlabormatters;
• employeebenefitplans;
• insurance;
• thereceiptofafinancialadvisor'sopinion;
• materialcontracts;
• findersorbrokers;
• compliancewithanti-briberylaws;
• exportcontrolsandsanctions;and
• theaccuracyofinformationsuppliedforinclusioninthisjointproxystatement/prospectusandothersimilardocuments.
AdditionalrepresentationsandwarrantiesmadeonlybyAtwoodrelatetostatetakeoverstatutes.AdditionalrepresentationsandwarrantiesmadebyEnscorelatetoitsownershipofAtwoodcommonstockandactivitiesofMergerSub.
TherepresentationsandwarrantiesdescribedaboveandincludedinthemergeragreementweremadebyeachofEnscoandAtwoodtotheother.Theserepresentationsandwarrantiesweremadeasofspecificdates,maybesubjecttoimportantqualificationsandlimitationsagreedtobyEnscoandAtwoodinconnectionwithnegotiatingthetermsofthemergeragreement,andmayhavebeenincludedinthemergeragreementforthepurposeofallocatingriskbetweenEnscoandAtwoodratherthantoestablishmattersasfacts.
ThemergeragreementisdescribedinandincludedasAnnexAtothisjointproxystatement/prospectusonlytoprovideyouwithinformationregardingitstermsandconditions,andnottoprovideanyotherfactualinformationregardingEnsco,Atwoodortheirrespectivebusinesses.Accordingly,therepresentationsandwarrantiesandotherprovisionsofthemergeragreementshouldnotbereadalone,butinsteadshouldbereadonlyinconjunctionwiththeinformationprovidedelsewhereinthisjointproxystatement/prospectusandinthedocumentsincorporatedbyreferenceintothisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
DefinitionofMaterialAdverseEffect
Indeterminingwhetheramaterialadverseeffecthasoccurredorisreasonablylikelytooccur,thepartieswilldisregardeffectsresultingfrom:
1. changesingeneraleconomic,financialorothercapitalmarketconditions(includingprevailinginterestratesandaccesstocapitalmarkets);
2. anychangesordevelopmentsgenerallyintheindustriesinwhichEnscoorAtwoodconductsitsbusiness;
3. theannouncementortheexistenceof,compliancewithorperformanceunder,themergeragreement(includingtheimpactthereofontherelationships,contractualorotherwise,ofeitherEnscoorAtwoodwithemployees,laborunions,customers,suppliersorpartners,andincludinganylawsuit,actionorotherproceedingwithrespecttothemerger);provided,however,thatthisexceptionwouldnotapplytoabreachofcertainrepresentationstotheextentthepurposeoftherepresentationistoaddresstheconsequencesresultingfromtheexecutionanddeliveryofthemergeragreementortheperformanceofobligationsunderthemergeragreement;
4. anytakingofanyactionattherequestoftheotherpartytothemergeragreement;
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5. anychangesordevelopmentsinpricesforoil,naturalgasorothercommodities;
6. anyadoption,implementation,promulgation,repealormodification,oranyannouncedintentiontodoanyoftheforegoing,followingthedateofthemergeragreementofanyrule,regulation,ordinance,order,protocoloranyotherlawoforbyanynational,regional,stateorlocalgovernmentalentity,ormarketadministrator;
7. anychangesinGAAPoraccountingstandardsfollowingthedateofthemergeragreement;
8. earthquakes,anyweather-relatedevent,naturaldisastersoroutbreakorescalationofhostilitiesoractsofwarorterrorism;
9. anyfailurebyEnscoorAtwoodtomeetanyfinancialprojectionsorforecastsorestimatesofrevenues,earningsorotherfinancialmetricsforanyperiod(althoughtheevent,change,effect,developmentoroccurrenceunderlyingsuchfailuremaycountasamaterialadverseeffectifitdoesnototherwisemeetanexception);or
10. anychangesinthesharepriceortradingvolumeofEnscoClassAordinarysharesorAtwoodcommonstock(althoughtheevent,change,effect,developmentoroccurrenceunderlyingsuchfailuremaycountasamaterialadverseeffectifitdoesnototherwisemeetanexception).
However,theexceptionslaidoutin(1),(2),(6),(7)and(8)maybeconsideredtotheextentdisproportionatelyaffectingEnscoorAtwood,takenasawhole,relativetoothersimilarlysituatedcompaniesintheirrespectiveindustries.Additionally,anyblowout,spill,explosion,orsimilaroccurrencewithrespecttoanyequipmentoperatedbyEnscoorAtwoodmaybetakenintoaccountindeterminingwhethertherehasbeenamaterialadverseeffect.
CovenantsandAgreements
EachofEnscoandAtwoodhasundertakencustomarycovenantsthatplacerestrictionsonitanditssubsidiariesuntiltheEffectiveTimeofthemergeror,ifearlier,themergeragreement'sterminationdate.EachofEnscoandAtwoodhasagreedtooperateitsbusinessonlyintheordinarycourseofbusiness,andhasagreedtousereasonablebesteffortstopreserveintactitspresentlinesofbusiness,maintainitsrights,franchisesandpermitsandpreserveitsrelationshipswithcustomersandsuppliers.Atwoodhasalsoagreedthat,withcertainexceptionsasmayberequiredbylaworthemergeragreementorassetforthindisclosureschedulestothemergeragreement,andexceptwithEnsco'spriorwrittenconsent,Atwoodwillnot,andwillnotpermitanyofitssubsidiariesto,amongotherthings,undertakethefollowingactions:
• adoptanyamendmentstoitscertificateofformationorbylawsorsimilarapplicableorganizationaldocuments;
• split,combineorreclassifyanyofitscapitalstockorissueorauthorizetheissuanceofanyothersecuritiesinrespectof,inlieuoforinsubstitutionforsharesofitscapitalstock,exceptforanysuchtransactionbyawhollyownedsubsidiarywhichremainsawhollyownedsubsidiaryafterconsummationofsuchtransaction;
• authorizeorpayanydividendsonormakeanydistributionwithrespecttoitsoutstandingsharesofcapitalstock(whetherincash,assets,stockorothersecurities),except(1)dividendsordistributionsbyanysubsidiariesonlytoAtwoodortoanywhollyownedsubsidiaryofAtwoodintheordinarycourseofbusiness,and(2)dividendsordistributionsbyanynon-whollyownedsubsidiaryorjointventurethatareconsistentwithpastpracticeorarerequiredundersuchentity'sorganizationaldocumentsineffectonthedateofthemergeragreement;
• adoptaplanofcompleteorpartialliquidation,dissolution,merger,consolidation,restructuring,recapitalizationorotherreorganization,otherthanthemergeritselfandotherthanany
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liquidations,dissolutions,mergers,consolidations,restructuringsorreorganizationssolelyamongAtwoodanditswhollyownedsubsidiariesoramongAtwood'swhollyownedsubsidiaries;
• makeanyacquisitionofanyotherpersonorbusiness,ormakeanyloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherperson,withavalueinexcessof$25millionintheaggregate,except(1)anyloan,advanceorcapitalcontributiontoorinvestmentinajointventure,partnershiporsimilarentityinwhichAtwoodoranyofitssubsidiariesacquiresanequityinterestinconnectionwiththecontemplationorinitiationofoperationsofaparticularrigorrigsorinaparticularjurisdictionwhereAtwoodanditssubsidiariesdonotcurrentlyoperate,providedthatsuchloan,advance,capitalcontributionorinvestmentwillnotexceed$10millionintheaggregateandberelatedtoasingleinvestmentopportunity,or(2)asmadeinconnectionwithanytransactionamongAtwoodanditswhollyownedsubsidiariesorAtwood'swhollyownedsubsidiaries;provided,however,thatAtwoodwillnot,andwillnotpermitanyofitssubsidiariesto,makeanyacquisitionofanyotherpersonorbusinessormakeloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherpersonthatwouldreasonablybeexpectedtoprevent,materiallyimpedeormateriallydelaytheconsummationofthemerger;
• sell,lease,license,transfer,exchangeorswap,orotherwisedisposeoforencumberanypropertiesornon-cashassetswithavalueinexcessof$25millionintheaggregate,exceptfor(1)sales,transfersanddispositionsofobsolete,surplusorworthlessequipment,(2)sales,transfersanddispositionsofassetsintheordinarycourseofbusiness,or(3)sales,leases,transfersorotherdispositionsmadeinconnectionwithanytransactionamongAtwoodanditswhollyownedsubsidiariesoramongAtwood'swhollyownedsubsidiaries;
• authorizeanycapitalexpendituresinexcessof$50millionindividuallyor$100millionintheaggregate,exceptfor(1)expendituresmadeintheordinarycourseofbusinessandconsistentwithpastpractice,or(2)expendituresmadeinresponsetoanyemergency,whethercausedbywar,terrorism,weatherevents,publichealthevents,outages,operationalincidentsorotherwise;
• exceptintheordinarycourseofbusinessandconsistentwithpastpractice,orasprovidedunderthetermsofanybenefitplanorothercontractenteredintopriortothedateofthemergeragreement,(1)establish,adopt,materiallyamendormodify,orterminateanycollectivebargainingagreementormaterialbenefitplan,(2)materiallyincreasethecompensationorseveranceentitlementsofanyofthecurrentorformerdirectorsorofficersofAtwood,(3)payoraward,orcommittopayoraward,anybonusesorincentivecompensationtoanyofficerordirectorofAtwood,(4)enterintoanynewormodifyanyexistingemployment,severance,termination,retentionorchangeofcontrolagreementwithanycurrentofformerdirectorsorofficersofAtwood,(5)acceleratethetimeofpaymentorvestingofanymaterialrightsorbenefitsunderanymaterialbenefitplan,(6)fundanyrabbitrustorsimilararrangementwithrespecttoanymaterialbenefitplan,(7)grantormateriallyamendanyequityawardsunderthecompanystockplans(provided,however,thatAtwoodmaynot,evenifdoneintheordinarycourseofbusinessconsistentwithpastpractice,grantormateriallyamendanyequityawardsunderthecompanystockplans(I)toanycurrentorformerexecutiveofficerofAtwood,(II)toanypersonwhocouldbea"disqualifiedindividual"withinthemeaningofSection280GoftheInternalRevenueCode,or(III)thatwillvest,besettledorbecomeexercisableonanacceleratedbasisasaresultofthetransactionscontemplatedbythemergeragreement),(8)materiallychangeanyactuarialorotherassumptionsusedtocalculatefundingobligationswithrespecttoanybenefitplanorchangethemannerinwhichcontributionstosuchplansaremadeorthebasisonwhichsuchcontributionsaredetermined,exceptasmayberequiredbyGAAPorapplicablelaw,(9)hireanyexecutiveofficerordirectorofAtwood,or(10)waiveanypost-employmentrestrictivecovenantofthecurrentorformerdirectorsorofficersofAtwood;
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• materiallychangefinancialaccountingpoliciesorproceduresoranyofitsmethodsofreportingincome,deductionsorothermaterialitemsforfinancialaccountingpurposes,exceptasrequiredbyGAAPorotherapplicableaccountingstandards,SECruleorpolicyorapplicablelaw;
• issue,sell,pledge,disposeof,grantorencumber,orauthorizetheissuance,sale,pledge,disposition,grantorencumbranceof,anysharesofitscapitalstockorotherownershipinterestinAtwoodoranyofitssubsidiariesoranysecuritiesconvertibleintoorexchangeableforanysuchsharesorownershipinterest,oranyrights,warrantsoroptionstoacquireanysuchsharesofcapitalstock,ownershipinterestorconvertibleorexchangeablesecurities,otherthan(1)issuanceofAtwoodcommonstockundertheAtwoodbenefitsplanstotheextentnotprohibitedunderthemergeragreementorinrespectoftheexercise,vestingorsettlementofanyAtwoodstockawardsoutstandingonthedateofthemergeragreement,(2)thevestingofsharesofAtwoodcommonstockorforwithholdingoftaxeswithrespecttoanyAtwoodstockawardstotheextentprovidedbythetermsofsuchawardsor(3)fortransactionsamongAtwoodanditswhollyownedsubsidiariesoramongAtwood'swhollyownedsubsidiaries;
• directlyorindirectly,purchase,redeemorotherwiseacquireanysharesofthecapitalstockofanyofthemoranyrights,warrantsoroptionstoacquireanysuchshares,exceptfortransactionsamongAtwoodanditssubsidiariesoramongAtwood'swhollyownedsubsidiariesorpursuanttoanyAtwoodbenefitsplan;
• incur,assumeguaranteeorotherwisebecomeliableforanyindebtednessforborrowedmoneyoranyguaranteeofsuchindebtedness,exceptfor(1)anyindebtednessunderAtwood'srevolvingcreditfacility,(2)anyindebtednessincurredintheordinarycourseofbusiness,(3)anyindebtednessamongAtwoodanditswhollyownedsubsidiariesoramongAtwood'swhollyownedsubsidiaries,(4)anyindebtednessincurredtoreplace,renew,extend,refinanceorrefundanyexistingindebtednessonsubstantiallythesameormorefavorabletermstoAtwoodthansuchexistingindebtedness,and(5)anyguaranteesbyAtwoodofindebtednessofitssubsidiariesorguaranteesbysuchsubsidiariesofindebtednessofAtwoodoranysubsidiaryofAtwood,whichindebtednessisincurredincompliancewiththetermsofthemergeragreement;provided,however,thatinthecaseof(1)through(5)above,suchindebtednessdoesnotimposeorresultinanyadditionalrestrictionsorlimitationsthatwouldbematerialtoAtwoodanditssubsidiariesotherthananyobligationtomakepaymentsonsuchindebtednessandotherthananyrestrictionsorlimitationstowhichAtwoodoranysubsidiaryiscurrentlysubjectunderthetermsofanyindebtednessoutstandingasofthedateofthemergeragreement;
• otherthanintheordinarycourseofbusiness,(1)enterinto,ormodifyoramendinanymaterialrespect,terminateorwaiveanymaterialrightsunderanyAtwoodmaterialcontractoranynewbuildingcontract,(2)modifyoramendinanymaterialrespect,orterminateorwaiveanymaterialrightsunderanymaterialpermit,or(3)enterintoanynewcontractthatwouldreasonablybeexpectedto,aftertheEffectiveTime,restrictorlimitinanymaterialrespectEnscooranyofitsaffiliatesfromengaginginanybusinessorcompetinginanygeographiclocationwithanyperson;
• waive,release,assign,settleorcompromiseanyclaim,actionorproceeding,otherthanwaivers,releases,assignments,settlementsorcompromises(1)thatareequaltoorlessthantheamountsspecificallyreservedwithrespecttheretoonAtwood'sbalancesheetasofMarch31,2017or(2)thatdonotexceed$15millionintheaggregateand,inallcases,donotobligateitoranyofitssubsidiariestotakeanymaterialaction(otherthanmakeapayment)orimposeanymaterialrestrictionsonitsbusinessorthebusinessofanyofitssubsidiaries;
• (1)make,changeorrevokeanymaterialtaxelection;(2)changeanymaterialtaxaccountingmethod;(3)fileanymaterialamendedtaxreturn;(4)enterintoanymaterialtaxallocationagreement,taxsharingagreement,taxindemnityagreement,advancepricingagreementor
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closingagreement;(5)requestanymaterialtaxruling;(6)settleorcompromiseanymaterialtaxproceeding;(7)consenttoanyextensionorwaiverofthestatuteoflimitationsperiodapplicabletoanymaterialtaxclaimorassessment;(8)changeitsjurisdictionoftaxresidence;or(9)surrenderanyclaimforamaterialrefundoftaxes;
• exceptasotherwisepermittedbythetermsofthemergeragreementorfortransactionsbetweenAtwoodanditssubsidiariesoramongAtwood'ssubsidiaries,prepay,redeem,repurchase,defease,cancelorotherwiseacquireanyindebtednessforborrowedmoneyorguaranteesthereofofAtwoodoritssubsidiariesotherthan(1)atorbelowparvalue,(2)atstatedmaturityor(3)anyrequiredamortizationpaymentsandmandatoryprepayments(includingmandatoryprepaymentsarisingfromanychangeofcontrolputrightstowhichholdersofsuchindebtednessorguaranteesthereofmaybeentitled),ineachcaseinaccordancewiththetermsoftheinstrumentgoverningsuchindebtednessasineffectonthedateofthemergeragreement;or
• agree,consent,resolveorproposetotakeanyoftheactionsprohibitedbytheprecedingbulletpoints.
Enscohasalsoagreedthat,withcertainexceptionsasmayberequiredbylaworthemergeragreementorassetforthinthedisclosureschedulestothemergeragreement,andexceptwithAtwood'spriorwrittenconsent,Enscowillnot,andwillnotpermitanyofitssubsidiariesto,amongotherthings,undertakethefollowingactions:
• amenditsarticlesofassociationorpermitanyofitssubsidiariestoadoptanyamendmentstoitscertificateofincorporationorbylawsorsimilarapplicableorganizationaldocuments,otherthan,inthecaseofthesubsidiaries,inconnectionwithinternalrestructuringsamongthesubsidiaries;
• split,combineorreclassifyanyofitscapitalstockorissueorauthorizetheissuanceofanyothersecuritiesinrespectof,inlieuoforinsubstitutionforsharesofitscapitalstock,except(1)foranysuchtransactionbyawhollyownedsubsidiarywhichremainsawhollyownedsubsidiaryafterconsummationofsuchtransactionor(2)withrespecttosubsidiariesonly,aswouldnotreasonablybeexpectedtoprevent,materiallyimpedeormateriallydelaytheconsummationofthemerger;
• exceptforsubsidiariesthataredirectlyorindirectlywhollyowned,authorize,make,declareorpayanydividendsonormakeanydistributionwithrespecttoitsoutstandingsharesofcapitalstock(whetherincash,assets,stockorothersecuritiesofEnscooritssubsidiaries),except(1)dividendsordistributionsbyanysubsidiariesonlytoEnscoortoanywhollyownedsubsidiaryofEnscointheordinarycourseofbusinessconsistentwithpastpractice,(2)dividendsordistributionsbyanynon-whollyownedsubsidiaryorjointventurethatareconsistentwithpastpracticeorrequiredundersuchentity'sorganizationaldocumentsineffectonthedateofthemergeragreementand(3)dividendsonEnscoClassAordinarysharesnottoexceed$0.01pershareperquarter;
• adoptaplanofcompleteorpartialliquidation,dissolution,merger,consolidation,restructuring,recapitalizationorotherreorganization,otherthanthemergeritselfandotherthananyliquidations,dissolutions,mergers,consolidations,restructuringsorreorganizationssolelyamongEnscoanditswhollyownedsubsidiariesoramongwhollyownedsubsidiariesofEnsco;
• makeanyacquisitionofanyotherpersonorbusiness,ormakeanyloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherperson,withavalueinexcessof$50millionintheaggregate,except(1)anyloan,advanceorcapitalcontributiontoorinvestmentinajointventure,partnershiporsimilarentityinwhichEnscooranyofitssubsidiariesacquiresanequityinterestinconnectionwiththeinitiationofoperationsofaparticularrigorrigsorinaparticularjurisdictionwhereEnscoanditssubsidiariesdonotcurrentlyoperate,or(2)asmadeinconnectionwithanytransactionamongEnscoanditswhollyownedsubsidiariesoramong
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Ensco'swhollyownedsubsidiaries;provided,however,thatEnscomaynot,andmaynotpermitanyofitssubsidiariesto,makeanyacquisitionofanyotherpersonorbusinessormakeloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherpersonthatwouldreasonablybeexpectedtoprevent,materiallyimpedeormateriallydelaytheconsummationofthemerger;
• materiallychangefinancialaccountingpoliciesorproceduresoranyofitsmethodsofreportingincome,deductionsorothermaterialitemsforfinancialaccountingpurposes,exceptasrequiredbyGAAPorotherapplicableaccountingstandards,SECruleorpolicyorapplicablelaw;
• issue,sell,pledge,disposeof,grantorencumber,orauthorizetheissuance,sale,pledge,disposition,grantorencumbranceof,anysharesofitscapitalstockorotherownershipinterestinEnscooranyofitssubsidiariesoranysecuritiesconvertibleintoorexchangeableforanysuchsharesorownershipinterest,oranyrights,warrantsoroptionstoacquireanysuchsharesofcapitalstock,ownershipinterestorconvertibleorexchangeablesecurities,otherthan(1)issuancesofEnscoClassAordinarysharesundertheEnscobenefitsplans,includinginrespectoftheexercise,vestingorsettlementofanyEnscostockawardsoutstandingonthedateofthemergeragreement,(2)thevestingofEnscoClassAordinarysharesorforwithholdingtaxeswithrespecttoanyEnscostockawardstotheextentprovidedbythetermsofsuchawardsor(3)fortransactionsamongEnscoanditswhollyownedsubsidiariesoramongEnsco'swhollyownedsubsidiaries;
• incur,assume,guaranteeorotherwisebecomeliableforanyindebtednessforborrowedmoneyinexcessoftheamountofavailableborrowingcapacityexistingfromtimetotimeunderEnsco'srevolvingcreditfacilityoranyguaranteeofsuchindebtedness,exceptfor(1)anyindebtednessincurredintheordinarycourseofbusiness,(2)anyindebtednessamongEnscoanditswhollyownedsubsidiariesoramongEnsco'swhollyownedsubsidiaries,(3)anyindebtednessincurredtoreplace,renew,extend,refinanceorrefundanyexistingindebtednessonsubstantiallythesameormorefavorabletermstoEnscothansuchexistingindebtedness,and(4)anyguaranteesbyEnscoofindebtednessofitssubsidiariesorguaranteesbysuchsubsidiariesofindebtednessofEnscooranysubsidiaryofEnsco,whichindebtednessisincurredincompliancewiththetermsofthemergeragreement;provided,however,thatinthecaseof(1)through(4)above,suchindebtednessdoesnotimposeorresultinanyadditionalrestrictionsorlimitationsthatwouldbematerialtoEnscoanditssubsidiariesotherthananyobligationtomakepaymentsonsuchindebtednessandotherthananyrestrictionsorlimitationstowhichEnscooranysubsidiaryiscurrentlysubjectunderthetermsofanyindebtednessoutstandingasofthedateofthemergeragreement;
• waive,release,assign,settleorcompromiseanyclaim,actionorproceeding,otherthanwaivers,releases,assignments,settlementsorcompromises(1)thatareequaltoorlessthantheamountsspecificallyreservedwithrespecttheretoontheEnscobalancesheetasofMarch31,2017or(2)thatdonotexceed$50millionintheaggregateand,inallcases,donotobligateitoranyofitssubsidiariestotakeanymaterialaction(otherthanmakeapayment)orimposeanymaterialrestrictionsonitsbusinessorthebusinessofanyofitssubsidiaries;
• (1)make,changeorrevokeanytaxelection;(2)changeanytaxaccountingmethod;(3)fileanyamendedtaxreturn;(4)enterintoanytaxallocationagreement,taxsharingagreement,taxindemnityagreement,advancepricingagreementorclosingagreement;(5)requestanytaxruling;(6)settleorcompromiseanytaxproceeding;(7)consenttoanyextensionorwaiverofthestatuteoflimitationsperiodapplicabletoanytaxclaimorassessment;(8)changeitsjurisdictionoftaxresidence;or(9)surrenderanyclaimforamaterialrefundoftaxes,if,inthecaseof(1)through(7)above,suchactionwouldhaveamaterialadverseeffectonEnsco;
• acquiresharesofAtwoodcommonstock;or
• agreetodoanyoftheactionsprohibitedbytheprecedingbulletpoints.
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Themergeragreementalsocontainsmutualcovenantsrelatingtothepreparationofthisjointproxystatement/prospectus,theholdingofthespecialmeetingofAtwoodshareholders,theholdingofthegeneralmeetingofEnscoshareholders,thegrantingofaccesstoinformation,theapplicabilityofstateanti-takeoverlaws,publicannouncementswithrespecttothetransactionscontemplatedbythemergeragreement,controlofeachother'sbusinessoperations,participationinshareholderlitigationrelatingtothemerger,actionswithrespecttothetaxtreatmentofthemerger,listingontheNYSEandreportingrequirementsofSection16(a)oftheExchangeAct.
AtwoodandEnscohavealsoagreedtousetheirreasonablebesteffortstotakeallactionsneededtoconsummateandmakeeffectivethemerger,including(i)thepreparationandfilingofallforms,registrationsandnoticesrequiredtobefiledtoconsummatethemerger,(ii)thesatisfactionoftheconditionstoconsummatethemerger,(iii)takingallreasonableactionsnecessarytoobtaingovernmentalandthirdpartyconsents,and(iv)theexecutionanddeliveryofanyadditionalinstrumentsnecessarytoconsummatethemergerandtofullycarryoutthepurposesofthemergeragreement.Additionally,Ensco,MergerSubandAtwoodhaveagreedtousetheirreasonablebesteffortstofulfillallconditionsprecedenttothemergerandtonottakeanyactionafterthedateofthemergeragreementthatwouldreasonablybeexpectedtomateriallydelaytheobtainingof,orresultinnotobtaining,anyconsent,authorization,orderorapprovalof,oranyexemptionby,anygovernmentalentitynecessarytobeobtainedpriortoclosing.Totheextentthattransfersofanypermitsissuedbyanygovernmentalentityarerequiredasaresultoftheexecutionofthemergeragreementortheconsummationofthemerger,Ensco,MergerSubandAtwoodhaveagreedtousetheirreasonablebesteffortstoeffectsuchtransfers.
EachofEnsco,MergerSubandAtwoodhaveagreedtouseitsreasonablebesteffortstotakeallstepstomakeanyandallundertakingsnecessarytoresolveobjectionsthatanyrelevantauthoritymayassertundertheHSRActandanyotherfederal,stateorforeignlawdesignedtoprohibit,restrictorregulateactionsforthepurposeoreffectofmonopolizationorrestraintoftradeorreductionofcompetition(collectively,"AntitrustLaws")orthatregulatesforeigninvestment("ForeignInvestmentLaws"),withrespecttothemergeragreement,andtoavoidoreliminateeachandeveryimpedimentunderanyAntitrustLawsorForeignInvestmentLawsthatmaybeassertedbyanyrelevantauthoritywithrespecttothemergeragreement,including(1)proposing,negotiating,committingtoandeffecting,byconsentdecree,holdseparateorder,orotherwise,thesale,divestitureordispositionofanybusinesses,assets,equityinterests,productlinesorpropertiesofEnsco,MergerSuborAtwood(oranyoftheirrespectivesubsidiaries)oranyequityinterestinanyjointventureheldbyEnsco,MergerSub,andAtwood(oranyoftheirrespectivesubsidiaries),(2)creating,terminating,ordivestingrelationships,ventures,contractualrightsorobligationsofEnsco,MergerSubandAtwoodortheirrespectivesubsidiariesand(3)otherwisetakingorcommittingtotakeanyactionthatwouldlimitEnsco'sortheMergerSub'sfreedomofactionwithrespectto,oritsabilitytoretainorhold,directlyorindirectly,anybusinesses,assets,equityinterests,productlinesorpropertiesofEnsco,MergerSubandAtwood(includinganyoftheirrespectivesubsidiaries)oranyequityinterestinanyjointventureheldbyEnsco,MergerSubandAtwood(oranyoftheirrespectivesubsidiaries),ineachcaseasmayberequiredinordertoobtainallapprovalsandconsentsrequireddirectlyorindirectlyunderanyAntitrustLawsorForeignInvestmentLaws;provided,however,thatEnscowillnotberequiredtotakeanyactionthatwouldreasonablybeexpectedto,individuallyorintheaggregate,resultinaone-yearlossofrevenuesdeterminedinaccordancewithGAAPofmorethan$175milliononacombinedbasisforbothAtwoodanditssubsidiariesandEnscoanditssubsidiaries.NothinginthemergeragreementwillrequireEnsco,MergerSuborAtwoodtotakeoragreetotakeanyactionwithrespecttoitsbusinessoroperationsunlesstheeffectivenessofsuchagreementoractionisconditionedupontheclosing.Inaddition,themergeragreementcontainsacustomarycooperationcovenantwherebyEnscoandAtwoodwillworkcooperativelyinobtainingrequiredapprovalsandconsentsandindealingswithregulatoryauthorities.
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AgreementNottoSolicitOtherOffers
Subjecttocertainexceptionsdiscussedherein,theEnscoBoardandtheAtwoodBoardshallnot:
• failtoincludetherecommendationofsuchboardofdirectorsinthejointproxystatement/prospectus;
• change,qualify,withhold,withdrawormodify,orauthorizeorpubliclyproposetochange,qualify,withhold,withdrawormodify,inamanneradversetoAtwoodorEnsco,itsrecommendation;
• takeanyformalactionormakeanyrecommendationorpublicstatementinconnectionwithatenderofferorexchangeoffer(otherthanarecommendationagainstsuchofferoracustomary"stop,lookandlisten"communicationofthetypecontemplatedbyRule14d-9(f)undertheExchangeAct)(itbeingunderstoodthattheEnscoBoardandtheAtwoodBoardmayrefrainfromtakingapositionwithrespecttosuchtenderofferorexchangeofferuntilthecloseofbusinessasofthetenthbusinessdayafterthecommencementofsuchtenderofferorexchangeofferpursuanttoRule14d-9(f)undertheExchangeActwithoutsuchactionbeingconsideredanadverserecommendationchangewithrespecttoEnscoorAtwood,asapplicable);
• adopt,approveorrecommend,orpubliclyproposetoadopt,approve,orrecommend,toEnscoshareholdersorAtwoodshareholders,asapplicable,atakeoverproposal(anyactiondescribedintheprecedingbulletpointsbeingreferredtoasan"adverserecommendationchange");or
• authorize,causeorpermitEnscoorAtwoodoranyoftheirrespectivesubsidiariestoenterintoanyletterofintent,agreement,commitmentoragreementinprinciplewithrespecttoanytakeoverproposal(otherthanapermissibleconfidentialityagreementdiscussedbeloworinaccordancewiththeapplicabletermsofthemergeragreementregardingasuperiorproposalwithrespecttosuchparty).
Notwithstandingtheabove,ifatanytimepriortoobtainingapprovaloftheEnscoMergerConsiderationProposalortheAtwoodMergerProposalbytheEnscoshareholdersorAtwoodshareholders,asapplicable,EnscoorAtwoodoranyoftheirrespectivesubsidiaries,oranyoftheirrepresentatives,asapplicable,directlyorindirectlyreceivesabonafide,unsolicitedwrittentakeoverproposalfromanypersonthatdidnotresultfromsuchparty's,itsaffiliates'orsuchparty'soritsaffiliates'representatives'breachofitsnon-solicitationobligationsandtheboardofdirectorsofsuchpartydeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounsel,thatsuchtakeoverproposalconstitutesorisreasonablylikelytoleadtoasuperiorproposalwithrespecttosuchparty,thensuchpartyandanyofitssubsidiaries,andanyofitsortheirrepresentatives,may,directlyorindirectly:
• furnish,pursuanttoanacceptableconfidentialityagreementnotlessfavorabletosuchpartythantheconfidentialityagreementwiththeotherparty,non-publicinformationandaccesstosuchparty'sbusiness,properties,assets,employees,officers,contracts,booksandrecordstothepersonthatmadesuchproposalanditsrepresentativesandpotentialsourcesoffinancing,providedanyinformationsoprovidedisconcurrentlyorhaspreviouslybeenprovidedtotheotherparty,and
• engageindiscussionsornegotiationswiththepersonmakingsuchtakeoverproposalanditsrepresentativesandpotentialsourcesoffinancing.
EachofEnscoandAtwoodwill,within24hoursofreceipt,notifytheotherpartyofanytakeoverproposalandthematerialtermsandconditionsthereofandwillkeeptheotherpartyreasonablyinformedregardingthestatusofanysuchtakeoverproposal.Eachpartywillnotenterintoanyagreementthatwouldprohibititfromprovidingcertaininformationtotheotherpartypursuanttothemergeragreement.
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EachofEnscoandAtwoodmaytakeanyoftheactionsdescribedaboveconstitutinganadverserecommendationchangeif,afterreceivingabonafide,unsolicitedtakeoverproposalthatdidnotresultfromabreachofthenon-solicitationprovisions,theboardofdirectorsofsuchpartydeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorsandlegalcounsel,thatthetakeoverproposalconstitutesasuperiorproposalwithrespecttosuchpartyandthatinlightofsuchtakeoverproposal,thefailuretotakesuchactionwouldreasonablybelikelytobeinconsistentwiththefiduciarydutiesoftheboardofdirectorsofsuchpartyunderapplicablelaw;providedthatpriortoanysuchchangeofrecommendation:
• suchpartyprovidestheotherpartywithatleastfourbusinessdays'priorwrittennoticeofitsintentiontotakesuchactionandspecifying,inreasonabledetail,thematerialtermsandconditionsofthetakeoverproposal;
• suchpartyhasnegotiatedwiththeotherpartyduringsuchnoticeperiodtoenabletheotherpartytoproposerevisionstothetermsofthemergeragreementsuchthatitwouldcausethesuperiorproposaltonolongerconstituteasuperiorproposal;
• followingtheendofsuchnoticeperiod,theboardofdirectorsofsuchpartyconsidersingoodfaithanyrevisionstothetermsofthemergeragreementanddetermines,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounsel,thatthesuperiorproposalcontinuestobeasuperiorproposalevenifsuchchangesweregiveneffect;and
• intheeventofanychangesinthetermsofthesuperiorproposal,suchpartyshallhavegiventheotherpartynoticeofsuchchangeandanewnoticeperiodshallcommenceequaltothelongeroftwobusinessdaysortheperiodremainingundertheinitialfourbusinessdaynoticeperiod.
Additionally,notwithstandinganythingtothecontrarysetforthabove,atanytimepriortoreceiptoftheapprovaloftheEnscoMergerConsiderationProposalortheAtwoodMergerProposal,EnscoorAtwood,asapplicable,maytakeanyoftheactionsdescribedaboveconstitutinganadverserecommendationchangeinresponsetoan"interveningevent"iftheboardofdirectorsofsuchpartyhasdeterminedingoodfaithafterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounselthatthefailuretotakesuchactionwouldbeinconsistentwithitsfiduciarydutiesunderapplicablelaw,providedthatpriortotakinganysuchaction,suchpartyprovidestheotherpartywithatleastfourbusinessdays'priorwrittennoticeofitsintentiontotakesuchactionandspecifying,inreasonabledetail,thereasonstherefor,andsuchpartyhasnegotiatedingoodfaithwiththeotherpartyduringsuchnoticeperiodtoenablesuchotherpartytoproposerevisionstothetermsofthemergeragreementinamannerthatwouldobviatetheneedtoeffectanadverserecommendationchange.
A"takeoverproposal"means,withrespecttoEnscoorAtwood:
• anyinquiry,proposalorofferfororwithrespectto(orexpressionbyanypersonthatitisconsideringormayengagein)amerger,consolidation,businesscombination,recapitalization,bindingshareexchange,liquidation,dissolution,jointventure,schemeofarrangementorothersimilartransactioninvolvingsuchpartyoranyofitssubsidiarieswhoseassets,takentogether,constitute20%ormoreofsuchparty'sconsolidatedassets;
• anyinquiry,proposaloroffer(includingtenderorexchangeoffers)to(orexpressionbyanypersonthatitisconsideringormayseekto)acquireinanymanner,directlyorindirectly,inoneormoretransactions,morethan20%oftheoutstandingsharesofsecuritiesofsuchpartyrepresentingmorethan20%ofthevotingpowerofsuchparty;or
• anyinquiry,proposalorofferto(orexpressionbyanypersonthatitisconsideringormayseekto)acquireinanymanner(includingtheacquisitionofequitysecuritiesinanysubsidiaryofsuchparty),directlyorindirectly,inoneormoretransactions,assetsorbusinessesofsuchpartyorits
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subsidiaries,includingpursuanttoajointventure,representingmorethan20%oftheconsolidatedassets,revenuesornetincomeofsuchparty,ineachcase,otherthanthemerger.
A"superiorproposal"meansabonafide,unsolicited,writtentakeoverproposal,withrespecttoEnscoorAtwood:
• thatifconsummatedwouldresultinathirdpartyacquiring,directlyorindirectly,morethan50%oftheoutstandingEnscoClassAordinarysharesorsharesofAtwoodcommonstock,asapplicable,ormorethan50%oftheassetsofsuchpartyanditssubsidiaries,takenasawhole,forconsiderationconsistingofcashand/orsecurities;
• thattheboardofdirectorsofsuchpartydeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorandoutsidelegalcounsel,isreasonablycapableofbeingcompleted,takingintoaccountallfinancial,legal,regulatoryandotheraspectsofsuchproposal,includingallconditionscontainedthereinandthepersonmakingsuchtakeoverproposal;and
• thattheboardofdirectorsofsuchpartydeterminesingoodfaithafterconsultationwithitsoutsidefinancialadvisorandoutsidelegalcounsel(takingintoaccountanychangestothemergeragreementproposedbytheotherpartyinresponsetosuchtakeoverproposal,andallfinancial,legal,regulatoryandotheraspectsofsuchtakeoverproposal,includingallconditionscontainedthereinandthepersonmakingsuchproposal,andthemergeragreement),ismorefavorablefromafinancialpointofviewtosuchparty'sshareholdersthanthemerger.
An"interveningevent"isamaterialeventorcircumstancethat,withrespecttoEnscoorAtwood:
• wasnotknowntotheboardofdirectorsofsuchparty,orthematerialconsequencesofwhich(basedonfactsknowntomembersoftheboardofdirectorsofsuchpartyasofthedateofthemergeragreement)werenotreasonablyforeseeable,asofthedateofthemergeragreement;
• becomesknownbytheboardofdirectorsofsuchpartypriortothereceiptofshareholderapprovalfromsuchpartiesshareholders;and
• doesnotrelatetothereceipt,existenceortermsofatakeoverproposalinvolvingsuchparty.
Exceptasexpresslypermittedbythemergeragreement,eachofEnscoandAtwoodwill,andwillcauseitsaffiliates,andofficers,directorsandemployeesto,andwillusereasonablebesteffortstocauseitsagents,financialadvisors,investmentbankers,attorneys,accountantsandotherrepresentativesto:
• immediatelyceaseanyongoingsolicitation,discussionsornegotiationswithanypersonwithrespecttoatakeoverproposal;
• promptlyinstruct(totheextentsuchpartyhasthecontractualauthoritytodoso)anypersonthathasexecutedaconfidentialityornon-disclosureagreementwithinthe24-monthperiodpriortothedateofthemergeragreementinconnectionwithanytakeoverproposaltoreturnordestroyallconfidentialinformationofsuchpartyinitspossession;and
• untiltheEffectiveTimeorterminationofthemergeragreement,not:
• solicit,initiateorknowinglyfacilitateorknowinglyencourage(includingbywayoffurnishingnon-publicinformation)anyinquiriesregarding,orthemakingofanyproposalorofferthatconstitutes,orcouldreasonablybeexpectedtoleadto,atakeoverproposal;
• engagein,continueorotherwiseparticipateinanydiscussionsornegotiationsregarding,orfurnishingtoanyotherpersonanynon-publicinformationinconnectionwithorforthepurposeofencouragingorfacilitating,atakeoverproposal;or
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• approve,recommendorenterinto,orproposetoapprove,recommendorenterinto,anyletterofintentorsimilardocument,agreement,commitmentoragreementinprinciple(whetherwrittenororal,bindingornonbinding)withrespecttoatakeoverproposal.
Inaddition,neitherpartywillreleaseanythirdpartyfromorwaiveoramendanystandstillprovisionorconfidentialityprovisionotherthananyconfidentialityprovisionthewaiverofwhichwouldnotbereasonablylikelytoleadtoatakeoverproposal,andeachpartywillenforcesuchconfidentialityandstandstillprovisionsofanysuchagreementsandtakeallstepswithinitspowertoterminateanywaiverspreviouslygrantedunderanysuchprovisions.
ExpensesandFees
Ingeneral,eachofEnscoandAtwoodwillberesponsibleforallexpensesincurredbyitinconnectionwiththenegotiationandcompletionofthetransactionscontemplatedbythemergeragreement.However,eachofEnscoandAtwoodshallpayone-halfofallfilingfeesrequiredundertheHSRActorotherantitrust,competition,foreigninvestmentorsimilarlawsoutsideoftheUnitedStates.Additionally,alltransfer,documentary,sales,use,stamp(includinganyliabilitytoanyU.K.stampdutyorU.K.stampdutyreservetaxinrespectofthemergerconsideration),registrationandothersubstantiallysimilartaxesandfees(includinganypenaltiesandinterest)incurredinconnectionwiththeissueanddeliveryofthemergerconsiderationtoAtwoodshareholdersinaccordancewiththemergeragreement(butnotinrespectofanysubsequenttransfersordealingsintheEnscoClassAordinarysharescomprisingthemergerconsideration)shallbepaidbyEnscowhendue,anditwill,atitsownexpense,fileallnecessarydocumentationwithrespecttoallsuchtransfertaxes.
EmployeeMatters
ThemergeragreementprovidesthatEnscoanditssubsidiarieswillcontinuetheemploymentofalloftheemployeeswhoareemployedbyAtwoodoranyofitssubsidiariesasofthedayimmediatelypriortotheEffectiveTimeinitiallyatthesamesalariesandwagesofsuchemployeesimmediatelypriortotheEffectiveTime.DuringtheperiodfromtheEffectiveTimetoandincludingtheoneyearanniversaryoftheclosingdate,Enscoanditssubsidiarieswillprovideeachaffectedemployeewithanannualsalaryrateorhourlywage,asapplicable,thatisnolessfavorabletosuchaffectedemployeethanthesalaryrateorwagerateprovidedtosuchaffectedemployeeimmediatelypriortotheEffectiveTime,andwillprovideaffectedemployeeswhoaresoemployedbyAtwoodoritssubsidiariesasofthedayimmediatelypriortotheEffectiveTime,intheaggregate,withemployeecompensationandbenefits(excludingequitycompensationandlong-termincentives)thatarenolessfavorableintheaggregatethanthoseprovidedbyAtwoodoritssubsidiariesimmediatelypriortotheEffectiveTime.However,EnscomaytransitionaffectedemployeestoEnsco'sbonusandincentivecompensationplansatanytimeinEnsco'sdiscretionand,followingtheendofthefiscalyearorbenefitplanyear,asapplicable,inwhichtheclosingdateoccurs,EnscomaytransitionaffectedemployeestoothercompensationandbenefitplansprovidingcompensationandbenefitsthataresubstantiallycomparabletothoseprovidedtoEnsco'sothersimilarlysituatedemployees.AftertheEffectiveTime,EnscowillhonoreachchangeofcontrolorseveranceagreementbetweenAtwoodanditssubsidiariesandanyemployeethereofandwillperformtheobligationsofAtwoodthereunder,andEnscowillproviderelocationbenefitsinaccordancewithAtwood'spolicyasineffectonthedateofthemergeragreementtoanyaffectedemployeewhobecomesentitledtoseverancebenefitsfollowingtheEffectiveTimepursuanttoanyAtwoodbenefitplan.
Withrespecttoeachaffectedemployee,EnscowillcredittheperiodofemploymentandservicerecognizedbytheapplicableemployerimmediatelypriortotheEffectiveTimetohaveemploymentandservicewithEnscoforpurposesofdeterminingtheaffectedemployee'seligibilitytojoinunderallemployeebenefitplans,programs,policiesorotheremploymentrelatedarrangementsofEnscoinwhichtheaffectedemployeeiseligibletoparticipate.However,nosuchcreditwillbeprovidedtothe
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extentthatitwouldresultinaduplicationofcreditorbenefits.Enscowillwaiveandusecommerciallyreasonableeffortstocausetherelevantinsurancecarriersandotherthirdpartiestowaive,anyrestrictionsandlimitationsformedicalconditionsexistingasoftheEffectiveTimeofthoseaffectedemployeesandtheirdependentswhowerecoveredimmediatelypriortotheEffectiveTimeunderagrouphealthplanmaintainedbyAtwood,Enscoortheirsubsidiaries,butonlytotheextentthatsuchmedicalconditionwouldbecoveredbyEnsco'sgrouphealthplanifitwerenotapre-existingconditionandonlytotheextentthatsuchlimitationswouldnothaveappliedundertheapplicablegrouphealthplancoveringtheaffectedemployeepriortotheEffectiveTime.Inaddition,Enscowilloffer,attheEffectiveTime,toeachaffectedemployeecoverageunderagrouphealthplanwhichcreditssuchaffectedemployeetowardsthedeductibles,coinsuranceandmaximumout-of-pocketprovisionsimposedundersuchgrouphealthplan,fortheplanyearduringwhichtheEffectiveTimeoccurs,withanyapplicableexpensesalreadyincurredduringsuchyearunderAtwood'sorEnsco'sgrouphealthplan.
EnscowillpaytoeachaffectedemployeewhowasemployedbyAtwoodoritssubsidiariesimmediatelypriortotheEffectiveTimeanamountequaltotheunpaidportionofanyannualincentivebonustowhichtheaffectedemployeewasentitledundertheapplicableAtwoodannualbonusplanfortheyearprior.EnscoandAtwoodagreethattheywillnotmakeanyrepresentationsorpromisestoanyoftheiremployeesconcerningcontinuedemploymentfollowingtheEffectiveTime.Inaddition,AtwoodandEnscohaveagreedtocooperateingoodfaithtoestablishaprocesstopromptlyintegratetheAtwoodbenefitplansandtheEnscobenefitplansfollowingtheEffectiveTime.
IndemnificationandInsurance
ThemergeragreementrequiresEnscotomaintainineffectforsixyearsaftercompletionofthemergerthecurrentrightsofAtwoodcurrentandformerdirectors,officersandemployeestoindemnificationundertheAtwoodcertificateofformationortheAtwoodbylawsordisclosedagreementsofAtwood.
Themergeragreementalsoprovidesthat,uponcompletionofthemerger,Enscowillindemnifyandholdharmless,andprovideadvancementofexpensesto,allpastandpresentofficers,directorsandemployeesofAtwood,andeachpersonwhoservedasadirector,officer,member,trusteeorfiduciaryofanothercorporation,partnership,jointventure,trust,pensionorotheremployeebenefitplanorenterpriseifsuchservicewasattherequestorforthebenefitofAtwoodanditssubsidiaries,againstanycostsorexpenses(includingadvancingattorneys'feesandexpenses)inadvanceofthefinaldispositionofanyclaim,suit,proceedingorinvestigationtothefullestextentpermittedbyapplicablelaw.
ThemergeragreementprovidesthatEnscowillmaintainforaperiodofsixyearsaftertheEffectiveTimeAtwood'scurrentdirectors'andofficers'liabilityinsurancepolicies,orpoliciesofatleastthesamecoverageandamountandcontainingtermsandconditionsthatarenotlessadvantageousthanthecurrentpolicy,withrespecttoactsoromissionsoccurringpriortotheEffectiveTime,exceptthatEnscoisnotrequiredtoincurannualpremiumexpensegreaterthantheMaximumAmount.
Eitherpartymaypurchasea"tailpolicy"withrespecttoactsoromissionsoccurringorallegedtohaveoccurredpriortotheEffectiveTimeofthemergerthatwerecommittedorallegedtohavebeencommittedbyapartytobeindemnifiedundertheagreement.InnoeventshallthecostofsuchpolicypurchasedbyAtwoodexceedsixtimestheMaximumAmount,andifa"tail"policyispurchased,Enscowillhavenofurtherobligationstomaintaintheinsurancepoliciesforcurrentdirectorsandofficersasdescribedabove.
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ConditionstoCompletetheMerger
Therespectiveobligationsofeachpartytocompletethemergeraresubjecttothefulfillmentorwaiverofcertainconditions,including:
• theapprovalofthemergeragreementbytheholdersoftwo-thirdsofthesharesofAtwoodcommonstockentitledtovotethereonasrequiredundertheTBOC;
• theresolutionauthorizingtheEnscoBoardtoallotandissuetheEnscoClassAordinarysharesshallhavebeenpassed;
• theeffectivenessoftheregistrationstatementfortheEnscoClassAordinarysharestobeissuedasmergerconsiderationandtheapprovalforlistingofsuchsharesontheNYSE;
• theabsenceofanyinjunctionorlawthatprohibitsclosing;
• theexpirationorterminationoftheHSRwaitingperiod(DOJandFTCgrantedearlyterminationonJune27,2017);and
• theabsenceofachangeinlaw(includingofficialinterpretationsthereofandcertainlegislation)thatmorelikelythannot,asaresultofthemerger,causesEnscotobetreatedasaUnitedStatesdomesticcorporationforU.S.federalincometaxpurposes.
EachofEnsco'sandAtwood'sobligationtocompletethemergerisalsoseparatelysubjecttothesatisfactionorwaiverofanumberofconditions,including:
• thetruthandcorrectnessoftherepresentationsandwarrantiesofeachotherpartyinthemergeragreement,subjecttothematerialitystandardprovidedinthemergeragreement,andtheperformancebyeachotherpartyinallmaterialrespectsoftheirobligationsunderthemergeragreement;and
• thereceiptbyeachofEnscoandAtwoodofacertificate,datedtheclosingdateandsignedbyitsChiefExecutiveOfficeroranotherseniorofficer,certifyingthattheconditionsofeachpartysetforthinprecedingbulletpointshavebeensatisfied.
Inaddition,theobligationofEnscoandMergerSubtocompletethemergerisfurthersubjecttotheconditionthatallconsentsofthespecifiedgovernmentalentitieshavebeenobtainedandanyapplicablewaitingperiodhasbeenexpiredorterminated.
Thepartiescannotprovideassuranceastowhenorifalloftheconditionstothemergercanorwillbesatisfiedorwaivedbytheappropriateparty.Asofthedateofthisjointproxystatement/prospectus,thepartieshavenoreasontobelievethatanyoftheseconditionswillnotbesatisfied.
TerminationoftheMergerAgreement
Themergeragreementcanbeterminatedatanytimepriortocompletionby:
• mutualwrittenconsentofAtwood,EnscoandMergerSub;
• eitherAtwoodorEnsco,ifthemergershallnothavebeencompletedonorpriortotheEndDate;providedthatifallconditionshavebeensatisfied(otherthanconditionsrelatingtotheexpirationorterminationoftheHSRwaitingperiodandotherspecifiedgovernmentalapprovals),thentheEndDatemaybeextendedbyeitherAtwoodorEnscobynoticetotheotherpartytoadatenotlaterthanMay29,2018;andprovidedfurtherthattherighttoterminateisnotavailabletoapartyifthefailureofclosingbytheEndDateresultsfromamaterialbreachbysuchpartyofanyrepresentation,warranty,covenantorotheragreementsetforthinthemergeragreement;
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• eitherAtwoodorEnsco,ifafinalandnon-appealableinjunctionshallhavebeenenteredprohibitingtheclosing,unlesssuchinjunctionwasprimarilyduetothefailureoftheterminatingpartytoperformanyofitsobligationsunderthemergeragreement;
• eitherAtwoodorEnsco,iftheAtwoodshareholders'meeting(includinganyadjournmentsorpostponements)hasconcludedandtherequisiteapprovalbyAtwoodshareholdersoftheAtwoodMergerProposalisnotobtained,providedthattherighttoterminateisnotavailabletoAtwoodifsuchfailuretoobtaintheAtwoodshareholderapprovalisproximatelycausedbyabreachbyAtwoodofitsnon-solicitationobligationsunderthemergeragreement;
• eitherAtwoodorEnsco,iftheEnscoshareholdermeeting(includinganyadjournmentsorpostponements)hasconcludedandtheresolutionregardingtheEnscoMergerConsiderationProposalisnotpassed,providedthattherighttoterminateisnotavailabletoEnscoifsuchfailuretopasstheresolutionisproximatelycausedbyabreachbyEnscoofitsnon-solicitationobligationsunderthemergeragreement;
• Atwood,ifEnscoorMergerSubbreachesthemergeragreementinamannerthatwouldcauseaconditiontoAtwood'sobligationtoclosenottobesatisfiedandsuchbreachiseithernotcurablebytheEndDateor,ifsuchbreachiscapableofbeingcuredbytheEndDate,hasnotbeencuredwithin(1)theearlierof30calendardaysafterreceiptofnoticefromAtwooddescribingsuchbreachorfailureinreasonabledetail,or(2)threebusinessdaysbeforetheEndDate,providedthatAtwoodisnottheninbreachofthemergeragreementinamannerthatwouldcauseaconditiontoEnsco'sobligationtoclosenottobesatisfied;
• Ensco,ifAtwoodbreachesthemergeragreementinamannerthatwouldcauseaconditiontoEnsco'sobligationtoclosenottobesatisfiedandsuchbreachiseithernotcurablebytheEndDateor,ifsuchbreachiscapableofbeingcuredbytheEndDate,hasnotbeencuredwithin(1)theearlierof30calendardaysafterreceiptofnoticefromEnscodescribingsuchbreachorfailureinreasonabledetail,or(2)threebusinessdaysbeforetheEndDate,providedthatneitherEnsconorMergerSubistheninbreachofthemergeragreementinamannerthatwouldcauseaconditiontoAtwood'sobligationtoclosenottobesatisfied;
• Atwood,intheeventofanEnscoadverserecommendationchangeoruponanyuncuredmaterialbreachbyEnscoofitsnon-solicitationobligationsunderthemergeragreement;
• Ensco,intheeventofanAtwoodadverserecommendationchangeoruponanyuncuredmaterialbreachbyAtwoodofitsnon-solicitationobligationsunderthemergeragreement;
• Atwood,if,atanytimepriortothereceiptofAtwoodshareholderapproval,Atwoodhas(i)effectedanAtwoodadverserecommendationchangeinordertoacceptanAtwoodsuperiorproposal,(ii)enteredintoadefinitiveagreementwithrespecttosuchAtwoodsuperiorproposalconcurrentlywiththeterminationofthemergeragreementand(iii)paidtheAtwoodTerminationFeetoEnscoinaccordancewiththetermsofthemergeragreement;or
• Ensco,if,atanytimepriortothereceiptofEnscoshareholderapproval,theEnscoBoardhas(i)effectedanEnscoadverserecommendationchangeinordertoacceptanEnscosuperiorproposal,(ii)enteredintoadefinitiveagreementwithrespecttosuchEnscosuperiorproposalconcurrentlywiththeterminationofthemergeragreementand(iii)paidtheEnscoTerminationFeetoAtwoodinaccordancewiththetermsofthemergeragreement.
Ifthemergeragreementisvalidlyterminated,therewillbenoliabilityonthepartofEnscoorAtwood,exceptthat(1)bothEnscoandAtwoodwillremainliableforfraudoranywillfulorintentionalbreachofanycovenantoragreementorwillfulorintentionalbreachofanyrepresentationorwarrantyinthemergeragreementoccurringpriortoterminationorasprovidedforinthe
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confidentialityagreementbetweenEnscoandAtwoodand(2)EnscoorAtwoodmayberequiredtopayaterminationfee(asdescribedbelow)and/orreimbursecertainexpensesoftheotherparty.
TerminationFeesandExpenseReimbursement
Ifthemergeragreementisterminated:
• byEnscoorAtwoodduetothemergernotbeingcompletedbytheEndDateorduetotherequisiteapprovalbyAtwoodshareholdersoftheAtwoodMergerProposalnotbeingobtained,orbyEnscoduetoabreachbyAtwoodofitsnon-solicitationobligationsunderthemergeragreement,and(i)atakeoverproposalhasbeenmadetoAtwoodorAtwoodshareholdersafterthedateofthemergeragreementoranypersonhaspubliclyannouncedanintentiontomakeatakeoverproposal,(ii)suchtakeoverproposalorintentiontomakeatakeoverproposalwaspubliclydisclosedpriortothetimeofsuchterminationandatakeoverproposalremainedpendingasofthedateofsuchtermination,and(iii)withintwelvemonthsaftertheterminationofthemergeragreement,(1)Atwoodentersintoadefinitiveagreementfortheconsummationofatakeoverproposal,or(2)atakeoverproposalisconsummated,thenAtwoodmustpayEnscotheAtwoodTerminationFeewithintwobusinessdaysaftertheconsummationofthetakeoverproposal(providedthatforpurposesofthisprovision,thereferencesto"20%ormore"inthedefinitionoftakeoverproposalwillbedeemedtobereferencesto"morethan50%");
• byEnscoorAtwoodduetothemergernotbeingcompletedbytheEndDateorbyAtwoodduetoabreachbyEnscoofitsnon-solicitationobligationsunderthemergeragreement,and(i)atakeoverproposalhasbeenmadetoEnscoortheEnscoshareholdersafterthedateofthemergeragreementoranypersonhaspubliclyannouncedanintentiontomakeatakeoverproposal,(ii)suchtakeoverproposalorintentiontomakeatakeoverproposalwaspubliclydisclosedpriortothetimeofsuchterminationandatakeoverproposalremainedpendingasofthedateofsuchtermination,and(iii)withintwelvemonthsaftertheterminationofthemergeragreement,(1)Enscoentersintoadefinitiveagreementfortheconsummationofatakeoverproposalor(2)atakeoverproposalisconsummated,thenEnscomustpayAtwoodtheEnscoTerminationFeewithintwobusinessdaysaftertheconsummationofthetakeoverproposal(providedthatforpurposesofthisprovision,thereferencesto"20%ormore"inthedefinitionoftakeoverproposalwillbedeemedtobereferencesto"morethan50%");
• byEnscoorAtwoodduetotheEnscoMergerConsiderationProposalnotbeingpassed,orbyAtwoodduetoanEnscoadverserecommendationchangeinresponsetoanEnscointerveningevent,thenEnscomustpayAtwoodtheEnscoTerminationFeewithintwobusinessdaysfollowingsuchtermination;
• byAtwoodduetoanAtwoodadverserecommendationchangeinresponsetoanAtwoodinterveningevent,thenAtwoodmustpayEnscotheAtwoodTerminationFeewithintwobusinessdaysfollowingsuchtermination;
• byEnscoorAtwoodduetotherequisiteapprovalbyAtwoodshareholdersoftheAtwoodMergerProposalnotbeingobtained,orbyEnscoduetoAtwood'sbreachorfailuretoperformanyofitsrepresentations,warranties,covenantsorotheragreementscontainedinthemergeragreement,thenAtwoodmustreimburseEnscoforreasonableout-of-pocketexpensesinanamountnottoexceed$10millionwithintwobusinessdaysfollowingsuchtermination(providedthatAtwood'spaymentunderthisprovisionwillnotrelieveAtwoodofanysubsequentobligationtopaytheAtwoodTerminationFeeexcepttotheextentindicatedinthemergeragreement,andprovidedfurtherthat,totheextenttheAtwoodTerminationFeebecomespayable,anypaymentpreviouslymadepursuanttothisprovisionwillbecreditedagainstAtwood'sobligationtopaytheAtwoodTerminationFee);
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• byAtwoodduetoEnsco'sbreachorfailuretoperformanyofitsrepresentations,warranties,covenantsorotheragreementscontainedinthemergeragreement,thenEnscomustreimburseAtwoodforreasonableout-of-pocketexpensesinanamountnottoexceed$10millionwithintwobusinessdaysfollowingsuchtermination(providedthatEnsco'spaymentunderthisprovisionwillnotrelieveEnscoofanysubsequentobligationtopaytheEnscoTerminationFeeexcepttotheextentindicatedinthemergeragreement,andprovidedfurtherthat,totheextenttheEnscoTerminationFeebecomespayable,anypaymentpreviouslymadepursuanttothisprovisionwillbecreditedagainstEnsco'sobligationtopaytheEnscoTerminationFee);
• byAtwoodtoenterintoanAtwoodsuperiorproposal,inwhichcaseAtwoodmustpayEnscotheAtwoodTerminationFeeconcurrentlywith,andasaconditionto,suchtermination;or
• byEnscotoenterintoanEnscosuperiorproposal,inwhichcaseEnscomustpayAtwoodtheEnscoTerminationFeeconcurrentlywith,andasaconditionto,suchtermination.
Amendment,Waiver,ExtensionandSpecificPerformanceoftheMergerAgreement
Subjecttoapplicablelaw,thepartiesmayamendthemergeragreementbywrittenagreement.However,ifafterapprovaloftheAtwoodMergerProposalbytheAtwoodshareholdersorafterthepassingoftheresolutionregardingtheEnscoMergerConsiderationProposalbyEnscoshareholders,thereisalegalrequirementpursuanttoapplicablelaworinaccordancewiththerulesandregulationsofNYSEforfurtherapprovalbyAtwoodshareholdersorEnscoshareholdersofanamendment,thentheremaynotbe,withoutfurtherapprovalofthoseshareholders,anysuchamendmentofthemergeragreement.EachofAtwoodandEnscoareentitledtoaninjunctionorinjunctionstopreventbreachesofthemergeragreementandtoenforcespecificallythetermsandprovisionsofthemergeragreement.
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UNAUDITEDPROFORMACONDENSEDCOMBINEDFINANCIALSTATEMENTSOFENSCO
OnMay29,2017,EnscoandAtwoodenteredintoadefinitivemergeragreementpursuanttowhichMergerSub,awhollyownedsubsidiaryofEnsco,willmergewithandintoAtwood,withAtwoodsurvivingthemergerandbecomingawhollyownedsubsidiaryofEnsco.Pursuanttothetermsofthemergeragreement,attheEffectiveTime,Atwoodshareholderswillreceive1.60EnscoClassAordinarysharesforeachshareofAtwoodcommonstock.ThemergerwillbeaccountedforusingtheacquisitionmethodofaccountingwithEnscoidentifiedastheacquirerinaccordancewithGAAP.Undertheacquisitionmethodofaccounting,Enscowillrecordallassetsacquiredandliabilitiesassumedattheirrespectiveacquisition-datefairvaluesattheEffectiveTime.
ThefollowingunauditedproformacondensedcombinedfinancialstatementsandtherelatednotespresentthecombinationofthehistoricalconsolidatedfinancialstatementsofEnscoandAtwood,adjustedtogiveeffecttothemerger.SeeadditionalinformationinNote 1—Basis of Presentation totheUnauditedProFormaCondensedCombinedFinancialInformation.
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ENSCOPLCANDSUBSIDIARIES
UNAUDITEDPROFORMACONDENSEDCOMBINEDBALANCESHEET
ASOFMARCH31,2017
Seenotestounauditedproformacondensedcombinedfinancialstatements.
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Historical
ProFormaAdjustments
ProFormaCombined
Ensco Atwood ASSETS CURRENTASSETS Cashandcashequivalents $ 272 $ 435 $ — $ 707Short-terminvestments 1,806 — (1,312) (a) 494Accountsreceivable,net 324 82 — 406Other 312 118 114 (b) 544
Totalcurrentassets 2,714 635 (1,198) (2,151)
PROPERTYANDEQUIPMENT,NET 11,121 4,143 (2,228) (c) 13,036
OTHERASSETS,NET 138 19 43 (d) 200
$ 13,973 $ 4,797 $ (3,383) $ 15,387
LIABILITIESANDSHAREHOLDERS'EQUITY
CURRENTLIABILITIES Accountspayableandaccruedliabilitiesandother $ 509 $ 52 $ 40 (e) $ 601Currentmaturitiesoflong-termdebt 38 — — 38
Totalcurrentliabilities 547 52 40 639
LONG-TERMDEBT 4,906 1,298 (1,298) (f) 4,906
OTHERLIABILITIES 294 46 165 (g) 505
TOTALEQUITY 8,226 3,401 (2,290) (h) 9,337
$ 13,973 $ 4,797 $ (3,383) $ 15,387
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ENSCOPLCANDSUBSIDIARIES
UNAUDITEDPROFORMACONDENSEDCOMBINEDSTATEMENTOFOPERATIONS
FORTHETHREE-MONTHPERIODENDEDMARCH31,2017
Seenotestounauditedproformacondensedcombinedfinancialstatements.
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Historical
ProFormaAdjustments
ProFormaCombined
Ensco Atwood OPERATINGREVENUES $ 471 $ 168 $ (9) (i) $ 630OPERATINGEXPENSES Contractdrilling(exclusiveofdepreciation) 278 70 — 348Lossonimpairment — 59 — 59Depreciation 109 41 (27) (j) 123Generalandadministrative 26 12 — 38
413 182 (27) 568
OPERATINGINCOME(LOSS) 58 (14) 18 62OTHEREXPENSE,NET (58) (13) 18 (k) (53)
LOSSFROMCONTINUINGOPERATIONSBEFOREINCOMETAX — (27) 36 9
PROVISIONFORINCOMETAX 24 2 — 26
LOSSFROMCONTINUINGOPERATIONS $ (24) $ (29) $ 36 $ (17)
NETINCOMEATTRIBUTABLETONONCONTROLLINGINTERESTANDNON-VESTEDSHARES 1 — — $ 1
LOSSFROMCONTINUINGOPERATIONSATTRIBUTABLETOTHEAPPLICABLECOMPANY $ (25) $ (29) $ 36 $ (18)
LOSSPERSHAREFROMCONTINUINGOPERATIONS Basicanddiluted $ (0.09) $ (0.04)
WEIGHTED-AVERAGESHARESOUTSTANDING Basicanddiluted 301 134 (l) 435
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ENSCOPLCANDSUBSIDIARIES
UNAUDITEDPROFORMACONDENSEDCOMBINEDSTATEMENTOFOPERATIONS
Seenotestounauditedproformacondensedcombinedfinancialstatements.
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Historical
ProFormaAdjustments
ProFormaCombined
Ensco(1) Atwood(2) OPERATINGREVENUES $ 2,776 $ 1,021 $ (140) (i) $ 3,657OPERATINGEXPENSES Contractdrilling(exclusiveofdepreciation) 1,301 407 — 1,708Lossonimpairment — 104 — 104Depreciation 445 166 (103) (j) 508Generalandadministrative 101 51 — 152
1,847 728 (103) 2,472
OPERATINGINCOME 929 293 (37) 1,185OTHERINCOME,NET 68 18 86 (k) 172
INCOMEFROMCONTINUINGOPERATIONSBEFOREINCOMETAX 997 311 49 1,357
PROVISIONFORINCOMETAX 109 47 — 156
INCOMEFROMCONTINUINGOPERATIONS $ 888 $ 264 $ 49 $ 1,201
NETINCOMEATTRIBUTABLETONONCONTROLLINGINTERESTANDNON-VESTEDSHARES 22 — — 22
INCOMEFROMCONTINUINGOPERATIONSATTRIBUTABLETOTHEAPPLICABLECOMPANY $ 866 $ 264 $ 49 $ 1,179
EARNINGSPERSHAREFROMCONTINUINGOPERATIONS Basicanddiluted $ 3.10 $ 2.85
WEIGHTED-AVERAGESHARESOUTSTANDING Basicanddiluted 279 134 (l) 413
(1) EnscohistoricalfinancialinformationisfortheyearendedDecember31,2016.
(2) AtwoodhistoricalfinancialinformationisforthefiscalyearendedSeptember30,2016.
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ENSCOPLCANDSUBSIDIARIES
NOTESTOUNAUDITEDPROFORMACONDENSEDCOMBINED
FINANCIALSTATEMENTS
Note1—BasisofPresentation
TheunauditedproformacondensedcombinedfinancialstatementswerepreparedinaccordancewithArticle11ofSECRegulationS-XusingtheacquisitionmethodofaccountinginaccordancewithGAAPandarebasedonthehistoricalconsolidatedfinancialstatementsofEnscoandAtwood,aftergivingeffecttothemergeraswellasproformaadjustments.
TheunauditedproformacondensedcombinedbalancesheetcombinestheunauditedhistoricalcondensedconsolidatedbalancesheetsofEnscoandAtwoodasofMarch31,2017,givingeffecttothemergerasifithadoccurredonMarch31,2017.
TheunauditedproformacondensedcombinedstatementsofoperationsforthefiscalyearendedDecember31,2016andthethreemonthsendedMarch31,2017assumethemergertookplaceonJanuary1,2016,thebeginningofEnsco'smostrecentlycompletedfiscalyear.Ensco'sauditedconsolidatedstatementofoperationsforthefiscalyearendedDecember31,2016hasbeencombinedwithAtwood'sauditedconsolidatedstatementofoperationsforthefiscalyearendedSeptember30,2016.TheunauditedproformacondensedcombinedstatementofoperationsforthethreemonthsendedMarch31,2017combinestheunauditedconsolidatedstatementofoperationsofEnscoandAtwoodforthethreemonthsendedMarch31,2017.
Theunauditedproformacondensedcombinedfinancialstatementsareprovidedforillustrativepurposesonlyandarenotintendedtorepresenttheconsolidatedresultsofoperationsorfinancialpositionofthecombinedcompanythatwouldhavebeenrecordedhadthemergerbeencompletedasofthedatespresentedandshouldnotbetakenasrepresentativeoffutureresultsofoperationsorfinancialpositionofthecombinedcompany.Theunauditedproformacondensedcombinedfinancialstatementsdonotreflecttheimpactsofanypotentialoperationalefficiencies,costsavingsoreconomiesofscalethatEnscomayachievewithrespecttothecombinedoperationsofEnscoandAtwood.Additionally,theproformastatementsofoperationsdonotincludenon-recurringchargesorcreditsandtherelatedtaxeffectsthatresultdirectlyfromthemerger.
Theunauditedproformacondensedcombinedfinancialstatementsreflecttheestimatedmergerconsideration,whichdoesnotrepresentwhattheactualmergerconsiderationtransferredwillbeattheEffectiveTime.InaccordancewithGAAP,thefairvalueofequitysecuritiesissuedastheconsiderationtransferredwillbemeasuredontheclosingdateofthemergeratthethen-currentmarketprice.Enscohasestimatedthetotalconsiderationtobe$711million,whichwillbepaidthroughtheconversionofapproximately83.5millionsharesofAtwoodcommonstock,inclusiveof2.9millionunvestedrestrictedstockandperformanceunitawardsthatvestuponchangeofcontrol,to133.6millionEnscoClassAordinarysharesusingtheexchangeratioof1.60andvaluedat$8.51pershareofAtwoodcommonstockbasedontheclosingpriceof$5.32perEnscoClassAordinaryshareonJuly18,2017.
UnderGAAP,acquisition-relatedtransactioncosts(e.g.,advisory,legal,valuationandotherprofessionalfees)arenotincludedasacomponentofconsiderationtransferredbutareaccountedforasexpensesintheperiodsinwhichthecostsareincurred.Enscoestimatesthatadvisory,legal,valuationandotherprofessionalfeesandexpenseswillbe$18millionandchangeofcontrolseveranceforcertainexecutiveandotherkeyAtwoodemployeeswilltotal$8million.TransactioncostsincurredbyAtwoodrelatedtothemergerareestimatedtototal$25million.Followingthecompletionofthemerger,EnscoexpectstoincuradditionalchargesandexpensesrelatingtorestructuringandintegratingtheoperationsofEnscoandAtwood,theamountofwhichhasnotyetbeendetermined.Certaintransactioncostsrelatedtothemergerarenotincludedintheproformafinancialstatementsinthisjointproxystatement/prospectus.
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TheunauditedproformacondensedcombinedfinancialstatementsillustratetheassetsandliabilitiesofAtwoodrecordedattheirpreliminaryestimatedfairvaluesattheassumedclosingdateofthemerger.Thepreliminaryfairvalueestimatesaresubjecttochangebasedonthefinalvaluationsthatwillbedeterminedasoftheclosingdateofthemerger.ActualresultswilldifferfromthisunauditedproformacondensedcombinedfinancialinformationonceEnscohasdeterminedthefinalmergerconsiderationandcompletedthevaluationanalysisandcomputationsnecessarytofinalizetherequiredpurchasepriceallocations.Accordingly,thefinalallocationsofmergerconsiderationandtheireffectsonresultsofoperationsmaydiffermateriallyfromthepreliminaryallocationsandunauditedproformacombinedamountsincludedherein.Manyofthesefairvaluemeasurementscanbehighlysubjective,anditispossiblethatotherprofessionals,applyingreasonablejudgmenttothesamefactsandcircumstances,coulddevelopandsupportarangeofalternativeestimatedamounts.
TheunauditedproformacondensedcombinedfinancialstatementsdonotconstitutestatutoryaccountsrequiredbytheCompaniesAct2006,whichfortheyearendedDecember31,2016werepreparedinaccordancewithgenerallyacceptedaccountingprinciplesintheU.K.andweredeliveredtotheRegistrarofCompaniesintheUnitedKingdom.TheU.K.statutoryaccountsincludedanunqualifiedauditor'sreport,whichdidnotcontainanyreferencetomatterstowhichtheauditorsdrewattentionbywayofemphasiswithoutqualifyingthereportoranystatementsunderSection498(2)or498(3)oftheCompaniesAct2006.
TheunauditedproformacondensedcombinedfinancialstatementsshouldbereadinconjunctionwiththehistoricalconsolidatedfinancialstatementsandaccompanyingnotescontainedintheAnnualReportsonForm10-KandQuarterlyReportsonForm10-QofEnscoandAtwood.
Note2—AccountingPolicies
TheunauditedproformafinancialinformationhasbeencompiledinamannerconsistentwiththeaccountingpoliciesofEnscoandAtwood.
Note3—EstimatedMergerConsiderationandAllocation
Underthetermsofthemergeragreement,Atwoodstockholderswillreceive1.60EnscoClassAordinarysharesforeachshareofAtwoodcommonstockforatotalvalueof$8.51pershareofAtwoodcommonstockbasedontheclosingsharepriceof$5.32perEnscoClassAordinaryshareonJuly18,2017.Theestimatedmergerconsiderationof$711millioniscomprisedof83.5millionsharesofAtwoodcommonstock,inclusiveof2.9millionunvestedrestrictedstockandperformanceunitawardsthatvestuponchangeofcontrol,convertedto133.6millionEnscoClassAordinarysharesusingtheexchangeratioof1.60andvaluedat$8.51pershare.ThevalueofthemergerconsiderationwillfluctuatebaseduponchangesinEnsco'ssharepriceandthenumberofAtwoodcommonsharesandequityawardsoutstandingattheclosingdate.
Thetablebelowillustratesthepotentialimpactoftheestimatedmergerconsiderationresultingfroma10%increaseordecreaseinthepriceof$5.32perEnscoClassAordinaryshareasofJuly18,2017.Forpurposesofthiscomputation,thetotalnumberofEnscoClassAordinarysharesissuedwasassumedtobe133.6million,asdescribedabove(inmillions):
UnderGAAP,whenthefairvalueassignedtoacquiredassetsandliabilitiesexceedstheconsiderationtransferredinanacquisition,thedifferenceisreflectedasabargainpurchasegain.The
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10%IncreaseinEnscoshareprice
10%DecreaseinEnscoshareprice
Mergerconsideration 782 640Bargainpurchasegain 347 489
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followingtablesummarizesourestimatedbargainpurchasegaincomputationasofMarch31,2017(inmillions):
Theestimatedfairvalueassignedtoassetsacquiredandliabilitiesassumedexceededtheestimatedconsiderationtransferredresultinginabargainpurchasegainprimarilydueto(1)depressedoffshoredrillingcompanyvaluationsresultinginAtwoodmarketcapitalizationthatwaslowerthantheNetAssetValuecalculatedbyEnscoManagementand(2)thetreatmentofcorporateoverheadcostsinpurchaseaccountingunderGAAP.
Marketcapitalizationsacrosstheoffshoredrillingindustryhavedeclinedsignificantlysincemid-2014duetothedeclineincommoditypricesandtherelatedimbalanceofsupplyanddemandfordrillingrigs.Thisimbalancehasledtosignificantlydepressedmarketcapitalizationsacrosstheoffshoredrillingindustry.
EnscoandAtwood'sstockpricesdeclined88%and85%fromhighsof$55.62and$53.79pershareinmid-2014to$6.70and$8.08pershareonthelasttradingdaypriortoannouncementofthemerger,respectively.EnscoandAtwoodarebothtradingbelowtheNetAssetValuesestimatedbyEnscoManagement.
Theindustrydownturnandcorrespondingdeclineinoffshoredrillingcompanymarketcapitalizationshaveresultedincorporateoverheadcoststhataredisproportionatelyhighwhencomparedtotheirrespectiveenterprisevalues.Thisrelationshipcouldcatalyzeindustryconsolidationactivityduetothehighpotentialfortransactionsthatarevalueaccretivetoshareholdersthroughrealizedsynergies,whichisakeydriverforthistransaction.EnscoManagementestimatesthatongoingcorporateoverheadcostsburdenedAtwood'smarketcapitalizationbyover$700million.
CorporateoverheadcostisnotincludedinthepurchasepriceallocationunderGAAPwhennotdirectlyattributabletothecashflowsoftheacquiredassetsandassumedliabilities.Accordingly,thefairvaluesassignedtoassetsacquiredandliabilitiesassumedinpurchaseaccountingsignificantlyexceedsAtwood'sNetAssetValueestimatedbyEnscoManagement,andtheconsiderationtobetransferred,resultinginabargainpurchasegain.
Note4—ProFormaAdjustments
(a) Short-term investments
Representstheproformaadjustmentstoshort-terminvestmentsasfollows(inmillions):
Theproformaadjustmentsrelatetotheassumedutilizationofshort-terminvestmentstorepayAtwood'srevolvingcreditfacilityand6.5%seniornotesdue2020,inclusiveofaccruedandunpaidinterest.Upontheclosingofthemerger,achangeofcontrolwilloccurundertheindenturegoverning
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Currentassets $ 748Non-currentassets 1,977Totalassetsacquired 2,725Liabilitiesassumed (1,596)Netassetsacquired 1,129Less:Estimatedmergerconsideration (711)Estimatedbargainpurchasegain $ 418
RepaymentofAtwoodrevolvingcreditfacility $ (854)RepaymentofAtwood6.5%seniornotesdue2020 (458)
$ (1,312)
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Atwood's6.5%seniornotesdue2020,andAtwoodwillberequiredtooffertorepurchasealloftheoutstandingseniornotesat101%oftheiroutstandingprincipalamount,plusaccruedandunpaidinterest.AsofMarch31,2017,Atwoodhad$449millioninaggregateprincipalamountofseniornotesoutstanding.
(b) Other current assets
Representstheproformaadjustmentstorecordtheestimatedfairvalueofothercurrentassetsasfollows(inmillions):
TheproformaadjustmenttorecordtheestimatedfairvalueofAtwooddrillingcontractsrepresentstheintangibleassetsrecognizedforfirmdrillingcontractsinplaceattheproformabalancesheetdatethathavefavorablecontracttermsascomparedtocurrentmarketdayratesforcomparabledrillingrigs.Contractsthatareexpectedtoexpirewithin12monthsoftheproformabalancesheetdateareclassifiedascurrent.Thevariousfactorsconsideredintheproformaadjustmentare(1)thecontracteddayrateforeachcontract,(2)theremainingtermofeachcontract,(3)therigclassand(4)themarketconditionsforeachrespectiverigclassattheproformabalancesheetdate.Theintangibleassetsarecomputedbasedonthepresentvalueofthedifferenceincashinflowsovertheremainingcontracttermascomparedtoahypotheticalcontractwiththesameremainingtermatanestimatedcurrentmarketdayrateusingarisk-adjusteddiscountrateandanestimatedeffectiveincometaxrate.Thecomputedamountissubjecttochangebasedoncontractpositionsandmarketconditionsattheclosingdateofthemerger.Thisbalancewillbeamortizedtooperatingrevenuesovertherespectiveremainingcontracttermsonastraight-linebasis.
TheproformaadjustmenttoAtwood'sinventoryadjuststhehistoricalamountstorecordtheestimatedfairvalueofconsumablepartsandsupplies.
TheproformaadjustmentfortheeliminationofAtwood'shistoricaldeferredexpensesassociatedwithcontractdrillingprimarilyrelatestodeferredmobilizationcosts.CostsincurredformobilizationofequipmentandpersonnelpriortothecommencementofdrillingservicesaredeferredandsubsequentlyamortizedbyAtwoodoverthetermoftherelateddrillingcontract.ThesedeferredcostshavenofutureeconomicbenefittoEnscoandareeliminatedfromtheproformafinancialstatements.
(c) Property and equipment, net
Representstheproformaadjustmentstohistoricalamountstorecordtheestimatedfairvalueofpropertyandequipment.
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EstimatedfairvalueofAtwooddrillingcontracts $ 135Incometaxreceivableimpactofcertainproformaadjustments 8AdjustmenttorecordAtwoodinventoryatestimatedfairvalue (24)EliminationofAtwoodhistoricaldebtissuancecosts (3)EliminationofAtwoodhistoricaldeferredexpensesrelatedtocontractdrilling (2)
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(d) Other assets
Representstheproformaadjustmentstorecordtheestimatedfairvalueofotherassetsasfollows(inmillions):
TheproformaadjustmenttorecordtheestimatedfairvalueofAtwooddrillingcontractsrepresentstheintangibleassetsrecognizedforfirmlong-termdrillingcontractsinplaceattheproformabalancesheetdatethathavefavorablecontracttermsascomparedtocurrentmarketdayratesforcomparabledrillingrigs.Contractsthatareexpectedtoexpirebeyond12monthsfromtheproformabalancesheetdateareclassifiedasnon-current.Thevariousfactorsconsideredintheproformaadjustmentare(1)thecontracteddayrateforeachcontract,(2)theremainingtermofeachcontract,(3)therigclassand(4)themarketconditionsforeachrespectiverigclassattheproformabalancesheetdate.Theintangibleassetsarecomputedbasedonthepresentvalueofthedifferenceincashinflowsovertheremainingcontracttermascomparedtoahypotheticalcontractwiththesameremainingtermatanestimatedcurrentmarketdayrateusingarisk-adjusteddiscountrateandanestimatedeffectiveincometaxrate.Thecomputedamountissubjecttochangebasedoncontractpositionsandmarketconditionsattheclosingdateofthemerger.Thisbalancewillbeamortizedtooperatingrevenuesovertherespectiveremainingcontracttermsonastraight-linebasis.
TheproformaadjustmentfortheeliminationofAtwood'shistoricaldeferredexpensesassociatedwithcontractdrillingprimarilyrelatestodeferredmobilizationcosts.CostsincurredformobilizationofequipmentandpersonnelpriortothecommencementofdrillingservicesaredeferredandsubsequentlyamortizedbyAtwoodoverthetermoftherelateddrillingcontract.ThesedeferredcostshavenofutureeconomicbenefittoEnscoandareeliminatedfromtheproformafinancialstatements.
(e) Accounts payable and accrued liabilities and other
Representstheproformaadjustmentstorecordtheestimatedfairvalueofcurrentliabilitiesasfollows(inmillions):
TheproformaadjustmentforchangeincontrolprovisionsonAtwoodbenefitplansrelatestotheadditionalliabilitythatwillbeincurredforestimatedcashseverancepaymentsuponachangeincontrolforbenefitspayabletoexecutivesandotherkeyAtwoodemployeesasaresultofpre-existingemployeearrangements.
TheproformaadjustmenttoeliminateAtwood'shistoricaldeferredrevenuesareprimarilyrelatedtomobilizationrevenuesthatwerepreviouslypaidbyacustomerascompensationtomobilizearigtothedrillinglocation.SuchpaymentsaredeferredandsubsequentlyamortizedbyAtwoodovertheterm
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EstimatedfairvalueofAtwooddrillingcontracts $ 39Deferredtaximpactofcertainproformaadjustments 11EliminationofAtwoodhistoricaldebtissuancecosts (4)EliminationofAtwoodhistoricaldeferredexpensesrelatedtocontractdrilling (3)
$ 43
EstimatedAtwoodtransactioncosts $ 25EstimatedEnscotransactioncosts 18ChangeincontrolprovisionsonAtwoodbenefitplans 8EliminationofaccruedinterestfromrepaymentofAtwooddebt (9)EliminationofAtwoodhistoricaldeferredrevenuesanddeferredrent (2)
$ 40
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oftherelateddrillingcontract.ThedeferredrevenuedoesnotrepresentcontractualobligationsofAtwoodandareeliminatedfromtheproformafinancialstatements.
(f) Long-term debt
RepresentstheproformaadjustmentsrelatedtotherepaymentofAtwood'shistoricaldebtasfollows(inmillions):
TheproformaadjustmentsrelatetotheassumedrepaymentofAtwood'srevolvingcreditfacilityand6.5%seniornotesdue2020uponclosingofthemergerasaresultofcertainchangeofcontrolprovisionsineachdebtagreement.
(g) Other liabilities
Representstheproformaadjustmentstorecordtheestimatedfairvalueofotherliabilitiesasfollows(inmillions):
TheproformaadjustmentfortheestimatedfairvalueofAtwooddrillshipconstructioncontractsrelatestoanunfavorableconstructioncontractliabilityrecordedasaresultofcomparingthefirmobligationsfortheremainingconstructioncontractstoestimatedcurrentmarketratesfortheconstructionofasimilardesigndrillingrig.Theunfavorableconstructioncontractliabilityiscomputedbasedonthepresentvalueofthedifferenceofthecashoutflowsfortheremainingcontractualpaymentsascomparedtoahypotheticalcontractwiththesameremainingcontractualpaymentsatcurrentmarketratesusingarisk-adjusteddiscountrateandestimatedeffectiveincometaxrate.
TheproformaadjustmenttorecordtheestimatedfairvalueofAtwooddrillingcontractsrepresentstheintangibleliabilitiesrecognizedforfirmlong-termdrillingcontractsinplaceattheproformabalancesheetdatethathaveunfavorablecontracttermsascomparedtocurrentmarketdayratesforcomparabledrillingrigs.Thevariousfactorsconsideredintheproformaadjustmentare(1)thecontracteddayrateforeachcontract,(2)theremainingtermofeachcontract,(3)therigclassand(4)themarketconditionsforeachrespectiverigclassattheproformabalancesheetdate.Theintangibleliabilitiesarecomputedbasedonthepresentvalueofthedifferenceincashinflowsovertheremainingcontracttermascomparedtoahypotheticalcontractwiththesameremainingtermatanestimatedcurrentmarketdayrateusingarisk-adjusteddiscountrateandanestimatedeffectiveincometaxrate.Thecomputedamountissubjecttochangebasedoncontractpositionsandmarketconditionsattheclosingdateofthemerger.Thisbalancewillbeamortizedtooperatingrevenuesovertheremainingcontracttermsonastraight-linebasis.
TheproformaadjustmenttoeliminateAtwood'shistoricaldeferredrevenuesareprimarilyrelatedtomobilizationrevenuesthatwerepreviouslypaidbyacustomerascompensationtomobilizearigtothedrillinglocation.SuchpaymentsaredeferredandsubsequentlyamortizedbyAtwoodovertheterm
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RepaymentofAtwoodrevolvingcreditfacility $ (850)RepaymentofAtwood6.5%seniornotesdue2020 (448)
$ (1,298)
EstimatedfairvalueofAtwooddrillshipconstructioncontracts $ 171Deferredtaximpactofcertainproformaadjustments 6EstimatedfairvalueofAtwooddrillingcontracts 2EliminationofAtwoodhistoricaldeferredrevenuesanddeferredrent (11)EliminationofAtwoodhistoricalamountsaccruedforretentionawards (3)
$ 165
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oftherelateddrillingcontract.ThedeferredrevenuedoesnotrepresentcontractualobligationsofAtwoodandareeliminatedfromtheproformafinancialstatements.
Theproformaadjustmentfortheaccruedretentionbonuseliminatesthehistoricalaccruedliabilityassociatedwiththetime-vestedcomponentofcash-basedretentionawardsgrantedtoexecutivesandotherkeyAtwoodemployees.Theretentionawardsbecomefullyvesteduponachangeofcontrolandarethereforereflectedintheproformaadjustmentstoaccountspayableandaccruedliabilitiesandother.
(h) Total equity
Representstheproformaadjustmentstototalequityasfollows(inmillions):
(i) Operating revenues
RepresentstheproformaadjustmentsfortheamortizationofintangibleassetsandliabilitiesassociatedwiththeestimatedfairvalueofAtwooddrillingcontracts.
(j) Depreciation
RepresentstheproformaadjustmentsfordepreciationofAtwood'spropertyandequipment.Atwood'spropertyandequipmentconsistsprimarilyofdrillingrigsandrelatedequipment.TheproformadepreciationadjustmentsrelatetotheproformaadjustmenttorecordtheestimatedfairvalueofAtwood'sdrillingrigsandrelatedequipmentafterconformingdepreciablelivesandsalvagevaluesandcomputingdepreciationusingthestraight-linemethod.EnscoestimatedremainingusefullivesforAtwood'sdrillingrigsrangedfrom16to35yearsbasedonoriginalestimatedusefullivesof30yearsto35years.
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EliminationofAtwood'shistoricalstockholders'equity $ (3,401)Enscoshareconsiderationrecordedascapitalinexcessofparvalue 698Estimatedbargainpurchasegain(1) 418Enscosharesissuedasmergerconsideration,parvalue 13EstimatedEnscotransactioncosts (18)
$ (2,290)
(1) TheestimatedbargainpurchasegainisinclusiveofAtwood'sestimatedtransactioncostsof$25millionand$5millionlossontherepaymentofAtwood's6.5%seniornotesdue2020asthesechargesareincludedinthepreliminaryestimatedfairvalueofthenetassetsacquired.
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(k) Other income (expense), net
RepresentstheproformaadjustmentsrelatedtotheeliminationofAtwood'shistoricaldebtforthequarterendedMarch31,2017andyearendedDecember31,2016asfollows(inmillions):
(l) Weighted-average shares outstanding
RepresentstheproformaadjustmentforEnscosharestobeissuedtoAtwoodshareholders.Underthemergeragreement,83.5millionsharesofAtwoodcommonstock,inclusiveof2.9millionunvestedrestrictedstockandperformanceunitawardsthatvestuponchangeofcontrol,willbeconvertedto133.6millionEnscoClassAordinarysharesusingtheexchangeratioof1.60EnscoClassAordinarysharesforeachshareofAtwoodcommonstock.
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ThreeMonthsEnded
March31,2017
YearEndedDecember31,
2016 EliminationofinterestexpenseforrepaymentofAtwoodoutstandingdebt $ 14 $ 69AdditionalEnscointerestcapitalizedfromacquiringrigsunderconstruction 7 28EliminationofinterestincomeearnedbyEnscoonshort-terminvestmentsusedtoredeemAtwoodoutstandingdebt $ (3) $ (11)
$ 18 $ 86
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MATERIALUNITEDSTATESFEDERALINCOMETAXCONSEQUENCESOFTHEMERGER
ThefollowingdiscussionisasummaryofthematerialU.S.federalincometaxconsequencesofthemergertoU.S.holdersandnon-U.S.holders(eachasdefinedbelow)ofsharesofAtwoodcommonstockandoftheownershipanddispositionoftheEnscoClassAordinarysharesreceivedbysuchholdersupontheconsummationofthemerger.ThediscussionisbasedonandsubjecttotheInternalRevenueCode,theU.S.TreasuryRegulationspromulgatedthereunder,administrativeguidanceandcourtdecisionsasofthedatehereof,allofwhicharesubjecttochange,possiblywithretroactiveeffect,andtodifferinginterpretations.ThediscussionassumesthatAtwoodshareholdersholdtheirsharesofAtwoodcommonstock,andwillholdtheirEnscoClassAordinaryshares,as"capitalassets"withinthemeaningofSection1221oftheInternalRevenueCode(generally,propertyheldforinvestment).Thediscussiondoesnotconstitutetaxadviceanddoesnotaddresslocalorforeigntaxconsequencesofthemerger;nordoesitaddressallaspectsofU.S.federalincometaxationthatmayberelevanttoparticularAtwoodshareholdersorEnscoshareholdersinlightoftheirpersonalcircumstances,includinganytaxconsequencesarisingundertheMedicarecontributiontaxonnetinvestmentincome,ortosuchshareholderssubjecttospecialtreatmentundertheInternalRevenueCode,suchas:
• banks,thrifts,mutualfunds,insurancecompaniesandotherfinancialinstitutions;
• realestateinvestmenttrustsandregulatedinvestmentcompanies;
• tradersinsecuritieswhoelecttoapplyamark-to-marketmethodoftaxaccounting;
• brokersordealersinsecuritiesorforeigncurrency;
• tax-exemptorganizations,pensionfundsorgovernmentalorganizations;
• individualretirementandotherdeferredaccounts;
• U.S.holderswhosefunctionalcurrencyisnottheU.S.dollar;
• U.S.expatriatesandformercitizensorlong-termresidentsoftheUnitedStates;
• "passiveforeigninvestmentcompanies"("PFICs")or"controlledforeigncorporations,"andcorporationsthataccumulateearningstoavoidU.S.federalincometax;
• personssubjecttothealternativeminimumtax;
• stockholderswhoholdtheirsharesaspartofastraddle,hedging,conversion,constructivesaleorotherriskreductiontransaction;
• "Scorporations,"partnershipsorotherentitiesorarrangementsclassifiedaspartnershipsforU.S.federalincometaxpurposesorotherpass-throughentities(andinvestorstherein);
• grantortrusts;
• stockholderswhoreceivedtheirsharesthroughtheexerciseofemployeestockoptions,ascompensation,throughatax-qualifiedretirementplanorinconnectionwiththeperformanceofservices;and
• personswhoown(directlyorthroughattribution)10%ormore(byvoteorvalue)oftheoutstandingEnscoClassAordinaryshares.
NorulingsareintendedtobesoughtfromtheIRSwithrespecttothemergerandtherecanbenoassurancethattheIRSoracourtwillnottakeacontrarypositionregardingthetaxconsequencesdescribedherein.
Forpurposesofthisdiscussion,a"U.S.holder"isabeneficialownerofsharesofAtwoodcommonstockwhois,forUSfederalincometaxpurposes:(i)anindividualwhoisacitizenorresidentoftheUnitedStates;(ii)acorporationorotherentitytaxableasacorporationcreatedororganizedunderthe
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lawsoftheUnitedStatesoranyofitspoliticalsubdivisions;(iii)anestatethatissubjecttoUSfederalincometaxonitsincomeregardlessofitssource;or(iv)atrust(A)ifaU.S.courtisabletoexerciseprimarysupervisionoveritsadministrationandoneormoreU.S.personshavetheauthoritytocontrolallsubstantialdecisionsofthetrustor(B)thathasmadeavalidelectiontobetreatedasaU.S.personforU.S.federalincometaxpurposes.
A"non-U.S.holder"meansabeneficialownerofsharesofAtwoodcommonstockorEnscoClassAordinaryshares,asthecasemaybe,whoisneitheraU.S.holdernorapartnership(orotherentitytreatedasapartnershipforU.S.federalincometaxpurposes).
Thisdiscussiondoesnotaddressthetaxtreatmentofpartnerships(orentitiesorarrangementsthataretreatedaspartnershipsforU.S.federalincometaxpurposes)orpersonsthatholdtheirsharesofAtwoodcommonstockthroughpartnershipsorotherpass-throughentitiesforU.S.federalincometaxpurposes.Ifapartnership,includinganyentityorarrangementtreatedasapartnershipforU.S.federalincometaxpurposes,holdssharesofAtwoodcommonstock,theU.S.federalincometaxtreatmentofapartnerinsuchpartnershipwillgenerallydependuponthestatusofthepartnerandtheactivitiesofthepartnership.Suchpartnersandpartnershipsshouldconsulttheirowntaxadvisorsregardingtheparticulartaxconsequencesofthemergertothem.
EachAtwoodshareholdershouldconsultitstaxadvisorwithrespecttotheparticulartaxconsequencesofthemergertosuchholder.
TaxConsequencesoftheMergertoAtwoodandEnsco
NeitherAtwoodnorEnscoisexpectedtobesubjecttoU.S.federalincometaxasaresultofthemerger.Inconjunctionwiththemerger,Atwood,Enscoandtheirrespectiveaffiliateswillengageincertainadditionalintercompanytransactions.ThediscussionhereindoesnotaddresstheU.S.federalincometaxtreatmentofsuchtransactions.
Afterthemerger,EnscoisexpectedtocontinuetobetreatedasaforeigncorporationforU.S.federalincometaxpurposes.However,asdescribedfurtherbelow,itispossiblethattheIRSwilldisagreewiththisconclusion.ShouldtheIRSconcludethatEnscoisproperlytreatedasaU.S."domestic"corporationforU.S.federalincometaxpurposesasaresultofthemerger(andsuchconclusionisnotoverturned),EnscowouldbesubjecttotaxonitsworldwideincomeatU.S.taxrates,andwouldbesubjecttootherprovisionsoftheU.S.taxregime,includingwithrespecttoEnscosubsidiariesthatwouldbetreatedas"controlledforeigncorporations"forU.S.taxpurposes.Also,certainpaymentsmadebyEnscotoforeignshareholders,includingdividendpayments,wouldbesubjecttoU.S.withholdingtaxatastatutoryrateof30%unlessreducedoreliminatedbyapplicabletreaty.
ForU.S.federalincometaxpurposes,acorporationisgenerallyconsidereda"domestic"corporation(orU.S.taxresident)ifitisorganizedintheUnitedStatesorunderthelawsoftheUnitedStatesorofanystateorpoliticalsubdivisiontherein,andisgenerallyconsidereda"foreign"corporation(ornon-U.S.resident)ifitisnotconsideredadomesticcorporation.BecauseEnscoisanentityincorporatedinEnglandandWales,itwouldgenerallybeconsideredaforeigncorporation(and,therefore,anon-U.S.taxresident)undertheserules.
UnderSection7874oftheInternalRevenueCode,unlesstheSubstantialBusinessActivitiesExceptionissatisfied,EnscowouldbetreatedasaU.S.domesticcorporation(thatis,asaU.S.taxresident)forU.S.federalincometaxpurposesiftheSection7874Percentageis80%ormore.
InorderforEnscotosatisfytheSubstantialBusinessActivitiesException,atleast25%oftheemployees(byheadcountandcompensation),realandtangibleassetsandgrossincomeoftheEnscoexpandedaffiliatedgroupmustbebased,locatedandderived,respectively,inthecountryinwhich
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Enscoisataxresidentafterthemerger.TheSubstantialBusinessActivitiesExceptionisnotexpectedtobesatisfied.
Inaddition,followingthemerger,Section7874oftheInternalRevenueCodecouldlimittheabilityofAtwoodanditsU.S.affiliatestouseU.S.taxattributes(includingnetoperatinglossesandcertaintaxcredits)tooffsetU.S.taxableincomeresultingfromcertaintransactionsiftheSection7874Percentageisatleast60%(butlessthan80%).
TheSection7874Percentageiscurrentlyexpectedtobelessthan60%.ThecalculationoftheSection7874Percentage,however,iscomplex,iscalculatedbasedonthefactsasoftheEffectiveTime,issubjecttodetailedregulations(theapplicationofwhichisuncertaininvariousrespects),andissubjecttofactualuncertainties.Further,therulesfordeterminingtheSection7874Percentagearesubjecttochange,possiblywithretroactiveeffect.
Forexample,theSection7874Percentagemaybeaffectedbytheamountofany"non-ordinarycoursedistributions"paidbyAtwoodtoitsshareholdersineachofthethree12-monthperiodspriortotheEffectiveTime.AsdefinedbyapplicableTreasuryRegulations,the"non-ordinarycoursedistributions"paidbyAtwoodwouldbeequaltotheexcessofalldistributions,includingdividendsandstockrepurchases,madeduringaparticular12-monthperiodbyAtwoodwithrespecttotheAtwoodstockover110%oftheaverageofsuchdistributionsduringthe36-monthperiodimmediatelyprecedingsuch12-monthperiod.TheamountofanysuchexcesswouldthenincreasethevalueofAtwoodforpurposesofcalculatingtheSection7874Percentage.
FluctuationsinthevalueofsharesofAtwoodcommonstockandEnscoClassAordinarysharesandassetsbetweenthetimeoftheexecutionofthemergeragreementandtheEffectiveTimemayalsoaffecttheSection7874Percentage.
Aftertakingintoaccounttheadjustmentsdescribedabove,theSection7874Percentageiscurrentlyexpectedtobelessthan60%(asmeasuredbyvoteandvalue).Asdiscussedabove,iftheSection7874Percentagewere80%ormore,EnscowouldbetreatedasaU.S.domesticcorporation(thatis,asaU.S.taxresident)forU.S.federalincometaxpurposes.Accordingly,followingthemerger,EnscoisexpectedtobetreatedasaforeigncorporationforU.S.federalincometaxpurposes,andtheremainderofthisdisclosureassumessuchtreatment.
TaxConsequencesoftheMergertoAtwoodShareholders
Tax Consequences to U.S. Holders
SubjecttothediscussionbelowrelatingtoSection304oftheInternalRevenueCode,thereceiptofEnscoClassAordinarysharespursuanttothemergershouldbeataxableexchangeforU.S.federalincometaxpurposes.Assumingsuchtreatment,aU.S.holdergenerallywillrecognizegainorlossequaltothedifferencebetween(i)thefairmarketvalueoftheEnscoClassAordinarysharesreceivedasconsiderationinthemergeronthedateoftheexchangeand(ii)theU.S.holder'sadjustedtaxbasisinitssharesofAtwoodcommonstocksurrenderedinthemerger.AU.S.holder'sadjustedbasisinitssharesofAtwoodcommonstockwillgenerallyequalsuchholder'spurchasepriceforsuchshares,asadjustedtotakeintoaccountstockdividends,certainnon-dividenddistributions,stocksplitsandsimilartransactions.
AU.S.holder'sgainorlossontheexchangeofsharesofAtwoodcommonstockforEnscoClassAordinarysharesinthemergergenerallywillbeacapitalgainorlossandwillgenerallybelong-termcapitalgainorlossiftheU.S.holderhasheldthesharesofAtwoodcommonstocksurrenderedintheexchangeformorethanoneyearasofthedateofthemerger.Long-termcapitalgainofanon-corporateU.S.holdercurrentlyissubjecttoamaximumU.S.federalincometaxrateof20%.Ifanon-corporateU.S.holderdoesnotqualifyforlong-termcapitalgaintreatment,anygain
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currentlyissubjecttoamaximumU.S.federalincometaxrateof39.6%.Thedeductibilityofcapitallossesissubjecttolimitations.
AnysuchgainorlossrecognizedbyaU.S.holderwillbetreatedasU.S.sourcegainorloss.IfaU.S.holderacquireddifferentblocksofsharesofAtwoodcommonstockatdifferenttimesanddifferentprices,suchholdermustdetermineitsadjustedtaxbasisandholdingperiodseparatelywithrespecttoeachblockofsharesofAtwoodcommonstock.
U.S.holdersareurgedtoconsulttheiradvisorsastotheparticularconsequencesofthereceiptofEnscoClassAordinarysharesforsharesofAtwoodcommonstockpursuanttothemerger.
Potential Application of Section 304 of the Internal Revenue Code to U.S. Holders
Notwithstandingthediscussionabove,thereceiptofEnscoClassAordinarysharesbyAtwoodshareholdersinthemergermaybesubjecttoSection304oftheInternalRevenueCode.Section304couldcausetheentireamountoftheEnscoClassAordinarysharesreceivedbyaholdertobetreatedasadividendregardlessofthegainrealizedonthemerger.IfSection304applies,themergerconsiderationreceivedbyaU.S.holderwillbetreatedastheproceedsofaredemptionofstockdeemedissuedbyAtwood.Thisdeemedredemptionwillbetreatedasadistribution,unlessthedeemedredemptionis"substantiallydisproportionate"or"notessentiallyequivalenttoadividend"withrespecttoaparticularholder,inwhichcasethedeemedredemptionwillbetreatedasasaleorexchangeofshares.Asaresult,insteadofrecognizingtaxablegainorlossasdescribedabove,aholderofsharesofAtwoodcommonstockwhosepercentageownershipinterestinEnscoimmediatelyafterthemergerisnotlowerthanitspercentageownershipinterestinAtwoodpriortothemergerbyanamountthatsatisfiesthe"substantiallydisproportionate"or"notessentiallyequivalenttoadividend"testdescribedbelow,wouldrecognizedividendincomeinanamountuptothefairmarketvalueoftheEnscoClassAordinarysharesreceivedinthemerger.
Thedeemedredemptiongenerallywillbe"substantiallydisproportionate"withrespecttoaholderifthepercentagedescribedin(2)belowislessthan80%ofthepercentagedescribedin(1)below.Whetherthedeemedredemptionis"notessentiallyequivalenttoadividend"withrespecttoaholderwilldependupontheholder'sparticularcircumstances.Ataminimum,however,forthedeemedredemptiontobe"notessentiallyequivalenttoadividend,"thedeemedredemptionmustresultina"meaningfulreduction"intheholder'sdeemedpercentagestockownershipofAtwood.Ingeneral,thatdeterminationrequiresacomparisonof(1)thepercentageoftheoutstandingsharesofAtwoodstockthattheholderisdeemedactuallyandconstructivelytohaveownedimmediatelybeforethedeemedredemptionand(2)thepercentageoftheoutstandingsharesofAtwoodstockthatisconstructivelyowned(throughactualandconstructiveownershipofEnscoafterthemerger)bytheholderimmediatelyafterthedeemedredemption.TheIRShasindicatedinarevenuerulingthataminoritystockholderinapubliclytradedcorporationwillexperiencea"meaningfulreduction"iftheminoritystockholder(i)hasaminimalpercentagestockinterest,(ii)exercisesnocontrolovercorporateaffairsand(iii)experiencesanyreductioninitspercentagestockinterest.Inapplyingtheabovetests,aholdermay,undertheconstructiveownershiprules,bedeemedtoownstockthatisownedbyotherpersonsorstockunderlyingaholder'soptiontopurchasestockinadditiontothestockactuallyownedbytheholder.ProvidedthatanAtwoodshareholderownsaminimalpercentageoftheoutstandingsharesofAtwoodcommonstockandexercisesnocontroloverAtwood'scorporateaffairs,itisexpectedthatanyreductioninthepercentageofoutstandingsharesofAtwoodcommonstocktreatedasowned(includingundertheattributionrules)byashareholderwillcausethemergertobetaxableasasaleorexchange.WestronglyencourageallU.S.holderstoconsulttheirowntaxadvisorswithrespecttotheapplicationofSection304inlightoftheirparticularcircumstances.
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AdistributionsubjecttoSection304oftheInternalRevenueCodewillbetaxableasadividendtoaU.S.holdertotheextentofsuchU.S.holder'sallocableshareoftherelevantcurrentoraccumulatedearningsandprofits.
Whilethereisnocontrollingauthority,assumingcertainholdingperiodrequirementsaresatisfied,areducedU.S.federalincometaxrateshouldbeavailableforadividendthatanon-corporateU.S.holderisdeemedtoreceiveunderSection304.TotheextentthatacorporateU.S.holderofsharesofAtwoodcommonstockistreatedashavingreceivedadividendasaresultofSection304,suchdividendmaybeeligibleforadividendsreceiveddeduction(subjecttocertainrequirementsandlimitations)andmaybesubjecttothe"extraordinarydividend"provisionsoftheInternalRevenueCode.
TheportionofthedeemeddistributionnotpaidoutoftherelevantcurrentoraccumulatedearningsandprofitswillbeappliedagainstsuchU.S.holder'sadjustedtaxbasisinitssharesofAtwoodcommonstockimmediatelybeforethemergerandthereafterwillbetreatedasgainfromthesaleofsuchU.S.holder'ssharesofAtwoodcommonstock.
IfthedistributionunderSection304istaxableasasaleorexchangetoaU.S.holder,theresultsforsuchU.S.holdershouldbesimilartothosedescribedunder"—TaxConsequencestoU.S.Holders"above.
Section304andtheU.S.TreasuryRegulationsandguidancethereunderarecomplex,andtheirapplicationtothemergerisunclear.U.S.holdersthatactuallyorconstructivelyownbothsharesofAtwoodcommonstockandEnscoClassAordinaryshares,orthatpurchaseorsellEnscoClassAordinarysharesinconnectionwiththemerger,shouldconsulttheirtaxadvisorswithrespecttotheapplicationofSection304inlightoftheirparticularcircumstances(includingastotheirtaxbasisinthesharessubjecttoSection304).U.S.holdersofsharesofAtwoodcommonstockthatalsoownEnscoClassAordinarysharesshouldconsulttheirtaxadvisorsregardingthepossibledesirabilityofsellingtheirsharesineitherAtwoodorEnscopriortocompletionofthemergerorinEnscoafterthemerger.
Tax Consequences to Non-U.S. Holders
SubjecttothediscussionsbelowrelatingtobackupwithholdingandthepotentialapplicationofSection304oftheInternalRevenueCode,anon-U.S.holdergenerallyshouldnotbesubjecttoU.S.federalincometaxonanygainrecognizedinthemerger,unless:
• thegainiseffectivelyconnectedwiththenon-U.S.holder'sconductofatradeorbusinesswithintheUnitedStates(and,ifrequiredbyanapplicableincometaxtreaty,thenon-U.S.holdermaintainsapermanentestablishmentintheUnitedStatestowhichsuchgainisattributable);
• thenon-U.S.holderisanonresidentalienindividualpresentintheUnitedStatesfor183daysormoreduringthetaxableyearofthedispositionandcertainotherrequirementsaremet;or
• sharesofAtwoodcommonstockconstituteU.S.realpropertyinterests("USRPIs")byreasonofAtwood'sstatusasaU.S.realpropertyholdingcorporation("USRPHC")forU.S.federalincometaxpurposes.
GaindescribedinthefirstbulletpointabovegenerallywillbesubjecttoU.S.federalincometaxonanetincomebasisattheregulargraduatedrates.Anon-U.S.holderthatisatreatedasacorporationforU.S.federalincometaxpurposesalsomaybesubjecttoabranchprofitstaxatarateof30%(orsuchlowerratespecifiedbyanapplicableincometaxtreaty)onsucheffectivelyconnectedgain,asadjustedforcertainitems.
GaindescribedinthesecondbulletpointabovewillbesubjecttoU.S.federalincometaxatarateof30%(orsuchlowerratespecifiedbyanapplicableincometaxtreaty),whichmaybeoffsetbyU.S.sourcecapitallossesofthenon-U.S.holder(eventhoughtheindividualisnotconsideredaresidentof
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theUnitedStates),providedthenon-U.S.holderhastimelyfiledU.S.federalincometaxreturnswithrespecttosuchlosses.
Withrespecttothethirdbulletpointabove,webelieveAtwoodcurrentlyisnot,anddonotanticipateitbecoming,aUSRPHCpriortotheEffectiveTime.BecausethedeterminationofwhetherAtwoodisaUSRPHCdependsonthefairmarketvalueofitsUSRPIsrelativetothefairmarketvalueofitsnon-U.S.realpropertyinterestsandotherbusinessassets,therecanbenoassurancethatAtwoodiscurrentlynotaUSRPHCorwillnotbecomeonepriortotheEffectiveTime.EvenifAtwoodisorweretobecomeaUSRPHCpriortotheEffectiveTime,anon-U.S.holder'sgainarisingfromthemergershouldnotbesubjecttoU.S.federalincometaxifsharesofAtwoodcommonstockare"regularlytraded,"asdefinedbyapplicableTreasuryRegulations,onanestablishedsecuritiesmarket,andsuchnon-U.S.holderowned,actuallyandconstructively,5%orlessoftheoutstandingsharesofAtwoodcommonstockthroughouttheshorterofthefive-yearperiodendingonthedateofthemergerorthenon-U.S.holder'sholdingperiod.
Potential Application of Section 304 of the Internal Revenue Code to Non-U.S. Holders
Asdiscussedaboveunder"—PotentialApplicationofSection304oftheInternalRevenueCodetoU.S.Holders,"receiptofEnscoClassAordinarysharesmaybetreatedasadistributiontoanon-U.S.holderandadividendtoanon-U.S.holdertotheextentofsuchnon-U.S.holder'sallocableshareoftherelevantcurrentoraccumulatedearningsandprofits.Anysuchconsiderationtreatedasadividendthatispaidtoorfortheaccountofanon-U.S.holdergenerallywillbesubjecttoU.S.federalwithholdingtaxattherateof30%(orsuchlowerratespecifiedbyanapplicabletaxtreatyifthenon-U.S.holderprovidesthedocumentationrequiredtoclaimbenefitsundersuchtaxtreatytotheapplicablewithholdingagent).
Notwithstandingtheabove,ifadividendiseffectivelyconnectedwiththeconductofatradeorbusinessintheUnitedStatesbyanon-U.S.holder(and,ifrequiredbyanapplicableincometaxtreaty,isattributabletoaU.S."permanentestablishment"ofsuchnon-U.S.holder),suchdividendgenerallywillnotbesubjecttoU.S.federalwithholdingtaxifsuchnon-U.S.holderprovidestheappropriatedocumentationtotheapplicablewithholdingagent.Instead,suchnon-U.S.holdergenerallywillbesubjecttoU.S.federalincometaxonsuchdividendinsubstantiallythesamemannerasaU.S.holder(exceptasotherwiseprovidedbyanapplicabletaxtreaty).Anon-U.S.holderthatisacorporationalsomaybesubjecttoabranchprofitstaxequalto30%(orsuchlowerratespecifiedbyanapplicabletaxtreaty)ofitseffectivelyconnectedearningsandprofitsforthetaxableyear,asadjustedforcertainitems.
GiventheuncertaintysurroundingtheapplicationofSection304tothemergerandthetreatmentofanyparticularnon-U.S.holder,abrokerorotherapplicablewithholdingagentmaytreattheEnscoClassAordinarysharesreceivedbyanon-U.S.holderassubjecttoU.S.federalwithholdingtaxattherateof30%initsentirety(regardlessoftheamountofearningsandprofits),unlesssuchnon-U.S.holdercanestablishthatareducedrateforsuchwithholdingoranexemptionapplies.Dependingonthecircumstances,thebroker(orotherapplicablewithholdingagent)mayobtainthefundsnecessarytoremitanysuchwithholdingtaxbyaskingthenon-U.S.holdertoprovidethefunds,byusingfundsinthenon-U.S.holder'saccountwiththebrokerorbyselling(onthenon-U.S.holder'sbehalf)alloraportionoftheEnscoClassAordinaryshares.Suchawithholdingtaxwouldnotapplyifanon-U.S.holdersolditssharesofAtwoodcommonstockpriortothemerger.Westronglyencourageallnon-U.S.holderstoconsulttheirtaxadvisorswithrespecttotheadvisabilityofsellingtheirsharesofAtwoodcommonstock.
TherulesofSection304arecomplex,andallnon-U.S.holdersshouldconsulttheirtaxadvisorswithrespecttotheapplicabilityofSection304tothemerger.
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TaxConsequencesofHoldingEnscoClassAOrdinarySharestoU.S.Holders
Taxation of Distributions to U.S. Holders
DistributionswithrespecttoEnscoClassAordinaryshareswillbetreatedasadividendtoU.S.holderstotheextentthattheyarepaidoutofEnsco'scurrentoraccumulatedearningsandprofits,asdeterminedunderU.S.federalincometaxprinciples.Thedividendincomewillbetreatedasforeignsource,passiveincomeforforeigntaxcreditlimitationpurposes.SubjecttothefollowingdiscussionofspecialrulesapplicabletoPFICs,thegrossamountofthedividendspaidbyEnscotoU.S.holdersmaybeeligiblefortaxationatlowerrates.ThemaximumU.S.federalincometaxrateimposedondividendsreceivedbynon-corporateU.S.holdersfromcertain"qualifiedforeigncorporations"iscurrently20%,providedthatcertainholdingperiodrequirementsaresatisfiedandcertainotherrequirementsaremet.DividendspaidwithrespecttostockofaforeigncorporationwhichisreadilytradableonanestablishedsecuritiesmarketintheUnitedStateswillbetreatedashavingbeenreceivedfroma"qualifiedforeigncorporation."TheU.S.TreasuryandtheIRShavedeterminedthatcommonstockisconsideredreadilytradableonanestablishedsecuritiesmarketifitislistedonanestablishedsecuritiesmarketintheUnitedStates,suchastheNYSE.Accordingly,dividendsreceivedbynon-corporateU.S.holdersshouldbeeligibleforfavorabletreatmentasdividendsreceivedwithrespecttostockofa"qualifiedforeigncorporation."DividendspaidbyEnscowillnotqualifyforthedividendsreceiveddeductionotherwiseavailabletocorporatestockholders.
TotheextentthattheamountofanydistributionexceedsEnsco'scurrentandaccumulatedearningsandprofitsforataxableyear,theexcesswillfirstbetreatedasatax-freereturnofcapital,causingareductionintheU.S.holder'sadjustedtaxbasisinU.S.holder'sEnscoClassAordinaryshares.Thebalanceoftheexcess,ifany,willbetreatedasgainfromthesaleofsuchU.S.holder'sEnscoClassAordinaryshares,asdescribedbelowunder"—Sale,ExchangeorOtherTaxableDispositionbyU.S.Holders."
ItispossiblethatEnscois,oratsomefuturetimewillbe,atleast50%ownedbyU.S.persons.Dividendspaidbyaforeigncorporationthatisatleast50%ownedbyU.S.personsmaybetreatedasU.S.sourceincome(ratherthanforeignsourceincome)forforeigntaxcreditpurposestotheextenttheforeigncorporationhasmorethananinsignificantamountofU.S.sourceincome.TheeffectofthisrulemaybetotreataportionofanydividendspaidbyEnscoasU.S.sourceincome.TreatmentofthedividendsasU.S.sourceincomeinwholeorinpartmaylimitaU.S.holder'sabilitytoclaimaforeigntaxcreditwithrespecttoforeigntaxespayableordeemedpayableinrespectofthedividendsorotheritemsofforeignsource,passiveincomeforU.S.federalforeigntaxcreditlimitationpurposes.TheInternalRevenueCodepermitsaU.S.holderentitledtobenefitsundertheU.K.-U.S.IncomeTaxTreatytoelecttotreatanycompanydividendsasforeignsourceincomeforforeigntaxcreditpurposesifthedividendincomeisseparatedfromotherincomeitemsforpurposesofcalculatingtheU.S.holder'sforeigntaxcredit.U.S.holdersshouldconsulttheirowntaxadvisorsaboutthedesirabilityandmethodofmakingsuchanelection.
Sale, Exchange or Other Taxable Disposition by U.S. Holders
SubjecttothefollowingdiscussionofspecialrulesapplicabletoPFICs,aU.S.holderwillrecognizetaxablegainorlossonthesale,exchangeorothertaxabledispositionofEnscoClassAordinarysharesinanamountequaltothedifferencebetweentheamountrealizedonsuchtaxabledispositionandtheU.S.holder'sadjustedtaxbasisintheEnscoClassAordinaryshares,ineachcaseasdeterminedinU.S.dollars.
Ingeneral,anysuchgainorlossrecognizedbyaU.S.holderwillbetreatedasU.S.sourcegainorloss.Gainorlossrealizedonthesale,exchangeorothertaxabledispositionofEnscoClassAordinaryshareswillbecapitalgainorlossandwillgenerallybelong-termcapitalgainorlossiftheEnscoClassAordinaryshareshavebeenheldformorethanoneyear.Long-termcapitalgainofa
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non-corporateU.S.holdercurrentlyissubjecttoamaximumU.S.federalincometaxrateof20%.Thedeductibilityofcapitallossesissubjecttolimitations.
Passive Foreign Investment Company Considerations
AforeigncorporationisaPFICif,aftertheapplicationofcertain"look-through"rules,(i)atleast75%ofitsgrossincomeis"passiveincome"asthattermisdefinedintherelevantprovisionsoftheInternalRevenueCodeandIRSrules,or(ii)atleast50%oftheaveragevalueofitsassetsproduce"passiveincome"orareheldfortheproductionof"passiveincome."EnscoisnotexpectedtobeaPFICforthecurrenttaxyear,andisnotexpectedtobecomeaPFICinthefuture.However,thisconclusionisafactualdeterminationmadeannuallyandissubjecttochange.TherecanbenoassurancethattheIRSwillnotsuccessfullychallengethispositionorthatEnscowillnotbeorbecomeaPFICatsomefuturetime.
IfaU.S.holderistreatedasowningstockinaPFIC,theU.S.holderwillbesubjecttospecialrulesintendedtoreduceoreliminatethebenefitofthedeferralofU.S.federalincometaxthatresultsfrominvestinginaforeigncorporationthatdoesnotdistributeallofitsearningsonacurrentbasis.TheserulesmayadverselyaffectthetaxtreatmenttoaU.S.holderofdividendspaidbyEnscoandofsales,exchangesandotherdispositionsofEnscoClassAordinaryshares,andmayresultinotherU.S.federalincometaxconsequences.U.S.holdersshouldconsulttheirowntaxadvisorsaboutthedeterminationofEnsco'sPFICstatusandtheU.S.federalincometaxconsequencesofholdingEnscoClassAordinarysharesifEnscoisconsideredaPFICinanytaxableyear.
TaxConsequencesofHoldingEnscoClassAOrdinarySharestoNon-U.S.Holders
Ingeneral,anon-U.S.holderofEnscoClassAordinaryshareswillnotbesubjecttoU.S.federalincometaxor,subjecttothediscussionbelowunder"—InformationReportingandBackupWithholding,"U.S.federalwithholdingtaxonanydividendsreceivedonEnscoClassAordinarysharesoranygainrecognizedonasaleorotherdispositionofEnscoClassAordinarysharesunless:
• thedividendorgainiseffectivelyconnectedwiththenon-U.S.holder'sconductofatradeorbusinessintheUnitedStates,andifrequiredbyanapplicabletaxtreaty,isattributabletoapermanentestablishmentmaintainedbythenon-U.S.holderintheUnitedStates;or
• inthecaseofgainonly,thenon-U.S.holderisanonresidentalienindividualpresentintheUnitedStatesfor183daysormoreduringthetaxableyearofthesaleordisposition,andcertainotherrequirementsaremet.
Anon-U.S.holderthatisacorporationmayalsobesubjecttoabranchprofitstaxatarateof30%(orsuchlowerratespecifiedbyanapplicabletaxtreaty)ontherepatriationfromtheUnitedStatesofitseffectivelyconnectedearningsandprofitsforthetaxableyear,asadjustedforcertainitems.
Information Reporting and Backup Withholding
Ingeneral,informationreportingrequirementswillapplyto(i)cashreceivedbyU.S.-holdersofsharesofAtwoodcommonstockinlieuoffractionalEnscoClassAordinarysharesand(ii)dividendsreceivedbyU.S.holdersofEnscoClassAordinarysharesandtheproceedsreceivedonthedispositionofEnscoClassAordinaryshareseffectedwithintheUnitedStates(and,incertaincases,outsidetheUnitedStates),ifpaidtoU.S.holdersotherthancertainexemptrecipients(suchascorporations).BackupwithholdingmayapplytosuchamountsiftheU.S.holderfailstoprovideanaccuratetaxpayeridentificationnumber(onanIRSFormW-9providedtothepayingagentortheU.S.holder'sbroker)orisotherwisesubjecttobackupwithholding.Theamountofanybackupwithholdingfromapayment
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toaU.S.holderwillbeallowedasarefundorcreditagainsttheU.S.holder'sU.S.federalincometaxliability,providedthattherequiredinformationisfurnishedtotheIRSinatimelymanner.
Individualsthatown"specifiedforeignfinancialassets"withanaggregatevalueofmorethan$50,000(orhigherthresholdforsomemarriedindividualsandindividualslivingabroad)mayberequiredtofileaninformationreport(IRSForm8938)withrespecttosuchassetswiththeirtaxreturns.EnscoClassAordinarysharesgenerallywillconstitutespecifiedforeignfinancialassetssubjecttothesereportingrequirements,unlesstheEnscoClassAordinarysharesareheldinanaccountatafinancialinstitution(which,inthecaseofaforeignfinancialaccount,mayalsobesubjecttoreporting).Additionally,underrecentlyfinalizedregulations,adomesticcorporation,domesticpartnership,ortrust(asdescribedinSection7701(a)(30)(E)oftheInternalRevenueCode)whichisformedoravailedofforpurposesofholding,directlyorindirectly,specifiedforeignfinancialassetsmaybesubjecttotheserules.U.S.holdersshouldconsulttheirowntaxadvisorsregardinginformationreportingrequirementsrelatingtotheirownershipofEnscoClassAordinarysharesandthesignificantpenaltiestowhichtheymaybesubjectforfailuretocomply.
Anon-U.S.holderwillnotbesubjecttoU.S.backupwithholdingifitprovidesacertificationofexemptstatus(onanappropriateIRSFormW-8oranapplicablesubstituteform).Anyamountswithheldunderthebackupwithholdingruleswillbeallowedasarefundoracreditagainstthenon-U.S.holder'sU.S.federalincometaxliability,providedtherequiredinformationisfurnishedtotheIRSinatimelymanner.
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ATWOODPROPOSAL2—COMPENSATORYPROPOSAL
AtwoodisrequiredpursuanttoSection14AoftheExchangeActandtheapplicableSECrulesissuedthereunderthatwereenactedpursuanttotheDodd-FrankWallStreetReformandConsumerProtectionActof2010toincludeinthisproxystatementanon-binding,advisoryvoteonthecompensationpayabletoeachofits"namedexecutiveofficers,"asdeterminedinaccordancewithItem402(t)ofRegulationS-K,inconnectionwiththeproposedmergerpursuanttheagreementsandunderstandingspursuanttowhichsuchcompensationmaybepaidorhasbecomepayableinconnectionwiththemerger.Thisnon-bindingadvisoryproposalrelatesonlytothecontractualobligationsofAtwoodthatexistasofthecompletionofthemergerthatmayresultinapaymenttoAtwood'snamedexecutiveofficersinconnectionwiththeconsummationofthemerger(regardlessofthetimingofpayment)anddoesnotrelatetoanynewcompensationorotherarrangementsfollowingthemerger.TheproposalgivesAtwoodshareholderstheopportunitytoexpresstheirviewsonthemerger-relatedcompensationofAtwood'snamedexecutiveofficers.Accordingly,Atwoodisthereforeaskingitsshareholderstoapprovethefollowingresolution:
"RESOLVED, that the compensation that may be paid or become payable to Atwood's named executive officers in connection with the merger, and theagreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) ofRegulation S-K in "The Merger—Atwood's Directors and Officers Have Financial Interests in the Merger," is hereby APPROVED ."
Thevoteregardingthisproposalonmerger-relatedcompensationisavoteseparateandapartfromthevoteontheAtwoodMergerProposal.Accordingly,AtwoodshareholdersmayvotetoapprovetheAtwoodMergerProposalandvotenottoapprovetheAtwoodCompensatoryProposalandviceversa.BecausetheAtwoodCompensatoryProposalisadvisoryonly,itwillnotbebindingoneitherAtwoodorEnsco.Accordingly,iftheAtwoodMergerProposalisapprovedandthemergeriscompleted,thenamedexecutiveofficerswillbeeligibletoreceivethespecifiedcompensationthatmaybecomepayableinconnectionwiththeconsummationofthemerger,subjectonlytotheconditionsapplicablethereto,regardlessoftheoutcomeoftheAtwoodCompensatoryProposal.
TheAtwoodBoardunanimouslyrecommendsthatAtwoodshareholdersvote"FOR"theAtwoodCompensatoryProposal.
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ATWOODPROPOSAL3—ADJOURNMENTPROPOSAL
AtwoodshareholdersarebeingaskedtoapproveaproposalthatwillgiveAtwoodauthoritytoadjourntheAtwoodspecialmeetingforthepurposeofsolicitingadditionalproxiesinfavoroftheAtwoodMergerProposaliftherearenotsufficientvotesatthetimeoftheAtwoodspecialmeetingtoapprovetheAtwoodMergerProposal.Ifthisadjournmentproposalisapproved,theAtwoodspecialmeetingcouldbeadjournedtoanydate.IftheAtwoodspecialmeetingisadjourned,Atwoodshareholderswhohavealreadysubmittedtheirproxieswillbeabletorevokethematanytimepriortotheiruse.Ifyoureturnaproxyanddonotindicatehowyouwishtovoteonanyproposal,orifyouindicatethatyouwishtovoteinfavoroftheapprovalofthemergeragreementbutdonotindicateachoiceontheadjournmentproposal,yourshareswillbevotedinfavoroftheadjournmentproposal.Butifyouindicatethatyouwishtovoteagainsttheapprovalofthemergeragreement,yourshareswillonlybevotedinfavoroftheadjournmentproposalifyouindicatethatyouwishtovoteinfavorofthatproposal.
TheAtwoodBoardunanimouslyrecommendsthatAtwoodshareholdersvote"FOR"theAtwoodAdjournmentProposal.
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INFORMATIONABOUTTHECOMPANIES
Enscoplc
Enscoisaglobaloffshorecontractdrillingcompanyandoneoftheleadingprovidersofoffshorecontractdrillingservicestotheinternationaloilandgasindustry.Enscoownsandoperatesanoffshoredrillingrigfleetof53rigs,withdrillingoperationsinmostofthestrategicmarketsaroundtheglobe.Enscoalsohastworigsunderconstruction.ForthethreemonthsendedMarch31,2017,Ensco'soperatingrevenuetotaledapproximately$471.1million.FortheyearendedDecember31,2016,Enscohadannualrevenueofapproximately$2.8billionandemployedapproximately4,900personnel.
TheEnscoClassAordinarysharesarelistedontheNYSEunderthesymbol"ESV."EnscoisapubliclimitedcompanyorganizedunderthelawsofEnglandandWales.Ensco'sprincipalexecutiveofficesarelocatedat6ChesterfieldGardens,London,W1J5BQ,UnitedKingdomanditstelephonenumberis44(0)2076594660.
AdditionalinformationaboutEnscoanditssubsidiariesisincludedindocumentsincorporatedbyreferenceinthisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
EchoMergerSubLLC
MergerSub,awhollyownedsubsidiaryofEnsco,isaTexaslimitedliabilitycompanyformedonMay26,2017forthepurposeofeffectingthemerger.Underthemergeragreement,MergerSubwillmergewithandintoAtwood,withAtwoodcontinuingasthesurvivingcompanyandawhollyownedsubsidiaryofEnsco.MergerSubhasnotconductedanyactivitiesotherthanthoseincidentaltoitsformationandthematterscontemplatedbythemergeragreement,includingthepreparationofapplicableregulatoryfilingsinconnectionwiththemerger.
AtwoodOceanics,Inc.
Atwoodisaglobaloffshoredrillingcontractorengagedinthedrillingandcompletionofexploratoryanddevelopmentaloilandgaswells.Atwoodcurrentlyownsadiversifiedfleetof10mobileoffshoredrillingunitslocatedintheU.S.GulfofMexico,theMediterraneanSea,offshoreWestAfrica,offshoreSoutheastAsiaandoffshoreAustralia.Atwoodrecentlyexecutedasaleandrecyclingagreementwithrespecttooneofthedrillingunits.ForthethreeandsixmonthsendedMarch31,2017,Atwood'soperatingrevenuetotaled$168millionand$325million,respectively.FortheyearendedSeptember30,2016,Atwood'soperatingrevenuestotaled$1.0billionandAtwoodemployed938personnel.
TheAtwoodcommonstockislistedontheNYSEunderthesymbol"ATW."Atwood'sregisteredofficeandprincipalexecutiveofficesarelocatedat15011KatyFreeway,Suite800,Houston,Texas77094anditstelephonenumberis(281)749-7800.
AdditionalinformationaboutAtwoodanditssubsidiariesisincludedindocumentsincorporatedbyreferenceinthisjointproxystatement/prospectus.See"WhereYouCanFindMoreInformation."
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DESCRIPTIONOFENSCOCLASSAORDINARYSHARES
ThefollowinginformationisasummaryofthematerialtermsoftheEnscoClassAordinaryshares,asspecifiedintheEnscoArticlesofAssociation.ThissummaryisnotcompleteandissubjecttothecompletetextoftheEnscoArticlesofAssociation.YouareencouragedtocarefullyreadtheEnscoArticlesofAssociation.
ShareCapital
AsofMay26,2017,Enscohad(i)303,488,494EnscoClassAordinaryshares,inissue,excludingEnscoClassAordinarysharesheldintreasury,and(ii)50,000EnscoClassBordinaryshares,nominalvalue£1.00pershare(the"EnscoClassBordinaryshares"),inissueandheldbyoneofEnsco'ssubsidiaries.
AlloftheissuedEnscoClassAordinarysharesarefullypaidandarenotsubjecttoanyfurthercallsbyEnsco.Therearenoconversionrights,redemptionprovisionsorsinkingfundprovisionsrelatingtoanyEnscoClassAordinaryshares;however,subjecttotheCompanyAct2006,Enscomaypurchaseorcontracttopurchaseanyofitsordinarysharesoff-market.
UnderEnglishlaw,personswhoareneitherresidentsnornationalsoftheUnitedKingdommayfreelyhold,voteandtransferEnsco'ssharesinthesamemannerandunderthesametermsasUnitedKingdomresidentsornationals.
TheEnscoClassAordinarysharesandtheEnscoClassBordinaryshareshavethesamerightsandprivilegesinallrespects.WhiletheEnscoClassBordinarysharesremaininissue,suchshareshavenovotingrightsorrightstodividendsordistributions,totheextentthatEnscooranyofEnsco'ssubsidiariesholdsuchshares.
Dividends
SubjecttotheCompaniesAct2006,theEnscoBoardmaydeclareadividendtobepaidtoEnsco'sshareholdersaccordingtotheirrespectiverightsandinterestsinEnsco,andmayfixthetimeforpaymentofsuchdividend.TheEnscoBoardmayfromtimetotimedeclareandpay(onanyclassofsharesofanyamounts)suchdividendsasappeartothemtobejustifiedbyEnsco'sprofitsthatareavailablefordistribution.Whenevaluatingdividendpaymenttimingandamounts,theEnscoBoardconsidersseveralfactors,includingEnsco'sprofitability,liquidity,financialcondition,marketoutlook,reinvestmentopportunities,capitalrequirementsandotherfactorsandrestrictionstheEnscoBoarddeemsrelevant.TherecanbenoassurancethatEnscowillpayadividendinthefuture.
TherearenofixeddatesonwhichentitlementtodividendsariseonanyofEnsco'sordinaryshares.TheEnscoBoardmaydirectthepaymentofalloranypartofadividendtobesatisfiedbydistributingspecificassets,inparticularpaidupsharesordebenturesofanyothercompany.TheEnscoArticlesofAssociationpermitascripdividendschemeunderwhichshareholdersmaybegiventheopportunitytoelecttoreceivefullypaidClassAordinarysharesinsteadofcash,withrespecttoallorpartoffuturedividends.AnyordinarysharesEnscooranyofEnsco'ssubsidiariesholdwillnotbeentitledtoanydividendsordistributions,includinganyscripdividends,bonussharesordividendsordistributionsofpropertyordebenturesofanyothercompany.Further,thetrusteesofanemployeebenefittrustestablishedinconnectionwithEnsco'sequityincentiveplansarenotentitledtoanydividendsordistributions,includinganyscripdividends,bonussharesordividendsordistributionsofpropertyordebenturesofanyothercompany.
IfashareholderowesanymoneytoEnscorelatinginanywaytoanyclassofEnscoshares,theEnscoBoardmaydeductanyofthismoneyfromanydividendonanysharesheldbytheshareholder,orfromothermoneypayablebyEnscoinrespectoftheshares.MoneydeductedinthiswaymaybeusedtopaytheamountowedtoEnsco.
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UnclaimeddividendsandotheramountspayableinrespectofEnsco'sordinarysharescanbeinvestedorotherwiseusedbythedirectorsforEnsco'sbenefituntiltheyareclaimedunderEnglishlaw.AdividendorothermoneyremainingunclaimedforaperiodoftwelveyearsafteritfirstbecamedueforpaymentwillbeforfeitedandceasetoremainowedbyEnsco.
VotingRights
AtageneralmeetingofEnscoshareholders,anyresolutionputtoavotemustbedecidedonapollratherthanbyashowofhands.
EachEnscoshareholder(otherthananyofitssubsidiarieswhoholdEnscoshares)who(beinganindividual)ispresentinpersonor(beingacorporation)ispresentbyadulyauthorizedcorporaterepresentativeatEnsco'sgeneralmeetingwillhaveonevoteforeveryshareheld,andeverypersonpresentwhohasbeenappointedasaproxyhasonevoteforeveryshareinrespectofwhichheorsheistheproxy,exceptthatanyproxywhohasbeenappointedbyDTCoritsproxieshavesuchnumberofvotesasequalsthenumberofsharesinrelationtowhichsuchproxyhasbeenappointed,subjecttoanyrightsorrestrictionsastovotingattachedtoanyclassofsharesinaccordancewiththeEnscoArticlesofAssociationorbyagreementandsubjecttothedisenfranchisement(i)intheeventofnon-paymentofanycallorothersumdueandpayableinrespectofanysharesnotfullypaid,(ii)intheeventofanynon-compliancewithanystatutorynoticerequiringdisclosureofaninterestinshares,(iii)withrespecttoanysharesheldbythetrusteesofanemployeebenefittrustestablishedinconnectionwithEnsco'sequityincentiveplansinwhichabeneficialinteresthasnotyetvestedinabeneficiaryofsuchtrust.
Inthecaseofjointholders,thevoteofthepersonwhosenamestandsfirstintheregisterofshareholdersandwhotendersavote,whetherinpersonorbyproxy,isacceptedtotheexclusionofanyvotestenderedbyanyotherjointholders.
Thenecessaryquorumforageneralmeetingistheshareholderswhotogetherrepresentatleastthemajorityofthevotingrightsofalltheshareholdersentitledtovotepresentinpersonorbyproxy(thatis,anyshareswhosevotingrightshavebeendisenfranchised(whetherpursuanttotheCompaniesAct2006and/orundertheEnscoArticlesofAssociation)aredisregardedforthepurposesofdeterminingaquorum).
AnannualgeneralmeetingofEnscoshareholdersmustbecalledbynotlessthan21cleardays'noticeandnomorethan60days'notice.Forallothergeneralmeetingsexceptgeneralmeetingsproperlyrequisitionedbyshareholders,suchmeetingsmaybecalledbynotlessthan14cleardays'noticeandnomorethan60days'notice.Thenoticeofmeetingalsomustspecifyatime(whichmaynotbemorethan60daysnorlessthan10daysbeforethedateofthemeeting)bywhichapersonmustbeenteredontheregisterinordertohavetherighttoattendorvoteatthemeeting.Thenumberofsharesthenregisteredintheirrespectivenameswilldeterminethenumberofvotesapersonisentitledtocastatthatmeeting.
Enscomustreceiveanappointmentofproxy(whetherinhardcopyformorelectronicform)beforethetimeforholdingthemeetingoradjournedmeetingatwhichthepersonnamedintheappointmentofproxyproposestovote;inthecaseofapolltakenmorethan48hoursafterthemeetingatwhichtherelevantvotewastobetaken,anappointmentofproxymustbereceivedaftersuchmeetingandnotlessthan24hours(orsuchshortertimeastheEnscoBoardmaydetermine)beforethetimeappointedfortakingthepoll;orinthecaseofapollnottakenimmediatelybuttakennotmorethan48hoursafterthemeeting,theappointmentofproxymustbedeliveredatthemeetingatwhichthepollistobetaken.AnappointmentofproxynotreceivedordeliveredinaccordancewiththeEnscoArticlesofAssociationisinvalidunderEnglishlaw.
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ReturnofCapital
Intheeventofavoluntarywinding-up,theliquidatormay,onobtaininganysanctionrequiredbylaw,divideamongEnscoshareholdersthewholeoranypartofEnsco'sassets,whetherornottheassetsconsistofpropertyofonekindorofdifferentkinds.
Theliquidatoralsomay,withthesameauthority,transferthewholeoranypartoftheassetstotrusteesuponanytrustsforthebenefitoftheshareholdersastheliquidatordecides.Nopastorpresentshareholdercanbecompelledtoacceptanyassetthatcouldsubjecthimorhertoaliability.
Pre-emptiveRightsandNewIssuesofShares
UnderSection549oftheCompaniesAct2006,directorsare,withcertainexceptions,unabletoallotsecuritieswithoutbeingauthorizedeitherbytheshareholdersinageneralmeetingorbytheEnscoArticlesofAssociationpursuanttoSection551oftheCompaniesAct2006.Inaddition,undertheCompaniesAct2006,theissuanceofequitysecuritiesthataretobepaidforwhollyincash(exceptsharesheldunderanemployees'sharescheme)mustbeofferedfirsttotheexistingequityshareholdersinproportiontotherespectivenominalvaluesoftheirholdingsonthesameormorefavorableterms,unlessaspecialresolutiontothecontraryhasbeenpassedinageneralmeetingofshareholdersortheArticlesofAssociationotherwiseprovideanexclusionfromthisrequirement(whichexclusioncanbeforamaximumoffiveyearsafterwhichshareholders'approvalwouldberequiredtorenewtheexclusion).Inthiscontext,equitysecuritiesgenerallymeansinrelationtoordinaryshares(beingsharesotherthansharesthat,withrespecttodividendsorcapital,carryarighttoparticipateonlyuptoaspecifiedamountinadistribution)andallrightstosubscribefororconvertsecuritiesintosuchshares.
OnMay22,2017,shareholderresolutionswereadoptedwhichauthorizedthedirectors(generallyandunconditionally),foraperioduptotheconclusionofthenextannualgeneralmeetingofshareholders(or,ifearlier,atthecloseofbusinessonAugust22,2018),toallotEnscoClassAordinarysharesandtograntrightstosubscribefororconvertanysecurityintoEnscoClassAordinaryshares:(i)uptoanaggregatenominalamountof$10,109,804,and(ii)uptoanominalamountof$20,219,607inconnectionwitharightsissueorothersimilarissue(suchamounttobereducedbythenominalamountofEnscoClassAordinarysharesallottedpursuantto(i)).Additionalshareholderresolutionswereadoptedwhichauthorizedthedirectorsto:(i)allotequitysecuritiesforcashfreeofpre-emptionrightsuptoanaggregatenominalamountof$1,517,989,and(ii)tofurtherallotequitysecuritiesforcashfreeofpre-emptionrightsuptoanaggregatenominalamountof$1,517,989forthepurposesoffinancing(orrefinancingiftheauthorityistobeusedwithinsixmonthsaftertheoriginaltransaction)atransactionwhichtheEnscoBoarddeemstobeanacquisitionorothercapitalinvestment,suchauthoritytobeeffectiveuntiltheconclusionofEnsco'snextannualgeneralmeetingofshareholders(or,ifearlier,atthecloseofbusinessonAugust22,2018).Enscomay,beforetheexpirationofanyauthoritytoallotsharesordisapplypre-emptionrightsgrantedpursuanttotheshareholderresolutionsadoptedonMay22,2017,makeanofferoragreementthatwouldormightrequiretheEnscoClassAordinarysharestobeallotted(orrightstobegranted)aftersuchexpiration,andthedirectorsmayallotsharesorgrantrightsinpursuanceofsuchanofferoragreementasiftheauthoritytoallothadnotexpired.
SubjecttotheprovisionsoftheCompaniesAct2006andtoanyrightsattachedtoanyexistingshares,theEnscoClassAordinarysharesmaybeissuedwith,orhaveattachedtothem,suchrightsorrestrictionsasEnsco'sshareholdersmaybyordinaryresolutiondetermine,or,wheretheaboveauthorizationsareinplace,theEnscoBoardmaydeterminesuchrightsorrestrictions.
TheCompaniesAct2006prohibitsanEnglishcompanyfromissuingsharesfornoconsideration,includingwithrespecttograntsofrestrictedsharesmadepursuanttoequityincentiveplans.Accordingly,thenominalvalueofthesharesissueduponthelapseofrestrictionsorthevestingofanyrestrictedshareawardoranyothershare-basedgrantmustbepaidpursuanttotheCompaniesAct2006.
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DisclosureofInterestsinShares
Section793oftheCompaniesAct2006providesEnscothepowertorequireapersonwhomEnscoknowshas,orwhomEnscohasreasonablecausetobelievehas,orwithinthepreviousthreeyearshashad,anyownershipinterestinanyshares(the"defaultshares")todiscloseprescribedparticularsofthoseshares.ForthispurposedefaultsharesincludesanysharesallottedorissuedafterthedateoftheSection793noticeinrespectofthoseshares.Failuretoprovidetheinformationrequestedwithintheprescribedperiodafterthedateofsendingthenoticewillresultinsanctionsbeingimposedagainsttheholderofthe"defaultshares"asprovidedwithintheCompaniesAct2006.
UndertheEnscoArticlesofAssociation,Enscomayalsowithdrawvotingandcertainotherrights,placerestrictionsontherightstoreceivedividendsandtransfer"defaultshares"iftherelevantholderof"defaultshares"hasfailedtoprovidetheinformationrequestedwithin14daysafterthedateofsendingthenotice,dependingontheleveloftherelevantshareholding(andunlesstheEnscoBoarddecidesotherwise).
AlterationofShareCapital/RepurchaseofShares
Enscomayfromtimetotime:
• increaseitssharecapitalbyallottingnewsharesinaccordancewithanyunusedportionofanyauthoritytoallotsharesapprovedbyEnscoshareholdersandinaccordancewiththeEnscoArticlesofAssociation;
• byordinaryresolutionofEnsco'sshareholders,consolidateanddividedalloranyofitssharecapitalintosharesofalargernominalamountthantheexistingshares;and
• byordinaryresolutionsofEnsco'sshareholders,subdivideanyofitssharesintosharesofasmallernominalamountthanitsexistingshares.
SubjecttotheCompaniesAct2006andtoanyrightstheEnscoshareholdersmayhave,EnscomaypurchaseanyofEnsco'ssharesofanyclass(includinganyredeemableshares,iftheEnscoBoardshoulddecidetoissueany)bywayof"off-marketpurchases"uptoanaggregateof$2.0billionofClassAordinarysharessubjecttocertainrestrictionsfollowingtheapprovaloftheshareholdersbyspecialresolutiononMay20,2013.Suchapprovallastsforuptofiveyearsfromthedateofthespecialresolution,andrenewalofsuchapprovalforadditionalfiveyeartermsmaybesought.Sharesmayonlyberepurchasedoutofdistributableprofitsortheproceedsofafreshissueofsharesmadeforthatpurpose,and,ifapremiumispaid,itmustbepaidoutofdistributableprofits.
TransferofShares
TheEnscoArticlesofAssociationallowEnsco'sshareholderstotransferalloranyoftheirsharesinanyformthatisapprovedbytheEnscoBoard.
TheEnscoBoardmayrefusetoregisteratransfer:
• ifthesharesinquestionarenotfullypaid;
• ifitiswithrespecttomorethanoneclassofshares;
• ifitiswithrespecttosharesonwhichEnscohasalien;
• ifitisinfavorofmorethanfourpersonsjointly;
• if,whereaninstrumentoftransferisrequiredtoeffectthetransfer,andthatinstrumentisrequiredtobestamped,HerMajesty'sRevenueandCustomshasnotdulystampedit;
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• ifitisnotpresentedforregistrationtogetherwiththesharecertificateandevidenceoftitleastheEnscoBoardreasonablyrequires;or
• incertaincircumstances,iftheholderhasfailedtoprovideEnscowiththerequiredparticularsasdescribedunder"—DisclosureofInterestsofShares"above.
TheEnscoClassAordinarysharestobeallottedandissuedinconnectionwiththemergerwillbeallottedandissuedtoAtwoodshareholdersthroughthefacilitiesofDTC.
IftheEnscoBoardrefusestoregisteratransferofashare,itmust,withintwomonthsafterthedateonwhichthetransferwaslodged,sendtothetransfereenoticeoftherefusaltogetherwithitsreasonsforrefusal.AninstrumentoftransferwhichtheEnscoBoardrefusestoregistermust(exceptinthecaseofsuspectedfraud)bereturnedtothepersondepositingit.
GeneralMeetingsandNotices
Thenoticeofageneralmeetingofshareholdersmustbegiventotheshareholdersofrecord(otherthananywho,undertheprovisionsoftheEnscoArticlesofAssociationorthetermsofallotmentorissueofshares,arenotentitledtoreceivenotice),totheEnscoBoardandtoitsauditors.
UnderEnglishlaw,EnscoisrequiredtoholdanannualgeneralmeetingofshareholderswithinsixmonthsfromthedayfollowingtheendofEnsco'sfiscalyearand,subjecttotheforegoing,themeetingmaybeheldatatimeandplacedeterminedbytheEnscoBoard.
LiabilityofEnsco'sDirectorsandOfficers
TheEnscoArticlesofAssociationprovidethatEnglishcourtshaveexclusivejurisdictionwithrespecttoanysuitsbroughtbyshareholdersagainstEnscooritsdirectors.Englishlawdoesnotpermitacompanytoexemptanydirectororcertainofficersfromanyliabilityarisingfromnegligence,default,breachofdutyorbreachoftrustagainstthecompany.However,despitethisprohibition,anEnglishcompanyispermittedtopurchaseandmaintaininsuranceforadirectororexecutiveofficerofthecompanyagainstanysuchliability.Enscohasenteredintodeedsofindemnitywitheachofitscurrentdirectorsandexecutiveofficersandpurchasedinsuranceontheirbehalf.Inaddition,directorsandexecutiveofficersmaybecoveredbyindemnificationagreementsandindemnificationrightsgrantedunderthecharterdocumentsofEnsco'ssubsidiaries.Shareholderscanratifybyordinaryresolutionadirector'sorcertainofficer'sconductamountingtonegligence,default,breachofdutyorbreachoftrustinrelationtothecompany.
TakeoverCode
TakeoveroffersandcertainothertransactionsinrespectofcertainpubliccompaniesareregulatedbytheTakeoverCode,whichisadministeredbytheTakeoverPanel,abodyconsistingofrepresentativesoftheCityofLondonfinancialandprofessionalinstitutionsthatoverseestheconductoftakeovers.AnEnglishpubliclimitedcompanypotentiallywillpotentiallybesubjecttotheTakeoverCodeif,amongotherfactors,itscentralplaceofmanagementandcontroliswithintheU.K.,theChannelIslandsortheIsleofMan.TheTakeoverPanelgenerallywilllooktotheresidencyofacompany'sdirectorstodeterminewhereitiscentrallymanagedandcontrolled.
TheTakeoverPanelhaspreviouslyconfirmedthatonthebasisofEnsco'scurrentdirectorsandmanagementtheTakeoverCodewouldnotapplytoEnsco.ItispossiblethatifthecharacteristicsofEnsco'sdirectorsormanagementweretochangeinthefuture,theTakeoverPanelmaytakeadifferentpositionandtheTakeoverCodemayapplytoEnsco.
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Anti-TakeoverProvisions
General
TheprovisionsofEnsco'sArticlesofAssociationsummarizedbelowmayhavetheeffectofdiscouraging,delayingorpreventinghostiletakeovers,includingthosethatmightresultinapremiumbeingpaidoverthemarketpriceofEnscoClassAordinarysharesanddiscouraging,delayingorpreventingchangesofcontrolormanagementofEnsco.
Issuance of Additional Shares
TheEnscoBoardhastheauthority,withoutfurtheractionofEnsco'sshareholders,butsubjecttoitsstatutoryandfiduciaryduties,toallotshares,ortograntrightstosubscribeforortoconvertorexchangeanysecurityintoshares,upto:(i)anaggregatenominalamountof$10,109,804,and(ii)uptoanominalamountof$20,219,607inconnectionwitharightsissueorothersimilarissue(suchamounttobereducedbythenominalamountofEnscosharesallottedpursuantto(i)),toallotequitysecuritiesforcashfreeofpre-emptionrightsuptoanaggregatenominalamountof$1,517,989,andtofurtherallotequitysecuritiesforcashfreeofpre-emptionrightsuptoanaggregatenominalamountof$1,517,989forthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsaftertheoriginaltransaction)atransactionwhichtheEnscoBoarddeemstobeanacquisitionorothercapitalinvestment.SuchauthoritywillcontinueuntiltheconclusionofEnsco'snextannualgeneralmeetingofshareholders(or,ifearlier,thecloseofbusinessonAugust22,2018)andthereafteritmustberenewed.TheissuanceoffurthersharesonvarioustermscouldadverselyaffecttheEnscoshareholders.ThepotentialissuanceoffurthersharesmaydiscouragebidsforEnscoClassAordinarysharesatapremiumoverthemarketprice,mayadverselyaffectthemarketpriceofEnscoClassAordinarysharesandmaydiscourage,delayorpreventachangeofcontrol.
Shareholder Rights Plan
TheEnscoBoardhasthenecessarycorporateauthoritytoexerciseanypowerofthecompanytoestablishashareholdersrightsplan.AnyshareholdersrightsplanmaybeinsuchformastheEnscoBoardmayinitsabsolutediscretiondecide.SuchaplancouldmakeitmoredifficultforanotherpartytoobtaincontrolofEnscobythreateningtodiluteapotentialacquirer'sownershipinterestundercertaincircumstances.TheEnscoBoardmayadoptashareholderrightsplanatanytime.
Theanti-takeoverandotherprovisionsoftheEnscoArticlesofAssociation,aswellastheadoptionofashareholderrightsplan,coulddiscouragepotentialacquisitionproposalsandcoulddelayorpreventachangeofcontrol.Theseprovisionsareintendedtoenhanceshareholdervaluebydiscouragingcertaintypesofabusivetakeovertactics.However,theseprovisionscouldhavetheeffectofdiscouragingothersfrommakingtenderoffersforEnscoClassAordinarysharesand,asaconsequence,alsomayinhibitfluctuationsinthemarketpriceofEnscoClassAordinarysharesthatcouldresultfromactualorrumoredtakeoverattempts.
Board of Directors
AteveryannualgeneralmeetingallEnscodirectorsmustretirefromofficeandeachdirectormayofferhimselfforre-appointmentbythemembers.UnderEnglishlaw,shareholdershavenocumulativevotingrights.Inaddition,Ensco'sArticlesofAssociationincorporateprovisionsthatregulateshareholders'abilitytonominatedirectorsforelection.AlthoughEnsco'sshareholdershavetheabilitytoremoveadirectorwithoutcauseunderEnglishlaw,thelackofcumulativevotingandthelimitationsonshareholders'powerstonominatedirectorswillhavetheeffectofmakingitmoredifficultnotonlyforanypartytoobtaincontroloverEnscobyreplacingthemajorityoftheEnscoBoardbutalsotoforceanimmediatechangeinthecompositionoftheEnscoBoard.However,underEnsco'sArticlesofAssociation,ifEnscoshareholdersremovetheentireEnscoBoard,ashareholdermaythenconveneageneralmeetingforthepurposeofappointingdirectors.
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COMPARISONOFRIGHTSOFATWOODSHAREHOLDERSANDENSCOSHAREHOLDERS
TherightsofAtwoodshareholdersaregovernedbytheTBOCandAtwood'scertificateofformationandbylaws.TherightsofEnscoshareholdersaregovernedbythelawsofEnglandandWalesandtheEnscoArticlesofAssociation.Afterthemerger,theformerAtwoodshareholders,throughownershipofEnscoClassAordinaryshares,willhavetherightsofEnscoshareholders,andtheirrightswillgenerallybegovernedbyEnglishlawandtheEnscoArticlesofAssociation.
TherearedifferencesbetweenshareholderrightsundertheTBOCandshareholderrightsunderapplicableEnglishlaw.Inaddition,therearedifferencesbetweenAtwood'scertificateofformationandbylawsandtheEnscoArticlesofAssociation.ThefollowingdiscussionisasummaryofthematerialdifferencesbetweenthecurrentrightsofAtwoodshareholdersandthecurrentrightsofEnscoshareholders.ThissummarydoesnotcoverallthedifferencesbetweenapplicableEnglishlawandtheTBOCaffectingcorporationsandtheirshareholdersorallofthedifferencesbetweenAtwood'scertificateofformationandbylawsandtheEnscoArticlesofAssociation.WhileEnscoandAtwoodbelievethissummaryisaccurateinallmaterialrespects,thefollowingdescriptionsarequalifiedintheirentiretybyreferencetothecompletetextoftherelevantprovisionsofapplicableEnglishlaw,theTBOC,Atwood'scertificateofformationandbylawsandtheEnscoArticlesofAssociation.EnscoandAtwoodencourageyoutoreadthoselawsanddocuments.ForinformationastohowyoucanobtainacopyofAtwood'scertificateofformationandbylawsortheEnscoArticlesofAssociation,see"WhereYouCanFindMoreInformation."
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RightsofAtwoodShareholders RightsofEnscoShareholders
ShareCapital
TheauthorizedcapitalstockofAtwoodconsistsof(i)180,000,000sharesofAtwoodcommonstockand(ii)1,000,000sharesofpreferredstock.
TheAtwoodBoardhastheauthoritytoissueoneormoreseriesofpreferredstock,havingtermsdesignatedbytheAtwoodBoard.
AsofMay26,2017,thesharecapitalofEnscoconsistsof(i)50,000ClassBordinarysharesinissue,whichareheldbyasubsidiaryofEnsco,and(ii)303,488,494ClassAordinarysharesinissue.
PreferencesharescanbeissuedbyEnglishcompanies,givingtheholdersrightsofpriorityoverordinaryshareholders.
Subjecttotherebeinganunexpiredauthoritytoallotshares,theEnscoArticlesofAssociationpermitthedirectorstoallotandissueshareswithrightstobedeterminedbythedirectorsatthetimeofissuance,whichmayincludepreferredrights.TheEnscoBoardiscurrentlyauthorizedtoallotandissuesharesinEnscouptoanominalamountof:
(i)upto$10,109,804;and
(ii)inconnectionwithapre-emptiveoffer,upto$20,219,607(suchamounttobereducedbythenominalamountofanyissuancesmadeunder(i)),
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RightsofAtwoodShareholders RightsofEnscoShareholders
whichmaybeEnscoClassAordinaryshares,EnscoClassBordinarysharesoraclassofshareswithsuchrightsastheEnscoBoardshalldetermineatthetimeofallotmentandissuance
VotingRights
Generally
EachAtwoodshareholderisentitledtoonevoteforeachshareofcapitalstockheldbytheshareholder.
Ifissued,thevotingrightsofholdersofpreferredstockwillbedeterminedbytheAtwoodBoard.
Atwood'sbylawsprovidethat,asageneralmatter,whenaquorumispresent,actiononamatterwillbeapprovedbyamajorityofsharespresentinpersonorrepresentedbyproxyatthemeeting.
EachEnscoshareholderisentitledtoonevoteforeachEnscoClassAordinaryshareheldbysuchshareholder.
ThevotingrightsofholdersofanyadditionalsharesthatmaybeissuedwillbedeterminedbytheEnscoBoardinaccordancewiththeEnscoArticlesofAssociation.
UnderEnglishlawandtheEnscoArticlesofAssociation,certainmattersrequire"ordinaryresolutions,"whichmustbeapprovedbyatleastamajorityofthevotescastbyshareholdersinageneralmeeting,andcertainothermattersrequire"specialresolutions,"whichrequiretheaffirmativevoteofatleast75%ofthevotescastatageneralmeeting.
Anordinaryresolutionisneededto(amongothermatters):removeadirector;provide,varyorrenewadirector'sauthoritytoallotshares;andappointdirectors(whereappointmentisbyshareholders).
Aspecialresolutionisneededto(amongothermatters):alteracompany'sarticlesofassociation,excludestatutorypreemptiverightsonallotmentofsecuritiesforcash;reduceacompany'ssharecapital;re-registerapubliccompanyasaprivatecompany(orviceversa);approveaschemeofarrangement.
Quorum
Holdersofatleastamajorityofthestockissuedandoutstandingandentitledtovote,presentatameetingorrepresentedbyproxy,constitutesaquorum.
Holdersofatleastamajorityofthesharesissuedandoutstandingandentitledtovote,presentatageneralmeeting(whetherinpersonorbyproxy),constitutesaquorum.
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RightsofAtwoodShareholders RightsofEnscoShareholders
Cumulative Voting
Texaslawdoesnotpermitshareholderstocumulatetheirvotesfortheelectionofdirectorsunlesspermittedbythearticlesofincorporation.Atwood'scertificateofformationexpresslyauthorizestherighttocumulatevotesintheelectionofdirectorsbyanyshareholder.
CumulativevotingisnotrecognizedunderEnglishlaworpermittedundertheEnscoArticlesofAssociation.
Atwood'sbylawsprovidethatatanyelectionfordirectors,eachshareholderentitledtovotemaycumulatehisvotesandgiveonecandidateanumberofvotesequaltothenumberofdirectorstobeelected,multipliedbythenumberofvotestowhichhissharesareentitled;oreachshareholdermaydistributehisvotesonthesameprincipleamongasmanycandidatesfordirectorsastheshareholderthinksfit.AnyshareholderwhointendstocumulatehisvotesmustgivewrittennoticeofthisintentiontotheAtwoodCorporateSecretaryonorbeforethedayprecedingtheelectionatwhichtheshareholderintendstocumulatehisvotes.
ActionbyWrittenConsent
Atwood'scertificateofformationauthorizesshareholderactionwithoutholdingameeting,providingnoticeortakingavoteifeachshareholderentitledtovoteontheactionsignsawrittenconsentorconsentsstatingtheactiontaken.
UnderEnglishlaw,apubliclimitedcompany'sshareholderscannotpassaresolutionbywrittenconsent.
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RightsofAtwoodShareholders RightsofEnscoShareholders
ShareholderProposals;DirectorNominations
UnderAtwood'sbylaws,atanannualmeetingofshareholdersofAtwood,onlysuchbusinessmaybeconducted,andonlysuchproposalsmaybeactedupon,ashavebeenproperlybroughtbeforesuchannualmeeting.Tobeproperlybroughtbeforeanannualmeeting,businessorproposals(otherthananynominationofdirectorsoftheAtwoodBoard,whichisgovernedbyaseparateprovisionofAtwood'sbylaws)must:
(i)bespecifiedinthenoticerelatingtothemeeting(oranysupplementthereto)givenbyoratthedirectionoftheAtwoodBoardinaccordancewiththeapplicableprovisionsregardingnoticeofshareholdermeetingsunderAtwood'sbylaws;
(ii)otherwisebeproperlybroughtbeforetheannualmeetingbyoratthedirectionoftheAtwoodBoard;or
(iii)beproperlybroughtbeforethemeetingbyanAtwoodshareholderwho(A)isashareholderofrecordatthetimeofthegivingofsuchshareholder'snoticeandontherecorddateforthedeterminationofshareholdersentitledtovoteatsuchannualmeeting,(B)isentitledtovoteattheannualmeetingand(C)complieswiththerequirementsoftheshareholderproposalprovisionsunderAtwood'sbylaws,andotherwisebepropersubjectsforshareholderactionandbeproperlyintroducedattheannualmeeting.Clause(iii)istheexclusivemeansforashareholdertosubmitbusinessorproposals(otherthanmattersproperlybroughtunderRule14a-8undertheExchangeActandincludedinthenoticerelatingtothemeeting(oranysupplementthereto)givenbyoratthedirectionoftheAtwoodBoardinaccordancewithapplicablenoticerequirementsunderAtwood'sbylaws)beforeanannualmeetingofAtwoodshareholders.
Shareholdersmeetingeitherofthefollowingcriteriacanrequireresolutionstobeputbeforetheannualgeneralmeeting:
(i)oneormoreshareholdersholdingatleast5%ofthepaid-upcapitalofEnscocarryingvotingrights;or
(ii)atleast100memberswhohavearighttovoteontheresolutionattheannualgeneralmeetingtowhicharequestrelatesandwhoholdsharesonwhichtherehasbeenpaidupanaveragesum,pershareholder,ofatleast£100.Therequestmustbereceivedatleast6weeksbeforetherelevantannualgeneralmeeting(or,iflater,thetimeatwhichnoticeisgivenofthatmeeting).Ifsorequested,Enscoisrequiredtogivenoticeofaresolutioninthesamemannerandatthesametime(orassoonasreasonablypracticalthereafter)asthenoticeoftheannualgeneralmeeting.
Shareholders,whetherindividuallyorcollectively,whodonotmeeteitherofthethresholdssetoutat(i)or(ii)abovewillnotbeentitledtonominateadirectororproposeashareholderresolutionforconsiderationatameetingoftheshareholdersexceptforshareholderproposalsrequiredbySECRule14a-8undertheExchangeAct.
DirectorsofEnscothatareproposedtobeelectedatashareholdermeetinggenerallymustbeelectedindividuallypursuanttoseparateproposalsatthemeeting;morethanonedirectorcannotbeelectedunderthesameshareholderproposal.
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RightsofAtwoodShareholders RightsofEnscoShareholdersForaproposaltobeproperlybroughtbeforeanannualmeetingbyanAtwoodshareholderinaccordancewiththeprovisionsofAtwood'sbylaws,inadditiontoanyotherapplicablerequirements,suchshareholdermusthavegiventimelyadvancenoticethereofinwritingtotheAtwoodCorporateSecretary.Tobetimely,suchshareholder'snoticemustbedeliveredto,ormailedandreceivedat,theprincipalexecutiveofficesofAtwoodnotearlierthanthecloseofbusinessonthe120thdayandnotlaterthanthecloseofbusinessonthe90thdaypriortothefirstanniversaryoftheannualmeetingdateoftheimmediatelyprecedingannualmeeting;provided,however,thatifthescheduledannualmeetingdateiscalledforadatethatisnotwithin30daysbeforeoraftersuchanniversarydate,noticebysuchshareholder,tobetimely,mustbesodeliveredorreceivednoearlierthanthecloseofbusinessonthe120thdayandnotlaterthanthecloseofbusinessonthelaterofthe90thdaypriortothedateofsuchannualmeetingor,iflessthan100days'priornoticeorpublicdisclosureofthescheduledmeetingdateisgivenormade,the10thdayfollowingtheearlierofthedayonwhichthenoticeofsuchmeetingwasmailedtoAtwoodshareholdersorthedayonwhichsuchpublicdisclosurewasmade.Innoeventwillanyadjournment,postponementordeferralofanannualmeetingortheannouncementthereofcommenceanewtimeperiodforthegivingofatimelynoticeasdescribedabove.
Anysuchshareholder'snoticetotheAtwoodCorporateSecretarymustsetforthastoeachmattersuchshareholderproposestobringbeforetheannualmeeting:
(i)adescriptionoftheproposaldesiredtobebroughtbeforetheannualmeetingandthereasonsforconductingsuchbusinessattheannualmeeting,togetherwiththetextoftheproposalorbusiness(includingthetextofanyresolutionsproposedforconsideration);
UndertheEnscoArticlesofAssociation,shareholdersholdingatleast5%ofthepaid-upcapitalofEnscocarryingvotingrightshaveanexpressrighttonominatecandidatesforelectiontotheEnscoBoardandbringotherbusinessbeforeanannualgeneralmeeting,providedtheshareholderwasashareholderofrecordatthetimenoticewasgivenofthemeetingandisashareholderatthetimeofthemeeting,isentitledtovoteatthemeetingandcomplieswiththenoticeproceduressetforthbelowastosuchbusinessornomination.Theshareholdermustgivetimelynoticeandthenoticemust:
(i)setforth,astotheshareholdergivingthenoticeandthebeneficialowner,ifany,onwhosebehalfthenominationorproposalismade(a)thenameandaddressofsuchshareholder,(b)theclassorseriesandnumberofsharesofthecorporationowned,anyoptionorconvertiblesecurityandcertainotherinformationregardingshareholderownershipofsharesand(c)anyotherinformationrelatingtosuchshareholderandbeneficialownerthatwouldberequiredtobedisclosedinaproxy;
(ii)ifthenoticerelatestoanybusinessotherthananominationofadirector(s),setforth(a)abriefdescriptionofthebusinessdesiredtobebroughtbeforethemeeting,thereasonsforconductingsuchbusinessatthemeetingandanymaterialinterestofsuchshareholderandbeneficialownerinsuchbusinessand(b)adescriptionofallagreementsbetweensuchshareholderandbeneficialownerandanyotherpersoninconnectionwiththeproposalofsuchbusinessbysuchshareholder;
(iii)setforth,foreachnominee(a)informationrelatingtosuchpersonthatwouldberequiredtobedisclosedinaproxystatementand(b)adescriptionofalldirectandindirectcompensationduringthepastthreeyears,andanyothermaterialrelationships,betweenoramongsuchshareholderandbeneficialownerontheonehand,andeachproposednominee,ontheotherhand;and
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RightsofAtwoodShareholders RightsofEnscoShareholders(ii)thenameandaddressofsuchshareholderproposingsuchbusiness,astheyappearonAtwood'sbooks,andofthebeneficialowner,ifany,onwhosebehalftheproposalismadeandthenameandaddressofanyothershareholdersknownbysuchshareholdertobesupportingsuchbusinessorproposal;
(iii)anydisclosableinterestsofsuchshareholderandsuchbeneficialowner,ifany;
(iv)anymaterialinterestofsuchshareholderandbeneficialowner,ifany,insuchbusinessorproposal;
(v)arepresentationthatsuchshareholderintendstoappearinpersonorbyproxyattheannualmeetingtobringsuchbusinessbeforethemeeting;and
(vi)adescriptionofallagreements,arrangementsandunderstandingsbetweensuchshareholderandbeneficialowner,ifany,andanyotherpersonorpersons(includingtheirnames)inconnectionwithsuchbusinessorproposalbysuchshareholder.
SubjecttoanyrightsofpreferredshareholderstoelectdirectorsasmaybeestablishedbytheAtwoodBoardanddescribedinAtwood'scertificateofformation,Atwood'sbylawsprovidethatdirectornominationsmayonlybemadeataproperlynoticedannualorspecialmeetingby(i)theAtwoodBoardor(ii)anyshareholderwho(A)isashareholderofrecordatthetimeofthegivingofsuchshareholder'snoticeandontherecorddateforthedeterminationofshareholdersentitledtovoteatsuchmeeting,(B)isentitledtovoteatsuchmeetingand(C)complieswiththerequirementsofthedirectornominationprovisionsunderAtwood'sbylaws.
(iv)includeacompletedandsignedquestionnaire,representationandagreementforeachnominee.
Tobetimely,ashareholder'snoticemustbedeliveredtoandreceivedbythesecretaryofthecompanynotearlierthanthecloseofbusinessonthe75thdayandnotlaterthanthecloseofbusinessonthe50thdaypriortothefirstanniversaryoftheprecedingyear'sannualgeneralmeeting,subjecttoanyotherrequirementsoflaw;provided,however,thatintheeventthatthedateoftheannualgeneralmeetingismorethan30daysbeforeormorethan60daysaftersuchanniversarydate,noticebytheshareholdertobetimelymustbesodeliverednotearlierthanthecloseofbusinessonthe75thdaypriortothedateofsuchannualgeneralmeetingandnotlaterthanthecloseofbusinessonthelaterofthe50thdaypriortothedateofsuchannualgeneralmeetingor,ifthefirstpublicannouncementofthedateofsuchannualgeneralmeetingislessthan65dayspriortothedateofsuchannualgeneralmeeting,the15thdayfollowingthedayonwhichpublicannouncementofthedateofsuchmeetingisfirstmadebythecompany.
UndertheEnscoArticlesofAssociationandexceptasotherwiseprovidedbylaw,thechairmanofthemeetingshalldeterminewhetheranominationoranybusinessproposedtobebroughtbeforethemeetingwasproperlymadeand,ifnot,todeclarethatsuchdefectiveproposalornominationshallbedisregarded.
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RightsofAtwoodShareholders RightsofEnscoShareholdersAnynominationbyashareholdermustbeprecededbytimelyadvancewrittennoticetotheAtwoodCorporateSecretaryasdescribedinthecontextofshareholderproposalsgenerally,above.However,ifthenumberofdirectorstobeelectedatsuchmeetingisincreased,andthereisnopublicnoticeorpublicdisclosurebyAtwoodnamingallofthenomineesfordirectororspecifyingthesizeoftheincreasedAtwoodBoardatleast100dayspriortotheanniversaryoftheimmediatelyprecedingannualmeetingor100dayspriortothespecialmeetingdate,asapplicable,ashareholder'snoticewithrespecttonomineesforanynewpositionscreatedbysuchincreasewillbeconsideredtimelyifitisdeliverednolaterthanthecloseofbusinessonthe10thdayfollowingtheearlierofthedayonwhichthenoticeofsuchmeetingwasmailedtotheshareholdersorthedayonwhichsuchdisclosurewasmade.
Inadditiontotheinformationdescribedaboveinthecontextofshareholderproposalsgenerally,anysuchshareholder'snoticetotheAtwoodCorporateSecretaryforadirectornominationmustsetforth,astoeachnominee:
(i)name,age,businessaddressandresidenceaddress;
(ii)principaloccupationoremployment;
(iii)anyotherinformationthatwouldberequiredtobedisclosedinaproxystatementorotherfilingrequiredtobemadeinconnectionwithsolicitationsofproxiesforelectionofdirectorsinacontestedelection,orwouldotherwiseberequiredpursuanttoSection14oftheExchangeActandrulespromulgatedthereunder;and
(iv)adescriptionofalldirectandindirectcompensationandothermaterialmonetaryagreements,arrangementsandunderstandingsduringthepastthreeyears,andanyothermaterialrelationships,betweenoramongsuchshareholdergivingthenoticeandthebeneficialowner,ifany,onwhosebehalfthenominationismade,andtheirrespectiveaffiliatesandassociates,orothersactinginconcerttherewith,ontheonehand,andeachproposednominee,andhisorherrespectiveaffiliatesandassociates,orothersactinginconcerttherewith,ontheotherhand.
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RightsofAtwoodShareholders RightsofEnscoShareholdersAshareholderprovidingsuchnoticemustprovidefurtherupdatesandsupplements,ifnecessary,uponanymaterialchangestotheinformationprovidedthereinandsothatsuchinformationistrueandcorrectbothasoftherecorddateandasofthedate10dayspriortothemeetingoranyadjournmentorpostponementthereof.Anysuchupdatesmustbedeliverednolaterthanfivebusinessdaysaftertherecorddateoreightbusinessdayspriortothemeetingdate,asapplicable.
Atwood'spresidentorpresidingofficershalldeterminewhetherthenominationrequirementshavebeenmet,and,ifsuchofficerdeterminesthatthenominationwasnotmadeinaccordancewiththeAtwoodbylaws,thedefectivenominationwillbedisregarded.
SourcesandPaymentofDividends
Sources of Dividends
UndertheAtwoodbylaws,beforedeclaringanydividendtheremaybereservedoutoftheearnedsurplussuchsumorsumsastheAtwoodBoard,fromtimetotimeintheabsolutediscretionofthedirectors,deemsproperforworkingcapitalorasareservefundtomeetcontingenciesorforequalizingdividends,orforsuchotherpurposesastheAtwoodBoardmaydeemconducivetotheinterestsofAtwood,andtheAtwoodBoardmayabolishanysuchreserveinthemannerinwhichitwascreated.
SubjecttoEnglishlaw,iftheEnscoBoardconsidersthatthefinancialpositionofEnscojustifiessuchpayments,itcanpayinterim,finalorotherdividendsonanyclassofsharesofanyamountsandonanydatesandforanyperiodswhichitdecides.
However,underEnglishlaw,Enscoisnotpermittedtomakeadistributionif,atthetime,theamountofitsnetassetsislessthantheaggregateofitsissuedandpaid-upsharecapitalandundistributablereservesortotheextentthatthedistributionwillreducethenetassetsbelowsuchamount.
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RightsofAtwoodShareholders RightsofEnscoShareholders
Declaration of Dividends
SubjecttocertainrestrictionsondeclarationandpaymentofdividendsinAtwood'screditagreements,theAtwoodBoardmaydeclaredividendsasandwhentheAtwoodBoarddeemsexpedientandasmaybepermittedbylawandundertheprovisionsoftheTBOC.
UnderTexaslaw,adistributionincludesatransferofcashorotherproperty(exceptacorporation'sownsharesorrightstoacquireitsshares),oranissuanceofdebt,byacorporationtoitsshareholdersintheformof:(i)adividendonanyclassorseriesofthecorporation'soutstandingshares;(ii)apurchaseorredemption,directlyorindirectly,ofitsshares;or(iii)apaymentinliquidationofalloraportionofitsassets.Texaslawalsoprovidesthatacorporationmaynotmakeadistributionifsuchdistributionviolatesitscertificateofformationorifiteitherrendersthecorporationunabletopayitsdebtsastheybecomedueinthecourseofitsbusinessoraffairsorexceeds,dependingonthetypeofdistribution,eitherthenetassetsorthesurplusofthecorporation.
TheEnscoArticlesofAssociationauthorizethedirectorstodeclaredividendsiftheEnscoBoardconsiderthatthefinancialpositionofEnscojustifiessuchpayment.
TheEnscoArticlesofAssociationprovidethatdividendsmaybepaidincash;bycheque,warrantormoneyordermadepayabletotheorderofthepersonentitledtothepayment;byabankorotherfundstransfersystemtoanaccountdesignatedinwritingbythepersonentitledtothepayment;iftheEnscoBoardsodecides,bymeansofarelevantsysteminrespectofanuncertificatedshare;orbysuchothermethodasthepersonentitledtothepaymentmayinwritingdirectandtheEnscoBoardmayagree.
Record Date
Atwood'sbylawsprovidethatfordividendsandothermatters,therecorddatemustbesetnotmorethan60dayspriortosuchaction.
TheEnscoArticlesofAssociationprovidethat,subjecttocertainrestrictions,theEnscoBoardmaysettherecorddateforadividendorotherdistribution,providedthedateisnotmorethan60daysbeforethedateofdeclarationofthedividend.
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RightsofAtwoodShareholders RightsofEnscoShareholders
PurchaseandRedemptionofStock
Atwoodcommonstockisnotconvertible,redeemableorassessable,orentitledtothebenefitsofanysinkingfund.
SubjecttoEnglishlaw,theEnscoArticlesofAssociationprovidethatEnscomaypurchaseitsownshares(includinganyredeemableshares).
SubjecttoEnglishlawandtoanyrightsattachedtoanyexistingshares,theEnscoArticlesofAssociationprovidethatEnscomayissueshareswhicharetoberedeemedorareliabletoberedeemedatEnsco'soptionortheholder,andtheEnscoBoardmaydeterminetheterms,conditionsandmannerofredemptionofanysharessoissued.
UnderEnglishlaw,anyshares(includingredeemableshares)purchasedbyEnscomustthenbecancelled(andcannotberesoldbythecompany)or,wherethepurchaseismadeoutofdistributableprofits,heldastreasuryshares.SharesrepurchasedintotreasurymayberesoldbyEnsco.
AnyredeemableshareswhichareredeemedbyEnscomustbecancelled,butpendingredemptioncouldbevotedanddeemedoutstandingforthepurposeofdeterminingthetotalnumberofsharesentitledtovoteonanysuchmatterunlessthetermsofissueprovideotherwise.
VotingTreasuryStock
Atwood'sbylawsprovidethattreasurysharesandsharesoftheAtwood'sownstockownedbyanothercorporationthemajorityofthevotingstockofwhichisownedorcontrolledbyAtwoodshallnotbevoted,directlyorindirectly,atanymeeting,andshallnotbecountedindeterminingthetotalnumberofoutstandingsharesatanygiventime;providedthattheforegoingshallnotprecludeAtwoodfromvotingsharesofitscapitalstockheldorcontrolledbyAtwoodinafiduciarycapacityorforwhichAtwoodotherwiseexercisesvotingpowerinafiduciarycapacity.
UnderEnglishlaw,Enscocannotexerciseanyrightinrespectofsharesheldintreasury(includingtherighttoattendandvoteatmeetings).Anypurportedexerciseofsucharightisvoid.
AnyredeemableshareswhichareredeemedbyEnscomustbecancelled,butpendingredemptioncouldbevotedanddeemedoutstandingforthepurposeofdeterminingthetotalnumberofsharesentitledtovoteonanysuchmatterunlessthetermsofissueprovideotherwise.
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RightsofAtwoodShareholders RightsofEnscoShareholders
Notice
Atwood'sbylawsprovidethatanynoticetoshareholdersmustbeinwritingandmaybedeliveredpersonally,orbymailtotheshareholdersattheirrespectiveaddressesappearingonthebooksandsharetransferrecords.
Noticetoshareholderswillbedeemedtobegivenatthetimewhenthesameshallbesodeliveredormailed.
Onconsentofashareholder,noticefromAtwoodmaybegiventotheshareholderbyelectronictransmission.TheshareholdermayspecifytheformofelectronictransmissiontobeusedtocommunicatenoticeandmayrevokethisconsentbywrittennoticetoAtwood.
TheEnscoArticlesofAssociationprovidethatwhenevernoticeisrequiredtobegiventoanyshareholder,suchnoticemaybegiveninwriting
(i)personally;
(ii)bymail,addressedtosuchshareholder,athisorheraddressasitappearsontherecordsofthecompany,withpostagethereonprepaid;
(iii)bysendingitinelectronicform(iftheshareholderhassoagreed);or
(iv)incertaincircumstances,bymakingthenoticeavailableonawebsite.
AnnualMeetingsofShareholders
Atwood'sbylawsprovidethatallshareholdermeetingswillbeheldatsuchtimeandplace,withinoroutsidetheStateofTexas,asmaybedesignatedbytheAtwoodBoardorasmaybestatedinthenoticeofthemeetingorinadulyexecutedwaiverofnoticethereof.TheAtwoodBoardmaydeterminethatanymeetingmaybeheldsolelybymeansofremotecommunicationinaccordancewithTexaslaw.
Atwood'sbylawsprovidethatnoticeoftheannualmeetingstatingtheplace,dateandhourofthemeetingmustbegiventoeachshareholderentitledtovoteatsuchmeetingnotlessthan10normorethan60daysbeforethedateofthemeeting.
TheEnscoArticlesofAssociationprovidethattheEnscoBoard,chairman,orchiefexecutiveofficermayconvenegeneralmeetingsoftheshareholdersatanyplacetheysodesignate.
Thenoticeofthegeneralmeetingmuststatethetime,dateandplaceofthemeetingandthegeneralnatureofthebusinesstobedealtwith.ThegeneralmeetingmaybewithinoroutsidetheUnitedKingdom.
Enscomustholditsannualgeneralmeetingwithin6monthsfromthedayfollowingtheendofitsfiscalyear.
UnderEnglishlaw,anannualgeneralmeetingmustbecalledbyatleast21cleardays'notice.Itispossibletoextendthisnoticeperiodinthecompany'sarticlesofassociation.Thisnoticeperiodcanbeshortenedifallshareholderswhoarepermittedtoattendandvoteagreetotheshorternotice.Ameetingotherthantheannualgeneralmeetingmustbecalledbynotlessthan14cleardays'notice,butthistoocanbelengthenedorshortenedbyagreement.ThemaximumnoticeintheEnscoArticlesofAssociationis60cleardaysforbothtypesofmeeting.
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RightsofAtwoodShareholders RightsofEnscoShareholders
"Cleardays"meanscalendardaysandexcludes(1)thedateofreceiptordeemedreceiptofthenotice;and(2)thedateofthemeetingitself.PursuanttotheEnscoArticlesofAssociation,noticeofameetingwillbedeemedtobereceivedbyshareholders24hoursafteritwasposted(providedthatfirstclasspostisused—ifsecondclasspostisused,orifthereisonlyoneclassofpost,thenoticewillbedeemedtobereceived48hoursafteritwasposted).
Special/GeneralMeetingsofShareholders
Calling a Special/General Meeting
Atwood'scertificateofformationandbylawsprovidethatspecialmeetingsofshareholdersmaybecalledonlyontheorderof:
(i)theAtwoodBoard;
(ii)thechairmanoftheAtwoodBoard;or
(iii)thepresident.
TheEnscoArticlesofAssociationprovidethatgeneralmeetingsofshareholdersmaybecalledontheorderof:
(i)theEnscoBoard;
(ii)thechairmanoftheEnscoBoard;or
(iii)thechiefexecutiveofficer.
Additionally,Atwood'sbylawsprovidethatoneormoreshareholdersrepresentingatleast10%ofallsharesofAtwoodcommonstockentitledtovoteataspecialmeetinghavetherighttocallsuchameetinguponwrittenrequest.
UnderEnglishlaw,oneormoreshareholdersrepresentingatleast5%ofthepaidupcapitalofEnscocarryingvotingrightshavetherighttorequisitiontheholdingofageneralmeeting.
Notice
Atwood'sbylawsprovidethatnoticeofaspecialmeetingstatingtheplace,date,hourofthemeetingandpurposeorpurposesforwhichthemeetingiscalledmustbegiventoeachshareholderentitledtovoteatsuchmeetingnotlessthan10normorethan60daysbeforethedateofthemeeting.Businesstransactedatanyspecialmeetingofshareholdersislimitedtothepurposeorpurposesstatedinthenotice.
Englishlawrequiresthatnoticeofageneralmeetingofshareholders(otherthantheannualgeneralmeetingconvenedbytheofficers,whichrequiresatleast21cleardays)mustbedeliveredtotheshareholdersatleast14cleardayspriortothemeeting.UndertheEnscoArticlesofAssociationthenoticemustbedeliverednotmorethan60cleardayspriortothemeeting.Thisnoticemuststatetheplace,dateandtimeofthemeetingandthepurposeorpurposesforwhichthemeetingiscalled.Businesstransactedatanygeneralmeetingofshareholderswillbelimitedtothepurposesstatedinthenotice.
WherethemeetingisproperlyrequisitionedbytheshareholdersofEnsco,theEnscoBoardmustcallthegeneralmeetingwithin21days,andthemeetingitselfshouldbeheldnotmorethan28daysafterthedateofthenoticeconveningthemeeting.
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RightsofAtwoodShareholders RightsofEnscoShareholders
Noticeperiodsforgeneralmeetingscanbeshortenedforpubliccompaniesifshareholdersholding95%ofthevotingrightsagreetoholdthemeetingatshortnotice.Inthecaseofannualgeneralmeetings,allshareholdersentitledtoattendandvotemustagreetoshortnotice.
AppraisalorDissenters'Rights
UndertheTBOC,shareholdersgenerallyhaveappraisalrightsintheeventofamergerorconsolidation.However,theseappraisalrightsarenotavailableif(a)thesharesheldbytheshareholderarepartofaclassofshareslistedonanationalsecuritiesexchangeorheldofrecordbyatleast2,000holders,(b)theshareholderisnotrequiredtoacceptforhisorhersharesanyconsiderationthatisdifferentthantheconsiderationtobeprovidedtoanyotherholderofsharesofthesameclassheldbytheshareholder,and(c)theshareholderisnotrequiredtoacceptanyconsiderationotherthansharesofacorporationthatsatisfytherequirementsinclause(a)above.See"Shareholders'VotesonCertainTransactions"below.
Englishlawdoesnotprovidefor"appraisalrights"similartothoserightsunderTexaslaw.However,Englishlawwillprovidefordissenter'srightswhichpermitashareholdertoobjecttoacourtinthecontextofthecompulsoryacquisitionofminorityshares.See"Shareholders'VotesonCertainTransactions"below.
PreemptiveRights
AtwoodcommonstockcarriesnopreemptiveorothersubscriptionrightstopurchasesharesofanycapitalstockofAtwood.
UnderEnglishlaw,unlesseitheraspecialresolutiontothecontraryhasbeenpassedbytheshareholdersorthereisaprovisionintheEnscoArticlesofAssociationconferringacorrespondingright,theissuanceforcash of:
(i)equitysecurities,(i.e.,ordinaryshares,whicharesharesotherthanshareswhich,withrespecttodividendsorcapital,carryarighttoparticipateonlyuptoaspecifiedamountinadistribution);or
(ii)rightstosubscribefor,orconvertsecuritiesinto,ordinaryshares,mustbeofferedfirsttotheexistingordinaryshareholdersinproportiontotherespectivenominalvaluesoftheirholdings.Englishlawpermitsacompany'sshareholdersbyspecialresolutionoraprovisioninacompany'sarticlesofassociationtoexcludepreemptiverightsforaperiodofuptofiveyears.
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RightsofAtwoodShareholders RightsofEnscoShareholders
PursuanttoresolutionspassedattheEnscoannualgeneralmeetingheldonMay22,2017,theEnscoBoardiscurrentlyauthorizedto:
(i)allotandissueequitysecuritiesforcashfreeofpre-emptionrightsuptoanominalamountof$1,517,989;and
(ii)furtherallotequitysecuritiesfreeofpre-emptionrightsuptoanominalamountof$1,517,989forthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsaftertheoriginaltransaction)atransactionwhichtheEnscoBoarddeemstobeanacquisitionorothercapitalinvestment.
Preemptiverightsdonotgenerallyapplytoacompany'sissuanceofsharesinexchangeforconsiderationotherthancash.
AmendmentofGoverningInstruments
ThevoterequiredforamendingAtwood'scertificateofformationistheaffirmativevoteofatleasttwo-thirdsoftheoutstandingsharesentitledtovotethereon.
Atwood'sbylawsprovidethatthebylawsmaybealtered,amendedorrepealedornewbylawsadoptedbyeithertheAtwoodBoardortheshareholders.Anyalteration,amendmentorrepealrelatingtotheprovisionsofAtwood'sbylawsthatsetforththenumberofdirectorsrequiresshareholderapproval.
TheprovisionsintheEnscoArticlesofAssociationofanEnglishpubliclimitedcompanyaregenerallyequivalenttothecollectiveprovisionsinacertificateofincorporationandbylawsofaDelawarecorporation.
UnderEnglishlaw,aspecialresolutionoftheshareholdersisrequiredtoamendanyprovisionoftheEnscoArticlesofAssociation.TheEnscoBoarddoesnothavethepowertoamendthearticleswithoutshareholderapproval.
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StockClassRights
UnderTexaslaw,unlessanamendmenttothecertificateofformationisundertakenbytheboardofdirectorsrelatingtoaseriesofsharesestablishedbytheboardofdirectors,separatevotingbyaclassorseriesofsharesisrequiredforapprovalofanamendmenttothecertificateofformationiftheamendmentwill:
(i)increaseordecreaseoftheaggregatenumberofauthorizedsharesoftheclassorseries;
(ii)increaseordecreaseoftheparvalueofthesharesoftheclassorseries,includingchangingshareswithparvalueintoshareswithoutparvalueorchangingshareswithoutparvalueintoshareswithparvalue;
(iii)effectanexchange,reclassification,orcancellationofallorpartofthesharesoftheclassorseries;
(iv)effectanexchangeorcreatingarightofexchangeofallorpartofthesharesofanotherclassorseriesintothesharesoftheclassorseries;
(v)changethedesignations,preferences,limitations,orrelativerightsofthesharesoftheclassorseries;
Amendmentsaffectingtherightsoftheholdersofanyclassofsharesmay,dependingontherightsattachedtotheclassandthenatureoftheamendments,alsorequireapprovaloftheclassaffectedataseparateclassmeeting.
TheEnscoArticlesofAssociationprovidethatshareholdersoftherelevantclassofsharescanapproveanyamendmenttotheirrightseitherby:
(i)consentinwritingofshareholdersholdingatleast75%oftheissuedsharesofthatclassbyamount;or
(ii)aspecialresolutionpassedataclassmeetingoftherelevantclass.Thequorumforsuchameetingisoneormoreshareholdersentitledtovoteatthemeetingbeingpresentinpersonorbyproxyandholding,whetherindividuallyorinaggregate,atleast20%innominalamountoftheissuedsharesoftherelevantclass.Everyshareholderwhoispresentinpersonorbyproxyandentitledtovoteatsuchameetingisentitledtoonevoteforeverysharethatheorsheholdsoftherelevantclass.
(vi)changethesharesoftheclassorseries,withorwithoutparvalue,intothesameoradifferentnumberofshares,withorwithoutparvalue,ofthesameclassorseriesoranotherclassorseries;
(vii)createanewclassorseriesofshareswithrightsandpreferencesequal,prior,orsuperiortothesharesoftheclassorseries;
(viii)increasetherightsandpreferencesofaclassorserieswithrightsandpreferencesequal,prior,orsuperiortothesharesoftheclassorseries;
(ix)increasetherightsandpreferencesofaclassorserieswithrightsorpreferenceslaterorinferiortothesharesoftheclassorseriesinsuchamannerthattherightsorpreferenceswillbeequal,prior,orsuperiortothesharesoftheclassorseries;
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(x)dividethesharesoftheclassintoseriesandsettinganddeterminingthedesignationoftheseriesandthevariationsintherelativerightsandpreferencesbetweenthesharesoftheseries;
(xi)limitordenyexistingpreemptiverightsorcumulativevotingrightsofthesharesoftheclassorseries;or
(xii)cancelorotherwiseaffectthedividendsonthesharesoftheclassorseriesthathaveaccruedbuthavenotbeendeclared.
Foreachamendmenttothecertificateofformationthatwouldcreatearesultdescribedinsubsections(i)through(xii)above,holdersofsharesofaclassorseriesareentitledtovoteasaclassorseriesuponsuchproposedamendment.
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RightsofAtwoodShareholders RightsofEnscoShareholdersShareholders'VotesonCertainTransactions
Mergers
UnderTexaslaw,unlessacorporation'scertificateofformationpermitsalesservote(butnotlessthanamajority),theaffirmativevoteoftheholdersofatleasttwo-thirdsoftheoutstandingsharesofthecorporationentitledtovoteonamergerisrequiredtoapproveamergertransaction.Atwood'scertificateofformationdoesnotpermitalesservoteonamergertransaction,andassuch,theaffirmativevoteofleasttwo-thirdsoftheoutstandingsharesofAtwoodentitledtovoteisrequiredtoapproveamergertransaction.
Asnotedabove,"ordinaryresolutions"mustbeapprovedbyatleastamajorityofthevotescastbyshareholders."Specialresolutions"requiretheaffirmativevoteofatleast75%ofthevotescastatthemeetingtobeapproved.
ThereisnoconceptofastatutorymergerunderEnglishlaw(exceptwhereanEnglishcompanymergeswithanothercompanybasedintheEuropeanEconomicArea).
UnderEnglishlawandsubjecttoapplicableU.S.securitieslawsandNYSErulesandregulations,whereEnscoproposestoacquireanothercompany,approvalofEnsco'sshareholdersisnotrequired.
UnderEnglishlaw,whereanothercompanyproposestoacquireEnsco,therequirementfortheapprovaloftheshareholdersofEnscodependsonthemethodofacquisition.
UnderEnglishlaw,schemesofarrangementarearrangementsorcompromisesbetweenacompanyandanyclassofshareholdersorcreditors,andareusedincertaintypesofreconstructions,amalgamations,capitalreorganizationsortakeovers(similartoamergerintheU.S.).Sucharrangementsrequiretheapprovalof:(i)amajorityinnumberofshareholdersorcreditors(asthecasemaybe)representing75%invalueofthecreditorsorclassofcreditorsorshareholdersorclassofshareholderspresentandvotingeitherinpersonorbyproxyataspecialmeetingconvenedbyorderofthecourt;and(ii)theEnglishcourt.
Onceapproved,sanctionedandbecomingeffective,allshareholdersandcreditorsoftherelevantclassareboundbythetermsofthescheme,andadissentingshareholderwouldhavenorightscomparabletoappraisalrightsprovidedunderTexaslaw.
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RightsofAtwoodShareholders RightsofEnscoShareholders TheCompaniesAct2006alsoprovidesthatwhere(i)atakeoverofferismade
forshares,and(ii)followingtheoffer,theofferorhasacquiredorcontractedtoacquirenotlessthan90%invalueofthesharestowhichthetakeoverofferrelates,andnotlessthan90%ofthevotingrightscarriedbythesharestowhichtheofferrelates,theofferormayrequiretheothershareholderswhodidnotaccepttheoffertotransfertheirsharesonthetermsoftheoffer.
Adissentingshareholdermayobjecttothetransferonthebasisthatthebidderisnotentitledtoacquiresharesortospecifytermsofacquisitiondifferentfromthoseintheofferbyapplyingtothecourtwithinsixweeksofthedateonwhichnoticeofthetransferwasgiven.Intheabsenceoffraudoroppression,thecourtisunlikelytoorderthattheacquisitionshallnottakeeffect,butitmayspecifytermsofthetransferthatitfindsappropriate.
Aminorityshareholderisalsoentitledinsimilarcircumstancestorequiretheofferortoacquirehisorhersharesonthetermsoftheoffer.
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RightsofAtwoodShareholders RightsofEnscoShareholdersRelated Party Transactions
NeitherTexaslawnorAtwood'scertificateofformationorbylawsrequiresshareholderapprovalofrelatedpartytransactions.
UndertherulesoftheNYSE,shareholderapprovalisrequiredpriortotheissuanceofcommonstock,orofsecuritiesconvertibleintoorexercisableforcommonstock,inanytransactionorseriesofrelatedtransactions,to:
(i)adirector,officerorsubstantialsecurityholderofthecompany(eacha"RelatedParty");
(ii)asubsidiary,affiliateorotherclosely-relatedpersonofaRelatedParty;or
(iii)anycompanyorentityinwhichaRelatedPartyhasasubstantialdirectorindirectinterest;
ifthenumberofsharesofcommonstocktobeissued,orifthenumberofsharesofcommonstockintowhichthesecuritiesmaybeconvertibleorexercisable,exceedseither1%ofthenumberofsharesofcommonstockor1%ofthevotingpoweroutstandingbeforetheissuance.However,iftheRelatedPartyinvolvedinthetransactionisclassifiedassuchsolelybecausesuchpersonisasubstantialsecurityholder,andiftheissuancerelatestoasaleofstockforcashatapriceatleastasgreataseachofthebookandmarketvalueoftheissuer'scommonstock,thenshareholderapprovalwillnotberequiredunlessthenumberofsharesofcommonstocktobeissued,orunlessthenumberofsharesofcommonstockintowhichthesecuritiesmaybeconvertibleorexercisable,exceedseither5%ofthenumberofsharesofcommonstockor5%ofthevotingpoweroutstandingbeforetheissuance.
UnderEnglishlaw,certaintransactions(suchasloans,credittransactionsandsubstantialpropertytransactions)betweenadirectorandarelatedcompanyofwhichheorsheisadirectorareprohibitedunlessapprovedbytheshareholders.
UndertherulesoftheNYSE,shareholderapprovalisrequiredpriortotheissuanceofcommonstock,orofsecuritiesconvertibleintoorexercisableforcommonstock,inanytransactionorseriesofrelatedtransactions,to:
(i)adirector,officerorsubstantialsecurityholderofthecompany(eachaRelatedParty);
(ii)asubsidiary,affiliateorotherclosely-relatedpersonofaRelatedParty;or
(iii)anycompanyorentityinwhichaRelatedPartyhasasubstantialdirectorindirectinterest;
ifthenumberofsharesofcommonstocktobeissued,orifthenumberofsharesofcommonstockintowhichthesecuritiesmaybeconvertibleorexercisable,exceedseither1%ofthenumberofsharesofcommonstockor1%ofthevotingpoweroutstandingbeforetheissuance.However,iftheRelatedPartyinvolvedinthetransactionisclassifiedassuchsolelybecausesuchpersonisasubstantialsecurityholder,andiftheissuancerelatestoasaleofstockforcashatapriceatleastasgreataseachofthebookandmarketvalueoftheissuer'scommonstock,thenshareholderapprovalwillnotberequiredunlessthenumberofsharesofcommonstocktobeissued,orunlessthenumberofsharesofcommonstockintowhichthesecuritiesmaybeconvertibleorexercisable,exceedseither5%ofthenumberofsharesofcommonstockor5%ofthevotingpoweroutstandingbeforetheissuance.
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RightsofAtwoodShareholders RightsofEnscoShareholdersApproval of Auditors
Atwood'sshareholdersdonothavetherighttoappointitsauditors;however,Atwoodtypicallyincludesaproposalatitsannualmeetingforshareholderstoratifytheappointmentofitsauditors.
UnderEnglishlaw,Ensco'sshareholdersapprovethecompany'sauditorseachyear.Inaddition,thecompany'sannualfinancialstatements,whichmust,tothesatisfactionofthedirectors,givea"trueandfairview"oftheassets,liabilities,financialpositionandprofitorlossofEnscoandtheconsolidatedgroup,mustbepresentedtotheshareholdersatageneralmeetingbutarenotrequiredtobeapprovedbytheshareholders.
RightsofInspection
UnderTexaslaw,subjecttothegoverningdocumentsandonwrittendemandstatingaproperpurpose,aholderofsharesofacorporationforatleastsixmonthsimmediatelyprecedingtheholder'sdemand,oraholderofatleast5%ofalloftheoutstandingsharesofacorporation,isentitledtoexamineandcopy,atareasonabletime,thecorporation'srelevantbooks,recordsofaccount,minutes,andsharetransferrecords.Theexaminationmaybeconductedinpersonorthroughanagent,accountant,orattorney.
Atwood'scertificateofformationandbylawshavenolimitationontherightofshareholderstoinspectitsbooksandrecords.
UnderTexaslaw,thelistofshareholdersentitledtovoteatthemeetingshallbe:
(i)subjecttoinspectionbyashareholderduringregularbusinesshours;and
(ii)producedandkeptopenatthemeeting.
Ifameetingoftheshareholdersisheldbymeansofremotecommunication,thelistmustbeopentoinspectionbyashareholderduringthemeetingonareasonablyaccessibleelectronicnetwork.
Theoriginalsharetransferrecordsareprimafacieevidenceofwhichshareholdersareentitledtoinspectthelist.
UnderEnglishlaw,theregisterandindexofnamesofshareholdersofEnscomaybeinspectedatanytime
(i)forfree,byitsshareholders,and
(ii)forafeebyanyotherperson.
Theinspectingshareholderhastoshowheorshehasaproperpurposeininspectingtheregister.Documentsmaybecopiedforafee.
UnderEnglishlaw,theservicecontracts,ifany,ofEnsco'sdirectorscanbeinspectedwithoutchargeandduringbusinesshours.InthisandcertainothercontextsunderapplicableEnglishlaw,a"director"includescertainexecutiveofficersanda"servicecontract"includesanycontractunderwhichsuchadirectororexecutiveofficerundertakespersonallytoprovideservicestothecompanyorasubsidiarycompany,whetherinthatperson'scapacityasadirector,anexecutiveofficerorotherwise.
UnderEnglishlaw,theshareholdersofEnscomayalsoinspect,withoutchargeandduringbusinesshours,theminutesofmeetingsoftheshareholdersfortheprevious10yearsandobtaincopiesoftheminutesforafee.
Inaddition,thepublishedannualaccountsofEnscoarerequiredtobeavailableforshareholdersatageneralmeetingandashareholderisentitledtoacopyoftheseaccounts.TheaccountsmustalsobemadeavailableonEnsco'swebsiteandremainavailableuntiltheaccountsforthenextfinancialyearareplacedonthewebsite.
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RightsofAtwoodShareholders RightsofEnscoShareholders UnderEnglishlaw,theshareholdersofacompanydonothavetherightto
inspectthecorporatebooksofasubsidiaryofthatcompany.
TheEnscoArticlesofAssociationpermitshareholderstoexamineacompletelistofshareholderspriorto,andat,ashareholdermeeting.
ApprovalofDirectorCompensation
SECrulesrequirethatAtwood'sshareholdersbeallowedanon-bindingadvisoryvotetoapprovenamedexecutiveofficercompensation.Thereisnosimilarrequirementwithrespecttodirectorcompensation.
SECrulesrequirethatEnscoshareholdersbeallowedanon-bindingadvisoryvotetoapprovenamedexecutiveofficercompensation.
UnderEnglishlaw,Enscomustprepareadirectors'remunerationpolicyatleasteverythreeyears.Theremustbeabindingshareholdervote(bywayofordinaryresolution)onthedirectors'remunerationpolicyatleasteverythreeyears.Shareholderapprovalisrequiredinrespectofanychangestothedirectors'remunerationpolicywithinthisthree-yearperiod.
EnglishlawalsorequiresEnscotoprepareadirectors'remunerationreportforeachfinancialyear,whichissubjecttoanannualnon-bindingadvisoryvotebyshareholders.Shareholderapprovalofthedirectors'remunerationpolicywillberequiredwherethedirectors'remunerationreportwasnotapprovedbyshareholdersatthepreviousmeetingwheretheannualreportsandaccountsofEnscowerepresentedtoshareholders.
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RightsofAtwoodShareholders RightsofEnscoShareholdersStandardofConductforDirectors
UnderTexaslaw,adirectorowesthefiduciarydutiesofloyalty(includinggoodfaith),careandobediencetothecorporation.Thedutyofloyaltyrequiresdirectorstoactingoodfaithandtonotallowpersonalinteresttoprevailoverthatofthecorporation.Thedutyofcarerequiresdirectorstoactandperformcorporatedutiesinthesamemannerasanordinarilyprudentpersonwouldundersimilarcircumstances.Inperformingthisobligation,directorsmustbediligentandinformedandexercisehonestandunbiasedbusinessjudgmentinpursuitofcorporateinterests.Texaslawprovidesthatdirectorsmayingoodfaithrelyoninformation,opinions,reportsorstatementspreparedbyofficersoremployeesofthecorporation,counsel,accountantsandinvestmentbankers.Thedutyofobediencerequiresthatdirectorsavoidcommittingactsbeyondthescopeofthepowersofthecorporation.Whendirectorsactconsistentlywiththeirdutiesofloyalty(includinggoodfaith),careandobedience,theirdecisionsaregenerallypresumedtobevalidundertheTexasbusinessjudgmentrule.
EnglishlawimposescertainspecificobligationsonthedirectorsofEnsco.Inadditiontocertaincommonlawandequitableprinciples,therearestatutorydirectorduties,includingsevencodifieddutiesasfollows:
(i)Toactinawayheorsheconsiders,ingoodfaith,wouldbemostlikelytopromotethesuccessofthecompanyforthebenefitofitsshareholdersasawhole;
(ii)Toactinaccordancewiththecompany'sconstitutionandexercisepowersonlyforthepurposesforwhichtheyareconferred;
(iii)Toexerciseindependentjudgment;
(iv)Toexercisereasonablecare,skillanddiligence;
(v)Toavoidconflictsofinterest;
(vi)Nottoacceptbenefitsfromthirdparties;and
(vii)Todeclareaninterestinaproposedtransactionwiththecompany.
ClassificationoftheBoardofDirectors
Texaslawpermitsthecertificateofformationorbylawstoprovidethatdirectorsbedividedintoone,twoorthreeclasses,withthetermofofficeofoneclassofdirectorstoexpireeachyear.
Atwood'sbylawsandcertificateofformationdonotprovideforclassesofdirectors.
Englishlawpermitsacompanytoprovidefortermsofdifferentlengthforitsdirectors.However,italsorequires,inthecaseofofficerswhoarealsoconsidereddirectorsunderEnglishlaw,thatemploymentagreementswithaguaranteedtermofmorethantwoyearsbesubjecttoapriorapprovalofshareholdersatageneralmeeting.
TheEnscoArticlesofAssociationprovidethateachnominateddirectorwillserveforatermtoexpireatthesubsequentannualmeeting.
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RightsofAtwoodShareholders RightsofEnscoShareholdersRemovalofDirectors
Unlessotherwiseprovidedbythecertificateofformationorbylaws,underTexaslaw,theshareholdersofacorporationmayremoveadirectorortheentireboardofdirectors,withorwithoutcause,atameetingcalledforthatpurpose,byavoteofholdersofamajorityoftheoutstandingsharesentitledtovoteatanelectionofthedirectorordirectors.
Atwood'sbylawsprovidethatdirectorsmayberemovedfromofficefromtimetotimeandatanytimewithorwithoutcause,bytheshareholdersentitledtovote,atanymeetingthereofatwhichaquorumispresent,bythevoteofatwo-thirdsmajorityofthevotesoftheshareholderspresentinpersonorbyproxyandentitledtovotethereat.
UnderEnglishlaw,shareholdersmayremoveadirectorwithoutcausebyordinaryresolution,irrespectiveofanyprovisionsinthecompany'sarticlesofassociation,providedthat28cleardays'noticeoftheresolutionisgiventothecompany.
UnderEnglishlaw,thedirectorhasarighttomakewrittenrepresentations,whichthecompanymustcirculatetoshareholders,astowhyheorsheshouldnotberemoved.
VacanciesontheBoardofDirectors
Generally
Atwood'sbylawsprovidethatanyvacancyorvacanciesoccurringintheAtwoodBoardmaybefilledbytheaffirmativevoteofamajorityoftheremainingdirectorsthoughlessthanaquorumoftheAtwoodBoard.Adirectorelectedtofillavacancyshallbeelectedfortheunexpiredtermofhispredecessorinofficeanduntilhissuccessorshallhavebeenelectedandqualified.
AnyvacancyoccurringintheEnscoBoardmaybefilledbyaresolutionoftheremainingdirectors.Ifthereare,however,nodirectorsinoffice,ashareholdermayconveneageneralmeetingforthepurposeofappointingdirectors.
Term of Service After Appointment to Fill a Vacancy
Atwood'sbylawsandcertificateofformationprovidethatanydirectorappointedtofillavacancyoranewly-createddirectorshipwillserveuntilthenextannualmeetingofshareholdersanduntilsuchdirector'ssuccessorshallhavebeendulyelectedandqualifiedoruntilhisearlierdeath,resignationorremoval.
TheEnscoArticlesofAssociationprovidethatallappointeddirectorswillserveforatermtoexpireatthesubsequentannualgeneralmeetingofshareholders.
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RightsofAtwoodShareholders RightsofEnscoShareholdersLiabilityofDirectorsandOfficers
Texaslawpermitsacorporationtoeliminateinitscertificateofformationallmonetaryliabilityofadirectortothecorporationoritsshareholdersforconductintheperformanceofsuchdirector'sduties,exceptwheresuchliabilityisbasedon:
(i)breachesofthedutyofloyaltytothecorporationoritsshareholders;
(ii)actsoromissionsnotingoodfaiththatconstituteabreachofdutyofthepersontothecorporationorinvolvesintentionalmisconductoraknowingviolationoflaw;
(iii)transactionsfromwhichthedirectorobtainsanimproperbenefit;or
(iv)violationsofapplicablestatuteswhichexpresslyprovidefortheliabilityofadirector.
Atwood'scertificateofformationprovidesthatadirectorwillnotbeliabletoAtwoodoritsshareholdersformonetarydamagesforanactoromissioninthedirector'scapacityasdirector,subjecttotheexceptionsprovidedundertheTBOC.
Englishlawdoesnotpermitacompanytoexemptanydirectororcertainofficersfromanyliabilityarisingfromnegligence,default,breachofdutyorbreachoftrustagainstthecompany.However,despitethisprohibition,anEnglishcompanyispermittedtopurchaseandmaintaininsuranceforadirectororexecutiveofficerofthecompanyagainstanysuchliability.
Shareholderscanratifybyordinaryresolutionadirector'sorcertainofficer'sconductamountingtonegligence,default,breachofdutyorbreachoftrustinrelationtothecompany.
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RightsofAtwoodShareholders RightsofEnscoShareholdersIndemnificationofDirectorsandOfficers
Texaslawpermitsacorporationtoindemnifyadirectororformerdirectoragainstjudgmentsandexpensesreasonablyandactuallyincurredbythepersoninconnectionwithaproceedingiftheperson(i)actedingoodfaith,(ii)reasonablybelieved,inthecaseofconductintheperson'sofficialcapacity,thattheperson'sconductwasinthecorporation'sbestinterests,andotherwise,thattheperson'sconductwasnotopposedtothecorporation'sbestinterests,and(iii)inthecaseofacriminalproceeding,didnothaveareasonablecausetobelievetheperson'sconductwasunlawful.If,however,thepersonisfoundliabletothecorporation,orisfoundliableonthebasisthatsuchpersonreceivedanimproperpersonalbenefit,thenindemnificationunderTexaslawislimitedtothereimbursementofreasonableexpensesactuallyincurred,andnoindemnificationwillbeavailableifthepersonisfoundliablefor(i)willfulorintentionalmisconductintheperformanceoftheperson'sdutytothecorporation,(ii)breachoftheperson'sdutyofloyaltyowedtothecorporation,or(iii)anactoromissionnotcommittedingoodfaiththatconstitutesabreachofadutyowedbythepersontothecorporation.
Atwood'sbylawsauthorizeindemnificationandadvancementofexpensestoitsdirectorsandofficersinthemannerprescribedin,andtothemaximumextentpermissibleunder,theTBOC.AspermittedbytheTBOC,Atwoodcurrentlyhasineffectadirectors'andofficers'liabilityinsurancepolicy.
Atwood,atthediscretionoftheAtwoodBoard,maypurchaseindemnificationinsuranceonbehalfofthecorporationandanypersonwhomithaspowertoindemnifypursuanttotheTBOC,itscertificateofformationanditsbylaws,orotherwise.
Subjecttoexceptions,Englishlawdoesnotpermitacompanytoexemptadirectororcertainofficersfrom,orindemnifyhimorheragainst,liabilityinconnectionwithanynegligence,default,breachofdutyorbreachoftrustbyhimorherinrelationtothecompany.
Theexceptionsallowacompanyto:
(i)purchaseandmaintaindirectorandofficerinsurance,or"D&OInsurance"againstanyliabilityattachinginconnectionwithanynegligence,default,breachofdutyorbreachoftrustowedtothecompany.D&OInsurancegenerallycoverscostsincurredindefendingallegationsandcompensatorydamagesthatareawarded.However,D&OInsurancewillnotcoverdamagesawardedinrelationtocriminalacts,intentionalmalfeasanceorotherformsofdishonesty,regulatoryoffencesorexcludedmatterssuchasenvironmentalliabilities.Inrelationtothesematters,D&OInsurancegenerallyonlycoversdefensecosts,subjecttotheobligationofthedirectororofficertorepaythecostsifanallegationofcriminality,dishonestyorintentionalmalfeasanceissubsequentlyadmittedorfoundtobetrue;and
(ii)provideaqualifyingthirdpartyindemnityprovision,or"QTPIP."Thispermitsacompanytoindemnifyitsdirectorsandcertainofficers(anddirectorsandcertainofficersofanassociatedcompany)inrespectofproceedingsbroughtbythirdparties(coveringbothlegalcostsandtheamountofanyadversejudgment,exceptfor:thelegalcostsofanunsuccessfuldefenseofcriminalproceedingsorcivilproceedingsbroughtbythecompanyitself;finesimposedincriminalproceedings;andpenaltiesimposedbyregulatorybodies).Enscocanthereforeindemnifydirectorsandcertainofficersagainstsuchthirdpartyactionsasclassactionsoractionsfollowingmergersandacquisitionsorshareissues;and
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RightsofAtwoodShareholders RightsofEnscoShareholders (iii)indemnifyadirectororcertainofficersinrespectofdefensecostsin
relationtocivilandcriminalproceedingsagainsthimorher(eveniftheactionisbroughtbythecompanyitself).Thisissubjecttotherequirementforthedirectororofficertoreimbursethecompanyifthedefenseisunsuccessful.However,ifthecompanyhasaQTPIPinplacewherebythedirectororofficerisindemnifiedinrespectoflegalcostsincivilproceedingsbroughtbythirdparties,thenthedirectororofficerwillnotberequiredtoreimbursethecompany.
TheEnscoArticlesofAssociationincludeaprovisionrequiringthecompanytoindemnifytoanyextentpermittedbylawanypersonwhoisorwasadirectororofficerofEnscoorofanyassociatedcompany,directlyorindirectly(includingbyfundinganyexpenditureincurredortobeincurredbyhimorher)againstanylossorliability,whetherinconnectionwithanynegligence,default,breachofdutyorbreachoftrustbyhimorherorotherwise,inrelationtothecompanyoranyassociatedcompany.TheEnscoArticlesofAssociationalsostatethatwhereapersonissoindemnified,suchindemnitymayextendtoallcosts,charges,losses,expensesandliabilitiesincurredbyhimorher.
Enscoisrequiredtodiscloseinitsannualdirectors'reportanyQTPIPinforceatanypointduringtherelevantfinancialyearorinforcewhenthedirectors'reportisapproved.Acopyoftheindemnityor,ifitisnotinwriting,amemorandumsettingoutitstermsmustbeopentoinspectionduringthelifeoftheindemnityandforaperiodofoneyearfromthedateofitsterminationorexpiration.Anyshareholdermayinspecttheindemnity,ormemorandum,withoutchargeormayrequestacopyonpaymentofafee.
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RightsofAtwoodShareholders RightsofEnscoShareholdersShareholders'Suits
UnderTexaslaw,ashareholdermayinitiateaderivativeactiontoenforcearightofacorporationifthecorporationfailstoenforcetherightitself.
(i)Thecomplaint/shareholdermust:
(a)havebeenashareholderofthecorporationatthetimeoftheactoromissioncomplainedof;or
(b)becameashareholderbyoperationoflawfromapersonthatwasashareholderatthetimeoftheactoromissioncomplainedof;and
(ii)theshareholderfairlyandadequatelyrepresentstheinterestsofthecorporationinenforcingtherightofthecorporation.
WhileEnglishlawonlypermitsashareholdertoinitiatealawsuitonbehalfofthecompanyinlimitedcircumstances,itdoespermitashareholderwhosenameisontheregisterofshareholdersofEnscotoapplyforacourtorder:
(i)whenEnsco'saffairsarebeingorhavebeenconductedinamannerunfairlyprejudicialtotheinterestsofallorsomeshareholders,includingtheshareholdermakingtheclaim;or
(ii)whenanyactoromissionofEnscoisorwouldbesoprejudicial.
Asdiscussedin"DescriptionofEnscoClassAOrdinaryShares—Anti-TakeoverProvisions,"EnscoisnotcurrentlysubjecttothejurisdictionoftheU.K.TakeoverPanel(i.e. ,theregulatoroftheTakeoverCode).
Ashareholdermaynotinstituteaderivativeproceedinguntilthe91stdayafterthedateawrittendemandisfiledwiththecorporationstatingwithparticularitytheact,omission,orothermatterthatisthesubjectoftheclaimorchallengeandrequestingthatthecorporationtakesuitableaction.However,anywaitingperiodrequiredbeforeaderivativeproceedingmaybeinstitutedisnotrequiredif:
(i)theshareholderhasbeenpreviouslynotifiedthatthedemandhasbeenrejectedbythecorporation;
(ii)thecorporationissufferingirreparableinjury;or
(iii)irreparableinjurytothecorporationwouldresultbywaitingfortheexpirationofthe90-dayperiod.
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RightsofAtwoodShareholders RightsofEnscoShareholdersAnti-TakeoverMatters
TheTBOCgenerallyprohibitsaTexascorporationwhosesharesarepubliclytradedfromenteringintoabusinesscombinationwithanaffiliatedshareholder(onewhoowns20%ormoreofacorporation'soutstandingvotingstock),oranaffiliatedshareholder'saffiliatesorassociates,foraperiodofthreeyearsaftertheshareholderbecameanaffiliatedshareholderunlesseither:
(i)thebusinesscombinationorthepurchaseoracquisitionofsharesmadebytheaffiliatedshareholderontheaffiliatedshareholder'sshareacquisitiondateisapprovedbytheboardofdirectorsoftheissuingpubliccorporationbeforetheaffiliatedshareholder'sshareacquisitiondate;or
(ii)thebusinesscombinationisapproved,byaffirmativevoteoftheshareholdersofatleasttwo-thirdsoftheoutstandingvotingsharesentitledtovoteoftheissuingpubliccorporationnotbeneficiallyownedbytheaffiliatedshareholder,atameetingofshareholderscalledforthatpurposenotlessthansixmonthsaftertheaffiliatedshareholder'sshareacquisitiondate.Approvalmaynotbebywrittenconsent.
UnderTexaslaw,acorporationcanoptoutof,orchoosenottobegovernedby,theanti-takeoverstatutebystatingsoinitscertificateofformationorbylaws.Atwoodhasnotspecificallyoptedoutoforchosennottobegovernedbytheanti-takeoverstatuteineitheritscertificateofformationorbylaws.
Englishlawdoesnotexpresslyprohibitanti-takeovermeasures,suchasshareholderrightsplans.TheEnscoArticlesofAssociationprovidethattheEnscoBoardmayadoptashareholderrightsplanatanytimesubjecttocompliancewiththeirfiduciaryduties.
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RightsofAtwoodShareholders RightsofEnscoShareholdersAbilitytoBringSuits,EnforceJudgmentsandEnforceU.S.Law
AtwoodisaU.S.companyincorporatedunderthelawsofTexasandhassubstantialassetslocatedintheU.S.Asaresult,investorsgenerallycaninitiatelawsuitsintheU.S.againstAtwoodanditsdirectorsandofficersandcanenforcelawsuitsbasedonU.S.federalsecuritieslawsinU.S.courts.
AsacompanylistedontheNYSE,EnscoanditsdirectorsandofficersaresubjecttoU.S.federalsecuritieslaws,andinvestorscouldinitiatecivillawsuitsintheU.S.againstEnscoforbreachesoftheU.S.federalsecuritieslaws.
BecauseEnscoisapubliclimitedcompanyincorporatedunderEnglishlaw,investorscouldexperiencemoredifficultyenforcingjudgmentsobtainedagainstEnscoinU.S.courtsthanwouldcurrentlybethecaseforU.S.judgmentsobtainedagainstAtwood.Inaddition,itmaybemoredifficult(orimpossible)tobringsometypesofclaimsagainstEnscoincourtssittinginEnglandthanitwouldbetobringsimilarclaimsagainstaU.S.companyinaU.S.court.Inaddition,theEnscoArticlesofAssociationprovidethatEnglishcourtshaveexclusivejurisdictionwithrespecttoanysuitsbroughtbyshareholdersagainstEnscooritsdirectors.
AjudgmentobtainedagainstEnscofromaU.S.courtwillnotberecognizedbytheEnglishcourtsbutanactionmaybecommencedintheEnglishcourtsforanamountdueunderajudgmentgivenbytheU.S.courtsifthatjudgmentis(i)foradebtordefinitesumofmoney;(ii)finalandconclusive;and(iii)notofapenaltyorrevenuenature.
Ajudgmentmaybeimpeachedbyshowingthat:(i)thecourtinquestiondidnot,inthecircumstancesofthecase,andinaccordancewiththeEnglishrulesofprivateinternationallaw,havejurisdictiontogivethatjudgment;(ii)thejudgmentwasobtainedthroughfraud;(iii)theenforcementofthejudgmentwouldbecontrarytothepublicpolicyoftheUnitedKingdom;or(iv)theproceedingsinwhichthejudgmentwasobtainedwereopposedtotherulesofnaturaljustice.
EnscoanditsdirectorsandofficersmaybesubjecttocriminalpenaltiesintheU.S.arisingfrombreachesoftheU.S.federalsecuritieslaws,butmaynotbesubjecttocriminalpenaltiesunlessthecriminallawsoftheUnitedKingdomwereviolated.
AcriminaljudgmentinaU.S.courtunderU.S.federalsecuritieslawsmaynotbeenforceableintheEnglishcourtsonpublicpolicygroundsandaprosecutionbroughtbeforetheEnglishcourtsunderU.S.federalsecuritieslawsmightnotbepermittedonpublicpolicygrounds.
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LEGALMATTERS
ThevalidityoftheEnscoClassAordinarysharestobeissuedinconnectionwiththemergerwillbepasseduponforEnscobyLatham&WatkinsLLP.
EXPERTS
TheconsolidatedfinancialstatementsofEnscoasofDecember31,2016and2015,andforeachoftheyearsinthethree-yearperiodendedDecember31,2016,andmanagement'sassessmentoftheeffectivenessofinternalcontroloverfinancialreportingasofDecember31,2016havebeenincorporatedbyreferencehereinandintheregistrationstatementinrelianceuponthereportsofKPMGLLP,independentregisteredpublicaccountingfirm,incorporatedbyreferenceherein,andupontheauthorityofsaidfirmasexpertsinaccountingandauditing.
ThefinancialstatementsofAtwoodOceanics,Inc.andmanagement'sassessmentoftheeffectivenessofinternalcontroloverfinancialreporting(whichisincludedinManagement'sReportonInternalControloverFinancialReporting)incorporatedinthisjointproxystatement/prospectusbyreferencetotheAnnualReportonForm10-KfortheyearendedSeptember30,2016havebeensoincorporatedinrelianceonthereportofPricewaterhouseCoopersLLP,anindependentregisteredpublicaccountingfirm,givenontheauthorityofsaidfirmasexpertsinauditingandaccounting.
ENSCO2018ANNUALSHAREHOLDERMEETINGANDSHAREHOLDERPROPOSALS
AnyofEnsco'sshareholdersintendingtopresentaproposalatthe2018AnnualGeneralMeetingofShareholdersmustdeliversuchproposaltoEnsco'sprincipalexecutiveoffice,inwritingandinaccordancewithSECRule14a-8,nolaterthanDecember11,2017forinclusionintheproxystatementrelatedtothatmeeting.TheproposalshouldbedeliveredtoEnsco'ssecretarybycertifiedmail,returnreceiptrequested.
Inaddition,apartfromtheSECRule14a-8processdescribedabove,ashareholderwhoseproposalisnotincludedintheproxystatementrelatedtothe2018AnnualGeneralMeetingofShareholders,butwhostillintendstosubmitaproposalatthatmeeting,isrequiredbytheEnscoArticlesofAssociationtodeliversuchproposal,inproperform,inwriting,toEnsco'ssecretaryatEnsco'sprincipalexecutiveofficesandtoprovidecertainotherinformation,notearlierthanthecloseofbusinessonthe75thdayandnotlaterthanthecloseofbusinessonthe50thdaypriortothefirstanniversaryoftheprecedingyear'sAnnualGeneralMeetingofShareholders,subjecttoanyotherrequirementsoflaw;provided,however,thatintheeventthatthedateoftheAnnualGeneralMeetingofShareholdersismorethan30daysbeforeormorethan60daysaftersuchanniversarydate,noticebytheshareholdertobetimelymustbesodeliverednotearlierthanthecloseofbusinessonthe75thdaypriortothedateofsuchAnnualGeneralMeetingofShareholdersandnotlaterthanthecloseofbusinessonthelaterofthe50thdaypriortothedateofsuchAnnualGeneralMeetingofShareholdersor,ifthefirstpublicannouncementofthedateofsuchAnnualGeneralMeetingofShareholdersislessthan65dayspriortothedateofsuchAnnualGeneralMeetingofShareholders,the15thdayfollowingthedayonwhichpublicannouncementofthedateofsuchmeetingisfirstmade.Inthecaseofthe2018AnnualGeneralMeetingofShareholders,referencestotheanniversarydateoftheprecedingyear'sAnnualGeneralMeetingofShareholdersshallmeanthefirstanniversaryofMay22,2017.
AnysuchproposalmustalsocomplywiththeotherprovisionscontainedintheEnscoArticlesofAssociationrelatingtoshareholderproposals,includingprovisionoftheinformationspecifiedintheEnscoArticlesofAssociation,suchasinformationconcerningthenomineeoftheproposal,ifany,andtheshareholderandthebeneficialowner,asthecasemaybe.AnyproposalsthatdonotmeettherequirementssetforthintheEnscoArticlesofAssociation,otherthanproposalssubmittedin
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compliancewithSECRule14a-8undertheExchangeAct,willbedeclaredoutoforderandwillnotbeconsideredatthe2018AnnualGeneralMeetingofShareholders.
InadditiontotheSECandtheEnscoArticlesofAssociationprocessesdescribedabove,undertheCompaniesAct2006,shareholdersrepresentingatleast5%ofthetotalvotingrightsofallshareholderswhohavearighttovoteatthe2018AnnualGeneralMeetingofShareholderscanrequireEnscotogiveshareholdersnoticeofaresolutionwhichmaybeandisintendedtobemovedattheAnnualGeneralMeetingofShareholdersunless(a)theresolutionwould,ifpassed,beineffective(whetherbyreasonofinconsistencywithanyenactmentorEnsco'sconstitutionorotherwise);(b)itisdefamatoryofanyperson;or(c)itisfrivolousorvexatious.Sucharequest,madebytherequisitenumberofshareholders,mustbereceivedbyEnsconotlaterthansixweeksbeforetheAnnualGeneralMeetingofShareholders.ForinformationastohowyoucanobtainacopyoftheEnscoArticlesofAssociation,see"WhereYouCanFindMoreInformation."
ATWOOD2018ANNUALSHAREHOLDERMEETINGANDSHAREHOLDERPROPOSALS
InlightoftheAtwoodspecialmeeting,Atwooddoesnotintendtoholda2018annualmeetingofshareholders.IfthemergeragreementisterminatedortheproposaltoadoptthemergeragreementisnotapprovedbyAtwoodshareholdersattheAtwoodspecialmeeting,Atwoodintendstocallanannualmeetingofshareholdersinthenormalcourse.
ProposalsfromAtwoodshareholdersintendedtobeincludedinAtwood'sproxystatementforthe2018AnnualMeetingofShareholdersmustbereceivedatAtwood'sprincipalexecutiveoffices(directedtoAtwood'scorporatesecretaryattheaddressindicatedinthisjointproxy/prospectus)nolaterthanSeptember11,2017andmustcomplywiththerequirementsoftheproxyrulespromulgatedbytheSECinordertobeincludedintheproxystatementandformofproxyrelatedtothatmeeting.
Atwood'sbylawspermitshareholderstoproposebusinesstobeconsideredortonominatedirectorsforelectionbytheshareholdersatitsannualmeeting.Toproposebusinessortonominateadirector,theshareholdermustdeliveranoticetoAtwood'scorporatesecretarynotearlierthanOctober18,2017andnotlaterthanNovember17,2017andmustcomplywiththeadvancenoticerequirementssetforthinAtwood'sbylawsandwiththerequirementsoftheproxyrulespromulgatedbytheSEC.
ForinformationastohowyoucanobtainacopyofAtwood'scertificateofformationandbylaws,see"WhereYouCanFindMoreInformation."
SHAREHOLDERSSHARINGANADDRESS
Onlyonecopyofthisjointproxystatement/prospectusisbeingdeliveredtomultipleshareholdersofEnscoorAtwoodsharinganaddressunlessEnscoorAtwood,asapplicable,haspreviouslyreceivedcontraryinstructionsfromoneormoreofsuchshareholders.OnwrittenororalrequesttotheSecretaryofEnscoatEnsco,6ChesterfieldGardens,London,W1J5BQ,UnitedKingdom,44(0)2076594660,Enscowilldeliverpromptlyaseparatecopyofthisjointproxystatement/prospectustoanEnscoshareholderatasharedaddresstowhichasinglecopyofthedocumentswasdelivered.OnwrittenororalrequesttotheCorporateSecretaryofAtwoodat15011KatyFreeway,Suite800,Houston,Texas77094,(281)749-7800,Atwoodwilldeliverpromptlyaseparatecopyofthisjointproxystatement/prospectustoanAtwoodshareholderatasharedaddresstowhichasinglecopyofthedocumentswasdelivered.Shareholderssharinganaddresswhowish,inthefuture,toreceiveseparatecopiesorasinglecopyofEnsco'sorAtwood'sproxystatementsandannualreportsshouldprovidewrittenororalnoticetotheSecretaryofEnscoortheCorporateSecretaryofAtwood,asapplicable,attheaddressandtelephonenumbersetforthabove.
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COMMISSIONPOSITIONONINDEMNIFICATIONFORSECURITIESACTLIABILITIES
TheEnscoArticlesofAssociationandAtwoodbylawsprovideforindemnificationforcurrentandformerdirectors,officers,employees,oragentsservingattherequestofthecorporationtothefullestextentpermittedbyEnglishlaworTexaslaw,asapplicable.InsofarasindemnificationforliabilitiesarisingundertheSecuritiesActmaybepermittedtoEnsco'sorAtwood'sdirectors,officersandpersonscontrollingEnscoorAtwood,asapplicable,EnscoandAtwoodhavebeenadvisedthatitistheSEC'sopinionthatsuchindemnificationisagainstpublicpolicyasexpressedintheSecuritiesAct,andis,therefore,unenforceable.
WHEREYOUCANFINDMOREINFORMATION
EnscohasfiledwiththeSECaregistrationstatementundertheSecuritiesActthatregisterstheissuancetoAtwoodshareholdersoftheEnscoClassAordinarysharestobeissuedinconnectionwiththemerger.Theregistrationstatement,includingtheattachedexhibitsandschedules,containsadditionalrelevantinformationaboutEnscoandEnscoClassAordinaryshares.TherulesandregulationsoftheSECallowEnscotoomitcertaininformationincludedintheregistrationstatementfromthisjointproxystatement/prospectus.
YoumayreadandcopythisinformationatthePublicReferenceRoomoftheSECat100FStreet,NE,Room1580,Washington,D.C.20549.YoumayobtaininformationontheoperationoftheSEC'sPublicReferenceRoombycallingtheSECat1-800-SEC-0330.TheSECalsomaintainsaninternetwebsitethatcontainsreports,proxystatementsandotherinformationaboutissuers,likeEnscoandAtwood,whofileelectronicallywiththeSEC.Theaddressofthesiteiswww.sec.gov.ThereportsandotherinformationfiledbyEnscowiththeSEC,includingacopyoftheEnscoArticlesofAssociation,arealsoavailableatEnsco'sinternetwebsite(www.enscoplc.com).ThereportsandotherinformationfiledbyAtwoodwiththeSEC,includingacopyofAtwood'scertificateofformationandbylaws,arealsoavailableatAtwood'sinternetwebsite(www.atwd.com).WehaveincludedthewebaddressesoftheSEC,Ensco,andAtwoodasinactivetextualreferencesonly.Exceptasspecificallyincorporatedbyreferenceintothisjointproxystatement/prospectus,informationonthosewebsitesisnotpartofthisjointproxystatement/prospectus.
TheSECallowsEnscoandAtwoodtoincorporatebyreferenceinformationinthisjointproxystatement/prospectus.ThismeansthatEnscoandAtwoodcandiscloseimportantinformationtoyoubyreferringyoutoanotherdocumentfiledseparatelywiththeSEC.Theinformationincorporatedbyreferenceisconsideredtobeapartofthisjointproxystatement/prospectus,exceptforanyinformationthatissupersededbyinformationthatisincludeddirectlyinthisjointproxystatement/prospectus.
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Thisjointproxystatement/prospectusincorporatesbyreferencethedocumentslistedbelowthatEnscoandAtwoodpreviouslyfiledwiththeSEC.Theycontainimportantinformationaboutthecompaniesandtheirfinancialcondition.
Inaddition,EnscoandAtwoodalsoincorporatebyreferenceadditionaldocumentsthateithercompanyfileswiththeSECunderSections13(a),13(c),14and15(d)oftheExchangeActafterthedateoftheinitialregistrationstatement(ofwhichthisjointproxystatement/prospectusformsapart)andpriortothedateoftheEnscogeneralmeetingandtheAtwoodspecialmeeting,asapplicable.Thesedocumentsincludeperiodicreports,suchasAnnualReportsonForm10-K,QuarterlyReportsonForm10-QandCurrentReportsonForm8-K,aswellasproxystatements.
180
EnscoSECFilings(SECFileNo.001-08097;CIKNo.0000314808) PeriodorDateFiledAnnualReportonForm10-K YearendedDecember31,2016(the"EnscoForm10-K")
QuarterlyReportsonForm10-Q
QuarterendedMarch31,2017
CurrentReportsonForm8-K
FiledonJanuary11,2017,January23,2017,March10,2017,May23,2017andMay30,2017(otherthantheportionsofthosedocumentsnotdeemedtobefiled)
DefinitiveProxyStatementonSchedule14AtotheextentincorporatedbyreferenceintotheEnscoForm10-K
FiledonMarch31,2017
ThedescriptionofEnscoClassAordinarysharescontainedinitsCurrentReportonForm8-K,asthatdescriptionmaybeupdatedfromtimetotime
FiledonMay15,2012AtwoodSECFilings(SECFileNo.001-13167;CIKNo.0000008411) PeriodorDateFiledAnnualReportonForm10-K FiscalYearendedSeptember30,2016(the"AtwoodForm10-K")
QuarterlyReportsonForm10-Q
QuartersendedDecember31,2016andMarch31,2017
CurrentReportsonForm8-K
FiledonNovember22,2016,December6,2016,December22,2016,January13,2017,February16,2017,May8,2017,May22,2017andMay30,2017(otherthantheportionsofthosedocumentsnotdeemedtobefiled)
DefinitiveProxyStatementonSchedule14AtotheextentincorporatedbyreferenceintotheAtwoodForm10-K
FiledonJanuary9,2017
ThedescriptionofAtwoodcommonstockcontainedinitsRegistrationStatementonForm8-A,asthatdescriptionmaybeupdatedfromtimetotime
FiledonJuly2,1997
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AnnexA
AGREEMENTANDPLANOFMERGER
byandamong
ENSCOPLC,
ECHOMERGERSUBLLC
and
ATWOODOCEANICS,INC.
DatedasofMay29,2017
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TABLEOFCONTENTS
A-i
PageARTICLEI.THEMERGER A-2
Section1.1TheMerger
A-2
Section1.2 Closing A-2Section1.3 EffectiveTime A-2Section1.4 EffectsoftheMerger A-2Section1.5 OrganizationalDocumentsoftheSurvivingCompany A-2Section1.6 DirectorsandOfficers A-2Section1.7 ParentBoard A-2
ARTICLEII.CONVERSIONOFSHARES;EXCHANGEOFCERTIFICATES
A-3
Section2.1EffectonCapitalStock
A-3
Section2.2 ExchangeofCertificates A-4Section2.3 StockAwards A-6Section2.4 FurtherAssurances A-7
ARTICLEIII.REPRESENTATIONSANDWARRANTIESOFTHECOMPANY
A-7
Section3.1Qualification,Organization,Subsidiaries,Capitalization
A-8
Section3.2 CompanyAuthorityRelativetothisAgreement;NoViolation A-9Section3.3 ReportsandFinancialStatements A-11Section3.4 InternalControlsandProcedures A-12Section3.5 NoUndisclosedLiabilities A-12Section3.6 CompliancewithLaw;Permits A-12Section3.7 AbsenceofCertainChangesorEvents A-13Section3.8 EnvironmentalLawsandRegulations A-13Section3.9 Investigations;Litigation A-13Section3.10 InvestmentCompany A-14Section3.11 IntellectualProperty A-14Section3.12 Properties A-14Section3.13 OwnershipandMaintenanceofDrillingUnits A-15Section3.14 TaxMatters A-15Section3.15 EmploymentandLaborMatters A-16Section3.16 EmployeeBenefitPlans A-17Section3.17 Insurance A-18Section3.18 OpinionofFinancialAdvisor A-18Section3.19 MaterialContracts A-19Section3.20 FindersorBrokers A-20Section3.21 Anti-Bribery A-20Section3.22 ExportControlsandSanctions A-20Section3.23 TakeoverStatutes A-21Section3.24 InformationSupplied A-21Section3.25 NoAdditionalRepresentations A-21
ARTICLEIV.REPRESENTATIONSANDWARRANTIESOFPARENTANDMERGERSUB
A-22
Section4.1Qualification,Organization,Subsidiaries,Capitalization
A-22
Section4.2 CompanyAuthorityRelativetothisAgreement;NoViolation A-24Section4.3 ReportsandFinancialStatements A-25Section4.4 InternalControlsandProcedures A-26Section4.5 NoUndisclosedLiabilities A-27
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PageSection4.6 CompliancewithLaw;Permits A-27Section4.7 AbsenceofCertainChangesorEvents A-27Section4.8 EnvironmentalLawsandRegulations A-28Section4.9 Investigations;Litigation A-28Section4.10 InvestmentCompany A-28Section4.11 IntellectualProperty A-28Section4.12 Properties A-29Section4.13 OwnershipandMaintenanceofDrillingUnits A-29Section4.14 TaxMatters A-29Section4.15 EmploymentandLaborMatters A-31Section4.16 EmployeeBenefitPlans A-31Section4.17 Insurance A-32Section4.18 OpinionofFinancialAdvisor A-33Section4.19 MaterialContracts A-33Section4.20 FindersorBrokers A-34Section4.21 Anti-Bribery A-34Section4.22 ExportControlsandSanctions A-34Section4.23 InformationSupplied A-35Section4.24 OwnershipofCompanyCommonStock A-35Section4.25 NoAdditionalRepresentations A-35
ARTICLEV.COVENANTSANDAGREEMENTS
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Section5.1ConductofBusinessbytheCompany
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Section5.2 ConductofBusinessbyParentandMergerSub A-40Section5.3 Access A-42Section5.4 NoSolicitationbytheCompany A-42Section5.5 NoSolicitationbyParent A-45Section5.6 Filings;OtherActions A-48Section5.7 Efforts;RegulatoryApprovals A-50Section5.8 TakeoverStatutes A-52Section5.9 PublicAnnouncements A-52Section5.10 IndemnificationandInsurance A-52Section5.11 ControlofOperations A-54Section5.12 Section16Matters A-54Section5.13 TransactionLitigation A-54Section5.14 NYSEListing A-54Section5.15 TaxMatters A-54Section5.16 CertificateofNon-USRPHCStatus A-55Section5.17 ConsenttoUseofFinancialStatements;FinancingCooperation A-55Section5.18 EmployeeMatters A-55Section5.19 ObligationsofMergerSubandtheSurvivingCompany A-57Section5.20 IntercompanyStructure A-57Section5.21 CompanyBondRedemption A-57
ARTICLEVI.CONDITIONSTOTHEMERGER
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Section6.1ConditionstoEachParty'sObligationtoEffecttheMerger
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Section6.2 ConditionstoObligationoftheCompanytoEffecttheMerger A-58Section6.3 ConditionstoObligationofParentandMergerSubtoEffecttheMerger A-58Section6.4 FrustrationofClosingConditions A-59
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PageARTICLEVII.TERMINATION A-59
Section7.1TerminationorAbandonment
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Section7.2 EffectofTermination A-60Section7.3 TerminationFees A-61
ARTICLEVIII.MISCELLANEOUS
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Section8.1NoSurvival
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Section8.2 Expenses A-63Section8.3 Counterparts;Effectiveness A-64Section8.4 GoverningLaw A-64Section8.5 Jurisdiction;SpecificPerformance A-64Section8.6 WAIVEROFJURYTRIAL A-65Section8.7 Notices A-65Section8.8 Assignment;BindingEffect A-66Section8.9 Severability A-66Section8.10 EntireAgreement A-66Section8.11 Amendments;Waivers A-66Section8.12 Headings A-66Section8.13 NoThird-PartyBeneficiaries A-67Section8.14 Interpretation A-67Section8.15 Definitions A-67
AnnexIIndexofDefinedTerms
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AGREEMENTANDPLANOFMERGER
ThisAGREEMENTANDPLANOFMERGER(this"Agreement "),datedasofMay29,2017,isbyandamongEnscoplc,apubliclimitedcompanyorganizedundertheLawsofEnglandandWales("Parent "),EchoMergerSubLLC,aTexaslimitedliabilitycompanyandwhollyownedsubsidiaryofParent("Merger Sub "),andAtwoodOceanics,Inc.,aTexascorporation(the"Company "and,togetherwithParentandMergerSub,the"Parties ").
WITNESSETH:
WHEREAS,uponthetermsandsubjecttotheconditionsofthisAgreementandinaccordancewiththeTexasBusinessOrganizationsCode("TBOC "),thePartiesintendthatMergerSubwillmergewithandintotheCompany(the"Merger "),withtheCompanycontinuingasthesurvivingcorporationintheMergerandawhollyownedsubsidiaryofParent(sometimesreferredtoinsuchcapacityasthe"Surviving Company ");
WHEREAS,theBoardofDirectorsoftheCompany(the"Company Board ")has(i)unanimouslydeterminedthatitisinthebestinterestsoftheCompanyandtheCompanyShareholderstoenterintothisAgreementandthetransactionscontemplatedhereby,includingtheMerger,(ii)approvedtheexecution,deliveryandperformanceofthisAgreementandtheconsummationofthetransactionscontemplatedhereby,includingtheMerger,and(iii)resolvedtosubmitthisAgreementtoavoteoftheCompanyShareholdersandrecommendapprovalofthisAgreementbytheCompanyShareholders;
WHEREAS,theBoardofDirectorsofParent(the"Parent Board ")has(i)unanimouslydeterminedthatitisinthebestinterestsofParentandtheParentShareholderstoenterinto,andhasdeclaredadvisable,thisAgreementandthetransactionscontemplatedhereby,includingtheMerger,(ii)approvedtheexecution,deliveryandperformanceofthisAgreementandtheconsummationofthetransactionscontemplatedhereby,includingtheMerger,and(iii)resolvedtorecommendthepassingoftheParentShareholderResolutionsbytheParentShareholders;
WHEREAS,Parent,asthesolememberofMergerSub,hasapprovedtheexecution,deliveryandperformanceofthisAgreementandtheconsummationofthetransactionscontemplatedhereby,includingtheMerger,andapprovedthisAgreement;and
WHEREAS,Parent,MergerSubandtheCompanydesiretomakecertainrepresentations,warranties,covenantsandagreementsspecifiedhereininconnectionwiththisAgreement.
NOW,THEREFORE,inconsiderationoftheforegoingandtherepresentations,warranties,covenantsandagreementscontainedherein,andintendingtobelegallyboundhereby,Parent,MergerSubandtheCompanyagreeasfollows:
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ARTICLEI.
THEMERGER
Section1.1 The Merger. AttheEffectiveTime,uponthetermsandsubjecttotheconditionssetforthinthisAgreementandinaccordancewiththeapplicableprovisionsoftheTBOC,MergerSubshallbemergedwithandintotheCompany,whereupontheseparateexistenceofMergerSubshallcease,andtheCompanyshallcontinueitsexistenceunderTexasLawastheSurvivingCompanyintheMergerandawhollyownedsubsidiaryofParent.
Section1.2 Closing. TheclosingoftheMerger(the"Closing ")shalltakeplaceattheofficesofLatham&WatkinsLLP,811MainStreet,37thFloor,Houston,Texasassoonaspracticable(andinanyeventwithinfivebusinessdays)afterthesatisfactionorwaiver(totheextentpermittedbyapplicableLaw)oftheconditionssetforthinArticle VI (otherthanthoseconditionsthatbytheirnaturearetobesatisfiedattheClosing,butsubjecttothesatisfactionorwaiverofsuchconditions),oratsuchotherplace,dateandtimeastheCompanyandParentmayagreeinwriting.ThedateonwhichtheClosingactuallyoccursisreferredtoasthe"Closing Date ."
Section1.3 Effective Time. OntheClosingDate,theCompanyandMergerSubshallfilewiththeSecretaryofStateoftheStateofTexasacertificateofmerger(the"Certificate of Merger "),executedinaccordancewith,andcontainingsuchinformationasisrequiredby,therelevantprovisionsoftheTBOCinordertoeffecttheMerger.TheMergershallbecomeeffectiveatsuchtimeastheCertificateofMergerhasbeenfiledwiththeSecretaryofStateoftheStateofTexasoratsuchother,laterdateandtimeasisagreedbetweenthePartiesandspecifiedintheCertificateofMergerinaccordancewiththerelevantprovisionsoftheTBOC(suchdateandtimeishereinafterreferredtoasthe"Effective Time ").
Section1.4 Effects of the Merger. TheeffectsoftheMergershallbeasprovidedinthisAgreementandintheapplicableprovisionsoftheTBOC.Withoutlimitingthegeneralityoftheforegoing,andsubjectthereto,attheEffectiveTime,alloftheproperty,rights,privileges,powersandfranchisesoftheCompanyandMergerSubshallvestintheSurvivingCompany,andalldebts,liabilitiesanddutiesoftheCompanyandMergerSubshallbecomethedebts,liabilitiesanddutiesoftheSurvivingCompany,allasprovidedundertheTBOC.
Section1.5 Organizational Documents of the Surviving Company. AttheEffectiveTime,theCompanyCharterandCompanyBylawsasineffectimmediatelypriortotheEffectiveTimewillremainunchangedandwillbethearticlesofincorporationandbylawsoftheSurvivingCompanyuntildulyamendedinaccordancewiththetermsthereofandapplicableLaw.
Section1.6 Directors and Officers. SubjecttoapplicableLaw,theofficersofMergerSubimmediatelypriortotheEffectiveTimeshallbetheinitialdirectorsandofficersoftheSurvivingCompanyandshallholdofficeuntiltheirrespectivesuccessorsaredulyelectedandqualified,ortheirearlierdeath,resignationorremoval.
Section1.7 Parent Board.
(a)ParentshalltakesuchactionsasarenecessaryfortheParentBoardtoexpandthesizeoftheParentBoardandtoappointtwopersonsdesignatedbytheCompany(the"Alpha Director Nominees ")tofillsuchvacancies,effectiveasoftheEffectiveTime,toserveuntilsuchperson'ssuccessoriselectedbytheParentShareholdersoruntilsuchperson'sdeath,retirement,resignationorremovalbytheParentShareholders.Eachdesigneeshallbeacurrentnon-employeedirectoroftheCompanyasagreedbetweenParentandtheCompanyandshallqualifyasanindependentdirectorofParentunderthelistingrulesoftheNYSE.
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(b)ExceptasprovidedinArticle II ,thePartiesshallensurethattheremuneration(includinganyshareorstockawards)tobepaidtotheAlphaDirectorNomineesaftertheEffectiveTimeshallbecompatiblewithParent'sdirectors'remunerationpolicy.
ARTICLEII.
CONVERSIONOFSHARES;EXCHANGEOFCERTIFICATES
Section2.1 Effect on Capital Stock.
(a)AttheEffectiveTime,byvirtueoftheMergerandwithoutanyactiononthepartofParent,theCompany,MergerSubortheholderofanysharesofCompanyCommonStockorlimitedliabilitycompanyinterestsofMergerSub:
(i) Limited Liability Company Interest of Merger Sub. ThesolelimitedliabilitycompanyinterestofMergerSubissuedandoutstandingimmediatelypriortotheEffectiveTimeshallbeconvertedintoandbecomeonefullypaidandnonassessableshareofcommonstock,parvalue$1.00pershare,oftheSurvivingCompanyandshallconstitutetheonlyoutstandingsharesofcapitalstockoftheSurvivingCompany.
(ii) Cancellation of Certain Stock. EachshareofCompanyCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTimethatisownedorheldintreasurybytheCompanyandeachshareofCompanyCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTimethatisownedbyParentorMergerSuboranyoftheirrespectiveSubsidiariesshallnolongerbeoutstandingandshallautomaticallybecancelledandshallceasetoexist(the"Cancelled Shares "),andnoconsiderationshallbedeliveredinexchangetherefor.
(iii) Conversion of Company Common Stock. SubjecttotheotherprovisionsofArticle II ,eachshareofCompanyCommonStockissuedandoutstandingimmediatelypriortoorupontheEffectiveTime,excludinganyCancelledShares(each,a"Company Share "),shallbeconvertedautomaticallyintoandshallthereafterrepresenttherighttoreceive1.60(the"Exchange Ratio ")ParentClassAOrdinaryShares(the"MergerConsideration "),creditedasfullypaidandfreefromallLiens.
AllCompanySharesconvertedintotherighttoreceivetheMergerConsiderationpursuanttothisArticle II shallnolongerbeoutstandingandshallautomaticallybecancelledandshallceasetoexistasoftheEffectiveTime,anduncertificatedCompanySharesrepresentedbybook-entryform("Book-Entry Shares ")andeachcertificatethat,immediatelypriortotheEffectiveTime,representedanysuchCompanyShares(each,a"Certificate ")shallthereafterrepresentonlytherighttoreceivetheMergerConsiderationandtheFractionalShareCashAmountintowhichtheCompanySharesrepresentedbysuchBook-EntryShareorCertificatehavebeenconvertedpursuanttothisSection 2.1 ,aswellasanyamountstowhichholdersofCompanySharesbecomeentitledinaccordancewithSection 2.2(e) .
(b) No Dissenters' Rights. Nodissenters'orappraisalrightsshallbeavailablewithrespecttotheMergerandtheothertransactionscontemplatedhereby.
(c) Certain Adjustments. If,betweenthedateofthisAgreementandtheEffectiveTime(andaspermittedbyArticle V ),theoutstandingCompanySharesorParentClassAOrdinarySharesshallhavebeenchangedinto,orexchangedfor,adifferentnumberofsharesoradifferentclassofsharesbyreasonofanystockdividend,subdivision,reorganization,reclassification,recapitalization,sharesplit,reversesharesplit,combinationorexchangeofshares,orastockdividendshallbedeclaredwitharecorddatewithinsuchperiod,oranysimilareventshallhaveoccurred,thentheExchangeRatioshallbeequitablyadjusted,withoutduplication,toproportionallyreflectsuchchange;provided ,thatnothing
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inthisSection 2.1(c) shallbeconstruedtopermittheCompanyorParenttotakeanyactionwithrespecttoitssecuritiesthatisprohibitedbySection 5.1 ortheothertermsofthisAgreement.
(d) No Fractional Shares. NofractionalParentClassAOrdinarySharesshallbeissuedinconnectionwiththeMerger,nocertificatesorscriprepresentingfractionalParentClassAOrdinarySharesshallbedeliveredupontheconversionofCompanySharespursuanttoSection 2.1(a)(iii) ,andsuchfractionalshareinterestsshallnotentitletheownerthereoftovoteortoanyotherrightsofaholderofParentClassAOrdinaryShares.NotwithstandinganyotherprovisionofthisAgreement,eachholderofCompanySharesconvertedpursuanttotheMergerwhowouldotherwisehavebeenentitledtoreceiveafractionofaParentClassAOrdinaryShare(afteraggregatingallsharesrepresentedbytheCertificatesandBook-EntrySharesdeliveredbysuchholder)shallreceive,inlieuthereofanduponsurrenderthereof,cash(withoutinterest)inanamountdeterminedbymultiplying(i)theParentClosingPriceby(ii)thefractionofaParentClassAOrdinaryShare(aftertakingintoaccountallCompanySharesheldbysuchholderattheEffectiveTimeandroundedtothenearestonethousandthwhenexpressedindecimalform)towhichsuchholderwouldotherwisebeentitled(the"Fractional Share Cash Amount ").Nosuchholdershallbeentitledtodividends,votingrightsoranyotherrightsinrespectofanyfractionalParentClassAOrdinaryShares.
Section2.2 Exchange of Certificates.
(a) Exchange Agent. PriortotheClosingDate,ParentshallappointabankortrustcompanythatisreasonablyacceptabletotheCompanytoactasexchangeagent(the"Exchange Agent ")forthepaymentoftheMergerConsiderationandshallenterintoanagreementrelatingtotheExchangeAgent'sresponsibilitiesunderthisAgreement.
(b) Exchange Fund. AsoftheEffectiveTime,Parentshall(i)allottoeachholderofrecordofCompanySharessuchwholenumberofParentClassAOrdinarySharesassuchholderisentitledtoreceiveunderSection 2.1(a)(iii) ,whichallotmentshallbeconditionalonlyupon(andsuchParentClassAOrdinarySharesshallbeissuableupon)compliancewithSection 2.2(d) ,and(ii)makeavailabletotheExchangeAgentcashsufficienttopaytheaggregateFractionalShareCashAmountspayable(suchParentClassAOrdinarySharesasareallottedtotheholdersofrecordofCompanyShares,togetherwithanydividendsordistributionswithrespectthereto,andthecashsufficienttopaytheaggregateFractionalShareCashAmount,the"Exchange Fund ").
(c) Exchange Procedures. AssoonasreasonablypracticableaftertheEffectiveTimeandinanyeventwithinfivebusinessdaysoftheClosingDate,ParentshallcausetheExchangeAgenttomailtoeachholderofrecordofCompanyShares(i)aletteroftransmittal(whichshallspecifythatdeliveryshallbeeffected,andriskoflossandtitletotheCertificatesshallpass(asapplicable),onlyupondeliveryoftheCertificatestotheExchangeAgentandshallbeinsuchformandhavesuchotherprovisionsasParentandtheCompanymayreasonablyagreeuponpriortotheEffectiveTime)(the"Letter of Transmittal ")and(ii)instructionsforuseineffectingthesurrenderofCertificatesorBook-EntryShares(asapplicable)inexchangefortheMergerConsideration,anyFractionalShareCashAmountandanyamountstowhichsuchCertificatesorBook-EntrySharesbecomeentitledinaccordancewithSection 2.2(e) .
(d) Surrender of Certificates or Book-Entry Shares. UponsurrenderofCertificatesorBook-EntrySharestotheExchangeAgent,ifapplicable,togetherwithaLetterofTransmittal,dulycompletedandvalidlyexecutedinaccordancewiththeinstructionsthereto,andsuchotherdocumentsasmaycustomarilyberequiredbytheExchangeAgent,theholderofsuchCertificatesorBook-EntrySharesshallbeentitledtoreceiveinexchangetherefortheMergerConsiderationdeliverableinrespectofthesharesrepresentedbysuchCertificatesorBook-EntrySharespursuanttothisAgreement,togetherwithanyFractionalShareCashAmountandamountstowhichsuchCertificatesorBook-EntrySharesbecomeentitledinaccordancewithSection 2.2(e) .IntheeventofatransferofownershipofsharesofCompanyCommonStockthatisnotregisteredinthetransferorstockrecordsoftheCompany,any
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ParentClassAOrdinarySharestobeissueduponduesurrenderoftheCertificateorBook-EntryShareformerlyrepresentingsuchsharesofCompanyCommonStockmaybeissuedtoatransfereeifsuchCertificateorBook-EntryShareispresentedtotheExchangeAgent,accompaniedbyalldocumentsrequiredtoevidenceandeffectsuchtransferandtoevidencethatanyapplicablestocktransferorothersimilarTaxeshavebeenpaidorarenotapplicable.UntilsurrenderedascontemplatedbythisSection 2.2 ,eachCertificateandBook-EntryShareshallbedeemedatanytimeaftertheEffectiveTimetorepresentonlytherighttoreceive,uponsuchsurrender,theMergerConsiderationdeliverableinrespectofthesharesrepresentedbysuchCertificatesorBook-EntrySharespursuanttothisAgreement,togetherwithanyFractionalShareCashAmountandanyamountstowhichsuchCertificatesorBook-EntrySharesbecomeentitledinaccordancewithSection 2.2(e) .
(e) Treatment of Unexchanged Shares. Nodividendsorotherdistributions,ifany,witharecorddateaftertheEffectiveTimewithrespecttoParentClassAOrdinaryShares(oramountsinrespectthereof),shallbepaidtotheholderofanyunsurrenderedCompanySharetobeconvertedintoParentClassAOrdinarySharespursuanttoSection 2.1(a)(iii) untilsuchholdershallsurrendersuchshareinaccordancewiththisSection 2.2 .AfterthesurrenderinaccordancewiththisSection 2.2 ofaCompanySharetobeconvertedintoParentClassAOrdinarySharespursuanttoSection 2.1(a)(iii) ,theholderthereofshallbeentitledtoreceive(inadditiontotheMergerConsiderationandanyFractionalShareCashAmount)anamountequaltoanysuchdividendsorotherdistributions,withoutanyinterestthereon,whichhadbeenpaiduponaParentClassAOrdinarySharepriortosuchtime(orhadbeendeclaredpriortosuchtimebutareunpaidatsuchtime)multipliedbythenumberofParentClassAOrdinarySharesbeingissuedtosuchholder.
(f) No Further Ownership Rights in Company Common Stock. TheMergerConsiderationdeliveredinaccordancewiththetermsofthisArticle II uponconversionofanyCompanyShares,togetherwiththeFractionalShareCashAmountandanyamountstowhichsuchCompanySharesbecomeentitledinaccordancewithSection 2.2(e) ,shallbedeemedtohavebeendeliveredandpaidinfullsatisfactionofallrightspertainingtosuchCompanyShares.FromandaftertheEffectiveTime,(i)allholdersofCertificatesandBook-EntrySharesshallceasetohaveanyrightsasshareholdersoftheCompanyotherthantherighttoreceivetheMergerConsiderationintowhichthesharesrepresentedbysuchCertificatesorBook-EntryShareshavebeenconvertedpursuanttothisAgreementuponthesurrenderofsuchCertificateorBook-EntryShareinaccordancewithSection 2.2(d) (togetherwithanyFractionalShareCashAmountandanyamountstowhichsuchCertificatesorBook-EntrySharesbecomeentitledinaccordancewithSection 2.2(e) ),withoutinterest,and(ii)thestocktransferbooksoftheCompanyshallbeclosedwithrespecttoallCompanySharesoutstandingimmediatelypriortotheEffectiveTimeandthereshallbenofurtherregistrationoftransfersonthestocktransferbooksoftheSurvivingCompanyofCompanySharesthatwereoutstandingimmediatelypriortotheEffectiveTime.If,aftertheEffectiveTime,anyCertificatesorBook-EntrySharesformerlyrepresentingCompanySharesarepresentedtotheSurvivingCompany,ParentortheExchangeAgentforanyreason,suchCertificatesorBook-EntrySharesshallbecancelledandexchangedasprovidedinthisArticle II .
(g) Investment of Exchange Fund. TheExchangeAgentshallinvestanycashincludedintheExchangeFundasdirectedbyParent;provided ,however ,thatnosuchinvestmentorlossthereonshallaffecttheamountspayabletoholdersofCertificatesorBook-EntrySharespursuanttothisArticle II ,andfollowinganylossesfromanysuchinvestment,ParentshallpromptlyprovideadditionalfundstotheExchangeAgentforthebenefitoftheholdersofsharesofCompanyCommonStockattheEffectiveTimeintheamountofsuchlosses,whichadditionalfundswillbedeemedtobepartoftheExchangeFund.AnyinterestorotherincomeresultingfromsuchinvestmentsshallbepaidtoParent,upondemand.
(h) Termination of Exchange Fund. AnyportionoftheExchangeFund(includinganyinterestorotheramountsreceivedwithrespectthereto)thatremainsunclaimedby,orotherwiseundistributedto,
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theholdersofCertificatesandBook-EntrySharesfor180daysaftertheEffectiveTimeshallbedeliveredtoParent,upondemand,andanyholderofCertificatesorBook-EntryShareswhohasnottheretoforecompliedwiththisArticle II shallthereafterlookonlytoParentortheSurvivingCompany(subjecttoabandonedproperty,escheatorothersimilarLaws),asgeneralcreditorsthereof,forsatisfactionofitsclaimforMergerConsideration,theFractionalShareCashAmountandanydividendsanddistributionswhichsuchholderhastherighttoreceivepursuanttothisArticle II withoutanyinterestthereon.
(i) No Liability. NoneofParent,theCompany,MergerSubortheExchangeAgentshallbeliabletoanypersoninrespectofanyportionoftheExchangeFundortheMergerConsiderationdeliveredtoapublicofficialpursuanttoanyapplicableabandonedproperty,escheatorsimilarLaw.NotwithstandinganyotherprovisionofthisAgreement,anyportionoftheMergerConsiderationoranycashtobepaidinaccordancewiththisArticle II thatremainsundistributedtotheholdersofCertificatesandBook-EntrySharesasofthesecondanniversaryoftheEffectiveTime(orimmediatelypriortosuchearlierdateonwhichtheMergerConsiderationorsuchcashwouldotherwiseescheattoorbecomethepropertyofanyGovernmentalEntity),shall,totheextentpermittedbyapplicableLaw,becomethepropertyoftheParent,freeandclearofallclaimsorinterestofanypersonpreviouslyentitledthereto.
(j) Withholding Rights. EachoftheSurvivingCompany,Parent,MergerSubandtheExchangeAgent,andtheirrespectiveaffiliates(withoutduplication),shallbeentitledtodeductandwithholdfromanyconsiderationpayablepursuanttothisAgreementsuchamountsasitisrequiredtodeductandwithholdwithrespecttothemakingofsuchpaymentunderapplicableLaw.TotheextentthatamountsaresowithheldandpaidovertotheappropriateTaxauthority,suchwithheldamountsshallbetreatedforallpurposesofthisAgreementashavingbeenpaidtotheholderoftheCertificateorBook-EntryShareinrespectofwhichsuchdeductionandwithholdingwasmade.
(k) Lost Certificates. IfanyCertificateshallhavebeenlost,stolenordestroyed,uponthemakingofanaffidavitofthatfactbythepersonclaimingsuchCertificatetobelost,stolenordestroyedand,ifrequiredbyParentortheExchangeAgent,thepostingbysuchpersonofabondinsuchamountasParentortheExchangeAgentmaydetermineisreasonablynecessaryasindemnityagainstanyclaimthatmaybemadeagainstitortheSurvivingCompanywithrespecttosuchCertificate,theExchangeAgent(or,ifsubsequenttotheterminationoftheExchangeFundandsubjecttoSection 2.2(h) ,Parent)shalldeliver,inexchangeforsuchlost,stolenordestroyedCertificate,theMergerConsiderationandanydividendsanddistributionsdeliverableinrespectthereofpursuanttothisAgreement.
Section2.3 Stock Awards.
(a) Company Restricted Stock Units. AsoftheEffectiveTime,eachawardofCompanyrestrictedstockunitsotherthananyCompanyrestrictedstockunitsthatarerequiredtobesettledincash("Company RSUs ")thatisoutstandingasofimmediatelypriortotheEffectiveTime,shall,inaccordancewiththetermsofsuchawards,becomefullyvestedasoftheEffectiveTime,withsuchawardsthataresubjecttoperformance-basedvestingtermsorconditionsbecomingearnedandvestedatthetargetlevelorsuchhigherlevelasdeterminedbythecompensationcommitteeoftheCompanyBoardinitssolediscretion(butnottoexceed200%ofthetargetlevel).AssoonaspracticableaftertheEffectiveTime,suchCompanyRSUswillbesettledthroughtheissuancetotheholdersthereofofParentClassAOrdinarySharesinanamountequaltothenumberofsharesofCompanyCommonStockoriginallysubjecttosuchawardofCompanyRSUs,multipliedbytheExchangeRatio(roundeddowntothenearestwholeshare),andotherwiseinaccordancewiththetermsofsuchawardsandsubjecttotheholder'sobligationstosatisfyanytaxwithholdingobligationsinconnectionwiththesettlementofsuchawards.EachawardofCompanyrestrictedstockunitsthatisrequiredtobesettledincashshallbetreatedinaccordancewiththetermsofsuchaward.
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(b) Company Stock Options. EachawardofstockoptionsthathasbeengrantedundertheCompanyStockPlans(each,an"Existing Option ")andthatremainsoutstandingandunexercisedimmediatelypriortotheEffectiveTime,shall,asoftheEffectiveTime,automaticallyandwithoutanyfurtheractionbeingrequired,becomefullyvestedandexercisableandconvertedintoastockoptionrelatingtoParentClassAOrdinaryShares,onthesametermsandconditions(includingexpirationterms)aswereapplicabletosuchExistingOptionimmediatelypriortotheEffectiveTime(each,a"Converted Option "),exceptthat(A)thenumberofParentClassAOrdinarySharessubjecttosuchConvertedOptionshallbedeterminedbymultiplyingthenumberofsharesofCompanyCommonStocksubjecttothecorrespondingExistingOptionimmediatelypriortotheEffectiveTimebytheExchangeRatio,andthenroundeddowntothenearestwholeshare,and(B)theexercisepricepershareoftheConvertedOptionshallequalthepershareexerciseorstrikepriceoftheExistingOptionimmediatelypriortotheEffectiveTimedividedbytheExchangeRatio,roundeduptothenearestwholecent.
(c) Company Actions. TheCompanyshalltake,orprocurethetakingof,allactionnecessary,asapplicable,toprovideforthetreatmentoftheCompanyRSUsandExistingOptions(collectively,the"Company Stock Awards ")assetforthintheforegoingprovisionsofthisSection 2.3 .
(d) Parent Actions. AsoftheEffectiveTime,ParentshallassumealloftheCompanyStockPlans,including(i)alloftheobligationsoftheCompanywithrespecttotheCompanyStockAwardsand(ii)withrespecttoanyamountofshares(asadjustedpursuanttotheExchangeRatio)thatremain(ormayagainbecome)availableforfutureissuancethereunder("Remaining Stock Plan Shares "),subjecttoanylimitationsunderapplicableLaworanyapplicablesecuritiesexchangelistingrequirements.Inaddition,ParentshallpromptlyfilewiththeSEConeormoreappropriateregistrationstatementswithrespecttoallConvertedOptionsheldbyindividualswhoareactivelyemployedorinservicewiththeCompanyasoftheEffectiveTimeandallParentClassAOrdinarySharesthatmaybeissuedinconnectionwiththeCompanyRSUsandRemainingStockPlanShares.
Section2.4 Further Assurances. IfatanytimebeforeoraftertheEffectiveTime,ParentortheCompanyreasonablybelievesorisadvisedthatanyfurtherinstruments,deeds,assignmentsorassurancesarereasonablynecessaryordesirabletoconsummatetheMergerortocarryoutthepurposesandintentofthisAgreementatoraftertheEffectiveTime,thenParent,MergerSubandtheCompanyandtheirrespectiveofficersanddirectorsshallexecuteanddeliverallsuchproperinstruments,deeds,assignmentsorassurancesanddoallotherthingsreasonablynecessaryordesirabletoconsummatetheMergerandtocarryouttheintentandpurposesofthisAgreement.
ARTICLEIII.
REPRESENTATIONSANDWARRANTIESOFTHECOMPANY
Exceptasdisclosed(a)intheCompanySECDocumentsfiledpriortothedatehereof(withoutgivingeffecttoanyamendmenttoanysuchCompanySECDocumentfiledonorafterthedatehereofandexcludinganydisclosuressetforthinanysuchCompanySECDocumentinanyriskfactorsection,anydisclosureinanysectionrelatingtoforward-lookingstatementsoranyotherstatementsthatarenon-specific,predictiveorprimarilycautionaryinnatureotherthanhistoricalfactsincludedtherein),wheretherelevanceoftheinformationasanexceptionto(ordisclosureforpurposesof)aparticularrepresentationisreasonablyapparentonthefaceofsuchdisclosure,or(b)inthedisclosurescheduledeliveredbytheCompanytoParentimmediatelypriortotheexecutionofthisAgreement(the"Company Disclosure Schedule ")(eachsectionofwhichqualifiesthecorrespondinglynumberedrepresentation,warrantyorcovenantifspecifiedthereinandsuchotherrepresentations,warrantiesorcovenantswhereitsrelevanceasanexceptionto(ordisclosureforpurposesof)suchother
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representation,warrantyorcovenantisreasonablyapparent),theCompanyrepresentsandwarrantstoParentasfollows:
Section3.1 Qualification, Organization, Subsidiaries, Capitalization.
(a)TheCompanyisacorporationdulyincorporatedandvalidlyexistingundertheLawsoftheStateofTexas.TheCompanyhastherequisitecorporatepowerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconductedexceptforanysuchfailurestohavesuchpowerandauthorityaswouldnot,individuallyorintheaggregate,haveaCompanyMaterialAdverseEffect.EachoftheCompany'sSubsidiariesisalegalentitydulyorganized,validlyexistingandingoodstanding(wheresuchconceptisrecognizedunderapplicableLaw)undertheLawsofitsjurisdictionoforganizationandhastherequisiteentitycapacity,powerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwherethefailuretobeingoodstandingortohavesuchpowerorauthoritywouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.EachoftheCompanyanditsSubsidiariesisdulyqualifiedorlicensed,andhasallnecessarygovernmentalapprovals,todobusinessandisingoodstandingasaforeignentity(wheresuchconceptisrecognizedunderapplicableLaw)ineachjurisdictioninwhichthepropertyowned,leasedoroperatedbyitorthenatureofthebusinessconductedbyitmakessuchapprovals,qualificationorlicensingnecessary,exceptwherethefailuretobesodulyapproved,qualifiedorlicensedandingoodstandingwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
(b)TheCompanyhasmadeavailabletoParent,priortothedatehereof,trueandcompletecopiesoftheCompanyCharter,CompanyBylawsandthecertificateofincorporation,certificateoflimitedpartnership,certificateofformation,bylaws,limitedpartnershipagreement,limitedliabilitycompanyagreementorcomparableconstituentororganizationaldocumentsforeachofitsmaterialSubsidiariesasidentifiedinSection3.1(b)oftheCompanyDisclosureSchedule(the"Company Material Subsidiaries "),ineachcaseasamendedtoandineffectasofthedatehereof(collectively,the"Company Organizational Documents ").TheCompanyisnotinviolation,andnoneoftheCompany'sSubsidiariesisinmaterialviolation,ofanyoftheCompanyOrganizationalDocuments.
(c)TheauthorizedcapitalstockoftheCompanyconsistsof180,000,000sharesofcommonstock,parvalue$1.00pershare(the"Company Common Stock"),and1,000,000sharesofpreferredstock,noparvalue(the"Company Preferred Stock ").AsofthecloseofbusinessonMay26,2017(i)80,519,422sharesofCompanyCommonStockwereissuedandoutstanding,(ii)nosharesofCompanyPreferredStockwereissuedandoutstanding,(iii)nosharesofCompanyCommonStockwereheldintreasuryand(iv)upto760,135sharesofCompanyCommonStockwereavailableforissuanceundertheCompanyStockPlans,ofwhichamount(A)647,656sharesofCompanyCommonStockmaybeissuedupontheexerciseofExistingOptions,and(B)2,988,083sharesofCompanyCommonStockweresubjecttoawardsofCompanyRSUAwards,withperformance-basedawardsreflectedinsuchnumberatthe"target"level.TheCompanyhasmadeavailabletoParentacompleteandcorrectlistoftheCompanyStockAwardsoutstandingasofthecloseofbusinessonMay26,2017,whichincludes,withrespecttoeachsuchCompanyStockAward,asapplicable,the:(x)exerciseprice,ifapplicable,and(y)numberofsharesofCompanyCommonStockunderlyingsuchaward(whichnumberrepresents,foroutstandingCompanyRSUsthatweresubjecttoperformance-basedvestingundertheCompanyStockPlans,the"target"level).AlloutstandingsharesofCompanyCommonStockare,andallsuchsharesofCompanyCommonStockthatmaybeissuedpriortotheEffectiveTime,whenissuedinaccordancewiththerespectivetermsthereof,willbe,dulyauthorized,validlyissued,fullypaidandnonassessableandfreeofpreemptiverights.ExceptassetforthinthisSection 3.1(c) ,therearenooutstandingsubscriptions,options,warrants,calls,convertiblesecurities,exchangeablesecuritiesorothersimilarrights,agreementsorcommitmentstowhichtheCompanyoranyofitsSubsidiariesisaparty(A)obligatingtheCompanyoranyofitsSubsidiariesto(1)issue,transfer,exchange,sellorregister
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forsaleanyequityinterestsoftheCompanyoranySubsidiaryoftheCompanyorsecuritiesconvertibleintoorexchangeableforsuchequityinterests,(2)grant,extendorenterintoanysuchsubscription,option,warrant,call,convertiblesecuritiesorothersimilarright,agreementorarrangement,(3)redeemorotherwiseacquireanysuchequityinterests,(4)provideamaterialamountoffundsto,ormakeanymaterialinvestment(intheformofaloan,capitalcontributionorotherwise)in,anySubsidiaryor(5)makeanypaymenttoanypersonthevalueofwhichisderivedfromorcalculatedbasedonthevalueofanyequitysecurityissuedbytheCompanyoranyofitsSubsidiariesor(B)grantinganypreemptiveorantidilutiveorsimilarrightswithrespecttoanypubliclytradedsecurityissuedbytheCompanyoritsSubsidiaries.WithrespecttoeachgrantoftheCompanyStockAwards,eachsuchgrantwasmadeinaccordancewiththetermsoftheapplicableCompanyStockPlan,theExchangeAct,theSecuritiesActandallotherapplicableLaws,includingtherulesoftheNYSE.
(d)NeithertheCompanynoranyofitsSubsidiarieshasoutstandingbonds,debentures,notesorotherindebtedness,theholdersofwhichhavetherighttovote(orwhichareconvertibleorexchangeableintoorexercisableforsecuritieshavingtherighttovote)withtheCompanyShareholdersonanymatter.
(e)TherearenovotingtrustsorotheragreementsorunderstandingstowhichtheCompanyoranyofitsSubsidiariesisapartywithrespecttothevotingorregistrationoftheequityinterestsoftheCompanyoranyofitsSubsidiaries.
(f)ExceptassetforthonSection3.1(f)oftheCompanyDisclosureSchedule,(i)noSubsidiaryoftheCompanyownsanyequityinterestsoftheCompanyand(ii)theCompanyoraSubsidiaryoftheCompanyowns,directlyorindirectly,alloftheissuedandoutstandingequityinterestsofeachSubsidiaryoftheCompany,freeandclearofanypreemptiverightsandanyLiensotherthantheCompanyPermittedLiens,andallofsuchequityinterestsaredulyauthorized,validlyissued,fullypaidandnonassessable(wheresuchconceptisapplicableandrecognizedunderapplicableLaw)andfreeofpreemptiverights.ExceptforequityinterestsintheCompany'sSubsidiaries,neithertheCompanynoranyofitsSubsidiariesowns,directlyorindirectly,anyequityinterestinanyperson(oranysecurityorotherright,agreementorcommitmentconvertibleorexercisableinto,orexchangeablefor,anyequityinterestinanyperson).ExceptforanyobligationspursuanttothisAgreement,neithertheCompanynoranyofitsSubsidiarieshasanyobligationtoacquireanyequityinterest,security,right,agreementorcommitmentortoprovidefundstoormakeanyinvestment(intheformofaloan,capitalcontributionorotherwise)in,anyperson.NeithertheCompanynoranyofitsSubsidiarieshasanyobligation,otherthanpursuanttotheCompanyStockPlans,torepurchase,redeemorotherwiseacquireanyequityinterestsoftheCompanyoranysuchSubsidiary.
Section3.2 Company Authority Relative to this Agreement; No Violation.
(a)TheCompanyhastherequisitecorporatepowerandauthoritytoexecuteanddeliverthisAgreementandeachotherdocumenttobeenteredintobytheCompanyinconnectionwiththetransactionscontemplatedhereby(togetherwiththisAgreement,the"Company Transaction Documents ")and,subjecttoreceiptoftheCompanyShareholderApproval,toconsummatethetransactionscontemplatedherebyandthereby,includingtheMerger.Theexecution,deliveryandperformanceofthisAgreementandtheotherCompanyTransactionDocumentsandtheconsummationofthetransactionscontemplatedherebyandtherebyhavebeendulyandvalidlyauthorizedbytheCompanyBoardand,exceptfortheCompanyShareholderApproval,noothercorporateactiononthepartoftheCompanyorvoteoftheCompanyShareholdersisnecessarytoauthorizetheexecutionanddeliverybytheCompanyofthisAgreementandtheotherCompanyTransactionDocumentsandtheconsummationoftheMergerandtheothertransactionscontemplatedherebyandthereby.TheCompanyBoardhasunanimouslydulyandvalidlyadoptedresolutions(i)approvingthisAgreementandtheotherCompanyTransactionDocuments,includingtheMergerandtheothertransactionscontemplatedherebyandtherebyand(ii)declaringthatitisinthebestinterestsoftheCompany
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ShareholdersthattheCompanyenterintothisAgreementandtheotherCompanyTransactionDocumentsandconsummatetheMergerandtheothertransactionscontemplatedherebyandtherebyonthetermsandsubjecttotheconditionssetforthhereinandtherein.TheCompanyBoardhasfurtherresolvedthatitwillrecommendthattheCompanyShareholdersapprovethisAgreement(suchrecommendationreferredtohereinasthe"Company Board Recommendation ").Noneoftheaforementionedresolutions,asofthedatehereof,havebeenrescinded,modifiedorwithdrawninanyway.EachoftheCompanyTransactionDocumentshasbeendulyandvalidlyexecutedanddeliveredbytheCompanyand,assumingeachsuchCompanyTransactionDocumenthasbeendulyauthorized,executedanddeliveredbyeachothercounterpartythereto,eachoftheCompanyTransactionDocumentsconstitutesthelegal,validandbindingobligationoftheCompany,enforceableagainsttheCompanyinaccordancewithitsterms,exceptassuchenforcementmaybesubjectto(A)theeffectofbankruptcy,insolvency,reorganization,receivership,administration,arrangement,moratoriumorotherLawsaffectingorrelatingtocreditors'rightsgenerallyor(B)therulesgoverningtheavailabilityofspecificperformance,injunctiverelieforotherequitableremediesandgeneralprinciplesofequity,regardlessofwhetherconsideredinaproceedinginequityoratlaw(the"Remedies Exceptions ").
(b)Otherthaninconnectionwithorincompliancewith(i)thefilingoftheCertificateofMergerwiththeSecretaryofStateoftheStateofTexas,(ii)theU.S.SecuritiesExchangeActof1934,asamended,andtherulesandregulationspromulgatedthereunder(the"Exchange Act "),(iii)theU.S.SecuritiesActof1933,asamended,andtherulesandregulationspromulgatedthereunder(the"Securities Act "),(iv)therulesandregulationsoftheNewYorkStockExchange("NYSE "),(v)theHart-Scott-RodinoAntitrustImprovementsActof1976,asamended,andtherulesandregulationspromulgatedthereunder(the"HSR Act "),andanyantitrust,competition,foreigninvestmentorsimilarLawsoutsideoftheUnitedStatesand(vi)theapprovalssetforthinSection3.2(b)oftheCompanyDisclosureSchedule(collectively,the"Company Approvals "),and,subjecttotheaccuracyoftherepresentationsandwarrantiesofParentandMergerSubinSection 4.2(b) ,noauthorization,consent,Order,license,permitorapprovalof,orregistration,declaration,noticeorfilingwith,ornoticeto,anyUnitedStates,stateoftheUnitedStatesornon-UnitedStatesgovernmentalorregulatoryagency,commission,court,body,entityorauthority,independentsystemoperator,regionaltransmissionorganization,othermarketadministrator,internationaltreatyorstandardsorganization,ornational,regionalorstatereliabilityorganization(each,a"Governmental Entity ")isnecessary,underapplicableLaw,fortheexecution,deliveryandperformanceofthisAgreementortheconsummationbytheCompanyofthetransactionscontemplatedhereby,exceptforsuchauthorizations,consents,Orders,licenses,permits,approvalsorfilingsthat,ifnotobtainedormade,wouldnotreasonablybeexpectedtomateriallyimpedeordelaytheconsummationoftheMergerandtheothertransactionscontemplatedbythisAgreementorreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
(c)Theexecution,deliveryandperformancebytheCompanyofthisAgreementdonot,and(assumingtheCompanyApprovalsareobtained)theconsummationofthetransactionscontemplatedherebyandcompliancewiththeprovisionshereofwillnot(i)resultinanyloss,suspension,limitationorimpairmentofanyrightoftheCompanyoranyofitsSubsidiariestoownoruseanyassetsrequiredfortheconductoftheirbusinessorresultinanyviolationof,ordefault(withorwithoutnoticeorlapseoftime,orboth)under,orgiverisetoanyrightoftermination,cancellation,firstoffer,firstrefusal,modificationoraccelerationofanymaterialobligationortothelossofabenefitunderanyloan,guaranteeofindebtednessorcreditagreement,note,bond,mortgage,indenture,lease,agreement,contract,instrument,permit,concession,franchise,rightorlicensebindingupontheCompanyoranyofitsSubsidiariesorbywhichortowhichanyoftheirrespectiveproperties,rightsorassetsareboundorsubject,orresultinthecreationofanyliens,claims,mortgages,encumbrances,pledges,securityinterests,equitiesorchargesofanykind(each,a"Lien ")(otherthantheCompanyPermittedLiensandanyLienscreatedinconnectionwithanyactiontakenbyParentoritsaffiliates),ineachcase,uponanyofthepropertiesorassetsoftheCompanyoranyofitsSubsidiariesorany
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contracttowhichtheCompanyoranyofitsSubsidiariesisapartyorbywhichanyoftheirrespectivepropertiesorassetsarebound,(ii)conflictwithorresultinanyviolationofanyprovisionoftheCompanyOrganizationalDocumentsor(iii)conflictwithorviolateanyapplicableLaws,exceptinthecaseofclauses(i)and(iii)forsuchlosses,suspensions,limitations,impairments,conflicts,violations,defaults,terminations,cancellations,accelerations,orLiensaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
Section3.3 Reports and Financial Statements.
(a)TheCompanyandeachofitsSubsidiarieshasfiledwithorfurnishedtotheU.S.SecuritiesandExchangeCommission("SEC ")allreports,schedules,forms,statementsandotherdocumentsrequiredtobefiledorfurnishedbyitsinceSeptember30,2015(allsuchdocumentsandreportsfiledorfurnishedbytheCompanyoranyofitsSubsidiaries,the"Company SEC Documents ").Asoftheirrespectivedatesoffilingor,inthecaseoftheCompanySECDocumentsthatareregistrationstatementsfiledpursuanttotherequirementsoftheSecuritiesAct,theirrespectivedatesofeffectiveness,or,ifamendedpriortothedatehereof,asofthedateofthelastsuchamendment,theCompanySECDocumentscomplied,astoform,inallmaterialrespectswiththerequirementsoftheSecuritiesAct,theExchangeActandtheSarbanes-OxleyActof2002andtherulesandregulationspromulgatedthereunder(the"Sarbanes-Oxley Act "),asthecasemaybe,andnoneoftheCompanySECDocumentscontainedanyuntruestatementofamaterialfactoromittedtostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading,exceptthatinformationsetforthintheCompanySECDocumentsasofalaterdate(butbeforethedatehereof)willbedeemedtomodifyinformationasofanearlierdate.
(b)Theconsolidatedfinancialstatements(includingallrelatednotesandschedulesthereto)oftheCompanyincludedintheCompanySECDocuments(i)fairlypresentinallmaterialrespectstheconsolidatedfinancialpositionoftheCompanyanditsconsolidatedSubsidiaries,asattherespectivedatesthereof,andtheconsolidatedresultsoftheiroperationsandtheirconsolidatedcashflowsfortherespectiveperiodsthenended(subject,inthecaseoftheunauditedstatements,tonormalyear-endauditadjustmentsandanyotheradjustmentsdescribedtherein),(ii)werepreparedinconformitywithU.S.generallyacceptedaccountingprinciples("GAAP ")(except,inthecaseoftheunauditedstatements,aspermittedbyapplicablerulesandregulationsoftheSEC)appliedonaconsistentbasisduringtheperiodsinvolved(exceptasmaybeindicatedthereinorinthenotesthereto),(iii)havebeenpreparedfrom,andareinaccordancewith,thebooksandrecordsoftheCompanyanditsconsolidatedSubsidiariesand(iv)comply,astoform,inallmaterialrespectswiththeapplicableaccountingrequirementsandwiththerulesandregulationsoftheSEC,theExchangeActandtheSecuritiesAct.
(c)Therearenooutstandingorunresolvedcommentsfrom,orunresolvedissuesraisedby,thestaffoftheSECrelatingtotheCompanySECDocuments.TheCompanyhasheretoforemadeavailabletoParenttrue,correctandcompletecopiesofallwrittencorrespondencebetweentheCompanyandtheSECoccurringsinceJanuary1,2016.NoneoftheCompanySECDocumentsis,totheknowledgeoftheCompany,thesubjectofongoingSECreview,andnoenforcementactionhasbeeninitiatedagainsttheCompanyrelatingtodisclosurescontainedinoromittedfromanyCompanySECDocument.
(d)NeithertheCompanynoranyofitsSubsidiariesisapartyto,nordoesithaveanycommitmenttobecomeapartyto,anyjointventure,off-balancesheetpartnershiporanysimilarcontract(includinganycontractrelatingtoanytransactionorrelationshipbetweenoramongtheCompanyoranyofitsSubsidiaries,ontheonehand,andanyunconsolidatedaffiliate,includinganystructuredfinance,specialpurposeorlimitedpurposeentityorperson,ontheotherhand)orany"off-balancesheetarrangements"(asdefinedinItem303(a)ofRegulationS-KoftheSEC),wheretheresult,purposeoreffectofsuchcontractistoavoiddisclosureofanymaterialtransactioninvolving,or
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materialliabilitiesof,theCompanyoranyofitsSubsidiariesintheCompany'sfinancialstatementsorotherCompanySECDocuments.
Section3.4 Internal Controls and Procedures. TheCompanyhasestablishedandmaintainsdisclosurecontrolsandproceduresandinternalcontroloverfinancialreporting(assuchtermsaredefinedinparagraphs(e)and(f),respectively,ofRule13a-15undertheExchangeAct)asrequiredbyRule13a-15undertheExchangeAct.TheCompany'sdisclosurecontrolsandproceduresarereasonablydesignedtoensurethatallmaterialinformationrequiredtobedisclosedbytheCompanyinthereportsthatitfilesorfurnishesundertheExchangeActisrecorded,processed,summarizedandreportedwithinthetimeperiodsspecifiedintherulesandformsoftheSEC,andthatallsuchmaterialinformationisaccumulatedandcommunicatedtotheCompany'smanagementasappropriatetoallowtimelydecisionsregardingrequireddisclosureandtomakethecertificationsrequiredpursuanttoSections302and906oftheSarbanes-OxleyAct.TheCompany'smanagementhascompletedanassessmentoftheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingincompliancewiththerequirementsofSection404oftheSarbanes-OxleyActfortheyearendedSeptember30,2016,andsuchassessmentconcludedthatsuchcontrolswereeffective.Basedonitsmostrecentevaluationofinternalcontrolsoverfinancialreportingpriortothedatehereof,whichhasbeenprovidedtoParent,managementoftheCompanyhasdisclosedtotheCompany'sauditorsandtheauditcommitteeoftheCompanyBoard(i)anysignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontrolsoverfinancialreportingthatarereasonablylikelytoadverselyaffectinanymaterialrespecttheCompany'sabilitytorecord,process,summarizeandreportfinancialinformationand(ii)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheCompany'sinternalcontroloverfinancialreporting,andeachsuchdeficiency,weaknessandfraudsodisclosedtoauditors,ifany,hasbeendisclosedtoParentpriortothedatehereof.
Section3.5 No Undisclosed Liabilities. TherearenoliabilitiesorobligationsoftheCompanyoranyofitsSubsidiaries,whetherknownorunknownandwhetheraccrued,absolute,determinedorcontingent,thatwouldberequiredbyGAAPtobereflectedonaconsolidatedbalancesheetoftheCompanyanditsconsolidatedSubsidiaries(includingthenotesthereto),exceptfor(i)liabilitiesorobligationsdisclosedandprovidedforinthemostrecentbalancesheetsincludedintheCompanyFinancialStatements(orinthenotesthereto)filedandpubliclyavailablepriortothedateofthisAgreement,(ii)liabilitiesorobligationsincurredinaccordancewithorinconnectionwiththisAgreement,(iii)liabilitiesorobligationsincurredsinceSeptember30,2016intheordinarycourseofbusinessconsistentwithpastpracticesincethedateofsuchbalancesheet,(iv)liabilitiesorobligationsthathavebeendischargedorpaidinfull,and(v)liabilitiesorobligationsthathavenothadandwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
Section3.6 Compliance with Law; Permits.
(a)TheCompanyanditsSubsidiariesareincompliancewith,andarenotindefaultunderorinviolationof,anyapplicableinternational,federal,state,localorforeignlaw,statute,ordinance,rule,regulation(includingthenon-applicabilityoftheTakeoverCode),convention,treaty,judgment,Order,injunction,decreeoragencyrequirementofanyGovernmentalEntity(collectively,"Laws "andeach,a"Law "),exceptwheresuchnon-compliance,defaultorviolationwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.SinceJanuary1,2015,neithertheCompanynoranyofitsSubsidiarieshasreceivedanywrittennoticeor,totheCompany'sknowledge,othercommunicationfromanyGovernmentalEntityregardinganyactualorpossibleviolationof,orfailuretocomplywith,anyLaw,exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
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(b)TheCompanyanditsSubsidiariesareinpossessionofallfranchises,grants,authorizations,licenses,concessions,permits,easements,variances,exceptions,consents,certificates,approvals,clearances,permissions,financialassuranceinstruments,qualificationsandregistrationsandOrdersofallapplicableGovernmentalEntities,andallrightsunderanyCompanyMaterialContractwithallGovernmentalEntities,andhavefiledalltariffs,reports,noticesandotherdocumentswithallGovernmentalEntitiesnecessaryfortheCompanyanditsSubsidiariestoown,leaseandoperatetheirpropertiesandassetsandtocarryontheirbusinessesastheyarenowbeingconducted(the"Company Permits "),exceptwherethefailuretohaveortohavefiledsuchCompanyPermitswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.AlltheCompanyPermitsarevalidandinfullforceandeffectandarenotsubjecttoanyadministrativeorjudicialproceedingthatcouldresultinmodification,terminationorrevocationthereof,exceptwherethefailuretobeinfullforceandeffectoranymodification,terminationorrevocationthereofwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.TheCompanyandeachofitsSubsidiariesisincompliancewiththetermsandrequirementsofallmaterialCompanyPermits,exceptwherethefailuretobeincompliancewouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
(c)ExceptassetforthinSection3.6oftheCompanyDisclosureSchedule,eachdrillingunitownedorleasedbytheCompanyoranyofitsSubsidiarieswhichissubjecttoclassification(otherthancoldstackedrigs)isinclassandfreeofsuspensionorcancellationtoclass,andisregisteredundertheflagofitsflagjurisdiction.
Section3.7 Absence of Certain Changes or Events.
(a)FromOctober1,2016throughthedateofthisAgreement,exceptinconnectionwiththenegotiationandexecutionofthisAgreement,thebusinessesoftheCompanyanditsSubsidiarieshavebeenconductedinallmaterialrespectsintheordinarycourseofbusiness.
(b)SinceOctober1,2016,therehasnotbeenanyevent,change,effect,development,occurrenceorstateoffactsthathashadorwouldreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect.
Section3.8 Environmental Laws and Regulations. Exceptaswouldnothave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect(i)therearenoinvestigations,actions,suitsorproceedings(whetheradministrativeorjudicial)pending,allegingnon-compliancewithorotherliabilityunderanyEnvironmentalLaw,(ii)theCompanyanditsSubsidiariesare,andexceptformattersthathavebeenfullyresolvedwiththeapplicableGovernmentalEntity,sinceJanuary1,2016havebeen,incompliancewithallEnvironmentalLaws(whichcomplianceincludesthepossessionbytheCompanyandeachofitsSubsidiariesofallPermitsrequiredunderapplicableEnvironmentalLawstoconducttheirrespectivebusinessandoperations,andcompliancewiththetermsandconditionsthereof),(iii)noneoftheCompanyanditsSubsidiariesissubjecttoanyOrderorhascreatedanyobligationsorliabilitiesunderapplicableEnvironmentalLawsorconcerningHazardousMaterialsorReleases,and(iv)noneoftheCompanyanditsSubsidiarieshasreceivedanyunresolvedclaim,notice,complaintorrequestforinformationfromaGovernmentalEntityoranyotherpersonrelatingtoactualorallegednoncompliancewithorliabilityunderapplicableEnvironmentalLaws(includinganysuchliabilityorobligationarisingunder,retainedorassumedbycontractorbyoperationoflaw).
Section3.9 Investigations; Litigation. Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffectorwouldnotreasonablybeexpectedtoprevent,impedeormateriallydelayconsummationoftheMerger,(i)thereisnoinvestigationorreviewpending(or,totheCompany'sknowledge,threatened)byanyGovernmentalEntitywithrespecttotheCompanyoranyofitsSubsidiaries,(ii)therearenoclaims,actions,suits,inquiries,investigations,arbitrationsoradministrativeorotherproceedings,oranysubpoenas,civilinvestigativedemandsorotherrequestsforinformation,relatingtopotentialviolationsofLawpending
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(or,totheCompany'sknowledge,threatened)againstoraffectingtheCompanyoranyofitsSubsidiaries,oranyoftheirrespectivepropertiesand(iii)therearenoOrders,injunctions,judgmentsordecreesof,orbefore,anyGovernmentalEntitypending(or,totheCompany'sknowledge,threatenedtobeimposed)againsttheCompanyoranyofitsSubsidiaries.
Section3.10 Investment Company. NoneoftheCompanyoranyofitsSubsidiariesisan"investmentcompany"oracompany"controlled"byan"investmentcompany"withinthemeaningoftheU.S.InvestmentCompanyActof1940,asamended,andtherulesandregulationspromulgatedthereunder.
Section3.11 Intellectual Property.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,eithertheCompanyoraSubsidiaryoftheCompanyowns,orislicensedorotherwisepossessesvalidrightstouse,freeandclearofLiensotherthantheCompanyPermittedLiens,alltrademarks,tradenames,servicemarks,servicenames,markregistrations,logos,assumednames,domainnames,registeredandunregisteredcopyrights,patentsorapplicationsandregistrations,tradesecretsandotherintellectualpropertyrightsnecessarytotheirrespectivebusinessesascurrentlyconducted(collectively,the"Company Intellectual Property "),andnothirdpartyhasownershiprightsorlicenserightstoimprovementsmadebytheCompanyintheCompanyIntellectualProperty.Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,(i)therearenopendingor,totheCompany'sknowledge,threatenedclaimsbyanypersonalleginginfringement,misappropriationorotherviolationbytheCompanyoranyofitsSubsidiariesofanyintellectualpropertyrightsofanyperson,(ii)totheCompany'sknowledge,theconductofthebusinessoftheCompanyanditsSubsidiariesdoesnotinfringe,misappropriateorotherwiseviolateanyintellectualpropertyrightsofanyperson,(iii)neithertheCompanynoranyofitsSubsidiarieshasmadeanyclaimofaviolation,infringementormisappropriationbyothersoftheCompany'soranyitsSubsidiaries'rightstoorinconnectionwiththeCompanyIntellectualPropertyand(iv)totheCompany'sknowledge,nopersonisinfringing,misappropriatingorotherwiseviolatinganyCompanyIntellectualProperty.
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,theCompanyanditsSubsidiarieshaveimplemented(i)commerciallyreasonablemeasurestoprotecttheconfidentiality,integrityandsecurityoftheCompanyITAssets(andallinformationandtransactionsstoredorcontainedthereinortransmittedthereby);and(ii)commerciallyreasonabledatabackup,datastorage,systemredundancyanddisasteravoidanceandrecoveryprocedures,aswellasacommerciallyreasonablebusinesscontinuityplan,ineachcaseconsistentwithcustomaryindustrypractices.
Section3.12 Properties.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,theCompanyanditsSubsidiarieshavegoodandmarketabletitletoallrealpropertyownedbytheCompanyoranyofitsSubsidiariesandgoodandvalidleaseholdinteresttoallrealpropertywhichisleased,subleased,licensedorotherwiseoccupiedbytheCompanyoranyofitsSubsidiaries(the"Company Leased Real Property "),ineachcasefreeandclearofallLiens(otherthantheCompanyPermittedLiens).
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,theCompanyanditsSubsidiarieshavegoodandmarketabletitleto,orhavevalidrightstoleaseorotherwiseuse,allitemsofpersonalpropertythatarematerialtotherespectivebusinessesoftheCompanyanditsSubsidiaries,ineachcasefreeandclearofallLiens(otherthantheCompanyPermittedLiens).
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Section3.13 Ownership and Maintenance of Drilling Units.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,eithertheCompanyoraSubsidiaryoftheCompanyhasgoodandmarketabletitletothedrillingunitslistedintheCompany'smostrecentfleetstatusreport,atrueandcompletecopyofwhichhasbeenfurnishedasanexhibittoaCurrentReportonForm8-KfiledbytheCompanywiththeSECorotherwiseprovidedtoParent(the"Company FleetReport "),ineachcasefreeandclearofallLiensexceptfortheCompanyPermittedLiensandnosuchdrillingunitoranyrelatedassetisleasedunderanoperatingleasefromalessorthat,totheCompany'sknowledge,hasincurrednon-recourseindebtednesstofinancetheacquisitionorconstructionofsuchasset.
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,thedrillingunitslistedintheCompanyFleetReport(otherthansuchdrillingunitsthatarenotedthereinas"coldstacked"orarebeingpreparedtobe"coldstacked")havebeenmaintainedconsistentwithgeneralpracticeintheoffshoredrillingindustryandareingoodoperatingconditionandrepair,subjecttoordinarywearandtear.
Section3.14 Tax Matters.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect:
(i)TheCompanyandeachofitsSubsidiariesandeachaffiliated,consolidated,combined,unitaryorsimilargroupthatincludestheCompanyoranyofitsSubsidiarieshavedulyandtimelyfiledorcausedtobefiled(takingintoaccountanyvalidextensionoftimewithinwhichtofile)allTaxReturnsrequiredtobefiledbyanyofthemandallsuchTaxReturnsaretrue,completeandaccurate.
(ii)TheCompanyandeachofitsSubsidiarieshavetimelypaidallTaxesthatarerequiredtobepaidbyanyofthemorthattheCompanyoranyofitsSubsidiariesareobligatedtowithholdfromamountsowingtoanyemployee,creditor,shareholderorthirdparty(ineachcase,whetherornotshownonanyTaxReturn),exceptwithrespecttomatterscontestedingoodfaiththroughappropriateproceedingsandforwhichadequatereserveshavebeenestablishedinaccordancewithGAAP.
(iii)NoTaxReturnoftheCompanyoranyofitsSubsidiariesisthesubjectofanaudit,examinationinvestigationorotherproceeding,andtherearenoaudits,examinations,investigationsorotherproceedingspendingorthreatenedinwritinginrespectofTaxesorTaxmattersoftheCompanyoranyofitsSubsidiaries.
(iv)NeithertheCompanynoranyofitsSubsidiariesiscurrentlythebeneficiaryofanywaiversofanylimitationperiodsoragreementsprovidingforanextensionoftimeforthefilingofanyTaxReturn,theassessmentorcollectionthereofbyanyrelevantTaxauthorityorthepaymentofanyTaxbytheCompanyoranyofitsSubsidiaries.
(v)NeithertheCompanynoranyofitsSubsidiarieshasanyliabilityfortheTaxesofanyperson(otherthanTaxesoftheCompanyoritsSubsidiaries)(A)underTreasuryRegulationsSection1.1502-6(oranysimilarprovisionofstate,localornon-U.S.TaxLaw),(B)asatransfereeorsuccessoror(C)byContract(otherthanContractsexclusivelybetweenoramongoneormoreoftheCompanyanditsSubsidiariesandotherthanascustomaryTaxindemnificationscontainedinordinarycoursecommercialagreementsorarrangementsthatarenotprimarilyrelatedtoTaxes).
(vi)NeithertheCompanynoranyofitsSubsidiarieshasanyliabilitypursuanttoanyTaxsharing,allocationorindemnificationagreementorarrangement(otherthansuchanagreementorarrangementexclusivelybetweenoramongoneormoreoftheCompanyandits
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SubsidiariesandotherthanascustomaryTaxindemnificationscontainedinordinarycoursecommercialagreementsorarrangementsthatarenotprimarilyrelatedtoTaxes).
(vii)NeithertheCompanynoranyofitsSubsidiarieshasbeenapartytoatransactionthatisa"listedtransaction,"assuchtermisdefinedinTreasuryRegulationsSection1.6011-4(b)(2),oranyothertransactionrequiringdisclosureunderanalogousprovisionsofstate,localornon-U.S.TaxLaw.
(viii)NeithertheCompanynoranyofitsSubsidiariesisapartytoanyclosingagreementdescribedinSection7121oftheCodeoranypredecessorprovisionthereoforanysimilaragreementunderstate,localornon-U.S.TaxLaw,andneithertheCompanynoranyofitsSubsidiariesissubjecttoanyprivaterulingissuedbyanyGovernmentalEntityinrespectofTaxes.
(ix)TherearenoLiensforTaxesonanyassetoftheCompanyoritsSubsidiaries,exceptforLiensforTaxesnotyetdueordelinquent.
(x)NowrittenclaimhasbeenreceivedbytheCompanyoranyofitsSubsidiariesfromaGovernmentalEntityinajurisdictionwheresuchentitydoesnotfileTaxReturnsthatitisormaybesubjecttotaxationbysuchjurisdiction.
(xi)NeithertheCompanynoranyofitsSubsidiarieshasbeena"UnitedStatesrealpropertyholdingcorporation"asthattermisdefinedinSection897(c)(2)oftheCodeduringtheapplicableperiodspecifiedinSection897(c)(1)(a)(ii)oftheCode.
(b)NeithertheCompanynoranyofitsSubsidiariesisorwasa"surrogateforeigncorporation"withinthemeaningofSection7874(a)(2)(B)oftheCode.
(c)NeithertheCompanynoranyofitsSubsidiariesbeneficiallyownssharesorotherequityinterestsofParentoranyofParent'saffiliates.
(d)Asofthedatehereof,theCompanyhasnoknowledgeofanyfactsorofanyreasonthat(whentakentogetherwiththeCompany'sunderstandingofotherrelevantfacts)wouldreasonablybeexpectedtocauseParenttobetreated,followingthecompletionofthetransactionscontemplatedbythisAgreement,asadomesticcorporationforU.S.federalincometaxpurposesunderSection7874oftheCode.
(e)Withinthepastthreeyears,neithertheCompanynoranyofitsSubsidiarieshasbeena"distributingcorporation"ora"controlledcorporation"(withinthemeaningofSection355(a)(1)(A)oftheCode)inadistributionintendedtoqualifyfortax-freetreatmentunderSection355oftheCode(orasimilarprovisionofstate,localornon-U.S.TaxLaw).
Section3.15 Employment and Labor Matters. NeithertheCompanynoranyofitsSubsidiariesisapartytoanyCollectiveBargainingAgreementwithrespecttoemployeesoftheCompanyoranyofitsSubsidiaries(each,a"Company Employee ")thathashadorcouldreasonablybeexpectedtohaveaCompanyMaterialAdverseEffect,otherthanthosethattheCompanyoranyofitsSubsidiariesmaybedeemedtobeapartytoorboundbyasaresultofdoingbusinessinaparticularjurisdiction.TotheCompany'sknowledge,asofthedatehereof,therearenoactivitiesorproceedingsofanylaborortradeunion,staffassociationorotherbodytoorganizeanyCompanyEmployeewheresuchactivitiesorproceedingscouldreasonablybeexpectedtohaveaCompanyMaterialAdverseEffect.NomaterialCollectiveBargainingAgreementisbeingnegotiatedbytheCompanyor,totheCompany'sknowledge,anyofitsSubsidiarieswithrespecttoanyCompanyEmployees.SinceJanuary1,2015,therehasbeennoactual,ortotheCompany'sknowledge,threatenedunfairlaborpracticecharges,grievances,arbitrations,strikes,lockouts,workstoppages,slowdowns,picketing,handbillingorotherlabordisputesagainstoraffectingtheCompanyoranyofitsSubsidiariesinvolvingtheCompanyEmployeesthatwould,individuallyorintheaggregate,reasonablybeexpectedtohaveaCompanyMaterialAdverse
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Effectandtherearenocircumstanceswhichcouldormightgiverisetoanysuchdisputethatwould,individuallyorintheaggregate,reasonablybeexpectedtohaveaCompanyMaterialAdverseEffect.TheCompanyis,andhasbeen,incompliancewithallLawsregardingemploymentandemploymentpractices,termsandconditionsofemploymentandwagesandhours(includingclassificationofemployees)andotherLawsinrespectofanyreductioninforce,includingnotice,informationandconsultationrequirements,exceptwhereanysuchnoncompliancewouldnot,individuallyorintheaggregate,bereasonablyexpectedtohaveaCompanyMaterialAdverseEffect.Therearenomaterialoutstandingassessments,penalties,fines,Liens,charges,surcharges,orotheramountsdueorowingbytheCompanypursuanttoanyworkplacesafetyandinsurance/workers'compensationLaws,theCompanyhasnotbeenreassessedinanymaterialrespectundersuchLawsduringthepastthreeyearsandtheCompanyhasnotreceivedanyclaimsundersuchLaws,ineachcase,thatcouldreasonablybeexpectedtohaveaCompanyMaterialAdverseEffect.
Section3.16 Employee Benefit Plans.
(a)ForpurposesofthisAgreement,"Company Benefit Plan "meansanyemployeebenefitplan,program,agreementorarrangement,includingpension,retirement,profit-sharing,deferredcompensation,stockoption,changeincontrol,retention,equityorequity-basedcompensation,stockpurchase,employeestockownership,severancepay,longserviceaward,vacation,bonus,anybenefitsreceivedotherwisethanincashorrelatedtosales,profits,turnoverorperformance,orwhichareotherwisevariable(otherthannormalovertime)orotherincentiveplans,medical,retireemedical,vision,dentalorotherhealthplans,lifeinsuranceplans,andeachotheremployeebenefitplanorfringebenefitplan,includingany"employeebenefitplan"asthattermisdefinedinSection3(3)ofERISA,ineachcase,(i)whetheroralorwritten,fundedorunfunded,insuredorself-insured,taxapprovedornon-taxapprovedand(ii)(A)sponsoredormaintainedbytheCompanyoranySubsidiary,or(B)towhichtheCompanyoranySubsidiarycontributesorisobligatedtocontributeforthebenefitofanycurrentorformeremployees,directors,consultantsorindependentcontractorsorotherwisehasanyobligationorliability,contingentorotherwise.
(b)Exceptaswouldnot,individuallyorintheaggregate,haveaCompanyMaterialAdverseEffect,eachCompanyBenefitPlanthatisintendedtobequalifiedunderSection401(a)oftheCode(a"Qualified Plan ")issoqualifiedandeachtrustmaintainedthereunderisexemptfromtaxationunderSection501(a)oftheCodeand,totheCompany'sknowledge,thereisnoreasonwhytaxapprovalunderanylocalLawinanypartoftheworldmightbewithdrawnormightceasetoapply.
(c)NoCompanyBenefitPlanis,andinthelastsixyears,noneoftheCompanyanditsSubsidiariesnoranyoftheirrespectiveERISAAffiliateshasmaintained,established,contributedtoorbeenobligatedtocontributeto(i)anybenefitplanthatissubjecttoTitleIVorSection302ofERISAorSection412,430or4971oftheCodeor(ineachcase)equivalentlocalLaw,or(ii)anymaterialdefinedbenefitpensionplan.NoneoftheCompanyanditsSubsidiariesnoranyoftheirrespectiveERISAAffiliateshas,atanytimeduringthelastsixyears,maintained,established,contributedtoorbeenobligatedtocontributetoany"multiemployerplan"withinthemeaningofSection4001(a)(3)ofERISA.
(d)(i)Therearenoexisting,pendingor,totheCompany'sknowledge,threatenedclaims(otherthanclaimsforbenefitsintheordinarycourse),lawsuitsorarbitrationswhichhavebeenassertedorinstituted;and(ii)totheCompany'sknowledge,nosetofcircumstancesexistswhichmayreasonablygiverisetoaclaimorlawsuitagainsttheCompanywithrespecttoanyCompanyBenefitPlan,anyfiduciariesthereofwithrespecttotheirdutiestotheCompanyBenefitsPlansortheassetsofanyofthetrustsunderanyoftheCompanyBenefitPlans,which,inthecaseofclause(i)and(ii),couldreasonablybeexpectedtohaveaCompanyMaterialAdverseEffect.
(e)NeithertheCompanynoranyofitsSubsidiarieshasanyobligationorliability,contingentorotherwise,withrespecttoanypensionorotheremployeebenefitplanthatiscurrentlymaintainedor
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sponsoredbyapersonotherthantheCompanyoritsSubsidiariesthatcouldreasonablybeexpectedtohaveaCompanyMaterialAdverseEffect.
(f)NomaterialCompanyBenefitPlanprovidesforanypost-employmentorpost-retirementmedicalorlifeinsurancebenefitsforretired,formerorcurrentemployeesorbeneficiariesordependentsthereof,exceptasrequiredbySection4980BoftheCodeoranyapplicableLaw.
(g)TheCompanyisnotpartyto,orotherwiseobligatedunder,anycontract,agreement,planorarrangementthatprovidesforthegross-upofTaxesimposedbySection409A(a)(1)(B)oftheCodeorequivalentlocalLaw.
(h)ExceptasotherwiseprovidedinthisAgreement,theconsummationofthetransactionscontemplatedbythisAgreementwillnot,eitheraloneorincombinationwithanotherevent(i)entitleanycurrentorformeremployee,director,consultantorofficeroftheCompanyoranyofitsSubsidiariestoseverancepay,unemploymentcompensationorothercompensatorypayment,(ii)acceleratethetimeofpaymentorvesting,orincreasetheamountofcompensationdueanysuchemployee,director,consultantorofficer,or(iii)triggeranyfundingobligationunderanyCompanyBenefitPlanorimposeanyrestrictionsorlimitationsontheCompany'srightstoadminister,amendorterminateanyCompanyBenefitPlan.
(i)TheconsummationoftheMergerandtheothertransactionscontemplatedbythisAgreementwillnot,eitheraloneorincombinationwithanotherevent,resultinanypayment(whetherincashorpropertyorthevestingofproperty)toany"disqualifiedindividual"(assuchtermisdefinedinTreasuryRegulationSection1.280G-1)oftheCompanythatcould,individuallyorincombinationwithanyothersuchpayment,constitutean"excessparachutepayment"(asdefinedinSection280G(b)(1)oftheCode).
(j)NoindividualisentitledunderanyCompanyBenefitPlanorotherwisetoanygross-uporreimbursementofTaxesunderSection4999oftheCode.
(k)Exceptaswouldnot,individuallyorintheaggregate,bereasonablyexpectedtohaveaCompanyMaterialAdverseEffect,neithertheCompanynoranyofitsSubsidiarieshasanyliabilitytomakeanypaymenttoanyCompanyBenefitPlanwhichisdueatthedateofthisAgreement,butremainsunpaid.
(l)TheCompanyanditsSubsidiarieshave,inrelationtotheCompanyBenefitPlans,atalltimescompliedwithallapplicableLaws,regulationsandrequirementsandthetrusts,powersandprovisionsoftheCompanyBenefitPlandocumentation,exceptwhereanysuchnoncompliancewouldnot,individuallyorintheaggregate,bereasonablyexpectedtohaveaCompanyMaterialAdverseEffect.
Section3.17 Insurance. Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,(i)allinsurancepoliciesmaintainedbyoronbehalfoftheCompanyoranyofitsSubsidiariesasofthedateofthisAgreementareinfullforceandeffectandarevalidandenforceable,andallpremiumsdueonsuchpolicieshavebeenpaidbytheCompanyoritsSubsidiaries,asapplicable,and(ii)theCompanyanditsSubsidiariesareincompliancewiththetermsandprovisionsofallinsurancepoliciesmaintainedbyoronbehalfoftheCompanyoranyofitsSubsidiariesasofthedateofthisAgreement,andneithertheCompanynoranyofitsSubsidiariesisinbreachordefaultunder,orhastakenanyactionthatcouldpermitterminationormaterialmodificationof,anymaterialinsurancepolicies.
Section3.18 Opinion of Financial Advisor. TheCompanyBoardhasreceivedtheopinionofGoldman,Sachs&Co.LLCtotheeffectthat,asofthedatethereofandbaseduponandsubjecttothefactorsandassumptionssetforththerein,theExchangeRatioisfair,fromafinancialpointofview,totheCompanyShareholders(otherthanParentanditsaffiliates).TheCompanyshall,promptly
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followingtheexecutionofthisAgreementbyallParties,furnishanaccurateandcompletecopyofsaidopiniontoParentsolelyforinformationalpurposes.
Section3.19 Material Contracts.
(a)ExceptforthisAgreement,theCompanyBenefitPlans,agreementswithcustomersfortheprovisionofdrillingandrelatedservices,agreementsfiledasexhibitstotheCompanySECDocumentsorassetforthontheapplicablesubsectionofSection3.19(a)oftheCompanyDisclosureSchedule,asofthedatehereof,neithertheCompanynoranyofitsSubsidiariesisapartytoorboundby:
(i)any"materialcontract"(assuchtermisdefinedinItem601(b)(10)ofRegulationS-KoftheSEC);
(ii)anyContractthat(A)imposesanyrestrictionontherightorabilityoftheCompanyoranyofitsSubsidiariestocompetewithanyotherpersonoracquireordisposeofthesecuritiesofanotherperson(otherthananyagreementrelatedtoapotentialTakeoverProposal)or(B)containsanexclusivityor"mostfavorednation"clausethatrestrictsthebusinessoftheCompanyoranyofitsSubsidiariesinamaterialmanner;
(iii)anyjointventure,partnershiporlimitedliabilitycompanyagreementorothersimilarContractrelatingtotheformation,creation,operation,managementorcontrolofanyjointventure,partnershiporlimitedliabilitycompany,otherthananysuchContractsolelybetweentheCompanyanditsSubsidiariesoramongtheCompany'sSubsidiaries;
(iv)anyContractexpresslylimitingorrestrictingtheabilityoftheCompanyoranyofitsSubsidiariestomakedistributionsordeclareorpaydividendsinrespectoftheircapitalstock,partnershipinterests,membershipinterestsorotherequityinterests,asthecasemaybe;
(v)anyContractthatbyitstermscallsforaggregatepaymentsbyortotheCompanyoranyofitsSubsidiariesofmorethan$50.0millionintheaggregateovertheremainingtermofsuchContract,exceptfor(A)Contractswithacustomerand(B)anysuchContractthatmaybecancelledbytheCompanyoranyofitsSubsidiarieswithapenaltyorotherliabilityoflessthan$10.0milliontotheCompanyoranyofitsSubsidiaries,uponnoticeof60daysorless;and
(vi)anyContractthatcontains"earnout"orothercontingentpaymentobligations,orremainingindemnityorsimilarobligations,thatcouldreasonablybeexpectedtoresultinpaymentsafterthedatehereofbytheCompanyoranyofitsSubsidiariesinexcessof$50.0million.
AllContractsofthetypesreferredtoinclauses(i)through(vi)abovearereferredtohereinas"Company Material Contracts ."Asusedherein,"Contract"shallmeananyagreement,contract,license,obligation,promise,understandingorundertaking(whetherwrittenororal)thatislegallybinding.
(b)TheCompanyhasdeliveredormadeavailabletoParenttrueandcompletecopiesofalltheCompanyMaterialContracts,subjecttocertainredactionsmadeinordertocomplywithlegalrequirements.
(c)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffect,(i)neithertheCompanynoranySubsidiaryoftheCompanyisinbreachofordefaultunderthetermsofanyCompanyMaterialContract,(ii)totheCompany'sknowledge,nootherpartytoanyCompanyMaterialContractisinbreachofordefaultunderthetermsofanyCompanyMaterialContractand(iii)eachCompanyMaterialContractisavalidandbindingobligationoftheCompanyortheSubsidiaryoftheCompanythatispartytheretoand,tothe
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Company'sknowledge,ofeachotherpartythereto,andisinfullforceandeffect,subjecttotheRemediesExceptions.
Section3.20 Finders or Brokers. ExceptforGoldman,Sachs&Co.LLC,neithertheCompanynoranyoftheCompany'sSubsidiarieshasemployedanyinvestmentbanker,brokerorfinderinconnectionwiththetransactionscontemplatedbythisAgreementwhowouldbeentitledtoormayreceiveanyfeeoranycommissioninconnectionwithoruponconsummationoftheMerger.
Section3.21 Anti-Bribery. Withinthepast5years,neither(a)theCompany,noranyofitsSubsidiaries,nor,totheCompany'sknowledge,anydirector,officer,oremployeeoftheCompanyoranyofitsSubsidiariesnor(b)totheCompany'sknowledge,anyRepresentativewhileactingonbehalfofanyoftheforegoing,onbehalfoftheCompanyoranyofitsSubsidiarieshasdirectlyorindirectly(i)madeanyunlawfulpaymenttoforeignordomesticgovernmentofficialsoremployeesortoanyforeignordomesticpoliticalpartiesorcampaignsorviolatedanyprovisionsofanyapplicableanti-briberyLaws,includingtheForeignCorruptPracticesActof1977,asamended,andtherulesandregulationsthereunder(collectively,the"FCPA ")ortheUKBriberyAct2010(the"Bribery Act "),or(ii)takenanyactiononbehalfoftheCompanyoranyofitsSubsidiariesthatwouldconstituteaviolationofanyapplicableanti-briberyLaws,includingtheFCPAandtheBriberyAct,includingmakinguseofthemailsoranymeansorinstrumentalityofinterstatecommercecorruptlyinfurtheranceofanoffer,payment,promisetopayorauthorizationofthepaymentofanymoney,orotherproperty,gift,promisetogive,orauthorizationofthegivingofanythingofvaluetoany"foreignofficial"(assuchtermisdefinedintheFCPA)oranyforeignpoliticalpartyorofficialthereoforanycandidateforforeignpoliticaloffice,incontraventionoftheFCPA.TheCompanymaintainspoliciesandproceduresthatarereasonablydesignedtoensure,andthatarereasonablyexpectedtocontinuetoensure,continuedcompliancewithanti-briberyLaws.NeithertheCompanynoranyofitsSubsidiaries,nor,totheknowledgeoftheCompany,anydirector,officeroremployeeoftheCompanyoranySubsidiaryoftheCompany,are,orinthepast5yearshavebeen,subjecttoanyactual,pending,or,totheCompany'sknowledge,threatenedcivil,criminal,oradministrativeactionsorgovernmentalinvestigations,inquiriesorenforcementactions,ormadeanyvoluntarydisclosurestoanygovernmentalauthority,involvingtheCompanyoranySubsidiaryoftheCompanyrelatingtoallegedviolationsofapplicableanti-briberyLaws,includingtheFCPAandtheBriberyAct.
Section3.22 Export Controls and Sanctions.
(a)Neither(i)theCompany,anyofitsSubsidiaries,nortotheCompany'sknowledgeanyemployee,officer,ordirectoroftheCompanyoranyofitsSubsidiariesnor(ii)totheCompany'sknowledge,anyRepresentativeofanyoftheforegoing,(A)iscurrentlyorhasbeenwithinthepast5yearsthetargetofTradeSanctions(includingbybeingdesignatedonthelistofSpeciallyDesignatedNationalsandBlockedPersonsoronanyothersanctionslistmaintainedbytheU.S.DepartmentofTreasury'sOfficeofForeignAssetsControl("OFAC "),theU.S.DepartmentofState,theUnitedNationsSecurityCouncil,theEuropeanUnionorHerMajesty'sTreasury),orisorhasbeenwithinthepast5yearsoperating,organizedorresidentinacountryorterritorythatitselfisthetargetofTradeSanctions(currently,Crimea,Cuba,Iran,NorthKorea,SudanandSyria);or(B)has,directlyor,totheknowledgeoftheCompany,indirectly,participatedinthepast5yearsinanyprohibitedorunlawfultransactionordealinginvolvingapersonorentitythatisthetargetofTradeSanctions,orwithanypersonorentityoperating,organized,orresidentinacountryorterritorythatisthetargetofTradeSanctions.
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aCompanyMaterialAdverseEffectonsuchparty,inthepast5years,eachoftheCompany,theCompany'sSubsidiariesand,totheCompany'sknowledge,anyRepresentativesoftheforegoing(i)hasconducteditsbusinessincompliancewithallapplicableTradeSanctionsandExportControlLaws;(ii)haveobtained,andareincompliancewith,allrequiredexportandimportlicenses,license
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exceptionsandotherconsents,notices,approvals,orders,permits,authorizations,declarations,classificationsandfilingswithanyGovernmentalEntityrequiredfortheimport,exportandre-exportofproducts,softwareandtechnology;and(iii)hasmaintainedpoliciesandproceduresthatarereasonablydesignedtoensure,andthatarereasonablyexpectedtocontinuetoensure,continuedcompliancetherewith.
Section3.23 Takeover Statutes. AssumingtheaccuracyoftherepresentationssetforthinSection 4.23 ofthisAgreement,theCompanyBoardhastakenallactionnecessarytorenderinapplicabletothisAgreementandthetransactionscontemplatedbythisAgreementallpotentiallyapplicablestateanti-takeoverstatutesorregulations,includingSection21-606oftheTBOC,andanysimilarprovisionsintheCompanyOrganizationalDocuments.
Section3.24 Information Supplied. TheinformationsuppliedortobesuppliedbytheCompanyforinclusionintheregistrationstatementonFormS-4tobefiledbyParentinconnectionwiththeissuanceoftheParentClassAOrdinarySharesintheMerger(the"Form S-4 ")shallnot,atthetimetheFormS-4isdeclaredeffectivebytheSEC,containanyuntruestatementofamaterialfactoromittostateanymaterialfactrequiredtobestatedthereinornecessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhichtheyaremade,notmisleading,exceptthatnorepresentationorwarrantyismadebytheCompanywithrespecttostatementsmadeorincorporatedbyreferencethereinbasedoninformationsuppliedbyParentorMergerSubinwritingexpresslyforinclusiontherein.TheinformationsuppliedortobesuppliedbytheCompanyforinclusionintheproxystatementrelatingtotheCompanyShareholderMeetingandParentShareholderMeetingincludedintheFormS-4(the"Proxy Statement/Prospectus ")willnot,atthetimetheProxyStatement/ProspectusisfirstmailedtotheCompanyShareholdersandatthetimeofeachShareholderMeetingtobeheldinconnectionwiththeMerger,containanyuntruestatementofamaterialfactoromittostateanymaterialfactrequiredtobestatedthereinornecessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhichtheyaremade,notmisleading,exceptthatnorepresentationorwarrantyismadebytheCompanywithrespecttostatementsmadeorincorporatedbyreferencethereinbasedoninformationsuppliedbyParentorMergerSubinwritingexpresslyforinclusiontherein.TheFormS-4andtheProxyStatement/Prospectus(solelywithrespecttotheportionthereofrelatingtotheCompanyShareholderMeetingbutexcludinganyportionthereofbasedoninformationsuppliedbyParentorMergerSubinwritingexpresslyforinclusiontherein,withrespecttowhichnorepresentationorwarrantyismadebytheCompany)willcomplyastoforminallmaterialrespectswiththeprovisionsoftheSecuritiesActandtheExchangeActandtherulesandregulationspromulgatedthereunder.
Section3.25 No Additional Representations.
(a)TheCompanyacknowledgesthatParentandMergerSubdonotmakeanyrepresentationorwarrantyastoanymatterwhatsoeverexceptasexpresslysetforthinArticle IV orinanycertificatedeliveredbyParentorMergerSubtotheCompanyinaccordancewiththetermshereof,andspecifically(butwithoutlimitingthegeneralityoftheforegoing)thatParentandMergerSubmakenorepresentationorwarrantywithrespectto(i)anyprojections,estimatesorbudgetsdeliveredormadeavailabletotheCompany,anyofitsaffiliatesoranyoftheirrespectiveofficers,directors,employeesorRepresentativesoffuturerevenues,resultsofoperations(oranycomponentthereof),cashflowsorfinancialcondition(oranycomponentthereof)ofParentanditsSubsidiariesor(ii)thefuturebusinessandoperationsofParentanditsSubsidiaries,andtheCompanyhasnotreliedonsuchinformationoranyotherrepresentationsorwarrantiesnotsetforthinArticle IV .
(b)TheCompanyhasconducteditsownindependentreviewandanalysisofthebusiness,operations,assets,liabilities,resultsofoperations,financialconditionandprospectsofParentanditsSubsidiariesandacknowledgesthattheCompanyhasbeenprovidedaccessforsuchpurposes.ExceptfortherepresentationsandwarrantiesexpresslysetforthinArticle IV orinanycertificatedeliveredto
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theCompanybyParentorMergerSubinaccordancewiththetermshereof,inenteringintothisAgreement,theCompanyhasreliedsolelyuponitsindependentinvestigationandanalysisofParentandParent'sSubsidiaries,andtheCompanyacknowledgesandagreesthatithasnotbeeninducedbyandhasnotrelieduponanyrepresentations,warrantiesorstatements,whetherexpressorimplied,madebyParentorMergerSub,theirSubsidiaries,oranyoftheirrespectiveaffiliates,shareholders,controllingpersonsorRepresentativesthatarenotexpresslysetforthinArticle IV orinanycertificatedeliveredtotheCompanybyParentorMergerSub,whetherornotsuchrepresentations,warrantiesorstatementsweremadeinwritingororally.TheCompanyacknowledgesandagreesthat,exceptfortherepresentationsandwarrantiesexpresslysetforthinArticle IV orinanycertificatedeliveredbyParentorMergerSubtotheCompany(i)ParentandMergerSubdonotmake,andhavenotmade,anyrepresentationsorwarrantiesrelatingtothemselvesortheirbusinessorotherwiseinconnectionwiththetransactionscontemplatedherebyandtheCompanyisnotrelyingonanyrepresentationorwarrantyexceptforthoseexpresslysetforthinthisAgreement,(ii)nopersonhasbeenauthorizedbyParentorMergerSubtomakeanyrepresentationorwarrantyrelatingtothemselvesortheirbusinessorotherwiseinconnectionwiththetransactionscontemplatedhereby,andifmade,suchrepresentationorwarrantymaynotberelieduponbytheCompanyashavingbeenauthorizedbyParentorMergerSuband(iii)anyestimates,projections,predictions,data,financialinformation,memoranda,presentationsoranyothermaterialsorinformationprovidedoraddressedtotheCompany,anyofitsaffiliatesoranyoftheirrespectiveofficers,directors,employeesorRepresentativesarenotandshallnotbedeemedtobeorincluderepresentationsorwarrantiesofParentorMergerSubunlessanysuchmaterialsorinformationisthesubjectofanyexpressrepresentationorwarrantysetforthinArticle IV .
ARTICLEIV.
REPRESENTATIONSANDWARRANTIESOFPARENTANDMERGERSUB
Exceptasdisclosed(a)intheParentSECDocumentsfiledpriortothedatehereof(withoutgivingeffecttoanyamendmenttoanysuchParentSECDocumentfiledonorafterthedatehereofandexcludinganydisclosuressetforthinanysuchParentSECDocumentinanyriskfactorsection,anydisclosureinanysectionrelatingtoforward-lookingstatementsoranyotherstatementsthatarenon-specific,predictiveorprimarilycautionaryinnatureotherthanhistoricalfactsincludedtherein),wheretherelevanceoftheinformationasanexceptionto(ordisclosureforpurposesof)aparticularrepresentationisreasonablyapparentonthefaceofsuchdisclosure,or(b)inthedisclosurescheduledeliveredbyParenttotheCompanyimmediatelypriortotheexecutionofthisAgreement(the"Parent DisclosureSchedule ")(eachsectionofwhichqualifiesthecorrespondinglynumberedrepresentation,warrantyorcovenantifspecifiedthereinandsuchotherrepresentations,warrantiesorcovenantswhereitsrelevanceasanexceptionto(ordisclosureforpurposesof)suchotherrepresentation,warrantyorcovenantisreasonablyapparent),ParentandMergerSubrepresentandwarranttotheCompanyasfollows:
Section4.1 Qualification, Organization, Subsidiaries, Capitalization.
(a)ParentisapubliclimitedcompanydulyorganizedandvalidlyexistingundertheLawsofEnglandandWalesandMergerSubisalimitedliabilitycompanydulyorganized,validlyexistingandingoodstandingundertheLawsoftheStateofTexas.EachofParentandMergerSubhastherequisiteentitycapacity,powerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconductedexceptforanysuchfailurestohavesuchpowerandauthorityaswouldnot,individuallyorintheaggregate,haveaParentMaterialAdverseEffect.EachofParent'sSubsidiariesisalegalentitydulyorganized,validlyexistingandingoodstanding(wheresuchconceptisrecognizedunderapplicableLaw)undertheLawsofitsrespectivejurisdictionoforganizationandhastherequisitecapacity,powerandauthoritytoown,leaseandoperateitspropertiesandassetsandtocarryonitsbusinessaspresentlyconducted,exceptwherethefailuretobeingoodstandingortohavesuchpowerorauthoritywouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,a
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ParentMaterialAdverseEffect.EachofParentanditsSubsidiariesisdulyqualifiedorlicensed,andhasallnecessarygovernmentalapprovals,todobusinessandisingoodstandingasaforeignentity(wheresuchconceptisrecognizedunderapplicableLaw)ineachjurisdictioninwhichthepropertyowned,leasedoroperatedbyitorthenatureofthebusinessconductedbyitmakessuchapprovals,qualificationorlicensingnecessary,exceptwherethefailuretobesodulyapproved,qualifiedorlicensedandingoodstandingwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
(b)ParenthasmadeavailabletotheCompany,priortothedatehereof,trueandcompletecopiesofParent'sarticlesofassociationandthearticlesofassociation,certificateofincorporation,certificateoflimitedpartnership,certificateofformation,bylaws,limitedpartnershipagreement,limitedliabilitycompanyagreementorcomparableconstituentororganizationaldocumentsforeachofitsmaterialSubsidiariesasidentifiedinSection4.1(b)oftheParentDisclosureSchedule(the"Parent Material Subsidiaries "),ineachcaseasamendedtoandineffectasofthedatehereof(collectively,the"Parent Organizational Documents").Parentisnotinviolation,andnoneofParent'sSubsidiariesisinmaterialviolation,ofanyoftheParentOrganizationalDocuments.
(c)AsofthecloseofbusinessonMay25,2017(i)303,748,617ParentClassAOrdinaryShares(excludingnon-vestedshareawardsgrantedundertheParentStockPlans)and50,000ParentClassBOrdinaryShareswereissuedandoutstanding,(ii)6,789,632ParentClassAOrdinaryShareswereheldintreasury,(iii)2,739,877non-vestedParentClassAOrdinaryShareswereoutstandingandsubjecttopotentialforfeitureundertheParentStockPlans,(iv)$700millioninaggregateprincipalamountof3.00%ExchangeableSeniorNotesdue2024issuedbyEnscoJerseyFinanceLimitedwereoutstanding,and(v)upto22,417,095ParentClassAOrdinaryShareswereavailableforfutureissuanceundertheParentStockPlans,ofwhichamount(A)248,914ParentClassAOrdinarySharesweresubjecttooutstandingoptionawardsundertheParentStockPlans,(B)649,616ParentClassAOrdinarySharesweresubjecttooutstandingnon-vestedshareunitawardsundertheParentStockPlans,and(C)822,225ParentClassAOrdinaryShares(atthe"targetlevel")weresubjecttooutstandingperformanceunitawardsundertheParentStockPlans.AlloutstandingParentOrdinarySharesare,andallsuchParentOrdinarySharesthatmaybeissuedpriortotheEffectiveTimeandtheParentClassAOrdinaryShares,whenissuedinaccordancewiththerespectivetermsthereof,willbe,dulyauthorized,validlyissued,fullypaidandnonassessableandfreeofpreemptiverights.ExceptassetforthinthisSection 4.1(c) (andotherthantheParentOrdinarySharesissuablepursuanttothetermsofawardsissuedundertheParentStockPlans(collectively,"Parent Stock Awards ")),therearenooutstandingsubscriptions,options,warrants,calls,convertiblesecurities,exchangeablesecuritiesorothersimilarrights,agreementsorcommitmentstowhichParentoranyofitsSubsidiariesisaparty(A)obligatingParentoranyofitsSubsidiariesto(1)issue,transfer,exchange,sellorregisterforsaleanyequityinterestsofParentoranySubsidiaryofParentorsecuritiesconvertibleintoorexchangeableforsuchequityinterests,(2)grant,extendorenterintoanysuchsubscription,option,warrant,call,convertiblesecuritiesorothersimilarright,agreementorarrangement,(3)redeemorotherwiseacquireanysuchequityinterests,(4)provideamaterialamountoffundsto,ormakeanymaterialinvestment(intheformofaloan,capitalcontributionorotherwise)in,anySubsidiaryor(5)makeanypaymenttoanypersonthevalueofwhichisderivedfromorcalculatedbasedonthevalueofanyequitysecurityissuedbyParentoranyofitsSubsidiariesor(B)grantinganypreemptiveorantidilutiveorsimilarrightswithrespecttoanypubliclytradedsecurityissuedbyParentoritsSubsidiaries.WithrespecttoeachgrantofParentStockAwards,eachsuchgrantwasmadeinaccordancewiththetermsoftheapplicableParentStockPlan,theExchangeAct,theSecuritiesActandallotherapplicableLaws,includingtherulesoftheNYSE.
(d)NeitherParentnoranyofitsSubsidiarieshasoutstandingbonds,debentures,notesorotherindebtedness,theholdersofwhichhavetherighttovote(orwhichareconvertibleorexchangeableintoorexercisableforsecuritieshavingtherighttovote)withtheParentShareholdersonanymatter.
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(e)TherearenovotingtrustsorotheragreementsorunderstandingstowhichParentoranyofitsSubsidiariesisapartywithrespecttothevotingorregistrationoftheequityinterestsofParentoranyofitsSubsidiaries.
(f)NoSubsidiaryofParentownsanyequityinterestsofParent,andParentoraSubsidiaryofParentowns,directlyorindirectly,alloftheissuedandoutstandingequityinterestsofeachSubsidiaryofParent,freeandclearofanypreemptiverightsandanyLiensotherthanParentPermittedLiens,andallofsuchequityinterestsaredulyauthorized,validlyissued,fullypaidandnonassessable(wheresuchconceptisapplicableandrecognizedunderapplicableLaw)andfreeofpreemptiverights.ExceptforequityinterestsinParent'sSubsidiaries,neitherParentnoranyofitsSubsidiariesowns,directlyorindirectly,anyequityinterestinanyperson(oranysecurityorotherright,agreementorcommitmentconvertibleorexercisableinto,orexchangeablefor,anyequityinterestinanyperson).ExceptforanyobligationspursuanttothisAgreement,neitherParentnoranyofitsSubsidiarieshasanyobligationtoacquireanyequityinterest,security,right,agreementorcommitmentortoprovidefundstoormakeanyinvestment(intheformofaloan,capitalcontributionorotherwise)in,anyperson.NeitherParentnoranyofitsSubsidiarieshasanyobligation,otherthanpursuanttotheParentStockPlans,torepurchase,redeemorotherwiseacquireanyequityinterestsofParentoranysuchSubsidiary.
(g)Sincethedateofitsformation,MergerSubhasnotengagedinanyactivitiesotherthaninconnectionwiththisAgreement.
Section4.2 Company Authority Relative to this Agreement; No Violation.
(a)EachofParentandMergerSubhastherequisitecorporateandlimitedliabilitycompanypowerandauthority,asapplicable,toexecuteanddeliverthisAgreementandeachotherdocumenttobeenteredintobyParentandMergerSubinconnectionwiththetransactionscontemplatedhereby(togetherwiththisAgreement,the"Parent Transaction Documents ")and,subjecttothepassingoftheresolutionreferredtoinclause(a)ofthedefinitionofParentShareholderResolutions,toconsummatethetransactionscontemplatedherebyandthereby,includingtheMerger.Theexecution,deliveryandperformanceofthisAgreementandtheotherParentTransactionDocumentsandtheconsummationofthetransactionscontemplatedherebyandtherebyhavebeendulyandvalidlyauthorizedbytheParentBoardand,exceptforthepassingoftheresolutionreferredtoinclause(a)ofthedefinitionofParentShareholderResolutions,noothercompanyactiononthepartofParentorMergerSuborvoteoftheParentShareholdersandmembersofMergerSubisnecessarytoauthorizetheexecutionanddeliverybyParentandMergerSubofthisAgreementandtheotherParentTransactionDocumentsandtheconsummationoftheMerger.TheParentBoardhasdulyandvalidlyadoptedresolutions(i)approvinganddeclaringadvisablethisAgreementandtheotherParentTransactionDocuments,includingtheMergerandtheothertransactionscontemplatedherebyandthereby,(ii)declaringthatitisinthebestinterestsoftheParentShareholdersthatParententerintothisAgreementandtheotherParentTransactionDocumentsandconsummatetheMergerandtheothertransactionscontemplatedherebyandtherebyonthetermsandsubjecttotheconditionssetforthherein,and(iii)appointing,conditionalupontheclosingoftheMergerandwitheffectfromtheEffectiveTime,theAlphaDirectorNomineestotheParentBoardinaccordancewithSection 1.7 (a).TheParentBoardhasfurtherresolvedthat,unlessithasmadeaParentAdverseRecommendationChangeinaccordancewithSection 5.5 ,itwillunanimouslyandunqualifiedlyrecommendthattheParentShareholdersvoteinfavoroftheParentShareholderResolutionsatdulyheldmeetingsofsuchshareholdersforsuchpurposes(the"Parent Board Recommendation ").Noneoftheaforementionedresolutions,asofthedatehereof,havebeenrescinded,modifiedorwithdrawninanyway.EachoftheParentTransactionDocumentshasbeendulyandvalidlyexecutedanddeliveredbyParentand,assumingeachsuchParentTransactionDocumenthasbeendulyauthorized,executedanddeliveredbyeachothercounterpartythereto,eachoftheParentTransactionDocumentsconstitutesthelegal,validandbindingobligationofParent,enforceableagainstParentinaccordancewithitsterms,exceptassuchenforcementmaybesubjectto(A)theeffectofbankruptcy,insolvency,reorganization,receivership,administration,arrangement,
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moratoriumorotherLawsaffectingorrelatingtocreditors'rightsgenerallyor(B)theRemediesExceptions.
(b)Otherthaninconnectionwithorincompliancewith(i)theCompaniesAct(ii)thefilingoftheCertificateofMergerwiththeSecretaryofStateoftheStateofTexas,(iii)theExchangeAct,(iv)theSecuritiesAct,(v)theNYSE,(vi)theHSRActandanyantitrust,competition,foreigninvestmentorsimilarLawsoutsideoftheUnitedStatesand(vii)theapprovalssetforthinSection4.2(b)oftheParentDisclosureSchedule(collectively,the"Parent Approvals "),and,subjecttotheaccuracyoftherepresentationsandwarrantiesoftheCompanyinSection 3.2(b) ,noauthorization,consent,Order,license,permitorapprovalof,orregistration,declaration,noticeorfilingwith,ornoticeto,anyGovernmentalEntityisnecessary,underapplicableLaw,fortheexecution,deliveryandperformanceofthisAgreementortheconsummationbyParentandMergerSubofthetransactionscontemplatedhereby,exceptforsuchauthorizations,consents,Orders,licenses,permits,approvalsorfilingsthat,ifnotobtainedormade,wouldnotreasonablybeexpectedtomateriallyimpedeordelaytheconsummationoftheMergerandtheothertransactionscontemplatedbythisAgreementorreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
(c)Theexecution,deliveryandperformancebyParentandMergerSubofthisAgreementdonot,and(assumingtheParentApprovalsareobtained)theconsummationofthetransactionscontemplatedherebyandcompliancewiththeprovisionshereofwillnot(i)resultinanyloss,suspension,limitationorimpairmentofanyrightofParentoranyofitsSubsidiariestoownoruseanyassetsrequiredfortheconductoftheirbusinessorresultinanyviolationof,ordefault(withorwithoutnoticeorlapseoftime,orboth)under,orgiverisetoanyrightoftermination,cancellation,firstoffer,firstrefusal,modificationoraccelerationofanymaterialobligationortothelossofabenefitunderanyloan,guaranteeofindebtednessorcreditagreement,note,bond,mortgage,indenture,lease,agreement,contract,instrument,permit,concession,franchise,rightorlicensebindinguponParentoranyofitsSubsidiariesorbywhichortowhichanyoftheirrespectiveproperties,rightsorassetsareboundorsubject,orresultinthecreationofanyLien(otherthanParentPermittedLiensandanyLienscreatedinconnectionwithanyactiontakenbytheCompanyoritsaffiliates),ineachcase,uponanyofthepropertiesorassetsofParentoranyofitsSubsidiariesoranycontracttowhichParentoranyofitsSubsidiariesisapartyorbywhichanyoftheirrespectivepropertiesorassetsarebound,(ii)conflictwithorresultinanyviolationofanyprovisionoftheParentOrganizationalDocumentsor(iii)conflictwithorviolateanyapplicableLaws,exceptinthecaseofclauses(i)and(iii)forsuchlosses,suspensions,limitations,impairments,conflicts,violations,defaults,terminations,cancellations,accelerations,orLiensaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
Section4.3 Reports and Financial Statements.
(a)ParentandeachofitsSubsidiarieshasfiledwithorfurnishedtotheSECallreports,schedules,forms,statementsandotherdocumentsrequiredtobefiledorfurnishedbyitsinceJanuary1,2016(allsuchdocumentsandreportsfiledorfurnishedbyParentoranyofitsSubsidiaries,the"Parent SEC Documents ")andParenthasfiledpriortothedatehereofallmaterialreturns,particulars,resolutionsanddocumentsrequiredtobefiledortobedeliveredonbehalfofParentwiththeRegistrarofCompaniesinEnglandandWales.Asoftheirrespectivedatesoffilingor,inthecaseofParentSECDocumentsthatareregistrationstatementsfiledpursuanttotherequirementsoftheSecuritiesAct,theirrespectivedatesofeffectiveness,or,ifamendedpriortothedatehereof,asofthedateofthelastsuchamendment,theParentSECDocumentscomplied,astoform,inallmaterialrespectswiththerequirementsoftheSecuritiesAct,theExchangeActandtheSarbanes-OxleyAct,asthecasemaybe,andnoneoftheParentSECDocumentscontainedanyuntruestatementofamaterialfactoromittedtostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading,except
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thatinformationsetforthintheParentSECDocumentsasofalaterdate(butbeforethedatehereof)willbedeemedtomodifyinformationasofanearlierdate.
(b)Theconsolidatedfinancialstatements(includingallrelatednotesandschedulesthereto)ofParentincludedintheParentSECDocuments(i)fairlypresentinallmaterialrespectstheconsolidatedfinancialpositionofParentanditsconsolidatedSubsidiaries,asattherespectivedatesthereof,andtheconsolidatedresultsoftheiroperationsandtheirconsolidatedcashflowsfortherespectiveperiodsthenended(subject,inthecaseoftheunauditedstatements,tonormalyear-endauditadjustmentsandanyotheradjustmentsdescribedtherein),(ii)werepreparedinconformitywithGAAP(except,inthecaseoftheunauditedstatements,aspermittedbyapplicablerulesandregulationsoftheSEC)appliedonaconsistentbasisduringtheperiodsinvolved(exceptasmaybeindicatedthereinorinthenotesthereto),(iii)havebeenpreparedfrom,andareinaccordancewith,thebooksandrecordsofParentanditsconsolidatedSubsidiariesand(iv)comply,astoform,inallmaterialrespectswiththeapplicableaccountingrequirementsandwiththerulesandregulationsoftheSEC,theExchangeActandtheSecuritiesAct.
(c)Therearenooutstandingorunresolvedcommentsfrom,orunresolvedissuesraisedby,thestaffoftheSECrelatingtotheParentSECDocuments.ParenthasheretoforemadeavailabletotheCompanytrue,correctandcompletecopiesofallwrittencorrespondencebetweenParentandtheSECoccurringsinceJanuary1,2016.NoneoftheParentSECDocumentsis,totheknowledgeofParent,thesubjectofongoingSECreview,andnoenforcementactionhasbeeninitiatedagainstParentrelatingtodisclosurescontainedinoromittedfromanyParentSECDocument.
(d)NeitherParentnoranyofitsSubsidiariesisapartyto,nordoesithaveanycommitmenttobecomeapartyto,anyjointventure,off-balancesheetpartnershiporanysimilarcontract(includinganycontractrelatingtoanytransactionorrelationshipbetweenoramongParentoranyofitsSubsidiaries,ontheonehand,andanyunconsolidatedaffiliate,includinganystructuredfinance,specialpurposeorlimitedpurposeentityorperson,ontheotherhand)orany"off-balancesheetarrangements"(asdefinedinItem303(a)ofRegulationS-KoftheSEC),wheretheresult,purposeoreffectofsuchcontractistoavoiddisclosureofanymaterialtransactioninvolving,ormaterialliabilitiesof,ParentoranyofitsSubsidiariesinParent'sfinancialstatementsorotherParentSECDocuments.
Section4.4 Internal Controls and Procedures. Parenthasestablishedandmaintainsdisclosurecontrolsandproceduresandinternalcontroloverfinancialreporting(assuchtermsaredefinedinparagraphs(e)and(f),respectively,ofRule13a-15undertheExchangeAct)asrequiredbyRule13a-15undertheExchangeAct.Parent'sdisclosurecontrolsandproceduresarereasonablydesignedtoensurethatallmaterialinformationrequiredtobedisclosedbyParentinthereportsthatitfilesorfurnishesundertheExchangeActisrecorded,processed,summarizedandreportedwithinthetimeperiodsspecifiedintherulesandformsoftheSEC,andthatallsuchmaterialinformationisaccumulatedandcommunicatedtoParent'smanagementasappropriatetoallowtimelydecisionsregardingrequireddisclosureandtomakethecertificationsrequiredpursuanttoSections302and906oftheSarbanes-OxleyAct.Parent'smanagementhascompletedanassessmentoftheeffectivenessofParent'sinternalcontroloverfinancialreportingincompliancewiththerequirementsofSection404oftheSarbanes-OxleyActfortheyearendedDecember31,2016,andsuchassessmentconcludedthatsuchcontrolswereeffective.Basedonitsmostrecentevaluationofinternalcontrolsoverfinancialreportingpriortothedatehereof,whichhasbeenprovidedtotheCompany,managementofParenthasdisclosedtoParent'sauditorsandtheauditcommitteeoftheParentBoard(i)anysignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontrolsoverfinancialreportingthatarereasonablylikelytoadverselyaffectinanymaterialrespectParent'sabilitytorecord,process,summarizeandreportfinancialinformationand(ii)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleinParent'sinternalcontroloverfinancialreporting,andeachsuchdeficiency,weaknessandfraudsodisclosedtoauditors,ifany,hasbeendisclosedtotheCompanypriortothedatehereof.
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Section4.5 No Undisclosed Liabilities. TherearenoliabilitiesorobligationsofParentoranyofitsSubsidiaries,whetherknownorunknownandwhetheraccrued,absolute,determinedorcontingent,thatwouldberequiredbyGAAPtobereflectedonaconsolidatedbalancesheetofParentanditsconsolidatedSubsidiaries(includingthenotesthereto),exceptfor(i)liabilitiesorobligationsdisclosedandprovidedforinthemostrecentbalancesheetsincludedintheParentFinancialStatements(orinthenotesthereto)filedandpubliclyavailablepriortothedateofthisAgreement,(ii)liabilitiesorobligationsincurredinaccordancewithorinconnectionwiththisAgreement,(iii)liabilitiesorobligationsincurredsinceDecember31,2016intheordinarycourseofbusinessconsistentwithpastpracticesincethedateofsuchbalancesheet,(iv)liabilitiesorobligationsthathavebeendischargedorpaidinfull,and(v)liabilitiesorobligationsthathavenothadandwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
Section4.6 Compliance with Law; Permits.
(a)ParentanditsSubsidiariesareincompliancewith,andarenotindefaultunderorinviolationof,anyapplicableLaw,exceptwheresuchnon-compliance,defaultorviolationwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.SinceJanuary1,2015,neitherParentnoranyofitsSubsidiarieshasreceivedanywrittennoticeor,toParent'sknowledge,othercommunicationfromanyGovernmentalEntityregardinganyactualorpossibleviolationof,orfailuretocomplywith,anyLaw,exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
(b)NeitherParent,northeMerger,issubjecttotheTakeoverCode.
(c)ParentanditsSubsidiariesareinpossessionofallfranchises,grants,authorizations,licenses,concessions,permits,easements,variances,exceptions,consents,certificates,approvals,clearances,permissions,financialassuranceinstruments,qualificationsandregistrationsandOrdersofallapplicableGovernmentalEntities,andallrightsunderanyParentMaterialContractwithallGovernmentalEntities,andhavefiledalltariffs,reports,noticesandotherdocumentswithallGovernmentalEntitiesnecessaryforParentanditsSubsidiariestoown,leaseandoperatetheirpropertiesandassetsandtocarryontheirbusinessesastheyarenowbeingconducted(the"Parent Permits "and,togetherwiththeCompanyPermits,the"Permits "),exceptwherethefailuretohaveortohavefiledsuchParentPermitswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.AllParentPermitsarevalidandinfullforceandeffectandarenotsubjecttoanyadministrativeorjudicialproceedingthatcouldresultinmodification,terminationorrevocationthereof,exceptwherethefailuretobeinfullforceandeffectoranymodification,terminationorrevocationthereofwouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.ParentandeachofitsSubsidiariesisincompliancewiththetermsandrequirementsofallmaterialParentPermits,exceptwherethefailuretobeincompliancewouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
(d)ExceptassetforthinSection4.6oftheParentDisclosureSchedule,eachdrillingunitownedorleasedbyParentoranyofitsSubsidiarieswhichissubjecttoclassification(otherthancoldstackedrigs)isinclassandfreeofsuspensionorcancellationtoclass,andisregisteredundertheflagofitsflagjurisdiction.
Section4.7 Absence of Certain Changes or Events.
(a)FromJanuary1,2017throughthedateofthisAgreement,exceptinconnectionwiththenegotiationandexecutionofthisAgreementthebusinessesofParentanditsSubsidiarieshavebeenconductedinallmaterialrespectsintheordinarycourseofbusiness.
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(b)SinceJanuary1,2017,therehasnotbeenanyevent,change,effect,development,occurrenceorstateoffactsthathashadorwouldreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect.
Section4.8 Environmental Laws and Regulations. Exceptaswouldnothave,individuallyorintheaggregate,aParentMaterialAdverseEffect(i)therearenoinvestigations,actions,suitsorproceedings(whetheradministrativeorjudicial)pending,allegingnon-compliancewithorotherliabilityunderanyEnvironmentalLaw,(ii)ParentanditsSubsidiariesare,andexceptformattersthathavebeenfullyresolvedwiththeapplicableGovernmentalEntity,sinceJanuary1,2016havebeen,incompliancewithallEnvironmentalLaws(whichcomplianceincludesthepossessionbyParentandeachofitsSubsidiariesofallPermitsrequiredunderapplicableEnvironmentalLawstoconducttheirrespectivebusinessandoperations,andcompliancewiththetermsandconditionsthereof),(iii)noneofParentanditsSubsidiariesissubjecttoanyOrderorhascreatedanyobligationsorliabilitiesunderapplicableEnvironmentalLawsorconcerningHazardousMaterialsorReleases,and(iv)noneofParentanditsSubsidiarieshasreceivedanyunresolvedclaim,notice,complaintorrequestforinformationfromaGovernmentalEntityoranyotherpersonrelatingtoactualorallegednoncompliancewithorliabilityunderapplicableEnvironmentalLaws(includinganysuchliabilityorobligationarisingunder,retainedorassumedbycontractorbyoperationoflaw).
Section4.9 Investigations; Litigation. Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffectorwouldnotreasonablybeexpectedtoprevent,impedeormateriallydelayconsummationoftheMerger,(i)thereisnoinvestigationorreviewpending(or,toParent'sknowledge,threatened)byanyGovernmentalEntitywithrespecttoParentoranyofitsSubsidiaries,(ii)therearenoclaims,actions,suits,inquiries,investigations,arbitrationsoradministrativeorotherproceedings,oranysubpoenas,civilinvestigativedemandsorotherrequestsforinformation,relatingtopotentialviolationsofLawpending(or,toParent'sknowledge,threatened)againstoraffectingParentoranyofitsSubsidiaries,oranyoftheirrespectivepropertiesand(iii)therearenoOrders,injunctions,judgmentsordecreesof,orbefore,anyGovernmentalEntitypending(or,toParent'sknowledge,threatenedtobeimposed)againstParentoranyofitsSubsidiaries.
Section4.10 Investment Company. NoneofParentoranyofitsSubsidiariesisan"investmentcompany"oracompany"controlled"byan"investmentcompany"withinthemeaningoftheU.S.InvestmentCompanyActof1940,asamended,andtherulesandregulationspromulgatedthereunder.
Section4.11 Intellectual Property.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,eitherParentoraSubsidiaryofParentowns,orislicensedorotherwisepossessesvalidrightstouse,freeandclearofLiensotherthanParentPermittedLiens,alltrademarks,tradenames,servicemarks,servicenames,markregistrations,logos,assumednames,domainnames,registeredandunregisteredcopyrights,patentsorapplicationsandregistrations,tradesecretsandotherintellectualpropertyrightsnecessarytotheirrespectivebusinessesascurrentlyconducted(collectively,the"Parent Intellectual Property "),andnothirdpartyhasownershiprightsorlicenserightstoimprovementsmadebyParentintheParentIntellectualProperty.Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,(i)therearenopendingor,toParent'sknowledge,threatenedclaimsbyanypersonalleginginfringement,misappropriationorotherviolationbyParentoranyofitsSubsidiariesofanyintellectualpropertyrightsofanyperson,(ii)toParent'sknowledge,theconductofthebusinessofParentanditsSubsidiariesdoesnotinfringe,misappropriateorotherwiseviolateanyintellectualpropertyrightsofanyperson,(iii)neitherParentnoranyofitsSubsidiarieshasmadeanyclaimofaviolation,infringementormisappropriationbyothersofParent'soranyitsSubsidiaries'rightstoorinconnection
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withParentIntellectualPropertyand(iv)toParent'sknowledge,nopersonisinfringing,misappropriatingorotherwiseviolatinganyParentIntellectualProperty.
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,ParentanditsSubsidiarieshaveimplemented(i)commerciallyreasonablemeasurestoprotecttheconfidentiality,integrityandsecurityoftheParentITAssets(andallinformationandtransactionsstoredorcontainedthereinortransmittedthereby);and(ii)commerciallyreasonabledatabackup,datastorage,systemredundancyanddisasteravoidanceandrecoveryprocedures,aswellasacommerciallyreasonablebusinesscontinuityplan,ineachcaseconsistentwithcustomaryindustrypractices.
Section4.12 Properties.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,ParentanditsSubsidiarieshavegoodandmarketabletitletoallrealpropertyownedbyParentoranyofitsSubsidiariesandgoodandvalidleaseholdinteresttoallrealpropertywhichisleased,subleased,licensedorotherwiseoccupiedbyParentoranyofitsSubsidiaries(the"Parent Leased Real Property "),ineachcasefreeandclearofallLiens(otherthanParentPermittedLiens).
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,ParentanditsSubsidiarieshavegoodandmarketabletitleto,orhavevalidrightstoleaseorotherwiseuse,allitemsofpersonalpropertythatarematerialtotherespectivebusinessesofParentanditsSubsidiaries,ineachcasefreeandclearofallLiens(otherthanParentPermittedLiens).
Section4.13 Ownership and Maintenance of Drilling Units.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,eitherParentoraSubsidiaryofParenthasgoodandmarketabletitletothedrillingunitslistedinParent'smostrecentfleetstatusreport,atrueandcompletecopyofwhichhasbeenfurnishedasanexhibittoaCurrentReportonForm8-KfiledbyParentwiththeSECorotherwiseprovidedtotheCompany(the"Parent Fleet Report "),ineachcasefreeandclearofallLiensexceptforParentPermittedLiensandnosuchdrillingunitoranyrelatedassetisleasedunderanoperatingleasefromalessorthat,toParent'sknowledge,hasincurrednon-recourseindebtednesstofinancetheacquisitionorconstructionofsuchasset.
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,thedrillingunitslistedintheParentFleetReport(otherthansuchdrillingunitsthatarenotedthereinas"coldstacked"orarebeingpreparedtobe"coldstacked")havebeenmaintainedconsistentwithgeneralpracticeintheoffshoredrillingindustryandareingoodoperatingconditionandrepair,subjecttoordinarywearandtear.
Section4.14 Tax Matters.
(a)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect:
(i)ParentandeachofitsSubsidiariesandeachaffiliated,consolidated,combined,unitaryorsimilargroupthatincludesParentoranyofitsSubsidiarieshavedulyandtimelyfiledorcausedtobefiled(takingintoaccountanyvalidextensionoftimewithinwhichtofile)allTaxReturnsrequiredtobefiledbyanyofthemandallsuchTaxReturnsaretrue,completeandaccurate.
(ii)ParentandeachofitsSubsidiarieshavetimelypaidallTaxesthatarerequiredtobepaidbyanyofthemorthatParentoranyofitsSubsidiariesareobligatedtowithholdfrom
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amountsowingtoanyemployee,creditor,shareholderorthirdparty(ineachcase,whetherornotshownonanyTaxReturn),exceptwithrespecttomatterscontestedingoodfaiththroughappropriateproceedingsandforwhichadequatereserveshavebeenestablishedinaccordancewithGAAP.
(iii)NoTaxReturnofParentoranyofitsSubsidiariesisthesubjectofanaudit,examinationinvestigationorotherproceeding,andtherearenoaudits,examinations,investigationsorotherproceedingspendingorthreatenedinwritinginrespectofTaxesorTaxmattersofParentoranyofitsSubsidiaries.
(iv)NeitherParentnoranyofitsSubsidiariesiscurrentlythebeneficiaryofanywaiversofanylimitationperiodsoragreementsprovidingforanextensionoftimeforthefilingofanyTaxReturn,theassessmentorcollectionthereofbyanyrelevantTaxauthorityorthepaymentofanyTaxbyParentoranyofitsSubsidiaries.
(v)NeitherParentnoranyofitsSubsidiarieshasanyliabilityfortheTaxesofanyperson(otherthanTaxesofParentoritsSubsidiaries)(A)underTreasuryRegulationsSection1.1502-6(oranysimilarprovisionofstate,localornon-U.S.TaxLaw),(B)asatransfereeorsuccessoror(C)byContract(otherthanContractsexclusivelybetweenoramongoneormoreoftheParentanditsSubsidiariesandotherthanascustomaryTaxindemnificationscontainedinordinarycoursecommercialagreementsorarrangementsthatarenotprimarilyrelatedtoTaxes).
(vi)NeitherParentnoranyofitsSubsidiarieshasanyliabilitypursuanttoanyTaxsharing,allocationorindemnificationagreementorarrangement(otherthansuchanagreementorarrangementexclusivelybetweenoramongoneormoreoftheParentanditsSubsidiariesandotherthanascustomaryTaxindemnificationscontainedinordinarycoursecommercialagreementsorarrangementsthatarenotprimarilyrelatedtoTaxes).
(vii)NeitherParentnoranyofitsSubsidiariesisapartytoanyclosingagreementdescribedinSection7121oftheCodeoranypredecessorprovisionthereoforanysimilaragreementunderstate,localornon-U.S.TaxLaw,andneitherParentnoranyofitsSubsidiariesissubjecttoanyprivaterulingissuedbyanyGovernmentalEntityinrespectofTaxes.
(viii)TherearenoLiensforTaxesonanyassetofParentoritsSubsidiaries,exceptforLiensforTaxesnotyetdueordelinquent.
(ix)NeitherParentnoranyofitsSubsidiarieshasbeenapartytoatransactionthatisa"listedtransaction,"assuchtermisdefinedinTreasuryRegulationsSection1.6011-4(b)(2),oranyothertransactionrequiringdisclosureunderanalogousprovisionsofstate,localornon-U.S.TaxLaw.
(x)NowrittenclaimhasbeenreceivedbyParentoranyofitsSubsidiariesfromaGovernmentalEntityinajurisdictionwheresuchentitydoesnotfileTaxReturnsthatitisormaybesubjecttotaxationbysuchjurisdiction.
(b)NeithertheParentnoranyofitsSubsidiariesisorwasa"surrogateforeigncorporation"withinthemeaningofSection7874(a)(2)(B)oftheCode.
(c)Asofthedatehereof,Parenthasnoknowledgeofanyfactsorofanyreasonthat(whentakentogetherwithParent'sunderstandingofotherrelevantfacts)wouldreasonablybeexpectedtocauseParenttobetreated,followingthecompletionofthetransactionscontemplatedbythisAgreement,asadomesticcorporationforU.S.federalincometaxpurposesunderSection7874oftheCode.
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(d)NeitherParentnoranyofitsSubsidiariesbeneficiallyownssharesorotherequityinterestsoftheCompanyoranyoftheCompany'saffiliates.
(e)Withinthepastthreeyears,neitherParentnoranyofitsSubsidiarieshasbeena"distributingcorporation"ora"controlledcorporation"(withinthemeaningofSection355(a)(1)(A)oftheCode)inadistributionintendedtoqualifyfortax-freetreatmentunderSection355oftheCode(orasimilarprovisionofstate,localornon-U.S.TaxLaw).
Section4.15 Employment and Labor Matters. NeitherParentnoranyofitsSubsidiariesisapartytoanyCollectiveBargainingAgreementwithrespecttoemployeesofParentoranyofitsSubsidiaries(each,an"Parent Employee ")thathashadorcouldreasonablybeexpectedtohaveaParentMaterialAdverseEffect,otherthanthosethatParentoranyofitsSubsidiariesmaybedeemedtobeapartytoorboundbyasaresultofdoingbusinessinaparticularjurisdiction.ToParent'sknowledge,asofthedatehereof,therearenoactivitiesorproceedingsofanylaborortradeunion,staffassociationorotherbodytoorganizeanyParentEmployeewheresuchactivitiesorproceedingscouldreasonablybeexpectedtohaveaParentMaterialAdverseEffect.NomaterialCollectiveBargainingAgreementisbeingnegotiatedbyParentor,toParent'sknowledge,anyofitsSubsidiarieswithrespecttoanyParentEmployees.SinceJanuary1,2015,therehasbeennoactual,ortoParent'sknowledge,threatenedunfairlaborpracticecharges,grievances,arbitrations,strikes,lockouts,workstoppages,slowdowns,picketing,handbillingorotherlabordisputesagainstoraffectingParentoranyofitsSubsidiariesinvolvingParentEmployeesthatwould,individuallyorintheaggregate,reasonablybeexpectedtohaveaParentMaterialAdverseEffectandtherearenocircumstanceswhichcouldormightgiverisetoanysuchdisputethatwould,individuallyorintheaggregate,reasonablybeexpectedtohaveaParentMaterialAdverseEffect.Parentis,andhasbeen,incompliancewithallLawsregardingemploymentandemploymentpractices,termsandconditionsofemploymentandwagesandhours(includingclassificationofemployees)andotherLawsinrespectofanyreductioninforce,includingnotice,informationandconsultationrequirements,exceptwhereanysuchnoncompliancewouldnot,individuallyorintheaggregate,bereasonablyexpectedtohaveaParentMaterialAdverseEffect.Therearenomaterialoutstandingassessments,penalties,fines,Liens,charges,surcharges,orotheramountsdueorowingbyParentpursuanttoanyworkplacesafetyandinsurance/workers'compensationLaws,ParenthasnotbeenreassessedinanymaterialrespectundersuchLawsduringthepastthreeyears,andParenthasnotreceivedanyclaimsundersuchLaws,ineachcase,thatcouldreasonablybeexpectedtohaveaParentMaterialAdverseEffect.
Section4.16 Employee Benefit Plans.
(a)ForpurposesofthisAgreement,"Parent Benefit Plan "meansanyemployeebenefitplan,program,agreementorarrangement,includingpension,retirement,profit-sharing,deferredcompensation,stockoption,changeincontrol,retention,equityorequity-basedcompensation,stockpurchase,employeestockownership,severancepay,longserviceaward,vacation,bonus,anybenefitsreceivedotherwisethanincashorrelatedtosales,profits,turnoverorperformance,orwhichareotherwisevariable(otherthannormalovertime)orotherincentiveplans,medical,retireemedical,vision,dentalorotherhealthplans,lifeinsuranceplans,andeachotheremployeebenefitplanorfringebenefitplan,includingany"employeebenefitplan"asthattermisdefinedinSection3(3)ofERISA,ineachcase,(i)whetheroralorwritten,fundedorunfunded,orinsuredorself-insured,taxapprovedornon-taxapprovedand(ii)(A)sponsoredormaintainedbyParentoranySubsidiary,or(B)towhichParentoranySubsidiarycontributesorisobligatedtocontributeforthebenefitofanycurrentorformeremployees,directors,consultantsorindependentcontractorsorotherwisehasanyobligationorliability,contingentorotherwise.
(b)Exceptaswouldnot,individuallyorintheaggregate,haveaParentMaterialAdverseEffect,eachParentBenefitPlanthatisintendedtobeaQualifiedPlanissoqualifiedandeachtrustmaintainedthereunderisexemptfromtaxationunderSection501(a)oftheCodeand,toParent's
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knowledge,thereisnoreasonwhytaxapprovalunderanylocalLawinanypartoftheworldmightbewithdrawnormightceasetoapply.
(c)NoParentBenefitPlanis,andinthelastsixyears,noneofParentanditsSubsidiariesnoranyoftheirrespectiveERISAAffiliateshasmaintained,established,contributedtoorbeenobligatedtocontributeto(i)anybenefitplanthatissubjecttoTitleIVorSection302ofERISAorSection412,430or4971oftheCodeor(ineachcase)equivalentlocalLaw,or(ii)anymaterialdefinedbenefitpensionplan.NoneofParentanditsSubsidiariesnoranyoftheirrespectiveERISAAffiliateshas,atanytimeduringthelastsixyears,maintained,established,contributedtoorbeenobligatedtocontributetoany"multiemployerplan"withinthemeaningofSection4001(a)(3)ofERISA.
(d)(i)Therearenoexisting,pendingor,toParent'sknowledge,threatenedclaims(otherthanclaimsforbenefitsintheordinarycourse),lawsuitsorarbitrationswhichhavebeenassertedorinstituted;and(ii)toParent'sknowledge,nosetofcircumstancesexistswhichmayreasonablygiverisetoaclaimorlawsuitagainstParentwithrespecttoanyParentBenefitPlan,anyfiduciariesthereofwithrespecttotheirdutiestotheParentBenefitsPlansortheassetsofanyofthetrustsunderanyoftheParentBenefitPlans,which,inthecaseofclause(i)and(ii),couldreasonablybeexpectedtohaveaParentMaterialAdverseEffect.
(e)NeitherParentnoranyofitsSubsidiarieshasanyobligationorliability,contingentorotherwise,withrespecttoanypensionorotheremployeebenefitplanthatiscurrentlymaintainedorsponsoredbyapersonotherthanParentoritsSubsidiariesthatcouldreasonablybeexpectedtohaveaParentMaterialAdverseEffect.
(f)NomaterialParentBenefitPlanprovidesforanypost-employmentorpost-retirementmedicalorlifeinsurancebenefitsforretired,formerorcurrentemployeesorbeneficiariesordependentsthereof,exceptasrequiredbySection4980BoftheCodeoranyapplicableLaw.
(g)Parentisnotpartyto,orotherwiseobligatedunder,anycontract,agreement,planorarrangementthatprovidesforthegross-upofTaxesimposedbySection409A(a)(1)(B)oftheCodeorequivalentlocalLaw.
(h)ExceptasotherwiseprovidedinthisAgreement,theconsummationoftheMergerandthetransactionscontemplatedbythisAgreementwillnot,eitheraloneorincombinationwithanotherevent(i)entitleanycurrentorformeremployee,director,consultantorofficerofParentoranyofitsSubsidiariestoseverancepay,unemploymentcompensationorothercompensatorypayment,(ii)acceleratethetimeofpaymentorvesting,orincreasetheamountofcompensationdueanysuchemployee,director,consultantorofficer,or(iii)triggeranyfundingobligationunderanyParentBenefitPlanorimposeanyrestrictionsorlimitationsonParent'srightstoadminister,amendorterminateanyParentBenefitPlan.
(i)NoindividualisentitledunderanyParentBenefitPlanorotherwisetoanygross-uporreimbursementofTaxesunderSection4999oftheCode.
(j)Exceptaswouldnot,individuallyorintheaggregate,bereasonablyexpectedtohaveaParentMaterialAdverseEffect,neitherParentnoranyofitsSubsidiarieshasanyliabilitytomakeanypaymenttoanyParentBenefitPlanwhichisdueatthedateofthisAgreement,butremainsunpaid.
(k)ParentanditsSubsidiarieshave,inrelationtotheParentBenefitPlans,atalltimescompliedwithallapplicableLaws,regulationsandrequirementsandthetrusts,powersandprovisionsoftheParentBenefitPlandocumentation,exceptwhereanysuchnoncompliancewouldnot,individuallyorintheaggregate,bereasonablyexpectedtohaveaParentMaterialAdverseEffect.
Section4.17 Insurance .Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,(i)allinsurancepoliciesmaintainedbyoronbehalfofParentoranyofitsSubsidiariesasofthedateofthisAgreementareinfullforceandeffectandare
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validandenforceable,andallpremiumsdueonsuchpolicieshavebeenpaidbyParentoritsSubsidiaries,asapplicable,and(ii)ParentanditsSubsidiariesareincompliancewiththetermsandprovisionsofallinsurancepoliciesmaintainedbyoronbehalfofParentoranyofitsSubsidiariesasofthedateofthisAgreement,andneitherParentnoranyofitsSubsidiariesisinbreachordefaultunder,orhastakenanyactionthatcouldpermitterminationormaterialmodificationof,anymaterialinsurancepolicies.
Section4.18 Opinion of Financial Advisor .TheParentBoardhasreceivedtheopinionofMorganStanley&Co.LLCtotheeffectthat,asofthedatethereofandsubjecttotheassumptions,limitations,qualificationsandothermatterssetforththerein,theExchangeRatioisfair,fromafinancialpointofview,toParent.Parentshall,promptlyfollowingtheexecutionofthisAgreementbyallParties,furnishanaccurateandcompletecopyofsaidopiniontotheCompanysolelyforinformationalpurposes.
Section4.19 Material Contracts .
(a)ExceptforthisAgreement,theParentBenefitPlans,agreementswithcustomersfortheprovisionofdrillingandrelatedservices,agreementsfiledasexhibitstotheParentSECDocumentsorassetforthontheapplicablesubsectionofSection4.19(a)oftheParentDisclosureSchedule,asofthedatehereof,neitherParentnoranyofitsSubsidiariesisapartytoorboundby:
(i)any"materialcontract"(assuchtermisdefinedinItem601(b)(10)ofRegulationS-KoftheSEC);
(ii)anyContractthat(A)imposesanyrestrictionontherightorabilityofParentoranyofitsSubsidiariestocompetewithanyotherpersonoracquireordisposeofthesecuritiesofanotherperson(otherthananyagreementrelatedtoapotentialTakeoverProposal)or(B)containsanexclusivityor"mostfavorednation"clausethatrestrictsthebusinessofParentoranyofitsSubsidiariesinamaterialmanner;
(iii)anyjointventure,partnershiporlimitedliabilitycompanyagreementorothersimilarContractrelatingtotheformation,creation,operation,managementorcontrolofanyjointventure,partnershiporlimitedliabilitycompany,otherthananysuchContractsolelybetweenParentanditsSubsidiariesoramongParent'sSubsidiaries;
(iv)anyContractexpresslylimitingorrestrictingtheabilityofParentoranyofitsSubsidiariestomakedistributionsordeclareorpaydividendsinrespectoftheircapitalstock,partnershipinterests,membershipinterestsorotherequityinterests,asthecasemaybe;
(v)anyContractthatbyitstermscallsforaggregatepaymentsbyortoParentoranyofitsSubsidiariesofmorethan$50.0millionintheaggregateovertheremainingtermofsuchContract,exceptfor(A)Contractswithacustomerand(B)anysuchContractthatmaybecancelledbyParentoranyofitsSubsidiarieswithapenaltyorotherliabilityoflessthan$10.0milliontoParentoranyofitsSubsidiaries,uponnoticeof60daysorless;and
(vi)anyContractthatcontains"earnout"orothercontingentpaymentobligations,orremainingindemnityorsimilarobligations,thatcouldreasonablybeexpectedtoresultinpaymentsafterthedatehereofbyParentoranyofitsSubsidiariesinexcessof$50.0million.
AllContractsofthetypesreferredtoinclauses(i)through(vi)abovearereferredtohereinas("Parent Material Contracts ").
(b)ParenthasdeliveredormadeavailabletotheCompanytrueandcompletecopiesofallParentMaterialContracts,subjecttocertainredactionsmadeinordertocomplywithlegalrequirements.
(c)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffect,(i)neitherParentnoranySubsidiaryofParentisinbreachofordefault
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underthetermsofanyParentMaterialContract,(ii)toParent'sknowledge,nootherpartytoanyParentMaterialContractisinbreachofordefaultunderthetermsofanyParentMaterialContractand(iii)eachParentMaterialContractisavalidandbindingobligationofParentortheSubsidiaryofParentthatispartytheretoand,toParent'sknowledge,ofeachotherpartythereto,andisinfullforceandeffect,subjecttotheRemediesExceptions.
Section4.20 Finders or Brokers .ExceptforMorganStanley&Co.LLC,DNBCapitalLLCandHSBCSecurities(USA)Inc.,neitherParentnoranyofParent'sSubsidiarieshasemployedanyinvestmentbanker,brokerorfinderinconnectionwiththetransactionscontemplatedbythisAgreementwhowouldbeentitledtoormayreceiveanyfeeoranycommissioninconnectionwithoruponconsummationoftheMerger.
Section4.21 Anti-Bribery .Withinthepast5years,neither(a)Parent,noranyofitsSubsidiaries,nor,toParent'sknowledge,anydirector,officer,oremployeeofParentoranyofitsSubsidiariesnor(b)toParent'sknowledge,anyRepresentativewhileactingonbehalfofanyoftheforegoing,onbehalfofParentoranyofitsSubsidiarieshasdirectlyorindirectly(i)madeanyunlawfulpaymenttoforeignordomesticgovernmentofficialsoremployeesortoanyforeignordomesticpoliticalpartiesorcampaignsorviolatedanyprovisionsofanyapplicableanti-briberyLaws,includingtheFCPAortheBriberyAct,or(ii)takenanyactiononbehalfofParentoranyofitsSubsidiariesthatwouldconstituteaviolationofanyapplicableanti-briberyLaws,includingtheFCPAandtheBriberyAct,includingmakinguseofthemailsoranymeansorinstrumentalityofinterstatecommercecorruptlyinfurtheranceofanoffer,payment,promisetopayorauthorizationofthepaymentofanymoney,orotherproperty,gift,promisetogive,orauthorizationofthegivingofanythingofvaluetoany"foreignofficial"(assuchtermisdefinedintheFCPA)oranyforeignpoliticalpartyorofficialthereoforanycandidateforforeignpoliticaloffice,incontraventionoftheFCPA.Parentmaintainspoliciesandproceduresthatarereasonablydesignedtoensure,andthatarereasonablyexpectedtocontinuetoensure,continuedcompliancewithanti-briberyLaws.NeitherParentnoranyofitsSubsidiaries,nor,totheknowledgeofParent,anydirector,officeroremployeeofParentoranySubsidiaryofParent,are,orinthepast5yearshavebeen,subjecttoanyactual,pending,or,toParent'sknowledge,threatenedcivil,criminal,oradministrativeactionsorgovernmentalinvestigations,inquiriesorenforcementactions,ormadeanyvoluntarydisclosurestoanygovernmentalauthority,involvingParentoranySubsidiaryofParentrelatingtoallegedviolationsofapplicableanti-briberyLaws,includingtheFCPAandtheBriberyAct.
Section4.22 Export Controls and Sanctions .
(a)Neither(i)Parent,anyofitsSubsidiaries,nortoParent'sknowledgeanyemployee,officer,ordirectorofParentoranyofitsSubsidiariesnor(ii)toParent'sknowledge,anyRepresentativeofanyoftheforegoing,(A)iscurrentlyorhasbeenwithinthepast5yearsthetargetofTradeSanctions(includingbybeingdesignatedonthelistofSpeciallyDesignatedNationalsandBlockedPersonsoronanyothersanctionslistmaintainedbyOFAC,theU.S.DepartmentofState,theUnitedNationsSecurityCouncil,theEuropeanUnionorHerMajesty'sTreasury),orisorhasbeenwithinthepast5yearsoperating,organizedorresidentinacountryorterritorythatitselfisthetargetofTradeSanctions(currently,Crimea,Cuba,Iran,NorthKorea,SudanandSyria);or(B)has,directlyor,totheknowledgeofParent,indirectly,participatedinthepast5yearsinanyprohibitedorunlawfultransactionordealinginvolvingapersonorentitythatisthetargetofTradeSanctions,orwithanypersonorentityoperating,organized,orresidentinacountryorterritorythatisthetargetofTradeSanctions.
(b)Exceptaswouldnotreasonablybeexpectedtohave,individuallyorintheaggregate,aParentMaterialAdverseEffectonsuchparty,inthepast5years,eachofParent,Parent'sSubsidiariesand,toParent'sknowledge,anyRepresentativeofanyoftheforegoing(i)hasconducteditsbusinessincompliancewithallapplicableTradeSanctionsandExportControlLaws;(ii)haveobtained,andarein
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compliancewith,allrequiredexportandimportlicenses,licenseexceptionsandotherconsents,notices,approvals,orders,permits,authorizations,declarations,classificationsandfilingswithanyGovernmentalEntityrequiredfortheimport,exportandre-exportofproducts,softwareandtechnology;and(iii)hasmaintainedpoliciesandproceduresthatarereasonablydesignedtoensure,andthatarereasonablyexpectedtocontinuetoensure,continuedcompliancetherewith.
Section4.23 Information Supplied .TheinformationsuppliedortobesuppliedbyParentorMergerSubforinclusionintheFormS-4shallnot,atthetimetheFormS-4isdeclaredeffectivebytheSEC,containanyuntruestatementofamaterialfactoromittostateanymaterialfactrequiredtobestatedthereinornecessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhichtheyaremade,notmisleading,exceptthatnorepresentationorwarrantyismadebyParentorMergerSubwithrespecttostatementsmadeorincorporatedbyreferencethereinbasedoninformationsuppliedbytheCompanyinwritingexpresslyforinclusiontherein.TheinformationsuppliedortobesuppliedbyParentorMergerSubforinclusionintheProxyStatement/Prospectuswillnot,atthetimetheProxyStatement/ProspectusisfirstmailedtoParentShareholdersandatthetimeofanymeetingofParentShareholderstobeheldinconnectionwiththeissuanceoftheParentClassAOrdinaryShares,containanyuntruestatementofamaterialfactoromittostateanymaterialfactrequiredtobestatedthereinornecessaryinordertomakethestatementstherein,inlightofthecircumstancesunderwhichtheyaremade,notmisleading,exceptthatnorepresentationorwarrantyismadebyParentandMergerSubwithrespecttostatementsmadeorincorporatedbyreferencethereinbasedoninformationsuppliedbytheCompanyinwritingexpresslyforinclusiontherein.TheFormS-4andtheProxyStatement/Prospectus(solelywithrespecttotheportionthereofrelatingtotheParentShareholderMeetingbutexcludinganyportionthereofbasedoninformationsuppliedbytheCompanyinwritingexpresslyforinclusiontherein,withrespecttowhichnorepresentationorwarrantyismadebyParentorMergerSub)willcomplyastoforminallmaterialrespectswiththeprovisionsoftheSecuritiesActandtheExchangeActandtherulesandregulationspromulgatedthereunder.
Section4.24 Ownership of Company Common Stock .NeitherParent,MergerSubnoranyoftheirrespectiveaffiliatesis,noratanytimeduringthelastthree(3)yearshasbeen,an"affiliatedshareholder"oftheCompanyasdefinedinSection21.606oftheTBOC.
Section4.25 No Additional Representations .
(a)EachofParentandMergerSubacknowledgesthattheCompanydoesnotmakeanyrepresentationorwarrantyastoanymatterwhatsoeverexceptasexpresslysetforthinArticle III orinanycertificatedeliveredbytheCompanytoParentandMergerSubinaccordancewiththetermshereof,andspecifically(butwithoutlimitingthegeneralityoftheforegoing)thattheCompanymakesnorepresentationorwarrantywithrespectto(i)anyprojections,estimatesorbudgetsdeliveredormadeavailabletoParent,anyofitsaffiliatesoranyoftheirrespectiveofficers,directors,employeesorRepresentativesoffuturerevenues,resultsofoperations(oranycomponentthereof),cashflowsorfinancialcondition(oranycomponentthereof)oftheCompanyanditsSubsidiariesor(ii)thefuturebusinessandoperationsoftheCompanyanditsSubsidiaries,andneitherParentnorMergerSubhasreliedonsuchinformationoranyotherrepresentationsorwarrantiesnotsetforthinArticle III .
(b)EachofParentandMergerSubhasconducteditsownindependentreviewandanalysisofthebusiness,operations,assets,liabilities,resultsofoperations,financialconditionandprospectsoftheCompanyanditsSubsidiariesandacknowledgesthatParentandMergerSubhavebeenprovidedaccessforsuchpurposes.ExceptfortherepresentationsandwarrantiesexpresslysetforthinArticle III orinanycertificatedeliveredtoParentandMergerSubbytheCompanyinaccordancewiththetermshereof,inenteringintothisAgreement,eachofParentandMergerSubhasreliedsolelyuponitsindependentinvestigationandanalysisoftheCompanyandtheCompany'sSubsidiaries,andeachofParentandMergerSubacknowledgesandagreesthatithasnotbeeninducedbyandhasnotrelieduponanyrepresentations,warrantiesorstatements,whetherexpressorimplied,madebytheCompany,
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itsSubsidiaries,oranyoftheirrespectiveaffiliates,shareholders,controllingpersonsorRepresentativesthatarenotexpresslysetforthinArticle III orinanycertificatedeliveredtoParentandMergerSubbytheCompany,whetherornotsuchrepresentations,warrantiesorstatementsweremadeinwritingororally.EachofParentandMergerSubacknowledgesandagreesthat,exceptfortherepresentationsandwarrantiesexpresslysetforthinArticle III orinanycertificatedeliveredbytheCompanytoParentandMergerSub(i)theCompanydoesnotmake,andhasnotmade,anyrepresentationsorwarrantiesrelatingtoitselforitsbusinessorotherwiseinconnectionwiththetransactionscontemplatedherebyandneitherParentnorMergerSubisrelyingonanyrepresentationorwarrantyexceptforthoseexpresslysetforthinthisAgreement,(ii)nopersonhasbeenauthorizedbytheCompanytomakeanyrepresentationorwarrantyrelatingtoitselforitsbusinessorotherwiseinconnectionwiththetransactionscontemplatedhereby,andifmade,suchrepresentationorwarrantymaynotberelieduponbyParentandMergerSubashavingbeenauthorizedbytheCompanyand(iii)anyestimates,projections,predictions,data,financialinformation,memoranda,presentationsoranyothermaterialsorinformationprovidedoraddressedtoParentorMergerSub,anyoftheiraffiliatesoranyoftheirrespectiveofficers,directors,employeesorRepresentativesarenotandshallnotbedeemedtobeorincluderepresentationsorwarrantiesoftheCompanyunlessanysuchmaterialsorinformationisthesubjectofanyexpressrepresentationorwarrantysetforthinArticle III .
ARTICLEV.
COVENANTSANDAGREEMENTS
Section5.1 Conduct of Business by the Company .
(a)FromandafterthedatehereofuntiltheearlieroftheEffectiveTimeorthedate,ifany,onwhichthisAgreementisterminatedpursuanttoSection 7.1(the"Termination Date "),andexcept(i)asmayberequiredbyapplicableLawortheregulationsorrequirementsofanystockexchangeorregulatoryorganizationapplicabletotheCompanyanditsSubsidiaries,(ii)withthepriorwrittenconsentofParent(suchconsentnottobeunreasonablywithheld,conditionedordelayed),(iii)asmaybeexpresslycontemplatedorrequiredbythisAgreementor(iv)assetforthinSection5.1(a)oftheCompanyDisclosureSchedule,theCompanycovenantsandagreesthatthebusinessoftheCompanyanditsSubsidiariesshallbeconductedintheordinarycourseofbusinessinallmaterialrespects,andtheCompanyanditsSubsidiariesshallusecommerciallyreasonableeffortstopreservesubstantiallyintacttheirrespectivepresentlinesofbusiness,maintaintheirrespectivematerialrights,franchisesandPermitsandpreservetheirrespectiverelationshipswithkeycustomersandsuppliers;provided ,however ,thatnoactionbytheCompanyanditsSubsidiarieswithrespecttomattersspecificallyaddressedbyanyprovisionofSection 5.1(b) shallbedeemedabreachofthissentenceunlesssuchactionwouldconstituteabreachofsuchprovisionofSection 5.1(b) .
(b)TheCompanyagreeswithParentandMergerSub,onbehalfofitselfanditsSubsidiaries,thatfromthedatehereofandpriortotheearlieroftheEffectiveTimeandtheTerminationDate,except(i)asmayberequiredbyapplicableLawortheregulationsorrequirementsofanystockexchangeorregulatoryorganizationapplicabletotheCompanyoritsSubsidiaries,(ii)withthepriorwrittenconsentofParent(suchconsentnottobeunreasonablywithheld,conditionedordelayed),(iii)asmaybeexpresslycontemplatedorrequiredbythisAgreementor(iv)assetforthinSection5.1(b)oftheCompanyDisclosureSchedule,theCompany:
(i)shallnotamendtheCompanyCharterandtheCompanyBylaws,andshallnotpermitanyofitsSubsidiariestoadoptanyamendmentstoitscertificateofincorporationorbylawsorsimilarapplicableorganizationaldocuments;
(ii)shallnot,andshallnotpermitanyofitsSubsidiariesto,split,combineorreclassifyanyofitscapitalstockorissueorauthorizetheissuanceofanyothersecuritiesinrespectof,inlieuoforinsubstitutionforsharesofitscapitalstock,exceptforanysuchtransactionbya
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whollyownedSubsidiarywhichremainsawhollyownedSubsidiaryafterconsummationofsuchtransaction;
(iii)shallnot,andshallnotpermitanyofitsSubsidiariesthatisnotdirectlyorindirectlywhollyownedto,authorize,make,declareorpayanydividendsonormakeanydistributionwithrespecttoitsoutstandingsharesofcapitalstock(whetherincash,assets,stockorothersecuritiesoftheCompanyoritsSubsidiaries),except(A)dividendsordistributionsbyanySubsidiariesonlytotheCompanyortoanywhollyownedSubsidiaryoftheCompanyintheordinarycourseofbusinessconsistentwithpastpractice,and(B)dividendsordistributionsbyanynon-whollyownedSubsidiaryorjointventurethatareconsistentwithpastpracticeorrequiredundersuchentity'sorganizationaldocumentsineffectonthedateofthisAgreement;
(iv)shallnot,andshallnotpermitanyofitsSubsidiariesto,adoptaplanofcompleteorpartialliquidation,dissolution,merger,consolidation,restructuring,recapitalizationorotherreorganization,otherthantheMergerandotherthananyliquidations,dissolutions,mergers,consolidations,restructuringsorreorganizationssolelyamongtheCompanyanditswhollyownedSubsidiariesoramongwhollyownedSubsidiariesoftheCompany;
(v)shallnot,andshallnotpermitanyofitsSubsidiariesto,makeanyacquisitionofanyotherpersonorbusiness,ormakeanyloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherperson,withavalueinexcessof$25.0millionintheaggregate,except(A)anyloan,advanceorcapitalcontributiontoorinvestmentinajointventure,partnershiporsimilarentityinwhichtheCompanyoranyofitsSubsidiariesacquiresanequityinterestinconnectionwiththecontemplationorinitiationofoperationsofaparticularrigorrigsorinaparticularjurisdictionwheretheCompanyanditsSubsidiariesdonotcurrentlyoperate,providedthatsuchloan,advance,capitalcontributionorinvestmentshallnotexceed$10millionintheaggregateandberelatedtoasingleinvestmentopportunity,or(B)asmadeinconnectionwithanytransactionamongtheCompanyanditswhollyownedSubsidiariesortheCompany'swhollyownedSubsidiaries;provided ,however ,thattheCompanyshallnot,andshallnotpermitanyofitsSubsidiariesto,makeanyacquisitionofanyotherpersonorbusinessormakeloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherpersonthatwouldreasonablybeexpectedtoprevent,materiallyimpedeormateriallydelaytheconsummationoftheMerger;
(vi)shallnot,andshallnotpermitanyofitsSubsidiariesto,sell,lease,license,transfer,exchangeorswap,orotherwisedisposeoforencumber(otherthanwithaCompanyPermittedLien)anypropertiesornon-cashassetswithavalueinexcessof$25.0millionintheaggregate,except(A)sales,transfersanddispositionsofobsolete,surplusorworthlessequipment,(B)sales,transfersanddispositionsofassetsintheordinarycourseofbusiness,or(C)sales,leases,transfersorotherdispositionsmadeinconnectionwithanytransactionamongtheCompanyanditswhollyownedSubsidiariesoramongtheCompany'swhollyownedSubsidiaries;
(vii)shallnot,andshallnotpermitanyofitsSubsidiariesto,authorizeanycapitalexpendituresinexcessof$50.0millionindividuallyor$100.0millionintheaggregate,exceptfor(A)expendituresmadeintheordinarycourseofbusinessandconsistentwithpastpractice,or(B)expendituresmadeinresponsetoanyemergency,whethercausedbywar,terrorism,weatherevents,publichealthevents,outages,operationalincidentsorotherwise;
(viii)exceptintheordinarycourseofbusinessandconsistentwithpastpractice,orasprovidedunderthetermsofanyBenefitPlanorothercontractenteredintopriortothedateofthisAgreement,shallnot,andshallnotpermitanyofitsSubsidiariesto,(A)establish,adopt,materiallyamendormodify,orterminateanyCollectiveBargainingAgreementormaterialBenefitPlan,(B)materiallyincreasethecompensationorseveranceentitlementsof
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anyofthecurrentorformerdirectorsorofficersoftheCompany,(C)payoraward,orcommittopayoraward,anybonusesorincentivecompensationtoanyofficerordirectoroftheCompany,(D)enterintoanynewormodifyanyexistingemployment,severance,termination,retentionorchangeincontrolagreementwithanycurrentorformerdirectorsorofficersoftheCompany,(E)acceleratethetimeofpaymentorvestingofanymaterialrightsorbenefitsunderanymaterialBenefitPlan,(F)fundanyrabbitrustorsimilararrangementwithrespecttoanymaterialBenefitPlan,(G)grantormateriallyamendanyequityawardsundertheCompanyStockPlans(provided,however,thattheCompanyshallnot,evenifdoneintheordinarycourseofbusinessconsistentwithpastpractice,grantormateriallyamendanyequityawardsundertheCompanyStockPlans(I)toanycurrentorformerexecutiveofficerofCompany,(II)toanypersonwhocouldbea"disqualifiedindividual"withinthemeaningofCodeSection280G,or(III)thatwillvest,besettledorbecomeexercisableonanacceleratedbasisasaresultofthetransactionscontemplatedbythisAgreement),(H)materiallychangeanyactuarialorotherassumptionsusedtocalculatefundingobligationswithrespecttoanyBenefitPlanorchangethemannerinwhichcontributionstosuchplansaremadeorthebasisonwhichsuchcontributionsaredetermined,exceptasmayberequiredbyGAAPorapplicableLaw,(I)hireanyexecutiveofficerordirectoroftheCompany,or(J)waiveanypost-employmentrestrictivecovenantwithanyofthecurrentorformerdirectorsorofficersoftheCompany;
(ix)shallnot,andshallnotpermitanyofitsSubsidiariesto,materiallychangefinancialaccountingpoliciesorproceduresoranyofitsmethodsofreportingincome,deductionsorothermaterialitemsforfinancialaccountingpurposes,exceptasrequiredbyGAAPorotherapplicableaccountingstandards,SECruleorpolicyorapplicableLaw;
(x)shallnot,andshallnotpermitanyofitsSubsidiariesto,issue,sell,pledge,disposeof,grantorencumber,orauthorizetheissuance,sale,pledge,disposition,grantorencumbranceof,anysharesofitscapitalstockorotherownershipinterestintheCompanyoranyofitsSubsidiariesoranysecuritiesconvertibleintoorexchangeableforanysuchsharesorownershipinterest,oranyrights,warrantsoroptionstoacquireanysuchsharesofcapitalstock,ownershipinterestorconvertibleorexchangeablesecurities,otherthan(A)issuancesofCompanyCommonStockundertheCompanyStockPlanstotheextentnotprohibitedbysubsection (vii) aboveorinrespectoftheexercise,vestingorsettlementofanyCompanyStockAwardsoutstandingonthedateofthisAgreement,(B)thevestingofsharesofCompanyCommonStockorforwithholdingofTaxeswithrespecttoanyCompanyStockAwardstotheextentprovidedbythetermsofsuchawardsor(C)fortransactionsamongtheCompanyanditswhollyownedSubsidiariesoramongtheCompany'swhollyownedSubsidiaries;
(xi)shallnot,andshallnotpermitanyofitsSubsidiariesto,directlyorindirectly,purchase,redeemorotherwiseacquireanysharesofthecapitalstockofanyofthemoranyrights,warrantsoroptionstoacquireanysuchshares,exceptfortransactionsamongtheCompanyanditsSubsidiariesoramongtheCompany'swhollyownedSubsidiariesorpursuanttoanyCompanyBenefitPlan;
(xii)shallnot,andshallnotpermitanyofitsSubsidiariesto,incur,assume,guaranteeorotherwisebecomeliableforanyindebtednessforborrowedmoneyoranyguaranteeofsuchindebtedness,exceptfor(A)anyindebtednessundertheCompany'srevolvingcreditfacilitydescribedintheCompanySECDocuments,(B)anyindebtednessincurredintheordinarycourseofbusiness,(C)anyindebtednessamongtheCompanyanditswhollyownedSubsidiariesoramongtheCompany'swhollyownedSubsidiaries,(D)anyindebtednessincurredtoreplace,renew,extend,refinanceorrefundanyexistingindebtednessonsubstantiallythesameormorefavorabletermstotheCompanythansuchexisting
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indebtedness,and(E)anyguaranteesbytheCompanyofindebtednessofitsSubsidiariesorguaranteesbysuchSubsidiariesofindebtednessoftheCompanyoranySubsidiaryoftheCompany,whichindebtednessisincurredincompliancewiththisSection 5.1(b) ;provided ,however ,thatinthecaseofeachofclauses(A)through(E)suchindebtednessdoesnotimposeorresultinanyadditionalrestrictionsorlimitationsthatwouldbematerialtotheCompanyanditsSubsidiariesotherthananyobligationtomakepaymentsonsuchindebtednessandotherthananyrestrictionsorlimitationstowhichtheCompanyoranySubsidiaryiscurrentlysubjectunderthetermsofanyindebtednessoutstandingasofthedatehereof;
(xiii)shallnot,andshallnotpermitanyofitsSubsidiariesto,(A)otherthanintheordinarycourseofbusiness,enterinto,ormodifyoramendinanymaterialrespect,terminateorwaiveanymaterialrightsunderanyCompanyMaterialContractoranynewbuildingcontract,(B)otherthanintheordinarycourseofbusiness,modifyoramendinanymaterialrespect,orterminateorwaiveanymaterialrightsunderanymaterialPermit,or(C)otherthanintheordinarycourseofbusiness,enterintoanynewcontractwhichwouldreasonablybeexpectedto,aftertheEffectiveTime,restrictorlimitinanymaterialrespectParentoranyofitsaffiliatesfromengaginginanybusinessorcompetinginanygeographiclocationwithanyperson;
(xiv)shallnot,andshallnotpermitanyofitsSubsidiariesto,waive,release,assign,settleorcompromiseanyclaim,actionorproceeding,otherthanwaivers,releases,assignments,settlementsorcompromises(A)thatareequaltoorlessthantheamountsspecificallyreservedwithrespecttheretoonthebalancesheetasofMarch31,2017includedintheCompanySECDocumentsor(B)thatdonotexceed$15.0millionintheaggregateand,inallcases,donotobligateitoranyofitsSubsidiariestotakeanymaterialaction(otherthanmakeapayment)orimposeanymaterialrestrictionsonitsbusinessorthebusinessofanyofitsSubsidiaries;
(xv)shallnot,andshallnotpermitanyofitsSubsidiariesto,make,changeorrevokeanymaterialTaxelection;changeanymaterialTaxaccountingmethod;fileanymaterialamendedTaxReturn;enterintoanymaterialTaxallocationagreement,Taxsharingagreement,Taxindemnityagreement,advancepricingagreementorclosingagreement;requestanymaterialTaxruling;settleorcompromiseanymaterialTaxproceeding;consenttoanyextensionorwaiverofthestatuteoflimitationsperiodapplicabletoanymaterialTaxclaimorassessment;changeitsjurisdictionofTaxresidence;orsurrenderanyclaimforamaterialrefundofTaxes;
(xvi)exceptasotherwisepermittedbythisAgreement,anyrefinancingpermittedbysub-clause (xii) aboveorfortransactionsbetweentheCompanyanditsSubsidiariesoramongtheCompany'sSubsidiaries,shallnotandshallnotpermitanyofitsSubsidiaries,toprepay,redeem,repurchase,defease,cancelorotherwiseacquireanyindebtednessforborrowedmoneyorguaranteesthereofoftheCompanyoritsSubsidiaries,otherthan(1)atorbelowparvalue,(2)atstatedmaturityor(3)anyrequiredamortizationpaymentsandmandatoryprepayments(includingmandatoryprepaymentsarisingfromanychangeofcontrolputrightstowhichholdersofsuchindebtednessorguaranteesthereofmaybeentitled),ineachcaseinaccordancewiththetermsoftheinstrumentgoverningsuchindebtednessasineffectonthedatehereof;and
(xvii)shallnot,andshallnotpermitanyofitsSubsidiariesto,agree,consent,resolveorpropose,inwritingorotherwise,totakeanyoftheforegoingactionsthatareprohibitedpursuanttosub-clauses(i)through(xvi)ofthisSection 5.1 .
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Section5.2 Conduct of Business by Parent and Merger Sub.
(a)FromandafterthedatehereofuntiltheearlieroftheEffectiveTimeortheTerminationDate,andexcept(i)asmayberequiredbyapplicableLawortheregulationsorrequirementsofanystockexchangeorregulatoryorganizationapplicabletoParentanditsSubsidiaries,(ii)withthepriorwrittenconsentoftheCompany(suchconsentnottobeunreasonablywithheld,conditionedordelayed),(iii)asmaybeexpresslycontemplatedorrequiredbythisAgreementor(iv)assetforthinSection5.2(a)oftheParentDisclosureSchedule,ParentandMergerSubcovenantandagreethatthebusinessofParentanditsSubsidiariesshallbeconductedintheordinarycourseofbusinessinallmaterialrespects,andParentanditsSubsidiariesshallusecommerciallyreasonableeffortstopreservesubstantiallyintacttheirrespectivematerialpresentlinesofbusiness,maintaintheirrespectiverights,franchisesandPermitsandpreservetheirrespectiverelationshipswithkeycustomersandsuppliers;provided ,however ,thatnoactionbyParentanditsSubsidiarieswithrespecttomattersspecificallyaddressedbyanyprovisionofSection 5.2(b) shallbedeemedabreachofthissentenceunlesssuchactionwouldconstituteabreachofsuchprovisionofSection 5.2(b) .
(b)ParentandMergerSubagreewiththeCompany,onbehalfofthemselvesandParent'sSubsidiaries,thatfromthedatehereofandpriortotheearlieroftheEffectiveTimeandtheTerminationDate,except(i)asmayberequiredbyapplicableLawortheregulationsorrequirementsofanystockexchangeorregulatoryorganizationapplicabletoParentanditsSubsidiaries,(ii)withthepriorwrittenconsentoftheCompany(suchconsentnottobeunreasonablywithheld,conditionedordelayed),(iii)asmaybeexpresslycontemplatedorrequiredbythisAgreementor(iv)assetforthinSection5.2(b)oftheParentDisclosureSchedule,ParentandMergerSub:
(i)shallnotamenditsarticlesofassociation,andshallnotpermitanyofitsSubsidiariestoadoptanyamendmentstoitscertificateofincorporationorbylawsorsimilarapplicableorganizationaldocuments,otherthan,inthecaseofSubsidiaries,inconnectionwithinternalrestructuringsamongtheSubsidiaries;
(ii)shallnot,andshallnotpermitanyofitsSubsidiariesto,split,combineorreclassifyanyofitscapitalstockorissueorauthorizetheissuanceofanyothersecuritiesinrespectof,inlieuoforinsubstitutionforsharesofitscapitalstock,except(A)foranysuchtransactionbyawhollyownedSubsidiarywhichremainsawhollyownedSubsidiaryafterconsummationofsuchtransactionor(B)withrespecttoSubsidiariesonly,aswouldnotreasonablybeexpectedtoprevent,materiallyimpedeormateriallydelaytheconsummationoftheMerger;
(iii)shallnot,andshallnotpermitanyofitsSubsidiariesthatisnotdirectlyorindirectlywhollyownedto,authorize,make,declareorpayanydividendsonormakeanydistributionwithrespecttoitsoutstandingsharesofcapitalstock(whetherincash,assets,stockorothersecuritiesofParentoritsSubsidiaries),except(A)dividendsordistributionsbyanySubsidiariesonlytoParentortoanywhollyownedSubsidiaryofParentintheordinarycourseofbusinessconsistentwithpastpractice,(B)dividendsordistributionsbyanynon-whollyownedSubsidiaryorjointventurethatareconsistentwithpastpracticeorrequiredundersuchentity'sorganizationaldocumentsineffectonthedateofthisAgreementand(C)dividendsonParentOrdinarySharesnottoexceed$0.01pershareperquarter;
(iv)shallnot,andshallnotpermitanyofitsSubsidiariesto,adoptaplanofcompleteorpartialliquidation,dissolution,merger,consolidation,restructuring,recapitalizationorotherreorganization,otherthantheMergerandotherthananyliquidations,dissolutions,mergers,consolidations,restructuringsorreorganizationssolelyamongParentanditswhollyownedSubsidiariesoramongwhollyownedSubsidiariesofParent;
(v)shallnot,andshallnotpermitanyofitsSubsidiariesto,makeanyacquisitionofanyotherpersonorbusiness,ormakeanyloans,advancesorcapitalcontributionsto,or
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investmentsin,anyotherperson,withavalueinexcessof$50.0millionintheaggregate,except(A)anyloan,advanceorcapitalcontributiontoorinvestmentinajointventure,partnershiporsimilarentityinwhichParentoranyofitsSubsidiariesacquiresanequityinterestinconnectionwiththeinitiationofoperationsofaparticularrigorrigsorinaparticularjurisdictionwhereParentanditsSubsidiariesdonotcurrentlyoperate,or(B)asmadeinconnectionwithanytransactionamongParentanditswhollyownedSubsidiariesorParent'swhollyownedSubsidiaries;provided ,however ,thatParentshallnot,andshallnotpermitanyofitsSubsidiariesto,makeanyacquisitionofanyotherpersonorbusinessormakeloans,advancesorcapitalcontributionsto,orinvestmentsin,anyotherpersonthatwouldreasonablybeexpectedtoprevent,materiallyimpedeormateriallydelaytheconsummationoftheMerger;
(vi)shallnot,andshallnotpermitanyofitsSubsidiariesto,materiallychangefinancialaccountingpoliciesorproceduresoranyofitsmethodsofreportingincome,deductionsorothermaterialitemsforfinancialaccountingpurposes,exceptasrequiredbyGAAPorotherapplicableaccountingstandards,SECruleorpolicyorapplicableLaw;
(vii)shallnot,andshallnotpermitanyofitsSubsidiariesto,issue,sell,pledge,disposeof,grantorencumber,orauthorizetheissuance,sale,pledge,disposition,grantorencumbranceof,anysharesofitscapitalstockorotherownershipinterestinParentoranyofitsSubsidiariesoranysecuritiesconvertibleintoorexchangeableforanysuchsharesorownershipinterest,oranyrights,warrantsoroptionstoacquireanysuchsharesofcapitalstock,ownershipinterestorconvertibleorexchangeablesecurities,otherthan(A)issuancesofParentOrdinarySharesundertheParentStockPlans,includinginrespectoftheexercise,vestingorsettlementofanyParentStockAwardsoutstandingonthedateofthisAgreement,(B)thevestingofParentOrdinarySharesorforwithholdingofTaxeswithrespecttoanyParentStockAwardstotheextentprovidedbythetermsofsuchawardsor(C)fortransactionsamongParentanditswhollyownedSubsidiariesoramongParent'swhollyownedSubsidiaries;
(viii)shallnot,andshallnotpermitanyofitsSubsidiariesto,incur,assume,guaranteeorotherwisebecomeliableforanyindebtednessforborrowedmoneyinexcessoftheamountofavailableborrowingcapacityexistingfromtimetotimeunderParent'srevolvingcreditfacilitydescribedintheParentSECDocumentsoranyguaranteeofsuchindebtedness,exceptfor(A)anyindebtednessincurredintheordinarycourseofbusiness,(B)anyindebtednessamongParentanditswhollyownedSubsidiariesoramongParent'swhollyownedSubsidiaries,(C)anyindebtednessincurredtoreplace,renew,extend,refinanceorrefundanyexistingindebtednessonsubstantiallythesameormorefavorabletermstoParentthansuchexistingindebtedness,and(D)anyguaranteesbyParentofindebtednessofitsSubsidiariesorguaranteesbysuchSubsidiariesofindebtednessofParentoranySubsidiaryofParent,whichindebtednessisincurredincompliancewiththisSection 5.1(b) ;provided ,however ,thatinthecaseofeachofclauses(A)through(D)suchindebtednessdoesnotimposeorresultinanyadditionalrestrictionsorlimitationsthatwouldbematerialtoParentanditsSubsidiariesotherthananyobligationtomakepaymentsonsuchindebtednessandotherthananyrestrictionsorlimitationstowhichParentoranySubsidiaryiscurrentlysubjectunderthetermsofanyindebtednessoutstandingasofthedatehereof;
(ix)shallnot,andshallnotpermitanyofitsSubsidiariesto,waive,release,assign,settleorcompromiseanyclaim,actionorproceeding,otherthanwaivers,releases,assignments,settlementsorcompromises(A)thatareequaltoorlessthantheamountsspecificallyreservedwithrespecttheretoonthebalancesheetasofMarch31,2017includedintheParentSECDocumentsor(B)thatdonotexceed$50.0millionintheaggregateand,inallcases,donotobligateitoranyofitsSubsidiariestotakeanymaterialaction(otherthan
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makeapayment)orimposeanymaterialrestrictionsonitsbusinessorthebusinessofanyofitsSubsidiaries;
(x)shallnot,andshallnotpermitanyofitsSubsidiariesto,(A)make,changeorrevokeanyTaxelection;(B)changeanyTaxaccountingmethod;(C)fileanyamendedTaxReturn;(D)enterintoanyTaxallocationagreement,Taxsharingagreement,Taxindemnityagreement,advancepricingagreementorclosingagreement;(E)requestanyTaxruling;(F)settleorcompromiseanyTaxproceeding;(G)consenttoanyextensionorwaiverofthestatuteoflimitationsperiodapplicabletoanyTaxclaimorassessment;(H)changeitsjurisdictionofTaxresidence;or(I)surrenderanyclaimforamaterialrefundofTaxes,if,inthecaseofclauses(A)through(G),suchactionwouldhaveaParentMaterialAdverseEffect;
(xi)shallnot,andshallnotpermitanyoftheirrespectiveSubsidiariesto,acquiresharesofCompanyCommonStock;and
(xii)shallnotagree,inwritingorotherwise,totakeanyoftheforegoingactionsthatareprohibitedpursuanttosub-clauses(i)through(xi)ofthisSection 5.2(b) .
Section5.3 Access.
(a)Forpurposesoffurtheringthetransactionscontemplatedhereby,eachPartyshallaffordtheotherPartyand(i)theofficersandemployeesand(ii)theaccountants,consultants,legalcounsel,financialadvisorsandagentsandotherrepresentativesofsuchotherPartyreasonableaccessduringnormalbusinesshours,throughouttheperiodpriortotheearlieroftheEffectiveTimeandtheTerminationDate,toitsanditsSubsidiaries'personnelandproperties,contracts,commitments,booksandrecordsandanyreport,scheduleorotherdocumentfiledorreceivedbyitpursuanttotherequirementsofapplicableLawsandwithsuchadditionalaccounting,financing,operating,environmentalandotherdataandinformationregardingsuchPartyastheotherPartymayreasonablyrequest.Notwithstandingtheforegoing,neitherPartyshallberequiredtoaffordsuchaccessifitwouldunreasonablydisrupttheoperationsofsuchPartyoranyofitsSubsidiaries,wouldcauseamaterialviolationofanyagreementtowhichsuchPartyoranyofitsSubsidiariesisaparty,wouldcauseariskofalossofprivilegetosuchPartyoranyofitsSubsidiariesorwouldconstituteaviolationofanyapplicableLaw.NeitherParty,noranyoftheirrespectiveofficers,employeesorRepresentatives,shallbepermittedtoperformanyonsiteprocedures(includinganonsitestudyoranyinvasivetestingorsampling)withrespecttoanypropertyofeitherPartyoranyoftheirrespectiveSubsidiarieswithoutthepriorwrittenconsentoftheotherParty(whichshallnotbeunreasonablywithheld,conditionedordelayed).
(b)ThePartiesheretoherebyagreethatallinformationprovidedtothemortheirrespectiveofficers,directors,employeesorRepresentativesinconnectionwiththisAgreementandtheconsummationofthetransactionscontemplatedherebyshallbegovernedinaccordancewiththeconfidentialityandnon-disclosureagreement,datedasofMay25,2017,betweentheParentandtheCompany,asamendedonMay26,2017(the"Confidentiality Agreement ").
Section5.4 No Solicitation by the Company.
(a)ExceptasexpresslypermittedbythisSection 5.4 ,theCompanyshall,shallcauseeachofitsaffiliatesanditsandtheirrespectiveofficers,directorsandemployeesto,andshalluseitsreasonablebesteffortstocauseitsandtheirrespectiveagents,financialadvisors,investmentbankers,attorneys,accountantsandotherrepresentatives(aperson'sofficers,directors,employees,agents,financialadvisors,investmentbankers,attorneys,accountantsandotherrepresentativesbeingcollectivelyits"Representatives ")to:(i)immediatelyceaseanysolicitation,knowingencouragement,discussionsornegotiationswithanypersonsthatmaybeongoingwithrespecttoormayreasonablybeexpectedtoleadtoaTakeoverProposal,andpromptlyinstruct(totheextentithascontractualauthoritytodosoandhasnotalreadydonesopriortothedateofthisAgreement)orotherwiserequest,anypersonthat
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hasexecutedaconfidentialityornon-disclosureagreementwithinthe24-monthperiodpriortothedateofthisAgreementinconnectionwithanyactualorpotentialTakeoverProposaltoreturnordestroyallsuchinformationordocumentsormaterialincorporatingconfidentialinformationinthepossessionofsuchpersonoritsRepresentativesand(ii)untiltheEffectiveTimeor,ifearlier,theterminationofthisAgreementinaccordancewithArticle VII ,not,directlyorindirectly,(1)solicit,initiateorknowinglyfacilitateorknowinglyencourage(includingbywayoffurnishingnon-publicinformation)anyinquiriesregarding,orthemakingofanyproposalorofferthatconstitutes,orcouldreasonablybeexpectedtoleadto,aTakeoverProposal,(2)engagein,continueorotherwiseparticipateinanydiscussionsornegotiationsregarding,orfurnishtoanyotherpersonanynon-publicinformationinconnectionwithorforthepurposeofencouragingorfacilitating,aTakeoverProposal(otherthan,solelyinresponsetoanunsolicitedinquiry,torefertheinquiringpersontothisSection 5.4 andtolimititsconversationorothercommunicationexclusivelytosuchreferral),or(3)approve,recommendorenterinto,orproposetoapprove,recommendorenterinto,anyletterofintentorsimilardocument,agreement,commitmentoragreementinprinciple(whetherwrittenororal,bindingornonbinding)withrespecttoaTakeoverProposal(otherthan(x)anAcceptableConfidentialityAgreementinaccordancewithSection 5.4(b) or(y)inaccordancewithSection 7.1(j) ).ExcepttotheextentnecessarytotakeanyactionsthattheCompanyoranythirdpartywouldotherwisebepermittedtotakepursuanttothisSection 5.4 (andinsuchcaseonlyinaccordancewiththetermshereof),(A)theCompanyanditsSubsidiariesshallnotreleaseanythirdpartyfrom,orwaive,amendormodifyanyprovisionof,orgrantpermissionunder,(x)anystandstillprovisioninanyagreementtowhichtheCompanyoranyofitsSubsidiariesisapartyor(y)anyconfidentialityprovisioninanyagreementtowhichtheCompanyoranyofitsSubsidiariesisapartyotherthan,withrespecttothisclause(y),anyconfidentialityprovision,thewaiver,amendment,modificationorpermissionofwhichdoesnot,andwouldnotbereasonablylikelyto,facilitate,encourageorrelateinanywaytoaTakeoverProposalorapotentialtheTakeoverProposaland(B)theCompanyshall,andshallcauseitsSubsidiariesto,enforcesuchconfidentialityandstandstillprovisionsofanysuchagreement,andtheCompanyshall,andshallcauseitsSubsidiariesto,immediatelytakeallstepswithintheirpowernecessarytoterminateanywaiverthatmayhavebeenheretoforegranted,toanypersonotherthanParentoranyofParent'saffiliates,underanysuchprovisions.
(b)NotwithstandinganythingtothecontrarycontainedinSection 5.4(a) ,ifatanytimefromandafterthedateofthisAgreementandpriortoobtainingtheCompanyShareholderApproval,theCompanyoranyofitsSubsidiaries,oranyofitsortheirRepresentatives,directlyorindirectlyreceivesabonafide,unsolicitedwrittenTakeoverProposalfromanypersonthatdidnotresultfromtheCompany's,itsaffiliates'ortheCompany'soritsaffiliates'Representatives'failuretocomplywiththeprovisionsofSection 5.4(a) andiftheCompanyBoarddeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounsel,thatsuchTakeoverProposalconstitutesorisreasonablylikelytoleadtoaCompanySuperiorProposal,thentheCompanyandanyofitsSubsidiaries,andanyofitsortheirRepresentatives,may,directlyorindirectly,(i)furnish,pursuanttoanAcceptableConfidentialityAgreement,information(includingnon-publicinformation)withrespecttotheCompanyanditsSubsidiaries,andaffordaccesstothebusiness,properties,assets,employees,officers,contracts,booksandrecordsoftheCompanyanditsSubsidiaries,tothepersonwhohasmadesuchTakeoverProposalanditsRepresentativesandpotentialsourcesoffinancing;provided thattheCompanyshallsubstantiallyconcurrentlywiththedeliverytosuchpersonprovidetoParentanynon-publicinformationconcerningtheCompanyoranyofitsSubsidiariesthatisprovidedormadeavailabletosuchpersonoritsRepresentativesunlesssuchnon-publicinformationhasbeenpreviouslyprovidedormadeavailabletoParentand(ii)engageinorotherwiseparticipateindiscussionsornegotiationswiththepersonmakingsuchTakeoverProposalanditsRepresentativesandpotentialsourcesoffinancingregardingsuchTakeoverProposal.AsusedthisSection 5.4 ,"AcceptableConfidentiality Agreement "meansanycustomaryconfidentialityagreementthatcontainsprovisionsthatarenolessrestrictivetothethirdpartyexecutingsuchagreementintheaggregatethanthose
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applicabletoParentthatarecontainedintheConfidentialityAgreement;provided thatsuchconfidentialityagreementshallnotprohibitcompliancebytheCompanywithanyoftheprovisionsofthisSection 5.4 .
(c)TheCompanyshallpromptly(andinnoeventlaterthan24hoursafterreceipt)notify,orallyandinwriting,ParentafterreceiptbytheCompanyoranyofitsSubsidiaries,oranyofitsortheirRepresentatives,ofanyTakeoverProposal,includingoftheidentityofthepersonmakingtheTakeoverProposalandthematerialtermsandconditionsthereof,andshallpromptly(andinnoeventlaterthan24hoursafterreceipt)provideunredactedcopiestoParentofanywrittenproposals,indicationsofinterest,and/ordraftagreementsreceivedfromthepersonmakingtheTakeoverProposal(oritsRepresentatives)relatingtosuchTakeoverProposal.TheCompanyshallkeepParentreasonablyinformed,onapromptbasis,astothestatusof(includingchangestoanymaterialtermsof,andanyothermaterialdevelopmentswithrespectto)suchTakeoverProposal(includingbypromptly(andinnoeventlaterthan24hoursafterreceipt)providingtoParentunredactedcopiesofanyadditionalorrevisedwrittenproposals,indicationsofinterest,and/ordraftagreementsrelatingtosuchTakeoverProposal).TheCompanyagreesthatitanditsSubsidiarieswillnotenterintoanyagreementwithanypersonsubsequenttothedateofthisAgreementwhichprohibitstheCompanyfromprovidinganyinformationtoParentinaccordancewiththisSection 5.4 .
(d)ExceptasexpresslypermittedbythisSection 5.4(d) orSection 5.4(e) ,neithertheCompanyBoardnoranycommitteethereofshall(i)(A)failtoincludetheCompanyBoardRecommendationintheProxyStatement/Prospectus,(B)change,qualify,withhold,withdrawormodify,orauthorizeorpubliclyproposetochange,qualify,withhold,withdrawormodify,inamanneradversetoParenttheCompanyBoardRecommendation,(C)takeanyformalactionormakeanyrecommendationorpublicstatementinconnectionwithatenderofferorexchangeoffer(otherthanarecommendationagainstsuchofferoracustomary"stop,lookandlisten"communicationofthetypecontemplatedbyRule14d-9(f)undertheExchangeAct)(itbeingunderstoodthattheCompanyBoardmayrefrainfromtakingapositionwithrespecttosuchtenderofferorexchangeofferuntilthecloseofbusinessasofthetenthbusinessdayafterthecommencementofsuchtenderofferorexchangeofferpursuanttoRule14d-9(f)undertheExchangeActwithoutsuchactionbeingconsideredaCompanyAdverseRecommendationChange),or(D)adopt,approveorrecommend,orpubliclyproposetoadopt,approveorrecommend,totheCompanyShareholdersaTakeoverProposal(anyactiondescribedinthisclause(i)beingreferredtoasa"Company Adverse Recommendation Change "),or(ii)authorize,causeorpermittheCompanyoranyofitsSubsidiariestoenterintoanyletterofintent,agreement,commitmentoragreementinprinciplewithrespecttoanyTakeoverProposal(otherthan(x)anAcceptableConfidentialityAgreemententeredintoinaccordancewithSection 5.4(b) or(y)inaccordancewithSection 7.1(j) ).NotwithstandinganythingtothecontrarysetforthinthisAgreement,atanytimepriortoreceiptoftheCompanyShareholderApproval,theCompanyBoardmaymakeaCompanyAdverseRecommendationChange(i)inresponsetoaCompanyInterveningEvent,or(ii)afterreceiptofabonafide,unsolicitedTakeoverProposal,whichtheCompanyBoarddeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounselisaCompanySuperiorProposal,ifandonlyif,(x)inthecaseofclause(ii),suchTakeoverProposalwasreceivedafterthedatehereofanddidnotresultfromabreachoftheprovisionsofthisSection 5.4 and(y)inthecaseofclauses(i)and(ii),theCompanyBoardhasdeterminedingoodfaithafterconsultationwiththeCompany'soutsidefinancialadvisorsandoutsidelegalcounselthatthefailuretotakesuchactionwouldbeinconsistentwiththefiduciarydutiesoftheCompanyBoardunderapplicableLawandtheCompanycomplieswithSection 5.4(e) .
(e)PriortomakingsuchCompanyAdverseRecommendationChange(i)inresponsetoaCompanyInterveningEvent,theCompanyshallprovideParentwithatleastfourbusinessdays'priorwrittennoticeofitsintentiontoeffectaCompanyAdverseRecommendationChangeandspecifying,inreasonabledetail,thereasonstherefor(includingthematerialfactsandcircumstancesrelatedtothe
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applicableCompanyInterveningEvent),andduringsuchfourbusinessdayperiod,theCompanyhasnegotiated,andhascauseditsRepresentativestonegotiate,ingoodfaithwithParentduringsuchnoticeperiod,totheextentParentwishestonegotiate,toenableParenttoproposerevisionstothetermsofthisAgreementinamannerthatwouldobviatetheneedtoeffectaCompanyAdverseRecommendationChangeor(ii)inconnectionwithaCompanySuperiorProposal,(1)theCompanyshallprovideParentwithatleastfourbusinessdays'priorwrittennoticeofitsintentiontotakesuchaction(whichnoticeshallspecifythematerialtermsandconditionsofanysuchCompanySuperiorProposal)andspecifying,inreasonabledetail,thematerialtermsandconditionsoftheTakeoverProposal,(2)theCompanyhasnegotiated,andhascauseditsRepresentativestonegotiate,ingoodfaithwithParentduringsuchnoticeperiod,totheextentParentwishestonegotiate,toenableParenttoproposerevisionstothetermsofthisAgreementsuchthatitwouldcausesuchCompanySuperiorProposaltonolongerconstituteaCompanySuperiorProposal,(3)followingtheendofsuchnoticeperiod,theCompanyBoardshallhaveconsideredingoodfaithanyrevisionstothetermsofthisAgreementproposedinwritingbyParent,andshallhavedetermined,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounsel,thattheCompanySuperiorProposalwouldneverthelesscontinuetoconstituteaCompanySuperiorProposaliftherevisionsproposedbyParentweretobegiveneffect,and(4)intheeventofanychangetoanyofthematerialfinancialterms(includingtheform,amountandtimingofpaymentofconsideration)oranyothermaterialtermsofsuchCompanySuperiorProposal,theCompanyshall,ineachcase,havedeliveredtoParentanadditionalnoticeconsistentwiththatdescribedinclause(1)ofthisSection 5.4(e) andanewnoticeperiodunderclause(1)ofthisSection 5.4(e) shallcommence(exceptthatthefourbusinessdaynoticeperiodreferredtoinclause(1)ofthisSection 5.4(e) shallinsteadbeequaltothelongerof(x)twobusinessdaysand(y)theperiodremainingunderthenoticeperiodunderclause(1)ofthisSection 5.4(e) immediatelypriortothedeliveryofsuchadditionalnoticeunderthisclause(4))duringwhichtimetheCompanyshallberequiredtocomplywiththerequirementsofthisSection 5.4(e) anewwithrespecttosuchadditionalnotice,includingclauses(1)through(4)aboveofthisSection 5.4(e) .
(f)NothingcontainedinthisSection 5.4 shallprohibittheCompanyortheCompanyBoardfromtakinganddisclosingtotheCompanyShareholdersapositioncontemplatedbyRule14e-2(a)orRule14d-9promulgatedundertheExchangeActorfrommakingany"stop,lookandlisten"communicationoranyothersimilardisclosuretotheCompanyShareholderspursuanttoRule14d-9(f)undertheExchangeActif,inthedeterminationingoodfaithoftheCompanyBoard,afterconsultationwithoutsidecounsel,thefailuresotodisclosewouldbeinconsistentwithitsfiduciarydutiesunderapplicableLaworobligationsunderapplicablefederalsecuritiesLawoftheCompanyBoard;provided thatthisSection 5.4(f) shallnotpermittheCompanyBoardtomakeaCompanyAdverseRecommendationChangeexcepttotheextentpermittedbythisSection 5.4 .
Section5.5 No Solicitation by Parent .
(a)ExceptasexpresslypermittedbythisSection 5.5 ,Parentshall,shallcauseeachofitsaffiliatesanditsandtheirrespectiveofficers,directorsandemployeesto,andshalluseitsreasonablebesteffortstocauseitsandtheirotherRepresentativesto:(i)immediatelyceaseanysolicitation,knowingencouragement,discussionsornegotiationswithanypersonsthatmaybeongoingwithrespecttoormayreasonablybeexpectedtoleadtoaTakeoverProposal,andpromptlyinstruct(totheextentithascontractualauthoritytodosoandhasnotalreadydonesopriortothedateofthisAgreement)orotherwiserequest,anypersonthathasexecutedaconfidentialityornon-disclosureagreementwithinthe24-monthperiodpriortothedateofthisAgreementinconnectionwithanyactualorpotentialTakeoverProposaltoreturnordestroyallsuchinformationordocumentsormaterialincorporatingconfidentialinformationinthepossessionofsuchpersonoritsRepresentatives,and(ii)untiltheEffectiveTimeor,ifearlier,theterminationofthisAgreementinaccordancewithArticle VII ,not,directlyorindirectly,(1)solicit,initiateorknowinglyfacilitateorknowinglyencourage(includingbywayoffurnishingnon-publicinformation)anyinquiriesregarding,orthemakingofanyproposalor
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offerthatconstitutes,orcouldreasonablybeexpectedtoleadto,aTakeoverProposal,(2)engagein,continueorotherwiseparticipateinanydiscussionsornegotiationsregarding,orfurnishtoanyotherpersonanynon-publicinformationinconnectionwithorforthepurposeofencouragingorfacilitating,aTakeoverProposal(otherthan,solelyinresponsetoanunsolicitedinquiry,torefertheinquiringpersontothisSection 5.5 andtolimititsconversationorothercommunicationexclusivelytosuchreferral),or(3)approve,recommendorenterinto,orproposetoapprove,recommendorenterinto,anyletterofintentorsimilardocument,agreement,commitmentoragreementinprinciple(whetherwrittenororal,bindingornonbinding)withrespecttoaTakeoverProposal(otherthan(x)anAcceptableConfidentialityAgreementinaccordancewithSection 5.5(b) or(y)inaccordancewithSection 7.1(k) ).ExcepttotheextentnecessarytotakeanyactionsthatParentoranythirdpartywouldotherwisebepermittedtotakepursuanttothisSection 5.5 (andinsuchcaseonlyinaccordancewiththetermshereof),(A)ParentanditsSubsidiariesshallnotreleaseanythirdpartyfrom,orwaive,amendormodifyanyprovisionof,orgrantpermissionunder,(x)anystandstillprovisioninanyagreementtowhichParentoranyofitsSubsidiariesisapartyor(y)anyconfidentialityprovisioninanyagreementtowhichParentoranyofitsSubsidiariesisapartyotherthan,withrespecttothisclause(y),anyconfidentialityprovision,thewaiver,amendment,modificationorpermissionthereofdoesnot,andwouldnotbereasonablylikelyto,facilitate,encourageorrelateinanywaytoaTakeoverProposalorapotentialtheTakeoverProposaland(B)Parentshall,andshallcauseitsSubsidiariesto,enforcesuchconfidentialityandstandstillprovisionsofanysuchagreement,andParentshall,andshallcauseitsSubsidiariesto,immediatelytakeallstepswithintheirpowernecessarytoterminateanywaiverthatmayhavebeenheretoforegranted,toanypersonotherthantheCompanyoranyoftheCompany'saffiliates,underanysuchprovisions.
(b)NotwithstandinganythingtothecontrarycontainedinSection 5.5(a) ,ifatanytimefromandafterthedateofthisAgreementandpriortoobtainingtheParentShareholderApproval,ParentoranyofitsSubsidiaries,oranyofitsortheirRepresentatives,directlyorindirectlyreceivesabonafide,unsolicitedwrittenTakeoverProposalfromanypersonthatdidnotresultfromParent's,itsaffiliates'orParent'soritsaffiliates'Representatives'failuretocomplywiththeprovisionsofSection 5.5(a) andiftheParentBoarddeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounsel,thatsuchTakeoverProposalconstitutesorisreasonablylikelytoleadtoaParentSuperiorProposal,thenParentandanyofitsSubsidiaries,andanyofitsortheirRepresentatives,may,directlyorindirectly,(i)furnish,pursuanttoanAcceptableConfidentialityAgreement,information(includingnon-publicinformation)withrespecttoParentanditsSubsidiaries,andaffordaccesstothebusiness,properties,assets,employees,officers,contracts,booksandrecordsofParentanditsSubsidiaries,tothepersonwhohasmadesuchTakeoverProposalanditsRepresentativesandpotentialsourcesoffinancing;provided thatParentshallsubstantiallyconcurrentlywiththedeliverytosuchpersonprovidetotheCompanyanynon-publicinformationconcerningParentoranyofitsSubsidiariesthatisprovidedormadeavailabletosuchpersonoritsRepresentativesunlesssuchnon-publicinformationhasbeenpreviouslyprovidedormadeavailabletotheCompanyand(ii)engageinorotherwiseparticipateindiscussionsornegotiationswiththepersonmakingsuchTakeoverProposalanditsRepresentativesandpotentialsourcesoffinancingregardingsuchTakeoverProposal.AsusedinthisSection 5.5 ,"Acceptable Confidentiality Agreement "meansanycustomaryconfidentialityagreementthatcontainsprovisionsthatarenolessrestrictivetothethirdpartyexecutingsuchagreementintheaggregatethanthoseapplicabletotheCompanythatarecontainedintheConfidentialityAgreement;provided thatsuchconfidentialityagreementshallnotprohibitcompliancebyParentwithanyoftheprovisionsofthisSection 5.5 .
(c)Parentshallpromptly(andinnoeventlaterthan24hoursafterreceipt)notify,orallyandinwriting,theCompanyafterreceiptbyParentoranyofitsSubsidiaries,oranyofitsortheirRepresentatives,ofanyTakeoverProposal,includingoftheidentityofthepersonmakingtheTakeoverProposalandthematerialtermsandconditionsthereof,andshallpromptly(andinnoeventlaterthan24hoursafterreceipt)provideunredactedcopiestotheCompanyofanywrittenproposals,indications
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ofinterest,and/ordraftagreementsreceivedfromthepersonmakingtheTakeoverProposal(oritsRepresentatives)relatingtosuchTakeoverProposal.ParentshallkeeptheCompanyreasonablyinformed,onapromptbasis,astothestatusof(includingchangestoanymaterialtermsof,andanyothermaterialdevelopmentswithrespectto)suchTakeoverProposal(includingbypromptly(andinnoeventlaterthan24hoursafterreceipt)providingtotheCompanyunredactedcopiesofanyadditionalorrevisedwrittenproposals,indicationsofinterest,and/ordraftagreementsrelatingtosuchTakeoverProposal).ParentagreesthatitanditsSubsidiarieswillnotenterintoanyagreementwithanypersonsubsequenttothedateofthisAgreementwhichprohibitsParentfromprovidinganyinformationtotheCompanyinaccordancewiththisSection 5.5 .
(d)ExceptasexpresslypermittedbythisSection 5.5(d) orSection 5.5(e) ,neithertheParentBoardnoranycommitteethereofshall(i)(A)failtoincludetheParentBoardRecommendationintheProxyStatement/Prospectus,(B)change,qualify,withhold,withdrawormodify,orauthorizeorpubliclyproposetochange,qualify,withhold,withdrawormodify,inamanneradversetotheCompanytheParentBoardRecommendation,(C)takeanyformalactionormakeanyrecommendationorpublicstatementinconnectionwithatenderofferorexchangeoffer(otherthanarecommendationagainstsuchofferoracustomary"stop,lookandlisten"communicationofthetypecontemplatedbyRule14d-9(f)undertheExchangeAct)(itbeingunderstoodthattheParentBoardmayrefrainfromtakingapositionwithrespecttosuchtenderofferorexchangeofferuntilthecloseofbusinessasofthetenthbusinessdayafterthecommencementofsuchtenderofferorexchangeofferpursuanttoRule14d-9(f)undertheExchangeActwithoutsuchactionbeingconsideredaParentAdverseRecommendationChange),or(D)adopt,approveorrecommend,orpubliclyproposetoadopt,approveorrecommend,totheParentShareholdersaTakeoverProposal(anyactiondescribedinthisclause(i)beingreferredtoasa"Parent Adverse Recommendation Change "),or(ii)authorize,causeorpermitParentoranyofitsSubsidiariestoenterintoanyletterofintent,agreement,commitmentoragreementinprinciplewithrespecttoanyTakeoverProposal(otherthan(x)anAcceptableConfidentialityAgreemententeredintoinaccordancewithSection 5.5(b) or(y)inaccordancewithSection 7.1(k) ).NotwithstandinganythingtothecontrarysetforthinthisAgreement,atanytimepriortoreceiptoftheParentShareholderApproval,theParentBoardmaymakeaParentAdverseRecommendationChange(i)inresponsetoaParentInterveningEvent,or(ii)afterreceiptofabonafide,unsolicitedTakeoverProposal,whichtheParentBoarddeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounselisaParentSuperiorProposal,ifandonlyif,(x)inthecaseofclause(ii),suchTakeoverProposalwasreceivedafterthedatehereofanddidnotresultfromabreachoftheprovisionsofthisSection 5.5 and(y)inthecaseofclauses(i)and(ii),theParentBoardhasdeterminedingoodfaithafterconsultationwithParent'soutsidefinancialadvisorsandoutsidelegalcounselthatthefailuretotakesuchactionwouldbeinconsistentwiththefiduciarydutiesoftheParentBoardunderapplicableLawandParentcomplieswithSection 5.5(e) .
(e)PriortomakingsuchParentAdverseRecommendationChange(i)inresponsetoaParentInterveningEvent,ParentshallprovidetheCompanywithatleastfourbusinessdays'priorwrittennoticeofitsintentiontoeffectaParentAdverseRecommendationChangeandspecifying,inreasonabledetail,thereasonstherefor(includingthematerialfactsandcircumstancesrelatedtotheapplicableParentInterveningEvent),andduringsuchfourbusinessdayperiod,Parenthasnegotiated,andhascauseditsRepresentativestonegotiate,ingoodfaithwiththeCompanyduringsuchnoticeperiod,totheextenttheCompanywishestonegotiate,toenabletheCompanytoproposerevisionstothetermsofthisAgreementinamannerthatwouldobviatetheneedtoeffectaParentAdverseRecommendationChangeor(ii)inconnectionwithaParentSuperiorProposal,(1)ParentshallprovidetheCompanywithatleastfourbusinessdays'priorwrittennoticeofitsintentiontotakesuchaction(whichnoticeshallspecifythematerialtermsandconditionsofanysuchParentSuperiorProposal)andspecifying,inreasonabledetail,thematerialtermsandconditionsoftheTakeoverProposal,(2)Parenthasnegotiated,andhascauseditsRepresentativestonegotiate,ingoodfaithwiththeCompanyduringsuchnoticeperiod,totheextenttheCompanywishestonegotiate,toenablethe
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CompanytoproposerevisionstothetermsofthisAgreementsuchthatitwouldcausesuchParentSuperiorProposaltonolongerconstituteaParentSuperiorProposal,(3)followingtheendofsuchnoticeperiod,theParentBoardshallhaveconsideredingoodfaithanyrevisionstothetermsofthisAgreementproposedinwritingbytheCompany,andshallhavedetermined,afterconsultationwithitsoutsidefinancialadvisorsandoutsidelegalcounsel,thattheParentSuperiorProposalwouldneverthelesscontinuetoconstituteaParentSuperiorProposaliftherevisionsproposedbytheCompanyweretobegiveneffect,and(4)intheeventofanychangetoanyofthematerialfinancialterms(includingtheform,amountandtimingofpaymentofconsideration)oranyothermaterialtermsofsuchParentSuperiorProposal,Parentshall,ineachcase,havedeliveredtotheCompanyanadditionalnoticeconsistentwiththatdescribedinclause(1)ofthisSection 5.5(e) andanewnoticeperiodunderclause(1)ofthisSection 5.5(e) shallcommence(exceptthatthefourbusinessdaynoticeperiodreferredtoinclause(1)ofthisSection 5.5(e) shallinsteadbeequaltothelongerof(x)twobusinessdaysand(y)theperiodremainingunderthenoticeperiodunderclause(1)ofthisSection 5.5(e) immediatelypriortothedeliveryofsuchadditionalnoticeunderthisclause(4))duringwhichtimeParentshallberequiredtocomplywiththerequirementsofthisSection 5.5(e) anewwithrespecttosuchadditionalnotice,includingclauses(1)through(4)aboveofthisSection 5.5(e) .
(f)NothingcontainedinthisSection 5.5 shallprohibitParentortheParentBoardfromtakinganddisclosingtotheParentShareholdersapositioncontemplatedbyRule14e-2(a)orRule14d-9promulgatedundertheExchangeActorfrommakingany"stop,lookandlisten"communicationoranyothersimilardisclosuretotheParentShareholderspursuanttoRule14d-9(f)undertheExchangeActif,inthedeterminationingoodfaithoftheParentBoard,afterconsultationwithoutsidecounsel,thefailuresotodisclosewouldbeinconsistentwithitsfiduciarydutiesunderapplicableLaworobligationsunderapplicablefederalsecuritiesLawoftheParentBoard;provided thatthisSection 5.5(f) shallnotpermittheParentBoardtomakeaParentAdverseRecommendationChangeexcepttotheextentpermittedbythisSection 5.5 .
Section5.6 Filings; Other Actions .
(a)AspromptlyasreasonablypracticablefollowingthedateofthisAgreement,ParentandtheCompanyshallprepareandfilewiththeSECtheFormS-4,whichwillincludetheProxyStatement/Prospectus.EachofParentandtheCompanyshallusecommerciallyreasonableeffortstohavetheFormS-4declaredeffectiveundertheSecuritiesActaspromptlyasreasonablypracticableaftersuchfilingandtokeeptheFormS-4effectiveaslongasnecessarytoconsummatetheMergerandtheothertransactionscontemplatedhereby.EachofParentandtheCompanywillcausetheProxyStatement/ProspectustobemailedtotheParentShareholdersandCompanyShareholders,asapplicable,assoonasreasonablypracticableaftertheFormS-4isdeclaredeffectiveundertheSecuritiesAct.ParentshallalsotakeanyactionrequiredtobetakenunderanyapplicablestateorprovincialsecuritieslawsinconnectionwiththeissuanceandreservationoftheParentClassAOrdinarySharesintheMerger,andtheCompanyshallfurnishallinformationconcerningtheCompanyandtheholdersofCompanyCommonStock,orholdersofabeneficialinteresttherein,asmaybereasonablyrequestedinconnectionwithanysuchaction.Nofilingof,oramendmentorsupplementto,theFormS-4ortheProxyStatement/ProspectuswillbemadebyParentortheCompany,asapplicable,withouttheother'spriorconsent(whichshallnotbeunreasonablywithheld,conditionedordelayed)andwithoutprovidingtheotherPartyareasonableopportunitytoreviewandcommentthereon.ParentortheCompany,asapplicable,willadvisetheotherpromptlyafteritreceivesoralorwrittennoticeofthetimewhentheFormS-4hasbecomeeffectiveoranysupplementoramendmenttheretohasbeenfiled,theissuanceofanystoporder,thesuspensionofthequalificationoftheParentClassAOrdinarySharesforofferingorsaleinanyjurisdiction,oranyoralorwrittenrequestbytheSECforamendmentoftheProxyStatement/ProspectusortheFormS-4orcommentsthereonandresponsestheretoorrequestsbytheSECforadditionalinformation,andwillpromptlyprovidetheotherwithcopiesofanywrittencommunicationfromtheSECoranystatesecuritiescommission.IfatanytimepriortotheEffective
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TimeanyinformationrelatingtoParentortheCompany,oranyoftheirrespectiveaffiliates,officersordirectors,isdiscoveredbyParentortheCompanywhichshouldbesetforthinanamendmentorsupplementtoanyoftheFormS-4ortheProxyStatement/Prospectus,sothatanyofsuchdocumentswouldnotincludeamisstatementofamaterialfactoromittostateanymaterialfactnecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading,thePartythatdiscoverssuchinformationshallpromptlynotifytheotherPartiesheretoandanappropriateamendmentorsupplementdescribingsuchinformationshallbepromptlyfiledwiththeSECand,totheextentrequiredbylaw,disseminatedtotheParentShareholdersandCompanyShareholders,asapplicable.
(b)TheCompany,actingthroughtheCompanyBoard,shall,inaccordancewithapplicableLawandtheCompanyCharterandCompanyBylaws,dulycall,givenoticeof,conveneandholdanannualorspecialmeetingofitsshareholders(the"Company Shareholder Meeting ")assoonasreasonablypracticablefollowingexecutionofthisAgreementforthepurposeofapprovingbyrequisitevotethisAgreement.TheCompanyBoardshall,subjecttoSection 5.4(d) ,includetheCompanyBoardRecommendationintheProxyStatement/ProspectusanduseitsreasonablebesteffortstoobtaintheCompanyShareholderApproval.NotwithstandinganythinginthisAgreementtothecontrary,unlessthisAgreementisterminatedinaccordancewithSection 7.1 andsubjecttocompliancewithSection 5.4 ,theCompany,regardlessofwhethertheCompanyBoardhasapproved,endorsedorrecommendedaTakeoverProposalorhaswithdrawn,modifiedoramendedtheCompanyBoardRecommendation,willsubmitthisAgreementforapprovalbytheCompanyShareholdersatsuchmeeting.
(c)Parent,actingthroughtheParentBoard,shall,inaccordancewithapplicableLawandParent'sarticlesofassociation,dulycall,givenoticeof,conveneandholdageneralmeetingofitsshareholders(the"Parent Shareholder Meeting ")assoonasreasonablypracticablefollowingexecutionofthisAgreementforthepurposeofapprovingbyrequisitevotetheParentShareholderResolutions.TheParentBoardshall,subjecttoSection 5.5(d) ,includetheParentBoardRecommendationintheProxyStatement/ProspectusanduseitsreasonablebesteffortstoobtainapprovaloftheParentShareholderResolutions.NotwithstandinganythinginthisAgreementtothecontrary,unlessthisAgreementisterminatedinaccordancewithSection 7.1 andsubjecttocompliancewithSection 5.5 ,Parent,regardlessofwhethertheParentBoardhasapproved,endorsedorrecommendedaTakeoverProposalorhaswithdrawn,modifiedoramendedtheParentBoardRecommendation,willsubmittheParentShareholderResolutionsforapprovalbytheParentShareholdersatsuchmeeting.
(d)NotwithstandinganythingtothecontrarycontainedinthisAgreement,ParentortheCompany,afterconsultationwiththeotherPartyheretoandsubjecttosuchotherParty'sapproval(whichshallnotbeunreasonablywithheld,conditionedordelayed),mayadjournorpostponetheParentShareholderMeetingortheCompanyShareholderMeeting,asapplicable,totheextentitbelievesingoodfaiththatsuchadjournmentorpostponementisnecessarytoensurethatanyrequiredsupplementoramendmenttotheProxyStatement/Prospectusisprovidedtoitsshareholdersor,ifasofthetimeforwhichtheParentShareholderMeetingortheCompanyShareholderMeetingisoriginallyscheduled(assetforthintheProxyStatement/Prospectus)thereareinsufficientParentClassAOrdinarySharesorsharesofCompanyCommonStock,asapplicable,represented(eitherinpersonorbyproxy)toconstituteaquorumnecessarytoconductbusinessatsuchmeeting.
(e)ParentandtheCompanywillusetheirrespectivereasonablebesteffortstoholdtheParentShareholderMeetingandtheCompanyShareholderMeetingsimultaneouslyandassoonasreasonablypracticableafterthedateofthisAgreementandshallcooperateingoodfaithtocoordinatethetimingoftheParentShareholderMeetingandtheCompanyShareholderMeetingwiththeParties'anticipatedClosingDate.
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Section5.7 Efforts; Regulatory Approvals .
(a)PriortotheClosing,Parent,MergerSubandtheCompanyshallusetheirrespectivereasonablebesteffortstotake,orcausetobetaken,allactions,andtodo,orcausetobedone,allthingsnecessary,properoradvisableunderanyapplicableLawstoconsummateandmakeeffectivetheMerger,including(i)thepreparationandfilingofallforms,registrationsandnoticesrequiredtobefiledtoconsummatetheMergerandtheprovisionofinformationinconnectiontherewith,(ii)thesatisfactionoftheconditionstoconsummatingtheMerger,(iii)takingallreasonableactionsnecessarytoobtain(andcooperatingwitheachotherinobtaining)anyconsent,authorization,Orderorapprovalof,oranyexemptionby,anythirdparty,includinganyGovernmentalEntity(whichactionsshallincludefurnishingallinformationanddocumentarymaterialrequiredundertheHSRActorotherantitrust,competition,foreigninvestmentorsimilarLawsoutsideoftheUnitedStates)requiredtobeobtainedormadebytheParent,MergerSub,theCompanyoranyoftheirrespectiveSubsidiariesinconnectionwiththeMergerorthetakingofanyactioncontemplatedbythisAgreement,and(iv)theexecutionanddeliveryofanyadditionalinstrumentsnecessarytoconsummatetheMergerandtofullycarryoutthepurposesofthisAgreement.Additionally,Parent,MergerSubandtheCompanyshallusereasonablebesteffortstofulfillallconditionsprecedenttotheMergerandshallnottakeanyactionafterthedateofthisAgreementthatwouldreasonablybeexpectedtomateriallydelaytheobtainingof,orresultinnotobtaining,anyconsent,authorization,Orderorapprovalof,oranyexemptionby,anysuchGovernmentalEntitynecessarytobeobtainedpriortoClosing.TotheextentthattransfersofanyPermitsissuedbyanyGovernmentalEntityarerequiredasaresultoftheexecutionofthisAgreementortheconsummationoftheMerger(includingPermitsrequiredpursuanttoEnvironmentalLaws),thePartiesheretoshallusereasonablebesteffortstoeffectsuchtransfers.
(b)InfurtheranceandnotinlimitationoftheothercovenantscontainedinthisSection 5.7 ,eachoftheParent,MergerSub,andtheCompanyshalluseitsreasonablebesteffortstotake,orcausetobetaken,anyandallstepsandtomake,orcausetobemadeanyandallundertakingsnecessarytoresolveobjections,ifany,thatanyRelevantAuthoritymayassertundertheHSRActandanyotherfederal,stateorforeignlawdesignedtoprohibit,restrictorregulateactionsforthepurposeoreffectofmonopolizationorrestraintoftradeorreductionofcompetition(collectively,"Antitrust Laws ")orthatregulatesforeigninvestment("Foreign Investment Laws "),withrespecttothisAgreement,andtoavoidoreliminateeachandeveryimpedimentunderanyAntitrustLaworForeignInvestmentLawsthatmaybeassertedbyanyRelevantAuthoritywithrespecttothisAgreement,ineachcase,soastoenabletheClosingtooccuraspromptlyaspracticableincluding(i)proposing,negotiating,committingtoandeffecting,byconsentdecree,holdseparateorder,orotherwise,thesale,divestitureordispositionofanybusinesses,assets,equityinterests,productlinesorpropertiesoftheParent,MergerSubandtheCompany(oranyoftheirrespectivesubsidiaries)oranyequityinterestinanyjointventureheldbyParent,MergerSubandtheCompany(oranyoftheirrespectivesubsidiaries),(ii)creating,terminating,ordivestingrelationships,ventures,contractualrightsorobligationsoftheParent,MergerSubandtheCompanyortheirrespectiveSubsidiariesand(iii)otherwisetakingorcommittingtotakeanyactionthatwouldlimittheParent'sortheMergerSub'sfreedomofactionwithrespectto,oritsabilitytoretainorhold,directlyorindirectly,anybusinesses,assets,equityinterests,productlinesorpropertiesoftheParent,MergerSubandtheCompany(includinganyoftheirrespectiveSubsidiaries)oranyequityinterestinanyjointventureheldbytheParent,MergerSubandtheCompany(oranyoftheirrespectiveSubsidiaries),ineachcaseasmayberequiredinordertoobtainallapprovalsandconsentsrequireddirectlyorindirectlyunderanyAntitrustLaworForeignInvestmentLaws,ortoavoidthecommencementofanyactiontoprohibittheClosingoftheAgreementunderanyAntitrustLaworForeignInvestmentLaws,ortoavoidtheentryof,ortoeffectthedissolutionof,anyinjunction,temporaryrestrainingorderorotherorderinanyactionorproceedingseekingtoprohibittheClosingoftheAgreementordelaytheClosingoftheAgreementbeyondtheEndDate,provided ,however ,thatParentshallnotberequiredtotakeanyactionsunderthisSection 5.7 thatwouldreasonablybeexpectedto,individuallyorintheaggregate,resultina
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one-yearlossofrevenuesdeterminedinaccordancewithGAAP(asmeasuredbythefourfullfiscalquartersforwhichfinancialstatementsareavailableimmediatelyprecedingtherelevantmeasurementperiod)ofmorethan$175.0milliononacombinedbasisforboththeCompanyanditsSubsidiariesandParentanditsSubsidiaries.NothinginthisSection 5.7(b) shallrequirebytheParent,MergerSubandtheCompanytotakeoragreetotakeanyactionwithrespecttoitsbusinessoroperationsunlesstheeffectivenessofsuchagreementoractionisconditionedupontheClosing.
(c)TheCompanyandParentshalleachkeeptheotherapprisedofthestatusofmattersrelatingtothecompletionoftheMergerandworkcooperativelyinconnectionwithobtainingallrequiredconsents,authorizations,Ordersorapprovalsof,oranyexemptionsby,anyGovernmentalEntityundertakenpursuanttotheprovisionsofthisSection 5.7 .Inthatregard,priortotheClosing,eachPartyshallpromptlyconsultwithoneanotherwithrespectto,andprovideanynecessaryinformationwithrespectto(and,inthecaseofcorrespondence,providetheotherParties(ortheircounsel)copiesof),allfilingsmadebysuchPartywithanyGovernmentalEntityoranyotherinformationsuppliedbysuchPartyto,orcorrespondencewith,aGovernmentalEntityinconnectionwiththisAgreementandtheMerger.EachPartytothisAgreementshallpromptlyinformtheotherPartiestothisAgreement,andifinwriting,furnishtheotherParty(ortheircounsel)withcopiesof(or,inthecaseoforalcommunications,advisetheotherParty(ortheircounsel)orallyof)anycommunicationfromanyGovernmentalEntityregardingtheMerger,andpermittheotherPartytoreviewanddiscussinadvance,andconsideringoodfaiththeviewsoftheotherPartyinconnectionwith,anyproposedcommunicationwithanysuchGovernmentalEntity.IfanyPartyoranyRepresentativeofsuchPartyreceivesarequestforadditionalinformationordocumentarymaterial,orotherrequestforinformation,fromanyGovernmentalEntitywithrespecttotheMerger,thensuchPartywillusereasonablebesteffortstomake,orcausetobemade,promptlyandafterconsultationwiththeotherParty,anappropriateresponseinsubstantialcompliancewithsuchrequest.NeitherPartyshallparticipateinanymeetingorteleconferencewithanyGovernmentalEntitywherematerialissueswouldlikelybediscussedinconnectionwiththisAgreementandtheMergerunless,solongasreasonablypracticable,itconsultswiththeotherPartyinadvanceand,totheextentpermittedbysuchGovernmentalEntity,givestheotherPartytheopportunitytoattendandparticipatethereat.EachPartyshallfurnishtheotherPartywithcopiesofallcorrespondence,filingsandcommunications(andmemorandasettingforththesubstancethereof)betweenitandanysuchGovernmentalEntitywithrespecttothisAgreementandtheMerger,andfurnishtheotherPartywithsuchnecessaryinformationandreasonableassistanceastheotherPartymayreasonablyrequestinconnectionwithitspreparationofnecessaryfilingsorsubmissionsofinformationtoanysuchGovernmentalEntity;provided ,however ,thatmaterialsprovidedpursuanttothisSection 5.7 mayberedacted(i)toremovereferencesconcerningthevaluationoftheCompanyandtheMergerorotherconfidentialinformation,(ii)asnecessarytocomplywithcontractualarrangements,and(iii)asnecessarytoaddressreasonableprivilegeconcerns.
(d)TheCompanyandParentshallusereasonablebesteffortsto(i)file,aspromptlyaspracticable,butinanyeventnolaterthanten(10)businessdaysafterthedateofthisAgreement,allnotificationsrequiredundertheHSRAct;and(ii)makeanyotherrequiredoradvisablefilings(asdeterminedbyParent)underanyantitrust,competition,foreigninvestmentorsimilarLawsaspromptlyaspracticable.IntheeventthatthePartiesreceivearequestforinformationordocumentarymaterialpursuanttotheHSRActorotherrequestforinformationfromanyGovernmentalEntity,thePartieswillusetheirrespectivereasonablebesteffortstorespondtosuchrequestaspromptlyaspracticable,andcounselforbothPartieswillcloselycooperateduringtheentiretyofanysuchresponseprocess.
(e)Notwithstandinganythingtothecontrarycontainedherein,thePartiesagreethatitisParent'ssolerighttocontrol,directanddevisethestrategyforallfilings,notifications,submissions,communicationsandotherdealingsanddecision-makinginconnectionwiththeHSRActandotherantitrust,competition,foreigninvestmentandsimilarLaws.Notwithstandingtheforegoing,nothinginthisSection 5.7(e) shalllimitParent'sobligationsunderSection 5.7(a) ,(b) ,(c)and(d) .
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Section5.8 Takeover Statutes .Ifany"moratorium,""controlshareacquisition,""fairprice,""supermajority,""affiliatetransactions,"or"businesscombinationstatuteorregulation"orothersimilarstateorotheranti-takeoverLawsandregulationsmaybecome,ormaypurporttobe,applicabletotheMergeroranyothertransactionscontemplatedhereby,eachoftheCompanyandParentshallgrantsuchapprovalsandtakesuchactionsasarereasonablynecessarysothatthetransactionscontemplatedbythisAgreementmaybeconsummatedaspromptlyaspracticableonthetermscontemplatedherebyandotherwiseacttoeliminateorminimizetheeffectsofsuchstatuteorregulationonthetransactionscontemplatedhereby.
Section5.9 Public Announcements .ParentandtheCompanyshallusecommerciallyreasonableeffortstodevelopajointcommunicationsplanandeachPartyshallusecommerciallyreasonableeffortstoensurethatallpressreleasesandotherpublicstatementswithrespecttothetransactionscontemplatedhereby,totheextenttheyhavenotbeenpreviouslyissuedordisclosed,shallbeconsistentwithsuchjointcommunicationsplan.UnlessotherwiserequiredbyapplicableLaworbyobligationspursuanttoanylistingagreementwithorrulesofanysecuritiesexchange,eachPartyshallconsultwitheachotherbeforeissuinganypressreleaseorpublicstatementwithrespecttotheMergerand,subjecttotherequirementsofapplicableLawortherulesofanysecuritiesexchange,shallnotissueanysuchpressreleaseorpublicstatementpriortosuchconsultation.ParentandtheCompanyagreetoissueamutuallyacceptableinitialjointpressreleaseannouncingthisAgreement.
Section5.10 Indemnification and Insurance .
(a)Parentagreesthat,tothefullestextentpermittedunderapplicableLaw,allrightstoexculpation,indemnificationandadvancementofexpensesforactsoromissionsoccurringatorpriortotheEffectiveTime,whetherassertedorclaimedpriorto,atoraftertheEffectiveTime,existingasatthedateofthisAgreementinfavorofthecurrentorformerdirectors,officersoremployees,asthecasemaybe,oftheCompanyoritsSubsidiariesasprovidedintheirrespectivecertificateofformationorbylawsorotherorganizationaldocumentsorinanyagreementshallsurvivetheMergerandshallcontinueinfullforceandeffectinaccordancewiththeirterms.ForaperiodofsixyearsfromtheEffectiveTime,tothefullestextentpermittedunderapplicableLaw,Parentshall,andshallcausetheSurvivingCompanyto,maintainineffectanyandallexculpation,indemnificationandadvancementofexpensesprovisionsofthecertificateofformation,bylawsorsimilarorganizationaldocumentsoftheCompanyanditsSubsidiariesineffectasatthedateofthisAgreementorinanyindemnificationagreementsoftheCompanyoritsSubsidiarieswithanyoftheirrespectivecurrentorformerdirectors,officersoremployeesineffectasatthedateofthisAgreement,andtothefullestextentpermittedunderapplicableLawshallnotamend,repealorotherwisemodifyanysuchprovisionsortheexculpation,indemnificationoradvancementofexpensesprovisionsoftheorganizationaldocumentsoftheCompanyoritsSubsidiariesinanymannerthatwouldadverselyaffecttherightsthereunderofanyindividualswhoimmediatelybeforetheEffectiveTimewerecurrentorformerdirectors,officersoremployeesoftheCompanyoranyofitsSubsidiaries;provided ,however ,thatallrightstoexculpation,indemnificationandadvancementofexpensesinrespectofanyActionpendingorassertedoranyclaimmadewithinsuchperiodshallcontinueuntilthedispositionofsuchActionorresolutionofsuchclaim.
(b)Parentshall,andshallcausetheSurvivingCompanyto,tothefullestextentpermittedunderapplicableLaw,indemnifyandholdharmless(andadvancefundsinrespectofeachoftheforegoing)eachcurrentandformerdirector,officeroremployeeoftheCompanyoranyofitsSubsidiariesandeachpersonwhoservedasadirector,officer,member,trusteeorfiduciaryofanothercorporation,partnership,jointventure,trust,pensionorotheremployeebenefitplanorenterpriseifsuchservicewasattherequestorforthebenefitoftheCompanyoranyofitsSubsidiaries(each,togetherwithsuchperson'sheirs,executorsoradministrators,an"Indemnified Party "),ineachcaseagainstanycostsorexpenses(includingadvancingattorneys'feesandexpensesinadvanceofthefinaldispositionofanyclaim,suit,proceedingorinvestigationtoeachIndemnifiedPartytothefullestextentpermittedbyapplicableLaw;provided ,however ,thattheIndemnifiedPartytowhomexpensesareadvancedprovides
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anundertakingconsistentwithapplicableLawandtheCompanyOrganizationalDocumentstorepaysuchamountsifitisultimatelydeterminedthatsuchpersonisnotentitledtoindemnification),judgments,fines,losses,claims,damages,liabilitiesandamountspaidinsettlementinconnectionwithanyactualorthreatenedclaim,action,suit,proceedingorinvestigation,whethercivil,criminal,administrativeorinvestigative(an"Action "),arisingoutof,relatingtoorinconnectionwithanyactionoromissionbythemintheircapacitiesassuchoccurringorallegedtohaveoccurredwhetherbeforeoraftertheEffectiveTime(includingactsoromissionsinconnectionwithsuchIndemnifiedPartyservingasanofficer,director,employeeorotherfiduciaryofanyentityifsuchservicewasattherequestorforthebenefitoftheCompany).IntheeventofanysuchAction,ParentandtheSurvivingCompanyshallcooperatewiththeIndemnifiedPartyinthedefenseofanysuchAction.
(c)ForaperiodofsixyearsfromtheEffectiveTime,ParentandtheSurvivingCompanyshallcausetobemaintainedineffectthecoverageprovidedbythepoliciesofdirectors'andofficers'liabilityinsuranceandfiduciaryliabilityinsuranceineffectasofthedatehereofbytheCompanyanditsSubsidiarieswithrespecttomattersexistingorarisingonorbeforetheEffectiveTime(providedthatParentmaysubstitutetheseforpolicieswithacarrierwithreasonablycomparablecreditratingstotheexistingcarrierofatleastthesamecoverageandamountsandcontainingtermsandconditionsthatitreasonablyconsidersarenolessfavorabletotheinsuredor,ifinsurancecoveragethatisnolessfavorableisunavailable,thebestavailablecoverage);provided ,however ,thatParentshallnotberequiredtopayanannualpremiuminexcessof300%ofthelastannualpremiumpaidbytheCompanypriortothedatehereofinrespectofthecoverages(the"MaximumAmount ")requiredtobeobtainedpursuanthereto,butinsuchcaseshallpurchaseasmuchcoverageasreasonablypracticableforsuchamount.IftheCompanyorParentelects,thentheCompanyorParent,asapplicable,may,priortotheEffectiveTime,purchasea"tailpolicy"withrespecttoactsoromissionsoccurringorallegedtohaveoccurredpriortotheEffectiveTimethatwerecommittedorallegedtohavebeencommittedbysuchIndemnifiedPartiesintheircapacityassuch;provided thatinnoeventshallthecostofsuchpolicy,ifpurchasedbytheCompany,exceedsix(6)timestheMaximumAmountand,ifsucha"tailpolicy"ispurchased,ParentshallhavenofurtherobligationsunderthisSection 5.10(c) .
(d)Parentshall,tothefullestextentpermittedunderapplicableLaw,payallreasonableexpenses,includingreasonableattorneys'fees,thatmaybeincurredbyanyIndemnifiedPartyinenforcingtheindemnityandotherobligationsprovidedinthisSection 5.10 .
(e)TherightsofeachIndemnifiedPartyunderthisSection 5.10 shallbeinadditionto,andnotinlimitationof,anyotherrightssuchIndemnifiedPartymayhaveunderthecertificateofincorporationorbylawsorotherorganizationaldocumentsoftheCompanyoranyofitsSubsidiariesortheSurvivingCompany,anyotherindemnificationarrangement,theTBOCorotherwise.
(f)IntheeventthatParent,theSurvivingCompanyoranyofitssuccessorsorassignsshall(i)consolidatewithormergeintoanyotherpersonandshallnotbethecontinuingorsurvivingcorporationorentityofsuchconsolidationormergeror(ii)transferallorsubstantiallyallitspropertiesandassetstoanyperson,then,andineachsuchcase,ParentshallcauseproperprovisiontobemadesothatthesuccessorandassignofParentortheSurvivingCompanyassumestheobligationssetforthinthisSection 5.10 .
(g)TheobligationsofParentunderthisSection 5.10 shallnotbeterminated,amendedormodifiedinanymannersoastoadverselyaffectanyIndemnifiedParty(includingtheirsuccessors,heirsandlegalrepresentatives)towhomthisSection 5.10 applieswithouttheconsentofsuchIndemnifiedParty.Itisexpresslyagreedthat,notwithstandinganyotherprovisionofthisAgreementthatmaybetothecontrary,(i)theIndemnifiedPartiestowhomthisSection 5.10 appliesshallbethird-partybeneficiariesofthisSection 5.10 ,and(ii)thisSection 5.10 shallsurviveconsummationoftheMergerandshallbeenforceablebysuchIndemnifiedPartiesandtheirrespectivesuccessors,heirsandlegalrepresentativesagainstParentanditssuccessorsandassigns.
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Section5.11 Control of Operations .WithoutinanywaylimitinganyParty'srightsorobligationsunderthisAgreement,thePartiesunderstandandagreethat(a)nothingcontainedinthisAgreementshallgiveParentortheCompany,directlyorindirectly,therighttocontrolordirecttheotherParty'soperationspriortotheEffectiveTimeand(b)priortotheEffectiveTime,eachofParentandtheCompanyshallexercise,consistentwiththetermsandconditionsofthisAgreement,completecontrolandsupervisionoveritsoperations.
Section5.12 Section 16 Matters .PriortotheEffectiveTime,ParentandtheCompanyshalltakeallsuchstepsasmayberequiredtocauseanydispositionsofCompanyCommonStock(includingderivativesecuritieswithrespecttoCompanyCommonStock)oracquisitionsofParentOrdinaryShares(includingderivativesecuritieswithrespecttoParentOrdinaryShares)resultingfromthetransactionscontemplatedbythisAgreementbyeachindividualwhoissubjecttothereportingrequirementsofSection16(a)oftheExchangeActwithrespecttotheCompanyorwillbecomesubjecttosuchreportingrequirementswithrespecttoParent,tobeexemptunderRule16b-3promulgatedundertheExchangeAct.
Section5.13 Transaction Litigation .EachPartyshallprovidetheotherPartypromptwrittennoticeofanylitigationbroughtbyanyshareholderofthatPartyagainstsuchParty,anyofitsSubsidiariesand/oranyoftheirrespectivedirectorsrelatingtotheMerger,thisAgreementoranyofthetransactionscontemplatedhereby.Unless,inthecaseofsuchlitigationwithrespecttotheCompany,theCompanyBoardhasmadeorisconsideringmakingaCompanyAdverseRecommendationChange,theCompanyshallgiveParenttheopportunitytoparticipate(atParent'sexpense)inthedefenseorsettlementofanyshareholderlitigationagainsttheCompanyand/oritsdirectorsorexecutiveofficersrelatingtothetransactionscontemplatedbythisAgreement,includingtheMerger.TheCompanyagreesthatitshallnotsettleoroffertosettleanylitigationcommencedpriortoorafterthedateofthisAgreementagainsttheCompanyoritsdirectors,executiveofficersorsimilarpersonsbyanyshareholderoftheCompanyrelatingtothisAgreement,theMergeroranyothertransactioncontemplatedherebywithoutthepriorwrittenconsentofParent(whichconsentshallnotbeunreasonablywithheld,conditionedordelayed).
Section5.14 NYSE Listing .ParentshalluseitsbesteffortstocausetheParentClassAOrdinarySharestobeissuedintheMergertobeapprovedforlistingontheNYSE,subjecttoofficialnoticeofissuance,priortotheClosingDate.
Section5.15 Tax Matters .ThePartiesshall(andshallcausetheirrespectiveaffiliatesto)usecommerciallyreasonableeffortstoensurethatSection7874oftheCode,theregulationspromulgatedthereunder,orofficialinterpretationthereofassetforthinpublishedguidancebytheIRS(the"Expatriated Entity Rules"),shouldnotapplyinsuchamannersoastocauseParenttobetreatedasa"domesticcorporation"forU.S.federalincomeTaxpurposesasaresultoftheMerger,includingby(i)nottakinganyactionthatsuchPartyknows(ornotfailingtotakeanyactionwhichfailuresuchPartyknows)isreasonablylikelytoresultinsuch"domesticcorporation"treatment,and(ii)negotiatingingoodfaithsuchamendmentstothisAgreementasmaybereasonablyrequiredinordertopreventsuch"domesticcorporation"treatment(itbeingunderstoodthatnoPartywillberequiredtoagreetoanysuchamendment).IfanyPartyis,orshouldreasonablybecome,awareofanyfactorcircumstancethatsuchPartymayreasonablyexpectwouldcausetherepresentationsinanyofSection 3.14(d) orSection 4.14(c) tobeuntrue,thensuchPartyshallpromptlynotifytheotherParties.ThePartiesagreetoexecutecertificates,atsuchtimeortimesasmaybereasonablyrequestedbyanyParty,informandsubstancereasonablyacceptabletotherequestingParty,containingappropriaterepresentationsestablishingthattheExpatriatedEntityRulesshouldnotapplyinsuchamannersoastocauseParenttobetreatedasa"domesticcorporation"forU.S.federalincomeTaxpurposesasaresultoftheMerger.
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Section5.16 Certificate of Non-USRPHC Status .TheCompanyshalldelivertoParentattheClosingacertificationbytheCompanythatmeetstherequirementsofTreasuryRegulationsSection1.1445-2(c)(3)andTreasuryRegulationsSection1.897-2(h)(1)(i),datedwithin30dayspriortotheClosingDateandinformandsubstancereasonablyacceptabletoParentalongwithwrittenauthorizationforParenttodeliversuchcertificationtotheIRSonbehalfoftheCompanyuponClosing.
Section5.17 Consent to Use of Financial Statements; Financing Cooperation .TheCompanyherebyconsentstoParent'sinclusionofanyauditedorunauditedfinancialstatements,includingthosecontainedinanyCompanySECDocuments,relatingtoandpreparedbytheCompanyreasonablyrequestedbyParenttobeusedinanyfinancingoranyfilingsthatParentdesirestomakewiththeSEC.Inaddition,theCompanywillusecommerciallyreasonableefforts,atParent'ssolecostandexpense,toobtaincustomarycomfortlettersfromPricewaterhouseCoopersLLPregardingfinancialstatementsoftheCompanyasreasonablyrequestedbytheleadunderwriter(s)orinitialpurchaser(s)inconnectionwithanyregisteredorprivateofferingorotherwiseandtoobtaintheconsentofPricewaterhouseCoopersLLPtotheinclusionofthefinancialstatementsreferencedaboveinappropriatefilingswiththeSEC.PriortotheClosing,theCompanywillusecommerciallyreasonableeffortstoprovideParentsuchinformationregardingtheCompany'sbusiness,andmakeavailablesuchpersonnel,asParentmayreasonablyrequestinordertoassistParentinconnectionwithanyfinancingactivities,includinganypublicofferingstoberegisteredundertheSecuritiesActorprivateofferings,ifpermittedunderSection 5.2(b) .Parentshallindemnify,defend,andholdharmlesstheCompany,itsSubsidiariesandtheirrespectiveRepresentativesfromandagainstanyandalllossessufferedorincurredbytheminconnectionwith(a)anyactiontakenbythemattherequestofParentorMergerSubpursuanttothisSection 5.17 orinconnectionwithanyregisteredorprivateofferingofParentor(b)anyinformationutilizedinconnectiontherewith(otherthaninformationprovidedbytheCompanyanditsSubsidiariesspecificallyforinclusionorincorporationbyreferencetherein).
Section5.18 Employee Matters .
(a)AttheEffectiveTime,ParentanditsSubsidiarieswillcontinuetheemploymentofalloftheemployeeswhoareemployedbytheCompanyoranyofitsSubsidiariesasofthedayimmediatelypriortotheEffectiveTime(the"Affected Employees ")initiallyatthesamesalariesandwagesofsuchemployeesimmediatelypriortotheEffectiveTime.DuringtheperiodfromtheEffectiveTimetoandincludingtheoneyearanniversaryoftheClosingDate,ParentanditsSubsidiaries(i)shallprovideeachAffectedEmployeewithanannualsalaryrateorhourlywagerate,asapplicable,thatisnolessfavorabletosuchAffectedEmployeethanthesalaryrateorwagerateprovidedtosuchAffectedEmployeeimmediatelypriortotheEffectiveTime,and(ii)shallprovideAffectedEmployeeswhoaresoemployedbytheCompanyoritsSubsidiariesasofthedayimmediatelypriortotheEffectiveTime,intheaggregate,withemployeecompensationandbenefits(excludingequitycompensationandlong-termincentives)thatarenolessfavorableintheaggregatethanthoseprovidedbytheCompanyoritsSubsidiariesimmediatelypriortotheEffectiveTime;provided ,however ,thatParentmaytransitionAffectedEmployeestoParent'sbonusandincentivecompensationplansatanytimeinParent'sdiscretionand,followingtheendofthefiscalyearorbenefitplanyear,asapplicable,inwhichtheClosingDateoccurs,ParentmaytransitionAffectedEmployeestoothercompensationandbenefitplansprovidingcompensationandbenefitsthataresubstantiallycomparableintheaggregatetothoseprovidedtoParent'sothersimilarlysituatedemployees.NothinginthisAgreementshallbeconsideredacontractbetweenParentanditsSubsidiariesandanyAffectedEmployeeorconsiderationfor,orinducementwithrespectto,anysuchemployee'scontinuedemploymentand,withoutlimitation,allsuchemployeesareandwillcontinuetobeconsideredtobeemployeesatwillpursuanttotheapplicableemploymentatwilllawsordoctrines,subjecttoanyexpresswrittenagreementtothecontrarywithsuchemployee.FromandaftertheEffectiveTime,Parentshallhonor,andshallcauseitsSubsidiariestohonor,eachchangeincontrolorseveranceagreementbetweentheCompanyandits
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SubsidiariesandanyemployeethereofandtoperformtheobligationsoftheCompanythereunder,andParentshallprovide,orcauseitsSubsidiariestoprovide,relocationbenefitsinaccordancewithCompanypolicyasineffectonthedateofthisAgreementtoanyAffectedEmployeewhobecomesentitledtoseverancebenefitsfollowingtheEffectiveTimepursuanttoanyCompanyBenefitPlan.
(b)WithrespecttoeachAffectedEmployee,Parentshallcredit,orcauseitsSubsidiariestocredit,theperiodofemploymentandservicerecognizedbytheapplicableemployerimmediatelypriortotheEffectiveTime(forpurposesofitscorrespondingplans,programs,policiesorsimilaremployment-relatedarrangements)tohavebeenemploymentandservicewithParentforpurposesofdeterminingtheAffectedEmployee'seligibilitytojoin(subjecttosatisfactionofallnon-servicerelatedeligibilitycriteria)andvesting(butnotbenefitaccrualforanypurposeotherthanvacationpay,severanceandterminationpayandsickleave)underallemployeebenefitplans,programs,policiesorsimilaremploymentrelatedarrangementsofParentanditsSubsidiariesinwhichtheAffectedEmployeeiseligibletoparticipate;provided ,however ,thatnosuchcreditshallbeprovidedtotheextentthatitwouldresultinaduplicationofcreditorbenefits.Parentshallwaive,andtotheextentnecessarytoeffectthetermshereof,shallusecommerciallyreasonableeffortstocausetherelevantinsurancecarriersandotherthirdpartiestowaive,anyrestrictionsandlimitationsformedicalconditionsexistingasoftheEffectiveTimeofthoseAffectedEmployeesandtheirdependentswhowerecoveredimmediatelypriortotheEffectiveTimeunderagrouphealthplanmaintainedbytheCompany,ParentortheirSubsidiaries,butonlytotheextentthatsuchmedicalconditionwouldbecoveredbyParent'sgrouphealthplanifitwerenotapre-existingconditionandonlytotheextentthatsuchlimitationswouldnothaveappliedundertheapplicablegrouphealthplancoveringtheAffectedEmployeepriortotheEffectiveTime.Further,Parentshalloffer,orcauseitsSubsidiariestooffer,attheEffectiveTimetoeachAffectedEmployeecoverageunderagrouphealthplan(asdefinedinSection5000(b)(1)oftheCode)whichcreditssuchAffectedEmployeetowardsthedeductibles,coinsuranceandmaximumout-of-pocketprovisionsimposedundersuchgrouphealthplan,fortheplanyearduringwhichtheEffectiveTime(orsuchlaterdateastheAffectedEmployeesparticipateinsuchgrouphealthplan)occurs,withanyapplicableexpensesalreadyincurredduringsuchyearundertheCompany'sorParent'sgrouphealthplan.
(c)TheCompanyandParentagreetocooperateingoodfaithtoestablishaprocesstopromptlyintegratetheCompanyBenefitPlansandtheParentBenefitPlansfollowingtheEffectiveTime.
(d)PromptlyfollowingtheEffectiveTime,Parentshallpay,orshallcauseitsSubsidiariestopay,toeachAffectedEmployeewhowasemployedbytheCompanyoritsSubsidiariesimmediatelypriortotheEffectiveTimeanamount,totheextentthenunpaid,equaltotheunpaidportionofanyannualincentivebonustowhichtheAffectedEmployeewerebeentitledundertheapplicableCompanyannualbonusplanfortheyearpriortotheyearinwhichtheEffectiveTimeoccurs.
(e)Exceptwithrespecttooffersofemploymenttoprospectivenewemployeesintheordinarycourseofbusinessconsistentwithpastpractices,theCompanyandParentagreethattheyshallnotmake,andshallcausetheirrespectiveSubsidiariesnottomake,anyrepresentationsorpromises,oralorwritten,toanyoftheiremployeesconcerningcontinuedemploymentfollowingtheEffectiveTime,orthetermsandconditionsofthatemployment,exceptinwritingwiththepriorwrittenconsentoftheotherparty.
(f)Notwithstandingtheforegoing,nothinginthisAgreement,whetherexpressorimplied,shallbetreatedasanamendmentorothermodificationofanyCompanyBenefitPlan,ParentBenefitPlanorothercompensationorbenefitplan,programorarrangementoftheCompany,ParentortheirSubsidiaries,orshalllimittherightoftheCompany,ParentoranyoftheirSubsidiaries,toamend,terminateorotherwisemodifyanysuchplanorarrangementortoterminatetheemploymentofanyAffectedEmployeeatanytime.NoAffectedEmployeeorotherindividualisanintendedthirdpartyofthisSection 5.18 andnosuchpersonshallhaveanyrighttoenforceanyprovisionofthisSection 5.18 .
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(g)Fortheavoidanceofdoubt,upontheEffectiveTime,a"changeincontrol"shallbedeemedtohaveoccurredforpurposesofallCompanyBenefitPlansandotheremployeeplans,programsandarrangementsoftheCompanythatuse"changeincontrol"orasimilarterm.
Section5.19 Obligations of Merger Sub and the Surviving Company .ParentshalltakeallactionnecessarytocauseMergerSubandtheSurvivingCompanytoperformtheirrespectiveobligationsunderthisAgreementandtoconsummatethetransactionscontemplatedhereby,includingtheMerger,uponthetermsandsubjecttotheconditionssetforthinthisAgreement.
Section5.20 Intercompany Structure .Within30daysafterthedatehereof,ParentshalldelivertotheCompany,fortheCompany'sreviewandapproval(whichapprovalshallnotbeunreasonablyconditioned,withheldordelayed),aplanbywhichParentcaneffect,priortotheEffectiveTime,certainintercompanytransfersofequityanddebtamongParent,MergerSubandanyotheraffiliatesofParent,includinganynewly-formedorto-be-formedentities,inaccordancewiththeprinciplessetforthinSchedule 5.20 .Theconsummationofthetransactionscontemplatedherebyshallbeeffectedinaccordancewithsuchplan,whichshallnotbemodifiedwithouttheCompany'sapproval(whichapprovalshallnotbeunreasonablyconditioned,withheldordelayed).ParentandtheCompanyshallworktogetheringoodfaithinordertoachieveanefficientintercompanystructureamongParent,suchaffiliatesandMergerSubinconnectionwiththeconsummationofthetransactionscontemplatedhereby.
Section5.21 Company Bond Redemption .Atleast45butnotmorethan75dayspriortotheClosingDate,ifrequestedbyParent,theCompanyshalldeliveraredemptionnoticetotheholders(the"Noteholders ")oftheCompany's6.50%SeniorNotesdue2020(the"Company Notes ")providingfortheredemptionofsuchCompanyNotesbytheCompanysubstantiallyconcurrentlywiththeClosing.TheredemptionofsuchCompanyNotes,ifany,shallbemadepursuanttoSection4.07ofthatcertainIndenturedatedasofJanuary18,2012amongtheCompany,thesubsidiaryguarantorsoftheCompanypartytheretoandWellsFargoBank,NationalAssociation,astrustee(the"Trustee "),assupplementedbytheFirstSupplementalIndenturetheretodatedJanuary18,2012(assosupplemented,the"Indenture "),andshallbeconditionedupontheClosing.TheCompanyshallcomplywiththeprovisionsinArticleIVoftheIndenturerelatingtotheredemptionoftheCompanyNotesandshallprovideParentareasonableopportunitytoreviewandcommentonanydocumentsdeliveredbytheCompanytotheNoteholdersortheTrusteeinconnectionwiththeredemption.
ARTICLEVI.
CONDITIONSTOTHEMERGER
Section6.1 Conditions to Each Party's Obligation to Effect the Merger .TherespectiveobligationsofeachPartytoeffecttheMergershallbesubjecttothefulfillment(orwaiverbyallParties,totheextentpermissibleunderapplicableLaw)atorpriortotheEffectiveTimeofthefollowingconditions:
(a)TheCompanyShareholderApprovalshallhavebeenobtained.
(b)Theresolutionreferredtoinclause(a)ofthedefinitionofParentShareholderResolutionsshallhavebeenpassed.
(c)TheParentClassAOrdinarySharestobeissuedintheMergershallhavebeenapprovedforlistingontheNYSE,subjecttoofficialnoticeofissuance.
(d)TheFormS-4shallhavebecomeeffectiveundertheSecuritiesAct,nostopordersuspendingtheeffectivenessoftheFormS-4shallhavebeenissuedandnoproceedingsforthatpurposeshallhavebeeninitiatedorthreatenedbytheSEC.
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(e)NoinjunctionbyanycourtorothertribunalofcompetentjurisdictionshallhavebeenenteredandshallcontinuetobeineffectandnoLawshallhavebeenadoptedorbeeffective,ineachcasethatprohibitstheconsummationoftheMerger.
(f)AllwaitingperiodsapplicabletotheMergerundertheHSRAct,includinganysecondaryacquisitionnotificationspursuantto16C.F.R.§801.4,shallhaveexpiredorbeenterminated.
(g)SincethedateofthisAgreement,thereshallhavebeennoAdverse7874TaxLawChange.
Section6.2 Conditions to Obligation of the Company to Effect the Merger .TheobligationoftheCompanytoeffecttheMergerisfurthersubjecttothefulfillment(orwaiverbytheCompany)atorpriortotheEffectiveTimeofthefollowingconditions:
(a)TherepresentationsandwarrantiesofParentandMergerSubsetforthin(i)thisAgreement(otherthaninSections 4.1(c) ,4.1(d) and4.7(b) )shallbetrueandcorrectbothatandasofthedateofthisAgreementandatandasoftheClosingDateasthoughmadeatandasoftheClosingDate,exceptwheresuchfailurestobesotrueandcorrect(withoutregardto"materiality,"ParentMaterialAdverseEffectandsimilarqualifierscontainedinsuchrepresentationsandwarranties)wouldnot,individuallyorintheaggregate,haveaParentMaterialAdverseEffect,(ii)Sections 4.1(c) and4.1(d) shallbetrueandcorrectatandasofthedateofthisAgreementandatandasoftheClosingDateasthoughmadeatandasoftheClosingDate,exceptforanydeminimis inaccuracies,and(iii)Section 4.7(b) shallbetrueandcorrectbothatandasofthedateofthisAgreementandatandasoftheClosingDateasthoughmadeatandasoftheClosingDate;provided ,however ,thatrepresentationsandwarrantiesthataremadeasofaparticulardateorperiodneedbetrueandcorrect(inthemannersetforthinclauses(i),(ii)and(iii),asapplicable)onlyasofsuchdateorperiod.
(b)EachofParentandMergerSubshallhaveinallmaterialrespectsperformedallobligationsandcompliedwithallcovenantsrequiredbythisAgreementtobeperformedorcompliedwithbyitpriortotheEffectiveTime.
(c)ParentshallhavedeliveredtotheCompanyacertificate,datedtheClosingDateandsignedbytheChiefExecutiveOfficeroranotherseniorofficer,certifyingtotheeffectthattheconditionssetforthinSection 6.2(a) andSection 6.2(b) havebeensatisfied.
Section6.3 Conditions to Obligation of Parent and Merger Sub to Effect the Merger. TheobligationofParentandMergerSubtoeffecttheMergerisfurthersubjecttothefulfillment(orthewaiverbyParent)atorpriortotheEffectiveTimeofthefollowingconditions:
(a)TherepresentationsandwarrantiesoftheCompanysetforthin(i)thisAgreement(otherthaninSections 3.1(c) ,3.1(d) and3.7(b) )shallbetrueandcorrectbothatandasofthedateofthisAgreementandatandasoftheClosingDateasthoughmadeatandasoftheClosingDate,exceptwheresuchfailurestobesotrueandcorrect(withoutregardto"materiality,"theCompanyMaterialAdverseEffectandsimilarqualifierscontainedinsuchrepresentationsandwarranties)wouldnot,individuallyorintheaggregate,haveaCompanyMaterialAdverseEffect,(ii)Sections 3.1(c) and3.1(d) shallbetrueandcorrectatandasofthedateofthisAgreementandatandasoftheClosingDateasthoughmadeatandasoftheClosingDate,exceptforanydeminimis inaccuracies,and(iii)Section 3.7(b) shallbetrueandcorrectbothatandasofthedateofthisAgreementandatandasoftheClosingDateasthoughmadeatandasoftheClosingDate;provided ,however ,thatrepresentationsandwarrantiesthataremadeasofaparticulardateorperiodneedbetrueandcorrect(inthemannersetforthinclauses(i),(ii)and(iii),asapplicable)onlyasofsuchdateorperiod.
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(b)TheCompanyshallhaveinallmaterialrespectsperformedallobligationsandcompliedwithallcovenantsrequiredbythisAgreementtobeperformedorcompliedwithbyitpriortotheEffectiveTime.
(c)TheCompanyshallhavedeliveredtoParentacertificate,datedtheClosingDateandsignedbyitsChiefExecutiveOfficeroranotherseniorofficer,certifyingtotheeffectthattheconditionssetforthinSection 6.3(a) andSection 6.3(b) havebeensatisfied.
(d)Allconsentsof,orfilingswith,theGovernmentalEntitiessetforthinSchedule6.3(d)shallhavebeenobtainedandanyapplicablewaitingperiodwithrespecttheretoshallhaveexpiredorbeenterminated,asthecasemaybe.
Section6.4 Frustration of Closing Conditions. NeithertheCompanynorParentorMergerSubmayrely,eitherasabasisfornotconsummatingtheMergerorterminatingthisAgreementandabandoningtheMerger,onthefailureofanyconditionsetforthinSection 6.1 ,Section 6.2 orSection 6.3 ,asthecasemaybe,tobesatisfiedifsuchfailurewascausedbysuchParty'swillfulandintentionalmaterialbreachofanymaterialprovisionofthisAgreement.
ARTICLEVII.
TERMINATION
Section7.1 Termination or Abandonment. NotwithstandinganythinginthisAgreementtothecontrary,thisAgreementmaybeterminatedandabandonedatanytimepriortotheEffectiveTime:
(a)bythemutualwrittenconsentoftheCompany,ParentandMergerSub;
(b)byeithertheCompanyorParent,iftheMergershallnothavebeenconsummatedonorpriortoFebruary28,2018(the"End Date ");provided ,however ,thatifalloftheconditionstoClosing,otherthantheconditionssetforthinSection 6.1(f) orSection 6.3(d) ,shallhavebeensatisfiedorshallbecapableofbeingsatisfiedatsuchtime,theEndDatemaybeextendedbyeithertheCompanyorParentfromtimetotimebywrittennoticetotheotherPartyuptoadatenotbeyondMay29,2018,thelatestofanyofwhichdatesshallthereafterbedeemedtobetheEndDate;andprovided ,further ,thattherighttoterminatethisAgreementpursuanttothisSection 7.1(b) shallnotbeavailabletoaPartyifthefailureoftheClosingtooccurbysuchdateshallbeduetothematerialbreachbysuchPartyofanyrepresentation,warranty,covenantorotheragreementofsuchPartysetforthinthisAgreement;
(c)byeithertheCompanyorParent,ifaninjunctionshallhavebeenenteredpermanentlyrestraining,enjoiningorotherwiseprohibitingtheconsummationoftheMergerandsuchinjunctionshallhavebecomefinalandnonappealable;provided ,however ,thattherighttoterminatethisAgreementunderthisSection 7.1(c) shallnotbeavailabletoaPartyifsuchinjunctionwasprimarilyduetothefailureofsuchPartytoperformanyofitsobligationsunderthisAgreement;
(d)byeithertheCompanyorParent,iftheCompanyShareholderMeeting(includinganyadjournmentsorpostponementsthereof)shallhaveconcludedandtheCompanyShareholderApprovalshallnothavebeenobtained;provided ,however ,thattherighttoterminatethisAgreementunderthisSection 7.1(d) shallnotbeavailabletotheCompanywherethefailuretoobtaintheCompanyShareholderApprovalisproximatelycausedbyabreachbytheCompanyofSection 5.4 ;
(e)byeithertheCompanyorParent,iftheParentShareholderMeeting(includinganyadjournmentsorpostponementsthereof)shallhaveconcludedandtheresolutionreferredtoinclause(a)ofthedefinitionofParentShareholderResolutionsshallnothavebeenpassed;provided ,however ,thattherighttoterminatethisAgreementunderthisSection 7.1(e) shallnotbeavailable
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toParentwherethefailuretopasstheresolutionreferredtoinclause(a)ofthedefinitionofParentShareholderResolutionsisproximatelycausedbyabreachbyParentofSection 5.5 ;
(f)bytheCompany,ifeitherParentorMergerSubshallhavebreachedorfailedtoperformanyofitsrepresentations,warranties,covenantsorotheragreementscontainedinthisAgreement,whichbreachorfailuretoperform(i)ifitoccurredorwascontinuingtooccurontheClosingDate,wouldresultinafailureofaconditionsetforthinSection 6.2(a) orSection 6.2(b) and(ii)byitsnature,cannotbecuredpriortotheEndDateor,ifsuchbreachorfailureiscapableofbeingcuredbytheEndDate,hasnotbeencuredwithintheearlierof(x)30calendardaysafterreceiptofnoticethereoffromtheCompanydescribingsuchbreachorfailureinreasonabledetailor(y)threebusinessdaysbeforetheEndDate(provided thattheCompanyisnottheninbreachofanyrepresentation,warranty,covenantorotheragreementcontainedhereinsuchthattheconditionssetforthinSection 6.3(a) andSection 6.3(b) shallnotbesatisfied);
(g)byParent,iftheCompanyshallhavebreachedorfailedtoperformanyofitsrepresentations,warranties,covenantsorotheragreementscontainedinthisAgreement,whichbreachorfailuretoperform(i)ifitoccurredorwascontinuingtooccurontheClosingDate,wouldresultinafailureofaconditionsetforthinSection 6.3(a) orSection 6.3(b) and(ii)byitsnature,cannotbecuredpriortotheEndDateor,ifsuchbreachorfailureiscapableofbeingcuredbytheEndDate,hasnotbeencuredwithintheearlierof(x)30calendardaysafterreceiptofnoticethereoffromParentdescribingsuchbreachorfailureinreasonabledetailor(y)threebusinessdaysbeforetheEndDate(provided thatneitherParentnorMergerSubistheninbreachofanyrepresentation,warranty,covenantorotheragreementcontainedhereinsuchthattheconditionssetforthinSection 6.2(a) andSection 6.2 (b) shallnotbesatisfied);
(h)bytheCompany,(i)intheeventofaParentAdverseRecommendationChangeor(ii)uponanyuncuredmaterialbreachbyParentofitsobligationsunderSection 5.5 ;
(i)byParent,(i)intheeventofaCompanyAdverseRecommendationChangeor(ii)uponanyuncuredmaterialbreachbytheCompanyofitsobligationsunderSection 5.4 ;
(j)bytheCompany,if,atanytimepriortothereceiptoftheCompanyShareholderApproval,theCompanyshallhave(i)effectedaCompanyAdverseRecommendationChangeinaccordancewithSection 5.4 inordertoacceptaCompanySuperiorProposal,(ii)enteredintoadefinitiveagreementwithrespecttosuchCompanySuperiorProposalconcurrentlywiththeterminationofthisAgreementinaccordancewiththisSection 7.1(j) and(iii)paidtheCompanyTerminationFeetoParentinaccordancewithSection 7.3(a)(vii) ;and
(k)byParent,if,atanytimepriortothereceiptoftheParentShareholderApproval,ParentBoardshallhave(i)effectedaParentAdverseRecommendationChangeinaccordancewithSection 5.5 inordertoacceptaParentSuperiorProposal,(ii)enteredintoadefinitiveagreementwithrespecttosuchParentSuperiorProposalconcurrentlywiththeterminationofthisAgreementinaccordancewiththisSection 7.1(k) and(iii)paidtheParentTerminationFeetotheCompanyinaccordancewithSection 7.3(a)(viii) .
AnyterminationpursuanttothisSection 7.1 (otherthanpursuanttoSection 7.1(a) )shallbeeffectedbywrittennoticefromtheterminatingPartytotheotherParties.
Section7.2 Effect of Termination. IntheeventofthevalidterminationofthisAgreementpursuanttoSection 7.1 ,thisAgreementshallterminate(exceptfortheprovisionsofthisSection 7.2 ,Section 7.3 andArticle VIII ),andthereshallbenootherliabilityonthepartofanyPartytotheotherexceptasprovidedinSection 7.3 andliabilityarisingoutof,ortheresultof,fraudoranywillfulorintentionalbreachofanycovenantoragreementorwillfulorintentionalbreachofanyrepresentationorwarrantyinthisAgreementoccurringpriortoterminationorasprovidedforintheConfidentiality
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Agreement,inwhichcasetheaggrievedPartyshallbeentitledtoallrightsandremediesavailableatLaworinequity.
Section7.3 Termination Fees.
(a)If,butonlyif,thisAgreementisterminated:
(i)(A)byParentortheCompanypursuanttoSection 7.1(b) [EndDate]orSection 7.1(d) [NoCompanyShareholderApproval]orbyParentpursuanttoSection 7.1(i)(ii) [BreachofNoShop]and(B)(x)aTakeoverProposalhasbeenmadetotheCompanyortheCompanyShareholdersafterthedatehereoforanypersonshallhavepubliclyannouncedanintention(whetherornotconditional)tomakeaTakeoverProposal,(y)suchTakeoverProposalorintentiontomakeaTakeoverProposalwaspubliclydisclosedpriortothetimeofsuchterminationandaTakeoverProposalremainedpendingasofthedateofsuchtermination,and(z)withintwelvemonthsaftertheterminationofthisAgreement,(1)theCompanyentersintoadefinitiveagreementfortheconsummationofaTakeoverProposalor(2)aTakeoverProposalisconsummated,thentheCompanyshallpay,orcausetobepaid,toParenttheCompanyTerminationFeewithintwobusinessdaysaftertheconsummationoftheTakeoverProposal(provided ,however ,thatforpurposesofthisSection 7.3(a)(i) ,thereferencesto"20%ormore"inthedefinitionofTakeoverProposalshallbedeemedtobereferencesto"morethan50%");
(ii)(A)byParentortheCompanypursuanttoSection 7.1(b) [EndDate]orbytheCompanypursuanttoSection 7.1(h)(ii) [BreachofNoShop]and(B)(x)aTakeoverProposalhasbeenmadetoParentortheParentShareholdersafterthedatehereoforanypersonshallhavepubliclyannouncedanintention(whetherornotconditional)tomakeaTakeoverProposal,(y)suchTakeoverProposalorintentiontomakeaTakeoverProposalwaspubliclydisclosedpriortothetimeofsuchterminationandaTakeoverProposalremainedpendingasofthedateofsuchtermination,and(z)withintwelvemonthsaftertheterminationofthisAgreement,(1)ParententersintoadefinitiveagreementfortheconsummationofaTakeoverProposalor(2)aTakeoverProposalisconsummated,thenParentshallpay,orcausetobepaid,totheCompanytheParentTerminationFeewithintwobusinessdaysaftertheconsummationoftheTakeoverProposal(provided ,however ,thatforpurposesofthisSection 7.3(a)(ii) ,thereferencesto"20%ormore"inthedefinitionofTakeoverProposalshallbedeemedtobereferencesto"morethan50%");
(iii)bytheCompanyorParentpursuanttoSection 7.1(e) [NoParentShareholderApproval]orbytheCompanypursuanttoSection 7.1(h)(i)[ParentRecommendationChange]inresponsetoaParentInterveningEvent,thenParentshallpay,orcausetobepaid,totheCompanytheParentTerminationFeepromptly,andinanyeventnotmorethantwobusinessdaysfollowingsuchtermination;
(iv)byParentpursuanttoSection 7.1(i)(i) [CompanyRecommendationChange]inresponsetoaCompanyInterveningEvent,thentheCompanyshallpay,orcausetobepaid,toParenttheCompanyTerminationFeepromptly,andinanyeventnotmorethantwobusinessdaysfollowingsuchtermination;
(v)bytheCompanyorParentpursuanttoSection 7.1(d) [NoCompanyShareholderApproval],orbyParentpursuanttoSection 7.1(g)[CompanyBreachofRepresentationsandCovenants],thentheCompanyshallpay,orcausetobepaid,toParenttheExpenseReimbursementAmountpromptly,andinanyeventnotmorethantwobusinessdaysfollowingsuchtermination;provided thatthepaymentbytheCompanyoftheExpenseReimbursementAmountpursuanttothisSection 7.3(a)(v) shallnotrelievetheCompanyofanysubsequentobligationtopaytheCompanyTerminationFeeunderSection 7.3 exceptto
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theextentindicatedinsuchsection;provided further that,totheextentaCompanyTerminationFeebecomespayable,anypaymentpreviouslymadepursuanttothisSection 7.3(a)(v) shallbecreditedagainstsuchobligationoftheCompanytopaytheCompanyTerminationFee;
(vi)bytheCompanypursuanttoSection 7.1(f) [Parent/MergerSubBreachofRepresentationsandCovenants],thenParentshallpay,orcausetobepaid,totheCompanytheExpenseReimbursementAmountpromptly,andinanyeventnotmorethantwobusinessdaysfollowingsuchtermination;provided thatthepaymentbyParentoftheExpenseReimbursementAmountpursuanttothisSection 7.3(a)(vi) shallnotrelievetheCompanyofanysubsequentobligationtopaytheParentTerminationFeeunderSection 7.3 excepttotheextentindicatedinsuchsection;providedfurther that,totheextentaParentTerminationFeebecomespayable,anypaymentpreviouslymadepursuanttothisSection 7.3(a)(vi) shallbecreditedagainstsuchobligationoftheParenttopaytheParentTerminationFee;
(vii)bytheCompanypursuanttoSection 7.1(j) [CompanySuperiorProposal],concurrentlywith,andasaconditionto,suchtermination,theCompanyshallpayorcausetobepaidtoParenttheCompanyTerminationFee;or
(viii)byParentpursuanttoSection 7.1(k) [ParentSuperiorProposal],concurrentlywith,andasaconditionto,suchtermination,ParentshallpayorcausetobepaidtotheCompanytheParentTerminationFee.
(b)"Company Termination Fee "shallmeanacashamountequalto$30,000,000."Parent Termination Fee "shallmeanacashamountequalto$50,000,000.NotwithstandinganythingtothecontraryinthisAgreement,iftheCompanyTerminationFeeorParentTerminationFeeshallbecomedueandpayableinaccordancewiththisSection 7.3 ,fromandaftersuchterminationandpaymentthereofpursuanttoandinaccordancewiththisSection 7.3 ,thePartypayingtheCompanyTerminationFeeorParentTerminationFeeshallhavenofurtherliabilityofanykindforanyreasoninconnectionwiththisAgreementortheterminationcontemplatedherebyotherthanasprovidedunderthisSection 7.3 .PaymentbytheCompanyoftheCompanyTerminationFeeorpaymentbyParentoftheParentTerminationFee,asapplicable,shallnotrelievetheCompanyorParent,asapplicable,fromanyliabilityordamageresultingfromfraudorawillfulandmaterialbreachbysuchPartyofthisAgreement;provided that,notwithstandingtheforegoing,(A)ifParentacceptspaymentoftheCompanyTerminationFeeinconnectionwithaterminationpursuanttoSection 7.1(i)(ii) ,noneoftheCompany,anyofitsSubsidiariesoranyoftheirrespectiveformer,currentorfutureofficers,directors,partners,shareholders,managers,members,affiliatesoragentsshallhaveanyfurtherliabilityorobligationrelatingtoorarisingoutofthisAgreementorthetransactionscontemplatedhereby,and(B)iftheCompanyacceptspaymentoftheParentTerminationFeeinconnectionwithaterminationpursuanttoSection 7.1(h)(ii) ,noneofParent,anyofitsSubsidiariesoranyoftheirrespectiveformer,currentorfutureofficers,directors,partners,shareholders,managers,members,affiliatesoragentsshallhaveanyfurtherliabilityorobligationrelatingtoorarisingoutofthisAgreementorthetransactionscontemplatedhereby.EachofthePartiesheretoacknowledgesthatneithertheCompanyTerminationFeenortheParentTerminationFeeisintendedtobeapenalty,butratherliquidateddamagesinareasonableamountthatwillcompensateaPartyinthecircumstancesinwhichsuchfeeisdueandpayableandwhichdonotinvolvefraudorwillfulandmaterialbreach,fortheeffortsandresourcesexpendedandopportunitiesforegonewhilenegotiatingthisAgreementandinrelianceonthisAgreementandontheexpectationoftheconsummationofthetransactionscontemplatedhereby,whichamountwouldotherwisebeimpossibletocalculatewithprecision.InnoeventshalltheCompanyorParentbeentitledtomorethanonepaymentoftheCompanyTerminationFeeorParentTerminationFee,asthecasemaybe,inconnectionwithaterminationofthisAgreementpursuanttowhichtheCompanyTerminationFeeorParentTerminationFeeispayable."ExpenseReimbursement Amount "meansanamount,nottoexceed$10,000,000,equaltothereasonableout-of-pocketfeesand
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expenses,incurredbyoronbehalfofthepersonentitledtopayment,inconnectionwiththepreparation,negotiation,executionandperformanceofthisAgreementandthetransactionscontemplatedhereby,butexcludinganyVATforwhichParent(oranymemberofaVATgroupingarrangementofwhichParentisamember)isentitledtoarefund,repaymentorcreditfromanyrelevanttaxauthority.
(c)EachoftheCompanyandParentacknowledgesthattheagreementscontainedinthisSection 7.3 areanintegralpartofthetransactionscontemplatedhereby,andthat,withouttheseagreements,theCompanyandParentwouldnotenterintothisAgreement.Accordingly,iftheCompanyorParentfailstopayinatimelymanneranyamountduepursuanttothisSection 7.3 ,then(i)theCompanyorParent,asapplicable,shallreimbursethePartyentitledtotheCompanyTerminationFeeorParentTerminationFeeforallcostsandexpenses(includingdisbursementsandreasonablefeesofcounsel)incurredinthecollectionofsuchoverdueamount,includinginconnectionwithanyrelatedActionscommencedand(ii)theCompanyorParent,asapplicable,shallpaytothePartyentitledtotheCompanyTerminationFeeorParentTerminationFeeinterestonsuchamountfromandincludingthedatepaymentofsuchamountwasduetobutexcludingthedateofactualpaymentattheprimeratesetforthinTheWallStreetJournalineffectonthedatesuchpaymentwasrequiredtobemadeplus2%.
(d)TheCompanyconfirmsthatitisestablishedoutsideoftheEuropeanUnionforVATpurposes.
ARTICLEVIII.
MISCELLANEOUS
Section8.1 No Survival. Noneoftherepresentations,warranties,covenantsandagreementsinthisAgreementorinanyinstrumentdeliveredpursuanttothisAgreementshallsurvivetheMerger,exceptfor:(a)thecovenantsandagreementsofthePartiesinSection 5.3(b) ,Section 7.2 ,Section 7.3 andthisArticle VIII;(b)thecovenantsandagreementsofParentinSection 5.10 ;and(c)anycovenantsandagreementswhichcontemplateperformanceaftertheEffectiveTimeorotherwiseexpresslybytheirtermssurvivetheEffectiveTime.
Section8.2 Expenses. ExceptassetforthinSection 7.3 ,whetherornottheMergerisconsummated,allcostsandexpensesincurredinconnectionwiththeMerger,thisAgreementandthetransactionscontemplatedherebyshallbepaidbythePartyincurringorrequiredtoincursuchexpenses;provided ,however ,thateachoftheCompanyandParentshallpayandbearone-halfofallfilingfeesrequiredundertheHSRActorotherantitrust,competition,foreigninvestmentorsimilarLawsoutsideoftheUnitedStates.ExceptasotherwiseprovidedinthisAgreement,alltransfer,documentary,sales,use,stamp(includinganyliabilitytoanyUKstampdutyorUKstampdutyreservetaxinrespectoftheMergerConsideration),registrationandothersubstantiallysimilarTaxesandfees(includinganypenaltiesandinterest)incurredinconnectionwiththeissueanddeliveryoftheMergerConsiderationtoholdersofCompanySharesinaccordancewiththisAgreementbutnot,fortheavoidanceofdoubt,inrespectofanysubsequenttransfersordealingsintheParentOrdinarySharescomprisingtheMergerConsideration(collectively,"Transfer Taxes ")shallbepaidbyParentwhendue,andParentshall,atitsownexpense,fileallnecessarydocumentationwithrespecttoallsuchTransferTaxes.
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Section8.3 Counterparts; Effectiveness. ThisAgreementmaybeexecutedintwoormorecounterparts,eachofwhichshallbeanoriginal,withthesameeffectasifthesignaturestheretoandheretowereuponthesameinstrument,andshallbecomeeffectivewhenoneormorecounterpartshavebeensignedbyeachofthePartiesanddelivered(bytelecopy,electronicdeliveryorotherwise)totheotherParties.SignaturestothisAgreementtransmittedbyfacsimiletransmission,byelectronicmailin"portabledocumentformat"(".pdf")form,orbyanyotherelectronicmeansintendedtopreservetheoriginalgraphicandpictorialappearanceofadocument,willhavethesameeffectasphysicaldeliveryofthepaperdocumentbearingtheoriginalsignature.
Section8.4 Governing Law. ThisAgreement,andallclaimsorcausesofaction(whetheratLaw,incontractorintortorotherwise)thatmaybebasedupon,ariseoutoforrelatetothisAgreementorthenegotiation,executionorperformancehereof,shallbegovernedbyandconstruedinaccordancewiththelawsoftheStateofTexas,withoutgivingeffecttoanychoiceorconflictoflawprovisionorrule(whetheroftheStateofTexasoranyotherjurisdiction)thatwouldcausetheapplicationofthelawsofanyjurisdictionotherthantheStateofTexas.
Section8.5 Jurisdiction; Specific Performance. ThePartiesagreethatirreparabledamagewouldoccurintheeventthatanyoftheprovisionsofthisAgreementwerenotperformed,orwerethreatenedtobenotperformed,inaccordancewiththeirspecifictermsorwereotherwisebreached.Itisaccordinglyagreedthat,inadditiontoanyotherremedythatmaybeavailabletoit,includingmonetarydamages,eachofthePartiesshallbeentitledtoaninjunctionorinjunctionstopreventbreachesofthisAgreementandtoenforcespecificallythetermsandprovisionsofthisAgreementexclusivelyinanyTexasStateorfederalcourtsittinginHouston,Texas(or,ifsuchcourtlackssubjectmatterjurisdiction,inanyappropriateTexasStateorfederalcourt)andallsuchrightsandremediesatlaworinequityshallbecumulative,exceptasmaybelimitedbySection 7.3 .ThePartiesfurtheragreethatnoPartytothisAgreementshallberequiredtoobtain,furnishorpostanybondorsimilarinstrumentinconnectionwithorasaconditiontoobtaininganyremedyreferredtointhisSection 8.5 andeachPartywaivesanyobjectiontotheimpositionofsuchrelieforanyrightitmayhavetorequiretheobtaining,furnishingorpostingofanysuchbondorsimilarinstrument.Inaddition,eachofthePartiesheretoirrevocablyagreesthatanylegalactionorproceedingwithrespecttothisAgreementandtherightsandobligationsarisinghereunder,orforrecognitionandenforcementofanyjudgmentinrespectofthisAgreementandtherightsandobligationsarisinghereunderbroughtbytheotherPartyheretooritssuccessorsorassigns,shallbebroughtanddeterminedexclusivelyinanyTexasStateorfederalcourtsittinginHouston,Texas(or,ifsuchcourtlackssubjectmatterjurisdiction,inanyappropriateTexasStateorfederalcourt).EachofthePartiesheretoherebyirrevocablysubmitswithregardtoanysuchactionorproceedingforitselfandinrespectofitsproperty,generallyandunconditionally,tothepersonaljurisdictionoftheaforesaidcourtsandagreesthatitwillnotbringanyactionrelatingtothisAgreementoranyofthetransactionscontemplatedbythisAgreementinanycourtotherthantheaforesaidcourts.EachofthePartiesheretoherebyirrevocablywaives,andagreesnottoassert,bywayofmotion,asadefense,counterclaimorotherwise,inanyactionorproceedingwithrespecttothisAgreement,(a)anyclaimthatitisnotpersonallysubjecttothejurisdictionoftheabovenamedcourts,(b)anyclaimthatitoritspropertyisexemptorimmunefromjurisdictionofanysuchcourtorfromanylegalprocesscommencedinsuchcourts(whetherthroughserviceofnotice,attachmentpriortojudgment,attachmentinaidofexecutionofjudgment,executionofjudgmentorotherwise)and(c)tothefullestextentpermittedbyapplicableLaw,anyclaimthat(i)thesuit,actionorproceedinginsuchcourtisbroughtinaninconvenientforum,(ii)thevenueofsuchsuit,actionorproceedingisimproperor(iii)thisAgreement,orthesubjectmatterhereof,maynotbeenforcedinorbysuchcourts.TothefullestextentpermittedbyapplicableLaw,eachofthePartiesheretoherebyconsentstotheserviceofprocessinaccordancewithSection 8.7 ;provided ,however ,thatnothinghereinshallaffecttherightofanypartytoservelegalprocessinanyothermannerpermittedbyLaw.
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Section8.6 WAIVER OF JURY TRIAL. EACHOFTHEPARTIESHERETOTOTHEFULLESTEXTENTPERMITTEDBYAPPLICABLELAWIRREVOCABLYWAIVESANYANDALLRIGHTTOTRIALBYJURYINANYLEGALPROCEEDINGARISING,DIRECTLYORINDIRECTLY,OUTOFORRELATINGTOTHISAGREEMENTORTHETRANSACTIONSCONTEMPLATEDHEREBYORTHEACTIONSOFTHECOMPANYORPARENTINTHENEGOTIATION,ADMINISTRATION,PERFORMANCEORENFORCEMENTTHEREOF.
Section8.7 Notices. Allnoticesandothercommunicationshereundershallbeinwritingandshallbedeemedgiven(a)uponpersonaldeliverytothePartytobenotified;(b)whenreceivedwhensentbyemailorfacsimilebythePartytobenotified;provided ,however ,thatnoticegivenbyemailorfacsimileshallnotbeeffectiveunlesseither(i)aduplicatecopyofsuchemailorfaxnoticeispromptlygivenbyoneoftheothermethodsdescribedinthisSection 8.7 or(ii)thereceivingPartydeliversawrittenconfirmationofreceiptforsuchnoticeeitherbyemailorfaxoranyothermethoddescribedinthisSection 8.7 ;or(c)whendeliveredbyacourier(withconfirmationofdelivery);ineachcasetothePartytobenotifiedatthefollowingaddress:
TotheCompany:AtwoodOceanics,Inc.15011KatyFreewaySuite800Houston,Texas77094Facsimile:(832)201-7093Attention:WalterA.BakerSeniorVicePresident,GeneralCounselandCorporateSecretary
withcopies(whichshallnotconstitutenotice)to:
Gibson,Dunn&Crutcher1221McKinneyStreetHouston,Texas77010Facsimile:(346)718-6901Attention:TullR.FloreyEmail:[email protected]
ToParentorMergerSub:Enscoplc6ChesterfieldGardensLondon,EnglandW1J5BQFacsimile:4402074090399Attention:MichaelT.McGuintySeniorVicePresident—GeneralCounselandSecretary
withcopies(whichshallnotconstitutenotice)to:Latham&WatkinsLLP811MainStreet,Suite3700Houston,Texas77002Facsimile:(713)546-5401Attention:SeanT.WheelerDebbieP.YeeEmail:[email protected]@lw.com
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SlaughterandMayOneBunhillRowLondon,UnitedKingdomEC1Y8YYFacsimile:44(0)2070905000Attention:HywelDaviesChrisMcGaffinEmail:[email protected]@slaughterandmay.com
ortosuchotheraddressasanyPartyshallspecifybywrittennoticesogiven,andsuchnoticeshallbedeemedtohavebeendeliveredasofthedatesotelecommunicatedorpersonallydelivered.AnyPartymaynotifyanyotherPartyofanychangestotheaddressoranyoftheotherdetailsspecifiedinthisparagraph;provided ,however ,thatsuchnotificationshallonlybeeffectiveonthedatespecifiedinsuchnoticeorfivebusinessdaysafterthenoticeisgiven,whicheverislater.Rejectionorotherrefusaltoacceptortheinabilitytodeliverbecauseofchangedaddressofwhichnonoticewasgivenshallbedeemedtobereceiptofthenoticeasofthedateofsuchrejection,refusalorinabilitytodeliver.
Section8.8 Assignment; Binding Effect. NeitherthisAgreementnoranyoftherights,interestsorobligationshereundershallbeassignedordelegatedbyaPartyheretowithoutthepriorwrittenconsentoftheotherParty.SubjecttothefirstsentenceofthisSection 8.8 ,thisAgreementshallbebindinguponandshallinuretothebenefitofthePartiesheretoandtheirrespectivesuccessorsandassigns.AnypurportedassignmentnotpermittedunderthisSectionshallbenullandvoid.
Section8.9 Severability. AnytermorprovisionofthisAgreementwhichisinvalidorunenforceableinanyjurisdictionshall,astothatjurisdiction,beineffectivetotheextentofsuchinvalidityorunenforceabilitywithoutrenderinginvalidorunenforceabletheremainingtermsandprovisionsofthisAgreementinanyotherjurisdiction.IfanyprovisionofthisAgreementissobroadastobeunenforceable,suchprovisionshallbeinterpretedtobeonlysobroadasisenforceable.
Section8.10 Entire Agreement. ThisAgreementtogetherwiththeexhibitshereto,schedulesheretoandtheConfidentialityAgreementconstitutetheentireagreement,andsupersedeallotherprioragreementsandunderstandings,bothwrittenandoral,betweentheParties,oranyofthem,withrespecttothesubjectmatterhereofandthereof,and,subjecttoSection 5.10 ,thisAgreementisnotintendedtograntstandingtoanypersonotherthanthePartieshereto.
Section8.11 Amendments; Waivers. AtanytimepriortotheEffectiveTime,whetherbeforeorafterreceiptoftheCompanyShareholderApprovalorthepassingoftheParentShareholderResolutions,anyprovisionofthisAgreementmaybeamendedorwaivedif,andonlyif,suchamendmentorwaiverisinwritingandsigned,inthecaseofanamendment,bytheCompany,ParentandMergerSub;provided ,however ,thatafterreceiptoftheCompanyShareholderApprovalorthepassingoftheParentShareholderResolutions,ifanysuchamendmentorwaivershallbyapplicableLaworinaccordancewiththerulesandregulationsoftheNYSErequirefurtherapprovaloftheCompanyShareholdersortheParentShareholders,asthecasemaybe,theeffectivenessofsuchamendmentorwaivershallbesubjecttotheapprovaloftheCompanyShareholdersortheParentShareholders,asthecasemaybe.Notwithstandingtheforegoing,nofailureordelaybyanyPartyheretoinexercisinganyrighthereundershalloperateasawaiverthereofnorshallanysingleorpartialexercisethereofprecludeanyotherorfurtherexerciseofanyotherrighthereunder.
Section8.12 Headings. HeadingsoftheArticlesandSectionsofthisAgreementareforconvenienceofthePartiesonlyandshallbegivennosubstantiveorinterpretiveeffectwhatsoever.ThetableofcontentstothisAgreementisforreferencepurposesonlyandshallnotaffectinanywaythemeaningorinterpretationofthisAgreement.
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Section8.13 No Third-Party Beneficiaries.
(a)EachoftheCompany,ParentandMergerSubagreesthat(i)theirrespectiverepresentations,warranties,covenantsandagreementssetforthhereinaresolelyforthebenefitoftheotherPartyhereto,inaccordancewithandsubjecttothetermsofthisAgreement,and(ii)exceptfortheprovisionsofSection 5.10 (the"Third Party Rights Clause "),thisAgreementisnotintendedto,anddoesnot,conferuponanypersonotherthanthePartiesheretoanyrightsorremedieshereunder,includingtherighttorelyupontherepresentationsandwarrantiessetforthherein.
(b)TheThirdPartyRightsClauseconfersabenefitoncertainpersonsnamedinSection 5.10 whoarenotaParty(eachforthepurposesofthisclausea"Third Party ")and,subjecttotheremainingprovisionsofthisclause,isintendedtobeenforceablebytheThirdPartybyvirtueoftheContracts(RightsofThirdParties)Act1999.
(c)ThePartiesdonotintendthatanytermofthisAgreement,apartfromtheThirdPartyRightsClause,shouldbeenforceable,byvirtueoftheContracts(RightsofThirdParties)Act1999,byanypersonwhoisnotaParty.
(d)Notwithstandingtheprovisionsofclauses(a)and(b)above,thisAgreementmayberescindedorvariedinanywayandatanytimebythePartieswithouttheconsentofanyThirdParty.
Section8.14 Interpretation. WhenareferenceismadeinthisAgreementtoanArticleorSection,suchreferenceshallbetoanArticleorSectionofthisAgreementunlessotherwiseindicated.Wheneverthewords"include,""includes"or"including"areusedinthisAgreement,theyshallbedeemedtobefollowedbythewords"withoutlimitation."Thewords"hereof,""herein"and"hereunder"andwordsofsimilarimportwhenusedinthisAgreementshallrefertothisAgreementasawholeandnottoanyparticularprovisionofthisAgreement,unlessthecontextotherwiserequires.IfthisAgreementrequiresthePartiesto"agree"orrequiresan"agreement"betweentheParties,such"agreements"mustbeinwriting,unlessspecificallyindicatedotherwise.AlltermsdefinedinthisAgreementshallhavethedefinedmeaningswhenusedinanycertificateorotherdocumentmadeordeliveredpursuanttheretounlessotherwisedefinedtherein.ThedefinitionscontainedinthisAgreementareapplicabletothesingularaswellasthepluralformsofsuchtermsandtothemasculineaswellastothefeminineandneutergendersofsuchterm.ReferencesinthisAgreementtospecificLawsortospecificprovisionsofLawsshallincludeallrulesandregulationspromulgatedthereunder,andanystatutedefinedorreferredtohereinorinanyagreementorinstrumentreferredtohereinshallmeansuchstatuteasfromtimetotimeamended,modifiedorsupplemented,includingbysuccessionofcomparablesuccessorstatutes.EachofthePartieshasparticipatedinthedraftingandnegotiationofthisAgreement.Ifanambiguityorquestionofintentorinterpretationarises,thisAgreementmustbeconstruedasifitisdraftedbyalltheParties,andnopresumptionorburdenofproofshallarisefavoringordisfavoringanyPartybyvirtueofauthorshipofanyoftheprovisionsofthisAgreement.
Section8.15 Definitions. AsusedinthisAgreement,thefollowingtermshavethemeaningssetforthbelow:
"Adverse 7874 Tax Law Change "meansanychangeinapplicableLaw(whetherornotsuchchangeinLawisyeteffective)withrespecttoSection7874oftheCode(oranyotherU.S.TaxLaw),orofficialinterpretationthereofassetforthinpublishedguidancebytheIRS(otherthanIRSNewsReleases)(whetherornotsuchchangeinofficialinterpretationisyeteffective),oranybillthatwouldimplementsuchachangewhichhasbeenpassedinidentical(orsubstantiallyidenticalsuchthataconferencecommitteeisnotrequiredpriortosubmissionofsuchlegislationforthePresident'sapprovalorveto)formbyboththeUnitedStatesHouseofRepresentativesandtheUnitedStatesSenateandforwhichthetimeperiodforthePresidentoftheUnitedStatestosignorvetosuchbillhasnotyetelapsed,ineachcase,that,onceeffective,morelikelythannot,asaresultoftheMerger,
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causesParenttobetreatedasaUnitedStatesdomesticcorporationforU.S.federalincometaxpurposes.
"affiliates "means,astoanyperson,anyotherpersonwhich,directlyorindirectly,controls,oriscontrolledby,orisundercommoncontrolwith,suchperson.Asusedinthisdefinition,"control"(including,withitscorrelativemeanings,"controlledby"and"undercommoncontrolwith")meansthepossession,directlyorindirectly,ofthepowertodirectorcausethedirectionofmanagementorpoliciesofaperson,whetherthroughtheownershipofsecuritiesorpartnershiporotherownershipinterests,bycontractorotherwise.
"Benefit Plan "meansaParentBenefitPlanoraCompanyBenefitPlan,asapplicable.
"business day "meansanydayotherthanaSaturday,SundayorotherdayonwhichthebanksintheStateofNewYorkareauthorizedbyLaworexecutiveordertoremainclosed.
"Code "meanstheUnitedStatesInternalRevenueCodeof1986,asamended.
"Collective Bargaining Agreement "meansanycollectivebargainingagreement,laborunioncontract,tradeunionagreement,oragreements,customs,practicesorarrangements(whetherlegallybindingornot)forcollectivebargainingorrecognitionwithanytradeunion,workscouncil,staffassociationorotherrepresentativebody.
"Companies Act "meanstheCompaniesAct2006,asamended.
"Company Bylaws "meanstheBy-LawsofAtwoodOceanics,Inc.,effectiveMarch7,2013.
"Company Charter "meanstheAmendedandRestatedCertificateofFormationofAtwoodOceanics,Inc.effectiveasofFebruary14,2013,asamendedbyAmendmentNo.1theretodatedFebruary19,2014.
"Company Financial Statements "meanstheconsolidatedfinancialstatements(includingallrelatednotesandschedulesthereto)oftheCompanyincludedintheCompanySECDocuments.
"Company Intervening Event "meansamaterialeventorcircumstancethat(a)wasnotknowntotheCompanyBoard,orthematerialconsequencesofwhich(basedonfactsknowntomembersoftheCompanyBoardasofthedateofthisAgreement)werenotreasonablyforeseeable,asofthedateofthisAgreement,(b)becomesknownbytheCompanyBoardpriortothereceiptoftheCompanyShareholderApprovaland(c)doesnotrelatetothereceipt,existenceortermsofaTakeoverProposalinvolvingtheCompany.
"Company IT Assets "meansthecomputers,software,servers,routers,hubs,switches,circuits,networks,datacommunicationslinesandallotherinformationtechnologyinfrastructureandequipmentoftheCompanyanditsSubsidiariesthatarerequiredinconnectionwiththecurrentoperationofthebusinessoftheCompanyanditsSubsidiaries.
"Company Material Adverse Effect "meansanevent,stateoffacts,circumstance,change,effect,development,occurrenceorcombinationoftheforegoingthathashad,orwouldbereasonablyexpectedtohave,amaterialadverseeffecton(A)theabilityoftheCompanytoconsummatetheMergerandtheothertransactionscontemplatedbythisAgreementor(B)thebusiness,condition(financialorotherwise)orresultsofoperationsoftheCompanyanditsSubsidiaries,takenasawhole,excludingforpurposesofthisclause(B)anyeffectresultingfromorarisingoutof:(1)changesingeneraleconomic,financialorothercapitalmarketconditions(includingprevailinginterestratesandaccesstocapitalmarkets),(2)anychangesordevelopmentsgenerallyintheindustriesinwhichtheCompanyoranyofitsSubsidiariesconductsitsbusiness,(3)theannouncementortheexistenceof,compliancewithorperformanceunder,thisAgreementorthetransactionscontemplatedhereby(including,subjecttothefollowingproviso,theimpactthereofontherelationships,contractualorotherwise,oftheCompanyoranyofitsSubsidiarieswithemployees,laborunions,customers,suppliers
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orpartners,andincludinganylawsuit,actionorotherproceedingbyshareholdersorotherwisewithrespecttotheMergeroranyoftheothertransactionscontemplatedbythisAgreement)(provided ,however ,thattheexceptionsinthisclause(3)shallnotapplytoanyrepresentationorwarrantycontainedinSection 3.2 orSection 3.19 (oranyportionthereof)totheextentthatthepurposeofsuchrepresentationorwarranty(orportionthereof)istoaddresstheconsequencesresultingfromtheexecutionanddeliveryofthisAgreementortheperformanceofobligationsorsatisfactionofconditionsunderthisAgreement),(4)anytakingofanyactionattherequestofParent,(5)anychangesordevelopmentsinpricesforoil,naturalgasorothercommodities,(6)anyadoption,implementation,promulgation,repealormodification,orannouncedintentiontodoanyoftheforegoing,followingthedateofthisAgreementofanyrule,regulation,ordinance,Order,protocoloranyotherLawoforbyanynational,regional,stateorlocalGovernmentalEntity,ormarketadministrator,(7)anychangesinGAAPoraccountingstandardsfollowingthedateofthisAgreement,(8)earthquakes,anyweather-relatedevent,naturaldisastersoroutbreakorescalationofhostilitiesoractsofwarorterrorism,(9)anyfailurebytheCompanyinandofitselftomeetanyfinancialprojectionsorforecastsorestimatesofrevenues,earningsorotherfinancialmetricsforanyperiod(provided thattheexceptioninthisclause(9)shallnotpreventorotherwiseaffectadeterminationthatanyevent,change,effect,developmentoroccurrenceunderlyingsuchfailurehasresultedin,orcontributedto,aCompanyMaterialAdverseEffectsolongasitisnototherwiseexcludedbythisdefinition),or(10)anychangesinthesharepriceortradingvolumeoftheCompanyCommonStock(provided thattheexceptioninthisclause(10)shallnotpreventorotherwiseaffectadeterminationthatanyevent,change,effect,developmentoroccurrenceunderlyingsuchchangehasresultedin,orcontributedto,aCompanyMaterialAdverseEffectsolongasitisnototherwiseexcludedbythisdefinition);except ,ineachcasewithrespecttoclauses(1),(2),(6),(7)and(8)totheextentdisproportionatelyaffectingtheCompanyanditsSubsidiaries,takenasawhole,relativetoothersimilarlysituatedcompaniesintheindustriesinwhichtheCompanyanditsSubsidiariesoperate;provided that,fortheavoidanceofdoubt,notwithstandinganythingtothecontraryabove,anyblowout,spill,explosion,orsimilaroccurrencewithrespecttoanyequipmentoperatedbytheCompanymaybetakenintoaccountindeterminingwhethertherehasbeenaCompanyMaterialAdverseEffect.
"Company Permitted Liens "means(A)anyLienforTaxesnotyetdueordelinquentorwhicharebeingcontestedingoodfaithbyappropriateproceedingsandforwhichadequatereserveshavebeenestablishedintheapplicablefinancialstatementsinaccordancewithGAAP,(B)vendors',mechanics',materialmens',carriers',workers',landlords',repairmen's,warehousemen's,constructionandothersimilarLiensarisingorincurredintheordinaryandusualcourseofbusinessandconsistentwithpastpracticeorwithrespecttoliabilitiesthatarenotyetdueandpayableor,ifdue,arenotdelinquentorarebeingcontestedingoodfaithbyappropriateproceedingsandforwhichadequatereserves(basedongoodfaithestimatesofmanagement)havebeensetasideforthepaymentthereof,(C)LiensimposedorpromulgatedbyapplicableLaworanyGovernmentalEntitywithrespecttorealproperty,includingzoning,buildingorsimilarrestrictions,(D)pledgesordepositsinconnectionwithworkers'compensation,unemploymentinsurance,andothersocialsecuritylegislation,(E)LiensrelatingtointercompanyborrowingsamongtheCompanyanditswhollyownedSubsidiaries,(F)Lienssecuringinterestrateprotectionagreementsorcurrencyrateprotectionagreementsincurredintheordinarycourseofbusinessandnotforspeculativepurposes,(G)banker'sLiensandcustomaryrightsofset-offorsimilarrightsandremediesastodepositaccountsorotherfundsmaintainedwithadepositoryinstitution,(H)LienssecuringobligationsundertheCompany'srevolvingcreditfacility,or(I)othernon-monetaryLiensthatdonot,individuallyorintheaggregate,materiallyinterferewiththepresentuse,ormateriallydetractfromthevalueof,thepropertyencumberedthereby.
"Company Shareholder "meansaholderofashareofCompanyCommonStockfromtimetotime.
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"Company Shareholder Approval "meanstheapprovalofthisAgreementandthetransactionscontemplatedhereby,includingtheMerger,bytheaffirmativevoteofCompanyShareholdersholdingatleasttwo-thirdsoftheoutstandingsharesofCompanyCommonStock.
"Company Stock Plans "means,collectively,theCompanyAmendedandRestated2001StockIncentivePlan,theAmendedandRestatedCompany2007Long-TermIncentivePlan,theCompany2013Long-TermIncentivePlanandanyotherplansorarrangementsoftheCompanyprovidingforthecompensatorygrantofawardsofsharesofCompanyCommonStockorawardsdenominated,inwholeorinpart,insharesofCompanyCommonStockoroptions,shareappreciationrightsorsimilarawardsrelatingtotheCompanyCommonStock,includinganyandallsuchplansofpredecessororacquiredentitiesthathavebeenassumedbytheCompany.
"Company Superior Proposal "meansabonafide,unsolicited,writtentheTakeoverProposal(A)thatifconsummatedwouldresultinathirdpartyacquiring,directlyorindirectly,morethan50%oftheoutstandingsharesofCompanyCommonStockormorethan50%oftheassetsoftheCompanyanditsSubsidiaries,takenasawhole,forconsiderationconsistingofcashand/orsecurities,(B)thattheCompanyBoarddeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorandoutsidelegalcounsel,isreasonablycapableofbeingcompleted,takingintoaccountallfinancial,legal,regulatoryandotheraspectsofsuchproposal,includingallconditionscontainedthereinandthepersonmakingsuchTakeoverProposaland(C)thattheCompanyBoarddeterminesingoodfaithafterconsultationwithitsoutsidefinancialadvisorandoutsidelegalcounsel(takingintoaccountanychangestothisAgreementproposedbyParentinresponsetosuchTakeoverProposal,andallfinancial,legal,regulatoryandotheraspectsofsuchTakeoverProposal,includingallconditionscontainedthereinandthepersonmakingsuchproposal,andthisAgreement),ismorefavorablefromafinancialpointofviewtotheCompanyShareholdersthantheMerger.
"Environmental Law "meansanyLawrelatingtotheprotection,preservationorrestorationoftheenvironment(includingair,surfacewater,groundwater,drinkingwatersupply,surfaceland,subsurfaceland,plantandanimallifeoranyothernaturalresource),oranyexposuretoorreleaseof,orthemanagementof(includingtheuse,storage,recycling,treatment,generation,transportation,processing,handling,labeling,productionordisposalofanyHazardousMaterials).
"ERISA "meanstheEmployeeRetirementIncomeSecurityActof1974,asamended.
"ERISA Affiliate "means,withrespecttoanyentity,tradeorbusiness,anyotherentity,tradeorbusinessthatis,orwasattherelevanttime,amemberofagroupdescribedinSection414(b),(c),(m)or(o)oftheCodeorSection4001(b)(1)ofERISAthatincludesorincludedthefirstentity,tradeorbusiness,orthatis,orwasattherelevanttime,amemberofthesame"controlledgroup"asthefirstentity,tradeorbusinesspursuanttoSection4001(a)(14)ofERISA.
"Export Control Laws "meansallLawsandregulationsrelatedtotheregulationofimports,exports,re-exports,transfers,releases,shipments,transmissionsoranyotherprovisionorreceiptofgoods,technology,softwareorservices,including(a)theUnitedStatesInternationalTrafficinArmsRegulationsadministeredbytheUnitedStatesStateDepartment'sDirectorateofDefenseTradeControls;(b)theExportAdministrationRegulationsadministeredbytheUnitedStatesCommerceDepartment(includingtheantiboycottregulationsadministeredbytheOfficeofAntiboycottCompliance);(c)nuclearexportregulationsadministeredbytheUnitedStatesNuclearRegulatoryCommissionandtheUnitedStatesDepartmentofEnergy;(d)UnitedStatescustomsregulationsadministeredbytheUnitedStatesCustomsandBorderProtection;(e)theEUDual-UseRegulation,CouncilRegulation(EC)No428/2009(andassociatedamendments);and(f)allotherapplicableimportandexportcontrolsinthecountriesinwhichthepartyconductsbusiness.
"Hazardous Materials "meansallsubstancesdefinedasHazardousSubstances,Oils,PollutantsorContaminantsintheU.S.NationalOilandHazardousSubstancesPollutionContingencyPlan,
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40C.F.R.§300.5,ordefinedassuchby,orregulatedbyanyGovernmentalEntityassuchunder,anyEnvironmentalLaw,includinganyregulatedpollutantorcontaminant(includinganyconstituent,rawmaterial,productorby-productthereof),petroleumornaturalgashydrocarbonsoranyliquidorfractionthereof,asbestosorasbestos-containingmaterial,polychlorinatedbiphenyls,leadpaint,anyhazardous,industrialorsolidwaste,biologicalmaterial,andanytoxic,radioactiveorhazardoussubstance,materialoragent.
"knowledge "means(i)withrespecttotheCompanyanditsSubsidiaries,theactualknowledgeoftheindividualslistedonSection8.15oftheCompanyDisclosureScheduleand(ii)withrespecttoParentanditsSubsidiaries,theactualknowledgeoftheindividualslistedinSection8.15oftheParentDisclosureSchedule.
"Order "meansanycharge,order,writ,injunction,judgment,decree,ruling,determination,directive,awardorsettlement,whethercivil,criminaloradministrativeandwhetherformalorinformal.
"Parent Class A Ordinary Shares "meanstheClassAOrdinarySharesinthesharecapitalofParent,eachwithanominalvalueof$0.10pershare.
"Parent Class B Ordinary Shares "meanstheClassBOrdinarySharesinthesharecapitalofParent,eachwithanominalvalueof£1.00pershare.
"Parent Closing Price "meanstheaverage,roundedtothenearestonetenthofacent,oftheclosingsalespricesofParentClassAOrdinarySharesontheNYSEasreportedbyTheWallStreetJournalforthetentradingdaysimmediatelyprecedingthedatewhichisfivetradingdaysimmediatelypriortothedateonwhichtheEffectiveTimeoccurs.
"Parent Financial Statements "meanstheconsolidatedfinancialstatements(includingallrelatednotesandschedulesthereto)ofParentincludedintheParentSECDocuments.
"Parent Intervening Event "meansamaterialeventorcircumstancethat(a)wasnotknowntotheParentBoard,orthematerialconsequencesofwhich(basedonfactsknowntomembersoftheParentBoardasofthedateofthisAgreement)werenotreasonablyforeseeable,asofthedateofthisAgreement,(b)becomesknownbytheParentBoardpriortothereceiptoftheParentShareholderApprovaland(c)doesnotrelatetothereceipt,existenceortermsofaTakeoverProposalinvolvingParent.
"Parent IT Assets "meansthecomputers,software,servers,routers,hubs,switches,circuits,networks,datacommunicationslinesandallotherinformationtechnologyinfrastructureandequipmentofParentanditsSubsidiariesthatarerequiredinconnectionwiththecurrentoperationofthebusinessofParentanditsSubsidiaries.
"Parent Material Adverse Effect "meansanevent,stateoffacts,circumstance,change,effect,development,occurrenceorcombinationoftheforegoingthathashad,orwouldbereasonablyexpectedtohave,amaterialadverseeffecton(A)theabilityofParenttoconsummatetheMergerandtheothertransactionscontemplatedbythisAgreementor(B)thebusiness,condition(financialorotherwise)orresultsofoperationsofParentanditsSubsidiaries,takenasawhole,excludingforpurposesofthisclause(B)anyeffectresultingfromorarisingoutof:(1)changesingeneraleconomic,financialorothercapitalmarketconditions(includingprevailinginterestratesandaccesstocapitalmarkets),(2)anychangesordevelopmentsgenerallyintheindustriesinwhichParentoranyofitsSubsidiariesconductsitsbusiness,(3)theannouncementortheexistenceof,compliancewithorperformanceunder,thisAgreementorthetransactionscontemplatedhereby(including,subjecttothefollowingproviso,theimpactthereofontherelationships,contractualorotherwise,ofParentoranyofitsSubsidiarieswithemployees,laborunions,customers,suppliersorpartners,andincludinganylawsuit,actionorotherproceedingbyshareholdersorotherwisewithrespecttotheMergeroranyoftheothertransactionscontemplatedbythisAgreement)(provided ,however ,thattheexceptionsinthis
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clause(3)shallnotapplytoanyrepresentationorwarrantycontainedinSection 4.2 orSection 4.19 (oranyportionthereof)totheextentthatthepurposeofsuchrepresentationorwarranty(orportionthereof)istoaddresstheconsequencesresultingfromtheexecutionanddeliveryofthisAgreementortheperformanceofobligationsorsatisfactionofconditionsunderthisAgreement),(4)anytakingofanyactionattherequestoftheCompany,(5)anychangesordevelopmentsinpricesforoil,naturalgasorothercommodities,(6)anyadoption,implementation,promulgation,repealormodification,orannouncedintentiontodoanyoftheforegoing,followingthedateofthisAgreementofanyrule,regulation,ordinance,Order,protocoloranyotherLawoforbyanynational,regional,stateorlocalGovernmentalEntity,ormarketadministrator,(7)anychangesinGAAPoraccountingstandardsfollowingthedateofthisAgreement,(8)earthquakes,anyweather-relatedevent,naturaldisastersoroutbreakorescalationofhostilitiesoractsofwarorterrorism,(9)anyfailurebyParentinandofitselftomeetanyfinancialprojectionsorforecastsorestimatesofrevenues,earningsorotherfinancialmetricsforanyperiod(provided thattheexceptioninthisclause(9)shallnotpreventorotherwiseaffectadeterminationthatanyevent,change,effect,developmentoroccurrenceunderlyingsuchfailurehasresultedin,orcontributedto,aParentMaterialAdverseEffectsolongasitisnototherwiseexcludedbythisdefinition),or(10)anychangesinthesharepriceortradingvolumeofParentOrdinaryShares(provided thattheexceptioninthisclause(10)shallnotpreventorotherwiseaffectadeterminationthatanyevent,change,effect,developmentoroccurrenceunderlyingsuchchangehasresultedin,orcontributedto,aParentMaterialAdverseEffectsolongasitisnototherwiseexcludedbythisdefinition);except ,ineachcasewithrespecttoclauses(1),(2),(6),(7)and(8)totheextentdisproportionatelyaffectingParentanditsSubsidiaries,takenasawhole,relativetoothersimilarlysituatedcompaniesintheindustriesinwhichParentanditsSubsidiariesoperate;provided that ,fortheavoidanceofdoubt,notwithstandinganythingtothecontraryabove,anyblowout,spill,explosion,orsimilaroccurrencewithrespecttoanyequipmentoperatedbyParentmaybetakenintoaccountindeterminingwhethertherehasbeenaParentMaterialAdverseEffect.
"Parent Ordinary Shares "meanstheParentClassAOrdinarySharesandtheParentClassBOrdinaryShares.
"Parent Permitted Lien "means(A)anyLienforTaxesnotyetdueordelinquentorwhicharebeingcontestedingoodfaithbyappropriateproceedingsandforwhichadequatereserveshavebeenestablishedintheapplicablefinancialstatementsinaccordancewithGAAP,(B)vendors',mechanics',materialmens',carriers',workers',landlords',repairmen's,warehousemen's,constructionandothersimilarLiensarisingorincurredintheordinaryandusualcourseofbusinessandconsistentwithpastpracticeorwithrespecttoliabilitiesthatarenotyetdueandpayableor,ifdue,arenotdelinquentorarebeingcontestedingoodfaithbyappropriateproceedingsandforwhichadequatereserves(basedongoodfaithestimatesofmanagement)havebeensetasideforthepaymentthereof,(C)LiensimposedorpromulgatedbyapplicableLaworanyGovernmentalEntitywithrespecttorealproperty,includingzoning,buildingorsimilarrestrictions,(D)pledgesordepositsinconnectionwithworkers'compensation,unemploymentinsurance,andothersocialsecuritylegislation,(E)LiensrelatingtointercompanyborrowingsamongParentanditswhollyownedSubsidiaries,(F)Lienssecuringinterestrateprotectionagreementsorcurrencyrateprotectionagreementsincurredintheordinarycourseofbusinessandnotforspeculativepurposes,(G)banker'sLiensandcustomaryrightsofset-offorsimilarrightsandremediesastodepositaccountsorotherfundsmaintainedwithadepositoryinstitution,or(H)othernon-monetaryLiensthatdonot,individuallyorintheaggregate,materiallyinterferewiththepresentuse,ormateriallydetractfromthevalueof,thepropertyencumberedthereby.
"Parent Shareholder "meansaholderofParentClassAOrdinarySharesfromtimetotime.
"Parent Shareholder Approval "meansthepassingoftheresolutionreferredtoinclause(a)ofthedefinitionofParentShareholderResolutions.
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"Parent Shareholder Resolutions "meanstheresolutionsincludedintheProxyStatement/Prospectusto:(a)authorizetheParentBoardtoallotandissuetheParentClassAOrdinarySharestobeissuedintheMergerpursuanttoArticle II ,and(b)ifParentsodetermines,(i)authorizetheParentBoardtoallotandissueuptoanominalamountofParentOrdinarySharesrepresentingapproximately33%oftheenlargedsharecapitalofParentimmediatelyfollowingClosing,anduptoafurthersamenominalamountofParentOrdinarySharesinconnectionwithapre-emptiveofferingofshares,(ii)authorizetheParentBoardtoallotandissueuptoanominalamountofParentOrdinarySharesrepresentingapproximately5%oftheenlargedsharecapitalofParentimmediatelyfollowingClosingforcashonanon-pre-emptivebasis,and(iii)authorizetheParentBoardtofurtherallotandissueuptoanominalamountofParentOrdinarySharesrepresentingapproximately5%oftheenlargedsharecapitalofParentimmediatelyfollowingClosingforcashonanon-pre-emptivebasis,suchauthoritytobeusedonlyforthepurposesoffinancing(orrefinancing,ifthepoweristobeusedwithinsixmonthsaftertheoriginaltransaction)atransactionwhichtheParentBoarddeemstobeanacquisitionorothercapitalinvestment.
"Parent Stock Plans "means,collectively,theParent2012Long-TermIncentivePlan,theParentInternationalIncorporated2005Long-TermIncentivePlanthePrideInternational,Inc.1998Long-TermIncentivePlanandthePrideInternational,Inc.2007Long-TermIncentivePlanandanyotherplansorarrangementsofParentprovidingforthecompensatorygrantofawardsofParentOrdinarySharesorawardsdenominated,inwholeorinpart,inParentOrdinarySharesoroptions,shareappreciationrightsorsimilarawardsrelatingtoParentOrdinaryShares,includinganyandallsuchplansofpredecessororacquiredentitiesthathavebeenassumedbyParent.
"Parent Superior Proposal "meansabonafide,unsolicited,writtenTakeoverProposal(A)thatifconsummatedwouldresultinathirdpartyacquiring,directlyorindirectly,morethan50%oftheoutstandingsharesofParentOrdinarySharesormorethan50%oftheassetsofParentanditsSubsidiaries,takenasawhole,forconsiderationconsistingofcashand/orsecurities,(B)thattheParentBoarddeterminesingoodfaith,afterconsultationwithitsoutsidefinancialadvisorandoutsidelegalcounsel,isreasonablycapableofbeingcompleted,takingintoaccountallfinancial,legal,regulatoryandotheraspectsofsuchproposal,includingallconditionscontainedthereinandthepersonmakingsuchTakeoverProposaland(C)thattheParentBoarddeterminesingoodfaithafterconsultationwithitsoutsidefinancialadvisorandoutsidelegalcounsel(takingintoaccountanychangestothisAgreementproposedbytheCompanyinresponsetosuchTakeoverProposal,andallfinancial,legal,regulatoryandotheraspectsofsuchTakeoverProposal,includingallconditionscontainedthereinandthepersonmakingsuchproposal,andthisAgreement),ismorefavorablefromafinancialpointofviewtotheParentShareholdersthantheMerger.
"person "meansanindividual,apubliclimitedcompany,acorporation,apartnership,alimitedliabilitycompany,anassociation,atrustoranyotherentity,group(assuchtermisusedinSection13oftheExchangeAct)ororganization,includingaGovernmentalEntity,andanypermittedsuccessorsandassignsofsuchperson.
"Release "meansanyrelease,spill,emission,discharge,leaking,pumping,injection,deposit,disposal,dispersal,leachingormigrationintotheindoororoutdoorenvironment(includingambientair,surfacewater,groundwaterandsurfaceorsubsurfacestrata)orintooroutofanyproperty,includingthemovementofHazardousMaterialsthroughorintheair,soil,surfacewater,groundwaterorproperty.
"Relevant Authority "meanstheUnitedStatesDepartmentofJustice,theU.S.FederalTradeCommission,andanyUnitedStates,foreignorsupranational,federal,stateorlocalgovernmentalcommission,board,body,bureau,orotherregulatoryauthority,agency,includingcourtsandotherjudicialbodies,oranycompetition,antitrustorsupervisorybody,centralbankorothergovernmental,tradeorregulatoryagencyorbody,securitiesexchangeoranyself-regulatorybodyorauthority,
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includinganyinstrumentalityorentitydesignedtoactfororonbehalfoftheforegoing,ineachcase,inanyjurisdiction.
"Shareholder Meetings "meanstheCompanyShareholderMeetingandtheParentShareholderMeeting.
"Subsidiaries "ofanyPartymeansanycorporation,partnership,limitedliabilitycompany,association,trustorotherformoflegalentityofwhich(i)fiftypercent(50%)ormoreofthevotingpoweroftheoutstandingvotingsecuritiesareonthedatehereofdirectlyorindirectlyownedbysuchPartyor(ii)suchPartyoranySubsidiaryofsuchPartyisageneralpartneronthedatehereof.
"Takeover Code "meanstheCityCodeonTakeoversandMergers.
"Takeover Proposal "means,withrespecttotheCompanyorParent,(A)anyinquiry,proposalorofferfororwithrespectto(orexpressionbyanypersonthatitisconsideringormayengagein)amerger,consolidation,businesscombination,recapitalization,bindingshareexchange,liquidation,dissolution,jointventure,schemeofarrangementorothersimilartransactioninvolvingsuchPartyoranyofitsSubsidiarieswhoseassets,takentogether,constitute20%ormoreofsuchParty'sconsolidatedassets,(B)anyinquiry,proposaloroffer(includingtenderorexchangeoffers)to(orexpressionbyanypersonthatitisconsideringormayseekto)acquireinanymanner,directlyorindirectly,inoneormoretransactions,morethan20%oftheoutstandingsharesofsecuritiesofsuchPartyrepresentingmorethan20%ofthevotingpowerofsuchPartyor(C)anyinquiry,proposalorofferto(orexpressionbyanypersonthatitisconsideringormayseekto)acquireinanymanner(includingtheacquisitionofequitysecuritiesinanySubsidiaryofsuchParty),directlyorindirectly,inoneormoretransactions,assetsorbusinessesofsuchPartyoritsSubsidiaries,includingpursuanttoajointventure,representingmorethan20%oftheconsolidatedassets,revenuesornetincomeofsuchParty,ineachcase,otherthantheMerger.
"Tax "or"Taxes "meansanyandallfederal,state,localorforeigntaxes,imposts,levies,duties,feesorotherassessments,includingallnetincome,grossreceipts,capital,sales,use,advalorem,valueadded,transfer,franchise,profits,inventory,capitalstock,license,withholding,payroll,employment,socialsecurity,unemployment,excise,severance,stamp,occupation,propertyandestimatedtaxes,customsduties,andothertaxesofanykindwhatsoever,includinganyandallinterest,penalties,additionstotaxoradditionalamountsimposedbyanyGovernmentalEntitywithrespectthereto.
"Tax Return "meansanyreturn,reportorsimilarfiling(includinganyattachedschedules,supplementsandadditionalorsupportingmaterial)filedorrequiredtobefiledwithrespecttoTaxes,includinganyinformationreturn,claimforrefund,ordeclarationofestimatedTaxes(andincludinganyamendmentswithrespectthereto).
"Trade Sanctions "meanseconomicortradesanctionsadministeredbyOFAC,theU.S.DepartmentofState,theUnitedNationsSecurityCouncil,theEuropeanUnion,orHerMajesty'sTreasury.
"Treasury Regulations "meanstheregulations(includingtemporaryregulations)promulgatedbytheU.S.DepartmentofTreasurywithrespecttotheCode.
"VAT "meansanyTaximposedincompliancewithDirective2006/112/EECandanysimilarTaxwhichmaybeimposedinsubstitutionfororinadditiontosuchtax.
[SIGNATUREPAGEFOLLOWS]
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INWITNESSWHEREOF,thePartiesheretohavecausedthisAgreementtobedulyexecutedanddeliveredasofthedatefirstabovewritten.
[SignaturePagetoAgreementandPlanofMerger]
ENSCOplc
By:/s/CARLG.TROWELL
Name: CarlG.Trowell Title: President and Chief Executive Officer
ECHOMERGERSUBLLC
By:/s/MELISSACOUGLE
Name: MelissaCougle Title: Vice President and Treasurer
ATWOODOCEANICS,INC.
By:/s/ROBERTJ.SALTIEL
Name: RobertJ.Saltiel Title: President and Chief Executive Officer
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ANNEXIINDEXOFDEFINEDTERMS
ExhibitA-A-1
AcceptableConfidentialityAgreement Section5.4(b)Action Section5.9(b)Adverse7874TaxLawChange Section8.15AdverseRecommendationChange Section5.4(d)AffectedEmployee Section5.18(a)affiliates Section8.15Agreement PreambleAlphaDirectorNominees Section1.7(a)AntitrustLaws Section5.7(b)BenefitPlan Section8.15Book-EntryShares Section2.1(a)BriberyAct Section3.21businessday Section8.15CancelledShares Section2.1(a)(ii)CertificateofMerger Section1.3Certificates Section2.1(a)Closing Section1.2ClosingDate Section1.2Code Section8.15CollectiveBargainingAgreement Section8.15CompaniesAct Section8.15Company PreambleCompanyApprovals Section3.2(b)CompanyBenefitPlan Section3.16(a)CompanyBoard RecitalsCompanyBoardRecommendation Section3.2(a)CompanyBylaws Section8.15CompanyCharter Section8.15CompanyCommonStock Section3.1(c)CompanyDisclosureSchedule ArticleIIICompanyEmployee Section3.15CompanyEquityAwards Section3.1(c)CompanyFinancialStatements Section8.15CompanyFleetReport Section3.13(a)CompanyIntellectualProperty Section3.11(a)CompanyInterveningEvent Section8.15CompanyITAssets Section8.15CompanyLeasedRealProperty Section3.12(a)CompanyMaterialAdverseEffect Section8.15CompanyMaterialContracts Section3.19(a)CompanyMaterialSubsidiaries Section3.1(b)CompanyNotes Section5.21CompanyOrganizationalDocuments Section3.1(b)CompanyPermits Section3.6(b)CompanyPermittedLiens Section8.15CompanyPreferredStock Section3.1(c)CompanySECDocuments Section3.3(a)CompanyShare Section2.1(a)(iii)
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ExhibitA-A-2
CompanyStockAwards Section2.3(c)CompanyStockPlans Section8.15CompanyShareholder Section8.15CompanyShareholderApproval Section8.15CompanyShareholderMeeting Section5.5(b)CompanySuperiorProposal Section8.15CompanyTerminationFee Section7.3(b)CompanyTransactionDocuments Section3.2(a)ConfidentialityAgreement Section5.3(b)Contract Section3.19(a)control Section8.15ConvertedOption Section2.3(b)EffectiveTime Section1.3EndDate Section7.1(b)EnvironmentalLaw Section8.15ERISA Section8.15ERISAAffiliate Section8.15ExchangeAct Section3.2(b)ExchangeAgent Section2.2(a)ExchangeFund Section2.2(b)ExchangeRatio Section2.1(a)(iii)ExistingOption Section2.3(b)ExpatriatedEntityRules Section5.14ExportControlLaws Section8.15FCPA Section3.21ForeignInvestmentLaws Section5.7(b)FormS-4 Section3.25FractionalShareCashAmount Section2.1(d)GAAP Section3.3(b)GovernmentalEntity Section3.2(b)HazardousMaterials Section8.15HSRAct Section3.2(b)IndemnifiedParty Section5.9(b)Indenture Section5.21knowledge Section8.15LaworLaws Section3.6(a)LetterofTransmittal Section2.2(c)Lien Section3.2(c)MaximumAmount Section5.9(c)Merger RecitalsMergerConsideration Section2.1(a)(iii)MergerSub PreambleNoteholders Section5.21NYSE Section3.2(b)OFAC Section3.22(a)Order Section8.15Parent PreambleParentApprovals Section4.2(b)ParentBenefitPlan Section4.16(a)ParentBoard RecitalsParentBoardRecommendation Section4.2(a)
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ExhibitA-A-3
ParentClassAOrdinaryShares Section8.15ParentClassBOrdinaryShares Section8.15ParentClosingPrice Section8.15ParentDisclosureSchedule ArticleIVParentEmployee Section4.15ParentFinancialStatements Section8.15ParentFleetReport Section4.13(a)ParentIntellectualProperty Section4.11(a)ParentInterveningEvent Section8.15ParentITAssets Section8.15ParentLeasedRealProperty Section4.12(a)ParentMaterialAdverseEffect Section8.15ParentMaterialContracts Section4.19(a)ParentMaterialSubsidiaries Section4.1(b)ParentOrdinaryShares Section8.15ParentOrganizationalDocuments Section4.1(b)ParentPermits Section4.6(b)ParentPermittedLien Section8.15ParentSECDocuments Section4.3(a)ParentShareholder Section8.15ParentShareholderApproval Section8.15ParentShareholderMeeting Section5.5(c)ParentShareholderResolutions Section8.15ParentStockAwards Section4.1(c)ParentStockPlans Section8.15ParentSuperiorProposal Section8.15ParentTerminationFee Section7.3(b)ParentTransactionDocuments Section4.2(a)Parties PreamblePermits Section4.6(b)person Section8.15ProxyStatement/Prospectus Section3.25QualifiedPlan Section3.16(b)Release Section8.15RelevantAuthority Section8.15RemainingStockPlanShares Section2.3(d)RemediesExceptions Section3.2(a)Representatives Section5.4(a)Sarbanes-OxleyAct Section3.3(a)SEC Section3.3(a)SecuritiesAct Section3.2(b)ShareholderMeetings Section8.15Subsidiaries Section8.15SurvivingCompany RecitalsTakeoverCode Section8.15TakeoverProposal Section8.15TaxorTaxes Section8.15TaxReturn Section8.15TBOC RecitalsTerminationDate Section5.1(a)ThirdParty Section8.13(b)
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ExhibitA-A-4
ThirdPartyRightsClause Section8.13(a)TradeSanctions Section8.15TransferTaxes Section8.2TreasuryRegulations Section8.15Trustee Section5.21VAT Section8.15
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AnnexB
OpinionofMorganStanley&Co.LLC
ExecutionVersion
May29,2017
BoardofDirectorsEnscoplc6ChesterfieldGardensLondon,EnglandW1J5BQ
MembersoftheBoard:
WeunderstandthatAtwoodOceanics,Inc.,aTexascorporation("Target"orthe"Company"),Enscoplc,apubliclimitedcompanyorganizedundertheLawsofEnglandandWales(the"Buyer"),andEchoMergerSubLLC,aTexaslimitedliabilitycompanyandwhollyownedsubsidiaryoftheBuyer("AcquisitionSub"),proposetoenterintoanAgreementandPlanofMerger,substantiallyintheformofthedraftdatedMay28,2017(the"MergerAgreement"),whichprovides,amongotherthings,forthemerger(the"Merger")ofAcquisitionSubwithandintotheCompany,withtheCompanysurvivingtheMergerasawhollyownedsubsidiaryoftheBuyer.PursuanttotheMerger,eachoutstandingshareofcommonstock,parvalue$1.00pershare,oftheCompany(the"CompanyCommonStock"),otherthansharesownedorheldintreasurybytheCompanyorownedbytheBuyerorAcquisitionSuboranyoftheirrespectivesubsidiaries,willbeconvertedintotherighttoreceive1.60shares(the"ExchangeRatio")ofClassAordinaryshares,nominalvalue$0.10pershare,oftheBuyer(the"BuyerCommonStock"),subjecttoadjustmentincertaincircumstances.ThetermsandconditionsoftheMergeraremorefullysetforthintheMergerAgreement.
YouhaveaskedforouropinionastowhethertheExchangeRatiopursuanttotheMergerAgreementisfairfromafinancialpointofviewtotheBuyer.
Forpurposesoftheopinionsetforthherein,wehave:
1) ReviewedcertainpubliclyavailablefinancialstatementsandotherpubliclyavailablebusinessandfinancialinformationoftheCompanyandtheBuyer,respectively;
2) ReviewedcertaininternalfinancialstatementsandotherfinancialandoperatingdataconcerningtheCompanyandtheBuyer,respectively;
3) Reviewed(i)certainfinancialprojectionspreparedbythemanagementsoftheCompanyandtheBuyer,respectivelyand(ii)certainfinancialprojectionsrelatingtotheCompanypreparedbythemanagementoftheBuyer;
4) Reviewedinformationrelatingtocertainstrategic,financialandoperationalbenefitsanticipatedfromtheMerger,preparedbythemanagementoftheBuyer;
5) DiscussedthepastandcurrentoperationsandfinancialconditionandtheprospectsoftheCompanywithseniorexecutivesoftheCompany;
6) DiscussedthepastandcurrentoperationsandfinancialconditionandtheprospectsoftheBuyer,includinginformationrelatingtocertainstrategic,financialandoperationalbenefitsanticipatedfromtheMerger,withseniorexecutivesoftheBuyer;
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7) ReviewedtheproformaimpactoftheMergerontheBuyer'searningspershare,cashflow,consolidatedcapitalizationandcertainfinancialratios;
8) ReviewedthereportedpricesandtradingactivityfortheCompanyCommonStockandtheBuyerCommonStock;
9) ComparedthefinancialperformanceoftheCompanyandtheBuyerandthepricesandtradingactivityoftheCompanyCommonStockandtheBuyerCommonStockwiththatofcertainotherpublicly-tradedcompaniescomparablewiththeCompanyandtheBuyer,respectively,andtheirsecurities;
10) Reviewedthefinancialterms,totheextentpubliclyavailable,ofcertaincomparableacquisitiontransactions;
11) ParticipatedincertaindiscussionsandnegotiationsamongrepresentativesoftheCompanyandtheBuyerandcertainpartiesandtheirfinancialandlegaladvisors;
12) ReviewedtheMergerAgreementandcertainrelateddocuments;and
13) Performedsuchotheranalyses,reviewedsuchotherinformationandconsideredsuchotherfactorsaswehavedeemedappropriate.
Wehaveassumedandreliedupon,withoutindependentverification,theaccuracyandcompletenessoftheinformationthatwaspubliclyavailableorsuppliedorotherwisemadeavailabletousbytheCompanyandtheBuyer,andformedasubstantialbasisforthisopinion.Withrespecttothefinancialprojections,includinginformationrelatingtocertainstrategic,financialandoperationalbenefitsanticipatedfromtheMerger,wehaveassumedthattheyhavebeenreasonablypreparedonbasesreflectingthebestcurrentlyavailableestimatesandjudgmentsoftherespectivemanagementsoftheCompanyandtheBuyerofthefuturefinancialperformanceoftheCompanyandtheBuyer.Forpurposesofouranalysis,wehave,atthedirectionoftheBuyer,reliedonfinancialprojectionsrelatingtotheCompanyandtheBuyer,ineachcasepreparedbythemanagementoftheBuyer.WehavebeenadvisedbytheBuyerandhaveassumed,withtheBuyer'sconsent,thattheprojectionspreparedbythemanagementoftheBuyerareareasonablebasisuponwhichtoevaluatethebusinessandfinancialprospectsoftheBuyerandtheCompany.Weexpressnoviewastosuchprojectionsortheassumptionsonwhichtheywerebased.Wehavereliedupon,withoutindependentverification,theassessmentbythemanagementoftheBuyerof:(i)thestrategic,financialandotherbenefitsexpectedtoresultfromtheMerger;(ii)thetimingandrisksassociatedwiththeintegrationoftheCompanyandtheBuyer;and(iii)theBuyer'sabilitytoretainkeyemployeesoftheCompanyandtheBuyer,respectively.Inaddition,wehaveassumedthattheMergerwillbeconsummatedinaccordancewiththetermssetforthintheMergerAgreementwithoutanywaiver,amendmentordelayofanytermsorconditions,including,amongotherthings,thatthedefinitiveMergerAgreementwillnotdifferinanymaterialrespectfromthedraftthereoffurnishedtous.MorganStanleyhasassumedthatinconnectionwiththereceiptofallthenecessarygovernmental,regulatoryorotherapprovalsandconsentsrequiredfortheproposedMerger,nodelays,limitations,conditionsorrestrictionswillbeimposedthatwouldhaveamaterialadverseeffectonthecontemplatedbenefitsexpectedtobederivedintheproposedMerger.Wearenotlegal,tax,orregulatoryadvisors.Wearefinancialadvisorsonlyandhavereliedupon,withoutindependentverification,theassessmentoftheBuyerandtheCompanyandtheirlegal,taxorregulatoryadvisorswithrespecttolegal,tax,orregulatorymatters.WehavenotperformedanytaxassessmentinconnectionwiththeMerger.WeexpressnoopinionwithrespecttothefairnessoftheamountornatureofthecompensationtoanyoftheCompany'sofficers,directorsoremployees,oranyclassofsuchpersons,relativetotheconsiderationtobepaidtotheholdersofsharesoftheCompanyCommonStockinthetransaction.WehavenotmadeanyindependentvaluationorappraisaloftheassetsorliabilitiesoftheCompanyortheBuyer,norhavewebeenfurnishedwithanysuchvaluationsorappraisals.OuropiniondoesnotaddresstherelativemeritsoftheMergerascomparedtoanyother
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alternativebusinesstransaction,orotheralternatives,orwhetherornotsuchalternativescouldbeachievedorareavailable.Ouropinionisnecessarilybasedonfinancial,economic,marketandotherconditionsasineffecton,andtheinformationmadeavailabletousasof,thedatehereof.Eventsoccurringafterthedatehereofmayaffectthisopinionandtheassumptionsusedinpreparingit,andwedonotassumeanyobligationtoupdate,reviseorreaffirmthisopinion.
WehaveactedasfinancialadvisortotheBoardofDirectorsoftheBuyerinconnectionwiththistransactionandwillreceiveafeeforourservices,aportionofwhichiscontingentupontherenderingofthisfinancialopinion,andtheremainderofwhichiscontingentupontheclosingoftheMerger.Inthetwoyearspriortothedatehereof,wehaveprovidedfinancingservicesfortheBuyerandhavereceivedfeesinconnectionwithsuchservices.Asofthedatehereof,MorganStanleyisalenderundertheBuyer'srevolvingcreditfacility.MorganStanleymayalsoseektoprovidefinancialadvisoryandfinancingservicestotheBuyerandtheCompanyandtheirrespectiveaffiliatesinthefutureandwouldexpecttoreceivefeesfortherenderingoftheseservices.
PleasenotethatMorganStanleyisaglobalfinancialservicesfirmengagedinthesecurities,investmentmanagementandindividualwealthmanagementbusinesses.Oursecuritiesbusinessisengagedinsecuritiesunderwriting,tradingandbrokerageactivities,foreignexchange,commoditiesandderivativestrading,primebrokerage,aswellasprovidinginvestmentbanking,financingandfinancialadvisoryservices.MorganStanley,itsaffiliates,directorsandofficersmayatanytimeinvestonaprincipalbasisormanagefundsthatinvest,holdlongorshortpositions,financepositions,andmaytradeorotherwisestructureandeffecttransactions,fortheirownaccountortheaccountsofitscustomers,indebtorequitysecuritiesorloansoftheBuyer,theCompany,oranyothercompany,oranycurrencyorcommodity,thatmaybeinvolvedinthistransaction,oranyrelatedderivativeinstrument.
ThisopinionhasbeenapprovedbyacommitteeofMorganStanleyinvestmentbankingandotherprofessionalsinaccordancewithourcustomarypractice.ThisopinionisfortheinformationoftheBoardofDirectorsoftheBuyerandmaynotbeusedforanyotherpurposeordisclosedwithoutourpriorwrittenconsent,exceptthatacopyofthisopinionmaybeincludedinitsentirety,andasummaryofthisopinion,whichisacceptabletoMorganStanley,maybedisclosed,inanyfilingtheBuyerisrequiredtomakewiththeSecuritiesandExchangeCommissioninconnectionwiththistransactionifsuchinclusionorsummaryisrequiredbyapplicablelaw.Inaddition,thisopiniondoesnotinanymanneraddressthepricesatwhichtheBuyerCommonStockwilltradefollowingconsummationoftheMergeroratanytimeandMorganStanleyexpressesnoopinionorrecommendationastohowtheshareholdersoftheBuyerandtheCompanyshouldvoteattheshareholders'meetingstobeheldinconnectionwiththeMerger.
Basedonandsubjecttotheforegoing,weareoftheopiniononthedatehereofthattheExchangeRatiopursuanttotheMergerAgreementisfairfromafinancialpointofviewtotheBuyer.
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Verytrulyyours,
MORGANSTANLEY&CO.LLC
By: /s/MichaelHarris
Name:MichaelHarris Title:ManagingDirector
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AnnexC
PERSONALANDCONFIDENTIAL
May29,2017
BoardofDirectorsAtwoodOceanics,Inc.15011KatyFreeway,Suite800Houston,TX77094
Gentlemen:
Youhaverequestedouropinionastothefairnessfromafinancialpointofviewtotheholders(otherthanEnscoplc("Ensco")anditsaffiliates)oftheoutstandingordinaryshares,parvalue$1.00pershare(the"Shares"),ofAtwoodOceanics,Inc.(the"Company")oftheexchangeratioof1.60sharesofClassAordinaryshares,parvalue$0.10pershare("EnscoOrdinaryShares"),ofEnscotobepaidforeachShare(the"ExchangeRatio")pursuanttotheAgreementandPlanofMerger,datedasofMay29,2017(the"Agreement"),byandamongEnsco,EchoMergerSubLLC,awhollyownedsubsidiaryofEnsco,andtheCompany.
GoldmanSachs&Co.LLCanditsaffiliatesareengagedinadvisory,underwritingandfinancing,principalinvesting,salesandtrading,research,investmentmanagementandotherfinancialandnon-financialactivitiesandservicesforvariouspersonsandentities.GoldmanSachs&Co.LLCanditsaffiliatesandemployees,andfundsorotherentitiestheymanageorinwhichtheyinvestorhaveothereconomicinterestsorwithwhichtheyco-invest,mayatanytimepurchase,sell,holdorvotelongorshortpositionsandinvestmentsinsecurities,derivatives,loans,commodities,currencies,creditdefaultswapsandotherfinancialinstrumentsoftheCompany,Ensco,anyoftheirrespectiveaffiliatesandthirdparties,oranycurrencyorcommoditythatmaybeinvolvedinthetransactionscontemplatedbytheAgreement(the"Transaction").WehaveactedasfinancialadvisortotheCompanyinconnectionwith,andhaveparticipatedincertainofthenegotiationsleadingto,theTransaction.WeexpecttoreceivefeesforourservicesinconnectionwiththeTransaction,theprincipalportionofwhichiscontingentuponconsummationoftheTransaction,andtheCompanyhasagreedtoreimbursecertainofourexpensesarising,andindemnifyusagainstcertainliabilitiesthatmayarise,outofourengagement.Wehaveprovidedcertainfinancialadvisoryand/orunderwritingservicestotheCompanyand/oritsaffiliatesfromtimetotimeforwhichourInvestmentBankingDivisionhasreceived,andmayreceive,compensation,includinghavingactedasleadbookrunnerinconnectionwiththepublicofferingof15,525,000SharesinJanuary2017.Wealsohaveprovidedcertainfinancialadvisoryand/orunderwritingservicestoEnscoand/oritsaffiliatesfromtimetotimeforwhichourInvestmentBankingDivisionhasreceived,andmayreceive,compensation,includinghavingactedasleadbookrunnerinconnectionwiththepublicofferingof57,000,000EnscoOrdinarySharesinApril2016anddealermanagerinconnectionwithatenderofferbyEnscoforits8.50%SeniorNotesdue2019,4.70%SeniorNotesdue2021,6.875%SeniorNotesdue2020,4.50%SeniorNotesdue2024and5.20%SeniorNotesdue2025(aggregateprincipalamount$750,000,000)inApril2016.Wemayalsointhefutureprovide
SecuritiesandInvestmentServicesProvidedbyGoldman,Sachs&Co.
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financialadvisoryand/orunderwritingservicestotheCompany,EnscoandtheirrespectiveaffiliatesforwhichourInvestmentBankingDivisionmayreceivecompensation.
Inconnectionwiththisopinion,wehavereviewed,amongotherthings,theAgreement;annualreportstoshareholdersandAnnualReportsonForm10-KoftheCompanyandEnscoforthefivefiscalyearsendedSeptember30,2016andfiveyearsendedDecember31,2016,respectively;certaininterimreportstoshareholdersandQuarterlyReportsonForm10-QoftheCompanyandEnsco;certainothercommunicationsfromtheCompanyandEnscototheirrespectiveshareholders;certainpubliclyavailableresearchanalystreportsfortheCompanyandEnsco;certaininternalfinancialanalysesandforecastsforEnscopreparedbyitsmanagement;andcertaininternalfinancialanalysesandforecastsfortheCompanypreparedbyitsmanagementandcertainfinancialanalysesandforecastsforEnscopreparedbythemanagementoftheCompany,ineachcase,asapprovedforourusebytheCompany(collectively,the"Forecasts"),includingcertainoperatingsynergiesprojectedbythemanagementoftheCompanytoresultfromtheTransaction,asapprovedforourusebytheCompany(the"Synergies").WehavealsohelddiscussionswithmembersoftheseniormanagementoftheCompanyregardingtheirassessmentofthestrategicrationalefor,andthepotentialbenefitsof,theTransactionandthepastandcurrentbusinessoperations,financialconditionandfutureprospectsoftheCompanyandwithmembersoftheseniormanagementsoftheCompanyandEnscoregardingtheirassessmentofthepastandcurrentbusinessoperations,financialconditionandfutureprospectsofEnsco;reviewedthereportedpriceandtradingactivityfortheSharesandEnscoOrdinaryShares;comparedcertainfinancialandstockmarketinformationfortheCompanyandEnscowithsimilarinformationforcertainothercompaniesthesecuritiesofwhicharepubliclytraded;andperformedsuchotherstudiesandanalyses,andconsideredsuchotherfactors,aswedeemedappropriate.
Forpurposesofrenderingthisopinion,wehave,withyourconsent,relieduponandassumedtheaccuracyandcompletenessofallofthefinancial,legal,regulatory,tax,accountingandotherinformationprovidedto,discussedwithorreviewedby,us,withoutassuminganyresponsibilityforindependentverificationthereof.Inthatregard,wehaveassumedwithyourconsentthattheForecasts,includingtheSynergies,havebeenreasonablypreparedonabasisreflectingthebestcurrentlyavailableestimatesandjudgmentsofthemanagementoftheCompany.Wehavenotmadeanindependentevaluationorappraisaloftheassetsandliabilities(includinganycontingent,derivativeorotheroff-balance-sheetassetsandliabilities)oftheCompanyorEnscooranyoftheirrespectivesubsidiariesandwehavenotbeenfurnishedwithanysuchevaluationorappraisal.Wewerenotrequestedtosolicit,anddidnotsolicit,interestfromotherpartieswithrespecttoanacquisitionof,orotherbusinesscombinationwith,theCompanyoranyalternativetransaction.Wehaveassumedthatallgovernmental,regulatoryorotherconsentsandapprovalsnecessaryfortheconsummationoftheTransactionwillbeobtainedwithoutanyadverseeffectontheCompanyorEnscoorontheexpectedbenefitsoftheTransactioninanywaymeaningfultoouranalysis.WehaveassumedthattheTransactionwillbeconsummatedonthetermssetforthintheAgreement,withoutthewaiverormodificationofanytermorconditiontheeffectofwhichwouldbeinanywaymeaningfultoouranalysis.
OuropiniondoesnotaddresstheunderlyingbusinessdecisionoftheCompanytoengageintheTransaction,ortherelativemeritsoftheTransactionascomparedtoanystrategicalternativesthatmaybeavailabletotheCompany;nordoesitaddressanylegal,regulatory,taxoraccountingmatters.Thisopinionaddressesonlythefairnessfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofShares,asofthedatehereof,oftheExchangeRatiopursuanttotheAgreement.Wedonotexpressanyviewon,andouropiniondoesnotaddress,anyothertermoraspectoftheAgreementorTransactionoranytermoraspectofanyotheragreementorinstrumentcontemplatedbytheAgreementorenteredintooramendedinconnectionwiththeTransaction,including,thefairnessoftheTransactionto,oranyconsiderationreceivedinconnectiontherewithby,theholdersofanyotherclassofsecurities,creditors,orotherconstituenciesoftheCompany;norastothefairnessof
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theamountornatureofanycompensationtobepaidorpayabletoanyoftheofficers,directorsoremployeesoftheCompanyorEnsco,orclassofsuchpersons,inconnectionwiththeTransaction,whetherrelativetotheExchangeRatiopursuanttotheAgreementorotherwise.WearenotexpressinganyopinionastothepricesatwhichEnscoOrdinaryShareswilltradeatanytimeorastotheimpactoftheTransactiononthesolvencyorviabilityoftheCompanyorEnscoortheabilityoftheCompanyorEnscotopaytheirrespectiveobligationswhentheycomedue.Ouropinionisnecessarilybasedoneconomic,monetary,marketandotherconditionsasineffecton,andtheinformationmadeavailabletousasof,thedatehereofandweassumenoresponsibilityforupdating,revisingorreaffirmingthisopinionbasedoncircumstances,developmentsoreventsoccurringafterthedatehereof.OuradvisoryservicesandtheopinionexpressedhereinareprovidedfortheinformationandassistanceoftheBoardofDirectorsoftheCompanyinconnectionwithitsconsiderationoftheTransactionandsuchopiniondoesnotconstitutearecommendationastohowanyholderofSharesshouldvotewithrespecttosuchTransactionoranyothermatter.ThisopinionhasbeenapprovedbyafairnesscommitteeofGoldmanSachs&Co.LLC.
Baseduponandsubjecttotheforegoing,itisouropinionthat,asofthedatehereof,theExchangeRatiopursuanttotheAgreementisfairfromafinancialpointofviewtotheholders(otherthanEnscoanditsaffiliates)ofShares.
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Verytrulyyours,
/s/GOLDMANSACHS&CO.LLC
(GOLDMANSACHS&CO.LLC)
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PARTII
INFORMATIONNOTREQUIREDINPROSPECTUS
Item20.IndemnificationofOfficersandDirectors.
ThediscussionbelowsummarizesthematerialindemnificationprovisionsoftheEnscoArticlesofAssociation(the"Articles")andcertainsectionsoftheCompaniesAct2006relatedtoindemnification.
Article138oftheArticlesprovides:
138. INDEMNITY
138.1TotheextentpermittedbytheActsandwithoutprejudicetoanyindemnitytowhichanypersonmayotherwisebeentitled,theCompanyshall:
(a)indemnifytoanyextentanypersonwhoisorwasadirectororofficeroftheCompany,oradirectororofficerofanyassociatedcompany,directlyorindirectly(includingbyfundinganyexpenditureincurredortobeincurredbyhim)againstanylossorliability,whetherinconnectionwithanynegligence,default,breachofdutyorbreachoftrustbyhimorotherwise,inrelationtotheCompanyoranyassociatedcompany;
(b)indemnifytoanyextentanypersonwhoisorwasadirectororofficerofanassociatedcompanythatisatrusteeofanoccupationalpensionscheme,directlyorindirectly(includingbyfundinganyexpenditureincurredortobeincurredbyhim)againstanyliabilityincurredbyhiminconnectionwiththecompany'sactivitiesastrusteeofanoccupationalpensionscheme;
(c)createatrustfund,grantasecurityinterestand/oruseothermeans(including,withoutlimitation,lettersofcredit,suretybondsand/orothersimilararrangements),aswellasenterintocontractsprovidingindemnificationtothefullextentauthorisedorpermittedbylawandincludingaspartthereofprovisionswithrespecttoanyoralloftheforegoingparagraphsofthisArticle144.1toensurethepaymentofsuchamountsasmaybecomenecessarytoeffectindemnificationasprovidedtherein,orelsewhere.
138.2WhereapersonisindemnifiedagainstanyliabilityinaccordancewithArticle138.1,suchindemnityshallextendtoallcosts,charges,losses,expensesandliabilitiesincurredbyhiminrelationthereto.
Article84oftheArticlesprovides:
84. Insurance
SubjecttotheprovisionsoftheActs,theboardmayexerciseallthepowersoftheCompanytopurchaseandmaintaininsuranceforthebenefitofapersonwhoisorwasadirector,alternatedirectororofficeroftheCompanyorofanyassociatedcompanyagainstanyliabilityattachingtohiminconnectionwithanynegligence,default,breachofdutyorbreachoftrustoranyotherliabilitywhichmaylawfullybeinsuredagainstbytheCompany.
Section232oftheCompaniesAct2006providesasfollows:
232 PROVISIONSPROTECTINGDIRECTORSFROMLIABILITY
(1)Anyprovisionthatpurportstoexemptadirectorofacompany(toanyextent)fromanyliabilitythatwouldotherwiseattachtohiminconnectionwithanynegligence,default,breachofdutyorbreachoftrustinrelationtothecompanyisvoid.
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(2)Anyprovisionbywhichacompanydirectlyorindirectlyprovidesanindemnity(toanyextent)foradirectorofthecompany,orofanassociatedcompany,againstanyliabilityattachingtohiminconnectionwithanynegligence,default,breachofdutyorbreachoftrustinrelationtothecompanyofwhichheisadirectorisvoid,exceptaspermittedby—
(a) section233(provisionofinsurance),
(b) section234(qualifyingthirdpartyindemnityprovision),or
(c) section235(qualifyingpensionschemeindemnityprovision).
(3)Thissectionappliestoanyprovision,whethercontainedinacompany'sarticlesorinanycontractwiththecompanyorotherwise.
(4)Nothinginthissectionpreventsacompany'sarticlesfrommakingsuchprovisionashaspreviouslybeenlawfulfordealingwithconflictsofinterest.
Section233oftheCompaniesAct2006providesasfollows:
233 PROVISIONOFINSURANCE
Section232(2)(voidnessofprovisionsforindemnifyingdirectors)doesnotpreventacompanyfrompurchasingandmaintainingforadirectorofthecompany,orofanassociatedcompany,insuranceagainstanysuchliabilityasismentionedinthatsubsection.
Section234oftheCompaniesAct2006providesasfollows:
234 QUALIFYINGTHIRDPARTYINDEMNITYPROVISION
(1)Section232(2)(voidnessofprovisionsforindemnifyingdirectors)doesnotapplytoqualifyingthirdpartyindemnityprovision.
(2)Thirdpartyindemnityprovisionmeansprovisionforindemnityagainstliabilityincurredbythedirectortoapersonotherthanthecompanyoranassociatedcompany.Suchprovisionisqualifyingthirdpartyindemnityprovisionifthefollowingrequirementsaremet.
(3)Theprovisionmustnotprovideanyindemnityagainst—
(a)anyliabilityofthedirectortopay—
(i)afineimposedincriminalproceedings,or
(ii)asumpayabletoaregulatoryauthoritybywayofapenaltyinrespectofnon-compliancewithanyrequirementofaregulatorynature(howeverarising);or
(b)anyliabilityincurredbythedirector—
(i)indefendingcriminalproceedingsinwhichheisconvicted,or
(ii)indefendingcivilproceedingsbroughtbythecompany,oranassociatedcompany,inwhichjudgmentisgivenagainsthim,or
(iii)inconnectionwithanapplicationforrelief(seesubsection(6))inwhichthecourtrefusestogranthimrelief.
(4)Thereferencesinsubsection(3)(b)toaconviction,judgmentorrefusalofreliefaretothefinaldecisionintheproceedings.
(5)Forthispurpose—
(a)aconviction,judgmentorrefusalofreliefbecomesfinal—
(i)ifnotappealedagainst,attheendoftheperiodforbringinganappeal,or
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(ii)ifappealedagainst,atthetimewhentheappeal(oranyfurtherappeal)isdisposedof;and
(b)anappealisdisposedof—
(i)ifitisdeterminedandtheperiodforbringinganyfurtherappealhasended,or
(ii)ifitisabandonedorotherwiseceasestohaveeffect.
(6)Thereferenceinsubsection(3)(b)(iii)toanapplicationforreliefistoanapplicationforreliefunder—section661(3)or(4)(powerofcourttograntreliefincaseofacquisitionofsharesbyinnocentnominee),orsection1157(generalpowerofcourttograntreliefincaseofhonestandreasonableconduct).
Section235oftheCompaniesAct2006providesasfollows:
235 QUALIFYINGPENSIONSCHEMEINDEMNITYPROVISION
(1)Section232(2)(voidnessofprovisionsforindemnifyingdirectors)doesnotapplytoqualifyingpensionschemeindemnityprovision.
(2)Pensionschemeindemnityprovisionmeansprovisionindemnifyingadirectorofacompanythatisatrusteeofanoccupationalpensionschemeagainstliabilityincurredinconnectionwiththecompany'sactivitiesastrusteeofthescheme.Suchprovisionisqualifyingpensionschemeindemnityprovisionifthefollowingrequirementsaremet.
(3)Theprovisionmustnotprovideanyindemnityagainst—
(a)anyliabilityofthedirectortopay—
(i)afineimposedincriminalproceedings,or
(ii)asumpayabletoaregulatoryauthoritybywayofapenaltyinrespectofnon-compliancewithanyrequirementofaregulatorynature(howeverarising);or
(b)anyliabilityincurredbythedirectorindefendingcriminalproceedingsinwhichheisconvicted.
(4)Thereferenceinsubsection(3)(b)toaconvictionistothefinaldecisionintheproceedings.
(5)Forthispurpose—
(a)aconvictionbecomesfinal—
(i)ifnotappealedagainst,attheendoftheperiodforbringinganappeal,or
(ii)ifappealedagainst,atthetimewhentheappeal(oranyfurtherappeal)isdisposedof;and
(b)anappealisdisposedof—
(i)ifitisdeterminedandtheperiodforbringinganyfurtherappealhasended,or
(ii)ifitisabandonedorotherwiseceasestohaveeffect.
(6)Inthissection"occupationalpensionscheme"meansanoccupationalpensionschemeasdefinedinsection150(5)oftheFinanceAct2004(c.12)thatisestablishedunderatrust.
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Section239oftheCompaniesAct2006providesasfollows:
239 RATIFICATIONOFACTSOFDIRECTORS
(1)Thissectionappliestotheratificationbyacompanyofconductbyadirectoramountingtonegligence,default,breachofdutyorbreachoftrustinrelationtothecompany.
(2)Thedecisionofthecompanytoratifysuchconductmustbemadebyresolutionofthemembersofthecompany.
(3)Wheretheresolutionisproposedasawrittenresolutionneitherthedirector(ifamemberofthecompany)noranymemberconnectedwithhimisaneligiblemember.
(4)Wheretheresolutionisproposedatameeting,itispassedonlyifthenecessarymajorityisobtaineddisregardingvotesinfavouroftheresolutionbythedirector(ifamemberofthecompany)andanymemberconnectedwithhim.Thisdoesnotpreventthedirectororanysuchmemberfromattending,beingcountedtowardsthequorumandtakingpartintheproceedingsatanymeetingatwhichthedecisionisconsidered.
(5)Forthepurposesofthissection—
(a)"conduct"includesactsandomissions;
(b)"director"includesaformerdirector;
(c)ashadowdirectoristreatedasadirector;and
(d)insection252(meaningof"connectedperson"),subsection(3)doesnotapply(exclusionofpersonwhoishimselfadirector).
(6)Nothinginthissectionaffects—
(a)thevalidityofadecisiontakenbyunanimousconsentofthemembersofthecompany,or
(b)anypowerofthedirectorstoagreenottosue,ortosettleorreleaseaclaimmadebythemonbehalfofthecompany.
(7)Thissectiondoesnotaffectanyotherenactmentorruleoflawimposingadditionalrequirementsforvalidratificationoranyruleoflawastoactsthatareincapableofbeingratifiedbythecompany.
Section1157oftheCompaniesAct2006providesasfollows:
1157 POWEROFCOURTTOGRANTRELIEFINCERTAINCASES
(1)Ifinproceedingsfornegligence,default,breachofdutyorbreachoftrustagainst—
(a)anofficerofacompany,or
(b)apersonemployedbyacompanyasauditor(whetherheisorisnotanofficerofthecompany),itappearstothecourthearingthecasethattheofficerorpersonisormaybeliablebutthatheactedhonestlyandreasonably,andthathavingregardtoallthecircumstancesofthecase(includingthoseconnectedwithhisappointment)heoughtfairlytobeexcused,thecourtmayrelievehim,eitherwhollyorinpart,fromhisliabilityonsuchtermsasitthinksfit.
(2)Ifanysuchofficerorpersonhasreasontoapprehendthataclaimwillormightbemadeagainsthiminrespectofnegligence,default,breachofdutyorbreachoftrust—
(a)hemayapplytothecourtforrelief,and
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(b)thecourthasthesamepowertorelievehimasitwouldhavehadifithadbeenacourtbeforewhichproceedingsagainsthimfornegligence,default,breachofdutyorbreachoftrusthadbeenbrought.
(3)Whereacasetowhichsubsection(1)appliesisbeingtriedbyajudgewithajury,thejudge,afterhearingtheevidence,may,ifheissatisfiedthatthedefendant(inScotland,thedefender)oughtinpursuanceofthatsubsectiontoberelievedeitherinwholeorinpartfromtheliabilitysoughttobeenforcedagainsthim,withdrawthecasefromthejuryandforthwithdirectjudgmenttobeenteredforthedefendant(inScotland,grantdecreeofabsolvitor)onsuchtermsastocosts(inScotland,expenses)orotherwiseasthejudgemaythinkproper.
UnderSection250oftheCompaniesAct2006,a"director"isdefinedtoinclude"anypersonoccupyingthepositionofdirector,bywhatevernamecalled."InEnsco'scase,referencesintheCompaniesAct2006toa"director"wouldalsoincludecertainofficers.
EachofEnsco'sdirectorsandofficersarepartiestoindemnityagreementsthatgenerallyprovidethatsuchpersonswillbeindemnifiedtothefullestextentpermittedbyapplicablelaw,includingwithrespecttolossessufferedorincurredbythem,amongothers,arisingoutoforinconnectionwiththeperson'sappointmentasadirectororofficerorservinginsuchcapacity.Theindemnityagreementsalsoprovideforadvancementofexpensestothedirectorsandofficersinconnectionwithlegalproceedings.Thetermsoftheindemnityagreementsaresubjecttocertainexceptionsorexclusionstotheextentrequiredbyapplicablelaw,includingtherepaymentofadvancementofexpensesincertaincircumstances.
Enscomaintainsdirectorsandofficersinsurancecoverage,which,subjecttopolicytermsandlimitations,includescoveragetoreimburseEnscoforamountsthatEnscomayberequiredorpermittedbylawtopayEnscodirectorsorofficers.
Themergeragreementprovidesthat,forsixyearsaftertheEffectiveTimeofthemerger,Enscowillindemnifythepresentandformerofficers,directors,employees,fiduciariesandagentsofAtwoodanditssubsidiariesfromliabilitiesactuallyandreasonablyincurredbythemarisingoutofactionsoromissionsintheircapacityassuchwhetheroccurringbeforeorafterthemerger,tothefullestextentpermittedunderEnglishlaw.Inaddition,EnscowillmaintainAtwood'sdirectors'andofficers'insurancecoverageforsixyearsaftertheEffectiveTimebutonlytotheextentrelatedtoactionsoromissionspriortotheEffectiveTime.
Item21.ExhibitsandFinancialStatementSchedules.
(a)Exhibits.
ReferenceismadetotheExhibitIndexfollowingthesignaturepagehereof,whichExhibitIndexisherebyincorporatedintothisItem.
(b)FinancialStatementSchedules.
Financialstatementschedulesareomittedbecausetheyarenotrequiredortherequiredinformationisshownintheconsolidatedfinancialstatementsorthenotestheretoincorporatedbyreferenceinthejointproxystatement/prospectusthatformsapartofthisregistrationstatement.
(c)Opinions.
TheopinionofMorganStanley&Co.LLC,financialadvisortoEnsco,andtheopinionofGoldmanSachs&Co.,financialadvisortoAtwood,areattachedasAnnexBandAnnexC,respectively,tothejointproxystatement/prospectusthatformsapartofthisregistrationstatement.
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Item22.Undertakings.
Theundersignedregistrantherebyundertakes:
(1)Tofile,duringanyperiodinwhichoffersorsalesarebeingmade,apost-effectiveamendmenttothisregistrationstatement:(i)toincludeanyprospectusrequiredbySection10(a)(3)oftheSecuritiesActof1933,asamended(the"SecuritiesAct");(ii)toreflectintheprospectusanyfactsoreventsarisingaftertheeffectivedateoftheregistrationstatement(orthemostrecentpost-effectiveamendmentthereof)which,individuallyorintheaggregate,representafundamentalchangeintheinformationsetforthintheregistrationstatement(notwithstandingtheforegoing,anyincreaseordecreaseinvolumeofsecuritiesoffered(ifthetotaldollarvalueofsecuritiesofferedwouldnotexceedthatwhichwasregistered)andanydeviationfromtheloworhighendoftheestimatedmaximumofferingrangemaybereflectedintheformofprospectusfiledwiththeCommissionpursuanttoRule424(b)if,intheaggregate,thechangesinvolumeandpricerepresentnomorethana20%changeinthemaximumaggregateofferingpricesetforthinthe"CalculationofRegistrationFee"tableintheeffectiveregistrationstatement);and(iii)toincludeanymaterialinformationwithrespecttotheplanofdistributionnotpreviouslydisclosedintheregistrationstatementoranymaterialchangetosuchinformationintheregistrationstatement.
(2)That,forthepurposeofdetermininganyliabilityundertheSecuritiesAct,eachsuchpost-effectiveamendmentshallbedeemedtobeanewregistrationstatementrelatingtothesecuritiesofferedtherein,andtheofferingofsuchsecuritiesatthattimeshallbedeemedtobetheinitialbonafideofferingthereof.
(3)Toremovefromregistrationbymeansofapost-effectiveamendmentanyofthesecuritiesbeingregisteredwhichremainunsoldattheterminationoftheoffering.
(4)That,forpurposesofdetermininganyliabilityundertheSecuritiesActtoanypurchaser,eachprospectusfiledpursuanttoRule424(b)aspartofaregistrationstatementrelatingtoanofferingotherthanregistrationstatementsrelyingonRule430BorotherthanprospectusesfiledinrelianceonRule430A,shallbedeemedtobepartofandincludedintheregistrationstatementasofthedateitisfirstusedaftereffectiveness.Provided,however,thatnostatementmadeinaregistrationstatementorprospectusthatispartoftheregistrationstatementormadeinadocumentincorporatedordeemedincorporatedbyreferenceintotheregistrationstatementorprospectusthatispartoftheregistrationstatementwill,astoapurchaserwithatimeofcontractofsalepriortosuchfirstuse,supersedeormodifyanystatementthatwasmadeintheregistrationstatementorprospectusthatwaspartoftheregistrationstatementormadeinanysuchdocumentimmediatelypriortosuchdateoffirstuse.
(5)That,forthepurposeofdeterminingliabilityoftheRegistrantundertheSecuritiesActof1933toanypurchaserintheinitialdistributionofthesecurities,inaprimaryofferingofsecuritiesoftheRegistrantpursuanttothisregistrationstatement,regardlessoftheunderwritingmethodusedtosellthesecuritiestothepurchaser,ifthesecuritiesareofferedorsoldtosuchpurchaserbymeansofanyofthefollowingcommunications,theundersignedRegistrantwillbeasellertothepurchaserandwillbeconsideredtoofferorsellsuchsecuritiestosuchpurchaser:
(i)anypreliminaryprospectusorprospectusoftheundersignedRegistrantrelatingtotheofferingrequiredtobefiledpursuanttoRule424;
(ii)anyfreewritingprospectusrelatingtotheofferingpreparedbyoronbehalfofsuchRegistrantorusedorreferredtobytheundersignedRegistrant;
(iii)theportionofanyotherfreewritingprospectusrelatingtotheofferingcontainingmaterialinformationabouttheundersignedRegistrantortheirsecuritiesprovidedbyoronbehalfofsuchRegistrant;and
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(iv)anyothercommunicationthatisanofferintheofferingmadebysuchRegistranttothepurchaser.
(6)That,forpurposesofdetermininganyliabilityundertheSecuritiesAct,eachfilingoftheRegistrant'sannualreportpursuanttoSection13(a)or15(d)oftheSecuritiesExchangeActof1934,asamended(and,whereapplicable,eachfilingofanemployeebenefitplan'sannualreportpursuanttoSection15(d)oftheSecuritiesExchangeActof1934,asamended)thatisincorporatedbyreferenceinthisregistrationstatementshallbedeemedtobeanewregistrationstatementrelatingtothesecuritiesofferedtherein,andtheofferingofsuchsecuritiesatthattimeshallbedeemedtobetheinitialbonafideofferingthereof.
(7)Thatpriortoanypublicreofferingofthesecuritiesregisteredhereunderthroughuseofaprospectuswhichisapartofthisregistrationstatement,byanypersonorpartywhoisdeemedtobeanunderwriterwithinthemeaningofRule145(c),theRegistrantundertakesthatsuchreofferingprospectuswillcontaintheinformationcalledforbytheapplicableregistrationformwithrespecttoreofferingsbypersonswhomaybedeemedunderwriters,inadditiontotheinformationcalledforbytheotheritemsoftheapplicableform.
(8)Thateveryprospectus(i)thatisfiledpursuanttoparagraph(5)above,or(ii)thatpurportstomeettherequirementsofSection10(a)(3)oftheSecuritiesActandisusedinconnectionwithanofferingofsecuritiessubjecttoRule415,willbefiledasapartofanamendmenttothisregistrationstatementandwillnotbeuseduntilsuchamendmenthasbecomeeffective,andthatforthepurposeofdeterminingliabilitiesundertheSecuritiesAct,eachsuchpost-effectiveamendmentshallbedeemedtobeanewregistrationstatementrelatingtothesecuritiesofferedtherein,andtheofferingofsuchsecuritiesatthattimeshallbedeemedtobetheinitialbonafideofferingthereof.
(9)TorespondtorequestsforinformationthatisincorporatedbyreferenceintotheprospectuspursuanttoItems4,10(b),11or13ofthisform,withinonebusinessdayofreceiptofsuchrequest,andtosendtheincorporateddocumentsbyfirstclassmailorotherequallypromptmeans.Thisincludesinformationcontainedindocumentsfiledsubsequenttotheeffectivedateoftheregistrationstatementthroughthedateofrespondingtotherequest.
(10)Tosupplybymeansofapost-effectiveamendmentallinformationconcerningatransaction,andthecompanybeingacquiredinvolvedtherein,thatwasnotthesubjectofandincludedinthisregistrationstatementwhenitbecameeffective.
(11)InsofarasindemnificationforliabilitiesarisingundertheSecuritiesActmaybepermittedtodirectors,officersandcontrollingpersonsoftheregistrantpursuanttotheforegoingprovisions,orotherwise,theregistranthasbeenadvisedthatintheopinionoftheSecuritiesandExchangeCommissionsuchindemnificationisagainstpublicpolicyasexpressedintheSecuritiesActandis,therefore,unenforceable.Intheeventthataclaimforindemnificationagainstsuchliabilities(otherthanthepaymentbytheregistrantofexpensesincurredorpaidbyadirector,officerorcontrollingpersonoftheregistrantinthesuccessfuldefenseofanyaction,suitorproceeding)isassertedbysuchdirector,officer,orcontrollingpersoninconnectionwiththesecuritiesbeingregistered,theregistrantwill,unlessintheopinionofitscounselthematterhasbeensettledbycontrollingprecedent,submittoacourtofappropriatejurisdictionthequestionwhethersuchindemnificationbyitisagainstpublicpolicyasexpressedintheSecuritiesActandwillbegovernedbythefinaladjudicationofsuchissue.
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SIGNATURES
PursuanttotherequirementsoftheSecuritiesActof1933,theregistranthasdulycausedthisregistrationstatement,oramendmentthereto,tobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized,intheCityofLondon,England,UnitedKingdom,onJuly20,2017.
ENSCOPLC
By: /s/JONATHANH.BAKSHT
JonathanH.BakshtSenior Vice President and Chief Financial Officer
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POWEROFATTORNEY
PursuanttotherequirementsoftheSecuritiesActof1933,asamended,thisregistrationstatement,oramendmentthereto,hasbeensignedbelowbythefollowingpersonsinthecapacitiesindicatedonJuly20,2017.
Signature Title
*
CarlG.Trowell Director,ChiefExecutiveOfficerandPresident
(principalexecutiveofficer)
/s/JONATHANH.BAKSHT
JonathanH.Baksht SeniorVicePresidentandChiefFinancialOfficer
(principalfinancialofficer)
/s/ROBERTW.EDWARDSIII
RobertW.EdwardsIII VicePresident—Finance(principalaccountingofficer)
*
RoxanneJ.Decyk Director
*
MaryE.FrancisCBE Director
*
ChristopherGaut Director
*
GeraldW.Haddock Director
*
FrancisS.Kalman Director
*
KeithO.Rattie Director
*
PaulE.RowseyIII Director
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Signature Title
*
J.RoderickClark Director
*By: /s/MICHAELMCGUINTY
MichaelMcGuintyAttorney-in-fact
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EXHIBITINDEX
ExhibitNumber DescriptionofExhibit
2.1* — AgreementandPlanofMerger,datedasofMay29,2017,byandamongEnscoplc,EchoMergerSubLLCandAtwoodOceanics,Inc.(copyincludedasAnnexAtothejointproxystatement/prospectusincludedinthisRegistrationStatementonFormS-4).
3.1 — CertificateofIncorporationonChangeofName(incorporatedbyreferencetoExhibit3.1toEnsco'sCurrentReportonForm8-KfiledonApril1,2010,FileNo.1-8097).
3.2 — ArticlesofAssociationofEnscoplc(incorporatedbyreferencetoAnnex2toEnsco'sProxyStatementonFormDEF14AfiledonApril5,2013,asadoptedbySpecialResolutionpassedonMay20,2013,FileNo.1-8097).
3.3 — ArticlesofAssociationadoptedbyEnscoJerseyFinanceLimited,awhollyownedsubsidiaryofEnsco,onDecember6,2016(incorporatedbyreferencetoExhibit3.1toEnsco'sCurrentReportonForm8-KfiledonDecember12,2016,FileNo.1-8097).
4.1 — Indenture,datedNovember20,1997,betweenENSCOInternationalIncorporatedandDeutscheBankTrustCompanyAmericas(successortoBankersTrustCompany),asTrustee(incorporatedbyreferencetoExhibit4.1toEnsco'sCurrentReportonForm8-KfiledonNovember24,1997,FileNo.1-8097).
4.2 — FirstSupplementalIndenture,datedNovember20,1997,betweenENSCOInternationalIncorporatedandDeutscheBankTrustCompanyAmericas(successortoBankersTrustCompany),asTrustee(incorporatedbyreferencetoExhibit4.2toEnsco'sCurrentReportonForm8-K,filedonNovember24,1997,FileNo.1-8097).
4.3 — SecondSupplementalIndenture,datedDecember22,2009,amongENSCOInternationalIncorporated,EnscoInternationalplcandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.1toEnsco'sCurrentReportonForm8-KfiledonDecember23,2009,FileNo.1-8097).
4.4 — FormofDebenture(incorporatedbyreferencetoExhibit4.4toEnsco'sCurrentReportonForm8-KfiledonNovember24,1997,FileNo.1-8097).
4.5 — Indenture,datedJuly1,2004,betweenPrideInternational,Inc.andTheBankofNewYorkMellon,asTrustee,includingtheformofnotesissuedpursuantthereto(successortoJPMorganChaseBank)(incorporatedbyreferencetoExhibit4.1toPride'sRegistrationStatementonFormS-4filedonAugust10,2004,FileNo.333-118104).
4.6 — SecondSupplementalIndenture,datedJune2,2009,betweenPrideInternational,Inc.andTheBankofNewYorkMellon,asTrustee,includingtheformofnotesissuedpursuantthereto(incorporatedbyreferencetoExhibit4.1toPride'sQuarterlyReportonForm10-QforthequarterendedJune30,2009,FileNo.1-13289).
4.7 — ThirdSupplementalIndenture,datedAugust6,2010,betweenPrideInternational,Inc.andTheBankofNewYorkMellon,asTrustee,includingtheformofnotesissuedpursuantthereto(incorporatedbyreferencetoExhibit4.3toPride'sQuarterlyReportonForm10-QforthequarterendedSeptember30,2010,FileNo.1-13289).
4.8 — FourthSupplementalIndenture,datedMay31,2011,amongEnscoplc,PrideInternational,Inc.andTheBankofNewYorkMellon,asTrustee(incorporatedbyreferencetoExhibit4.4toEnsco'sCurrentReportonForm8-KfiledonMay31,2011,FileNo.1-8097).
4.9 — FormofGuaranteebyEnscoplc(incorporatedbyreferencetoExhibit4.4toEnsco'sCurrentReportonForm8-KfiledonMay31,2011,FileNo.1-8097).
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ExhibitNumber DescriptionofExhibit
4.10 — Indenture,datedMarch17,2011,betweenEnscoplcandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.22toPost-EffectiveAmendmentNo.2toEnsco'sRegistrationStatementonFormS-3filedonMarch17,2011,FileNo.333-156705).
4.11 — FirstSupplementalIndenture,datedMarch17,2011,betweenEnscoplcandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.23toPost-EffectiveAmendmentNo.2toEnsco'sRegistrationStatementonFormS-3filedonMarch17,2011,FileNo.333-156705).
4.12 — SecondSupplementalIndenture,datedasofSeptember29,2014,betweenEnscoplcandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.1toEnsco'sQuarterlyReportonForm10-QfiledonOctober30,2014,FileNo.1-8097).
4.13 — ThirdSupplementalIndenture,datedasofMarch12,2015,betweenEnscoplcandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.3toEnsco'sCurrentReportonForm8-KfiledonMarch12,2015,FileNo.1-8097).
4.14 — FourthSupplementalIndenture,datedasofJanuary9,2015,betweenEnscoplcandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.2toEnsco'sCurrentReportonForm8-KfiledonJanuary11,2017,FileNo.1-8097).
4.15 — FormofNotefor4.50%SeniorNotesdue2024(incorporatedbyreferencetoExhibit4.2toEnsco'sQuarterlyReportonForm10-QfiledonOctober30,2014,FileNo.1-8097).
4.16 — FormofNotefor5.75%SeniorNotesdue2044(incorporatedbyreferencetoExhibit4.3toEnsco'sQuarterlyReportonForm10-QfiledonOctober30,2014,FileNo.1-8097).
4.17 — FormofNotefor5.20%SeniorNotesdue2025(incorporatedbyreferencetoExhibit4.4toEnsco'sCurrentReportonForm8-KfiledonMarch12,2015,FileNo.1-8097).
4.18 — FormofGlobalNotefor4.700%SeniorNotesdue2021(incorporatedbyreferencetoExhibitBofExhibit4.23toPost-EffectiveAmendmentNo.2toEnsco'sRegistrationStatementonFormS-3filedonMarch17,2011,FileNo.333-156705).
4.19 — FormofNotefor8.00%SeniorNotesdue2024(incorporatedbyreferencetoExhibit4.3toEnsco'sCurrentReportonForm8-KfiledonJanuary11,2017,FileNo.1-8097).
4.20 — RegistrationRightsAgreementdatedasofJanuary9,2017byandbetweenEnscoandCitigroupGlobalMarketsInc.,HSBCSecurities(USA)Inc.,BNPParibasSecuritiesCorp.,DeutscheBankSecuritiesInc.andDNBMarkets,Inc.(incorporatedbyreferencetoExhibit4.4toEnsco'sCurrentReportonForm8-KfiledonJanuary11,2017,FileNo.1-8097).
4.21 — FormofDeedofReleaseofShareholders(incorporatedbyreferencetoAnnexAtoEnsco'sProxyStatementonSchedule14AfiledonApril5,2011,FileNo.1-8097).
4.22 — Indenture,datedasofDecember12,2016,amongEnscoplc,EnscoJerseyFinanceLimitedandDeutscheBankTrustCompanyAmericas,asTrustee(incorporatedbyreferencetoExhibit4.1toEnsco'sCurrentReportonForm8-KfiledonDecember12,2016,FileNo.1-8097).
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ExhibitNumber DescriptionofExhibit
4.23 — Formof3.00%ExchangeableSeniorNotedue2024(incorporatedbyreferencetoExhibitAofExhibit4.1toEnsco'sCurrentReportonForm8-KfiledonDecember12,2016,FileNo.1-8097).
4.24 — DeedPoll,datedasofDecember12,2016,executedbyEnscoplc(incorporatedbyreferencetoExhibit4.3toEnsco'sCurrentReportonForm8-KfiledonDecember12,2016,FileNo.1-8097).
5.1** — OpinionofLatham&WatkinsLLP(London)astothelegalityofthesecuritiesbeingoffered.
10.1 — FourthAmendedandRestatedCreditAgreement,datedMay7,2013,byandamongEnscoplc,andPrideInternational,Inc.,asBorrowers,theBanksnamedtherein,Citibank,N.A.,asAdministrativeAgent,DNBBankASA,asSyndicationAgent,DeutscheBankSecuritiesInc.,HSBCBankUSA,NAandWellsFargoBank,NationalAssociation,asCo-DocumentationAgents,andCitigroupGlobalMarketsInc.,DNBMarkets,Inc.,DeutscheBankSecuritiesInc.,HSBCSecurities(USA)Inc.andWellsFargoSecurities,LLC,asJointLeadArrangersandJointBookManagers(incorporatedbyreferencetoExhibit10.1toEnsco'sCurrentReportonForm8-KfiledonMay13,2013,FileNo.1-8097).
10.2 — FirstAmendmenttotheFourthAmendedandRestatedCreditAgreement,datedasofSeptember30,2014,byandamongEnscoplc,andPrideInternational,Inc.,thelendersnamedtherein,andCitibank,N.A.,asAdministrativeAgent(incorporatedbyreferencetoExhibit10.1toEnsco'sCurrentReportfiledonForm8-KonOctober1,2014FileNo.1-8097).
10.3 — SecondAmendmenttoFourthAmendedandRestatedCreditAgreement,datedasofMarch9,2015,byandamongEnscoplc,PrideInternational,Inc.,thelenderspartytheretoandCitibank,N.A.,asAdministrativeAgent(incorporatedbyreferencetoExhibit10.1toEnsco'sCurrentReportfiledonForm8-KonMarch12,2015FileNo.1-8097).
10.4 — ThirdAmendmenttoFourthAmendedandRestatedCreditAgreement,datedasofJuly1,2016,byandamongEnscoplc,PrideInternational,Inc.,thelenderspartytheretoandCitibank,N.A.,asAdministrativeAgent(incorporatedbyreferencetoExhibit10.1toEnsco'sQuarterlyReportfiledonForm10-QonOctober27,2016FileNo.1-8097).
10.5 — ExtensionAgreementtoFourthAmendedandRestatedCreditAgreement,datedOctober4,2016,byandamongEnscoplc,PrideInternational,Inc.,thelenderspartytheretoandCitibank,N.A.,asAdministrativeAgent(incorporatedbyreferencetoExhibit10.2toEnsco'sQuarterlyReportfiledonForm10-QonOctober27,2016FileNo.1-8097).
10.6 — FourthAmendmenttoFourthAmendedandRestatedCreditAgreement,datedasofDecember15,2016,byandamongEnscoplc,PrideInternational,Inc.,thelenderspartytheretoandCitibank,N.A.,asAdministrativeAgent(incorporatedbyreferencetoExhibit10.1toEnsco'sCurrentReportfiledonForm8-KonDecember16,2016FileNo.1-8097).
15.1* — Letterregardingunauditedinterimfinancialinformation
21.1*** — SubsidiariesofEnsco.
23.1* — ConsentofKPMGLLP.
23.2* — ConsentofPricewaterhouseCoopersLLP.
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ExhibitNumber DescriptionofExhibit
23.3** — ConsentofLatham&WatkinsLLP(London)(includedinExhibit5.1).
24.1*** — PowerofAttorney.
99.1* — ConsentofMorganStanley&Co.LLC.
99.2* — ConsentofGoldmanSachs&Co.LLC.
99.3** — FormofProxyCardforEnscoplcGeneralMeeting.
99.4** — FormofProxyCardforAtwoodOceanics,Inc.SpecialMeeting.
99.5* — ConsentofDirectorNominee(JackE.Golden)
99.6* — ConsentofDirectorNominee(PhilD.Wedemeyer)
* Filedherewith.
** Tobefiledbyamendment.
*** Previouslyfiled.
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Exhibit15.1
July20,2017
EnscoplcLondon,England
Re:RegistrationStatementonFormS-4
Withrespecttothesubjectregistrationstatement,weacknowledgeourawarenessoftheusethereinofourreportdatedApril27,2017,relatedtoourreviewofinterimfinancialstatements.
PursuanttoRule436undertheSecuritiesActof1933(theAct),suchreportisnotconsideredpartofaregistrationstatementpreparedorcertifiedbyanindependentregisteredpublicaccountingfirm,orareportpreparedorcertifiedbyanindependentregisteredpublicaccountingfirmwithinthemeaningofSections7and11oftheAct.
/s/KPMGLLP
Houston,Texas
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Exhibit15.1
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Exhibit23.1
ConsentofIndependentRegisteredPublicAccountingFirm
TheBoardofDirectorsEnscoplc:
WeconsenttotheuseofourreportsdatedFebruary28,2017,withrespecttotheconsolidatedbalancesheetsofEnscoplcandsubsidiariesasofDecember31,2016and2015,andtherelatedconsolidatedstatementsofoperations,comprehensiveincome(loss),andcashflows,foreachoftheyearsinthethree-yearperiodendedDecember31,2016,andtheeffectivenessofinternalcontroloverfinancialreportingasofDecember31,2016,incorporatedhereinbyreferenceandtothereferencetoourfirmundertheheading"Experts"intheregistrationstatement.
/s/KPMGLLP
Houston,TexasJuly20,2017
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Exhibit23.1
ConsentofIndependentRegisteredPublicAccountingFirm
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Exhibit23.2
CONSENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
WeherebyconsenttotheincorporationbyreferenceinthisAmendmentNo.1totheRegistrationStatementonFormS-4ofEnscoplcofourreportdatedNovember15,2016relatingtothefinancialstatementsandtheeffectivenessofinternalcontroloverfinancialreporting,whichappearsinAtwoodOceanics,Inc.'sAnnualReportonForm10-KfortheyearendedSeptember30,2016.Wealsoconsenttothereferencetousundertheheading"Experts"insuchRegistrationStatement.
/s/PricewaterhouseCoopersLLP
Houston,TexasJuly20,2017
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Exhibit23.2
CONSENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
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Exhibit99.1
ConsentofMorganStanley&Co.LLC
WeherebyconsenttotheuseinAmendmentNo.1totheRegistrationStatementofEnscoplconFormS-4(the"RegistrationStatement")andintheJointProxyStatement/ProspectusofEnscoplcandAtwoodOceanics,Inc.,whichispartoftheRegistrationStatement,ofourwrittenopinion,datedMay29,2017,appearingasAnnexBtosuchRegistrationStatement,andtothedescriptionofsuchopinionandtothereferencestheretoandtoournamecontainedthereinundertheheadings"Summary—OpinionofFinancialAdvisortoEnsco,""RiskFactors—RisksRelatingtotheMerger,""TheMerger—BackgroundoftheMerger,""TheMerger—Ensco'sReasonsfortheMerger;RecommendationoftheEnscoBoardofDirectors,""TheMerger—Atwood'sReasonsfortheMerger;RecommendationoftheAtwoodBoardofDirectors,""TheMerger—OpinionofFinancialAdvisortoEnsco,"and"TheMerger—CertainUnauditedFinancialForecastsPreparedbytheManagementofEnsco."Ingivingtheforegoingconsent,wedonotadmitthatwecomewithinthecategoryofpersonswhoseconsentisrequiredunderSection7oftheSecuritiesActof1933,asamended(the"SecuritiesAct"),ortherulesandregulationspromulgatedthereunder,nordoweadmitthatweareexpertswithrespecttoanypartofsuchRegistrationStatementwithinthemeaningoftheterm"experts"asusedintheSecuritiesActortherulesandregulationspromulgatedthereunder.
Houston,TexasJuly20,2017
MORGANSTANLEY&CO.LLC
By:
/s/YosukeNishibayashi
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Exhibit99.1
ConsentofMorganStanley&Co.LLC
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Exhibit99.2
July20,2017
BoardofDirectorsAtwoodOceanics,Inc.15011KatyFreeway,Suite800Houston,TX77094
Re: AmendmentNo.1toRegistrationStatementonFormS-4ofEnscoplc,filedJuly20,2017(the"RegistrationStatement")
Gentlemen:
Referenceismadetoouropinionletter,datedMay29,2017("OpinionLetter"),withrespecttothefairnessfromafinancialpointofviewtotheholders(otherthanEnscoplc("Ensco")anditsaffiliates)oftheoutstandingordinaryshares,parvalue$1.00pershare(the"Shares")ofAtwoodOceanics,Inc.(the"Company")oftheexchangeratioof1.60sharesofClassAordinaryshares,parvalue$0.10pershare,ofEnscotobepaidforeachSharepursuanttotheAgreementandPlanofMerger,datedasofMay29,2017,byandamongEnsco,EchoMergerSubLLC,awhollyownedsubsidiaryofEnsco,andtheCompany.
TheOpinionLetterisprovidedfortheinformationandassistanceoftheBoardofDirectorsoftheCompanyinconnectionwithitsconsiderationofthetransactioncontemplatedtherein.WeunderstandthattheCompanyhasdeterminedtoincludeouropinionintheRegistrationStatement,asamended.Inthatregard,weherebyconsenttothereferencetoourOpinionLetterunderthecaptions"Summary—OpinionofFinancialAdvisortoAtwood","AtwoodProposal1—TheMerger:BackgroundoftheMerger","AtwoodProposal1—TheMerger:Atwood'sReasonsfortheMerger;RecommendationsoftheAtwoodBoardofDirectors","AtwoodProposal1—TheMerger:CertainUnauditedFinancialForecastsPreparedbytheManagementofAtwood"and"AtwoodProposal1—TheMerger:OpinionofFinancialAdvisortoAtwood"andtotheinclusionoftheforegoingopinionintheJointProxyStatement/ProspectusincludedintheRegistrationStatement,asamended.Notwithstandingtheforegoing,itisunderstoodthatourconsentisbeingdeliveredsolelyinconnectionwiththefilingoftheRegistrationStatementandthatourOpinionLetterisnottobeused,circulated,quotedorotherwisereferredtoforanyotherpurpose,norisittobefiledwith,includedinorreferredto,inwholeorinpartinanyregistrationstatement(includinganysubsequentamendmentstotheRegistrationStatement),proxystatementoranyotherdocument,exceptinaccordancewithourpriorwrittenconsent.Ingivingsuchconsent,wedonottherebyadmitthatwecomewithinthecategoryofpersonswhoseconsentisrequiredunderSection7oftheSecuritiesActof1933ortherulesandregulationsoftheSecuritiesandExchangeCommissionthereunder.
Verytrulyyours,
/s/GoldmanSachs&Co.LLC(GOLDMANSACHS&CO.LLC)
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Exhibit99.2
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Exhibit99.5
ConsentofDirectorNominee
PursuanttoRule438ofRegulationCpromulgatedundertheSecuritiesActof1933,asamended(the"SecuritiesAct"),inconnectionwiththeRegistrationStatementonFormS-4(the"RegistrationStatement")ofEnscoplc(the"Company"),theundersignedherebyconsentstobeingnamedanddescribedasapersonwhowillbecomeadirectoroftheCompanyintheRegistrationStatementandanyamendmentorsupplementtoanyprospectusincludedinsuchRegistrationStatement,anyamendmenttosuchRegistrationStatementoranysubsequentRegistrationStatementfiledpursuanttoRule462(b)undertheSecuritiesActandtothefilingorattachmentofthisconsentwithsuchRegistrationStatementandanyamendmentorsupplementthereto.
INWITNESSWHEREOF,theundersignedhasexecutedthisconsentasofthe20thdayofJuly,2017.
By: /s/JACKE.GOLDEN
JackE.Golden
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Exhibit99.5
ConsentofDirectorNominee
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Exhibit99.6
ConsentofDirectorNominee
PursuanttoRule438ofRegulationCpromulgatedundertheSecuritiesActof1933,asamended(the"SecuritiesAct"),inconnectionwiththeRegistrationStatementonFormS-4(the"RegistrationStatement")ofEnscoplc(the"Company"),theundersignedherebyconsentstobeingnamedanddescribedasapersonwhowillbecomeadirectoroftheCompanyintheRegistrationStatementandanyamendmentorsupplementtoanyprospectusincludedinsuchRegistrationStatement,anyamendmenttosuchRegistrationStatementoranysubsequentRegistrationStatementfiledpursuanttoRule462(b)undertheSecuritiesActandtothefilingorattachmentofthisconsentwithsuchRegistrationStatementandanyamendmentorsupplementthereto.
INWITNESSWHEREOF,theundersignedhasexecutedthisconsentasofthe20thdayofJuly,2017.
By: /s/PHILD.WEDEMEYER
PhilD.Wedemeyer
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Exhibit99.6
ConsentofDirectorNominee