Advisory Approval of the Compensation Payments to Named Executive Officers
It is proposed, as an ordinary resolution to be proposed at the Rowan general meeting, that the Rowan shareholders vote on the approval, on a
non-binding advisory basis, of the compensation that may be paid or become payable to its named executive officers in connection with the transaction and the agreements and understandings pursuant to
which such compensation may be paid or become payable as more fully described in the section labeled "Rowan Transaction-Related Compensation Proposal".
Recommendation of the Rowan Board
The Rowan Board has unanimously approved the transaction agreement and the actions required and contemplated thereby, including the transaction
and determined that such actions are advisable and in the best interests of Rowan and its shareholders.
The Rowan Board unanimously recommends that Rowan shareholders vote
"FOR" the Rowan Scheme Proposal, "FOR" the Rowan Scheme and Articles Amendment Proposal and "FOR" the Rowan Transaction-Related Compensation Proposal.
See "The
TransactionRowan's Reasons for the Transaction; Recommendation of the Rowan Board of Directors" for a more detailed discussion of the Rowan Board's recommendation with respect to the
Rowan Scheme Proposal, the Rowan Scheme and Articles Amendment Proposal and the Rowan Transaction-Related Compensation Proposal.
Entitlement to Vote at the Rowan Shareholder Meetings; Quorum
Each Rowan shareholder who is entered in Rowan's register of members at the Notice Record Time will be entitled to receive notice of the Rowan
Court meeting and the Rowan general meeting. Each Rowan shareholder who is entered in Rowan's register of members at the Voting Record Time (expected to be
[
·
] a.m./p.m. (London time) on
[
·
], 2019) will be entitled to attend and vote on all resolutions to be put to the
Rowan Court meeting and the Rowan general meeting. Each beneficial owner of Rowan ordinary shares (i.e., holds its Rowan ordinary shares in "street name") as of the Beneficial Ownership Record
Time will be entitled to direct his or her broker, bank, trust or other nominee how to vote such Rowan ordinary shares on all resolutions to be put to the Rowan Court meeting and the Rowan general
meeting. If either meeting is adjourned, only those Rowan shareholders on the register of members at
[
·
] (London time) which is two days (excluding
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non-working
days) before the adjourned meeting will be entitled to attend and vote. If you are a "street name" holder of Rowan ordinary shares and wish to attend the Rowan Court meeting and/or the
Rowan general meeting, you will need to bring evidence of your share ownership in the form of a currently dated letter from your broker, bank, trust or other nominee and proof of your identity. On
verification of such evidence, you will be admitted to the Rowan Court meeting and/or the Rowan general meeting, but may not vote at the Rowan Court meeting and/or Rowan general meeting unless you are
a shareholder of record or hold a valid proxy from a shareholder of record.
The
presence at the Rowan general meeting of a member or members present in person or by proxy, who represent(s) at least the majority of the voting rights of all the members entitled to
attend and vote at the meeting is necessary to constitute a quorum. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present at the Rowan general
meeting.
Sanction of the Scheme of Arrangement by the Court
Under the Companies Act 2006, the Scheme of Arrangement also requires the sanction of the Court. The hearing by the Court to sanction the Scheme
of Arrangement is currently expected to be held on [
·
], 2019, subject to the prior
satisfaction or waiver of the other conditions set out in the section of this joint proxy statement titled "The Transaction AgreementConditions to Complete the Transaction." Scheme
Shareholders are entitled to attend the Court hearing, should they wish to do so, in person or through counsel.
Following
sanction of the Scheme of Arrangement by the Court, the Scheme of Arrangement will become effective in accordance with its terms upon a copy of the Court order being delivered
to the Registrar of Companies. This is presently expected to occur [
·
] business
days after the date of the Court hearing, subject to satisfaction (or, where applicable, waiver) of the conditions.
Upon the Scheme of Arrangement becoming effective, it will be binding on all Scheme Shareholders holding Scheme Shares at the Scheme Record Time (including the
depositary and so, in effect, Rowan beneficial owners), irrespective of whether or not they attended or voted in favor of, or against, the Scheme of Arrangement at the Rowan Court meeting or in favor
of, or against, or abstained from voting on the special resolution at the Rowan general meeting.
If
the Scheme of Arrangement does not become effective by [
·
] (or
such later date as may be agreed in writing by Rowan and Ensco and as the Court may approve (if such approval is required)), the Scheme of Arrangement will not become effective.
Proxies
Each copy of this document mailed to holders of Rowan ordinary shares is accompanied by two forms of proxy with instructions for voting. The
blue form of proxy corresponds to the Rowan Court meeting and the yellow form of proxy corresponds to the Rowan general meeting. If you hold stock in your name as a shareholder of record, you should
complete and return both proxy cards accompanying this document to ensure that your vote is counted at both of the meetings, or at any adjournment or postponement of the meetings, regardless of
whether you plan to attend the meetings. You may also authorize a proxy to vote your shares by telephone or through the Internet as instructed on the proxy card.
If
you hold your stock in "street name" through a broker, bank, trust or other nominee, you must direct your broker, bank, trust or other nominee to vote in accordance with the
instructions you have received from your broker, bank, trust or other nominee.
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If
you are a shareholder of record of Rowan ordinary shares, you can revoke your proxy or voting instructions or change your vote after you have delivered your proxy or voting
instructions in any of the following ways:
-
-
by sending a written notice to the Company Secretary of Rowan at the address set forth in this joint proxy statement, in time to be received
before the Rowan shareholder meetings, stating that you would like to revoke your proxy;
-
-
by completing, signing and dating another proxy card and returning it by mail in time to be received before the Rowan shareholder meetings, or
by submitting a later dated proxy by the Internet in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
-
-
by attending the Rowan shareholder meetings and voting in person (simply attending the meetings without voting will not revoke your proxy or
change your vote).
Written
notices of revocation and other communications about revoking your proxy should be addressed to:
Rowan
Companies plc
2800 Post Oak Blvd., Suite 5450, Houston, Texas 77056
Attention: Company Secretary
All
shares of Rowan ordinary shares represented by valid proxies that Rowan receives through this solicitation, and that are not revoked, will be voted in accordance with your
instructions on the proxy card.
If you fail to make a specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted "FOR" the
Rowan Scheme Proposal and "FOR" the Rowan Scheme and Articles Amendment Proposal.
The
Rowan Board is not currently aware of any business to be acted upon at the Rowan shareholder meetings other than the matters described in this joint proxy statement. If, however,
other matters are properly brought before the meetings, the persons appointed as proxies will have discretion to vote or act on those matters as in their judgment is in the best interest of Rowan and
its shareholders.
Solicitation of Proxies
Rowan will bear its own costs and expenses incurred in connection with the filing, printing and mailing of this joint proxy statement to Rowan
shareholders and the retention of any information agent or other service provider in connection with the transaction. This proxy solicitation is being made by Rowan on behalf of the Rowan Board. Rowan
has hired MacKenzie Partners, Inc. to assist in the solicitation of proxies. Rowan has agreed to pay MacKenzie Partners, Inc. a fee of $20,000 plus payment of certain fees and expenses
for its services to solicit proxies. In addition to this mailing, proxies may be solicited by directors, officers or employees of Rowan or its affiliates in person or by
telephone or electronic transmission. None of the directors, officers or employees will be directly compensated for such services.
In
accordance with the regulations of the SEC and the NYSE, Rowan also will reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in
sending proxies and proxy materials to beneficial owners of Rowan ordinary shares.
Settlement
[
·
]
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ROWAN SCHEME AND ARTICLES AMENDMENT PROPOSAL
For the reasons described above, Rowan is requesting its shareholders adopt the following resolution at the Rowan general meeting, which is a
special resolution:
THAT,
-
(a)
-
for the purpose of giving effect to the scheme of arrangement dated
[
·
] 2019 (the "Scheme") between Rowan and the holders of the Scheme Shares (as
defined in the Scheme), a print of which has been produced to this meeting and for the purpose of identification signed by the chairman hereof, in its original form or subject to any modification,
addition or condition agreed between Rowan and Ensco plc and approved or imposed by the Court, the directors of the Company be authorised to take all such action as they may consider necessary
or appropriate for carrying the Scheme into effect; and
-
(b)
-
with effect from the passing of this resolution, the articles of association of Rowan be amended by the adoption and inclusion of the
following new article 148:
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-
(b)
-
All cheques shall be in US dollars ($) and shall be made payable to the persons respectively entitled to the moneys represented thereby, and
the encashment of any such cheque shall be a complete discharge of all nominees and authorised persons' obligations under this Article 148.3 to pay the monies represented thereby and shall be a
complete discharge of Ensco's obligations under this Article 148.3 or otherwise to transfer Ensco Shares to the relevant holders of Post-Scheme
Shares.
-
148.4
-
On any reorganisation of, or material alteration to, the share capital of Rowan (including, without limitation, any subdivision and/or
consolidation) carried out after the Scheme Effective Time, the value of the consideration per Post-Scheme Share to be paid under Article 148.3 shall be adjusted by Rowan in such manner as the
auditors of Rowan may determine to be appropriate to reflect such reorganisation or alteration. References in this Article to such shares shall, following such adjustment, be construed
accordingly.
-
148.5
-
The Ensco Shares allotted and issued to a New Member pursuant to Article 148.3 shall be credited as fully paid and shall rank
equally in all respects with all other fully paid ordinary shares of Ensco in issue at that time, including as to voting rights and the right to receive and retain all dividends and other
distributions (if any) made, paid or declared in respect of the Ensco Shares after the time of such allotment.
-
148.6
-
No fraction of an Ensco Share shall be allotted, issued or transferred to a New Member pursuant to this Article 148. Any fraction of
an Ensco Share to which a New Member would otherwise have become entitled shall be aggregated with the fractional entitlements of any other New Members whose shares are being transferred under this
Article 148 on the same date and sold in the market and the net proceeds of sale (after the deduction of the expenses of sale, without interest and subject to any tax withholding) shall be paid
to the persons entitled thereto in due proportions to the fractional share(s) to which they would otherwise have been entitled. If, however, the amount which would otherwise be payable to a New Member
in respect of their fractional share(s) is less than an aggregate amount equal to $5.00, then that amount shall not be paid to such holder but shall instead be retained by Ensco for its
benefit.
-
148.7
-
To give effect to any transfer of Post-Scheme Shares required pursuant to Article 148.3, Rowan may appoint any person as attorney
and/or agent for the New Member to transfer the Post-Scheme Shares to the Purchaser and/or its nominees and do all such other things and execute and deliver all such documents or deeds as may in the
opinion of such attorney or agent be necessary or desirable to vest the Post-Scheme Shares in the Purchaser and pending such vesting to exercise all such rights attaching to the Post-Scheme Shares as
the Purchaser may direct. If an attorney or agent is so appointed, the New Member shall not thereafter (except to the extent that the attorney or agent fails to act in accordance with the directions
of the Purchaser) be entitled to exercise any rights attaching to the Post-Scheme Shares unless so agreed in writing by the Purchaser. The attorney or agent shall be empowered to execute and deliver
as transferor a form of transfer or instructions of transfer on behalf of the New Member (or any subsequent holder) in favour of the Purchaser and Rowan may give a good receipt for the consideration
for the Post-Scheme Shares and may register the Purchaser as holder thereof and issue to it certificate(s) for the same. Rowan shall not be obliged to issue a certificate to the New Member for the
Post-Scheme Shares. The Purchaser shall issue and allot or transfer (or procure the issue and allotment or transfer of) the Ensco Shares to the New Member pursuant in accordance with and subject to
Article 148.3 as soon as practicable and in any event no later than 28 days after the date on which the Post-Scheme Shares are issued to the New
Member.
-
148.8
-
If the Rowan Scheme shall not have become effective by the applicable date referred to in (or otherwise set in accordance with)
paragraph 6(B) of the Rowan Scheme, this Article 148 shall cease to be of any effect.
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-
148.9
-
Notwithstanding any other provision of these Articles, both Rowan and the board of directors of Rowan shall refuse to register the transfer
of any Scheme Shares effected between the Scheme Record Time and the Scheme Effective Time (as defined in the Rowan Scheme) other than to the Purchaser and/or its nominees pursuant to the Rowan
Scheme.
"
Vote Required and Rowan Board Recommendation
Assuming a quorum is present, the Rowan Scheme and Articles Amendment Proposal will be passed if at least 75% of the votes cast at the meeting
(in person or by proxy) are cast in favor of this proposal.
Completion
of the transaction is conditional on Rowan shareholder approval of the Rowan Scheme and Articles Amendment Proposal.
The Rowan Board unanimously recommends that you vote "FOR" the Rowan Scheme and Articles Amendment Proposal. If no indication is given as to how you want your
Rowan ordinary shares to be voted, the persons designated as proxies will vote the proxies received "FOR" the Rowan Scheme and Articles Amendment Proposal.
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ROWAN TRANSACTION-RELATED COMPENSATION PROPOSAL
In accordance with Section 14A of the Exchange Act, Rowan is providing its shareholders with the opportunity to cast an advisory,
non-binding vote at the Rowan general meeting on the compensation that may be paid or become payable to its named executive officers in connection with the transaction and the agreements and
understandings pursuant to which such compensation may be paid or become payable. For a more detailed summary of the compensation payments, see "The TransactionRowan's Directors and
Officers Have Financial Interests in the Transaction" and "The TransactionQuantification of Potential Payments and Benefits to Rowan's Named Executive Officers in Connection with the
Transaction." As required by those rules, Rowan is asking its shareholders to vote on the adoption of the following resolution:
"RESOLVED,
that the compensation that may be paid or become payable to Rowan's named executive officers in connection with the transaction, as disclosed pursuant to Item 402(t) of
Regulation S-K in the table in the section of the proxy statement entitled "The TransactionRowan Directors and Officers Have Financial Interests in the Transaction." and "The
TransactionQuantification of Potential Payments and Benefits to Rowan's Named Executive Officers in Connection with the Transaction," including the associated narrative discussion, are
hereby APPROVED on an advisory (non-binding) basis."
The
votes on each proposal are separate and apart from the votes on the other proposals. Accordingly, you may vote to approve certain of the proposals and vote not to approve other
proposals. Because the vote on this compensation proposal is advisory in nature only, it will not be binding on Rowan or
Ensco. Accordingly, if the proposals related to the Scheme of Arrangement are approved and the transaction is completed, the compensation may become payable, subject only to the conditions applicable
thereto, regardless of the outcome of the non-binding, advisory vote of the Rowan shareholders.
Vote Required and Rowan Board Recommendation
Assuming a quorum is present, the Rowan Transaction-Related Compensation Proposal will be passed if a simple majority of the votes cast at the
meeting (in person or by proxy) are cast in favor of this proposal.
Completion
of the transaction is not conditioned on approval of the Rowan Transaction-Related Compensation Proposal.
The Rowan Board unanimously recommends that you vote "FOR" the Rowan Transaction-Related Compensation Proposal. If no indication is given as to how you want your
Rowan ordinary shares to be voted, the persons designated as proxies will vote the proxies received "FOR" the Rowan Transaction-Related Compensation Proposal.
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THE TRANSACTION
Background of the Transaction
The Ensco Board, together with Ensco's executive management team, periodically reviews strategies to improve Ensco's capital structure, optimize
operational efficiency and enhance Ensco's future growth opportunities and shareholder value. The review of future growth opportunities encompasses a range of potential strategies, including:
improving Ensco's existing drilling rig fleet through capital improvements and investments in innovation; expanding the markets in which Ensco operates through joint ventures and/or strategic
partnerships; acquisitions of individual or groups of drilling rigs; and larger scale business combinations and strategic transactions, including combinations with peer group companies. The Ensco
Board established the Strategic Transactions Advisory Committee of the Ensco Board (the "Ensco Advisory Committee") in May 2017 consisting of Messrs. Paul E. Rowsey, the Non-Executive Chairman
of the Ensco Board, J. Roderick Clark, and C. Christopher Gaut to serve as an advisory committee assisting executive management with the review and assessment of potential strategic
transactions.
As
part of its strategy, Ensco acquired Atwood in October 2017. Following the acquisition of Atwood, Ensco continued its periodic review and also considered further strategic
combinations, including a combination with Rowan.
Similarly, as part of Rowan's ongoing strategic planning process, the Rowan Board, together with Rowan's executive management team, regularly reviews and assesses Rowan's long-term
strategic plan and goals, opportunities, overall industry trends, Rowan's financial leverage and financing options, the competitive environment in which Rowan operates and Rowan's short- and long-term
performance, with the goal of promoting the success of Rowan. In connection with these activities, the Rowan Board met from time-to-time in the ordinary course of business to consider and evaluate
potential strategic alternatives, including business combinations, acquisitions, dispositions, internal restructurings, joint ventures, the purchase of distressed assets and similar transactions.
Additionally, the Rowan Board from time-to-time assessed the potential risks Rowan faced in executing its strategic plan, including the highly competitive landscape, cyclicality and intense price
competition in the offshore drilling industry, the oversupply of drilling units in the worldwide fleet, its financial leverage, increased consolidation and restructuring of the offshore drilling
industry, oil and gas prices and other macroeconomic trends. Specifically, due to these factors affecting the industry generally, the Rowan Board concluded that a multi-pronged strategy was necessary
to maximize shareholder value, including, among other things, exploring a variety of strategic transactions and asset lease and purchase opportunities.
As
part of Rowan's continuing assessment of strategic alternatives and efforts, Rowan executive management periodically met with investment banks covering the offshore drilling industry,
including Goldman Sachs. In addition, from time-to-time, Rowan received general inquiries or expressed interest regarding strategic transactions involving Rowan or certain of its businesses or assets
as well as discussing with potential counterparties the possible acquisition of additional rigs. The Rowan Board determined that none of these inquiries or resulting discussions was sufficiently
compelling to be potentially actionable, other than its formation of an offshore drilling joint venture with the Saudi
Arabian Oil Company ("Aramco"), the purchase of two recently built jack-ups in Brazil, both of which are described below and, ultimately, the combination with Ensco.
In
the fourth quarter of 2014, certain representatives of Aramco entered into discussions with Dr. Thomas Burke, a director and Chief Executive Officer and President of Rowan, and
other Rowan representatives about the possibility of creating a joint venture with the purpose of offshore drilling in the Kingdom of Saudi Arabia and potentially elsewhere.
At
the beginning of 2015, Aramco commenced a formal process to select a partner for an offshore drilling company. In the second phase of this process, which started in the beginning of
the second
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quarter
of 2015, Rowan was one of three finalists. The other two finalists were offshore drillers of significantly larger scale and more resources compared to Rowan.
In
the third quarter of 2015, after two rounds of management presentations, which included financial and other proposals, Aramco selected Rowan as the potential future joint venture
partner for offshore drilling. Dr. Burke made multiple visits to Saudi Arabia to promote Rowan's proposal. The Rowan Board concluded that the Rowan executive management team, led by
Dr. Burke, was instrumental in helping Rowan achieve this result based on their personal effort to engage with Aramco and its strategic goals.
From
the second quarter of 2015 to the fourth quarter of 2016, Rowan, represented by Dr. Burke and others, and Aramco negotiated the terms of the offshore drilling joint venture.
Between
late 2015 and August 2016, Dr. Carl Trowell, a director and President and Chief Executive Officer of Ensco, and Dr. Burke held several informal and non-specific
conversations exploring whether a combination of the two companies could add value to shareholders and under which conditions a combination might happen. These conversations did not result in
any formal engagement between the parties.
In
the first quarter of 2016, Rowan made two proposals to purchase Party A, a global provider of offshore contract drilling services with jack-up rigs and lift-boats.
Additionally,
in the second and fourth quarters of 2016, Rowan made offers to purchase two harsh environment jack-ups from Party A. Ultimately, Party A decided to pursue other
opportunities for the sale of these assets.
During
the summer and fall of 2016, members of the Rowan Board and Rowan executive management engaged in a series of exploratory conversations and meetings with Party B, a global
provider of offshore contract drilling services with jack-up and floating rigs, regarding a possible transaction.
Shortly
after Rowan had commenced further discussions with Party B, in August 2016, Dr. Trowell contacted Dr. Burke to discuss Rowan's interest in a possible business
combination with Ensco. Dr. Burke and Dr. Trowell agreed to further discuss a possible combination.
On
October 27, 2016, Rowan held a meeting of the Rowan Board, during which the Rowan Board and executive management conducted a strategic assessment, including assessing the
current industry dynamics, Rowan's competitive position and evaluating Rowan's long-range forecast under a variety of scenarios. At this meeting, the Rowan Board and Rowan executive management
discussed the conversation between Dr. Trowell and Dr. Burke. The Rowan Board directed executive management to temporarily postpone discussions with Ensco given on-going negotiations
regarding ARO, the on-going discussions with Party B and the continuing bid to acquire two harsh environment assets from Party A.
On
November 7, 2016, Dr. Trowell again contacted Dr. Burke to ask if Rowan would have an interest in pursuing a possible business combination. Dr. Burke
stated that he would discuss the matter with the Rowan Board. The Rowan Board later determined that Rowan would continue to explore a combination with Party B based on the perceived benefits of that
combination at that time.
On
November 21, 2016, Rowan and Aramco, through their subsidiaries, entered into a Shareholders' Agreement to create a 50/50 joint venture to own, manage and operate offshore
drilling units in Saudi Arabia and potentially elsewhere, which joint venture would ultimately be named Saudi Aramco Rowan Offshore Drilling Company ("ARO"). Dr. Burke committed to support the
new venture by taking a seat on the ARO board of directors.
On
January 2017, Rowan engaged a financial advisor to review an opportunity to acquire Party C, a global provider of offshore contract drilling services with deep-water rigs. In that
same month, a
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Rowan
Board meeting was held during which the Rowan Board and executive management reviewed the opportunity with Party C and received the Rowan Board's support to further explore the opportunity.
In
the first and second quarters of 2017, following Rowan's and Party B's entry into a confidentiality agreement, Rowan and Party B commenced a series of discussions to determine, among
other matters, if a mutually acceptable structure could be achieved.
On
February 24, 2017, Dr. Burke met in Europe with principals of Party D, a global provider of offshore contract drilling services with harsh environment semisubmersibles.
Rowan evaluated an acquisition of Party D, but executive management was ultimately unable to make a recommendation to the Rowan Board to pursue the transaction.
From
January 2017 to March 2017, Party E, a global provider of offshore contract drilling services, and Mr. Stephen Butz, the Executive Vice President and Chief Financial Officer
of Rowan, had several conversations regarding the potential acquisition of Party E's jack-up fleet. Rowan's executive management evaluated the opportunity and, on March 9, 2017, received
approval from the Rowan Board to make a non-binding offer. However, after Mr. Butz discussed price expectations with Party E, Rowan's executive management decided not to submit a formal bid on
the assets given the parties' disparate price expectations.
On
April 26, 2017, the Rowan Board held a board meeting and Rowan executive management presented the opportunity to acquire Party C. The Rowan Board and executive management did
not find Party C's proposed valuation compelling, particularly given the associated risks of the opportunity and decided to keep monitoring the situation with Party C for changes rather than actively
pursue a potential business combination. The Rowan Board also reviewed several other potential transactions, including the acquisition of two recently built jack-ups in Brazil (P-59 & P-60) and
other potential corporate combinations. The Rowan Board also reviewed a combination with Party F, a global provider of offshore contract drilling services with jack-ups and floating rigs. While the
Rowan Board believed the industrial logic of a combination with Party F was attractive, they decided to not actively pursue the opportunity due to the low level of Party F's contracted backlog and
Party F's near-term debt maturities.
During
a customer workshop on May 3, 2017, Dr. Trowell approached Dr. Burke about Ensco's continued interest in a transaction with Rowan. Dr. Burke responded
that he would discuss a potential combination of Rowan and Ensco with the Rowan Board, which was scheduled to occur in late May 2017.
On
May 10, 2017, Rowan was notified that it was the highest bidder at auction of P-59 & P-60, two recently built jack-ups in Brazil.
On
May 25, 2017, Dr. Burke and Dr. Trowell met in London, England. Dr. Trowell noted that Ensco would be interested in a potential combination with Rowan.
Dr. Burke informed Dr. Trowell that Dr. Burke believed the Rowan Board would be amenable to further discussions provided the terms of the combination were compelling. However,
while Dr. Burke had discussed a potential combination with Ensco with Rowan's Chairman, he had yet to discuss it with the Rowan Board, which he was scheduled to do later that day.
Later
that day, Rowan's Board, together with executive management, held a telephonic meeting and discussed the potential purchase at auction of the two recently built jack-ups
(P-59 & P-60), a potential combination with Party B and a potential combination with Ensco. Rowan executive management recommended, that for several reasons, Rowan should focus on pursing a
transaction with Party B. If a transaction with Party B was unsuccessful, then Rowan's executive management recommended that Rowan could consider a combination with Ensco or Party G, a global provider
of
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offshore
contract drilling services with jack-up and floating rigs. The Rowan Board agreed with this assessment and instructed executive management to pursue a combination with Party B.
On
May 30, 2017, Ensco announced its acquisition of Atwood.
On
June 1, 2017, the Chief Executive Officer of Party G and Dr. Burke discussed a possible transaction. Rowan and Party G entered into a confidentiality agreement on
June 12, 2017, to permit the parties to exchange confidential materials.
On
June 8, 2017, Party B informed Rowan that it would start a formal bidding process and provided Rowan with an instruction letter with respect to the process. Rowan
submitted a bid for Party B in July 2017. From that time through November 2017, Rowan and Party B engaged in extensive discussions regarding the financial and legal terms of a proposed
transaction and accompanying governance arrangements. Over that period, the Rowan Board met multiple times to review the potential combination with Party B. At its meeting in July, the Rowan
Board concurred with Rowan executive management's assessment that pursuing a combination with Party B was preferable to a transaction with Party G (with Ensco now engaged with the Atwood
combination). However, at the end of November
2017, negotiations with Party B were terminated after reaching an impasse over numerous remaining issues.
On
October 19, 2017, Rowan announced the commercial start-up of ARO.
On
December 10, 2017, the chief executive officer of Party G contacted representatives of Rowan to express Party G's interest in a possible transaction with Rowan.
Dr. Burke and Party G's Chief Executive Officer agreed to meet after the start of 2018.
The
next day, on December 11, 2017, Rowan and Party B agreed to recommence their negotiations that had terminated at the end of November 2017. From then until mid-February 2018,
Rowan and Party B continued discussions regarding a possible transaction. During this period, the Rowan Board evaluated the merits of the potential transaction with Party B several times. However,
towards the end of February 2018, Rowan and Party B again agreed to terminate discussions given continued disagreements over significant issues.
On
January 19, 2018, Rowan executive management met with advisors for Party H, a global provider of offshore contract drilling services with floating rigs that recently emerged
from restructuring, to discuss strategic alternatives under review by Party H. Rowan executive management commenced due diligence to evaluate the industrial and financial merits of a combination with
Party H.
On
February 5, 2018, a representative of Rowan discussed Party H's price expectations with Party H, after which Rowan executive management determined that further
diligence was not warranted given the significant difference in price expectations.
That
same month, Dr. Burke and the Chief Executive Officer of Party G met for breakfast to discuss a possible transaction between Rowan and Party G. Dr. Burke and Party G's
Chief Executive Officer agreed that each company's respective senior executives should meet to further discuss a possible transaction.
On
February 26, 2018, Rowan held a meeting of the Rowan Board to review various strategic alternatives, including remaining a standalone company, acquiring additional rigs in
asset transactions or engaging in a business combination with other offshore drilling companies. Representatives of Rowan executive management and Goldman Sachs also attended. The Rowan Board reviewed
material about and discussed potential transactions with both Ensco and Party G. There was a discussion concerning the likelihood that Ensco would pay a meaningful premium for Rowan given Ensco's
experience with the shareholder activist campaign with respect to the Atwood acquisition and overall market sentiment in the offshore drilling industry. The Rowan Board further discussed certain
concerns with Party G and potential solutions, none of which seemed commercially satisfactory, but which were
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nonetheless
worthy of additional investigation. The Rowan Board reviewed the 10-year historical exchange ratio of Rowan common shares compared to both Party G and Ensco's respective equity securities
and determined that the then-current exchange ratio was at a multi-year high-point in favor of Rowan shareholders. Rowan executive management advised the Rowan Board that, in management's opinion,
Ensco's fleet was significantly improved given its acquisition of Atwood, which made a combination with Ensco more attractive than before its merger with Atwood. The Rowan Board determined to pursue
both the Ensco and Party G opportunities contemporaneously and to evaluate each transaction at a further date after additional analysis.
On
March 3, 2018, executives of Rowan and their counterparts from Party G met to discuss initial due diligence around the aforementioned concerns. On March 19, 2018, Rowan
and Party G entered into an amendment to the June 12, 2017 confidentiality agreement to allow for the exchange of certain sensitive information through a clean team. Throughout the month, Rowan
and Party G exchanged due diligence materials.
On
March 23, 2018, Dr. Burke and Dr. Trowell met in Houston, Texas for dinner. Dr. Trowell again queried whether Rowan would be interested in a possible
transaction with Ensco. Dr. Trowell proposed a merger transaction structure, with neither party's shareholders receiving a premium to market value. Dr. Burke again reiterated that the
Rowan Board was amenable to discussions subject to acceptable terms. However, Dr. Burke noted that the Rowan Board would want a premium for Rowan shareholders. Dr. Trowell reiterated the
merger transaction structure, with neither party's shareholders receiving a premium to market value. Dr. Burke committed to communicate a combination as described by Dr. Trowell to the
chairman of the Rowan Board, Mr. William Albrecht, and the broader Rowan Board.
On
March 28, 2018, Rowan held a meeting of the Rowan Board during which the Rowan Board and Rowan executive management discussed both potential transactions with Party G and
Ensco, in addition to other routine matters. The Rowan Board determined that concerns around Party G undercut the strategic rationale of the possible transaction with Party G and the potential benefit
to Rowan shareholders. The Rowan Board instructed Rowan executive management to terminate discussions with Party G. The Rowan Board then discussed a possible combination with Ensco. Following that
discussion, the Rowan Board instructed Rowan executive management to continue discussions with Ensco.
On
March 29, 2018, Rowan terminated discussions with Party G regarding a potential transaction.
On
April 26, 2018, Ensco and Rowan entered into a mutual confidentiality agreement (the "confidentiality agreement") with mutual standstill provisions. Following the execution of
the confidentiality agreement, Ensco and Rowan began to share confidential information regarding their operations.
During
a meeting of the Ensco Advisory Committee held on April 27, 2018, Ensco executive management, consisting of Dr. Trowell, Patrick Carey Lowe, Executive Vice President
and Chief Operating Officer of Ensco, Jonathan Baksht, Senior Vice President and Chief Financial Officer of Ensco, and Michael T. McGuinty, Senior Vice President, General Counsel and Secretary of
Ensco, presented a potential transaction with Rowan to the Ensco Advisory Committee. Following an update call with the Ensco Board later that day, the Ensco Board authorized Ensco executive management
to send a non-binding proposal to Rowan consistent with the terms presented to the Board.
On
April 27, 2018, Ensco sent a non-binding proposal to Rowan regarding a potential combination of Ensco and Rowan. Ensco proposed an all-stock transaction reflecting an
at-market, no premium combination, with an exchange ratio determined based on the trailing 30-day average trading price for the Rowan ordinary shares and Ensco ordinary shares preceding the signing.
The indication of interest
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included
Ensco's initial proposal for certain governance matters, including a nine member board of directors, with Ensco designating five directors and Rowan designating four directors.
On
April 30, 2018, Dr. Trowell again met Dr. Burke in Houston, Texas to discuss the April 27 framework. Dr. Trowell expressed his strong view that the
exchange ratio must reflect an at-market deal.
Throughout
May 2018, Rowan and Ensco conducted preliminary due diligence with respect to each other's operations, financial condition and legal matters.
On
May 2, 2018, Goldman Sachs delivered an executed disclosure letter regarding certain of its relationships with Ensco to Rowan. An engagement letter dated June 18, 2018,
detailing the terms of Goldman Sachs' engagement, was subsequently executed.
On
May 7, 2018, Rowan held a meeting of the Rowan Board during which the Rowan Board and executive management of Rowan and certain of Rowan's financial and legal advisors
discussed the proposal sent by Ensco and the possible combination between the companies. The Rowan Board asked
questions and considered the non-binding proposal in detail, together with the executive management of Rowan. The Rowan Board discussed the risks of certain unresolved Ensco contingent liabilities,
namely the litigation and regulatory review in connection with a terminated drilling contract in Brazil and certain on-going governmental investigations with respect to the procurement of such
drilling contract (collectively, the "Brazil matter"), and attractiveness of a combination with Ensco versus remaining a standalone company. The Rowan Board also discussed the implications of asking
for and the requirement to obtain a waiver of certain rights that Aramco had with respect to ARO in the event of a change in control of Rowan (the "CIC Rights"). The Rowan Board instructed executive
management to continue discussions with Ensco.
On
May 9, 2018, each of Ensco and Rowan executed clean team addendums to the confidentiality agreement, pursuant to which each party would share certain competitively sensitive
confidential information only with specified individuals from Ensco and Rowan and their outside financial and legal advisors. Following execution of the clean team addendums, Ensco and Rowan began to
share competitively sensitive confidential information in accordance with the procedures agreed between the parties and their advisors.
On
May 17, 2018, representatives of Ensco, including Dr. Trowell and Messrs. Baksht and McGuinty held a telephonic meeting with representatives of Rowan, including
Dr. Burke, Mr. Butz, Mark F. Mai, Executive Vice President, General Counsel and Secretary of Rowan, and Son Vann, Vice President of Corporate Development of Rowan, to discuss ARO.
On
May 18, 2018, Dr. Trowell and Messrs. McGuinty, Baksht and Lowe held a telephonic meeting with Dr. Burke and Messrs. Butz, Mai and Vann to discuss
Ensco's business operations, including an overview of its rig fleet.
During
a regular quarterly Ensco Board meeting held on May 20 and 21, 2018, Dr. Trowell and Messrs. Lowe, Baksht and McGuinty presented the Rowan opportunity to the
Ensco Board as one of several potential strategic options and discussed with the Ensco Board Rowan's fleet quality, potential synergies, geographic footprint, and the unique growth opportunity
presented by Rowan's partnership with Aramco through ARO. Given the attractiveness of a combination with Rowan, the Ensco Board determined that Ensco should continue discussions with Rowan regarding a
potential transaction.
On
May 23, 2018, Dr. Trowell and Dr. Burke met in London. During the meeting, they discussed, among other things, the strategic rationale for a potential business
combination between Ensco and Rowan, value creation opportunities, and potential synergies of such a combination. Dr. Trowell reiterated that Rowan's response to Ensco's non-binding proposal
should be a merger at market value.
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That
same day, Dr. Burke met with representatives of Party I, a global provider of offshore contract drilling services with jack-up and floating rigs, to discuss a possible
acquisition of certain jack-up assets from Party I.
On
May 24, 2018, Rowan held a meeting of the Rowan Board during which the Rowan Board and executive management discussed various strategic alternatives available to Rowan,
including three potential transactions, the possible combination with Ensco and several other opportunities to acquire assets from counterparties in financial distress. The Rowan Board discussed in
depth the possible combination between Rowan and Ensco and a response to Ensco's proposal from April 27, 2018. Among other things, the Rowan Board instructed executive management to pursue
terms of a possible combination that would result in Rowan's shareholders collectively owning 45% of the combined company pro forma for the transaction and provide for certain governance arrangements
in favor of Rowan. The Rowan Board also instructed Rowan executive management to further evaluate potential exposure arising from the Brazil matter. The Rowan Board discussed the CIC Rights and the
reasons why Aramco might exercise these rights. Additionally, the Rowan Board discussed whether Rowan must have the right to appoint the initial Chief Executive Officer of the combined company because
of the important dynamics involved in Dr. Burke's continued contributions to ARO and the ongoing relationship with Aramco. The Rowan Board concluded that continuity of Dr. Burke's
leadership between Rowan and the combined company was integral to delivering value from ARO. The Rowan Board instructed Rowan executive management to communicate these terms to Ensco.
On
May 29, 2018, Rowan sent Ensco a letter in response to Ensco's April 27
th
proposal. In this non-binding proposal, Rowan expressed its interest in
continuing discussions regarding a potential transaction and, based on instructions from the Rowan Board, proposed an exchange ratio that would result in Rowan's shareholders collectively owning 45%
of the combined company pro forma for the transaction. In addition, Rowan's letter described certain governance matters, including a desire that Rowan's Chief Executive Officer be the Chief Executive
Officer of the combined company, that Ensco's Chief Executive Officer or its chairman of the board be the chairman of the board of directors of the combined company, that Ensco and Rowan designate an
equal number of directors to the combined company's board and that the committees of the combined company's board have equal representation of legacy Ensco and Rowan directors.
Also
on May 29, 2018, Ensco retained Morgan Stanley to act as a financial advisor to Ensco in connection with a potential transaction with Rowan. Morgan Stanley's engagement was
formalized by execution of an engagement letter with Ensco on October 2, 2018.
On
June 3, 2018, the Ensco Board participated in a telephone call with representatives of Morgan Stanley to discuss a response to Rowan's May 29th letter and the
terms of a potential transaction proposed by Rowan.
On
June 5, 2018, Ensco sent an updated non-binding proposal to Rowan, which proposed that Rowan shareholders receive 2.50 ordinary shares of Ensco for each Rowan ordinary share as
transaction consideration. In addition, the proposal covered certain governance matters, including that Ensco's Chief Executive Officer be the Chief Executive Officer of the combined company, that the
chairman of the board of the combined company would be nominated by Rowan, that the combined company board would consist of 11 directors, including six Ensco directors and five Rowan directors and
that the headquarters of the combined company would be located in London, England or Houston, Texas.
Later
that day, Dr. Burke and Dr. Trowell discussed Ensco's proposal. Dr. Trowell told Dr. Burke that, due to feedback from Ensco shareholders during the
proxy solicitation with respect to the Atwood acquisition, Ensco would not agree to pay the premium that Rowan had sought in its May 29th response.
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On
June 11, 2018, the Rowan Board met to discuss, among other items, Rowan's pursuit of a purchase of assets from Party I, and a response to Ensco's June 5th letter.
As of June 8, 2018, the last trading day before the Rowan Board meeting, the exchange ratio was approximately 2.46 based on the close of trading the previous day, having moved in Rowan's favor
the last five days, making the Ensco proposal effectively an at-market offer. The Rowan Board again reviewed the implications of the CIC Rights, the dynamics involved in Dr. Burke's continued
contributions to ARO and determined that to ensure success of ARO, the combined company's CEO would need to be Dr. Burke. The Rowan Board again expressed significant concern over the contingent
liability associated with the Brazil matter and instructed executive management to continue to evaluate that exposure.
Dr. Burke
and Dr. Trowell had a lunch meeting in Houston, Texas on June 14, 2018 to discuss the terms of Ensco's June 5, 2018 proposal, the need for a consent
from Aramco related to the CIC Rights and outstanding due diligence items.
On
June 16, 2018, Dr. Burke and a representative from Party B held a meeting to discuss the previously abandoned negotiations and agreed that recommencing negotiations was
not warranted.
On
June 17, 2018, Dr. Burke met with a board member of Party J, a global provider of offshore contract drilling services with jack-ups rigs, in London, England. At the
meeting, they discussed the market
generally for offshore drilling services and a potential combination between Rowan and Party J. The representative of Party J stated that he would like for Rowan and Party J to engage in a
transaction. Dr. Burke responded that he would discuss the opportunity with the Rowan Board but deemed the combination likely unattractive to Rowan's shareholders because, in Dr. Burke's
opinion, Party J's relative valuation was much higher than Rowan's, its equity had significantly lower trading volumes than Rowan and Party J had a weak backlog position. The Rowan Board ultimately
agreed with Dr. Burke's assessment.
On
June 18, 2018, Dr. Burke and Mr. Albrecht met with Dr. Trowell and Mr. Rowsey in London to discuss the terms of a potential transaction, including
the proposed exchange ratio and the strategic rationale of the transaction. At the meeting, Mr. Albrecht noted the Rowan Board was focused on the continuity in relationships with ARO,
particularly with respect with Dr. Burke's role in the combined company. Dr. Trowell and Mr. Rowsey insisted that the transaction be effected in an at-market, no premium
transaction based on the trailing 30-day average share price for Rowan ordinary shares. Messrs. Rowsey and Albrecht met separately later that day to discuss governance matters.
Between
June 20, 2018 and August 31, 2018, Dr. Trowell and Dr. Burke had multiple phone calls to discuss the terms of a potential transaction between Rowan
and Ensco and the transaction process generally. During this time period and through the execution of the transaction agreement, Dr. Trowell updated Mr. Rowsey and Dr. Burke
updated Mr. Albrecht, in each case, on a regular basis regarding the status of discussions between the parties, and Mr. Rowsey had multiple phone calls with individual Ensco directors to
discuss the same, and Mr. Albrecht had multiple phone calls with individual Rowan directors to discuss the same.
On
June 29, 2018, Dr. Burke and Dr. Trowell had a telephone conversation. Dr. Trowell reiterated to Dr. Burke the terms on which the Ensco Board would
engage in a business combination transaction, including an at-market, no premium transaction based on the trailing 30-day average share price, that Ensco would appoint the initial chief executive
officer of the combined company and that Rowan would appoint the executive chairman of the combined company for a defined period of time. Dr. Burke expressed to Dr. Trowell the Rowan
Board's concern with the Brazil matter. Dr. Burke also informed Dr. Trowell that the Rowan Board was still considering Ensco's proposals and the various discussions during the preceding
month and would further discuss them at a board meeting in July 2018. Using an exchange ratio based on the close of trading the previous day, Ensco's "at market proposal" would mean that Rowan
shareholders receive 2.214 Ensco ordinary shares for each Rowan ordinary share as transaction consideration.
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That
same day, Mr. Albrecht and Mr. Rowsey also had a telephone conversation. Mr. Rowsey communicated the same terms to Mr. Albrecht that Dr. Trowell
had communicated to Dr. Burke.
On
July 3, 2018, Dr. Burke and Dr. Trowell had a call to discuss the transaction. Dr. Burke told Dr. Trowell that, based on conversations between
Dr. Burke and members of the Rowan Board, a merger on the terms proposed by Ensco seemed unlikely, but the Rowan Board would discuss the potential transaction at its board meeting in London at
the end of July.
On
July 9, 2018, Dr. Burke met representatives of Party I in London, England to continue their discussions of May 22, 2018.
Twice
in July 2018, representatives of Rowan met or communicated with officials from shipyards to discuss an acquisition of drilling assets from a financially distressed counterparty.
On
July 12, 2018, Dr. Burke and Mr. Butz met with a significant shareholder in Houston, Texas. At the meeting, the shareholder presented a concept for significantly
restructuring Rowan's balance sheet while creating a jack-up company and drillship company, both publicly traded entities, both to be managed by the current Rowan management team. The Rowan Board
subsequently reviewed the concept and determined that the transaction would not be in the best interest of Rowan stakeholders given the importance of scale, cost structure and credit profile, which
the proposed concept would cause to deteriorate.
On July 25, 26 and 27, 2018, Rowan held a meeting of the Rowan Board. The Rowan Board reviewed the medium- and long-term outlook for deep-water based on a third-party analysis and
compared that to Rowan's executive management's assessment of the future of the deep-water market. The Rowan Board also continued its on-going strategic assessment, including examining various
alternatives to a combination transaction such as a sale of Rowan drill ships or the movement of certain assets into new publicly traded holding companies. The Rowan Board determined that these
alternatives were not attractive. The Rowan Board also considered the acquisition of certain jack-up and floating rig opportunities. The Rowan Board concluded that the uncertain financial returns
against the significant risks of these opportunities did not merit further due diligence at this time. Rowan executive management advised the Rowan Board that, in management's opinion, the opportunity
with Party I was considerably less attractive than a combination with Ensco. Nevertheless, Rowan's executive management proposed that it was worth exploring this opportunity in the event a combination
with Ensco could not be achieved. The Rowan Board instructed Rowan executive management to continue its engagement with Party I.
On
July 27, 2018, during the Rowan Board meeting Mr. Albrecht and Mr. Rowsey had a telephone conversation to discuss various aspects of a proposed transaction.
During
the same Rowan Board meeting, the Rowan Board reviewed the strategic rationale of the Rowan/Ensco combination, together with the strengths and weaknesses of the proposed
transaction. The Rowan Board also considered (1) the historic exchange ratio between the two companies (and that the exchange ratio had moved in Ensco's favor since negotiations commenced),
(2) the relative EBITDA
and other financial contributions from the two companies, (3) certain pro forma financials of the combined company, (4) expected benefits of the proposed transaction
vis-à-vis Rowan on a standalone basis, (5) the Brazil matter and various considerations around ARO and (6) precedent merger-of-equals transactions. After discussion, and
upon receiving advice from its legal and financial advisors, the Rowan Board advised Rowan executive management to continue its pursuit of the transaction and then discussed the elements of a proposed
response to Ensco. Using an exchange ratio based on the close of trading the previous day, Ensco's "at market proposal" would mean that Rowan shareholders receive 2.003 Ensco ordinary shares for each
Rowan ordinary share.
On
August 2, August 12 and August 24, 2018, representatives of Rowan and representatives of Party I had telephone calls to continue their conversation of
July 9, 2018.
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On
August 8, 2018, in a phone conversation between Dr. Burke and Mr. Albrecht, Dr. Burke noted that, using an exchange ratio based on the close of trading the
previous day, Ensco's "at market proposal" would mean that Rowan shareholders would receive 1.788 Ensco ordinary shares for each Rowan ordinary share.
On
August 16, 2018, Ensco and its customer announced that they had settled all claims between them relating to the Brazil matter, with no payments being made by either party.
Rowan executive management considered this an important milestone that made a combination with Ensco more attractive.
During
an Ensco Board meeting held on August 21, 2018, Mr. Rowsey and Dr. Trowell updated the Ensco Board regarding their recent discussions with Mr. Albrecht
and Dr. Burke relating to the terms of a potential transaction and proposed governance matters, including Rowan's desire that Dr. Burke be the Chief Executive Officer of the combined
company due to his involvement in ARO and his working relationship with Aramco. The Ensco Board determined to continue discussions with Rowan on the basis that Rowan's Chief Executive Officer be the
Chief Executive Officer of the combined company provided that the transaction reflected an at-market, no premium combination, Ensco directors retained six of the 11 combined company board seats and
Ensco retained the right to appoint other key executive management positions.
On
August 24, 2018, Ensco sent a letter to Rowan reiterating its interest in a potential combination of Ensco and Rowan. The letter outlined Ensco's proposed terms for the
potential transaction, including (1) an all-stock transaction, (2) a no premium combination resulting in a relative ownership split in the combined company of 62% for Ensco shareholders
and 38% for Rowan shareholders, (3) agreement that Rowan's Chief Executive Officer would serve as Chief Executive Officer of the combined company,
(4) appointment of the Chief Operating Officer, Chief Financial Officer and General Counsel of the combined company by Ensco, (5) appointment of Ensco's Chief Executive Officer as
Executive Chairman of the combined company, (6) an 11 member board of directors of the combined company, comprising six Ensco directors and five Rowan directors, (7) a condition to
closing that Rowan obtain any required consents by the parties to ARO required in connection with the proposed transaction, and (8) the headquarters of the combined company would be in London,
England.
On
August 28, 2018, on behalf of Ensco, Dr. Trowell and Mr. Rowsey delivered to Mr. Albrecht and Dr. Burke, on behalf of Rowan, an additional
non-binding letter clarifying certain governance arrangements, including how certain appointment and removal rights would work for the Executive Chairman of the combined company, the term of the
Executive Chairman's tenure, and the roles and responsibilities of the Executive Chairman vis-à-vis the chief executive officer of the combined company.
On
August 29, 2018, Dr. Trowell contacted Dr. Burke to let him know that the SEC had informed Ensco that it was concluding its investigation related to the Brazil
matter without any enforcement action.
On
August 31, 2018, the Rowan Board convened a meeting by telephone to review the status of the potential transaction and its strategic rationale. The Rowan Board, among other
items, reviewed the proposed exchange ratio versus historic share performance between the two companies. The Rowan Board also reviewed additional transaction considerations, including the magnitude
and likelihood of expected synergies and the strategic advantages the combined company would have due to increased scale (including the capacity to develop new technology, the benefits of a more
diverse fleet and the ability to absorb the fixed costs of operations). In light of those transaction considerations, the Rowan Board determined a combination with Ensco to be highly attractive and
expressed willingness to consider an at-market exchange ratio. However, the Rowan Board instructed Rowan executive management that Rowan would not accept any discount to the trading price of Rowan's
ordinary shares
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immediately
prior to announcement. Rowan management also advised the Rowan Board that the SEC's investigation regarding the Brazil matter had concluded, which made an Ensco combination more
attractive. Using an exchange ratio based on the close of trading the previous day, Ensco's "at market proposal" would mean that Rowan shareholders receive 2.014 Ensco ordinary shares for each Rowan
ordinary share.
Rowan
executive management also again reviewed the proposal previously put forward by the Rowan shareholder which, after discussion, the Rowan Board again declined to pursue as the
proposal being put forth by Ensco was considerably more compelling for the long-term success of Rowan.
On August 31, 2018, Rowan sent a letter to Ensco in response to Ensco's August 24, 2018 letter, as clarified by Ensco's letter from August 28, 2018, indicating
Rowan's continued interest in the transaction and in proceeding to solicit Aramco's support for the proposed transaction. In its non-binding letter, Rowan proposed that (1) the combined company
include an independent lead director, which would be Rowan's chairman of the board initially, (2) Dr. Burke would waive the accelerated vesting of an equity retention grant awarded in
February 2017 and severance rights, both triggered by the move of his employment to London in connection with the proposed transaction, (3) the Executive Chairman of the combined company would
serve for a term of 18 months following the closing of the proposed transaction, and (4) supermajority voting requirements for the combined company's board and any agreed governance
requirements of the combined company for a period of two years would be set forth in revised articles of association of the combined company.
The
following day, Dr. Burke and Dr. Trowell had a telephone conversation regarding Rowan's response. During this call, Dr. Burke and Dr. Trowell concluded
that the governance arrangements were the most significant issues remaining.
On
September 4, 2018, Ensco publicly announced that the SEC had concluded its investigation and that the U.S. Department of Justice had stated that it had closed its inquiry into
the Brazil matter.
At
an industry conference on September 4, 2018, members of Rowan executive management made an investor presentation that included further disclosures regarding ARO, for which
Rowan had recently received permission from Aramco. Later that day, Dr. Burke and Dr. Trowell met to discuss the potential combination and had a follow-up telephone conversation on
September 6, 2018. Following the conversation, they had agreed a framework for determining the combined company's management team and generally resolved issues with respect to the roles and
responsibilities of the Executive Chairman and chief executive officer of the combined company. Additionally, they discussed the strategy for obtaining Aramco's waiver of the CIC Rights.
On September 6, 2018, the Ensco Board held a meeting during which Mr. Rowsey and Dr. Trowell updated the Ensco Board regarding recent discussions with Rowan, including
discussions regarding a framework for determining the combined company's management team and combined company board governance.
On
September 7, 2018, Mr. Rowsey called Mr. Albrecht to discuss the potential transaction, including the strategic rationale of the transaction, exchange ratio,
governance structure and executive management positions.
Mr. Lowe
met with Dr. Burke in Houston, Texas on September 8, 2018, to discuss ARO and the impact of a potential transaction on the operations of ARO. At the
meeting, Mr. Lowe and Dr. Burke discussed the need to obtain a waiver from ARO related to the CIC Rights.
On
September 10, 2018, Mr. Rowsey and Mr. Gaut met with Mr. Albrecht and Thomas R. Hix, a director of Rowan, in Houston, Texas to discuss the proposed
transaction, including the governance structure, executive management positions, and chief executive officer and executive chairman compensation matters (including a requirement that Dr. Burke
waive additional rights to the
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acceleration
of his time-based unvested restricted stock awards in order to align his interests with the shareholders of the combined company).
On
the evening of September 10, 2018, Gibson, Dunn & Crutcher LLP ("Gibson Dunn"), Ensco's U.S. legal advisor, sent Kirkland & Ellis LLP ("Kirkland"),
Rowan's legal advisor, a draft of the transaction agreement that proposed, among other provisions: (1) to expand the Ensco Board to include 11 directors in total and five Rowan directors;
(2) that the parties make substantially reciprocal representations and warranties; (3) substantially reciprocal restrictions on Ensco's and Rowan's conduct of business prior to closing;
(4) reciprocal no-shop covenants applicable to Ensco and Rowan; (5) a termination fee in an amount equal to one percent of Rowan's equity capitalization payable by Ensco and Rowan under
certain circumstances, including if either party's shareholders did not approve the transaction; and (6) a "force the vote" provision requiring both parties to hold a vote of their shareholders
regardless of whether such party's board of directors changed its recommendation for the proposed transaction.
On
September 10, 2018, representatives from Rowan, Kirkland, Ensco and Gibson Dunn met in Houston, Texas. During the meeting, the parties exchanged certain due diligence
information with each other and discussed the strategic importance of ARO and its support. Throughout the month of September until the parties executed the transaction agreement, the parties and their
respective legal counsel either met or participated in telephone conference calls with respect to due diligence matters, including on September 21, 2018, September 24, 2018 and
September 25, 2018.
Dr. Burke
called Dr. Trowell on September 12, 2018 to discuss ARO and specifically Ensco's proposal that the transaction agreement contain a condition to closing
with respect to ARO.
On
September 13, 18 and 20, 2018, Dr. Burke met with representatives of Aramco to discuss the combination of Ensco and Rowan and Aramco's waiver of the CIC Rights.
Dr. Burke stated to the Aramco representatives the combined company's commitment to the future success of ARO, as well as of his continued leadership. On September 17, 2018, Rowan sent a
formal waiver request to Aramco. On September 18, 2018, Dr. Trowell met with representatives of Aramco to discuss the combination of Ensco and Rowan.
Between
September 13 and September 18, Dr. Burke and Dr. Trowell met in Saudi Arabia and had several calls to discuss the possible combination and matters
related to ARO.
On
September 15, 2018, Kirkland sent Gibson Dunn a revised draft of the transaction agreement. The revised transaction agreement, among other things: (1) removed the
reciprocal "force the vote" provisions, (2) provided for reciprocal expense reimbursement by Ensco or Rowan in an amount not to exceed $10 million if the other party did not obtain
shareholder approval at its shareholder meeting, (3) increased the termination fee payable by Ensco to an amount equal to one percent of Ensco's equity capitalization, (4) provided for
the amendment of Ensco's existing Governance Policy regarding director appointments, the designation of six directors by Ensco and five directors by Rowan, (5) removed the closing condition
related to ARO and (6) extended the outside date for the transaction to 15 months.
On
September 17, 2018, Slaughter and May ("Slaughter"), Ensco's UK legal advisor, delivered the initial draft of the Scheme of Arrangement to Kirkland.
On
September 18, 2018, Kirkland sent Gibson Dunn a draft of the Ensco Rowan Corporate Governance Policy, which would take effect upon the closing of the proposed transaction, and
Kirkland subsequently sent Gibson Dunn a further revised draft of the Ensco Rowan Corporate Governance Policy on September 25, 2018. The Ensco Rowan Corporate Governance Policy set forth the
core responsibilities of the combined company's executive chairman, independent lead director and chief executive officer, and reflected Rowan's proposal for governance of the combined company,
including the following: (1) an 11 member board with six Ensco directors and five Rowan directors, (2) a
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nominating
and governance committee comprised of four members, with two Ensco directors and two Rowan directors and (3) the appointment of Dr. Trowell as Executive Chairman and
Dr. Burke as Chief Executive Officer of the combined company.
On
September 20, 2018, Gibson Dunn delivered to Kirkland a revised draft of the transaction agreement. Between September 20, 2018 and October 7, 2018, Gibson Dunn
and Slaughter, on behalf of Ensco, and Kirkland, on behalf of Rowan, engaged in a number of conversations regarding, and exchanged drafts of, the documents for the potential transaction, including,
among others, the transaction agreement and each party's disclosure schedules thereto, the Scheme of Arrangement and the Ensco Rowan Corporate Governance Policy.
Between
September 23, 2018 and October 4, 2018, Dr. Burke and Dr. Trowell had a series of telephone conversations regarding various aspects of the potential
combination, including management positions, governance considerations and duties of executives.
On September 24, 2018, the Ensco Board held a meeting. Members of Ensco's executive management provided the Ensco Board with an update regarding legal due diligence conducted to
date, the status of negotiations, a summary of the remaining material issues to be finalized and the key closing conditions in the transaction agreement. Mr. Baksht provided the Ensco Board
with an overview of the expected synergies and operational benefits of the combined company.
On
September 24, 2018, Rowan held a meeting of the Rowan Board. During the meeting, representatives of Rowan executive management and Goldman Sachs provided the Rowan Board with
an overview of financial due diligence conducted to date and representatives of Rowan management and Kirkland provided the Rowan Board with an overview of legal due diligence conducted to date. The
Rowan Board asked questions with respect to the due diligence findings and made additional requests for further due diligence with respect to certain matters. Representatives of Kirkland then provided
a summary of the then-current draft of the transaction agreement and the remaining material issues and answered the Rowan Board's questions with respect thereto. Following these presentations, the
Rowan Board discussed the benefits and detriments of the transaction. Among other things, the Rowan Board discussed the magnitude and likelihood of expected synergies and operational benefits the
combined company would achieve, and further discussed the importance the CIC Rights waiver to achieve such expectations. Finally, the Rowan Board discussed the open issues and instructed executive
management of Rowan, Kirkland and Goldman Sachs to attempt to resolve the remaining open issues.
Additionally,
at the same meeting, Dr. Burke agreed to Ensco's requirement that he waive his rights to acceleration of his time-based unvested restricted stock awards in order to
align his interests with the shareholders of the combined company and reduce the transaction costs.
On
October 4, 2018, Mukamala Oil Field Services Limited, a subsidiary of Saudi Aramco Development Company and holder of 50% of the interests of ARO, delivered a letter that, among
other things, waived its option, arising in connection with the proposed transaction, to purchase Rowan's interest in ARO and consented to the completion of the transaction.
That
same day, Dr. Burke and Dr. Trowell met in London to discuss the material outstanding issues, including the governance arrangements for the combined company.
Between
October 4, 2018 and October 6, 2018, Mr. Rowsey and Mr. Albrecht engaged in conversations regarding the terms of the proposed transaction, including
the governance of the combined company following the closing.
On
October 5, 2018, Dr. Burke and Dr. Trowell met in London again to discuss material outstanding issues, including the exchange ratio and the governance
arrangements for the combined company. After the close of trading on the NYSE, Dr. Burke and Dr. Trowell had a telephone call to discuss the exchange ratio to use in the transaction.
Dr. Burke proposed that the exchange ratio should
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be
based on the closing price at the end of trading that day and, therefore, should be 2.215. Dr. Trowell stated that he would discuss the matter with the Ensco Board.
The
same day, Ensco retained Citigroup Global Markets Inc. and HSBC Securities (USA) Inc. as co-financial advisors to Ensco in connection with the potential
transaction with Rowan.
Later
on October 6, 2018, the Ensco Board held a meeting, together with its legal and financial advisors, to discuss the proposed transaction. At this meeting, among other
matters, Ensco management discussed with the Ensco Board the diligence conducted with respect to Rowan, and Gibson Dunn and Slaughter reviewed with the Ensco Board the terms of the transaction
agreement, the Ensco Rowan Corporate Governance Policy and the Scheme of Arrangement. Representatives of Morgan Stanley rendered its oral opinion to the Ensco Board, subsequently confirmed by delivery
of a written opinion, dated October 6, 2018, that, as of the date of such opinion, and based upon and subject to the various assumptions made, procedures followed, matters considered and
qualifications and limitations on the scope of review undertaken as set forth in its written opinion, the exchange ratio pursuant to the transaction agreement was fair from a financial point of view
to Ensco. Following a discussion regarding the proposed transaction by the Ensco Board, including a discussion of the Chief Executive Officer and Executive Chairman Employment Agreements in executive
session, the Ensco Board unanimously determined that the form, terms and provisions of the transaction agreement and the transactions contemplated thereby, including the transaction and the allotment
and issuance of the Ensco ordinary shares and the Reverse Stock Split, were advisable, fair and reasonable to and in the best interests of Ensco and its shareholders. The Ensco Board unanimously
determined to recommend that Ensco shareholders vote to approve the Ensco Transaction Consideration Proposal and the Ensco Reverse Stock Split Proposal.
Following
the Ensco Board meeting, Dr. Trowell informed Dr. Burke that the Ensco Board approved the proposed terms of the transaction and the exchange ratio of 2.215, based
on the market price at the close of trading on October 5, 2018. Also on October 6, 2018, Rowan and Ensco finalized the remaining outstanding issues, including setting expense
reimbursement if a party's shareholders did not approve the transaction at $15 million instead of $10 million and establishing a threshold for remedial actions related to antitrust
matters at $400 million.
Later
on October 6, 2018, Rowan held a meeting of the Rowan Board in London, England. Members of Rowan's executive management, together with representatives from Kirkland, Goldman
Sachs and Rowan's compensation consultants, participated in the meeting in person and by telephone conference. At the meeting, representatives of Kirkland provided to the Rowan Board an update
regarding the terms of the transaction, including the terms of the transaction agreement, the governance policy and the employment agreements of Dr. Burke and Dr. Trowell to be entered
into in connection with the transaction. The Rowan Board discussed that the parties had agreed to an exchange ratio of 2.215 Ensco ordinary shares for each Rowan ordinary share. Also at the meeting,
Goldman Sachs reviewed with the Rowan Board its financial analyses of the exchange ratio provided for in the transaction and delivered to the Rowan Board an oral opinion, confirmed by delivery of a
written opinion dated October 7, 2018, to the effect that, as of such date and based upon and subject to the factors and assumptions stated in such opinion, the exchange ratio pursuant to the
transaction agreement was fair, from a financial point of view, to the holders (other than Ensco and its affiliates) of the Rowan ordinary shares. The Rowan Board then (i) unanimously
determined that the transaction and the scheme of arrangement were in the best interests of Rowan and the Rowan shareholders, and declared it advisable to enter into the transaction agreement,
(ii) approved the execution, delivery and performance of the transaction agreement and the consummation of the transactions contemplated thereby, including the transaction and the scheme of
arrangement, and (iii) resolved to recommend the adoption of the transaction agreement and the passing of the Rowan shareholder resolutions by the Rowan shareholders.
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That
night and the following day, Kirkland and Gibson Dunn finalized the transaction agreement and the ancillary documents.
Ensco
and Rowan then executed the transaction agreement on October 7, 2018. In connection with the execution of the transaction agreement and with respect to their employment upon
the consummation of the transaction, Dr. Burke entered into an employment agreement with Rowan Companies, Inc., ENSCO Global Resources Limited and, solely for the purposes of
guaranteeing the payments and obligations under his employment agreement, Ensco and Dr. Trowell entered into a new employment agreement with Ensco.
Also
on October 7, 2018, Dr. Trowell met with Dr. Burke in Houston, Texas to discuss the announcement of the transaction and communications to investors regarding
the proposed transaction.
Prior
to the opening of markets in the United States on October 8, 2018, Ensco and Rowan jointly announced the transaction and held a joint investor conference call.
Ensco's Reasons for the Transaction; Recommendation of the Ensco Board of Directors
By vote at a meeting held on October 6, 2018, the Ensco Board unanimously determined that the form, terms and provisions of the
transaction agreement and the actions required and contemplated thereby, including the allotment and issuance of the Ensco ordinary shares, are advisable, fair and reasonable to and in the best
interests of Ensco and its shareholders.
The Ensco Board unanimously recommends that Ensco shareholders vote "FOR" the Ensco Transaction Consideration
Proposal.
In
deciding to approve the transaction agreement and to recommend that Ensco shareholders vote to approve the Ensco Transaction Consideration Proposal, the Ensco Board consulted with
Ensco's management and financial and legal advisors and considered several factors.
The
Ensco Board considered a number of factors when evaluating the transaction, the majority of which support the Ensco Board's determination that the transaction is advisable, fair and
reasonable to and in the best interest of Ensco and its shareholders. The Ensco Board considered these factors as a whole and without assigning relative weights to each such factor, and overall
considered the relevant factors to be favorable to, and in support of, its determinations and recommendations. These factors included:
-
-
that the transaction would create a more diversified company, with a presence in nearly all major offshore regions and asset classes and a
larger customer base, combining two world-class operators that have complementary cultures and share similar core values centered around safety, operational excellence, technology, employee
development and customer satisfaction;
-
-
that the transaction would strategically position the combined company for offshore recovery through a broad geographic footprint, diverse
customer base and exposure to customer demand across all water depths;
-
-
that the combined company would benefit from a unique growth opportunity through the partnership with Saudi Aramco, the world's largest
customer for jack-up rigs;
-
-
that the combined company would operate a high-specification rig fleet capable of meeting customer demand across all water depths and in the
most challenging environments, with a strong portfolio of highest-specification drillships and ultra-harsh and modern harsh environment jackups;
-
-
that both Ensco and Rowan are focused on investing in innovation and technology, and that the combined company will be able to develop and
implement technologies more economically and efficiently and deploy those technologies across a broader base of drilling rigs;
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-
-
that Ensco management expects the transaction to result in meaningful cost savings and operational synergies, including anticipated cost
synergies of more than $150 million on an annualized basis by the end of the year following consummation of the transaction;
-
-
that the combined company would have significant liquidity of approximately $3.9 billion as of June 30, 2018, including
$1.9 billion of cash and short-term investments;
-
-
that the combined company would benefit from an estimated revenue backlog of approximately $2.7 billion as of June 30, 2018, plus
additional unconsolidated revenue backlog from its partnership with Saudi Aramco;
-
-
that the combined company's geographic and customer diversification, enhanced rig fleet and stronger financial position will provide for
greater access to the capital markets and improve the combined company's competitiveness going forward;
-
-
the fact that the combined company board of directors will have six Ensco directors and five directors designated by Rowan from its highly
experienced board of directors;
-
-
the fact that Carl Trowell, current President and Chief Executive Officer of Ensco, will serve as the Executive Chairman of Ensco;
-
-
the Ensco Board's belief that the foregoing two bullets and the other governance arrangements set out in the Ensco Rowan Corporate Governance
Policy provide for clear and balanced corporate governance and leadership;
-
-
the terms of the transaction agreement, the structure of the transaction, including the conditions to each party's obligation to complete the
transaction and the ability of the Ensco Board to terminate the agreement under certain circumstances; and
-
-
Morgan Stanley's oral opinion rendered to the Ensco Board on October 6, 2018 and its written opinion dated the same date, to the effect
that, as of the date thereof and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken as
set forth in its written opinion, the exchange ratio pursuant to the transaction agreement was fair from a financial point of view to Ensco. The full text of the written opinion of Morgan Stanley to
the Ensco Board, dated as of October 6, 2018, is attached as Annex B to this joint proxy statement. See "Opinion of Financial Advisor to Ensco."
The
Ensco Board considered additional information concerning the transaction as a whole and without assigning relative weights to each such item, and overall considered the relevant
factors to be favorable to, and in support of, its determinations and recommendations. This information included:
-
-
information concerning the financial condition, results of operations, prospects and businesses of Ensco and Rowan provided by management of
Ensco, including the respective companies' cash flows from operations, expected accretion to discounted cash flows, the recent performance of the Ensco ordinary shares and the Rowan ordinary shares
and the ratio of the Ensco ordinary share price to the Rowan ordinary share price over various periods, as well as current industry, economic and market conditions;
-
-
the share price versus the present value of estimated future cash flows of both Ensco and Rowan;
-
-
the implied asset prices versus alternative transactions, new asset pricing and precedent transactions;
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-
other market factors of both Ensco and Rowan; and
-
-
the results of Ensco's business, legal, financial and compliance due diligence review of Rowan.
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The
Ensco Board also considered a variety of risks and other potentially negative factors concerning the transaction agreement and the transactions contemplated thereby. These factors
included:
-
-
that there are significant risks inherent in combining and integrating two companies, including that the companies may not be successfully
integrated or that the expected synergies from combining the two companies may not be realized, and that successful integration of the companies will require the dedication of significant management
resources, which will temporarily detract attention from the day-to-day businesses of the combined company;
-
-
the effects on cash flows from operations and other financial measures under various modeling assumptions, and the uncertainties in timing and
execution with respect to the anticipated benefits of the transaction;
-
-
that the transaction agreement provides that, in certain circumstances, Ensco could be required to pay a termination fee of $24 million
to Rowan or reimburse Rowan for expenses of $15 million;
-
-
that the transaction might not be completed as a result of a failure to satisfy the conditions contained in the transaction agreement,
including failure to receive necessary regulatory approvals such as under the HSR Act and from UK and Saudi Arabia competition authorities;
-
-
that Rowan's obligation to close the transaction is conditioned on: (i) the approval of the Scheme of Arrangement at the Rowan Court
meeting by a majority in number of the Scheme Shareholders present and voting (and entitled to vote) representing 75% or more in value of the Scheme Shares held by such Scheme Shareholders;
(ii) the approval of the Rowan Scheme and Articles Amendment Proposal as a special resolution at the Rowan general meeting by at least 75% of the votes cast by Rowan shareholders; and
(iii) the sanction of the Scheme of Arrangement by the Court;
-
-
Rowan's ability, under certain circumstances, to terminate the transaction agreement in order to enter into an agreement providing for a
superior proposal, provided that Rowan concurrently with such termination pays to Ensco a termination fee of $24 million;
-
-
the restrictions on the conduct of Ensco's business prior to the consummation of the transaction, which may delay or prevent Ensco from
undertaking business opportunities that may arise or other actions it would otherwise take with respect to the operations of Ensco pending consummation of the transaction;
-
-
the substantial costs to be incurred in connection with the transaction, including the costs of integrating the businesses of Ensco and Rowan
and the transaction costs to be incurred in connection with the transaction;
-
-
the possibility that the $15 million expense reimbursement that Rowan would be required to pay under the transaction agreement upon
termination of the transaction agreement under certain circumstances would be insufficient to compensate Ensco for its costs incurred in connection with the transaction agreement;
-
-
the possibility of losing key employees and skilled workers as a result of the transaction and the expected consolidation of Ensco and Rowan
personnel;
-
-
the possibility of customer overlap or that key customers may choose not to do business with the combined company; and
-
-
other risks of the type and nature described under "Risk Factors."
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This discussion of the information and factors considered by the Ensco Board in reaching its conclusion and recommendations includes all of the material factors
considered by the Ensco Board but is not intended to be exhaustive and is not provided in any specific order or ranking. In view of the wide variety of factors considered by the Ensco Board in
evaluating the transaction agreement and the actions required and contemplated thereby and the complexity of these matters, the Ensco Board did not find it practicable to, and did not attempt to,
quantify, rank or otherwise assign relative weight to those factors. In addition, different members of the Ensco Board may have given different weight to different factors. The Ensco Board did not
reach any specific conclusion with respect to any of the factors considered and instead conducted an overall analysis of such factors and determined that, in the aggregate, the potential benefits
considered outweighed the potential risks or possible negative consequences of approving the transaction agreement and the allotment and issuance of Ensco ordinary shares pursuant to the transaction
agreement.
It
should be noted that this explanation of the reasoning of the Ensco Board and all other information presented in this section is forward-looking in nature and, therefore, should be
read in light of the factors discussed under the heading "Cautionary Statement Regarding Forward-Looking Statements."
Rowan's Reasons for the Transaction; Recommendation of the Rowan Board of Directors
On October 6, 2018, the Rowan Board unanimously determined that the transaction agreement and the Scheme of Arrangement are in the best
interests of Rowan and Rowan's shareholders, and declared it advisable to enter into the transaction agreement and Scheme of Arrangement, and approved the execution, delivery and performance of the
transaction agreement and the Scheme of Arrangement and the transactions contemplated thereby are fair to and in the best interests of Rowan's shareholders.
The Rowan Board unanimously and unqualifiedly recommends that the Rowan shareholders vote "FOR" the Scheme of Arrangement Proposal at the Scheme meeting and "FOR"
the other proposals at the Rowan special meetings.
In
its evaluation of the transaction agreement, Scheme of Arrangement and the transactions contemplated thereby, the Rowan Board consulted with Rowan's executive management and Rowan's
outside legal and financial advisors and considered several potentially positive factors, including the following (not necessarily in order of relative
importance):
-
-
The belief that the transaction would create a leading global offshore drilling company with enhanced scale, large high-graded fleet, clear
growth strategies and a diversified revenue mix across segments, geographies and customers, resulting in improved opportunities for growth, cost savings, earnings and innovation relative to what Rowan
could achieve on a standalone basis.
-
-
The fact that, in receiving Ensco ordinary shares in the transaction, the holders of Rowan ordinary shares will participate in a combined
entity that, among other things, will have increased share liquidity, will have a strong balance sheet, will be capable of pursuing significantly larger growth opportunities, and will participate in
the increased diversification of the assets and operations of the combined entity, in each case as compared to Rowan on a standalone basis.
-
-
The fact that the Rowan Board and Rowan's executive management estimate that the combined company will generate annual run-rate cost synergies
of approximately $150 million, of which 75% is expected to be realized within one year of the consummation of the transaction, which is expected to result in the combined company having greater
potential to achieve further earnings growth and generate accretive cash flow the year following the consummation of the transaction.
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-
-
The fact that members of executive management of the combined company, led by Dr. Burke, will be responsible for the establishment,
execution and achievement of synergies in the global offshore drilling market.
-
-
The fact that, after giving effect to certain issuances, Rowan shareholders are expected to own approximately 39.5% of the combined company pro
forma for the transaction.
-
-
The fact that, for an extended period prior to any discussions regarding the transaction, Rowan pursued a variety of strategies designed to
maximize shareholder value, including strategic transactions and asset lease and purchase opportunities in its deep water and jack-up rig business lines and, despite the successful execution of two
such transactions, Rowan's deep-water fleet did not achieve the scale necessary to fully absorb fixed cost operations.
-
-
The fact that the Rowan Board and Rowan's executive management, with the assistance of Rowan's outside legal and financial advisors, reviewed
the potential strategic advantages and risks of over 10 strategic options, including with respect to synergies, valuation, fleet scale and segment composition, backlog and other transaction-related
matters such as execution risk and governance.
-
-
The belief, after a thorough review of, and based on the Rowan Board's knowledge of, Rowan's long-term strategic goals and opportunities,
industry trends, competitive environment and short- and long-term performance in light of Rowan's strategic plan, including the potential impact of those factors on the trading price of the Rowan
ordinary shares (which cannot be precisely quantified numerically), that the value offered to Rowan's shareholders pursuant to the transaction is more favorable to Rowan's shareholders than the
potential value that might reasonably be expected to result from other strategic alternatives, including remaining an independent public company.
-
-
The financial analysis reviewed and discussed with representatives of Goldman Sachs, as well as the oral opinion of Goldman Sachs rendered to
the Rowan Board, which was subsequently confirmed by delivery of a written opinion dated October 7, 2018, to the effect that, as of such date and based upon and subject to the factors and
assumptions stated in such opinion, the exchange ratio was fair, from a financial point of view, to the holders (other than Ensco and its affiliates) of the Rowan ordinary shares.
-
-
The fact that Dr. Burke will serve as the chief executive officer of the combined company and Dr. Trowell will serve as the
executive chairman of the board of directors of the combined company together with certain provisions of the transaction agreement that provide for the retention of each such appointment for a
designated period following the combination of Rowan and Ensco.
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-
The fact that five members of the 11-member board of directors of the combined company will be comprised of members from the Rowan Board as of
immediately prior to the Scheme Effective Time, including that the lead independent director of the combined company will be a member of the Rowan Board as of immediately prior to the Scheme Effective
Time.
-
-
The fact that backlog for the combined company of approximately $2.7 billion will be approximately six times Rowan's standalone backlog.
-
-
The fact that the combined company will have increased liquidity of approximately $3.9 billion as of June 30, 3018, including
$1.9 billion of cash and short-term investments.
-
-
The fact that the combined company will be better positioned to advance technological improvements in the offshore drilling industry that could
lead to positive competitive differentiation for the combined company's fleet.
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-
The belief that the combined company will continue to leverage Rowan's and Ensco's demonstrated commitment to safe operations, to customer
satisfaction and to deliver industry-leading service for its combined customer base.
-
-
The belief that the transaction is both geographically accretive with respect to Ensco's and Rowan's respective customers' operations,
including with respect to Rowan in the key regions of Southeast Asia, Nigeria, Australia and Brazil, and a reinforcement of strong customer relationships in the deep-water, ultra-harsh and high-spec
jack-up markets.
-
-
The belief that the transaction will enable the combined company to integrate the skill sets and capabilities of each of Rowan's and Ensco's
management teams to apply operational and cost discipline across the combined company.
-
-
The belief that, in coordination with Rowan's legal advisors, the terms of the transaction agreement, taken as a whole, including the parties'
representations, warranties, covenants and conditions to closing, and the circumstances under which the transaction agreement may be terminated, are reasonable.
-
-
The belief that Ensco's proposal, which the Rowan Board evaluated with the assistance of its legal and financial advisors, was more favorable
to Rowan's shareholders, taking into account the potential risks, rewards and uncertainties associated therewith, than the other opportunities and alternatives reasonably available to Rowan.
-
-
The fact that completion of the transaction requires the approval of the Rowan shareholders.
The
Rowan Board also considered and balanced against the potentially positive factors a number of uncertainties, risks and other countervailing factors in its deliberations concerning
the transaction and the other transactions contemplated by the transaction agreement, including the following (not necessarily in order of relative
importance):
-
-
That subsequent to completion of the transaction, Rowan's shareholders would forgo the opportunity to realize the potential long-term value of
the successful execution of Rowan's current strategy as an independent public company by participating in any future earnings or growth or in any future appreciation in value of the Rowan ordinary
shares as represented in the forecasts or otherwise.
-
-
That certain of Rowan's directors and executive officers have interests in the transaction that are different from, or in addition to, those of
the Rowan's public shareholders. The Rowan Board was aware of and extensively discussed and considered these interests; for more information about such interests, see below under the heading
"Rowan's Directors and Officers Have Financial Interests in the Transaction."
-
-
That, while Rowan expects the transaction to be consummated if the Rowan Scheme Proposal is approved by Rowan's shareholders, there can be no
assurance that all conditions to the parties' obligations to consummate the transaction will be satisfied even if the Rowan Scheme Proposal is approved by Rowan's shareholders.
-
-
The fact that the combined company may not achieve, to the extent or within the time expected, the full benefit of the expected
$150 million of cost synergies.
-
-
The fact that the exchange ratio in the transaction agreement provides for a fixed number of Ensco ordinary shares, and, as such, Rowan
shareholders cannot be certain at the time of the Rowan special meetings of the market value of the transaction consideration they will receive, and the possibility that Rowan shareholders could be
adversely affected by a decrease in the trading price of Ensco ordinary shares before the closing of the transaction.
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-
-
The fact that Ensco may, prior to the Scheme Effective Time, conduct a reverse share split and, despite the fact that the exchange ratio for
Rowan's shareholders will be proportionately adjusted in connection with the consummation of the transaction, such a reverse share split may impact Rowan's share price.
-
-
The fact that, under specified circumstances, Rowan may be required to pay certain termination fees in the event the transaction agreement is
terminated and the effect this could have on Rowan, including:
-
-
the possibility that the $24,000,000 termination fee payable by Rowan to Ensco upon the termination of the transaction agreement
in order to allow Rowan to enter into an agreement with respect to a superior proposal could discourage other potential acquirers from making a competing proposal, although the Rowan Board believes
that the termination fee is reasonable in amount and will not unduly deter, preclude or restrict any other party that might be interested in acquiring Rowan; and
-
-
if the transaction is not consummated, Rowan will generally be required to pay its own expenses associated with the transaction
and, if the transaction agreement is terminated for the failure of Rowan's shareholders to approve the transaction agreement and transactions contemplated thereby, Rowan will be required to pay Ensco
$15,000,000 for Ensco's costs, fees and expenses incurred in connection with the transactions contemplated by the transaction agreement.
-
-
The restrictions in the transaction agreement on Rowan's ability to actively solicit competing bids to acquire it and to entertain other
acquisition proposals unless certain conditions are satisfied.
-
-
That the restrictions on Rowan's conduct of business prior to completion of the transaction, could delay or prevent Rowan from undertaking
business opportunities that may arise or taking other actions with respect to its operations during the pendency of the transaction.
-
-
That the amount of time that may be required to consummate the transaction, including the fact that the completion of the transaction depends
on factors outside of Rowan's or Ensco's control and the risk that the pendency of the transaction for an extended period of time could have an adverse effect on Rowan.
-
-
That the significant costs involved in connection with entering into the transaction agreement and completing the transaction and the
substantial time and effort of management required to consummate the transaction could disrupt Rowan's business operations.
-
-
That the announcement and pendency of the transaction, or the failure to complete the transaction, may cause substantial harm to Rowan's
relationships with its employees, including making it more difficult to attract and retain key personnel and the possible loss of key management and other personnel.
-
-
That the market price of the Rowan ordinary shares could be affected by many factors, including: (i) if the transaction agreement is
terminated, the reason or reasons for such termination and whether such termination resulted from factors adversely affecting Rowan; (ii) the possibility that, as a result of the termination of
the transaction agreement, possible acquirers may consider Rowan to be an unattractive acquisition candidate; and (iii) the possible sale of the Rowan ordinary shares by short-term investors
following an announcement that the transaction agreement was terminated.
-
-
The risks and uncertainties associated with executing on Rowan's business strategy and achieving Rowan's related financial projections and
opportunities, including as described in the "risk factors" and "forward looking statements" sections of Rowan's disclosures filed with the SEC,
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After
taking into account the factors set forth above, as well as others, the Rowan Board concluded that the risks, uncertainties, restrictions and potentially negative factors
associated with the transaction were outweighed by the potential benefits of the transaction to Rowan's shareholders.
The
foregoing discussion of factors considered by Rowan is not intended to be exhaustive, but summarizes the material factors considered by the Rowan Board. In light of the variety of
factors considered in connection with their evaluation of the transaction agreement and the transaction, Rowan did not find it practicable to, and did not, quantify or otherwise assign relative
weights to the specific factors considered in reaching their determinations and recommendations. Moreover, each member of the Rowan Board applied his own personal business judgment to the process and
may have given different weight to different factors. The Rowan Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported
or did not support their ultimate determinations. The Rowan Board based its recommendation on the totality of the information presented, including thorough discussions with, and questioning of,
Rowan's executive management and the Rowan Board's financial advisors and outside legal counsel.
In
considering the recommendation of the Rowan Board to approve the Rowan Scheme Proposal, Rowan shareholders should be aware that the executive officers and directors of Rowan have
certain interests in the transaction that may be different from, or in addition to, the interests of Rowan shareholders generally. The Rowan Board was aware of these interests and considered them when
approving the transaction agreement and recommending that Rowan shareholders vote to approve the Rowan Scheme Proposal. See "Interests of Rowan Directors and Executive Officers in the
Transaction."
It
should be noted that this explanation of the reasoning of the Rowan Board and certain information presented in this section is forward-looking in nature and should be read in light of
the factors set forth in "Cautionary Statement Regarding Forward-Looking Statements."
Opinion of Financial Advisor to Ensco
The Ensco Board retained Morgan Stanley to provide it with financial advisory services in connection with the proposed transaction and to
provide a financial opinion. The Ensco Board selected Morgan Stanley to act as its financial advisor based on Morgan Stanley's qualifications, expertise and reputation and its knowledge of the
business and affairs of Ensco. On October 6, 2018, at a meeting of the Ensco Board, Morgan Stanley rendered its oral opinion, subsequently confirmed by delivery of a written opinion, dated
October 6, 2018, that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of
review undertaken by Morgan Stanley as set forth in the written opinion, the exchange ratio pursuant to the transaction agreement was fair from a financial point of view to Ensco.
The full text of the written opinion of Morgan Stanley delivered to the Ensco Board, dated as of October 6, 2018, is attached to this joint proxy statement
as Annex B and is incorporated herein by reference in its entirety. You should read Morgan Stanley's opinion and this summary of Morgan Stanley's opinion carefully and in their entirety for a
discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. This
summary is qualified in its entirety by reference to the full text of such opinion. Morgan Stanley's opinion was directed to the Ensco Board, in its capacity as such, and addressed only the fairness
from a financial point of view to Ensco of the exchange ratio pursuant to the transaction agreement as of the date of such opinion. Morgan Stanley's opinion did not address any other aspects or
implications of the transaction. Morgan Stanley's opinion did not in
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any manner address the price at which the Ensco ordinary shares would trade following the transaction or at any time, and Morgan Stanley expressed no opinion or recommendation to any holder of Ensco
ordinary shares or Rowan ordinary shares as to how such holder should vote at the Ensco general meeting or the Rowan Court meeting and Rowan general meeting, respectively, or whether to take any other
action with respect to the transaction.
For
purposes of rendering its opinion, Morgan Stanley:
-
(1)
-
reviewed
certain publicly available financial statements and other business and financial information of Rowan and Ensco, respectively;
-
(2)
-
reviewed
certain internal financial statements and other financial and operating data concerning Rowan and Ensco, respectively;
-
(3)
-
reviewed
certain financial projections prepared by the management of Ensco with respect to the future financial performance of Rowan and Ensco;
-
(4)
-
reviewed
certain financial projections prepared by the management of Rowan with respect to the future financial performance of Rowan;
-
(5)
-
reviewed
information relating to certain strategic, financial and operational benefits anticipated from the transaction, prepared by the management of Ensco;
-
(6)
-
discussed
the past and current operations and financial condition and the prospects of Ensco, including information relating to certain strategic, financial and
operational benefits anticipated from the transaction, with senior executives of Ensco;
-
(7)
-
reviewed
the pro forma impact of the transaction on Ensco's earnings per share, cash flow, consolidated capitalization and certain financial ratios;
-
(8)
-
reviewed
the reported prices and trading activity for Rowan ordinary shares and Ensco ordinary shares;
-
(9)
-
compared
the financial performance of Rowan and Ensco and the prices and trading activity of Rowan ordinary shares and Ensco ordinary shares with that of certain
other publicly-traded companies comparable with Rowan and Ensco, respectively, and their securities;
-
(10)
-
reviewed
the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
-
(11)
-
participated
in certain discussions and negotiations among representatives of Rowan and Ensco and certain parties and their financial and legal advisors;
-
(12)
-
reviewed
the transaction agreement and certain related documents; and
-
(13)
-
performed
such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
Morgan
Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made
available to it by Rowan and Ensco, and formed a substantial basis for its opinion. With respect to the financial projections, including information relating to certain strategic, financial and
operational benefits anticipated from the transaction, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the
respective managements of Rowan and Ensco of the future financial performance of Rowan and Ensco. For purposes of its analysis, Morgan Stanley, at the direction of Ensco, relied on financial
projections relating to Rowan and Ensco, in each case prepared by the management of Ensco. Morgan Stanley was advised by Ensco and assumed, with Ensco's consent, that the projections prepared by the
management of Ensco were a
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reasonable
basis upon which to evaluate the business and financial prospects of Ensco and Rowan. Morgan Stanley expressed no view as to such projections or the assumptions on which they were based.
Morgan Stanley relied upon, without independent verification, the assessment by the management of Ensco of: (i) the strategic, financial and other benefits expected to result from the
transaction; (ii) the timing and risks associated with the integration of Rowan and Ensco; and (iii) Ensco's ability to retain key employees of Rowan and Ensco, respectively. In
addition, Morgan Stanley assumed that the transaction would be consummated in accordance with the terms set forth in the transaction agreement without any waiver, amendment or delay of any terms or
conditions, including, among other things, that the transaction would be treated as a tax-free reorganization, pursuant to the Internal Revenue Code and that the definitive transaction agreement would
not differ in any material respect from the draft thereof furnished to it. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals
and consents required for the proposed transaction, no delays, limitations, conditions or restrictions would be imposed that would have a material adverse effect on the contemplated benefits expected
to be derived in the proposed transaction. Morgan Stanley is not a legal, tax, or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the
assessment of Ensco and Rowan and their legal, tax or regulatory advisors with respect to legal, tax, or regulatory matters. Morgan Stanley did not perform any tax assessment in connection with the
transaction. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Rowan's officers, directors or employees, or any class of such
persons, relative to the consideration to be paid to the holders of Rowan ordinary shares in the transaction. Morgan Stanley did not make any independent valuation or appraisal of the assets or
liabilities of Rowan or Ensco, nor was it furnished with any such valuations or appraisals. Morgan Stanley's opinion did not address the relative merits of the transaction as compared to any other
alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Morgan Stanley's opinion was necessarily based on financial, economic,
market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events occurring after such date may affect Morgan Stanley's opinion and the
assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.
Summary of Financial Analyses of Morgan Stanley
The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the
preparation of its written opinion to the Ensco Board, each dated as of October 6, 2018. The following summary is not a complete description of the financial analyses performed and factors
considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Except as otherwise noted,
the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before October 5, 2018, the most
recent trading day prior to Morgan Stanley's presentation to the Ensco Board of its financial analysis on October 6, 2018. Some of these summaries of financial analyses include information
presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not
constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole. Assessing any portion of such analyses and of the
factors reviewed, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley's opinion. Furthermore, mathematical analysis
(such as determining the average or median) is not in itself a meaningful method of using the data referred to below.
In
performing the financial analyses summarized below and in arriving at its opinion, at the direction of the Ensco Board, Morgan Stanley utilized and relied upon certain financial
projections relating to Rowan and Ensco, each provided by the management of Ensco and which are described
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below.
In addition, Morgan Stanley utilized and relied upon the number of issued and outstanding shares of Rowan provided by management of Rowan.
As
part of the financial projections, Ensco management provided, and Morgan Stanley relied upon with the consent of the Ensco Board, Ensco Management Case A and Ensco Management Case B
(the "Ensco financial forecasts"). Ensco management informed Morgan Stanley that Ensco Management Case A reflected a stronger market for offshore drilling rigs, including a more rapid day rate
recovery with higher terminal day rates, than Ensco Management Case B. The Ensco financial forecasts are more fully described in the section entitled "Certain Unaudited Financial
Forecasts Prepared by the Management of Ensco."
Useful Life Discounted Cash Flow Analysis
Morgan Stanley performed a discounted cash flow analysis, which is designed to provide an implied value of a company by calculating the present
value of the estimated future unlevered free cash flows and terminal value of that company. In the "useful life" discounted cash flow analysis, Morgan Stanley performed a discounted cash flow analysis
on each of Rowan (excluding its interest in ARO), ARO and Ensco, respectively, based on the unlevered free cash flows generated by Rowan's, ARO's and Ensco's fleet of rigs through the estimated end of
their useful lives as estimated by the management of Ensco (which are estimated to extend through 2050 for Rowan (excluding ARO), through 2059 for ARO and through 2055 for Ensco).
Rowan Useful Life Discounted Cash Flow Analysis
With respect to Rowan, Morgan Stanley calculated a range of implied total equity values of Rowan and values per Rowan ordinary share based on
(i) estimates of Rowan's future unlevered free cash flows from July 1, 2018 through December 31, 2050 (excluding ARO) and (ii) estimates of future unlevered free cash flows
from ARO from July 1, 2018 through June 30, 2059. Morgan Stanley performed this analysis on the estimated future unlevered free cash flows of each of Rowan (excluding ARO) and ARO
included in Ensco Management Case A and Ensco Management Case B. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as earnings before interest, taxes, and
depreciation and amortization, which is referred to in this section as EBITDA, less capital expenditures (including rig purchases) and unlevered taxes, plus proceeds from asset sales, and adjusted for
any changes in working capital and deferred expense) of each of Rowan (excluding ARO) and ARO. The projected unlevered free cash flows of each of Rowan (excluding ARO) and ARO were discounted to
June 30, 2018 using discount rates ranging from 9.3% to 10.5% for the period between July 1, 2018 through December 31, 2025 based on Morgan Stanley's estimate of Rowan's weighted
average cost of capital ("WACC") for such period under both Ensco Management Case A and Ensco Management Case B. The projected unlevered cash flows of Rowan (excluding ARO) for the period from
January 1, 2026 through December 31, 2050, and for ARO the period from January 1, 2026 through June 30, 2059, were discounted to June 30, 2018 using discount rates
ranging from 8.2% to 10.1% based on Morgan Stanley's estimate of Rowan's WACC for such period under both Ensco Management Case A and Ensco Management Case B. The range of discount rates used for such
period differed from that used for the period ending December 31, 2025 as a result of an assumed repayment of certain senior notes of Rowan that are due in future years, resulting in an
adjustment to Rowan's debt-to-capitalization ratio.
With
respect to ARO, Morgan Stanley then deducted from the implied aggregate value ranges of ARO the estimated gross debt of ARO and added ARO's cash and cash equivalents as of
June 30, 2018, resulting in the equity value of ARO. To arrive at the implied equity value of Rowan's 50% interest in ARO, Morgan Stanley multiplied the equity value of ARO by 50% and added the
value of a shareholder loan provided by Rowan to ARO (such resulting value, the "ARO DCF Value"). To arrive at the implied equity value of Rowan, Morgan Stanley then (i) deducted from the
implied aggregate
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value
ranges of Rowan (excluding ARO) (A) the estimated gross debt of Rowan (excluding ARO) and (B) the value of cash settled performance units of Rowan (excluding ARO) and
(ii) added to the implied aggregate value ranges of Rowan (excluding ARO) (A) cash and cash equivalents as of June 30, 2018 of Rowan (excluding ARO) and (B) the ARO DCF
Value. Aggregate values also included the then-current estimate of the value of capital spare parts of Rowan as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per share for Rowan as of June 30, 2018 for each of Ensco Management Case A and Ensco
Management Case B of $25.39 to $33.30 and $14.38 to $20.17, respectively.
Ensco Useful Life Discounted Cash Flow Analysis
With respect to Ensco, Morgan Stanley calculated a range of implied total equity values of Ensco and values per Ensco ordinary share based on
estimates of future unlevered free cash flows of Ensco from July 1, 2018 through December 31, 2055. Morgan Stanley performed this analysis on the estimated future unlevered free cash
flows included in Ensco Management Case A and Ensco Management Case B. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as EBITDA, less capital expenditures
(including rig purchases) and unlevered taxes, plus proceeds from asset sales, and adjusted for any changes in working capital and deferred expense). The projected unlevered free cash flows were
discounted to June 30, 2018 using discount rates ranging from 9.0% to 10.1% for the period between July 1, 2018 through December 31, 2025 based on Morgan Stanley's estimate of
Ensco's WACC for such period under both Ensco Management Case A and Ensco Management Case B, and the projected unlevered free cash flows for the period from January 1, 2026 through
December 31, 2055 were discounted to present value using discount rates ranging from 8.7% to 10.3% in Ensco Management Case A and 8.8% to 10.3% in Ensco Management Case B based on Morgan
Stanley's estimate of Ensco's WACC for such period. The range of discount rates used for such period differed from that used for the period ending December 31, 2025 as a result of an assumed
repayment of senior notes, resulting in an adjustment to Ensco's debt-to-capitalization ratio. The range of discount rates used for the period from January 1, 2026 through December 31,
2055 differed under Ensco Management Case A and Ensco Management Case B as a result of an assumed repayment of indebtedness under Ensco's credit facility under Ensco Management Case A. Morgan Stanley
then deducted from the implied aggregate value ranges Ensco's estimated gross debt and minority interest and added Ensco's cash and cash equivalents as of June 30, 2018. Aggregate values also
included the then-current estimate of the value of capital spare parts of Ensco as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per Ensco ordinary share as of June 30, 2018 for each of Ensco Management Case A and Ensco
Management Case B of $12.35 to $15.72 and $6.27 to $8.84, respectively.
Exchange Ratio Implied by Useful Life Discounted Cash Flow Analysis
Morgan Stanley calculated the exchange ratio ranges implied by the useful life discounted cash flow analyses. Morgan Stanley compared the lowest
implied per share value for Rowan ordinary shares to the highest implied per share value for Ensco ordinary shares to derive the lowest exchange ratio implied by the analyses. Similarly, Morgan
Stanley compared the highest implied per share value for Rowan ordinary shares to the lowest implied per share value for Ensco ordinary shares to derive the highest exchange ratio implied by the
analyses. The implied exchange ratio ranges resulting from the analysis, which Morgan Stanley noted did not include synergies, were 1.61x to 2.70x for Ensco Management Case A and 1.63x to 3.22x for
Ensco Management Case B. Morgan Stanley noted that the transaction agreement provided for an exchange ratio of 2.215x.
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10-Year Discounted Cash Flow Analysis
Morgan Stanley also performed a discounted cash flow analysis on both Rowan and Ensco based on estimates of future cash flows from
July 1, 2018 through June 30, 2028 and calculated a terminal value at the end of such projection period.
Rowan 10-Year Discounted Cash Flow Analysis
With respect to Rowan, Morgan Stanley calculated a range of implied total equity values of Rowan and values per Rowan ordinary share based on
(i) estimates of future unlevered free cash flows for Rowan from July 1, 2018 to June 30, 2028 (excluding ARO) and (ii) estimates of future unlevered free cash flows from
ARO from July 1, 2018 through June 30, 2028. Morgan Stanley performed this analysis on the estimated future unlevered free cash flows of each of Rowan (excluding ARO) and ARO included in
Ensco Management Case A and Ensco Management Case B. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as EBITDA, less capital expenditures (including rig purchases)
and unlevered taxes, plus proceeds from asset sales, and adjusted
for any changes in working capital and deferred expense) of each of Rowan (excluding ARO) and ARO based on estimates by the management of Ensco. Morgan Stanley then calculated a terminal value range
for each of Rowan (excluding ARO) and ARO by applying a multiple of aggregate value (defined as market capitalization plus total debt and minority interests and less cash and cash equivalents) to
estimated EBITDA for the twelve months ending June 30, 2029 of 5.0x to 8.0x. This range was derived based on Morgan Stanley's professional judgment after analyzing the aggregate value to NTM
EBITDA multiple that Rowan ordinary shares had traded at from October 5, 2013 to October 5, 2018. The projected unlevered free cash flows for each of Rowan (excluding ARO) and ARO were
discounted to June 30, 2018 using discount rates ranging from 9.3% to 10.5% for the period from July 1, 2018 through December 31, 2025 based on Morgan Stanley's estimate of
Rowan's WACC for such period under both Ensco Management Case A and Ensco Management Case B, and the projected unlevered free cash flows for the period from January 1, 2026 through
June 30, 2028 and terminal value were discounted to June 30, 2018 using discount rates ranging from 8.2% to 10.1% based on Morgan Stanley's estimate of Rowan's WACC for such period under
both Ensco Management Case A and Ensco Management Case B. The range of discount rates used for such period differed from that used for the period ending December 31, 2025 as a result of the
factors described under "Rowan Useful Life Discounted Cash Flow Analysis." With respect to ARO, Morgan Stanley then deducted from the implied aggregate value ranges of ARO the estimated
gross debt of ARO and added the cash and cash equivalents as of June 30, 2018 of ARO, resulting in the equity value of ARO. To arrive at the implied equity value of Rowan's 50% interest in ARO,
Morgan Stanley multiplied the equity value of ARO by 50% and added the value of a shareholder loan provided by Rowan to ARO (such resulting value, the "ARO 10-Year DCF Value"). To arrive at the
implied equity value of Rowan, Morgan Stanley then (i) deducted from the implied aggregate value ranges of Rowan (excluding ARO) (A) the estimated gross debt of Rowan (excluding ARO) and
(B) the value of cash settled performance units of Rowan (excluding ARO) and (ii) added to the implied aggregate value ranges of Rowan (excluding ARO) (A) cash and cash
equivalents as of June 30, 2018 of Rowan (excluding ARO) and (B) the ARO 10-Year DCF Value. Aggregate values also included the then-current estimate of the value of capital spare parts
of Rowan as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per share for Rowan as of June 30, 2018 for each of Ensco Management Case A and Ensco
Management Case B of $22.85 to $38.90 and $13.67 to $26.62, respectively.
Ensco 10-Year Discounted Cash Flow Analysis
With respect to Ensco, Morgan Stanley calculated a range of implied total equity values of Ensco and values per Ensco ordinary share based on
estimates of future unlevered free cash flows for Ensco
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from
July 1, 2018 to June 30, 2028. Morgan Stanley performed this analysis on the estimated future unlevered free cash flows included in Ensco Management Case A and Ensco Management Case
B. Morgan Stanley first calculated the estimated unlevered free cash flows (calculated as EBITDA, less capital expenditures (including rig purchases) and unlevered taxes, plus proceeds from asset
sales, and adjusted for any changes in working capital and deferred expense) of Ensco based on estimates by the management of Ensco. Morgan Stanley then calculated a terminal value range for Ensco by
applying a multiple of aggregate value to estimated EBITDA for the twelve months ending June 30, 2029 of 5.0x to 8.0x. This range was derived based on Morgan Stanley's professional judgment
after analyzing the aggregate value to NTM EBITDA multiple that Ensco ordinary shares had traded at from October 5, 2013 to October 5, 2018. The projected unlevered free cash flows were
discounted to June 30, 2018 using discount rates ranging from 9.0% to 10.1% for the period from July 1, 2018 through December 31, 2025 based on Morgan Stanley's estimate of
Ensco's WACC for such period under both Ensco Management Case A and Ensco Management Case B, and the projected unlevered free cash flows for the period from January 1, 2026 through
June 30, 2028 and terminal value were discounted to June 30, 2018 using discount rates ranging from 8.7% to 10.3% in Ensco Management Case A and 8.8% to 10.3% in Ensco Management Case B
based on Morgan Stanley's estimate of Ensco's WACC for such period. The range of discount rates used for such period differed from that used for the period ending December 31, 2025 as a result
of the factors described under "Ensco Useful Life Discounted Cash Flow Analysis." The range of discount rates used for the period from January 1, 2026 through June 30, 2028
differed under Ensco Management Case A and Ensco Management Case B as a result of the factors described under "Ensco Useful Life Discounted Cash Flow Analysis." Morgan Stanley then
deducted from the implied aggregate value ranges Ensco's estimated gross debt and minority interest and added Ensco's cash and cash equivalents as of June 30, 2018. Aggregate values also
included the then-current estimate of the value of capital spare parts of Ensco as estimated by Ensco management.
Based
on the above-described analysis, Morgan Stanley derived a range of implied values per Ensco ordinary share as of June 30, 2018 for each of Ensco Management Case A and Ensco
Management Case B of $10.51 to $17.86 and $5.01 to $10.88, respectively.
Exchange Ratio Implied by 10-Year Discounted Cash Flow Analysis
Morgan Stanley calculated the exchange ratio ranges implied by the discounted cash flow analyses. Morgan Stanley compared the lowest implied per
share value for Rowan ordinary shares to the highest implied per share value for Ensco ordinary shares to derive the lowest exchange ratio implied by the analyses. Similarly, Morgan Stanley compared
the highest implied per share value for Rowan ordinary shares to the lowest implied per share value for Ensco ordinary shares to derive the highest exchange ratio implied by the analyses. The implied
exchange ratio ranges resulting from the analysis, which Morgan Stanley noted did not include synergies, were 1.28x to 3.70x for Ensco
Management Case A and 1.26x to 5.31x for Ensco Management Case B. Morgan Stanley noted that the transaction agreement provided for an exchange ratio of 2.215x.
Discounted Equity Value Analysis
For each of Rowan and Ensco, Morgan Stanley performed a discounted equity value analysis, which is designed to provide an indication of the
present value of a theoretical future value of a company's equity as a function of such company's estimated future EBITDA.
Rowan Discounted Equity Value
Morgan Stanley calculated the discounted equity value per Rowan ordinary share as of June 30, 2018. To calculate the discounted equity
value per Rowan ordinary share, Morgan Stanley utilized calendar year 2023 EBITDA based on the financial forecasts of each of Rowan (excluding ARO) and
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ARO
provided by Ensco. Morgan Stanley calculated the future aggregate value of Rowan (excluding ARO) and ARO at December 31, 2022 by applying an aggregate value to EBITDA multiple of 5.0x to
8.0x to the estimated calendar year 2023 EBITDA of each of Rowan (excluding ARO) and ARO based on the financial forecasts of each of Rowan (excluding ARO) and ARO provided by Ensco. This reference
range was based on Morgan Stanley's professional judgment and derived in the manner described under "Rowan 10-Year Discounted Cash Flow Analysis." To arrive at the equity value of Rowan's
50% stake in ARO, Morgan Stanley (i) deducted the estimated gross debt of ARO from the implied aggregate value ranges of ARO and added the cash and cash equivalents of ARO as of June 30,
2018 to the implied aggregate value ranges of ARO, (ii) multiplied such resulting value by 50% and (iii) added the value of a shareholder loan provided by Rowan to ARO (such resulting
value, the "ARO DEV Value").
To
arrive at the implied equity value of Rowan, Morgan Stanley then (i) deducted from the implied aggregate value ranges of Rowan (excluding ARO) (A) the estimated gross
debt of Rowan (excluding
ARO) and (B) the value of cash settled performance units of Rowan (excluding ARO) and (ii) added to the implied aggregate value ranges of Rowan (excluding ARO) (A) cash and cash
equivalents as of June 30, 2018 of Rowan (excluding ARO) and (B) the ARO DEV Value. The resulting equity values were then discounted to June 30, 2018 using a cost of equity for
Rowan of 14.1% based on Morgan Stanley's estimate of Rowan's then-current cost of equity. Morgan Stanley added the then-current estimate of the per share value of capital spare parts of Rowan as
estimated by Ensco management to Rowan's implied share price. This analysis resulted in a range of implied values per Rowan ordinary share for each of Ensco Management Case A and Ensco Management Case
B of $16.66 to $29.26 and $10.10 to $19.85, respectively.
Ensco Discounted Equity Value
Morgan Stanley calculated the discounted equity value per Ensco ordinary share as of June 30, 2018. To calculate the discounted equity
value per Ensco ordinary share, Morgan Stanley utilized calendar year 2023 EBITDA based on the financial forecasts provided by Ensco. Morgan Stanley calculated the future aggregate value of Ensco at
December 31, 2022 by applying an aggregate value to EBITDA multiple of 5.0x to 8.0x to the estimated calendar year 2023 EBITDA based on the financial forecasts provided by Ensco. This reference
range was based on Morgan Stanley's professional judgment and derived in the manner described under "Ensco 10-Year Discounted Cash Flow Analysis." To arrive at the implied equity value of
Ensco, Morgan Stanley then deducted from the implied aggregate value ranges Ensco's estimated gross debt and minority interest and added Ensco's cash and cash equivalents as of June 30, 2018.
The resulting equity values were then discounted to June 30, 2018 using a cost of equity for Ensco of 14.7% based on Morgan Stanley's estimate of Ensco's then-current cost of equity. Morgan
Stanley added the then-current estimate of the per share value of capital spare parts of Ensco and estimated present value of dividends on each Ensco common share, each as estimated by Ensco
management to Ensco's implied share price. This analysis resulted in a range of implied values per Ensco ordinary share for each of Ensco Management Case A and Ensco Management Case B of $7.81 to
$14.95 and $3.87 to $9.51, respectively.
Exchange Ratio Implied by Discounted Equity Value Analysis
Morgan Stanley then calculated the exchange ratio range implied by the discounted equity value analysis. Morgan Stanley compared the lowest
implied equity value per Rowan ordinary share to the highest implied equity value per Ensco ordinary share to derive the lowest exchange ratio implied by the discounted equity value analyses.
Similarly, Morgan Stanley compared the highest implied equity value per Rowan ordinary share to the lowest implied equity value per Ensco ordinary share to derive the highest exchange ratio implied by
the discounted equity value analyses. The implied exchange ratio ranges resulting from the analysis, which Morgan Stanley noted did not include synergies, were 1.11x to
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3.75x
for Ensco Management Case A and 1.06x to 5.13x for Ensco Management Case B. Morgan Stanley noted that the transaction agreement provided for an exchange ratio of 2.215x.
Trading Multiple Analysis
Morgan Stanley performed a trading multiple analysis to determine the ratio of the closing stock price per Rowan ordinary share and per Ensco
ordinary share, in each case as of October 5, 2018, to Rowan's and Ensco's respective then current net asset value per share ("NAV"). Morgan Stanley refers to this statistic as "Price/NAV." The
Price/NAVs of Rowan and Ensco were also compared against the Price/NAVs of four comparable public companies: Diamond Offshore Drilling, Inc., Transocean Ltd., Ocean Rig UDW Inc.,
and Noble Corporation plc. These companies were chosen based on Morgan Stanley's knowledge of the industry and because they have businesses that may be considered similar to that of Rowan and
Ensco. The NAVs utilized were based on an average of publicly available analyst research reports disclosing discounted cash flow, sum-of-the-parts or net asset value-based valuations. The Price/NAVs
of Transocean Ltd. and Ocean Rig UDW Inc. were calculated as of September 3, 2018 which, based on Morgan Stanley's professional judgement, represented the unaffected date prior to
the announcement of Transocean Ltd.'s acquisition of Ocean Rig UDW Inc. The Price/NAVs were as follows:
|
|
|
|
|
Company
|
|
Price / NAV
|
|
Rowan
|
|
|
0.9x
|
|
Ensco
|
|
|
1.3x
|
|
Noble Corporation plc
|
|
|
2.2x
|
|
Diamond Offshore Drilling, Inc.
|
|
|
1.7x
|
|
Transocean Ltd.
|
|
|
1.3x
|
|
Ocean Rig UDW Inc.
|
|
|
0.9x
|
|
Based
on this analysis and its professional judgment, Morgan Stanley selected a reference range of Price/NAV of 0.9x to 1.5x, and applied the reference range to the NAVs of Rowan and
Ensco, respectively. This analysis resulted in an implied share price range of $19.54 to $31.52 per Rowan ordinary share and $6.56 to $10.51 per Ensco ordinary share.
Morgan
Stanley then calculated the exchange ratio implied by the trading multiple analysis. Morgan Stanley compared the lowest implied equity value per Rowan ordinary share to the
highest implied equity value per Ensco ordinary share to derive the lowest exchange ratio implied by the trading multiple analysis. Similarly, Morgan Stanley compared the highest implied equity value
per Rowan ordinary share to the lowest implied equity value per Ensco ordinary share to derive the highest exchange ratio implied by the trading multiple analysis. The implied exchange ratio reference
range resulting from this analysis, which Morgan Stanley noted did not include synergies, was 1.86x to 4.81x. Morgan Stanley noted that the transaction agreement provided for an exchange ratio of
2.215x.
No
company utilized in the trading multiple analysis is identical to Rowan or Ensco and hence the foregoing summary and underlying financial analyses involved complex considerations and
judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Rowan and Ensco were
compared, respectively. In evaluating comparable companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Rowan and Ensco.
Pro Forma Discounted Cash Flow Accretion Analysis
Morgan Stanley performed a pro forma discounted cash flow accretion analysis, which is designed to compare a range of pro forma useful life
discounted cash flow values per share based on the 2.215x
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exchange
ratio provided for in the transaction agreement to the range of Ensco useful life discounted cash flow values per share calculated on a standalone basis (see "Ensco Useful Life
Discounted Cash Flow Analysis").
Morgan
Stanley calculated a range of pro forma implied aggregate values by summing the present values of the useful life unlevered free cash flows of Rowan (excluding ARO), ARO, Ensco
and estimated synergies (based on assumed run-rate synergies of $150 million, as directed by Ensco management). For the purposes of the pro forma discounted cash flow accretion analysis,
(i) the projected unlevered free cash flows of Ensco were discounted to June 30, 2018 using discount rates ranging from 9.0% to 10.1% for the period between July 1, 2018 through
December 31, 2025 based on Morgan Stanley's estimate of Ensco's WACC for such period under both Ensco Management Case A and Ensco Management Case B, and the projected unlevered free cash flows
for the forecast period thereafter were discounted to present value using discount rates ranging from 8.7% to 10.3% in Ensco Management Case A and 8.8% to 10.3% in Ensco Management Case B based on
Morgan Stanley's estimate of Ensco's WACC for such period, (ii) the projected unlevered free cash flows of each of Rowan (excluding ARO) and ARO were discounted to June 30, 2018 using
discount rates ranging from 9.3% to 10.5% for the period between July 1, 2018 through December 31, 2025 based on Morgan Stanley's estimate of Rowan's WACC for such period under both
Ensco Management Case A and Ensco Management Case B, and the projected unlevered free cash flows for the forecast period thereafter were discounted to present value using discount rates ranging from
8.2% to 10.1% based on Morgan Stanley's estimate of Rowan's WACC for such period under both Ensco Management Case A and Ensco Management Case B, and (iii) estimated synergies were discounted to
June 30, 2018 using discount rates ranging from 9.1% to 10.2% for the period between July 1, 2018 through December 31, 2025 and using discount rates ranging from 8.6% to 10.2% for
the forecast period thereafter, in each case based on Morgan Stanley's estimates of the pro forma WACC resulting from a combination of Ensco and Rowan. Morgan Stanley then adjusted the total pro forma
implied aggregate value ranges by Ensco's, Rowan's (excluding ARO) and ARO's estimated gross debt, minority interest and cash and cash equivalents as of June 30, 2018, as well as for the value
of a shareholder loan provided by Rowan to ARO. Aggregate values also included the then-current estimate of the value of capital spare parts of Rowan and Ensco as estimated by Ensco management. To
derive a range of pro forma useful life discounted cash flow values per share, such amount was then divided by the number of fully diluted shares expected to be outstanding by Ensco management
following completion of the transaction based on the 2.215x exchange ratio provided for in the transaction agreement. This analysis resulted in a
range of per Ensco ordinary share values of $13.39 to $17.07 for Ensco Management Case A and $7.76 to $10.58 for Ensco Management Case B. These ranges compared with ranges of implied values per Ensco
ordinary share on a standalone basis for each of Ensco Management Case A and Ensco Management Case B of $12.35 to $15.72 and $6.27 to $8.84, respectively.
ENSCO 2019 ANNUAL SHAREHOLDER MEETING AND SHAREHOLDER PROPOSALS
Any of Ensco's shareholders intending to present a proposal at the 2019 Annual General Meeting of Shareholders must deliver such proposal to
Ensco's principal executive office, in writing and in accordance with SEC Rule 14a-8, no later than December 10, 2018 for inclusion in the proxy statement related to that meeting. The
proposal should be delivered to Ensco's secretary by certified mail, return receipt requested.
In
addition, apart from the SEC Rule 14a-8 process described above, a shareholder whose proposal is not included in the proxy statement related to the 2019 Annual General Meeting
of Shareholders, but who still intends to submit a proposal at that meeting, is required by the Ensco Articles of Association to deliver such proposal, in proper form, in writing, to Ensco's secretary
at Ensco's principal executive offices and to provide certain other information, not earlier than the close of business on the 75th day and not later than the close of business on the
50th day prior to the first anniversary of the preceding
year's Annual General Meeting of Shareholders, subject to any other requirements of law; provided, however, that in the event that the date of the Annual General Meeting of Shareholders is more than
30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 75th day
prior to the date of such Annual General Meeting of Shareholders and not later than the close of business on the later of the 50th day prior to the date of such Annual General Meeting of
Shareholders or, if the first public announcement of the date of such Annual General Meeting of Shareholders is less than 65 days prior to the date of such Annual General Meeting of
Shareholders, the 15th day following the day on which public announcement of the date of such meeting is first made. In the case of the 2019 Annual General Meeting of Shareholders, references
to the anniversary date of the preceding year's Annual General Meeting of Shareholders shall mean the first anniversary of May 21, 2018.
Any
such proposal must also comply with the other provisions contained in the Ensco Articles of Association relating to shareholder proposals, including provision of the information
specified in the Ensco Articles of Association, such as information concerning the nominee of the proposal, if any, and the shareholder and the beneficial owner, as the case may be. Any proposals that
do not meet the requirements set forth in the Ensco Articles of Association, other than proposals submitted in compliance with SEC Rule 14a-8 under the Exchange Act, will be declared out of
order and will not be considered at the 2019 Annual General Meeting of Shareholders.
In
addition to the SEC and the Ensco Articles of Association processes described above, under the Companies Act 2006, shareholders representing at least 5% of the total voting rights of
all shareholders who have a right to vote at the 2019 Annual General Meeting of Shareholders can require Ensco to give shareholders notice of a resolution which may be and is intended to be moved at
the Annual General Meeting of Shareholders unless (a) the resolution would, if passed, be ineffective (whether by reason of inconsistency with any enactment or Ensco's constitution or
otherwise); (b) it is defamatory of any person; or (c) it is frivolous or vexatious. Such a request, made by the requisite number of shareholders, must be received by Ensco not later
than six weeks before the Annual General Meeting of Shareholders. For information as to how you can obtain a copy of the Ensco Articles of Association, see "Where You Can Find More Information."
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ROWAN 2019 ANNUAL SHAREHOLDER MEETING AND SHAREHOLDER PROPOSALS
In light of the Rowan Court meeting and the Rowan general meeting, Rowan does not intend to hold a 2019 annual meeting of shareholders. If the
transaction agreement is terminated or the Rowan shareholder proposals set forth herein that are required to consummate the transaction are not approved by Rowan shareholders at the Rowan Court
meeting and the Rowan general meeting, Rowan intends to call an annual meeting of shareholders in the normal course.
Shareholder
proposals intended for inclusion in Rowan's proxy materials for its 2019 annual general meeting of shareholders must be submitted in accordance with Rule 14a-8 under
the Exchange Act, and received by Rowan at its executive offices no later than the close of business on December 6, 2018. Such proposals should be addressed to the Company Secretary, 2800 Post
Oak Blvd., Suite 5450, Houston, Texas 77056.
In
addition, Rowan's Articles of Association establish an advance notice procedure outside of Rule 14a-8 for shareholders who wish to present a proposal or nominations for the
election of directors at an annual general meeting. Any such proposals or nominations must be submitted in accordance with the requirements of Rowan's Articles of Association and received no earlier
than the 120
th
day and no later than the 90
th
day prior to the anniversary of the 2018 annual general meeting of shareholders. As a result, such proposals or
nominations submitted pursuant to the provisions of Rowan's Articles of Association for its 2019 annual general meeting must be received no earlier than January 24, 2019 and no later than the
close of business on February 22, 2019.
In
the event that the 2019 annual general meeting of shareholders takes place more than 30 days before or more than 70 days after the anniversary of the 2018 annual general
meeting of shareholders, then alternative cut-off dates will apply in accordance with Rowan's Articles of Association. Rowan shareholders are advised to review the Rowan Articles of Association, which
contain further details and additional requirements about advance notice of shareholder proposals and director nominations.
For
information as to how you can obtain a copy of Rowan's Articles of Association, see "Where You Can Find More Information."
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SHAREHOLDERS SHARING AN ADDRESS
Only one copy of this joint proxy statement is being delivered to multiple shareholders of Ensco or Rowan sharing an address unless Ensco or
Rowan, as applicable, has previously received contrary instructions from one or more of such shareholders. On written or oral request to the Secretary of Ensco at Ensco, 6 Chesterfield Gardens,
London, W1J 5BQ, United Kingdom, 44 (0) 207 659 4660, Ensco will deliver promptly a separate copy of this joint proxy statement to an Ensco shareholder at a shared address
to which a single copy of the documents was delivered. On written or oral request to the Secretary of Rowan at 2800 Post Oak Blvd., Suite 5450, Houston, Texas 77056, (713) 621-7800,
Rowan will deliver promptly a separate copy of this joint proxy statement to an Rowan shareholder at a shared address to which a single copy of the documents was delivered. Shareholders sharing an
address who wish, in the future, to receive separate copies or a single copy of Ensco's or Rowan's proxy statements and annual reports should provide written or oral notice to the Secretary of Ensco
or the Secretary of Rowan, as applicable, at the address and telephone number set forth above.
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows Ensco and Rowan to incorporate by reference information in this joint proxy statement. This means that Ensco and Rowan can
disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this joint proxy
statement, except for any information that is superseded by information that is included directly in this joint proxy statement.
The
SEC maintains an internet website that contains reports, proxy statements and other information about issuers, like Ensco and Rowan, who file electronically with the SEC. The address
of the site is www.sec.gov. The reports and other information filed by Ensco with the SEC, including a copy of the Ensco Articles of Association, are also available at Ensco's internet website
(www.enscoplc.com). The reports and other information filed by Rowan with the SEC, including a copy of Rowan's Articles of Association, are also available at Rowan's internet website (www.rowan.com).
We have included the web addresses of the SEC, Ensco, and Rowan as inactive textual references only. Except as specifically incorporated by reference into this joint proxy statement, information on
those websites is not part of this joint proxy statement.
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This
joint proxy statement incorporates by reference the documents listed below that Ensco and Rowan previously filed with the SEC. They contain important information about the companies
and their financial condition.
|
|
|
Ensco SEC Filings
(SEC File No. 001-08097; CIK No. 0000314808)
|
|
Period or Date Filed
|
Annual Report on Form 10-K
|
|
Year ended December 31, 2017 (the "Ensco Form 10-K")
|
Quarterly Reports on Form 10-Q
|
|
Quarter ended March 31, 2018, Quarter ended June 30, 2018 and Quarter ended September 30, 2018
|
Current Reports on Form 8-K
|
|
Filed on January 16, 2018, January 26, 2018, February 22, 2018, February 23, 2018, May 22, 2018, September 4, 2018, October 9, 2018, October 23, 2018 and October 29, 2018
(other than the portions of those documents not deemed to be filed)
|
Definitive Proxy Statement on Schedule 14A to the extent incorporated by reference into the Ensco Form 10-K
|
|
Filed on March 30, 2018
|
The description of Ensco ordinary shares contained in its Current Report on Form 8-K, as that description may be updated from time to time
|
|
Filed on May 15, 2012
|
|
|
|
Rowan SEC Filings
(SEC File No. 001-05491; CIK No. 0000085408)
|
|
Period or Date Filed
|
Annual Report on Form 10-K (as recast in part by Rowan's Current Reports on Form 8-K filed on May 9, 2018, with respect to Part II, Item 6 and Part II, Item 7, and August 24, 2018,
with respect to Part II, Item 8)
|
|
Year ended December 31, 2017 (the "Rowan Form 10-K")
|
Quarterly Reports on Form 10-Q
|
|
Quarter ended March 31, 2018, Quarter ended June 30, 2018 and Quarter ended September 30, 2018
|
Current Reports on Form 8-K
|
|
Filed on March 2, 2018, May 9, 2018, May 23, 2018, May 29, 2018, August 24, 2018, August 24, 2018, October 9, 2018, October 15, 2018, October 26, 2018 and October 31,
2018 (other than the portions of those documents not deemed to be filed)
|
Definitive Proxy Statement on Schedule 14A to the extent incorporated by reference into the Rowan Form 10-K
|
|
Filed on April 3, 2018
|
The description of Rowan ordinary shares contained in its Registration Statement on Form 8-K12B, as that description may be updated from time to time
|
|
Filed on May 4, 2012
|
In
addition, Ensco and Rowan also incorporate by reference additional documents that either company files with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act after the date of this joint proxy statement and prior to the date of the Ensco general meeting and the Rowan Court meeting and Rowan general meeting, as applicable. These documents include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
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ANNEX A
Execution Version
TRANSACTION AGREEMENT
by and between
ENSCO PLC
and
ROWAN COMPANIES PLC
Dated as of
October 7, 2018
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A-ii
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TRANSACTION AGREEMENT
This TRANSACTION AGREEMENT (this "
Agreement
"), dated as of October 7, 2018, is by and
between Ensco plc, a public limited company organized under the Laws of England and Wales ("
Ensco
"), and Rowan Companies plc, a public
limited company organized under the Laws of England and Wales ("
Rowan
" and, together with Ensco, the
"
Parties
").
WITNESSETH
:
WHEREAS, the Parties intend that the Rowan Ordinary Shares be acquired by Ensco or a DR Nominee (as defined in
Section 1.1
below) on
the terms and subject to the conditions set out in this Agreement (the
"
Transaction
"), pursuant to the Scheme of Arrangement or the Offer (as the case may be);
WHEREAS,
the Board of Directors of Rowan has (i) unanimously determined that the Transaction and the Scheme of Arrangement are in the best interests of Rowan and the Rowan
Shareholders, and declared it advisable to enter into this Agreement, (ii) approved the execution, delivery and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Transaction and the Scheme of Arrangement, and (iii) resolved to recommend adoption of this Agreement and the passing of the Rowan Shareholder Resolutions by
the Rowan Shareholders;
WHEREAS,
the Board of Directors of Ensco has (i) unanimously determined that the Transaction is in the best interests of Ensco and the Ensco Shareholders, and declared it
advisable to enter into this Agreement, (ii) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the
Transaction, (iii) subject to the passing of the resolution referred to in clause (b) of the definition of Ensco Shareholder Resolutions, approved a consolidation (being a reverse share
split under English Law) of Existing Ensco Class A Ordinary Shares (and all fractional entitlements thereto) whereby, conditional upon and effective immediately (or as soon as practicable)
following Closing every four issued Existing Ensco Class A Ordinary Share shown in the register of members of Ensco immediately following the updating of such register to give effect to the
provisions of the Scheme of Arrangement (or completion of any Offer, as the case may be) will be consolidated into one Class A ordinary share each with a nominal value of $0.40 per share (each
a "
Consolidated Ensco Share
") and all fractional entitlements to Existing Ensco Class A Ordinary Shares shall at the same time be aggregated and
consolidated in the same proportion (the "
Consolidation
"), and (iv) resolved to recommend the passing of the Ensco Shareholder Resolutions by the
Ensco Shareholders;
WHEREAS,
Rowan and Ensco intend that, for U.S. federal income tax purposes, (i) the Transaction qualify as a "reorganization" within the meaning of Section 368(a) of the
Code and (ii) this Agreement constitute a "plan of reorganization" within the meaning of Treasury Regulations Section 1.368-2(g) and 1.368-3(a);
WHEREAS,
contemporaneously with the execution of this Agreement, (i) Dr. Thomas P. Burke has entered into a new employment agreement with Rowan Companies, Inc.,
ENSCO Global Resources Limited and, solely for the purposes of guaranteeing the payments and obligations under the employment agreement, Ensco (the "
CEO Employment
Agreement
") and (ii) Carl G. Trowell has entered into a new employment agreement with Ensco (the "
Executive Chairman
Agreement
"); and
WHEREAS,
Rowan and Ensco desire to make certain representations, warranties, covenants and agreements specified herein in connection with this Agreement.
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NOW,
THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Rowan and
Ensco agree as follows:
ARTICLE I.
THE TRANSACTION
Section 1.1
The Transaction
. At the Effective Time, upon the terms and
subject to the conditions set forth in this Agreement and in accordance with the Laws of England and Wales, the Companies Act and the terms of the Scheme of Arrangement: (i) all the Rowan
Ordinary Shares then outstanding shall be transferred from the Rowan Shareholders to Ensco or, alternatively, to a company falling within Section 67(6) of the Finance Act of 1986 (a
"
DR Nominee
"); and (ii) Ensco shall allot and issue New Ensco Shares to the Rowan Shareholders. The Rowan Ordinary Shares will be acquired with
full title guarantee, free from all Liens (other than those arising under generally applicable securities Laws) and together with all rights at the Effective Time or thereafter attached thereto,
including the right to receive and retain all dividends and other distributions (if any).
Section 1.2
Closing
. The closing of the Transaction (the
"
Closing
") shall take place at the offices of Gibson, Dunn & Crutcher LLP at 811 Main Street, Suite 3000, Houston, Texas 77002 as
soon as practicable (and in any event within five business days) after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in
Article VI
(other than
those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of
such conditions), or at such other place, date and time as Rowan and Ensco may agree in writing. The date on which the Closing actually occurs is referred to as the "
Closing
Date
."
Section 1.3
Effective Time
. The Scheme of Arrangement shall become effective
at such time as an order of the High Court of Justice (the "
Court
") sanctioning the Scheme of Arrangement (such order, the
"
Court Order
") has been delivered to the Registrar of Companies in England and Wales (such date and time is hereinafter referred to as the
"
Effective Time
").
Section 1.4
Directors
.
(a) Ensco
shall take all action so that, immediately after the Effective Time, the Board of Directors of Ensco shall consist of 11 members, consisting of six members of the
Board of Directors of Ensco as at the date of this Agreement designated by Ensco, after consultation with Rowan, before the mailing of the Proxy Statement (the "
Designated
Ensco Directors
"), five of whom shall qualify as an "
independent director
" under applicable rules of the NYSE, and five members
of the Board of Directors of Rowan as at the date of this Agreement designated by Rowan, after consultation with Ensco, before the mailing of the Proxy Statement (the
"
Designated Rowan Directors
"), four of whom shall qualify as an "
independent director
" under applicable
rules of the NYSE.
(b) If,
prior to the Effective Time, any Designated Ensco Director is unwilling or unable to serve (or to continue to serve) as a director of Ensco following the Effective
Time as a result of illness, death, resignation or any other reason, then any replacement for such person shall be selected by the Board of Directors of Ensco from the persons who are members of the
Board of Directors of Ensco as at the date of this Agreement, after consultation with Rowan, and such replacement shall constitute a Designated Ensco Director for all purposes under this Agreement.
(c) If,
prior to the Effective Time, any Designated Rowan Director is unwilling or unable to serve as a director of Ensco following the Effective Time as a result of
illness, death, resignation or any other reason, then any replacement for such person shall be selected by the Board of Directors of Rowan from the persons who are members of the Board of Directors of
Rowan as at
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the
date of this Agreement, after consultation with Ensco, and such replacement shall constitute a Designated Rowan Director for all purposes under this Agreement.
(d) From
and after the Effective Time, each person designated as a director of Ensco shall serve as a director until (i) such person's successor shall be elected and
qualified, (ii) such person's earlier death, resignation, retirement, disqualification by a UK court of competent jurisdiction or removal by shareholders in accordance with applicable Law, the
articles of association of Ensco (the "
Ensco Articles of Association
"), the Corporate Governance Policy and/or the terms of their contract of service
(or letter of appointment, as the case may be), or (iii) such person shall be vacated pursuant to applicable Law or the Ensco Articles of Association without requiring further action by the
Board of Directors of Ensco.
(e) Subject
to
Section 1.5
, immediately after the Effective Time, Mr. Trowell shall be the Executive Chairman
of the Board of Directors of Ensco, subject to the terms of the Executive Chairman Agreement and the Corporate Governance Policy, and his principal office will be located in London, England. If, prior
to the Effective Time, Mr. Trowell is unable or unwilling to serve, then a non-executive chairman shall be selected from the Designated Ensco Directors by Ensco (which shall include any
replacement Designated Ensco Director designated in accordance with this
Section 1.4
) with the consent of Rowan, which shall not be unreasonably
withheld, conditioned or delayed. Subject to
Section 1.5
, before the mailing of the Proxy Statement, Rowan, after consultation with Ensco, will
designate one of the Designated Rowan Directors to be the independent lead director immediately after the Effective Time.
(f) Ensco
shall take all action as is necessary to, effective as of the Effective Time, in each case selected with mutual agreement by Ensco and Rowan, (i) cause the
Nominating and Governance Committee of the Board of Directors of Ensco to consist of four members, consisting of two Designated Ensco Directors and two Designated Rowan Directors, (ii) cause
each other committee of the Board of Directors of Ensco to consist of at least one Designated Ensco Director and one Designated Rowan Director, and (iii) determine and appoint the Chairman of
each such committee which shall be divided as evenly as possible between Ensco and Rowan.
Section 1.5
Executive Management
. At the Effective Time, Dr. Burke
shall be the President and Chief Executive Officer of Ensco, subject to the terms of the CEO Employment Agreement and the Corporate Governance Policy, and shall be one of the Designated Rowan
Directors, and his principal office will be located in London, England. If, prior to the Effective Time, Dr. Burke is unable or unwilling to serve as President and Chief Executive Officer of
Ensco, then Mr. Trowell (i) shall be the President and Chief Executive Officer of Ensco and (ii) shall not be the Executive Chairman of the Board of Directors of Ensco, a
non-executive chairman shall be selected from the Designated Rowan Directors by Rowan (which shall include any replacement Designated Rowan Director designated in accordance with
Section 1.4
) with
the consent of Ensco, which shall not be unreasonably withheld, conditioned or delayed, and no independent lead director will
be appointed pursuant to
Section 1.4(e)
and the Corporate Governance Policy. At the Effective Time, the executive management positions with Ensco
listed on
Section 1.5
of the Ensco Disclosure Schedule shall be selected by the applicable Party set forth on such Schedule, with the consent of
the other Party, which shall not be unreasonably withheld, conditioned or delayed, and each such individual shall serve until such individual's successor shall be elected and qualified or such
individual's earlier death, resignation, retirement, disqualification or removal in accordance with applicable Law, the Ensco Articles of Association and/or the Corporate Governance Policy. If, prior
to the Effective Time, any individual selected pursuant to the preceding sentence is unable or unwilling to serve as a member of executive management of Ensco in the capacity set forth in this
Agreement, then a substitute individual shall be so selected by the applicable Party set forth on
Section 1.5
of the Ensco Disclosure Schedule,
with the consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed. Unless otherwise agreed to by the Board of
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Directors,
the Chief Executive Officer of Ensco shall inform the Board of Directors prior to removing any officer identified with an asterisk on
Section 1.5
of the Ensco Disclosure Schedule.
Section 1.6
Name and Trading Symbol
. Ensco shall cause (a) the name of
Ensco to be changed to "Ensco Rowan plc" (or such other name as shall be agreed by the Parties) as of the Effective Time, by resolution of the Board of Directors of Ensco, and (b) the
NYSE ticker symbol of Ensco to be changed to "ERD" as of the Effective Time and, to the extent such ticker symbol is not available, the Parties will reach a mutual agreement regarding a new ticker
symbol.
Section 1.7
Headquarters
. Immediately following the Effective Time, Ensco
shall have its registered office and global headquarters located in London, England.
Section 1.8
Corporate Governance Policy
.
(a) On
or prior to the Closing, Ensco shall take all actions (including holding a meeting of the Board of Directors of Ensco (or a duly authorized committee thereof)) to
approve and adopt the Corporate Governance Policy.
(b) For
a period of two years following the Effective Time (the "
Governance Period
"), unless required by applicable Law or
stock exchange rule or listing standard (as determined in good faith by the Board of Directors of Ensco after consultation with outside legal counsel), Ensco shall not amend, modify or terminate or
agree to amend, modify or terminate the Corporate Governance Policy or take any action, or agree to take any action that would have the effect of causing Ensco to no longer be bound by the Corporate
Governance Policy, except in compliance with the terms thereof (including paragraph 13 and Exhibit A thereof).
(c) Throughout
the duration of the Governance Period, unless required by applicable Law or stock exchange rule or listing standard (as determined in good faith by the Board
of Directors of Ensco after consultation with outside legal counsel), Ensco shall comply in all material respects with the Corporate Governance Policy (including paragraph 13 and
Exhibit A thereto).
(d) It
is expressly agreed that, notwithstanding any other provision of this Agreement that may be to the contrary, (i) each non-management Designated Ensco Director
and non-management Designated Rowan Director shall be an express third party beneficiary of
Section 1.4(d)
and this
Section 1.8
and
(ii)
Section 1.4(d)
and this
Section 1.8
shall survive consummation of the Transaction until the expiration
of the Governance Period and shall be enforceable by any of such non-management Designated Ensco Directors and non-management Designated Rowan Directors against Ensco and its successors and assigns;
provided
,
however
that none of such persons shall be entitled to bring any claim for damages or other
remedies at law or equity except for claims for injunctive relief to specifically perform
Section 1.4(d)
or this
Section 1.8
.
ARTICLE II.
TRANSFER OF ROWAN ORDINARY SHARES; ALLOTMENT AND ISSUANCE OF NEW ENSCO SHARES
Section 2.1
Transfer of Rowan Ordinary Shares
. At the Effective Time, all
Rowan Ordinary Shares then outstanding shall be transferred from the Rowan Shareholders in accordance with the provisions of the Scheme of Arrangement,
Section 1.1
, this
Section 2.1
and
Section 2.2
, and the Rowan Shareholders shall cease to have any rights with respect to the Rowan Ordinary Shares, except their rights under
the
Scheme of Arrangement, including the right to receive the consideration thereunder (including cash in lieu of any fractional share of New Ensco Shares pursuant to
Section 2.7
). At the Effective
Time, or as soon as reasonably practicable thereafter, Rowan's Register of Members will be
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updated
in accordance with the provisions of the Scheme of Arrangement to reflect the transfer of the Rowan Ordinary Shares under the Scheme of Arrangement.
Section 2.2
Allotment and Issuance of New Ensco Shares
.
(a) Subject
to and in consideration for the transfer of the Rowan Ordinary Shares pursuant to
Section 2.1
, on the
Closing Date, Ensco shall, under the Scheme of Arrangement and subject to the terms and conditions thereof and subject to
Section 2.2(b)
and
Section 2.3
, allot and issue 2.215 New Ensco Shares for each Rowan Ordinary Share subject to the Scheme of Arrangement (as may be adjusted
pursuant to
Section 2.2(b)
, the "
Exchange Ratio
") to the relevant Rowan Shareholders, credited as
fully paid and free from all Liens.
(b) If,
between the date of this Agreement and the Effective Time, the outstanding Rowan Ordinary Shares or Existing Ensco Class A Ordinary Shares shall have been
changed into, or exchanged for, a different number of shares or a different class of shares by reason of any stock dividend, subdivision, reorganization, reclassification, recapitalization, share
split, reverse share split (including the Consolidation), combination or exchange of shares, or a stock dividend shall be declared with a record date within such period, or any similar event shall
have occurred, then the Exchange Ratio shall be equitably adjusted, without duplication, to proportionally reflect such change;
provided
that nothing in
this
Section 2.2(b)
shall be construed to permit Rowan or Ensco to take any action with respect to its securities that is prohibited by
Section 5.1
or the other terms of this Agreement. For the avoidance of doubt, if the Parties have agreed to effect the Consolidation prior to the
allotment and issue of New Ensco Shares to holders of the Rowan Ordinary Shares, the aggregate number of New Ensco Shares shall be adjusted appropriately to reflect the effect of the Consolidation
once the Consolidation has occurred.
(c) The
Parties' obligations in relation to the allotment and issue of the New Ensco Shares will be as set out more specifically in the Scheme of Arrangement.
Section 2.3
Rowan Long Term Incentive Awards
.
(a)
Rowan Restricted Share Units.
Each Existing RSU Award, whether vested or unvested, shall, as of the
Effective Time, automatically and without any action on the part of the holder thereof, be converted on the same terms and conditions (including applicable vesting conditions) applicable to such
Existing RSU Award under the applicable Rowan Equity Plan and Award Agreement in effect immediately prior to Closing into a restricted stock unit of Ensco covering a number of Ensco Class A
Ordinary Shares, rounded up or down to the nearest whole share, determined by multiplying the number of Rowan Ordinary Shares subject to such Rowan RSU Award immediately prior to Closing by the
Exchange Ratio (a "
Converted RSU Award
").
(b)
Rowan Performance Units.
Each Existing PU Award, shall, in accordance with the terms and conditions
applicable to such Existing PU Award under the applicable Rowan Equity Plan and Award Agreement in effect immediately prior to Closing, (i) vest as of the Effective Time with performance deemed
to have been achieved, with regard to each one and three year performance period, at the greater of (A) the target value of the performance units subject to such Existing PU Award for such
period, and (B) the value of the performance units subject to such Existing PU Award based on the then-expected level of attainment of the applicable performance goal as of the Effective Time,
as determined by the compensation committee of the Rowan Board, and (ii) automatically and without any action on the part of the holder thereof, be paid out in cash on the first regularly
scheduled payroll date that is at least five business days following the Effective Time to such holder thereof.
(c)
Rowan Share Options.
Each Existing Option Award, whether vested or unvested, shall, as of the Effective
Time, automatically and without any action on the part of the holder thereof, be converted into an Ensco nonqualified stock option award on the same terms and conditions
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(including
applicable vesting conditions) applicable to such Existing Option Award under the applicable Rowan Equity Plan and Award Agreement in effect immediately prior to Closing, with respect to a
number of Ensco Class A Ordinary Shares, rounded down to the nearest whole share, determined by multiplying the number of Rowan Ordinary Shares subject to such Existing Option Award immediately
prior to Closing by the Exchange Ratio, at an exercise price per Ensco Class A Ordinary Share (rounded up to the nearest whole cent) equal to the quotient of (A) the exercise price per
Rowan Ordinary Share of such Existing Option Award and (B) the Exchange Ratio (a "
Converted Option Award
").
(d)
Rowan Share Appreciation Rights.
Each Existing SAR Award, whether vested or unvested, shall, as of the
Effective Time, automatically and without any action on the part of the holder thereof, be converted into an Ensco stock appreciation right award on the same terms and conditions (including applicable
vesting conditions) applicable to such Existing SAR Award under the applicable Rowan Stock Plan and Award Agreement in effect immediately prior to Closing, with respect to a number of Ensco
Class A Ordinary Shares, rounded down to the nearest whole share, determined by multiplying the number of Rowan Ordinary Shares subject to such Existing SAR Award immediately prior to Closing
by the Exchange Ratio, at an exercise price per Ensco Class A Ordinary Share (rounded up to the nearest whole cent) equal to the quotient of (A) the exercise price per Rowan Ordinary
Share of such Existing SAR Award and (B) the Exchange Ratio (a "
Converted SAR Award
").
(e)
Rowan Director Units.
Each Existing DU Award, whether vested or unvested, shall, as of the Effective Time,
automatically and without any action on the part of the holder thereof, be converted into an Ensco restricted stock unit award on the same terms and conditions (including applicable vesting
conditions) applicable to such Existing DU Award under the applicable Rowan Equity Plan and Award Agreement in effect immediately prior to Closing, with respect to a number of Ensco Class A
Ordinary Shares, rounded up or down to the nearest whole share, determined by multiplying the number of Rowan Class A Ordinary Shares subject to such Existing RSU Award immediately prior to
Closing by the Exchange Ratio (a "
Converted DU Award
").
(f) Notwithstanding
the foregoing, the Existing RSU Awards, Existing PU Awards, Existing Options and Existing SARs held by individuals who have entered into the Change in
Control Agreements listed on
Section 5.23
of the Rowan Disclosure Schedule shall be treated in accordance with the terms set forth in such Change
in Control Agreements, as amended.
(g) Rowan
and Ensco shall each take, or procure the taking of, all action necessary, as applicable, to provide for the treatment of the Existing RSU Awards, Existing DU
Awards, Existing PU Awards, Existing Options, and Existing SARs (collectively, the "
Rowan Equity Awards
") as set forth in the foregoing provisions of
this
Section 2.3
.
(h) As
of the Effective Time, Ensco shall assume all of the Rowan Stock Plans, including (i) all of the obligations of Rowan with respect to the Rowan Equity Awards
and (ii) with respect to any amount of shares (as adjusted pursuant to the Exchange Ratio) that remain (or may again become) available for future issuance thereunder
("
Remaining Stock Plan Shares
"), subject to any limitations under applicable Law or any applicable securities exchange listing requirements. In
addition, Ensco shall file with the SEC one or more appropriate registration statements with respect to all Converted Options and Converted SARs, and all Ensco Class A Ordinary Shares that may
be issued in connection with the Converted RSU Awards, Converted DU Awards, and Remaining Stock Plan Shares.
Section 2.4
Withholding Rights
. Ensco, its affiliates and any other person
shall be entitled to deduct and withhold from any consideration or other amount otherwise payable pursuant to this Agreement or the Scheme of Arrangement such amounts, if any, as it is required to
deduct and withhold with respect to the making of such payment under the Code, the rules and regulations
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promulgated
thereunder, or any other applicable state, local or national Tax Law applicable in any jurisdiction. All Parties to this Agreement shall cooperate in coordinating the deduction and
withholding of any Taxes required to be deducted and withheld under applicable Tax Law. To the extent that amounts are so withheld, such withheld amounts (i) shall be remitted to the applicable
Governmental Entity; and (ii) shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.
Section 2.5
Rowan and Ensco Actions Prior to and at Closing
.
(a) On
or prior to Closing, Rowan shall procure that a meeting of the Board of Directors of Rowan (or a duly authorized committee thereof) is held at which resolutions are
passed (conditional upon the delivery of the Court Order to the Registrar of Companies in England and Wales and effective as of the Effective Time) approving:
(i) the
transfer to Ensco or a DR Nominee of the Rowan Ordinary Shares provided to be transferred under the Scheme of Arrangement and the registration as a member of such
person(s) in accordance with the Scheme of Arrangement in respect of such Rowan Ordinary Shares;
(ii) the
removal or resignation of the directors and officers of Rowan; and
(iii) the
appointment of such persons as Ensco and Rowan shall determine (acting reasonably) as the directors and officers of Rowan.
(b) On
or prior to Closing, Ensco shall procure that a meeting of the Board of Directors of Ensco (or a duly authorized committee thereof) is held at which resolutions are
passed, conditional upon the delivery of the Court Order to the Registrar of Companies in England and Wales (and effective as of the Effective Time) approving:
(i) the
allotment and issue, in accordance with and subject to the terms and conditions of the Scheme of Arrangement, to holders of the Rowan Ordinary Shares, subject to
the Scheme of Arrangement, of the number of New Ensco Shares provided for in the Scheme of Arrangement and the payment of cash in lieu of any fractional shares of New Ensco Shares pursuant to
Section 2.7
;
(ii) the
change of the name of Ensco in accordance with
Section 1.6
;
(iii) the
removal or resignation of the directors of Ensco other than the Designated Ensco Directors and the removal or resignation of such persons currently serving as
officers of Ensco as necessary to effect
Section 1.5
; and
(iv) the
appointment of the Designated Rowan Directors pursuant to
Section 1.4
, the appointment of the executive
officers pursuant to
Section 1.5
and the appointment of the Executive Chairman of the Board of Directors of Ensco pursuant to
Section 1.4
.
(c) On
the Closing Date, Rowan shall:
(i) deliver
the Court Order to the Registrar of Companies in England and Wales with a copy to Ensco;
(ii) deliver
to Ensco a certified copy of the resolutions referred to in
Section 2.5(a)
;
(iii) deliver
to Ensco a letter of resignation in an agreed form (or evidence of removal) from each director who resigns (or is removed) in accordance with
Section 2.5(a)(ii)
; and
(iv) deliver
to Ensco all share certificates received by Rowan in respect of the Rowan Ordinary Shares transferred to Ensco or a DR Nominee in accordance with the Scheme of
Arrangement; provided that to the extent any such share certificates are received after the Closing Date, delivery to Ensco shall be made as soon as reasonably practicable thereafter.
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(d) On
the Closing Date, Ensco shall deliver to Rowan:
(i) a
certified copy of the resolutions referred to in
Section 2.5(b)
; and
(ii) a
letter of resignation in an agreed form (or evidence of removal) from each director who resigns (or is removed) in accordance with
Section 2.5(b)(iii)
.
Section 2.6
Further Assurances.
If at any time before or after the Effective
Time, Ensco or Rowan reasonably believes or is advised that any further instruments, deeds, documents, conveyances,
assignments or assurances are reasonably necessary or desirable to consummate the Transaction or to carry out the purposes and intent of this Agreement at or after the Effective Time, then Ensco and
Rowan and their respective officers and directors shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to
consummate the Transaction and to carry out the intent and purposes of this Agreement.
Section 2.7
No Fractional Shares.
(a) No
fractional shares of New Ensco Shares shall be issued to holders of Rowan Ordinary Shares in connection with the Scheme of Arrangement and no Consolidated Ensco
Shares shall be issued to holders of Existing Ensco Ordinary Shares in connection with the Consolidation or otherwise in connection with this Agreement, and no certificates for any such fractional
shares shall be issued.
(b) Any
fraction of a New Ensco Share and (if the Consolidation is effected) any fraction of a Consolidated Ensco Share to which any person who held Rowan Ordinary Shares
immediately prior to the Effective Time would otherwise be entitled will be aggregated and sold in the market as soon as reasonably practicable following the later of the Closing Date and (if the
Consolidation is effected) the date on which the Consolidation completes in accordance with the terms of the resolution referred to in clause (b) of the definition of Ensco Shareholder
Resolutions and the holders shall be paid in cash, after the later of the Closing Date and (if the Consolidation is effected) the date on which the Consolidation completes, the net proceeds of the
sale (after the deduction of the expenses of the sale (including any tax and amounts in respect of value added tax payable thereon), without interest and subject to any required Tax withholding) in
due proportion to the fractional shares to which they would otherwise have been entitled (it being understood that, for these purposes, any person who held Rowan Ordinary Shares immediately prior to
the Effective Time shall be paid the net proceeds of sale attributable both to any fraction of a New Ensco Share and/or any fraction of a Consolidated Ensco Share to which he would otherwise have been
entitled), provided that where such former Rowan Shareholder would be entitled to an aggregate amount which is less than $5.00, then that amount shall not be paid to such former Rowan Shareholder but
shall instead be retained by Ensco for its benefit. The Parties acknowledge that payment of the net proceeds from the sale of the fractional shares of New Ensco Shares was not separately bargained-for
consideration but merely represents mechanical rounding off for purposes of avoiding the expense and inconvenience to Ensco that would otherwise be caused by the issuance of fractional shares of New
Ensco Shares. For the avoidance of doubt, for the purposes of determining whether the
de minimis
threshold specified in this
Section 2.7(b)
has been
met or passed, the net proceeds of sale attributable to (i) any fraction of a New Ensco Share and (ii) any
fraction of a Consolidated Ensco Share, to which the relevant Scheme Shareholder would otherwise have been entitled shall be aggregated.
(c) If
the Consolidation is effected, any fraction of a Consolidated Ensco Share to which any holder of Existing Ensco Class A Ordinary Shares (other than any holder
of the New Ensco Shares) would otherwise be entitled will be aggregated and sold in the market as soon as reasonably practicable following the date on which the Consolidation completes in accordance
with the terms of the resolution referred to in clause (b) of the definition of Ensco Shareholder
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Resolutions
and the holders shall be paid in cash by Ensco, after the date on which the Consolidation completes, the net proceeds of the sale (after the deduction of the expenses of the sale), without
interest and subject to any required Tax withholding, in due proportion to the fractional shares to which they would otherwise have been entitled, provided that where a holder of Existing Ensco
Class A Ordinary Shares (other than any holder of the New Ensco Shares) would be entitled to an amount which is less than an aggregate amount equal to $5.00, then that amount shall not be paid
to such holder but shall instead be retained by Ensco for its benefit.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ROWAN
Except as disclosed (a) in the Rowan SEC Documents filed prior to the date hereof (without giving effect to any amendment to any such
Rowan SEC Document filed on or after the date hereof and excluding any disclosures set forth in any such Rowan SEC Document in any risk factor section, any disclosure in any section relating to
forward-looking statements or any other statements that are non-specific, predictive or primarily cautionary in nature other than historical facts included therein), where the relevance of the
information as an exception to (or disclosure for purposes of) a particular representation is reasonably apparent on the face of such disclosure, or (b) in the disclosure schedule delivered by
Rowan to Ensco immediately prior to the execution of this Agreement (the "
Rowan Disclosure Schedule
") (each section of which qualifies the
correspondingly numbered representation, warranty or covenant if specified therein and such other representations, warranties or covenants where its relevance as an exception to (or disclosure for
purposes of) such other representation, warranty or covenant is reasonably apparent), Rowan represents and warrants to Ensco as follows:
Section 3.1
Qualification, Organization, Subsidiaries, Capitalization.
(a) Rowan
is a public limited company duly organized and validly existing under the Laws of England and Wales. Rowan has the requisite capacity, power and authority to enter
into and perform this Agreement and to own, lease and operate its properties and assets and to carry on its business as presently conducted. Each of Rowan's Subsidiaries is a legal entity duly
organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the Laws of its respective jurisdiction of organization and has the requisite capacity,
power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except where the failure to be in good standing or to have such power or
authority would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect. Each of Rowan and its Subsidiaries is duly qualified or licensed, and has all
necessary governmental approvals, to do business and is in good standing as a foreign entity (where such concept is recognized under applicable Law) in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes such approvals, qualification or licensing necessary, except where the failure to be so duly approved, qualified or
licensed and in good standing would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect.
(b) Rowan
has made available to Ensco, prior to the date hereof, true and complete copies of Rowan's articles of association (the "
Rowan Articles of
Association
"). Rowan is not in violation of the Rowan Articles of Association. None of Rowan's "significant subsidiaries" as of the date hereof, as such term is defined in
Regulation S-X promulgated by the U.S. Securities and Exchange Commission ("
SEC
"), as identified in
Section 3.1(b)
of the Rowan Disclosure
Schedule (the "
Rowan Material Subsidiaries
"), is in
material violation of any of its articles of association, certificate of incorporation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or
organizational documents, in each case as amended to and in effect as of the date hereof (collectively and, together with the Rowan Articles of
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Association,
the "
Rowan Organizational Documents
"). Rowan has made available prior to the date of this Agreement true and complete copies of the minute
books of Rowan's Board of Directors, which copies contain true and complete records of all meetings and other company actions held or taken since November 1, 2016;
provided
,
however
, that (i) Rowan has redacted such materials to the extent necessary to omit
information concerning this Agreement or the transactions contemplated hereby and (ii) minutes of meetings that pertain solely to discussion of this Agreement or the transactions contemplated
hereby have not been provided.
(c) As
of the close of business on October 5, 2018, (i) 128,203,716 Rowan Ordinary Shares were issued and outstanding, which amount includes 1,139,965 Rowan
Ordinary Shares held in an employee benefit trust, (ii) 50,000 Rowan Class B Shares were issued or outstanding and all of the Rowan Class B Shares were legally and beneficially
owned by Rowan Companies, Inc. (being a wholly-owned Subsidiary of Rowan), and (iii) up to 6,741,294 Rowan Ordinary Shares were available for issuance under the Rowan Stock Plans, of
which amount (A) 454,946 Rowan Ordinary Shares may be issued upon the exercise of Existing Options, (B) 1,011,639 Rowan Ordinary Shares may be issued upon the exercise of Existing SARs,
(C) 2,591,936 Rowan Ordinary Shares were subject to Existing RSU Awards and (D) 308,132 Rowan Ordinary Shares were subject to Existing DU Awards. Rowan has made available to Ensco a
complete and correct list of Rowan Equity Awards outstanding as of the close of business on August 31, 2018, which includes, with respect to each such Rowan Equity Award, as applicable, the:
(x) exercise price; (y) number of Rowan Ordinary Shares underlying such award; and (z) the target number of performance units underlying such award. All outstanding Rowan Ordinary
Shares are, and all such Rowan Ordinary Shares that may be issued prior to the Effective Time, when issued in accordance with the respective terms thereof, will be, duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. Except as set forth in this
Section 3.1(c)
, there are no outstanding subscriptions,
options, warrants, calls, convertible securities, exchangeable securities, Rights Plans, Rights or other similar rights, agreements or commitments to which Rowan or any of its Subsidiaries is a party
(A) obligating (or, in connection with a Rights Plan, empowering the Board of Directors of) Rowan or any of its Subsidiaries to (1) issue, transfer, exchange, sell or register for sale
any equity interests of Rowan or any Subsidiary of Rowan or securities convertible into or exchangeable for such equity interests, (2) grant, extend or enter into any such subscription, option,
warrant, call, convertible securities or other similar right, agreement or arrangement, (3) redeem or otherwise acquire any such equity interests, (4) provide a material amount of funds
to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any person (other than a wholly owned Subsidiary) or (5) make any payment to any person the
value of which is derived from or calculated based on the value of any equity security issued by Rowan or any of its Subsidiaries or (B) granting any preemptive or antidilutive or similar
rights with respect to any security issued by Rowan or its Subsidiaries. With respect to each grant of Rowan Equity Awards, each such grant was made in accordance with the terms of the applicable
Rowan Stock Plan, the Exchange Act, the Securities Act and all other applicable Laws, including the rules of the NYSE.
(d) Except
as set forth in this
Section 3.1(d)
, no equity interests of Saudi Aramco Rowan Offshore Drilling Company
(the "
ARO JV
") are authorized, issued or outstanding. All outstanding equity interests of the ARO JV are duly authorized, validly issued, fully-paid and
nonassessable and free of preemptive rights. The authorized equity interests of the ARO JV consist solely of a single class of shares, of which (i) 50% are held by a direct wholly-owned
Subsidiary of Rowan and, (ii) as of the date of this Agreement, 50% are held by Saudi Aramco Development Company. There are no outstanding subscriptions, options, warrants, calls, convertible
securities, exchangeable securities or other similar rights, agreements or commitments to which the ARO JV or any of its Subsidiaries is a party (A) obligating the ARO JV or any of its
Subsidiaries to (1) issue, transfer, exchange, sell or register for sale any equity interests of the ARO JV or any Subsidiary of the ARO JV or securities convertible into or exchangeable for
such equity interests, (2) grant, extend
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or
enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (3) redeem or otherwise acquire any such equity interests,
(4) provide a material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any such Subsidiary or (5) make any payment to
any person the value of which is derived from or calculated based on the value of any equity security issued by the ARO JV or any of its Subsidiaries or (B) granting any preemptive or
antidilutive or similar rights with respect to any security issued by the ARO JV or its Subsidiaries.
(e) Neither
Rowan nor any of its Subsidiaries has outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are
convertible or exchangeable into or exercisable for securities having the right to vote) with the Rowan Shareholders on any matter.
(f) There
are no voting trusts or other agreements or understandings to which Rowan or any of its Subsidiaries is a party with respect to the voting or registration of the
equity interests of Rowan or any of its Subsidiaries.
(g) No
Subsidiary of Rowan owns any equity interests of Rowan, and Rowan or a Subsidiary of Rowan owns, directly or indirectly, all of the issued and outstanding equity
interests of each Subsidiary of Rowan, free and clear of any preemptive rights and any Liens other than Rowan Permitted Liens, and all of such equity interests are duly authorized, validly issued,
fully paid and nonassessable (where such concept is applicable and recognized under applicable Law) and free of preemptive rights. Except for equity interests in Rowan's Subsidiaries, neither Rowan
nor any of its Subsidiaries owns, directly or indirectly, any equity interest in any person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable
for, any equity interest in any person). Except for any obligations pursuant to this Agreement, neither Rowan nor any of its Subsidiaries has any obligation to acquire any equity interest, security,
right, agreement or commitment or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any person. Neither Rowan nor any of its Subsidiaries has
any obligation, other than pursuant to the Rowan Stock Plans, to repurchase, redeem or otherwise acquire any equity interests of Rowan or any such Subsidiary.
(h) The
Rowan Material Subsidiaries identified in
Section 3.1(b)
of the Rowan Disclosure Schedule include each
"significant subsidiary," as such term is defined in Regulation S-X promulgated by the SEC, of Rowan as of the date hereof.
(i) Rowan
does not hold, directly or indirectly, any Ensco Class A Ordinary Shares or Ensco Class B Ordinary Shares.
Section 3.2
Company Authority Relative to this Agreement; No Violation.
(a) Rowan
has the requisite corporate power and authority to execute and deliver this Agreement and each other document to be entered into by Rowan in connection with the
transactions contemplated hereby (together with this Agreement, the "
Rowan Transaction Documents
") and, subject to
Section 3.2(b)
, receipt of the
Rowan Shareholder Approval and receipt of the Court Order, to consummate the transactions contemplated hereby and
thereby, including the Transaction. The execution, delivery and performance of this Agreement and the other Rowan Transaction Documents and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of Rowan and, except for the Rowan Shareholder Approval and the filing of the required documents and other actions in connection
with the Scheme of Arrangement with, and to receipt of the required approval of the Scheme of Arrangement by, the Court, no other company action on the part of Rowan or vote of the Rowan Shareholders
is necessary to authorize the execution and delivery by Rowan of this Agreement and the other Rowan Transaction Documents and the consummation of
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the
Transaction. The Board of Directors of Rowan has duly and validly adopted resolutions (i) approving and declaring advisable this Agreement and the other Rowan Transaction Documents,
including the Transaction and the other transactions contemplated hereby and thereby, (ii) declaring that it is in the best interests of the Rowan Shareholders that Rowan enter into this
Agreement and the other Rowan Transaction Documents and consummate the Transaction and the other transactions contemplated hereby and thereby on the terms and subject to the conditions set forth
herein and therein, and (iii) directing that a petition and application be made to the Court pursuant to the Scheme of Arrangement. The Board of Directors of Rowan has further resolved that it
will unanimously and unqualifiedly recommend that the Rowan Shareholders vote in favor of all the resolutions comprising the Rowan Shareholder Approval at duly held meetings of such shareholders for
such purposes (such recommendation referred to herein as the "
Rowan Board Recommendation
"). None of the aforementioned resolutions, as of the date
hereof, have been rescinded, modified or withdrawn in any way. The Transaction constitutes a "Permitted Acquisition" for the purposes of the Rowan Articles of Association. Each of the Rowan
Transaction Documents has been duly and validly executed and delivered by Rowan and, assuming each such Rowan Transaction Document has been duly authorized, executed and delivered by each other
counterparty thereto, each of the Rowan Transaction Documents constitutes the legal, valid and binding obligation of Rowan, enforceable against Rowan in accordance
with its terms, except as such enforcement may be subject to (A) the effect of bankruptcy, insolvency, reorganization, receivership, administration, arrangement, moratorium or other Laws
affecting or relating to creditors' rights generally or (B) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of
equity, regardless of whether considered in a proceeding in equity or at law (the "
Remedies Exceptions
").
(b) Other
than in connection with or in compliance with (i) the Companies Act, (ii) the U.S. Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "
Exchange Act
"), (iii) the U.S. Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "
Securities Act
"), (iv) the rules and regulations of the New York Stock Exchange
("
NYSE
"), (v) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the
"
HSR Act
"), and any antitrust, competition, foreign investment or similar Laws outside of the United States, (vi) the DPA (including the filing
of the CFIUS Notice and receipt of the CFIUS Clearance) and (vii) the approvals set forth in
Section 3.2(b)
of the Rowan Disclosure
Schedule (collectively, the "
Rowan Approvals
"), and, subject to the accuracy of the representations and warranties of Ensco in
Section 4.2(b)
, no
authorization, consent, Order, license, permit or approval of, or registration, declaration, notice or filing with, or notice
to, any United States, state of the United States or non-United States governmental or regulatory agency, commission, court, body, entity or authority, independent system operator, regional
transmission organization, other market administrator, international treaty or standards organization, or national, regional or state reliability organization (each, a
"
Governmental Entity
") is necessary, under applicable Law, for the execution, delivery and performance of this Agreement or the consummation by Rowan of
the transactions contemplated hereby, except for such authorizations, consents, Orders, licenses, permits, approvals or filings that, if not obtained or made, would not reasonably be expected to
materially impede or delay the consummation of the Transaction and the other transactions contemplated by this Agreement or reasonably be expected to have, individually or in the aggregate, a Rowan
Material Adverse Effect.
(c) The
execution, delivery and performance by Rowan of this Agreement do not, and (assuming the Rowan Approvals are obtained) the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not (i) result in any loss, suspension, limitation or impairment of any right of Rowan or any of its Subsidiaries to own or
use any assets required for the conduct of their business or result in any violation of, or default (with or without
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notice
or lapse of time, or both) under, or give rise to any right of termination, cancellation, first offer, first refusal, modification or acceleration of any material obligation or to the loss of a
benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract, instrument, permit, concession, franchise, right or license binding
upon Rowan or
any of its Subsidiaries or by which or to which any of their respective properties, rights or assets are bound or subject, or result in the creation of any liens, claims, mortgages, encumbrances,
pledges, security interests, equities or charges of any kind (each, a "
Lien
") (other than Rowan Permitted Liens and any Liens created in connection with
any action taken by Ensco or its affiliates), in each case, upon any of the properties or assets of Rowan or any of its Subsidiaries or any contract to which Rowan or any of its Subsidiaries is a
party or by which any of their respective properties or assets are bound, (ii) conflict with or result in any violation of any provision of the Rowan Organizational Documents or
(iii) conflict with or violate any applicable Laws, except in the case of clauses (i) and (iii) for such losses, suspensions, limitations, impairments, conflicts, violations,
defaults, terminations, cancellations, accelerations, or Liens as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect.
Section 3.3
Reports and Financial Statements.
(a) Rowan
and each of its Subsidiaries has timely filed with or furnished to the SEC all reports, schedules, forms, statements and other documents required to be filed or
furnished by it since January 1, 2016 (all such documents and reports filed or furnished by Rowan or any of its Subsidiaries, the "
Rowan SEC
Documents
") and Rowan has filed prior to the date hereof all material returns, particulars, resolutions and documents required to be filed or to be delivered on behalf of Rowan
with the Registrar of Companies in England and Wales. As of their respective dates of filing or, in the case of Rowan SEC Documents that are registration statements filed pursuant to the requirements
of the Securities Act, their respective dates of effectiveness, or, if amended prior to the date hereof, as of the date of the last such amendment, the Rowan SEC Documents complied in all material
respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the
"
Sarbanes-Oxley Act
"), as the case may be, and none of the Rowan SEC Documents contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that information set forth in
the Rowan SEC Documents as of a later date (but before the date hereof) will be deemed to modify information as of an earlier date.
(b) The
consolidated financial statements (including all related notes and schedules thereto) of Rowan included in the Rowan SEC Documents (i) fairly present in all
material respects the consolidated financial position of Rowan and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and any other adjustments described therein),
(ii) were prepared in conformity with U.S. generally accepted accounting principles ("
GAAP
") (except, in the case of the unaudited statements, as
permitted by applicable rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), (iii) have been
prepared from, and are in accordance with, the books and records of Rowan and its consolidated Subsidiaries and (iv) comply in all material respects with the applicable accounting requirements
and with the rules and regulations of the SEC, the Exchange Act and the Securities Act.
(c) There
are no outstanding or unresolved comments from, or unresolved issues raised by, the staff of the SEC relating to the Rowan SEC Documents. Rowan has heretofore made
available
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to
Ensco true, correct and complete copies of all written correspondence between Rowan and the SEC occurring since January 1, 2015. None of the Rowan SEC Documents is, to the knowledge of
Rowan, the subject of ongoing SEC review, and no enforcement action has been initiated against Rowan relating to disclosures contained in or omitted from any Rowan SEC Document.
(d) Neither
Rowan nor any of its Subsidiaries is a party to, nor does it have any commitment to become a party to, any joint venture, off-balance sheet partnership or any
similar contract (including any contract relating to any transaction or relationship between or among Rowan or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any
structured finance, special purpose or limited purpose entity or person, on the other hand) or any "
off-balance sheet arrangements
" (as defined in
Item 303(a) of Regulation S-K of the SEC), where the result, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of,
Rowan or any of its Subsidiaries in Rowan's financial statements or other Rowan SEC Documents.
Section 3.4
Internal Controls and Procedures.
Rowan has established and maintains disclosure
controls and procedures and internal control over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Rowan's disclosure controls and procedures are
reasonably designed to ensure that all material information required to be disclosed by Rowan in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to Rowan's management as appropriate to allow
timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Rowan's management has completed an assessment
of the effectiveness of Rowan's internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended December 31,
2017, and such assessment concluded that such controls were effective. Based on its most recent evaluation of internal controls over financial reporting prior to the date hereof, management of Rowan
has disclosed to Rowan's auditors and the audit committee of the Board of Directors of Rowan (i) any significant deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting that are reasonably likely to adversely affect in any material respect Rowan's ability to record, process, summarize and report financial information and
(ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Rowan's internal control over financial reporting, and each such deficiency,
weakness and fraud so disclosed to auditors, if any, has been disclosed to Ensco prior to the date hereof.
Section 3.5
No Undisclosed Liabilities.
There are no liabilities or obligations of Rowan or any
of its Subsidiaries, whether known or unknown and whether accrued, absolute, determined or contingent,
that would be required by GAAP, consistently applied, to be reflected on a consolidated balance sheet of Rowan and its consolidated Subsidiaries (including the notes thereto), except for
(i) liabilities or obligations disclosed and provided for in the most recent balance sheets included in the Rowan Financial Statements (or in the notes thereto) filed and publicly available
prior to the date of this Agreement, (ii) liabilities or obligations incurred in accordance with or in connection with this Agreement, (iii) liabilities or obligations incurred since
December 31, 2017 in the ordinary course of business consistent with past practice since the date of such balance sheet, (iv) liabilities or obligations that have been discharged or paid
in full, or (v) liabilities or obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect.
Section 3.6
Compliance with Law; Permits.
(a) Rowan
and its Subsidiaries are in compliance with, and are not in default under or in violation of, any applicable international, federal, state, local or foreign law,
statute, ordinance,
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rule,
regulation, convention, treaty, judgment, Order, injunction, decree or agency requirement of any Governmental Entity (collectively, "
Laws
" and
each, a "
Law
"), except where such non-compliance, default or violation would not have and would not reasonably be expected to have, individually or in
the aggregate, a Rowan Material Adverse Effect. Since January 1, 2016, neither Rowan nor any of its Subsidiaries has received any written notice or, to Rowan's knowledge, other communication
from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law, except as would not reasonably be expected to have, individually or in the aggregate, a
Rowan Material Adverse Effect.
(b) Rowan
and its Subsidiaries are in possession of all franchises, grants, authorizations, licenses, concessions, permits, easements, variances, exceptions, consents,
certificates, approvals, clearances, permissions, financial assurance instruments, qualifications and registrations and Orders of all applicable Governmental Entities, and all rights under any Rowan
Material Contract with all Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for Rowan and its Subsidiaries to own, lease
and operate their properties and assets and to carry on their businesses as they are now being conducted (the "
Rowan Permits
"), except where the failure
to have or to have filed such Rowan Permits would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect. All Rowan Permits are valid and in full force
and effect and are not subject to any administrative or judicial proceeding that could result in modification, termination or revocation thereof, except where the failure to be in full force and
effect or any modification, termination or revocation thereof would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect. Rowan and each of its
Subsidiaries is in compliance with the terms and requirements of all material Rowan Permits, except where the failure to be in compliance would not reasonably be expected to have, individually or in
the aggregate, a Rowan Material Adverse Effect.
(c) Each
drilling unit owned or leased by Rowan or any of its Subsidiaries which is subject to classification (other than cold stacked rigs) is in class and free of
suspension or cancellation to class, and is registered under the flag of its flag jurisdiction.
Section 3.7
Absence of Certain Changes or Events.
(a) From
January 1, 2018 through the date of this Agreement, except in connection with the negotiation and execution of this Agreement, the businesses of Rowan and
its Subsidiaries have been conducted in the ordinary course of business consistent with past practice, except when such conduct outside the
ordinary course of business would not have, and would not be reasonably expected to have, individually or in the aggregate, a Rowan Material Adverse Effect.
(b) Since
January 1, 2018, there has not been any event, change, effect, development, occurrence or state of facts that has had or would reasonably be expected to
have, individually or in the aggregate, a Rowan Material Adverse Effect.
Section 3.8
Environmental Laws and Regulations.
Except as would not have, individually or in the
aggregate, a Rowan Material Adverse Effect (i) there are, to the knowledge of Rowan, no investigations,
actions, suits, proceedings (whether administrative or judicial) pending or threatened in writing against Rowan or any of its Subsidiaries or any person or entity whose liability Rowan or any of its
Subsidiaries has retained or assumed either contractually or by operation of law, alleging non-compliance with or other liability under any Environmental Law, (ii) Rowan and its Subsidiaries
are, and except for matters that have been fully resolved with the applicable Governmental Entity, since January 1, 2016 have been, in compliance with all Environmental Laws (which compliance
includes the possession by Rowan and each of its Subsidiaries of all Permits required under applicable Environmental Laws to conduct their respective business and operations, and compliance with the
terms and conditions thereof), (iii) there have been no Releases at any location of Hazardous Materials
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by
Rowan or any of its Subsidiaries, or, to Rowan's knowledge, as a result of any operations or activities of Rowan or any of its Subsidiaries or their contractors or third-party operators, that could
reasonably be expected to give rise to any fine, penalty, remediation, investigation, obligation or liability of any kind to Rowan or its Subsidiaries, (iv) none of Rowan and its Subsidiaries
is subject to any Order or any indemnity obligation with any other person that could reasonably be expected to result in obligations or liabilities under applicable Environmental Laws or concerning
any Releases of Hazardous Materials, (v) none of Rowan and its Subsidiaries has received any unresolved claim, notice, complaint or request for information from a Governmental Entity or any
other person relating to actual or alleged noncompliance by Rowan or its Subsidiaries with or liability of Rowan or its Subsidiaries under applicable Environmental Laws (including any such liability
or obligation arising under, retained or assumed by Rowan or its Subsidiaries by contract or by operation of law), and (vi) Rowan and its Subsidiaries have made available to Ensco all reports,
audits, assessments and documents materially bearing on any material environmental, health and safety liabilities relating to Rowan and its Subsidiaries' current or former operations, properties or
facilities.
Section 3.9
Investigations; Litigation.
Except as would not reasonably be expected to have,
individually or in the aggregate, a Rowan Material Adverse Effect or would not reasonably be expected to
prevent, impede or delay consummation of the Transaction, (i) there is no investigation or review pending (or, to Rowan's knowledge, threatened) by any Governmental Entity with respect to Rowan
or any of its Subsidiaries, (ii) there are no claims, actions, suits, inquiries, investigations, arbitrations or administrative or other proceedings, or any subpoenas, civil investigative
demands or other requests for information, relating to potential violations of Law pending (or, to Rowan's knowledge, threatened) against or affecting Rowan or any of its Subsidiaries, or any of their
respective properties and (iii) there are no Orders, injunctions, judgments or decrees of, or before, any Governmental Entity pending (or, to Rowan's knowledge, threatened to be imposed)
against Rowan or any of its Subsidiaries.
Section 3.10
Investment Company.
None of Rowan or any of its Subsidiaries is an "investment
company" or a company "controlled" by an "investment company" within the meaning of the U.S. Investment
Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
Section 3.11
Intellectual Property.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, either Rowan or a Subsidiary of Rowan owns, or is
licensed or otherwise possesses valid rights to use, free and clear of Liens other than Rowan Permitted Liens, all trademarks, trade names, service marks, service names, mark registrations, logos,
assumed names, domain names, registered and unregistered copyrights, patents or applications and registrations, trade secrets and other intellectual property rights necessary to their respective
businesses as currently conducted (collectively, the "
Rowan Intellectual Property
"), and no third party has ownership rights or license rights to
improvements made by Rowan in the Rowan Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, (i) there
are no pending or, to Rowan's knowledge, threatened claims by any person alleging infringement, misappropriation or other violation by Rowan or any of its Subsidiaries of any intellectual property
rights of any person, (ii) to Rowan's knowledge, the conduct of the business of Rowan and its Subsidiaries does not infringe, misappropriate or otherwise violate any intellectual property
rights of any person, (iii) neither Rowan nor any of its Subsidiaries has made any claim of a violation, infringement or misappropriation by others of Rowan's or any its Subsidiaries' rights to
or in connection with Rowan Intellectual Property and (iv) to Rowan's knowledge, no person is infringing, misappropriating or otherwise violating any Rowan Intellectual Property.
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(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, Rowan and its Subsidiaries have implemented
(i) commercially reasonable measures, consistent with industry standards, to protect the confidentiality, integrity and security of the Rowan IT Assets (and all information and transactions
stored or contained therein or transmitted thereby); and (ii) commercially reasonable data backup, data storage, system redundancy and disaster avoidance and recovery procedures, as well as a
commercially reasonable business continuity plan, in each case consistent with customary industry practices.
Section 3.12
Properties
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, Rowan and its Subsidiaries have good and
defensible title to all real property owned by Rowan or any of its Subsidiaries and good and valid leasehold interest to all real property which is leased, subleased, licensed or otherwise occupied by
Rowan or any of its Subsidiaries (the "
Rowan Leased Real Property
"), in each case free and clear of all Liens (other than Rowan Permitted Liens).
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, Rowan and its Subsidiaries have good and
defensible title to, or have valid rights to lease or otherwise use, all items of personal property that are material to the respective businesses of Rowan and its Subsidiaries, in each case free and
clear of all Liens (other than Rowan Permitted Liens).
Section 3.13
Ownership and Maintenance of Drilling Units
.
(a) Either
Rowan or a Subsidiary of Rowan has good and marketable title to the drilling units listed in Rowan's most recent fleet status report, a true and complete copy of
which has been provided to Ensco (the "
Rowan Fleet Report
"), in each case free and clear of all Liens except for Rowan Permitted Liens. No such drilling
unit or any related asset is leased under an operating lease from a lessor that, to Rowan's knowledge, has incurred non-recourse indebtedness to finance the acquisition or construction of such asset.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, the drilling units listed in the Rowan Fleet
Report (other than such drilling units that are noted therein as "cold stacked" or are being prepared to be "cold stacked") (i) have been maintained consistent with general practice in the
offshore drilling industry, and are in good operating condition and repair, subject to ordinary wear and tear; (ii) are adequate for the purpose for which they are being used and are capable of
being used in the business as presently conducted without present need for replacement or repair, except in the ordinary course of business; (iii) conform in all material respects with all
applicable legal requirements; and (iv) in the aggregate, provide the capacity to engage in Rowan's business on a continuous basis as it is presently conducted, subject to routine maintenance.
Section 3.14
Tax Matters
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect:
(i) Rowan
and each of its Subsidiaries have duly and timely filed or caused to be filed (taking into account any valid extension of time within which to file) all Tax
Returns required to be filed by any of them and all such Tax Returns are true, complete and accurate.
(ii) Rowan
and each of its Subsidiaries have timely paid all Taxes that are required to be paid by any of them or that Rowan or any of its Subsidiaries are obligated to
withhold from amounts owing to any
employee, creditor, shareholder or third party (in each case, whether or not shown on any Tax Return), except with respect to matters contested in good faith through
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appropriate
proceedings and for which adequate reserves have been established, in accordance with GAAP on the most recent financial statements of Rowan and its Subsidiaries.
(iii) No
Tax Return of Rowan or any of its Subsidiaries is the subject of an audit, examination investigation or other proceeding, and there are no audits, examinations,
investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of Rowan or any of its Subsidiaries.
(iv) Neither
Rowan nor any of its Subsidiaries is currently the beneficiary of any waivers of any limitation periods or agreements providing for an extension of time for the
filing of any Tax Return, the assessment or collection thereof by any relevant Tax authority or the payment of any Tax by Rowan or any of its Subsidiaries.
(v) Neither
Rowan nor any of its Subsidiaries has any liability for the Taxes of any person (other than Taxes of Rowan or its Subsidiaries) (A) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Tax Law), (B) as a transferee or successor or (C) by Contract (other than customary Tax
indemnifications contained in ordinary course commercial agreements or arrangements that are not primarily related to Taxes).
(vi) Neither
Rowan nor any of its Subsidiaries has any liability pursuant to any Tax sharing, allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among such party and any of its wholly owned Subsidiaries and other than as customary Tax indemnifications contained in ordinary course commercial
agreements or arrangements that are not primarily related to Taxes).
(vii) Neither
Rowan nor any of its Subsidiaries is a party to any closing agreement described in Section 7121 of the Code or any predecessor provision thereof or any
similar agreement under state, local or non-U.S. Tax Law, and neither Rowan nor any of its Subsidiaries is subject to any private ruling issued by any Governmental Entity in respect of Taxes.
(viii) There
are no Liens for Taxes on any asset of Rowan or its Subsidiaries, except for Rowan Permitted Liens.
(ix) No
written claim has been received by Rowan or any of its Subsidiaries from a Governmental Entity in a jurisdiction where such entity does not file Tax Returns that it
is or may be subject to taxation by such jurisdiction.
(x) Neither
Rowan nor any of its Subsidiaries is or was a "surrogate foreign corporation" within the meaning of Section 7874(a)(2)(B) of the Code.
(xi) Neither
Rowan nor any of its Subsidiaries has been a party to a transaction that is a "listed transaction," as such term is defined in Treasury Regulations
Section 1.6011-4(b)(2), or any other transaction requiring disclosure under analogous provisions of state, local or non-U.S. Tax Law.
(xii) Within
the past three years, neither Rowan nor any of its Subsidiaries has been a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution intended to qualify for tax-free treatment under Section 355 of the Code (or a similar provision of state, local or non-U.S. Tax Law).
(xiii) Neither
Rowan nor any of its Subsidiaries (nor any of their respective predecessors) (i) is treated as a domestic corporation under Section 7874(b) of
the Code or (ii) was created or organized in the United States such that such entity would be taxable in the United States as a domestic entity pursuant to the dual charter provision of
Treasury Regulations
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Section 301.7701-5(a).
Neither Rowan nor any of its Subsidiaries has knowledge of any facts or of any reason that would reasonably be expected to cause Ensco to be treated, following the
completion of the Transaction, as a domestic corporation for U.S. federal income tax purposes under Section 7874 of the Code.
(b) To
the knowledge of Rowan, neither Rowan nor any of its Subsidiaries has taken or agreed to take any action that would (and none of them is aware of any facts,
agreement, plan or other circumstance that would) reasonably be expected to prevent the Transaction from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code.
Section 3.15
Employment and Labor Matters
.
(a) Neither
Rowan nor any of its Subsidiaries is a party to or bound by any Collective Bargaining Agreement with respect to employees of Rowan or any of its Subsidiaries
(each, a "
Rowan Employee
"), other than those nationwide, industry wide or similar Collective Bargaining Agreements that Rowan or any of its Subsidiaries
may be deemed to be a party to or bound by as a result of doing business in a particular jurisdiction.
(b) No
notice to or approval from any trade union, works council, staff association or other body representing Rowan Employees is required in connection with Rowan entering
into this Agreement or completing the Transaction. Rowan has delivered to Ensco a complete and accurate list of all labor organizations recognized by Rowan in any way for bargaining, information or
consultation purposes and/or which represent any Rowan Employee with respect to their employment with Rowan or any of its Subsidiaries.
(c) There
are no outstanding applications for recognition or information and consultation rights with respect to Rowan Employees. To Rowan's knowledge, there are no
activities or proceedings of any labor or trade union, staff association or other body to organize any Rowan Employee. No Collective Bargaining Agreement is being negotiated by Rowan or, to Rowan's
knowledge, any of its Subsidiaries with respect to any Rowan Employees.
(d) Since
January 1, 2016, there has been no actual, or to Rowan's knowledge, threatened unfair labor practice charges, grievances, arbitrations, strikes, lockouts,
work stoppages, slowdowns, picketing or other labor disputes against Rowan or any of its Subsidiaries involving Rowan Employees that would reasonably be expected to have, individually or in the
aggregate, a Rowan Material Adverse Effect.
(e) Rowan
is, and has been, in compliance with all Laws regarding employment and employment practices, terms and conditions of employment and wages and hours (including
classification of employees) and other Laws in respect of any reduction in force, including notice, information and consultation requirements, except where such non-compliance, default or violation
would not have and would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect.
(f) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, there are no material outstanding assessments,
penalties, fines, Liens, charges, surcharges, or other amounts due or owing by Rowan pursuant to any workplace safety and insurance/workers' compensation Laws, and Rowan has not been reassessed in any
material respect under such Laws during the past three years and Rowan has not received any claims under such Laws.
(g) No
Key Employee or other officer has provided written notice to any officer of Rowan that he or she intends to resign or retire as a result of the transactions
contemplated by this Agreement or otherwise.
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Section 3.16
Employee Benefit Plans
.
(a)
Section 3.16(a)
of the Rowan Disclosure Schedule sets forth a correct and complete list of each material Rowan
Benefit Plan. For purposes of this Agreement, "
Rowan Benefit Plan
" means any (i) "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), (ii) "employee welfare benefit plan" (as defined in Section 3(1) of ERISA) or (iii) plan, program, agreement, policy or arrangement providing for
compensation, employment, benefits, retirement benefits, profit-sharing, deferred compensation, stock option, phantom stock, stock appreciation, change in control, retention, equity or equity-based
compensation, stock purchase, employee stock ownership, severance pay, long service award, vacation, bonus, commissions, incentive, medical, retiree medical, vision, dental or other health plans, life
insurance plans, and each other employee benefit plan or fringe benefit plan or post-employment or retirement benefit, including any "employee benefit plan" as that term is defined in
Section 3(3) of ERISA (whether or not subject to ERISA), in each case (x) sponsored, maintained or administered by Rowan or any Subsidiary, (y) to which Rowan or any Subsidiary
contributes or is obligated to contribute for the benefit of any current or former employees, directors, consultants or independent contractors or (z) with respect to which Rowan or any of its
Subsidiaries has or could reasonably be expected to have any obligation or liability, contingent or otherwise.
(b) Each
Rowan Benefit Plan that is intended to be qualified under Section 401(a) of the Code (a "
Qualified Plan
") is
so qualified and each trust maintained thereunder is exempt from taxation under Section 501(a) of the Code and there is no reason why tax approval or registration under any local Law in any
part of the world, with respect to any Rowan Benefit Plan that is subject to any such approval, or registration, might be withdrawn or might cease to apply.
(c) Except
as set forth on
Section 3.16(c)
of the Rowan Disclosure Schedule, no Rowan Benefit Plan is (i) a
benefit plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the
Code, or (ii) a material defined benefit pension plan that is governed by local Law that is the equivalent of Title IV or Section 302 of ERISA or Section 412, 430 or 4971
of the Code.
(d) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, with respect to each Rowan Benefit Plan,
(i) no reportable event, as defined in Section 4043 of ERISA, no prohibited transaction, as described in Section 406 of ERISA or Section 4975 of the Code, and no
accumulated funding deficiency, as defined in Section 302 of ERISA and 412 of the Code has occurred, and (ii) all material contributions required to have been made under the terms of any
such Rowan Benefit Plan have been timely made.
(e) None
of Rowan and its Subsidiaries maintains, contributes to or is obligated to contribute to any "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA or a plan that has two or more contributing sponsors at least two of whom are not under common control that is subject to Title IV of ERISA (a "
multiple employer
plan
"), and none of Rowan and its Subsidiaries has incurred any undischarged liability to a multiemployer plan or a multiple employer plan as a result of a complete or partial
withdrawal from such plan.
(f) Neither
Rowan nor any of its Subsidiaries have been issued with a restoration order, a contribution notice or financial support direction (or a warning notice,
improvement notice or any other fine, penalty or notice of exercise or proposed exercise of any of its powers) by the UK pensions regulator in relation to any pension arrangement and, to
Rowan's knowledge, no facts or circumstances exist under which the UK pensions regulator could issue any such notice, direction, fine or penalty, and there has been no act or deliberate failure
to act falling within Section 38(5) of the Pensions Act 2004.
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(g) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, there is no Action (including any investigation,
audit or other administrative proceeding) by the U.S. Department of Labor, the PBGC, the U.S. Internal Revenue Service or any other Governmental Entity or by any plan participant or
beneficiary pending, or to Rowan's knowledge, threatened, relating to the Rowan Benefit Plans, any fiduciaries thereof with respect to their duties to the Rowan Benefit Plans or the assets of any of
the trusts under any of the Rowan Benefit Plans (other than routine claims for benefits) nor to Rowan's knowledge are there facts or circumstances that exist that could reasonably give rise to any
such Actions.
(h) Except
as set forth on
Section 3.16(h)
of the Rowan Disclosure Schedule, no Rowan Benefit Plan provides for any
post-employment or post-retirement medical or life insurance benefits for retired, former or current employees or beneficiaries or dependents thereof, except as required by
Section 4980B of the Code or any applicable Law except as would not result in material liability to Rowan and its Subsidiaries, taken as a whole.
(i) Rowan
is not party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of Taxes imposed by
Sections 409A, 457A, or 4999 of the Code or equivalent local Law.
(j) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, the consummation of the Transaction and the
transactions contemplated by this Agreement will not, either alone or in combination with another event (i) entitle any current or former employee, director, consultant or officer of Rowan or
any of its Subsidiaries to severance pay, unemployment compensation or other compensatory payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation or
benefits due to any such employee, director, consultant or officer, (iii) except as provided in
Section 2.3
, result in an increase in any
contributions payable to, or an acceleration of the timing of payment of any contributions to, or result in an increase in liabilities in or create or accelerate any obligation to or in relation to,
any Rowan Benefit Plan, (iv) result in the termination of, or allow any other party to terminate, any Rowan Benefit Plan or (v) impose any restrictions or limitations on Rowan's rights
to administer, amend or terminate any Rowan Benefit Plan.
(k) The
consummation of this Transaction and the transactions contemplated by this Agreement will not, either alone or in combination with another event, result in any
payment (whether in cash or property or the vesting of property) to any "disqualified individual" (as such term is defined in Treasury Regulation Section 1.280G-1) of Rowan that could,
individually or in combination with any other such payment, constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code).
(l) Each
Rowan Benefit Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been
operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder that would reasonably be expected to have, individually or in
the aggregate, a Rowan Material Adverse Effect.
(m) Rowan
and its Subsidiaries have, in relation to the Rowan Benefit Plans, at all times complied with all applicable Laws, regulations and requirements and the trusts,
powers and provisions of the Rowan Benefit Plan documentation, except where such non-compliance, default or violation would not have and would not reasonably be expected to have, individually or in
the aggregate, a Rowan Material Adverse Effect. Rowan and its Subsidiaries have at all times complied with their obligations in relation to automatic enrolment arising under the UK Pensions
Act 2008, except where such non-compliance, default or violation would not have and would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
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(n) With
respect to Rowan Employees primarily based in the UK, except pursuant to the Rowan Benefit Plans and obligations under applicable Law, neither Rowan nor any of its
Subsidiaries has any obligation (whether legally binding or not) to: (i) pay any pension, (ii) make any other payment on or after retirement or death (whether of a temporary nature or a
permanent nature), or (iii) pay or otherwise provide or contribute towards any pension, lump sum, gratuity or other like benefit provided or to be provided on retirement or death or, in
connection with past service, after retirement or death, (in each case) to, or in respect of, any Rowan Employee or spouse, civil partner or dependent of such Rowan Employee. Neither Rowan nor any of
its Subsidiaries is or has at any time in the last six years been (for the purposes of section 75 of the UK Pensions Act 1995 or Part 3 of the UK Pensions
Act 2014) an "employer" in an occupational pension scheme to which section 75 of the UK Pensions Act 1995 or Part 3 of the Pensions Act 2014 applies and has
not been associated or connected with an employer (for the purposes of sections 38 through 51 of the UK Pensions Act 2004 or otherwise). No person has ever become employed in the
United Kingdom by Rowan or any of its Subsidiaries as a result of a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 or 2006 where such person was, prior
to the transfer, a member of a UK occupational pension scheme that provided any benefits other than on old age, invalidity or death, except where such non-compliance, default or violation would
not have and would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
Section 3.17
Insurance
.
Rowan and its Subsidiaries maintain insurance in such amounts and against such risks substantially as Rowan believes to be customary for the international offshore drilling business as
of the date hereof. Except as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect, (i) all insurance policies maintained by or on behalf
of Rowan or any of its Subsidiaries as of the date of this Agreement are in full force and effect and are valid and enforceable, and all premiums due on such policies have been paid by Rowan or its
Subsidiaries, as applicable, and (ii) Rowan and its Subsidiaries are in compliance with the terms and provisions of all insurance policies maintained by or on behalf of Rowan or any of its
Subsidiaries as of the date of this Agreement, and neither Rowan nor any of its Subsidiaries is in breach or default under, or has taken any action that could permit termination or material
modification of, any material insurance policies.
Section 3.18
Opinion of Financial Advisor
.
The Board of Directors of Rowan has received the opinion letter of Goldman, Sachs & Co. LLC to the effect that, as of the date hereof and subject to the assumptions,
limitations, qualifications and other matters set forth therein, the Exchange Ratio pursuant to this Agreement is fair from a financial point of view, to the holders (other than Ensco and its
affiliates) of Rowan Ordinary Shares. Rowan shall, promptly following the execution of this Agreement by all Parties, furnish an accurate, complete and confidential copy of said opinion letter to
Ensco solely for informational purposes.
Section 3.19
Material Contracts
.
(a) Except
for this Agreement, the Rowan Benefit Plans, agreements with customers for the provision of drilling and related services, agreements filed as exhibits to the
Rowan SEC Documents or as set forth on the applicable subsection of
Section 3.19(a)
of the Rowan Disclosure Schedule, as of the date hereof,
neither Rowan nor any of its Subsidiaries is a party to or bound by:
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);
(ii) any
Contract that (A) imposes any restriction on the right or ability of Rowan or any of its Subsidiaries to compete with any other person or in any geographic
area or acquire or
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dispose
of the securities of another person or (B) contains an exclusivity or "most favored nation" clause that restricts the business of Rowan and its Subsidiaries in a material manner;
(iii) any
mortgage, note, debenture, indenture, security agreement, guaranty, pledge or other agreement or instrument evidencing indebtedness for borrowed money or any
guarantee of such indebtedness of Rowan or any of its Subsidiaries in an amount in excess of $50.0 million, except any transaction among Rowan and its wholly owned Subsidiaries or among Rowan's
wholly owned Subsidiaries;
(iv) any
executory Contract that provides for the acquisition or disposition of assets, rights or properties with a value in excess of $50.0 million, except any
transaction among Rowan and its wholly owned Subsidiaries or among Rowan's wholly owned Subsidiaries;
(v) any
material joint venture, partnership or limited liability company agreement or other similar Contract relating to the formation, creation, operation, management or
control of any material joint venture, partnership or limited liability company, other than any such Contract solely between Rowan and its Subsidiaries or among Rowan's Subsidiaries;
(vi) any
Contract expressly limiting or restricting the ability of Rowan or any of its Subsidiaries to make distributions or declare or pay dividends in respect of their
capital stock, partnership interests, membership interests or other equity interests, as the case may be;
(vii) any
Contract that obligates Rowan or any of its Subsidiaries to make any loans, advances or capital contributions to, or investments in, any person other than any loan
or capital contribution to, or investment in, (A) Rowan or one of its Subsidiaries or (B) any person (other than an officer, director or employee of Rowan or any of its Subsidiaries)
that is less than $50.0 million to such person;
(viii) any
Contract that by its terms calls for aggregate payments by or to Rowan or any of its Subsidiaries of more than $50.0 million in the aggregate over the
remaining term of such Contract, except for (A) Contracts with a customer and (B) any such Contract that may be cancelled by Rowan or any of its Subsidiaries with a penalty or other
liability of less than $10.0 million to Rowan or any of its Subsidiaries, upon notice of 60 days or less;
(ix) any
Contract that involves, or is reasonably expected in the future to involve, annual revenues of $50.0 million;
(x) any
Contract providing for drilling unit construction, repair, modification, life extension, overhaul or conversion for an amount in excess of $50.0 million;
(xi) any
Contract with a customer with a remaining duration of greater than 180 days, including fixed price customer options;
(xii) any
Contract that includes any affiliate of Rowan as a counterparty or third party beneficiary and that would be required to be disclosed under Item 404 of
Regulation S-K of the SEC;
(xiii) any
Contract that contains "earn out" or other contingent payment obligations, or remaining indemnity or similar obligations, that could reasonably be expected to
result in payments after the date hereof by Rowan or any of its Subsidiaries in excess of $50.0 million;
(xiv) any
lease or sublease with respect to a Rowan Leased Real Property with remaining payments in excess of $10.0 million; and
(xv) any
Contract the loss or breach of which would reasonably be expected to have a Rowan Material Adverse Effect.
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All
Contracts of the types referred to in clauses
(i)
through
(xv)
above are referred to
herein as "
Rowan Material Contracts.
" As used herein, "
Contract
" shall mean any agreement, contract,
license, obligation, promise, understanding or undertaking (whether written or oral) that is legally binding.
(b) Rowan
has delivered or made available to Ensco true and complete copies of all Rowan Material Contracts.
(c) Except
as would not reasonably be expected to have, individually or in the aggregate, a Rowan Material Adverse Effect (other than the occurrence of a change in control
or "similar term" as acknowledged by the parties in
Section 5.23
), (i) neither Rowan nor any Subsidiary of Rowan is in breach of or
default under the terms of any Rowan Material Contract, (ii) to Rowan's knowledge, no other party to any Rowan Material Contract is in breach of or default under the terms of any Rowan Material
Contract and (iii) each Rowan Material Contract is a valid and binding obligation of Rowan or the Subsidiary of Rowan that is party thereto and, to Rowan's knowledge, of each other party
thereto, and is in full force and effect, subject to the Remedies Exceptions.
Section 3.20
Finders or Brokers
.
Except for Goldman, Sachs & Co. LLC, neither Rowan nor any of Rowan's Subsidiaries has employed any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement who would be entitled to or may receive any fee or any commission in connection with or upon consummation of the Transaction.
Section 3.20
of the Rowan
Disclosure Schedule sets out, as at the date of this Agreement, Rowan's good faith estimate of the fees, commissions
and expenses (including discretionary fees) payable by it or any of Rowan's Subsidiaries to Goldman, Sachs & Co. LLC in connection with this Agreement and the Transaction.
Section 3.21
Anti-Bribery
.
Within the past five years, neither (a) Rowan, nor any of its Subsidiaries, nor, to Rowan's knowledge, any director, officer, or employee of Rowan or any of its Subsidiaries nor
(b) to Rowan's knowledge, any Representative while acting for or on behalf of any of the foregoing, has directly or indirectly (i) made, accepted, promised, or authorized the giving of
any unlawful payment to/from any foreign or domestic government officials or employees or to/from any foreign or domestic political parties or campaigns, or to/from any private third parties, or
otherwise violated any provisions of any applicable anti-bribery Laws, including without limitation the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (collectively, the "
FCPA
") or the UK Bribery Act 2010 (the "
Bribery Act
"), or
(ii) taken any action or engaged in any conduct, activity or practice for or on behalf of Rowan or any of its Subsidiaries that would otherwise constitute a violation of or an offence under any
applicable anti-bribery Laws, including the FCPA and the Bribery Act, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any
"foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. In the past
five years, Rowan has maintained policies and procedures that are reasonably designed to ensure, and that are reasonably expected to continue to ensure, continued compliance with anti-bribery Laws.
Neither Rowan nor any of its Subsidiaries, nor, to the knowledge of Rowan, any director, officer or employee of Rowan or any Subsidiary of Rowan, are, or in the past five years have been, subject to
any actual, pending, or, to Rowan's knowledge, threatened civil, criminal, or administrative actions or governmental investigations, inquiries or enforcement actions, or made any voluntary disclosures
to any governmental authority, involving Rowan or any Subsidiary of Rowan relating to alleged violations of applicable anti-bribery Laws, including the FCPA and the Bribery Act.
Section 3.22
Export Controls and Sanctions
.
(a) Neither
(i) Rowan, any of its Subsidiaries, or any employee, officer, or director of Rowan or any of its Subsidiaries nor (ii) to Rowan's knowledge, any
Representative of any of the foregoing, (A) is currently or has been within the past five years the target of Trade Sanctions
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(including
by being designated on the list of Specially Designated Nationals and Blocked Persons or on any other sanctions list maintained by the U.S. Department of Treasury's Office of Foreign
Assets Control ("
OFAC
"), the U.S. Department of State, the United Nations Security Council, the European
Union or Her Majesty's Treasury or direct or indirect ownership or control by one or more designated parties), or is or has been within the past five years operating, organized or resident in a
country or territory that itself is the target of Trade Sanctions (currently, Crimea, Cuba, Iran, North Korea and Syria); or (B) has, directly or, to the knowledge of Rowan, indirectly,
participated in the past five years in any prohibited or unlawful transaction or dealing involving a person or entity that is the target of Trade Sanctions, or with any person or entity operating,
organized, or resident in a country or territory that is the target of Trade Sanctions.
(b) In
the past five years, each of Rowan, Rowan's Subsidiaries and, to Rowan's knowledge, their respective affiliates (i) has conducted its business in compliance
with all applicable Trade Sanctions and Export Control Laws in all material respects; (ii) have obtained, and are in compliance in all material respects with, all required export and import
licenses, license exceptions and other consents, notices, approvals, orders, permits, authorizations, declarations, classifications and filings with any Governmental Entity required for the import,
export and re-export of products, software and technology; and (iii) has maintained and enforces policies and procedures that are reasonably designed to ensure, and that are reasonably expected
to continue to ensure, continued compliance therewith.
Section 3.23
Derivatives
.
Section 3.23
of the Rowan Disclosure Schedule contains a complete and correct schedule of all material Derivative Transactions
entered into by Rowan or any of its Subsidiaries or for the account of any of their respective customers as of the date hereof.
Section 3.24
Takeover Statutes
.
There are no "moratorium," "control share acquisition," "fair price," "supermajority," "affiliate transactions," or "business combination statute or regulation" or other similar state or
other anti-takeover Laws and regulations applicable to Rowan, the Rowan Ordinary Shares, the Transaction or any other transactions contemplated by this Agreement.
Section 3.25
Information Supplied
.
The information supplied or to be supplied by Rowan for inclusion in the Registration Statement provided for in
Section 5.18(d)
to
be filed by Ensco in connection with the issuance of the New Ensco Shares in the Transaction shall not, at the time the Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by Rowan with respect to statements made or incorporated by reference therein based on information supplied by Ensco in writing
expressly for inclusion therein. The information supplied or to be supplied by Rowan for inclusion in the Proxy Statement (including, for the avoidance of any doubt, the Scheme Document) will not, at
the time the Proxy Statement is first mailed to the Ensco Shareholders and at the time of the Ensco Shareholder Meeting, the Scheme Meeting and the Rowan GM to be held in connection with the
Transaction, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no representation or warranty is made by Rowan with respect to statements made or incorporated by reference therein based on
information supplied by Ensco in writing expressly for inclusion therein. The Registration Statement and the Proxy Statement (solely with respect to the portion thereof relating to the Rowan GM but
excluding any portion thereof based on information supplied by Ensco in writing expressly for inclusion therein, with respect to which no representation or warranty is made by Rowan) will comply as to
form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder and any applicable provisions of the Companies Act and
the Scheme Document will comply in all material respects with the provisions of the Companies Act.
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Section 3.26
No Additional Representations
.
(a) Rowan
acknowledges that Ensco does not make any representation or warranty as to any matter whatsoever except as expressly set forth in
Article IV
or in any certificate delivered by Ensco to Rowan in
accordance with the terms hereof, and specifically (but without limiting the
generality of the foregoing) that Ensco makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered or made available to Rowan, any of its affiliates
or any of their respective officers, directors, employees or Representatives of future revenues, results of operations (or any component thereof), cash flows or financial condition (or any component
thereof) of Ensco and its Subsidiaries or (ii) the future business and operations of Ensco and its Subsidiaries, and Rowan has not relied on such information or any other representations or
warranties not set forth in
Article IV
.
(b) Rowan
has conducted its own independent review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of
Ensco and its Subsidiaries and acknowledges that Rowan has been provided access for such purposes. Except for the representations and warranties expressly set forth in
Article IV
or in any
certificate delivered to Rowan by Ensco in
accordance with the terms hereof, in entering into this Agreement, Rowan has relied solely upon its independent investigation and analysis of Ensco and Ensco's Subsidiaries, and Rowan acknowledges and
agrees that it has not been induced by and has not relied upon any representations, warranties or statements, whether express or implied, made by Ensco, its Subsidiaries, or any of their respective
affiliates, shareholders, controlling persons or Representatives that are not expressly set forth in
Article IV
or in any certificate delivered
to Rowan by Ensco, whether or not such representations, warranties or statements were made in writing or orally. Rowan acknowledges and agrees that, except for the representations and warranties
expressly set forth in
Article IV
or in any certificate delivered by Ensco to Rowan (i) Ensco does not make, and has not made, any
representations or warranties relating to itself or its business or otherwise in connection with the transactions contemplated hereby and Rowan is not relying on any representation or warranty except
for those expressly set forth in this Agreement, (ii) no person has been authorized by Ensco to make any representation or warranty relating to itself or its business or otherwise in connection
with the transactions contemplated hereby, and if made, such representation or warranty may not be relied upon by Rowan as having been authorized by Ensco and (iii) any estimates, projections,
predictions, data, financial information, memoranda, presentations or any other materials or information provided or addressed to Rowan, any of its affiliates or any of their respective officers,
directors, employees or Representatives are not and shall not be deemed to be or include representations or warranties of Ensco unless any such materials or information is the subject of any express
representation or warranty set forth in
Article IV
.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ENSCO
Except as disclosed (a) in the Ensco SEC Documents filed prior to the date hereof (without giving effect to any amendment to any such
Ensco SEC Document filed on or after the date hereof and excluding any disclosures set forth in any such Ensco SEC Document in any risk factor section, any disclosure in any section relating to
forward-looking statements or any other statements that are non-specific, predictive or primarily cautionary in nature other than historical facts included therein), where the relevance of the
information as an exception to (or disclosure for purposes of) a particular representation is reasonably apparent on the face of such disclosure, or (b) in the disclosure schedule delivered by
Ensco to Rowan immediately prior to the execution of this Agreement (the "
Ensco Disclosure Schedule
") (each section of which qualifies the
correspondingly numbered representation, warranty or covenant if specified therein and such other representations, warranties or covenants where
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its
relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent), Ensco represents and warrants to Rowan as follows:
Section 4.1
Qualification, Organization, Subsidiaries, Capitalization
.
(a) Ensco
is a public limited company duly organized and validly existing under the Laws of England and Wales. Ensco has the requisite capacity, power and authority to enter
into and perform this Agreement and to own, lease and operate its properties and assets and to carry on its business as presently conducted. Each of Ensco's Subsidiaries is a legal entity duly
organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the Laws of its respective jurisdiction of organization and has the requisite capacity,
power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except where the failure to be in good standing or to have such power or
authority would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect. Each of Ensco and its Subsidiaries is duly qualified or licensed, and has all
necessary governmental approvals, to do business and is in good standing as a foreign entity (where such concept is recognized under applicable Law) in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes such approvals, qualification or licensing necessary, except where the failure to be so duly approved, qualified or
licensed and in good standing would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(b) Ensco
has made available to Rowan, prior to the date hereof, true and complete copies of the Ensco Articles of Association. Ensco is not in violation of the Ensco
Articles of Association. None of Ensco's "significant subsidiaries" as of the date hereof, as such term is defined in Regulation S-X promulgated by the SEC, as identified in
Section 4.1(b)
of
the Ensco Disclosure Schedule (the "
Ensco Material Subsidiaries
"), is in
material violation of its articles of association, certificate of incorporation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or organizational
documents, in each case as amended to and in effect as of the date hereof (collectively and, together with the Ensco Articles of Association, the "
Ensco Organizational
Documents
"). Ensco has made available prior to the date of this Agreement true and complete copies of the minute books of Ensco's Board of Directors, which copies contain true
and complete records of all meetings and other company actions held or taken since November 1, 2016;
provided
,
however
, that (i) Ensco has
redacted such materials to the extent necessary to omit information concerning this Agreement or the transactions
contemplated hereby and (ii) minutes of meetings that pertain solely to discussion of this Agreement or the transactions contemplated hereby have not been provided.
(c) As
of the close of business on October 5, 2018 (i) 434,435,904 Ensco Class A Ordinary Shares (excluding non-vested share awards granted under the
Ensco Stock Plans) and 50,000 Ensco Class B Ordinary Shares were issued and outstanding, (ii) 23,618,272 Ensco Class A Ordinary Shares were held in treasury, (iii) 50,000
Ensco Class B Ordinary Shares were held in treasury, (iv) 2,662,343 non-vested
Ensco Class A Ordinary Shares were outstanding and subject to potential forfeiture under the Ensco Stock Plans, (v) $849,500,000 aggregate principal amount of 3.00% Exchangeable Senior
Notes due 2024 issued by Ensco Jersey Finance Limited were outstanding, and (vi) up to 35,263,421 Ensco Class A Ordinary Shares were available for future issuance under the Ensco Stock
Plans, of which amount (A) 803,180 Ensco Class A Ordinary Shares were subject to outstanding option awards under the Ensco Stock Plans, (B) 608,430 Ensco Class A Ordinary
Shares (at the "target level") were subject to outstanding performance unit awards under the Ensco Stock Plans and 5,412,984 Ensco Class A Ordinary Shares were subject to outstanding restricted
stock unit awards under the Ensco Stock Plans. All outstanding Ensco Ordinary Shares are, and all such Ensco Ordinary Shares that may be issued prior to the Effective Time and the New Ensco Shares,
when issued in accordance with the respective terms thereof, will be, duly
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authorized,
validly issued, fully paid and nonassessable and free of preemptive rights. Except as set forth in this
Section 4.1(c)
(and other
than the Ensco Ordinary Shares issuable pursuant to the terms of awards issued under the Ensco Stock Plans (collectively, "
Ensco Equity Awards
")), there
are no outstanding subscriptions, options, warrants, calls, convertible securities, exchangeable securities or other similar rights, agreements or commitments to which Ensco or any of its Subsidiaries
is a party (A) obligating Ensco or any of its Subsidiaries to (1) issue, transfer, exchange, sell or register for sale any equity interests of Ensco or any Subsidiary of Ensco or
securities convertible into or exchangeable for such equity interests, (2) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar
right, agreement or arrangement, (3) redeem or otherwise acquire any such equity interests, (4) provide a material amount of funds to, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any person (other than a wholly owned Subsidiary) or (5) make any payment to any person the value of which is derived from or calculated based on
the value of any equity security issued by Ensco or any of its Subsidiaries or (B) granting any preemptive or antidilutive or similar rights with respect to any security issued by Ensco or its
Subsidiaries. With respect to each grant of Ensco Equity Awards, each such grant was made in accordance with the terms of the applicable Ensco Stock Plan, the Exchange Act, the Securities Act and all
other applicable Laws, including the rules of the NYSE.
(d) Neither
Ensco nor any of its Subsidiaries has outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are
convertible or exchangeable into or exercisable for securities having the right to vote) with the Ensco Shareholders on any matter.
(e) There
are no voting trusts or other agreements or understandings to which Ensco or any of its Subsidiaries is a party with respect to the voting or registration of the
equity interests of Ensco or any of its Subsidiaries.
(f) No
Subsidiary of Ensco owns any equity interests of Ensco, and Ensco or a Subsidiary of Ensco owns, directly or indirectly, all of the issued and outstanding equity
interests of each Subsidiary of Ensco, free and clear of any preemptive rights and any Liens other than Ensco Permitted Liens, and all of such equity interests are duly authorized, validly issued,
fully paid and nonassessable (where such concept is applicable and recognized under applicable Law) and free of preemptive rights. Except for equity interests in Ensco's Subsidiaries, neither Ensco
nor any of its Subsidiaries owns, directly or indirectly, any equity interest in any person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable
for, any equity interest in any person). Except for any obligations pursuant to this Agreement, neither Ensco nor any of its Subsidiaries has any obligation to acquire any equity interest, security,
right, agreement or commitment or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any person. Neither Ensco nor any of its Subsidiaries has
any obligation, other than pursuant to the Ensco Stock Plans, to repurchase, redeem or otherwise acquire any equity interests of Ensco or any such Subsidiary.
(g) The
Ensco Material Subsidiaries identified in
Section 4.1(b)
of the Ensco Disclosure Schedule include each
"significant subsidiary," as such term is defined in Regulation S-X promulgated by the SEC, of Ensco as of the date hereof.
(h) Ensco
does not hold, directly or indirectly, any Rowan Ordinary Shares.
Section 4.2
Company Authority Relative to this Agreement; No Violation
.
(a) Ensco
has the requisite corporate power and authority to execute and deliver this Agreement and each other document to be entered into by Ensco in connection with the
transactions contemplated hereby (together with this Agreement, the "
Ensco Transaction
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Documents
") and, subject to,
Section 4.2(b)
and the passing of the resolution referred to in clauses (a) and
(b) of the definition of Ensco Shareholder Resolutions, to consummate the transactions contemplated hereby and thereby, including the Transaction and the Consolidation. The execution, delivery
and performance of this Agreement and the other Ensco Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board
of Directors of Ensco and, except for the passing of the resolution referred to
in clauses (a) and (b) of the definition of Ensco Shareholder Resolutions, no other company action on the part of Ensco or vote of the Ensco Shareholders is necessary to authorize the
execution and delivery by Ensco of this Agreement and the other Ensco Transaction Documents and the consummation of the Transaction and the Consolidation. The Board of Directors of Ensco has duly and
validly adopted resolutions (i) approving and declaring advisable this Agreement and the other Ensco Transaction Documents, including the Transaction, the Consolidation and the other
transactions contemplated hereby and thereby, and (ii) declaring that it is in the best interests of the Ensco Shareholders that Ensco enter into this Agreement and the other Ensco Transaction
Documents and consummate the Transaction, the Consolidation and the other transactions contemplated hereby and thereby on the terms and subject to the conditions set forth herein and therein. The
Board of Directors of Ensco has further resolved that it will unanimously and unqualifiedly recommend that the Ensco Shareholders vote in favor of the Ensco Shareholder Resolutions at duly held
meetings of such shareholders for such purposes (such recommendation referred to herein as the "
Ensco Board Recommendation
"). None of the aforementioned
resolutions, as of the date hereof, have been rescinded, modified or withdrawn in any way. Each of the Ensco Transaction Documents has been duly and validly executed and delivered by Ensco and,
assuming each such Ensco Transaction Document has been duly authorized, executed and delivered by each other counterparty thereto, each of the Ensco Transaction Documents constitutes the legal, valid
and binding obligation of Ensco, enforceable against Ensco in accordance with its terms, except as such enforcement may be subject to (A) the effect of bankruptcy, insolvency, reorganization,
receivership, administration, arrangement, moratorium or other Laws affecting or relating to creditors' rights generally or (B) the Remedies Exceptions.
(b) Other
than in connection with or in compliance with (i) the Companies Act, (ii) the Exchange Act, (iii) the Securities Act, (iv) the rules
and regulations of the NYSE, (v) the HSR Act and any antitrust, competition, foreign investment or similar Laws outside of the United States, (vi) the DPA (including the filing of the
CFIUS Notice and receipt of the CFIUS Clearance) and (vii) the approvals set forth in
Section 4.2(b)
of the Ensco Disclosure Schedule
(collectively, the "
Ensco Approvals
"), and, subject to the accuracy of the representations and warranties of Rowan in
Section 3.2(b)
, no authorization,
consent, Order, license, permit or approval of, or registration, declaration, notice or filing with, or notice
to, any Governmental Entity is necessary, under applicable Law, for the execution, delivery and performance of this Agreement or the consummation by Ensco of the transactions contemplated hereby,
except for such authorizations, consents, Orders, licenses, permits, approvals or filings that, if not obtained or made, would not reasonably be expected to materially impede or delay the consummation
of the Transaction and the other transactions contemplated by this Agreement or reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(c) The
execution, delivery and performance by Ensco of this Agreement do not, and (assuming the Ensco Approvals are obtained) the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not (i) result in any loss, suspension, limitation or impairment of any right of Ensco or any of its Subsidiaries to own or
use any assets required for the conduct of their business or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to any right of termination,
cancellation, first offer, first refusal, modification or acceleration of any material obligation or to the loss of a
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benefit
under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract, instrument, permit, concession, franchise, right or license binding
upon Ensco or any of its Subsidiaries or by which or to which any of their respective properties, rights or assets are bound or subject, or result in the creation of any Lien (other than Ensco
Permitted Liens and any Liens created in connection with any action taken by Rowan or its affiliates), in each case, upon any of the properties or assets of Ensco or any of its Subsidiaries or any
contract to which Ensco or any of its Subsidiaries is a party or by which any of their respective properties or assets are bound, (ii) conflict with or result in any violation of any provision
of the Ensco Organizational Documents or (iii) conflict with or violate any applicable Laws, except in the case of clauses (i) and (iii) for such losses, suspensions, limitations,
impairments, conflicts, violations, defaults, terminations, cancellations, accelerations, or Liens as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material
Adverse Effect.
Section 4.3
Reports and Financial Statements
.
(a) Ensco
and each of its Subsidiaries has timely filed with or furnished to the SEC all reports, schedules, forms, statements and other documents required to be filed or
furnished by it since January 1, 2016 (all such documents and reports filed or furnished by Ensco or any of its Subsidiaries, the "
Ensco SEC
Documents
") and Ensco has filed prior to the date hereof all material returns, particulars, resolutions and documents required to be filed or to be delivered on behalf of Ensco
with the Registrar of Companies in England and Wales. As of their respective dates of filing or, in the case of Ensco SEC Documents that are registration statements filed pursuant to the requirements
of the Securities Act, their respective dates of effectiveness, or, if amended prior to the date hereof, as of the date of the last such amendment, the Ensco SEC Documents complied in all material
respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and none of the Ensco SEC Documents contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except
that information set forth in the Ensco SEC Documents as of a later date (but before the date hereof) will be deemed to modify information as of an earlier date.
(b) The
consolidated financial statements (including all related notes and schedules thereto) of Ensco included in the Ensco SEC Documents (i) fairly present in all
material respects the consolidated financial position of Ensco and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and any other adjustments described therein),
(ii) were prepared in conformity with GAAP (except, in the case of the unaudited statements, as permitted by applicable rules and regulations of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), (iii) have been prepared from, and are in accordance with, the books and records
of Ensco and its consolidated Subsidiaries and (iv) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act
and the Securities Act.
(c) There
are no outstanding or unresolved comments from, or unresolved issues raised by, the staff of the SEC relating to the Ensco SEC Documents. Ensco has heretofore made
available to Rowan true, correct and complete copies of all written correspondence between Ensco and the SEC occurring since January 1, 2015. None of the Ensco SEC Documents is, to the
knowledge of Ensco, the subject of ongoing SEC review, and no enforcement action has been initiated against Ensco relating to disclosures contained in or omitted from any Ensco SEC Document.
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(d) Neither
Ensco nor any of its Subsidiaries is a party to, nor does it have any commitment to become a party to, any joint venture, off-balance sheet partnership or any
similar contract (including any contract relating to any transaction or relationship between or among Ensco or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any
structured finance, special purpose or limited purpose entity or person, on the other hand) or any "off-balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K of the
SEC), where the result, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, Ensco or any of its Subsidiaries in Ensco's
financial statements or other Ensco SEC Documents.
Section 4.4
Internal Controls and Procedures
.
Ensco has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f),
respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Ensco's disclosure controls and procedures are reasonably designed to ensure that
all material information required to be disclosed by Ensco in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to Ensco's management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Ensco's management has completed an assessment of the effectiveness of Ensco's
internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2017, and such assessment concluded
that such controls were effective. Based on its most recent evaluation of internal controls over financial reporting prior to the date hereof management of Ensco has disclosed to Ensco's auditors and
the audit committee of the Board of Directors of Ensco (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are
reasonably likely to adversely affect in any material respect Ensco's ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in Ensco's internal control over financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any,
has been disclosed to Rowan prior to the date hereof.
Section 4.5
No Undisclosed Liabilities
.
There are no liabilities or obligations of Ensco or any of its Subsidiaries, whether known or unknown and whether accrued, absolute, determined or contingent, that would be required by
GAAP, consistently applied, to be reflected on a consolidated balance sheet of Ensco and its consolidated Subsidiaries (including the notes thereto), except for (i) liabilities or obligations
disclosed and provided for in the most recent balance sheets included in the Ensco Financial Statements (or in the notes thereto) filed and publicly available prior to the date of this Agreement,
(ii) liabilities or obligations incurred in accordance with or in connection with this Agreement, (iii) liabilities or obligations incurred since December 31, 2017 in the ordinary
course of business consistent with past practice since the date of such balance sheet, (iv) liabilities or obligations that have been discharged or paid in full, or (v) liabilities or
obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
Section 4.6
Compliance with Law; Permits
.
(a) Ensco
and its Subsidiaries are in compliance with, and are not in default under or in violation of, any applicable Law, except where such non-compliance, default or
violation would not have and would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect. Since January 1, 2016, neither Ensco nor any of its
Subsidiaries has received any written notice or, to Ensco's knowledge, other communication from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any
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Law,
except as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(b) Ensco
and its Subsidiaries are in possession of all franchises, grants, authorizations, licenses, concessions, permits, easements, variances, exceptions, consents,
certificates, approvals, clearances, permissions, financial assurance instruments, qualifications and registrations and Orders of all applicable Governmental Entities, and all rights under any Ensco
Material Contract with all Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for Ensco and its Subsidiaries to own, lease
and operate their properties and assets and to carry on their businesses as they are now being conducted (the "
Ensco Permits
" and, together with the
Rowan Permits, the "
Permits
"), except where the failure to have or to have filed such Ensco Permits would not reasonably be expected to have,
individually or in the aggregate, an Ensco Material Adverse Effect. All Ensco Permits are valid and in full force and effect and are not subject to any administrative or judicial proceeding that could
result in modification, termination or revocation thereof, except where the failure to be in full force and effect or any modification, termination or revocation thereof would not reasonably be
expected to have, individually or in the aggregate, an Ensco Material Adverse Effect. Ensco and each of its Subsidiaries is in compliance with the terms and requirements of all material Ensco Permits,
except where the failure to be in compliance would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(c) Each
drilling unit owned or leased by Ensco or any of its Subsidiaries which is subject to classification (other than cold stacked rigs) is in class and free of
suspension or cancellation to class, and is registered under the flag of its flag jurisdiction.
Section 4.7
Absence of Certain Changes or Events
.
(a) From
January 1, 2018 through the date of this Agreement, except in connection with the negotiation and execution of this Agreement, the businesses of Ensco and
its Subsidiaries have been conducted in the ordinary course of business consistent with past practice, except when such conduct outside the ordinary course of business would not have, and would not
reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(b) Since
January 1, 2018, there has not been any event, change, effect, development, occurrence or state of facts that has had or would reasonably be expected to
have, individually or in the aggregate, an Ensco Material Adverse Effect.
Section 4.8
Environmental Laws and Regulations
.
Except as would not have, individually or in the aggregate, an Ensco Material Adverse Effect (i) there are, to the knowledge of Ensco, no investigations, actions, suits,
proceedings (whether administrative or judicial) pending or threatened in writing against Ensco or any of its Subsidiaries or any person or entity whose liability Ensco or any of its Subsidiaries has
retained or assumed either contractually or by operation of law, alleging non-compliance with or other liability under any Environmental Law, (ii) Ensco and its Subsidiaries are, and except for
matters that have been fully resolved with the applicable Governmental Entity, since January 1, 2016 have been, in compliance with all Environmental Laws (which compliance includes the
possession by Ensco and each of its Subsidiaries of all Permits required under applicable Environmental Laws to conduct their respective business and operations, and compliance with the terms and
conditions thereof), (iii) there have been no Releases at any location of Hazardous Materials by Ensco or any of its Subsidiaries, or, to Ensco's knowledge, as a result of any operations or
activities of Ensco or any of its Subsidiaries or their contractors or third-party operators, that could reasonably be expected to give rise to any fine, penalty, remediation, investigation,
obligation or liability of any kind to Ensco or its Subsidiaries, (iv) none of Ensco and its Subsidiaries is subject to any Order or any indemnity obligation with any other person that could
reasonably be expected to result in obligations or liabilities under applicable Environmental Laws or concerning any Releases of Hazardous Materials,
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(v) none
of Ensco and its Subsidiaries has received any unresolved claim, notice, complaint or request for information from a Governmental Entity or any other person relating to actual or
alleged noncompliance by Ensco or its Subsidiaries with or liability of Ensco or its Subsidiaries under applicable Environmental Laws (including any such liability or obligation arising under,
retained or assumed by Ensco or its Subsidiaries by contract or by operation of law), and (vi) Ensco and its Subsidiaries have made available to Rowan all reports, audits, assessments and
documents materially bearing on any material environmental, health and safety liabilities relating to Ensco and its Subsidiaries' current or former operations, properties or facilities.
Section 4.9
Investigations; Litigation
.
Except as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect or would not reasonably be expected to prevent, impede or delay
consummation of the Transaction, (i) there is no investigation or review pending (or, to Ensco's knowledge, threatened) by any Governmental Entity with respect to Ensco or any of its
Subsidiaries, (ii) there are no claims, actions, suits, inquiries, investigations, arbitrations or administrative or other proceedings, or any subpoenas, civil investigative demands or other
requests for information, relating to potential violations of Law pending (or, to Ensco's knowledge, threatened) against or affecting Ensco or any of its Subsidiaries, or any of their respective
properties and (iii) there are no Orders, injunctions, judgments or decrees of, or before, any Governmental Entity pending (or, to Ensco's knowledge, threatened to be imposed) against Ensco or
any of its Subsidiaries.
Section 4.10
Investment Company
.
None of Ensco or any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the U.S. Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder.
Section 4.11
Intellectual Property
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, either Ensco or a Subsidiary of Ensco owns, or is
licensed or otherwise possesses valid rights to use, free and clear of Liens other than Ensco Permitted Liens, all trademarks, trade names, service marks, service names, mark registrations, logos,
assumed names, domain names, registered and unregistered copyrights, patents or applications and registrations, trade secrets and other intellectual property rights necessary to their respective
businesses as currently conducted (collectively, the "
Ensco Intellectual Property
"), and no third party has ownership rights or license rights to
improvements made by Ensco in the Ensco Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, (i) there
are no pending or, to Ensco's knowledge, threatened claims by any person alleging infringement, misappropriation or other violation by Ensco or any of its Subsidiaries of any intellectual property
rights of any person, (ii) to Ensco's knowledge, the conduct of the business of Ensco and its Subsidiaries does not infringe, misappropriate or otherwise violate any intellectual property
rights of any person, (iii) neither Ensco nor any of its Subsidiaries has made any claim of a violation, infringement or misappropriation by others of Ensco's or any its Subsidiaries' rights to
or in connection with Ensco Intellectual Property and (iv) to Ensco's knowledge, no person is infringing, misappropriating or otherwise violating any Ensco Intellectual Property.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, Ensco and its Subsidiaries have implemented
(i) commercially reasonable measures, consistent with industry standards, to protect the confidentiality, integrity and security of the Ensco IT Assets (and all information and transactions
stored or contained therein or transmitted thereby); and (ii) commercially reasonable data backup, data storage, system redundancy and disaster
avoidance and recovery procedures, as well as a commercially reasonable business continuity plan, in each case consistent with customary industry practices.
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Section 4.12
Properties
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, Ensco and its Subsidiaries have good and
defensible title to all real property owned by Ensco or any of its Subsidiaries and good and valid leasehold interest to all real property which is leased, subleased, licensed or otherwise occupied by
Ensco or any of its Subsidiaries (the "
Ensco Leased Real Property
"), in each case free and clear of all Liens (other than Ensco Permitted Liens).
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, Ensco and its Subsidiaries have good and
defensible title to, or have valid rights to lease or otherwise use, all items of personal property that are material to the respective businesses of Ensco and its Subsidiaries, in each case free and
clear of all Liens (other than Ensco Permitted Liens).
Section 4.13
Ownership and Maintenance of Drilling Units
.
(a) Either
Ensco or a Subsidiary of Ensco has good and marketable title to the drilling units listed in Ensco's most recent fleet status report, a true and complete copy of
which has been provided to Rowan (the "
Ensco Fleet Report
"), in each case free and clear of all Liens except for Ensco Permitted Liens. No such drilling
unit or any related asset is leased under an operating lease from a lessor that, to Ensco's knowledge, has incurred non-recourse indebtedness to finance the acquisition or construction of such asset.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, the drilling units listed in the Ensco Fleet
Report (other than such drilling units that are noted therein as "cold stacked" or are being prepared to be "cold stacked") (i) have been maintained consistent with general practice in the
offshore drilling industry, and are in good operating condition and repair, subject to ordinary wear and tear; (ii) are adequate for the purpose for which they are being used and are capable of
being used in the business as presently conducted without present
need for replacement or repair, except in the ordinary course of business; (iii) conform in all material respects with all applicable legal requirements; and (iv) in the aggregate,
provide the capacity to engage in Ensco's business on a continuous basis as it is presently conducted, subject to routine maintenance.
Section 4.14
Tax Matters
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect:
(i) Ensco
and each of its Subsidiaries have duly and timely filed or caused to be filed (taking into account any valid extension of time within which to file) all Tax
Returns required to be filed by any of them and all such Tax Returns are true, complete and accurate.
(ii) Ensco
and each of its Subsidiaries have timely paid all Taxes that are required to be paid by any of them or that Ensco or any of its Subsidiaries are obligated to
withhold from amounts owing to any employee, creditor, shareholder or third party (in each case, whether or not shown on any Tax Return), except with respect to matters contested in good faith through
appropriate proceedings and for which adequate reserves have been established, in accordance with GAAP on the most recent financial statements of Ensco and its Subsidiaries.
(iii) No
Tax Return of Ensco or any of its Subsidiaries is the subject of an audit, examination investigation or other proceeding, and there are no audits, examinations,
investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of Ensco or any of its Subsidiaries.
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(iv) Neither
Ensco nor any of its Subsidiaries is currently the beneficiary of any waivers of any limitation periods or agreements providing for an extension of time for the
filing of any Tax Return, the assessment or collection thereof by any relevant Tax authority or the payment of any Tax by Ensco or any of its Subsidiaries.
(v) Neither
Ensco nor any of its Subsidiaries has any liability for the Taxes of any person (other than Taxes of Ensco or its Subsidiaries) (A) under Treasury
Regulations Section 1.1502-6 (or any similar
provision of state, local or non-U.S. Tax Law), (B) as a transferee or successor or (C) by Contract (other than customary Tax indemnifications contained in ordinary course commercial
agreements or arrangements that are not primarily related to Taxes).
(vi) Neither
Ensco nor any of its Subsidiaries has any liability pursuant to any Tax sharing, allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among such party and any of its wholly owned Subsidiaries and other than as customary Tax indemnifications contained in ordinary course commercial
agreements or arrangements that are not primarily related to Taxes).
(vii) Neither
Ensco nor any of its Subsidiaries is a party to any closing agreement described in Section 7121 of the Code or any predecessor provision thereof or any
similar agreement under state, local or non-U.S. Tax Law, and neither Ensco nor any of its Subsidiaries is subject to any private ruling issued by any Governmental Entity in respect of Taxes.
(viii) There
are no Liens for Taxes on any asset of Ensco or its Subsidiaries, except for Ensco Permitted Liens.
(ix) No
written claim has been received by Ensco or any of its Subsidiaries from a Governmental Entity in a jurisdiction where such entity does not file Tax Returns that it
is or may be subject to taxation by such jurisdiction.
(x) Neither
Ensco nor any of its Subsidiaries is or was a "surrogate foreign corporation" within the meaning of Section 7874(a)(2)(B) of the Code.
(xi) Neither
Ensco nor any of its Subsidiaries has been a party to a transaction that is a "listed transaction," as such term is defined in Treasury Regulations
Section 1.6011-4(b)(2), or any other transaction requiring disclosure under analogous provisions of state, local or non-U.S. Tax Law.
(xii) Within
the past three years, neither Ensco nor any of its Subsidiaries has been a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution intended to qualify for tax-free treatment under Section 355 of the Code (or a similar provision of state, local or non-U.S. Tax Law).
(xiii) Neither
Ensco nor any of its Subsidiaries (nor any of their respective predecessors) (i) is treated as a domestic corporation under Section 7874(b) of
the Code or (ii) was created or organized in the United States such that such entity would be taxable in the United States as a domestic entity pursuant to the dual charter provision of
Treasury Regulations Section 301.7701-5(a). Neither Ensco nor any of its
Subsidiaries has knowledge of any facts or of any reason that would reasonably be expected to cause Ensco to be treated, following the completion of the Transaction, as a domestic corporation for U.S.
federal income tax purposes under Section 7874 of the Code.
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(b) To
the knowledge of Ensco, neither Ensco nor any of its Subsidiaries has taken or agreed to take any action that would (and none of them is aware of any facts,
agreement, plan or other circumstance that would) reasonably be expected to prevent the Transaction from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code.
Section 4.15
Employment and Labor Matters.
(a) Neither
Ensco nor any of its Subsidiaries is a party to or bound by any Collective Bargaining Agreement with respect to employees of Ensco or any of its Subsidiaries
(each, an "
Ensco Employee
"), other than those nationwide, industry wide or similar Collective Bargaining Agreements that Ensco or any of its
Subsidiaries may be deemed to be a party to or bound by as a result of doing business in a particular jurisdiction.
(b) No
notice to or approval from any trade union, works council, staff association or other body representing Ensco Employees is required in connection with Ensco entering
into this Agreement or completing the Transaction. Ensco has delivered to Rowan a complete and accurate list of all labor organizations recognized by Ensco in any way for bargaining, information or
consultation purposes and/or which represent any Ensco Employee with respect to their employment with Ensco or any of its Subsidiaries.
(c) There
are no outstanding applications for recognition or information and consultation rights with respect to Ensco Employees. To Ensco's knowledge, there are no
activities or proceedings of any labor or trade union, staff association or other body to organize any Ensco Employee. No Collective Bargaining Agreement is being negotiated by Ensco or, to Ensco's
knowledge, any of its Subsidiaries with respect to any Ensco Employees.
(d) Since
January 1, 2016, there has been no actual, or to Ensco's knowledge, threatened unfair labor practice charges, grievances, arbitrations, strikes, lockouts,
work stoppages, slowdowns, picketing or other labor disputes against Ensco or any of its Subsidiaries involving Ensco Employees that would reasonably be expected to have, individually or in the
aggregate, an Ensco Material Adverse Effect.
(e) Ensco
is, and has been, in compliance with all Laws regarding employment and employment practices, terms and conditions of employment and wages and hours (including
classification of employees) and other Laws in respect of any reduction in force, including notice, information and consultation requirements, except where such non-compliance, default or violation
would not have and would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(f) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, there are no material outstanding assessments,
penalties, fines, Liens, charges, surcharges, or other amounts due or owing by Ensco pursuant to any workplace safety and insurance/workers' compensation Laws, and Ensco has not been reassessed in any
material respect under such Laws during the past three years, and Ensco has not received any claims under such Laws.
(g) No
Key Employee or other officer has provided written notice to any officer of Ensco that he or she intends to resign or retire as a result of the transactions
contemplated by this Agreement or otherwise.
Section 4.16
Employee Benefit Plans.
(a)
Section 4.16(a)
of the Ensco Disclosure Schedule sets forth a correct and complete list of each material Ensco
Benefit Plan. For purposes of this Agreement, "
Ensco Benefit Plan
" means any
(i) "employee pension benefit plan" (as defined in Section 3(2) of ERISA), (ii) "employee welfare benefit plan" (as defined in Section 3(1) of ERISA) or (iii) plan,
program, agreement,
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policy
or arrangement providing for compensation, employment, benefits, retirement benefits, profit-sharing, deferred compensation, stock option, phantom stock, stock appreciation, change in control,
retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, long service award, vacation, bonus, commissions, incentive, medical, retiree medical, vision,
dental or other health plans, life insurance plans, and each other employee benefit plan or fringe benefit plan or post-employment or retirement benefit, including any "employee benefit plan" as that
term is defined in Section 3(3) of ERISA (whether or not subject to ERISA), in each case (x) sponsored, maintained or administered by Ensco or any Subsidiary, (y) to which Ensco
or any Subsidiary contributes or is obligated to contribute for the benefit of any current or former employees, directors, consultants or (z) independent contractors or with respect to which
Ensco or any of its Subsidiaries has or could reasonably be expected to have any obligation or liability, contingent or otherwise.
(b) Each
Ensco Benefit Plan that is intended to be a Qualified Plan is so qualified and each trust maintained thereunder is exempt from taxation under Section 501(a)
of the Code and there is no reason why tax approval or registration under any local Law in any part of the world, with respect to any Ensco Benefit Plan that is subject to any such approval, or
registration, might be withdrawn or might cease to apply.
(c) No
Ensco Benefit Plan is (i) a benefit plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code, or
(ii) a material defined benefit pension plan that is governed by local Law that is the equivalent of Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code.
(d) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, with respect to each Ensco Benefit Plan,
(i) no reportable event, as defined in Section 4043 of ERISA, no prohibited transaction, as described in Section 406 of ERISA or Section 4975 of the Code, and no
accumulated funding deficiency, as defined in Section 302 of ERISA and 412 of the Code, has occurred, and (ii) all material contributions required to have been made under the terms of
any such Ensco Benefit Plan have been timely made.
(e) None
of Ensco and its Subsidiaries maintains, contributes to or is obligated to contribute to any "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA or a plan that has two or more contributing sponsors at least two of whom are not under common control that is a multiple employer plan, and none of Ensco and its Subsidiaries has incurred any
undischarged liability to a multiemployer plan or a multiple employer plan as a result of a complete or partial withdrawal from such plan.
(f) Neither
Ensco nor any of its Subsidiaries have been issued with a restoration order, a contribution notice or financial support direction (or warning notice, improvement
notice or any other fine, penalty or notice of exercise or proposed exercise of any of its powers) by the UK pensions regulator in relation to any pension arrangement and, to Ensco's knowledge, no
facts or circumstances exist under which the UK pensions regulator could issue any such notice, direction, fine or penalty, and there has been no act or deliberate failure to act falling within
Section 38(5) of the Pensions Act 2004.
(g) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, there is no Action (including any investigation,
audit or other administrative proceeding) by the U.S. Department of Labor, the PBGC, the U.S. Internal Revenue Service or any other Governmental Entity or by any plan participant or beneficiary
pending, or to Ensco's knowledge, threatened, relating to the Ensco Benefit Plans, any fiduciaries thereof with respect to their duties to the Ensco Benefit Plans or the assets of any of the trusts
under any of the Ensco Benefit Plans (other than routine claims for benefits) nor to Ensco's
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knowledge
are there facts or circumstances that exist that could reasonably give rise to any such Actions.
(h) Except
as set forth on
Section 4.16(h)
of the Ensco Disclosure Schedule, no Ensco Benefit Plan provides for any
material post-employment or post-retirement medical or life insurance benefits for retired, former or current employees or beneficiaries or dependents thereof, except as required by
Section 4980B of the Code or any applicable Law except as would not result in material liability to Rowan and its Subsidiaries, taken as a whole.
(i) Ensco
is not party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of Taxes imposed by
Sections 409A, 457A or 4999 of the Code or equivalent local Law.
(j) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, the consummation of the Transaction and the
transactions contemplated by this Agreement will not, either alone or in combination with another event (i) entitle any current or former employee, director, consultant or officer of Ensco or
any of its Subsidiaries to severance pay, unemployment compensation or other compensatory payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation or
benefits due to any such employee, director, consultant or officer, or (iii) result in an increase in any contributions payable to, or an acceleration of the timing of payment of any
contributions to, or result in an increase in liabilities in or create or accelerate any obligation to or in relation to, any Ensco Benefit Plan, (iv) result in the termination of, or allow any
other party to terminate, any Ensco Benefit Plan or (v) impose any restrictions or limitations on Ensco's rights to administer, amend or terminate any Ensco Benefit Plan.
(k) The
consummation of this Transaction and the transactions contemplated by this Agreement will not, either alone or in combination with another event, result in any
payment (whether in cash or property or the vesting of property) to any "disqualified individual" (as such term is defined in Treasury Regulation Section 1.280G-1) of Ensco that could,
individually or in combination with any other such payment, constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code).
(l) Each
Ensco Benefit Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been
operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder that would reasonably be expected to have, individually or in
the aggregate, an Ensco Material Adverse Effect.
(m) Ensco
and its Subsidiaries have, in relation to the Ensco Benefit Plans, at all times complied with all applicable Laws, regulations and requirements and the trusts,
powers and provisions of the Ensco Benefit Plan documentation, except where such non-compliance, default or violation would not have and would not reasonably be expected to have, individually or in
the aggregate, an Ensco Material Adverse Effect. Ensco and its Subsidiaries have at all times complied with their obligations in relation to automatic enrolment arising under the UK Pensions Act 2008,
except where such non-compliance, default or violation would not have and would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect.
(n) With
respect to Ensco Employees primarily based in the UK, except pursuant to the Ensco Benefit Plans and obligations under applicable Law, neither Ensco nor any of its
Subsidiaries has any obligation (whether legally binding or not) to: (i) pay any pension, (ii) make any other payment on or after retirement or death (whether of a temporary nature or a
permanent nature), or (iii) pay or otherwise provide or contribute towards any pension, lump sum, gratuity or other like benefit provided or to be provided on retirement or death or, in
connection with past
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service,
after retirement or death, (in each case) to, or in respect of, any Ensco Employee or spouse, civil partner or dependent of such Ensco Employee. Neither Ensco nor any of its Subsidiaries is
or has at any time in the last six years been (for the purposes of section 75 of the UK Pensions Act 1995 or Part 3 of the UK Pensions Act 2014) an "employer" in an occupational pension
scheme to which section 75 of the UK Pensions Act 1995 or Part 3 of the Pensions Act 2014 applies and has not been associated or connected with an employer (for the purposes of
sections 38 through 51 of the UK Pensions Act 2004 or otherwise). No person has ever become employed in the United Kingdom by Ensco or any of its Subsidiaries as a result of a transfer under
the Transfer of Undertakings (Protection of Employment) Regulations 1981 or 2006 where such person was, prior to the transfer, a member of a UK occupational pension scheme that provided any
benefits other than on old age, invalidity or death, except where such non-compliance, default or violation would not have and would not reasonably be expected to have, individually or in the
aggregate, an Ensco Material Adverse Effect.
Section 4.17
Insurance.
Ensco and its Subsidiaries maintain insurance in such amounts and
against such risks substantially as Ensco believes to be customary for the international
offshore drilling business as of the date hereof. Except as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, (i) all insurance
policies maintained by or on behalf of Ensco or any of its Subsidiaries as of the date of this Agreement are in full force and effect and are valid and enforceable, and all premiums due on such
policies have been paid by Ensco or its Subsidiaries, as applicable, and (ii) Ensco and its Subsidiaries are in compliance with the terms and provisions of all insurance policies maintained by
or on behalf of Ensco or any of its Subsidiaries as of the date of this Agreement, and neither Ensco nor any of its Subsidiaries is in breach or default under, or has taken any action that could
permit termination or material modification of, any material insurance policies.
Section 4.18
Opinion of Financial Advisor.
The Board of Directors of Ensco has received the
opinion of Morgan Stanley & Co. LLC to the effect that, as of the date thereof and subject
to the assumptions, limitations, qualifications and other matters set forth therein, the Exchange Ratio is fair, from a financial point of view, to holders of Ensco Class A Ordinary Shares.
Ensco shall, promptly following the execution of this Agreement by all Parties, furnish an accurate, complete and confidential copy of said opinion letter to Rowan solely for informational purposes.
Section 4.19
Material Contracts.
(a) Except
for this Agreement, the Ensco Benefit Plans, agreements with customers for the provision of drilling and related services, agreements filed as exhibits to the
Ensco SEC Documents or as set forth on the applicable subsection of
Section 4.19(a)
of the Ensco Disclosure Schedule, as of the date hereof,
neither Ensco nor any of its Subsidiaries is a party to or bound by:
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);
(ii) any
Contract that (A) imposes any restriction on the right or ability of Ensco or any of its Subsidiaries to compete with any other person or in any geographic
area or acquire or dispose of the securities of another person or (B) contains an exclusivity or "most favored nation" clause that restricts the business of Ensco and its Subsidiaries in a
material manner;
(iii) any
mortgage, note, debenture, indenture, security agreement, guaranty, pledge or other agreement or instrument evidencing indebtedness for borrowed money or any
guarantee of such indebtedness of Ensco or any of its Subsidiaries in an amount in excess of $50.0 million, except any transaction among Ensco and its wholly owned Subsidiaries or among Ensco's
wholly owned Subsidiaries;
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(iv) any
executory Contract that provides for the acquisition or disposition of assets, rights or properties with a value in excess of $50.0 million, except any
transaction among Ensco and its wholly owned Subsidiaries or among Ensco's wholly owned Subsidiaries;
(v) any
material joint venture, partnership or limited liability company agreement or other similar Contract relating to the formation, creation, operation, management or
control of any material joint venture, partnership or limited liability company, other than any such Contract solely between Ensco and its Subsidiaries or among Ensco's Subsidiaries;
(vi) any
Contract expressly limiting or restricting the ability of Ensco or any of its Subsidiaries to make distributions or declare or pay dividends in respect of their
capital stock, partnership interests, membership interests or other equity interests, as the case may be;
(vii) any
Contract that obligates Ensco or any of its Subsidiaries to make any loans, advances or capital contributions to, or investments in, any person other than any loan
or capital contribution to, or
investment in, (A) Ensco or one of its Subsidiaries or (B) any person (other than an officer, director or employee of Ensco or any of its Subsidiaries) that is less than
$50.0 million to such person;
(viii) any
Contract that by its terms calls for aggregate payments by or to Ensco or any of its Subsidiaries of more than $50.0 million in the aggregate over the
remaining term of such Contract, except for (A) Contracts with a customer and (B) any such Contract that may be cancelled by Ensco or any of its Subsidiaries with a penalty or other
liability of less than $10.0 million to Ensco or any of its Subsidiaries, upon notice of 60 days or less;
(ix) any
Contract that involves, or is reasonably expected in the future to involve, annual revenues of $50.0 million;
(x) any
Contract providing for drilling unit construction, repair, modification, life extension, overhaul or conversion for an amount in excess of $50.0 million;
(xi) any
Contract with a customer with a remaining duration of greater than 180 days, including fixed price customer options;
(xii) any
Contract that includes any affiliate of Ensco as a counterparty or third party beneficiary and that would be required to be disclosed under Item 404 of
Regulation S-K of the SEC;
(xiii) any
Contract that contains "earn out" or other contingent payment obligations, or remaining indemnity or similar obligations, that could reasonably be expected to
result in payments after the date hereof by Ensco or any of its Subsidiaries in excess of $50.0 million;
(xiv) any
lease or sublease with respect to an Ensco Leased Real Property with remaining payments in excess of $10.0 million; and
(xv) any
Contract the loss or breach of which would reasonably be expected to have an Ensco Material Adverse Effect.
All
Contracts of the types referred to in clauses
(i)
through
(xv)
above are referred to
herein as "
Ensco Material Contracts.
" As used herein, "
Contract
" shall be as defined in
Section 3.19(a)
.
(b) Ensco
has delivered or made available to Rowan true and complete copies of all Ensco Material Contracts.
(c) Except
as would not reasonably be expected to have, individually or in the aggregate, an Ensco Material Adverse Effect, (i) neither Ensco nor any Subsidiary of
Ensco is in breach of or default under the terms of any Ensco Material Contract, (ii) to Ensco's knowledge, no other party to any Ensco Material Contract is in breach of or default under the
terms of any Ensco Material
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Contract
and (iii) each Ensco Material Contract is a valid and binding obligation of Ensco or the Subsidiary of Ensco that is party thereto and, to Ensco's knowledge, of each other party
thereto, and is in full force and effect, subject to the Remedies Exceptions.
Section 4.20
Finders or Brokers.
Except for Morgan Stanley & Co. LLC,
HSBC Securities (USA) Inc. and Citigroup Global Markets Inc., neither Ensco nor any
of Ensco's Subsidiaries has employed any investment banker, broker or finder in connection with the transactions contemplated by this Agreement who would be entitled to or may receive any fee or any
commission in connection with or upon consummation of the Transaction.
Section 4.20
of the Ensco Disclosure Schedule sets out, as at the date of
this Agreement, Ensco's good faith estimate of the fees, commissions and expenses (including discretionary fees) payable by it or any of Ensco's Subsidiaries to Morgan
Stanley & Co. LLC, HSBC Securities (USA) Inc. and Citigroup Global Markets Inc. in connection with this Agreement and the Transaction.
Section 4.21
Anti-Bribery.
Within the past five years, neither (a) Ensco, nor any of its
Subsidiaries, nor, to Ensco's knowledge, any director, officer, or employee of Ensco or any
of its Subsidiaries nor (b) to Ensco's knowledge, any Representative while acting for or on behalf of any of the foregoing, has directly or indirectly (i) made, accepted, promised, or
authorized the giving of any unlawful payment to/from any foreign or domestic government officials or employees or to/from any foreign or domestic political parties or campaigns, or to/from any
private third parties, or otherwise violated any provisions of any applicable anti-bribery Laws, including without limitation the FCPA or the Bribery Act, or (ii) taken any action or engaged in
any conduct, activity or practice for or on behalf of Ensco or any of its Subsidiaries that would otherwise constitute a violation of or an offence under any applicable anti-bribery Laws, including
the FCPA and the Bribery Act, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any "foreign official" (as such term is defined in
the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. In the past five years, Ensco has maintained policies and
procedures that are reasonably designed to ensure, and that are reasonably expected to continue to ensure, continued compliance with anti-bribery Laws. Neither Ensco nor any of its Subsidiaries, nor,
to the knowledge of Ensco, any director, officer or employee of Ensco or any Subsidiary of Ensco, are, or in the past five years have been, subject to any actual, pending, or, to Ensco's knowledge,
threatened civil, criminal, or administrative actions or governmental investigations, inquiries or enforcement actions, or made any voluntary disclosures to any governmental authority, involving Ensco
or any Subsidiary of Ensco relating to alleged violations of applicable anti-bribery Laws, including the FCPA and the Bribery Act.
Section 4.22
Export Controls and Sanctions.
(a) Neither
(i) Ensco, any of its Subsidiaries, or any employee, officer, or director of Ensco or any of its Subsidiaries nor (ii) to Ensco's knowledge, any
Representative of any of the foregoing, (A) is currently or has been within the past five years the target of Trade Sanctions (including by being designated on the list of Specially Designated
Nationals and Blocked Persons or on any other sanctions list maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty's Treasury or
direct or indirect ownership or control by one or more designated parties), or is or has been within the past five years operating, organized or resident in a country or territory that itself is the
target of Trade Sanctions (currently, Crimea, Cuba, Iran, North Korea and Syria); or (B) has, directly or, to the knowledge of Ensco, indirectly, participated in the past five years in any
prohibited or unlawful transaction or dealing involving a person or entity that is the target of Trade Sanctions, or with any person or entity operating, organized, or resident in a country or
territory that is the target of Trade Sanctions.
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(b) In
the past five years, each of Ensco, Ensco's Subsidiaries and, to Ensco's knowledge, their respective affiliates (i) has conducted its business in compliance
with all applicable Trade Sanctions and Export Control Laws in all material respects; (ii) have obtained, and are in compliance in all material respects with, all required export and import
licenses, license exceptions and other consents, notices, approvals, orders, permits, authorizations, declarations, classifications and filings with any Governmental Entity required for the import,
export and re-export of products, software and technology; and (iii) has maintained and enforces policies and procedures that are reasonably designed to ensure, and that are reasonably expected
to continue to ensure, continued compliance therewith.
Section 4.23
Derivatives.
Section 4.23
of
the Ensco Disclosure Schedule contains a complete and correct schedule of all material
Derivative Transactions entered into by Ensco or any of its Subsidiaries or for the account of any of their respective customers as of the date hereof.
Section 4.24
Takeover Statutes.
There are no "moratorium," "control share acquisition," "fair
price," "supermajority," "affiliate transactions," or "business combination statute or regulation"
or other similar state or other anti-takeover Laws and regulations applicable to Ensco, the Ensco Class A Ordinary Shares, the Transaction or any other transactions contemplated by this
Agreement.
Section 4.25
Information Supplied.
The information supplied or to be supplied by Ensco for
inclusion in the Registration Statement provided for in
Section 5.18(d)
shall not, at the time the Registration Statement is declared effective by the SEC, contain any untrue statement of a
material
fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading,
except that no representation or warranty is made by Ensco with respect to statements made or incorporated by reference therein based on information supplied by Rowan in writing expressly for
inclusion therein. The information supplied or to be supplied by Ensco for inclusion in the Proxy Statement (including, for the avoidance of any doubt, the Scheme Document) will not, at the time the
Proxy Statement is first mailed to Ensco Shareholders and at the time of any meeting of Ensco Shareholders to be held in connection with the issuance of the New Ensco Shares, the Scheme Meeting and
the Rowan GM to be held in connection with the Transaction, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by Ensco with respect to statements made or
incorporated by reference therein based on information supplied by Rowan in writing expressly for inclusion therein. The Registration Statement and the Proxy Statement (solely with respect to the
portion thereof relating to the Ensco Shareholder Meeting but excluding any portion thereof based on information supplied by Rowan in writing expressly for inclusion therein, with respect to which no
representation or warranty is made by Ensco) will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder and any applicable provisions of the Companies Act.
Section 4.26
No Additional Representations.
(a) Ensco
acknowledges that Rowan does not make any representation or warranty as to any matter whatsoever except as expressly set forth in
Article III
or in any certificate delivered by Rowan to Ensco in
accordance with the terms hereof, and specifically (but without limiting the
generality of the foregoing) that Rowan makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered or made available to Ensco, any of its affiliates
or any of their respective officers, directors, employees or Representatives of future revenues, results of operations (or any component thereof), cash flows or financial condition (or any component
thereof) of Rowan and its Subsidiaries or (ii) the future business and operations of
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Rowan
and its Subsidiaries, and Ensco has not relied on such information or any other representations or warranties not set forth in
Article III
.
(b) Ensco
has conducted its own independent review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of
Rowan and its Subsidiaries and acknowledges that Ensco has been provided access for such purposes. Except for the representations and warranties expressly set forth in
Article III
or in any
certificate delivered to Ensco by Rowan in accordance with the terms hereof, in entering into this Agreement, Ensco has
relied solely upon its independent investigation and analysis of Rowan and Rowan's Subsidiaries, and Ensco acknowledges and agrees that it has not been induced by and has not relied upon any
representations, warranties or statements, whether express or implied, made by Rowan, its Subsidiaries, or any of their respective affiliates, shareholders, controlling persons or Representatives that
are not expressly set forth in
Article III
or in any certificate delivered to Ensco by Rowan, whether or not such representations, warranties or
statements were made in writing or orally. Ensco acknowledges and agrees that, except for the representations and warranties expressly set forth in
Article III
or in any certificate delivered by
Rowan to Ensco (i) Rowan does not make, and has not made, any representations or warranties
relating to itself or its business or otherwise in connection with the transactions contemplated hereby and Ensco is not relying on any representation or warranty except for those expressly set forth
in this Agreement, (ii) no person has been authorized by Rowan to make any representation or warranty relating to itself or its business or otherwise in connection with the transactions
contemplated hereby, and if made, such representation or warranty may not be relied upon by Ensco as having been authorized by Rowan and (iii) any estimates, projections, predictions, data,
financial information, memoranda, presentations or any other materials or information provided or addressed to Ensco, any of its affiliates or any of their respective officers, directors, employees or
Representatives are not and shall not be deemed to be or
include representations or warranties of Rowan unless any such materials or information is the subject of any express representation or warranty set forth in
Article III
.
ARTICLE V.
COVENANTS AND AGREEMENTS
Section 5.1
Conduct of Business.
(a) From
and after the date hereof until the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant to
Section 7.1
(the "
Termination
Date
"), and except (i) as may be required by applicable Law
or the regulations or requirements of any stock exchange or regulatory organization applicable to Rowan and its Subsidiaries and Ensco and its Subsidiaries, as applicable, (ii) with the prior
written consent of Rowan or Ensco with respect to the business of Ensco and its Subsidiaries and Rowan and its Subsidiaries, respectively (such consent not to be unreasonably withheld, conditioned or
delayed), (iii) as may be expressly contemplated or required by this Agreement or (iv) as set forth in
Section 5.1(a)
of the Rowan
Disclosure Schedule or
Section 5.1(a)
of the Ensco Disclosure Schedule, as applicable, each of Rowan and Ensco covenants and agrees that the
business of Rowan and its Subsidiaries and of Ensco and its Subsidiaries, respectively, shall be conducted in the ordinary course of business consistent with past practice, and Rowan and its
Subsidiaries and Ensco and its Subsidiaries shall use, and Rowan and Ensco shall cause their respective Subsidiaries to use, commercially reasonable efforts to preserve intact their respective present
lines of business and business organization, minimize the incurrence of or exposure to liabilities for which adequate reserves have not been established or maintained or for which adequate insurance
coverage or third-party indemnification rights are unavailable and, in any case, which would reasonably be expected to result in a Rowan Material Adverse Effect or an Ensco Adverse Effect, as
applicable, maintain
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their
respective rights, franchises and Permits, preserve their respective relationships and goodwill with customers and suppliers and keep available the services of its current officers and key
employees;
provided
,
however
, that no action by Rowan and its Subsidiaries or Ensco and its Subsidiaries with
respect to matters specifically addressed by any provision of
Section 5.1(b)
shall be deemed a breach of this sentence unless such action would
constitute a breach of such provision of
Section 5.1(b)
.
(b) Rowan
agrees with Ensco, on behalf of itself and its Subsidiaries, and Ensco agrees with Rowan, on behalf of itself and its Subsidiaries, that from the date hereof and
prior to the earlier of the Effective Time and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory
organization applicable to Rowan and its Subsidiaries and Ensco and its Subsidiaries, as applicable, (ii) with the prior written consent of Rowan or Ensco with respect to the business of Ensco
and its Subsidiaries and Rowan and its Subsidiaries, respectively (such consent not to be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or required by
this Agreement (including with respect to the Scheme of Arrangement) or (iv) as set forth in
Section 5.1(b)
of the Rowan Disclosure
Schedule or
Section 5.1(b)
of the Ensco Disclosure Schedule, as applicable, each of Rowan and Ensco:
(i) shall
not amend or modify its articles of association, and shall not permit any of its Subsidiaries to adopt any amendments or modifications to its articles of
association, certificate of incorporation or bylaws or similar applicable organizational documents, other than, in the case of wholly owned Subsidiaries, in connection with internal restructurings
among such Subsidiaries;
(ii) shall
not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock (excluding, in the case of Ensco, the Consolidation)
or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary
which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) shall
not, and shall not permit any of its Subsidiaries that is not directly or indirectly wholly owned to, authorize, make, declare or pay any dividends on or make
any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of Rowan or Ensco, as applicable, or their respective Subsidiaries), except
(A) dividends or distributions by any Subsidiaries only to Rowan or Ensco, as applicable, or to any wholly owned Subsidiary of Rowan or Ensco, as applicable, in the ordinary course of business
consistent with past practice, (B) dividends or distributions by any non-wholly owned Subsidiary or joint venture that are consistent with past practice or required under such entity's
organizational documents in effect on the date of this Agreement, and (C) in the case of Ensco only, quarterly cash dividends or distributions on the Ensco Ordinary Shares of not more than
$0.01 per share per quarter, consistent with past practice as to timing of declaration, record date and payment date of such quarterly dividend;
(iv) shall
not, and shall not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization, other than the Transaction and other than any liquidations, dissolutions, mergers, consolidations, restructurings or reorganizations solely among Rowan or
Ensco, as applicable, and their respective Subsidiaries or among Rowan's or Ensco's respective Subsidiaries, or take any action with respect to
any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Transaction;
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(v) shall
not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make any loans, advances or capital contributions to,
or investments in, any other person with a value in excess of $30.0 million in the aggregate, except (A) any loan, advance or capital contribution to or investment in a joint venture,
partnership or similar entity in which a Party acquires an equity interest in connection with the initiation of operations of a particular rig or rigs or in a particular jurisdiction where such Party
does not currently operate;
provided
, that such loan, advance, capital contribution or investment shall not exceed $30.0 million in the aggregate
and be related to a single investment opportunity or (B) as made in connection with any transaction among (1) in the case of Rowan, (x) Rowan and its wholly owned Subsidiaries,
(y) Rowan's wholly owned Subsidiaries, or (z) Rowan or any of its wholly owned Subsidiaries and a joint venture to which it is a party (so long as made in the ordinary course of business
and consistent with past practice, or contemplated under the organizational documents of the applicable joint venture to which it is a party), or (2) in the case of Ensco, (x) Ensco and
its wholly owned Subsidiaries, (y) Ensco's wholly owned Subsidiaries or (z) Ensco or any of its wholly owned Subsidiaries and a joint venture to which it is a party (so long as made in
the ordinary course of business and consistent with past practice, or contemplated under the organizational documents of the applicable joint venture);
provided
,
however
, that Rowan or Ensco shall not, and shall not permit any of its Subsidiaries to, make
any acquisition of any other person or business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to prevent, materially impede
or materially delay the consummation of the Transaction;
(vi) shall
not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, or otherwise dispose of or encumber (x) any
properties or non-cash assets with a value in excess of $30.0 million in the aggregate, except (A) sales, transfers and dispositions of obsolete, surplus or worthless equipment,
(B) sales, transfers and dispositions of assets in the ordinary course of business consistent with past practice, or (C) sales, leases, transfers or other dispositions made in connection
with any transaction among (1) in the case of Rowan, Rowan and its wholly owned Subsidiaries or among Rowan's wholly owned Subsidiaries, or (2) in the case of Ensco, Ensco and its wholly
owned Subsidiaries or among Ensco's wholly owned Subsidiaries or (y) in the case of Rowan only, any equity interests in the ARO JV;
(vii) shall
not, and shall not permit any of its Subsidiaries to, authorize any capital expenditures in excess of $50.0 million in the aggregate, except for
(A) expenditures made in the ordinary course of business and consistent with past practice or (B) expenditures made in response to any emergency, whether caused by war, terrorism,
weather events, public health events, outages, operational incidents or otherwise;
(viii) except
in the ordinary course of business and consistent with past practice, or as required under the terms of any Benefit Plan or other contract entered into prior
to the date of this Agreement, shall not, and shall not permit any of its Subsidiaries to, (A) enter into, establish, adopt, materially amend or modify, or terminate any Collective Bargaining
Agreement or material Benefit Plan, (B) materially increase the compensation or increase the severance entitlements of any of the current or former directors or officers of Rowan or Ensco, as
applicable, (C) pay or award, or commit to pay or award, any bonuses or incentive compensation to any officer or director of Rowan or Ensco, as applicable, (D) enter into any new or
modify any existing employment, severance, termination, retention or change in control agreement with any current or former directors or officers of Rowan or Ensco, as applicable,
(E) accelerate the time of payment or vesting of any material rights or benefits under any material Benefit Plan, (F) fund any rabbi trust or similar arrangement with respect to any
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material
Benefit Plan, (G) grant or materially amend any awards under the Rowan Stock Plans or Ensco Stock Plans, as applicable (which new awards, even if made in the ordinary course of
business shall not contain any terms or conditions providing for automatic vesting or acceleration in connection with the consummation of the transactions contemplated by this Agreement),
(H) change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or applicable Law, (I) hire
or terminate the employment or services of (other than for cause) any officer or director of Rowan or Ensco, as applicable, except that if any officer is terminated for cause, death, resignation or
disability, Rowan or Ensco, as applicable, may hire a replacement officer, or (J) waive any post-employment restrictive covenant with any of the current or
former directors or officers of Rowan or Ensco, as applicable, except in connection with the replacement thereof in a manner consistent with this Agreement;
(ix) shall
not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income,
deductions or other material items for financial accounting purposes, except as required by GAAP or other applicable accounting standards, SEC rule or policy or applicable Law;
(x) shall
not, and shall not permit any of its Subsidiaries to establish any Rights Plan or grant any Rights or to issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any shares of its capital stock or other ownership interest in Rowan or Ensco, as applicable, or any of their respective
Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership
interest or convertible or exchangeable securities, other than (A) issuances of Rowan Ordinary Shares or Ensco Ordinary Shares under the Rowan Stock Plans and Ensco Stock Plans, as applicable,
to the extent not prohibited by
subsection (viii)
above or in respect of the exercise, vesting or settlement of any Rowan Equity Awards or Ensco
Equity Awards, as applicable, outstanding on the date of this Agreement or granted in accordance with the terms of this Agreement, (B) the vesting of Rowan Ordinary Shares or Ensco Ordinary
Shares or for withholding of Taxes with respect to any Rowan Equity Awards or Ensco Equity Awards, as applicable, to the extent provided by the terms of such awards or (C) for transactions
among (1) in the case of Rowan, Rowan and its wholly owned Subsidiaries or among Rowan's wholly owned Subsidiaries or (2) in the case of Ensco, Ensco and its wholly owned Subsidiaries or
among Ensco's wholly owned Subsidiaries;
(xi) shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of the capital stock of any of them
or any rights, warrants or options to acquire any such shares, except for transactions among (1) in the case of Rowan, Rowan and its Subsidiaries or among Rowan's wholly owned Subsidiaries or
(2) in the case of Ensco, Ensco and its Subsidiaries or among Ensco's wholly owned Subsidiaries;
(xii) shall
not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee or otherwise become liable for any indebtedness for borrowed money or any
guarantee of such indebtedness, except (A) for any indebtedness incurred in the ordinary course of business consistent with past practice, (B) for any indebtedness among Rowan or Ensco,
as applicable, and its wholly owned Subsidiaries or among such respective wholly owned Subsidiaries, (C) for any indebtedness incurred to replace, renew, extend, refinance or refund any
existing indebtedness on substantially the same or more favorable terms to Rowan or Ensco, as applicable, than such existing indebtedness, and (D) for any guarantees by Rowan or Ensco of
indebtedness of Subsidiaries or guarantees by such Subsidiaries of indebtedness of Rowan or Ensco, as applicable, or any Subsidiary of Rowan or Ensco, as applicable, which indebtedness
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is
incurred in compliance with this
Section 5.1(b)
;
provided
,
however
, that in the case of each of
clauses (A) through (D) such indebtedness does not impose or result in any additional restrictions or
limitations that would be material to Rowan or Ensco and its Subsidiaries other than any obligation to make payments on such indebtedness and other than any restrictions or limitations to which Rowan
or Ensco or any Subsidiary is currently subject under the terms of any indebtedness outstanding as of the date hereof;
provided, further
, that,
notwithstanding anything contained herein, the Rowan 2019 Senior Notes may be replaced, renewed, extended, redeemed or refunded (i) with the proceeds of any Permitted Refinancing Debt or
(ii) with cash, in each case, at an amount up to the make-whole amount (including all accrued interest) as specified in the Rowan 2019 Senior Notes;
(xiii) shall
not, and shall not permit any of its Subsidiaries to, (A) other than in the ordinary course of business consistent with past practice, modify or amend in
any material respect, terminate or waive any material rights under any Rowan Material Contract or Ensco Material Contract, as applicable, (B) in the case of Rowan and its Subsidiaries only,
modify, amend or terminate, or waive any material rights under, any Contract of the ARO JV, (C) other than in the ordinary course of business consistent with past practice, modify or amend in
any material respect, or terminate or waive any material rights under any material Permit, or (D) other than in the ordinary course of business consistent with past practice, enter into any new
contract which would be a Rowan Material Contract or Ensco Material Contract, as applicable, or which would reasonably be expected to, after the Effective Time, restrict or limit in any material
respect Ensco or any of its affiliates from engaging in any business or competing in any geographic location with any person;
(xiv) shall
not, and shall not permit any of its Subsidiaries to, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases,
assignments, settlements or compromises (A) that are equal to or less than the amounts specifically reserved with respect thereto on the balance sheet as of June 30, 2018 included in the
Rowan SEC Documents or the Ensco SEC Documents, as applicable, or (B) that do not exceed $50.0 million in the aggregate and, in all cases, do not obligate it or any of its Subsidiaries
to take any material action (other than make a payment) or impose any material restrictions on its business or the business of any of its Subsidiaries;
(xv) shall
not, and shall not permit any of its Subsidiaries to, make, change or revoke any material Tax election; change any material Tax accounting method; file any
material amended Tax Return; enter into any material Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement, advance pricing agreement or closing agreement (other than customary Tax
indemnifications contained in ordinary course commercial agreements or arrangements that are not primarily related to Taxes); request any material Tax ruling; settle or compromise any material Tax
proceeding; consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment; change its jurisdiction of Tax residence; or surrender any claim
for a material refund of Taxes;
(xvi) except
as otherwise permitted by this Agreement, any refinancing permitted by sub-clause
(xii)
above or for
transactions (A) in the case of Rowan, between Rowan and its Subsidiaries or among Rowan's Subsidiaries or (B) in the case of Ensco, between Ensco and its Subsidiaries or among Ensco's
Subsidiaries, shall not and shall not permit any of its Subsidiaries, to prepay, redeem, repurchase, defease, cancel or otherwise acquire any indebtedness or guarantees thereof of Rowan or Ensco, as
applicable, or its Subsidiaries, other than (1) with respect to debt securities maturing prior to December 21, 2021, at or below par value, (2) at stated maturity or
(3) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to which holders of such indebtedness or
guarantees thereof may be entitled), in each case in
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accordance
with the terms of the instrument governing such indebtedness as in effect on the date hereof; and
(xvii) shall
not, and shall not permit any of its Subsidiaries to, agree, authorize, consent, resolve or propose, in writing or otherwise, to take any of the foregoing
actions that are prohibited pursuant to sub-clauses
(i)
through
(xvi)
of this
Section 5.1
.
Section 5.2
Access
.
(a) For
purposes of furthering the transactions contemplated hereby, each Party shall afford the other Party and (i) the officers and employees and (ii) the
accountants, consultants, legal counsel, financial advisors and agents and other representatives of such other Party reasonable access during normal business hours, throughout the period prior to the
earlier of the Effective Time and the Termination Date, to its and its Subsidiaries' personnel and properties, contracts, commitments, books and records and any report, schedule or other document
filed or received by it pursuant to the requirements of applicable Laws and with such additional accounting, financing, operating, environmental and other data and information regarding such Party as
the other Party may reasonably request. Notwithstanding the foregoing, neither Party shall be required to afford such access if it would unreasonably disrupt the operations of such Party or any of its
Subsidiaries, would cause a material violation of any agreement to which such Party or any of its Subsidiaries is a party, would cause a risk of a loss of privilege to such Party or any of its
Subsidiaries or would constitute a violation of any applicable Law. Neither Party, nor any of their respective officers, employees or Representatives, shall be permitted to perform any onsite
procedures (including an onsite study or invasive testing or sampling) with respect to any property of
either Party or any of their respective Subsidiaries without the prior written consent of the other Party (which shall not be unreasonably withheld, conditioned or delayed).
(b) The
Parties hereto hereby agree that all information provided to them or their respective officers, directors, employees or Representatives in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be governed in accordance with the confidentiality and non-disclosure agreement, dated as of April 26, 2018, between
Rowan and Ensco, as amended (the "
Confidentiality Agreement
"), the term of which is hereby extended until the earlier to occur of (x) the
Effective Time and (y) the first anniversary following the termination of this Agreement in accordance with
Article VII
.
Section 5.3
No Solicitation by Rowan
.
(a) Except
as expressly permitted by this
Section 5.3
, Rowan shall, shall cause each of its affiliates and its and
their respective officers, directors and employees to, and shall use reasonable best efforts to cause its and their respective agents, financial advisors, investment bankers, attorneys, accountants
and other representatives (a person's officers, directors, employees, agents, financial advisors, investment bankers, attorneys, accountants and other representatives being collectively its
"
Representatives
") to: (i) immediately cease any solicitation, knowing encouragement, discussions or negotiations with any persons that may be
ongoing with respect to or may reasonably be expected to lead to a Rowan Takeover Proposal, and promptly instruct (to the extent it has contractual authority to do so and has not already done so prior
to the date of this Agreement) or otherwise request, any person that has executed a confidentiality or non-disclosure agreement within the 12-month period prior to the date of this Agreement in
connection with any actual or potential Rowan Takeover Proposal to return or destroy all such information or documents or material incorporating confidential information in the possession of such
person or its Representatives and (ii) until the Effective Time or, if earlier, the termination of this Agreement in accordance with
Article VII
, not, directly or indirectly, (1) solicit,
initiate or knowingly facilitate or knowingly encourage (including by way of
furnishing non-public information) any inquiries regarding, or the making of any proposal or offer that constitutes, or
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could
reasonably be expected to lead to, a Rowan Takeover Proposal, (2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person
any non-public information in connection with or for the purpose of encouraging or facilitating, a Rowan Takeover Proposal (other than, solely in response to an unsolicited inquiry, to refer the
inquiring person to this
Section 5.3
and to limit its conversation or other communication exclusively to such
referral), or (3) approve, recommend or enter into, or propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment or agreement in principle
(whether written or oral, binding or nonbinding) with respect to a Rowan Takeover Proposal. Except to the extent necessary to take any actions that Rowan or any third party would otherwise be
permitted to take pursuant to this
Section 5.3
(and in such case only in accordance with the terms hereof), (A) except in the event that
the Rowan Board of Directors has determined in good faith after consultation with Rowan's outside legal counsel that the failure to take such action would be reasonably likely to constitute a breach
of the fiduciary duties of the members of the Rowan Board of Directors under applicable Law with respect to any standstill or confidentiality provision in any agreement to which Rowan or any of its
Subsidiaries is a party as of the date hereof, Rowan and its Subsidiaries shall not release any third party from, or waive, amend or modify any provision of, or grant permission under, (x) any
standstill provision in any agreement to which Rowan or any of its Subsidiaries is a party or (y) any confidentiality provision in any agreement to which Rowan or any of its Subsidiaries is a
party other than, with respect to this clause (y), any waiver, amendment, modification or permission under a confidentiality provision that does not, and would not be reasonably likely to,
facilitate, encourage or relate in any way to a Rowan Takeover Proposal or a potential Rowan Takeover Proposal and (B) Rowan shall, and shall cause its Subsidiaries to, enforce the
confidentiality and standstill provisions of any such agreement (including by exercising any right to require a recipient of confidential information to cease use of, return or destroy such
information), and Rowan shall, and shall cause its Subsidiaries to, immediately take all steps within their power necessary to terminate any waiver that may have been heretofore granted, to any person
other than Ensco or any of Ensco's affiliates, under any such provisions.
(b) Notwithstanding
anything to the contrary contained in
Section 5.3(a)
, if at any time from and after the date of
this Agreement and prior to obtaining the Rowan Shareholder Approval, Rowan or any of its Subsidiaries, or any of its or their Representatives, directly or indirectly receives a bona fide, unsolicited
written Rowan Takeover Proposal from any person that did not result from Rowan's, its affiliates' or Rowan's or its affiliates' Representatives' failure to comply with the provisions of
Section 5.3(a)
and if the Board of Directors of Rowan determines in good faith, after consultation with its outside financial advisors and
outside legal counsel, that such Rowan Takeover Proposal constitutes or would reasonably be expected to lead to a Rowan Superior Proposal, then Rowan and any of its Subsidiaries, and any of its or
their Representatives, may, directly or indirectly, (i) furnish, pursuant to a Rowan Acceptable Confidentiality Agreement, information (including non-public information) with respect to Rowan
and its Subsidiaries, and afford access to the business, properties, assets, employees, officers, contracts, books and records of Rowan and its Subsidiaries, to the person who has made such Rowan
Takeover Proposal and its Representatives and potential sources of financing;
provided
that Rowan shall substantially concurrently with the delivery to
such person provide to Ensco any non-public information concerning Rowan or any of its Subsidiaries that is provided or made available to such person or its Representatives unless such non-public
information has been previously provided or made available to Ensco, (ii) seek to clarify and understand the terms and conditions of any Rowan Takeover Proposal (or amended proposal) solely to
determine whether such Rowan Takeover Proposal constitutes or would be reasonable expected to lead to a Rowan Superior Proposal, and (iii) engage in or otherwise participate in discussions or
negotiations with the person making such Rowan Takeover Proposal and its Representatives and potential sources of financing regarding
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such
Rowan Takeover Proposal. As used herein, "
Rowan Acceptable Confidentiality Agreement
" means any customary confidentiality agreement that contains
provisions that are no less restrictive to the third party executing such agreement than those applicable to Ensco that are contained in the Confidentiality Agreement (including standstill
restrictions);
provided
that such confidentiality agreement shall not prohibit compliance by Rowan with any of the provisions of this
Section 5.3
.
(c) Rowan
shall promptly (and in no event later than 24 hours after receipt) notify, orally and in writing, Ensco after receipt by Rowan or any of its Subsidiaries,
or any of its or their Representatives, of any Rowan Takeover Proposal, including of the identity of the person making the Rowan Takeover Proposal and the material terms and conditions thereof, and
shall promptly (and in no event later than 24 hours after receipt) provide unredacted copies to Ensco of any written proposals, indications of interest, and/or draft agreements relating to such
Rowan Takeover Proposal. Rowan shall keep Ensco reasonably informed, on a prompt basis, as to the status of (including changes to any material terms of, and any other material developments with
respect to) such Rowan Takeover Proposal (including by promptly (and in no event later than 24 hours after receipt) providing to Ensco unredacted copies of any additional or revised written
proposals, indications of interest, and/or draft agreements relating to such Rowan Takeover Proposal). Rowan agrees that it and its Subsidiaries will not enter into any agreement with any person
subsequent to the date of this Agreement which prohibits Rowan from providing any information to Ensco in accordance with this
Section 5.3
.
(d) Except
as expressly permitted by this
Section 5.3(d)
,
Section 5.3(e)
or
Section 5.3(f)
, or where
required in order to implement the Transaction
by way of an Offer made in accordance with
Section 5.18
, neither the Board of Directors of Rowan nor any committee thereof shall (i) (A)
withhold, withdraw or modify in a manner adverse to Ensco the Rowan Board Recommendation or fail to make the Rowan Board Recommendation in accordance with
Section 5.5(a)(xi)
(or, in the period
prior to publication of the Scheme Document, publicly change, withdraw or modify its intention and
expectation that it will give such recommendation), (B) fail to reiterate the Rowan Board Recommendation (or, in the period prior to publication of the Scheme Document, fail to publicly
reiterate its intention and expectation that it will give the Rowan Board Recommendation) within five business days after a written request by Ensco, (C) take any formal action or make any
recommendation or public statement in connection with a Rowan Takeover Proposal (other than a recommendation against such Rowan Takeover Proposal or a customary "stop, look and listen" communication
of the type contemplated by Rule 14d-9(f) under the Exchange Act, in each case that includes a reaffirmation of the Rowan Board Recommendation) (it being understood that the Board of Directors
of Rowan may refrain from taking a position with respect to such Rowan Takeover Proposal until the close of business as of the tenth business day after the commencement of such Rowan Takeover Proposal
pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered a Rowan Adverse Recommendation Change), (D) adopt, approve or recommend, or publicly propose to
adopt, approve or recommend, to Rowan Shareholders a Rowan Takeover Proposal or (E) fail to publicly recommend against a publicly announced Rowan Takeover Proposal (it being understood that the
Board of Directors of Rowan may refrain from taking a position with respect to such Rowan Takeover Proposal until the close of business as of the tenth business day
after the commencement of such Rowan Takeover Proposal pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered a Rowan Adverse Recommendation Change) (any action
described in this clause (i) being referred to as a "
Rowan Adverse Recommendation Change
"), or (ii) authorize, cause or permit Rowan or
any of its Subsidiaries to enter into any letter of intent, agreement, commitment or agreement in principle with respect to any Rowan Takeover Proposal (other than a Rowan Acceptable Confidentiality
Agreement entered into in accordance with
Section 5.3(b)
). Notwithstanding anything to the contrary set forth in this Agreement, prior to the
time the Rowan Shareholder Approval is obtained, the Board of Directors of Rowan may make a Rowan Adverse Recommendation Change
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if,
after receiving a bona fide, unsolicited Rowan Takeover Proposal that did not result from a breach of
Section 5.3
, the Board of Directors of
Rowan has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that (A) such Rowan Takeover Proposal constitutes a Rowan Superior Proposal
and (B) in light of such Rowan Takeover Proposal, the failure to take such action would be reasonably likely to be inconsistent with the fiduciary duties of the Board of Directors of Rowan
under applicable Law;
provided
,
however
, that, prior to making such Rowan Adverse Recommendation Change,
(1) Rowan has given Ensco at least four business days' prior written notice of its intention to take such action (which notice shall specify the material terms and conditions of any such Rowan
Superior Proposal) and has contemporaneously provided to Ensco a copy of the Rowan Superior Proposal, a copy of any proposed transaction agreements with the person making such Rowan Superior Proposal
and a copy of any financing commitments relating thereto (or, if not provided in writing to Rowan, a written summary of the material terms thereof), (2) Rowan has negotiated, and has caused its
Representatives to negotiate, in good faith with Ensco during such notice period, to the extent Ensco wishes to negotiate, to enable Ensco to propose revisions to the terms of this Agreement such that
it would cause such Rowan Superior Proposal to no longer constitute a Rowan Superior Proposal, (3) following the end of such notice period, the Board of Directors of Rowan shall have considered
in good faith any revisions to the terms of this Agreement proposed in writing by Ensco, and shall have determined, after consultation with its outside financial advisors and outside legal counsel,
that the Rowan Superior Proposal would nevertheless continue to constitute a Rowan Superior Proposal if the revisions proposed by Ensco were to be given effect, and (4) in the event of any
change to any of the financial terms (including the form, amount and timing of payment of consideration) or any other material terms of such Rowan Superior Proposal, Rowan shall, in each case, have
delivered to Ensco an additional notice consistent with that described in clause (1) above of this proviso and a new notice period under clause (1) of this proviso shall commence (except
that the four business day notice period referred to in clause (1) above of this proviso shall instead be equal to the longer of (x) two business days and (y) the period remaining
under the notice period under clause (1) of this proviso immediately prior to the delivery of such additional notice under this clause (4)) during which time Rowan shall be required to
comply with the requirements of this
Section 5.3(d)
anew with respect to such additional notice, including clauses (1) through
(4) above of this proviso; and
provided further
that Rowan has complied in all material respects with its obligations under this
Section 5.3
.
(e) Nothing
in this Agreement shall prohibit the Board of Directors of Rowan, prior to the time the Rowan Shareholder Approval is obtained, from making a Rowan Adverse
Recommendation Change in response to an Intervening Event if the Board of Directors of Rowan has determined in good faith, after consultation with its outside financial advisers and outside legal
counsel, that the failure of the Board of Directors of Rowan to make such a Rowan Adverse Recommendation Change would be reasonably likely to be inconsistent with the fiduciary duties of the Board of
Directors of Rowan under applicable Law;
provided
,
however
, that, prior to making such Rowan Adverse
Recommendation Change, (A) Rowan has given Ensco at least four business days' prior written notice of its intention to take such action, which notice shall specify the reasons therefor,
(B) Rowan has negotiated, and has caused its Representatives to negotiate, in good faith with Ensco during such notice period, to the extent Ensco wishes to negotiate, to enable Ensco to
propose revisions to the terms of this Agreement such that it would permit the Board of Directors of Rowan not to make a Rowan Adverse Recommendation Change pursuant to this
Section 5.3(e)
, and
(C) following the end of such notice period, the Board of Directors of Rowan shall have considered in good faith any
revisions to the terms of this Agreement proposed in writing by Ensco, and shall have determined, after consultation with its outside financial advisors and outside legal counsel, that the failure to
make a Rowan Adverse Recommendation Change continues to be
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reasonably
likely to be inconsistent with the fiduciary duties of the Board of Directors of Rowan under applicable Law.
(f) Nothing
contained in this
Section 5.3
shall prohibit Rowan or the Board of Directors of Rowan from
(x) taking and disclosing to the Rowan Shareholders a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making any "stop, look and
listen" communication or any other similar disclosure to the Rowan Shareholders pursuant to Rule 14d-9(f) under the Exchange Act or (y) making any disclosure to the Rowan Shareholders
if, in the reasonable determination in good faith of the Board of Directors of Rowan, after consultation with outside legal counsel, the failure to make such disclosure would be reasonably likely to
be inconsistent with their duties under applicable Law or that such disclosure is otherwise required by Law or if, in each case, in the reasonable determination in good faith of the Board of Directors
of Rowan, after consultation with outside legal counsel, the failure so to disclose would be reasonably likely to be inconsistent with its fiduciary duties under applicable Law or obligations under
applicable federal securities Law of the Board of Directors of Rowan;
provided
that, with respect to each of clause (x) and clause (y),
any such position or disclosure (other than any "stop, look and listen" communication that includes a reaffirmation of the Rowan Board Recommendation) shall be deemed to be a Rowan Adverse
Recommendation Change unless the Board of Directors of Rowan expressly and concurrently reaffirms the Rowan Board Recommendation.
Section 5.4
No Solicitation by Ensco
.
(a) Except
as expressly permitted by this
Section 5.4
, Ensco shall, shall cause each of its affiliates and its and
their respective officers, directors and employees to, and shall use reasonable best efforts to cause its and their Representatives to: (i) immediately cease any solicitation, knowing
encouragement, discussions or negotiations with any persons that may be ongoing with respect to or may reasonably be expected to lead to an Ensco Takeover Proposal, and promptly instruct (to the
extent it has contractual authority to do so and has not already done so prior to the date of this Agreement) or otherwise request, any person that has executed a confidentiality or non-disclosure
agreement within the 12-month period prior to the date of this Agreement in connection with any actual or potential Ensco Takeover Proposal to return or destroy all such information or documents or
material incorporating confidential information in the possession of such person or its Representatives and (ii) until the Effective Time or, if earlier, the termination of this Agreement in
accordance with
Article VII
, not, directly or indirectly, (1) solicit, initiate or knowingly facilitate or knowingly encourage (including
by way of furnishing non-public information) any inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, an Ensco Takeover Proposal,
(2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information in connection with or for the purpose of
encouraging or facilitating, an Ensco Takeover Proposal (other than, solely in response to an unsolicited inquiry, to refer the inquiring person to this
Section 5.4
and to limit its conversation or
other communication exclusively to such referral), or (3) approve, recommend or enter into,
or propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment or agreement in principle (whether written or oral, binding or nonbinding) with respect
to an Ensco Takeover Proposal. Except to the extent necessary to take any actions that Ensco or any third party would otherwise be permitted to take pursuant to this
Section 5.4
(and in such case
only in accordance with the terms hereof), (A) except in the event the Ensco Board of Directors has
determined in good faith after consultation with Ensco's outside legal counsel that the failure to take such action would be reasonably likely to constitute a breach of the fiduciary duties of the
members of the Ensco Board of Directors under applicable Law with respect to any standstill or confidentiality provision in any agreement to which Ensco or any of its Subsidiaries is a party as of the
date
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hereof,
Ensco and its Subsidiaries shall not release any third party from, or waive, amend or modify any provision of, or grant permission under, (x) any standstill provision in any agreement
to which Ensco or any of its Subsidiaries is a party or (y) any confidentiality provision in any agreement to which Ensco or any of its Subsidiaries is a party other than, with respect to this
clause (y), any waiver, amendment, modification or permission under a confidentiality provision that does not, and would not be reasonably likely to, facilitate, encourage or relate in any way
to an Ensco Takeover Proposal or a potential Ensco Takeover Proposal and (B) Ensco shall, and shall cause its Subsidiaries to, enforce the
confidentiality and standstill provisions of any such agreement (including by exercising any right to require a recipient of confidential information to cease use of, return or destroy such
information), and Ensco shall, and shall cause its Subsidiaries to, immediately take all steps within their power necessary to terminate any waiver that may have been heretofore granted, to any person
other than Rowan or any of Rowan's affiliates, under any such provisions.
(b) Notwithstanding
anything to the contrary contained in
Section 5.4(a)
, if at any time from and after the date of
this Agreement and prior to the passing of the resolution referred to in clause (a) of the definition of Ensco Shareholder Resolutions, Ensco or any of its Subsidiaries, or any of its or their
Representatives, directly or indirectly receives a bona fide, unsolicited written Ensco Takeover Proposal from any person that did not result from Ensco's, its affiliates' or Ensco's or its
affiliates' Representatives' failure to comply with the provisions of
Section 5.4(a)
and if the Board of Directors of Ensco determines in good
faith, after consultation with its outside financial advisors and outside legal counsel, that such Ensco Takeover Proposal constitutes or would reasonably be expected to lead to an Ensco Superior
Proposal, then Ensco and any of its Subsidiaries, and any of its or their Representatives, may, directly or indirectly, (i) furnish, pursuant to an Ensco Acceptable Confidentiality Agreement,
information (including non-public information) with respect to Ensco and its Subsidiaries, and afford access to the business, properties, assets, employees, officers, contracts, books and records of
Ensco and its Subsidiaries, to the person who has made such Ensco Takeover Proposal and its Representatives and potential sources of financing;
provided
that Ensco shall substantially concurrently with the delivery to such person provide to Rowan any non-public information concerning Ensco or any of its Subsidiaries that is provided or made available
to such person or its Representatives unless such non-public information has been previously provided or made available to Rowan, (ii) seek to clarify and understand the terms and conditions of
any Ensco Takeover Proposal (or amended proposal) solely to determine whether such Ensco Takeover Proposal constitutes or would be reasonable expected to lead to an Ensco Superior Proposal, and
(iii) engage in or otherwise participate in discussions or negotiations with the person making such Ensco Takeover Proposal and its Representatives and potential sources of financing regarding
such Ensco Takeover Proposal. As used herein, "
Ensco Acceptable Confidentiality Agreement
" means any customary confidentiality agreement that contains
provisions that are no less restrictive to the third party executing such agreement than those applicable to Rowan that are contained in the Confidentiality Agreement (including standstill
restrictions);
provided
that such confidentiality agreement shall not prohibit compliance by Ensco with any of the provisions of this
Section 5.4
.
(c) Ensco
shall promptly (and in no event later than 24 hours after receipt) notify, orally and in writing, Rowan after receipt by Ensco or any of its Subsidiaries,
or any of its or their Representatives, of any Ensco Takeover Proposal, including of the identity of the person making the Ensco Takeover Proposal and the material terms and conditions thereof, and
shall promptly (and in no event later than 24 hours after receipt) provide unredacted copies to Rowan of any written proposals, indications of interest, and/or draft agreements relating to such
Ensco Takeover Proposal. Ensco shall keep Rowan reasonably informed, on a prompt basis, as to the status of (including changes to any material terms of, and any other material developments with
respect to) such Ensco Takeover Proposal (including by promptly (and in no event later than 24 hours after
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receipt)
providing to Rowan unredacted copies of any additional or revised written proposals, indications of interest, and/or draft agreements relating to such Ensco Takeover Proposal). Ensco agrees
that it and its Subsidiaries will not enter into any agreement with any person subsequent to the date of this Agreement which prohibits Ensco from providing any information to Rowan in accordance with
this
Section 5.4
.
(d) Except
as expressly permitted by this
Section 5.4(d)
,
Section 5.4(e)
or
Section 5.4(f)
, or where
required in order to implement the Transaction
by way of an Offer made in accordance with
Section 5.18
, neither the Board of Directors of Ensco nor any committee thereof shall (i) (A)
withhold, withdraw or modify in a manner adverse to Rowan the Ensco Board Recommendation, (B) fail to reiterate the Ensco Board Recommendation within five business days after a written request
by Rowan, (C) take any formal action or make any recommendation or public statement in connection with an Ensco Takeover Proposal (other than a recommendation against such Ensco Takeover
Proposal or a customary "stop, look and listen" communication of the type contemplated by Rule 14d-9(f) under the Exchange Act, in each case that includes a reaffirmation of the Ensco Board
Recommendation) (it being understood that the Board of Directors of Ensco may refrain from taking a position with respect to such Ensco Takeover Proposal until the close of business as of the tenth
business day after the commencement of such Ensco Takeover Proposal pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered an Ensco Adverse Recommendation
Change), (D) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, to Ensco Shareholders an Ensco Takeover Proposal or (E) fail to publicly recommend against a
publicly announced Ensco Takeover Proposal (it being understood that the Board of Directors of Ensco may refrain from taking a position with respect to such Ensco Takeover Proposal until the close of
business as of the tenth business day after the commencement of such Ensco Takeover Proposal pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered an Ensco
Adverse Recommendation Change) (any action described in this clause (i) being referred to as a "
Ensco Adverse Recommendation Change
"), or
(ii) authorize, cause or permit Ensco or any of its Subsidiaries to enter into any letter of intent, agreement, commitment or agreement in principle with respect to any Ensco Takeover Proposal
(other than an Ensco Acceptable Confidentiality Agreement entered into in accordance with
Section 5.4(b)
). Notwithstanding anything to the
contrary set forth in this Agreement, prior to the time the resolution referred to in clause (a) of the definition of the Ensco Shareholder Resolutions is passed, the Board of Directors of
Ensco may make an Ensco Adverse Recommendation Change if, after receiving a bona fide, unsolicited Ensco Takeover Proposal that did not result from a breach of
Section 5.4
, the Board of Directors
of Ensco has determined in good faith, after consultation with its outside financial advisors and outside
legal counsel, that (A) such Ensco Takeover Proposal constitutes an Ensco Superior Proposal and (B) in light of such Ensco Takeover Proposal, the failure to take such action would be
reasonably likely to be inconsistent with the fiduciary duties of the Board of Directors of Ensco under applicable Law;
provided
,
however
, that, prior to
making such Ensco Adverse Recommendation Change, (1) Ensco has given Rowan at least four business days' prior written
notice of its intention to take such action (which notice shall specify the material terms and conditions of any such Ensco Superior Proposal) and has contemporaneously provided to Rowan a copy of the
Ensco Superior Proposal, a copy of any proposed transaction agreements with the person making such Ensco Superior Proposal and a copy of any financing commitments relating thereto (or, if not provided
in writing to Ensco, a
written summary of the material terms thereof), (2) Ensco has negotiated, and has caused its Representatives to negotiate, in good faith with Rowan during such notice period, to the extent
Rowan wishes to negotiate, to enable Rowan to propose revisions to the terms of this Agreement such that it would cause such Ensco Superior Proposal to no longer constitute an Ensco Superior Proposal,
(3) following the end of such notice period, the Board of Directors of Ensco shall have considered in good faith any revisions to the terms of this Agreement proposed in writing by Rowan, and
shall have determined,
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after
consultation with its outside financial advisors and outside legal counsel, that the Ensco Superior Proposal would nevertheless continue to constitute an Ensco Superior Proposal if the revisions
proposed by Rowan were to be given effect, and (4) in the event of any change to any of the financial terms (including the form, amount and timing of payment of consideration) or any other
material terms of such Ensco Superior Proposal, Ensco shall, in each case, have delivered to Rowan an additional notice consistent with that described in clause (1) above of this proviso and a
new notice period under clause (1) of this proviso shall commence (except that the four business day notice period referred to in clause (1) above of this proviso shall instead be equal
to the longer of (x) two business days and (y) the period remaining under the notice period under clause (1) of this proviso immediately prior to the delivery of such additional
notice under this clause (4)) during which time Ensco shall be required to comply with the requirements of this
Section 5.4(d)
anew with
respect to such additional notice, including clauses (1) through (4) above of this proviso; and
provided further
that Ensco has complied
in all material respects with its obligations under this
Section 5.4
.
(e) Nothing
in this Agreement shall prohibit or restrict the Board of Directors of Ensco, prior to the passing of the resolution referred to in clause (a) of the
definition of the Ensco Shareholder Resolutions, from making an Ensco Adverse Recommendation Change in response to an Intervening Event if the Board of Directors of Ensco has determined in good faith,
after consultation with its outside financial advisers and outside legal counsel, that the failure of the Board of Directors of Ensco to make an Ensco Adverse Recommendation Change would be reasonably
likely to be inconsistent with the fiduciary duties of the Board of Directors of Ensco under applicable Law;
provided
,
however
, that, prior to making such
Ensco Adverse Recommendation Change, (A) Ensco has given Rowan at least four business days' prior written
notice of its intention to take such action, which notice shall specify the reasons therefor, (B) Ensco has negotiated, and has caused its Representatives to negotiate, in good faith with Rowan
during such notice period, to the extent Rowan wishes to negotiate, to enable Rowan to propose revisions to the terms of this Agreement such that it would permit the Board of Directors of Ensco not to
make an Ensco Adverse Recommendation Change pursuant to this
Section 5.4(e)
, and (C) following the end of such notice period, the Board of
Directors of Ensco shall have considered in good faith any revisions to the terms of this Agreement proposed in writing by Rowan, and shall have determined, after consultation with its outside
financial advisors and outside legal counsel, that the failure to make an Ensco Adverse Recommendation Change continues to be reasonably likely to be inconsistent with the fiduciary duties of the
Board of Directors of Ensco under applicable Law.
(f) Nothing
contained in this
Section 5.4
shall prohibit Ensco or the Board of Directors of Ensco from
(x) taking and disclosing to the Ensco Shareholders a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making any "stop, look and
listen" communication or any other similar disclosure to the Ensco Shareholders pursuant to Rule 14d-9(f) under the Exchange Act or (y) making any disclosure to the Ensco Shareholders
if, in the reasonable determination in good faith of the Board of Directors of Ensco, after consultation with outside legal counsel, the failure to make such disclosure would be reasonably likely to
be inconsistent with their duties under applicable Law or that such disclosure is otherwise required by Law or if, in each case, in the reasonable determination in good faith of the Board of Directors
of Ensco, after consultation with outside legal counsel, the failure so to disclose would be reasonably likely to be inconsistent with its fiduciary duties under applicable Law or obligations under
applicable federal securities Law of the Board of Directors of Ensco;
provided
that, with respect to each of clause (x) and clause (y),
any such position or disclosure (other than any "stop, look and listen" communication that includes a reaffirmation of the Ensco Board Recommendation) shall be deemed to be an Ensco Adverse
Recommendation Change unless the Board of Directors of Ensco expressly and concurrently reaffirms the Ensco Board Recommendation.
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Section 5.5
Responsibilities of Rowan in Respect of the Scheme of Arrangement
.
(a) Rowan
shall:
(i) prepare
as soon as reasonably practicable following the date hereof the shareholder document (or the relevant sections of the Proxy Statement comprising the scheme
document), incorporating the Scheme of Arrangement (the "
Scheme Document
"), in accordance with applicable Laws, and all other documentation reasonably
necessary to effect the Scheme of Arrangement and to convene the Rowan GM and Scheme Meeting;
(ii) consult
with Ensco as to the form and content of the Scheme Document and seek the approval of Ensco (such approval not to be unreasonably withheld, conditioned or
delayed) to the content of the Scheme Document (excluding information in relation to Rowan, any of Rowan's Subsidiaries or directors and excluding the terms of the Scheme of Arrangement, which shall
be in all material respects
in the form set out in
Annex II
subject to any amendment that the Parties agree in accordance with
Section 5.8(b)
);
(iii) afford
Ensco reasonably sufficient time to consider the Scheme Document in order to give its approval and take into consideration all comments proposed by Ensco;
(iv) not
finalize or post the Scheme Document to the Rowan Shareholders unless Rowan has first obtained the prior written approval of Ensco (such approval not to be
unreasonably withheld, conditioned or delayed);
(v) provide
Ensco with drafts of the forms of proxy for use by the Rowan Shareholders at the Rowan GM and the Scheme Meeting (the "
Forms of
Proxy
"), all the necessary evidence and pleadings in relation to the Scheme of Arrangement (the "
Court Documentation
") and any
supplemental circular or document required to be published or submitted to the Court in connection with the Scheme of Arrangement or any variation or amendment to the Scheme of Arrangement (a
"
Scheme Supplemental Document
"), in each case prepared in accordance with applicable Laws and customary practice;
(vi) afford
Ensco reasonably sufficient time to consider all such documents detailed in clause
(v)
above and take into
consideration all comments proposed by Ensco;
(vii) for
the purpose of implementing the Scheme of Arrangement, instruct a barrister (of senior counsel standing) and provide Ensco and its advisers with the opportunity to
attend any meetings with such barrister to discuss matters pertaining to the Scheme of Arrangement and any issues arising in connection with it (except to the extent the barrister is to advise on
matters relating to the fiduciary duties of the directors of Rowan or otherwise in circumstances where a conflict has arisen between the interests of Rowan and Ensco);
(viii) as
promptly as reasonably practicable, notify Ensco of any matter of which it becomes aware which would reasonably be expected to materially delay or prevent filing
of the Scheme Document or the Court Documentation;
(ix) as
promptly as reasonably practicable, make all necessary applications to the Court in connection with the implementation of the Scheme of Arrangement (including
applying to the Court for leave to convene the Scheme Meeting and settling with the Court the Scheme Document, the Forms of Proxy and any Scheme Supplemental Document and taking such other steps as
may be required or desirable in connection with such applications, in each case as promptly as reasonably practicable), and use its reasonable best efforts so as to ensure that the hearing of such
proceedings occurs as promptly as practicable in order to facilitate the dispatch of the Scheme Document and any Scheme Supplemental Document and seek such directions of the Court as it considers
necessary or desirable in connection with the Scheme Meeting;
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(x) procure
the publication of the advertisements required by applicable Law and dispatch of the Scheme Document, the Forms of Proxy and any Scheme Supplemental Document to
Rowan Shareholders on the Register of Members of Rowan on the record date as agreed with the Court, as promptly as reasonably practicable after the approval of the Court to dispatch the documents
being obtained, and thereafter shall publish and/or post such other documents and information (the form of which shall be agreed between the Parties) as the Court may approve or direct from time to
time in connection with the implementation of the Scheme of Arrangement in accordance with applicable Law as promptly as reasonably practicable after the approval of the Court to publish or post such
documents being obtained;
(xi) unless
the Board of Directors of Rowan has effected a Rowan Adverse Recommendation Change pursuant to and in accordance with
Section 5.3
, procure that the Scheme Document includes the Rowan Board
Recommendation;
(xii) include
in the Scheme Document a notice convening the Rowan GM to be held immediately following the Scheme Meeting to consider and, if thought fit, approve the
Rowan Shareholder Resolutions and it will convene the Scheme Meeting and the Rowan GM for the date that is as soon after the date of the dispatch of the Scheme Document as is permissible under
applicable Laws and the Rowan Articles of Association (subject only to
Section 5.6
);
(xiii) call,
convene, hold and conduct the Scheme Meeting and the Rowan GM in compliance with this Agreement, the Rowan Articles of Association and applicable Laws
and permit up to four representatives of Ensco and/or its financial and legal advisers to attend and observe the Scheme Meeting and the Rowan GM;
(xiv) prior
to the Scheme Meeting, keep Ensco informed on a regular basis in the two weeks prior to the Scheme Meeting of the number of valid proxy votes received in respect
of resolutions to be proposed at the Scheme Meeting and/or the Rowan GM (with the number of valid proxy votes for and against being separately identified in respect of each resolution), and in
any event provide such number as soon as reasonably practicable following a request by Ensco or its Representatives and, unless the Board of Directors of Rowan has effected a Rowan Adverse
Recommendation Change, conduct any proxy solicitation exercise and undertake any other steps as may reasonably be requested by Ensco to assist in obtaining the Rowan Shareholder Approval;
(xv) except
as required by applicable Law or the Court or pursuant to
Section 5.8(a)
, not postpone or adjourn the
Scheme Meeting and/or the Rowan GM;
provided, however
, that Rowan may, without the consent of Ensco and only in accordance with the Rowan
Articles of Association and applicable Law, adjourn or postpone the Scheme Meeting and/or the Rowan GM (i) in the case of adjournment, if requested by the Rowan Shareholders (on a poll)
to do so,
provided
that the adjournment resolution was not proposed, procured or instigated by or on behalf of Rowan or any of its officers, directors,
employees, agents or other Representatives, (ii) to the extent reasonably necessary to ensure that any required supplement or amendment to the Scheme Document is provided to the Rowan
Shareholders or to permit dissemination of information which is material to the Rowan Shareholders voting at the Scheme Meeting and/or the Rowan GM, but only for so long as the Board of
Directors of Rowan have determined in good faith, that such action is reasonably necessary or advisable to give the Rowan Shareholders sufficient time to evaluate any such disclosure or information so
provided or disseminated, or (iii) if, as of the time for which the Scheme Meeting or the Rowan GM is scheduled (as set forth in the Scheme Document), there are insufficient Rowan
Ordinary Shares represented (either in person or by proxy) (a) to constitute a quorum necessary to conduct the business of the Scheme Meeting or the Rowan GM, but only until a meeting
can be held at which there are a sufficient number of Rowan Ordinary Shares
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represented
to constitute a quorum or (b) to obtain the Rowan Shareholder Approval, but only until a meeting can be held at which there are sufficient number of votes of the Rowan Shareholders
to obtain the Rowan Shareholder Approval;
(xvi) not
withdraw the Scheme of Arrangement or allow it to lapse without the prior written consent of Ensco;
(xvii) following
the Scheme Meeting and Rowan GM, assuming the Scheme of Arrangement and Rowan Shareholder Resolutions are duly passed (including by the requisite
majorities required under Part 26 of the Companies Act in the case of the Scheme Meeting) and all other Conditions are satisfied or, in the sole discretion of the applicable Party, waived where
applicable (with the exception of the condition set out in
Section 6.1(b)
), take all necessary steps on the part of Rowan to prepare and issue,
serve and lodge all such court documents as are required to seek the sanction of the Court to the Scheme of Arrangement as soon as possible thereafter;
(xviii) give
such undertakings as are required by the Court in connection with the Scheme of Arrangement as are reasonably and commercially necessary or desirable to
implement the Scheme of Arrangement;
(xix) as
soon as reasonably practicable after the Court Order is made, deliver the Court Order to the Registrar of Companies (and if, notwithstanding the provisions of
Section 5.17
, such Court Order is
determined to be subject to United Kingdom stamp duty, procure that the Court Order is duly stamped prior to
the delivery of the Court Order to the Registrar of Companies);
(xx) promptly
provide Ensco with a certified copy of the resolutions passed at the Scheme Meeting, the Rowan Shareholder Resolutions and of each order of the Court
(including the Court Order) once obtained; and
(xxi) subject
to the foregoing, take any other action reasonably necessary to make the Scheme of Arrangement effective (it being acknowledged that this requirement shall not
extend, in the event of a Rowan Adverse Recommendation Change, to obliging Rowan to convene or reconvene either the Scheme Meeting or the Rowan GM or conduct any proxy solicitation exercise).
Section 5.6
Responsibilities of Ensco in Respect of the Scheme of Arrangement
.
(a) Ensco
shall:
(i) instruct
counsel to appear on its behalf at the Court hearing to sanction the Scheme of Arrangement and undertake to the Court to be bound by the terms of the Scheme of
Arrangement (including the issuance of the New Ensco Shares pursuant thereto) insofar as it relates to Ensco,
provided
that this shall not oblige Ensco
to waive any of the Conditions or treat them as satisfied;
(ii) subject
to the terms of this Agreement, afford all such cooperation and assistance as may reasonably be requested of it by Rowan in respect of the preparation and
verification of any document required for the implementation of the Scheme of Arrangement, including the provision to Rowan of such information and confirmations relating to it, its Subsidiaries and
any of its or their respective directors or employees as Rowan may reasonably request (including for the purposes of preparing the Scheme Document or any Scheme Supplemental Document) and to do so in
a timely manner;
(iii) review
and provide comments (if any) in a reasonably timely manner on all such documentation submitted to it; and
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Section 5.7
Joint Proxy Statement
.
(a) Subject
to
Section 5.5
, as promptly as reasonably practicable following the date of this Agreement, Ensco and
Rowan shall take all action reasonably necessary to prepare, in accordance with applicable Law, the Ensco Organizational Documents and the Rowan Organizational Documents, as applicable, joint proxy
materials which shall constitute (A) the Scheme Document, which shall also constitute the proxy statement relating to the Scheme Meeting and the Rowan GM for the purpose of passing the
Rowan Shareholder Resolutions and (B) the proxy statement relating to a meeting of the Ensco Shareholders for the purpose of passing the Ensco Shareholder Resolutions (such joint proxy
materials being the "
Proxy Statement
"). Ensco shall also take any action required to be taken under any applicable state or provincial securities laws
in connection with the issuance of the New Ensco Shares in the Transaction. Ensco and Rowan shall furnish all information concerning Ensco and the Ensco Shareholders and Rowan and the Rowan
Shareholders, respectively, as may be reasonably requested in connection with the Proxy Statement (or any supplement required thereto) and any such action as aforesaid. No filing of, or amendment or
supplement to, the Proxy Statement will be made by either Party without the other Party's prior consent (which shall not be unreasonably withheld, conditioned or delayed) and without providing the
other Party a reasonable opportunity to review and comment thereon. Each Party will advise the other Party promptly after it receives any oral or written request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC for additional information, and will promptly provide the other Party with copies of any written communication from the SEC
or any state securities commission. Each of Rowan and Ensco shall ensure (a) that the information provided by it for inclusion in the Proxy Statement (and any supplement required thereto) at
the time of mailing thereof and at the time of the Ensco Shareholder Meeting, the Scheme Meeting and the Rowan GM will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (b) that the Proxy
Statement (and any supplement required thereto) at the time of mailing thereof and at the time of the Ensco Shareholder Meeting, the Scheme Meeting and the Rowan GM will comply as to form in
all material respects with the provisions of the Securities Act and the Exchange Act.
(b) As
promptly as reasonably practicable following the clearance of the Proxy Statement by the SEC, Ensco shall take all action necessary in accordance with applicable Laws
and the Ensco Articles of Association to duly give notice of, convene and hold a meeting of the Ensco Shareholders for the purpose of passing the Ensco Shareholder Resolutions (the
"
Ensco Shareholder Meeting
") and (subject to
Section 5.8(a)
) shall not postpone or adjourn the
Ensco Shareholder Meeting except (i) to the extent
required by applicable Law, (ii) if requested by the Ensco Shareholders (on a poll) to do so,
provided
that the adjournment resolution was not
proposed, procured or instigated by or on behalf of Ensco or any of its officers, directors, employees, agents or other Representatives, (iii) if, as of the time for which the Ensco Shareholder
Meeting is scheduled (as set forth in the Proxy Statement), there are insufficient Ensco Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the
business of the Ensco Shareholder Meeting, but only until a meeting can be held at which there are a sufficient number of Ensco Ordinary Shares represented to constitute a quorum or (iv) to
solicit additional proxies or votes for the approval of the allotment and issuance of the New Ensco Shares, but only until a meeting can be held at which there is a sufficient number of proxies or
votes of the Ensco Shareholders to approve the allotment and issuance of the New Ensco Shares.
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(c) Unless
the Board of Directors of Ensco has effected an Ensco Adverse Recommendation Change pursuant to and in accordance with
Section 5.4,
Ensco shall procure that the Proxy Statement includes the Ensco
Board Recommendation.
(d) Prior
to the Ensco Shareholder Meeting, Ensco shall keep Rowan informed on a regular basis in the two weeks prior to the Ensco Shareholder Meeting of the number of valid
proxy votes received in respect of resolutions to be proposed at the Ensco Shareholder Meeting (with the number of valid proxy votes for and against being separately identified in respect of each
resolution), and in any event provide such number as soon as reasonably practicable following a request by Rowan or its Representatives and, unless the Board of Directors of Ensco has effected an
Ensco Adverse Recommendation Change pursuant to and in accordance with
Section 5.4
, conduct any proxy solicitation exercise and undertake any
other steps as may reasonably be requested by Rowan to assist in obtaining the approval of the Ensco Shareholders to the Ensco Shareholder Resolutions.
Section 5.8
Mutual Provisions in Relation to the Scheme of Arrangement and the Meetings
.
(a) Notwithstanding
anything to the contrary in this Agreement, Ensco and Rowan shall co-operate to schedule and convene the Ensco Shareholder Meeting and the Scheme Meeting
and Rowan GM for the same date, it being understood and agreed that (i) in the event the Ensco Shareholder Meeting is adjourned or postponed, Rowan shall, in accordance with the Rowan
Articles of Association, use its reasonable best efforts to adjourn or postpone the Scheme Meeting and the Rowan GM to the same date of the Ensco Shareholder Meeting, as so adjourned or
postponed, (ii) in the event the Scheme Meeting or the Rowan GM is adjourned or postponed, Ensco shall, in accordance with the Ensco Articles of Association, use its reasonable best
efforts to adjourn or postpone the Ensco Shareholder Meeting to the date of the Scheme Meeting or Rowan GM (whichever is the latest to occur, if they are not to be held on the same date), as so
adjourned or postponed, and (iii) if, within five business days prior to any scheduled meeting date, the Board of Directors of Ensco or Rowan determines that failure
to make an Ensco Adverse Recommendation Change or a Rowan Adverse Recommendation Change, as applicable, would be reasonably likely to be inconsistent with its fiduciary duties under applicable Law,
such Board of Directors shall be permitted to adjourn or postpone the Ensco Shareholder Meeting, the Scheme Meeting or the Rowan GM (including any postponements or adjournments thereof), as
applicable, for up to five business days.
(b) Ensco
may at any time (and on more than one occasion) prior to the Scheme Meeting propose such amendments or modifications to the Scheme of Arrangement as it reasonably
considers necessary or desirable for the purposes of procuring that all Rowan Ordinary Shares outstanding at the Effective Time shall be transferred from the Rowan Shareholders to Ensco or a DR
Nominee and Rowan hereby agrees that it shall promptly (and in any event prior to the Scheme Meeting) make and carry into effect any amendments or modifications to the Scheme of Arrangement that are
proposed by Ensco in accordance with this
Section 5.8(b)
and shall take all such steps and do such things as are reasonably necessary or
desirable including adjourning or postponing the Scheme Meeting and Rowan GM in order to give effect to such amendment or modification. Subject and without prejudice to the foregoing, if Ensco
or Rowan acting reasonably considers that an amendment should be made to the provisions of the Scheme of Arrangement in order to implement the Transaction in as efficient a manner as practicable or
otherwise, it may notify the other Party and the Parties shall be obliged to consider and negotiate, acting reasonably and in good faith, such amendment
(
provided,
without prejudice to any matter specified in the first sentence in this
Section 5.8(b)
, that no Party shall be required to consider and
negotiate in good faith any amendment that would materially and adversely affect
it, its shareholders or the likelihood of consummation of the Transaction).
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Section 5.9
Reasonable Best Efforts; Regulatory Approvals
.
(a) Prior
to the Closing, and subject to
Section 5.5
through
5.8
and
Section 5.18
, Rowan and Ensco shall use
their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, all things necessary, proper or advisable under any applicable Laws to consummate and make effective the Transaction, including (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the Transaction and the provision of information in connection therewith, (ii) the satisfaction of the conditions to consummating
the Transaction, (iii) taking all reasonable actions necessary to obtain (and cooperating with each other in obtaining) any consent, authorization, Order or approval of, or any exemption by,
any third party, including any Governmental Entity (which actions shall include furnishing all information and documentary material required under the HSR Act or other antitrust, competition, foreign
investment or similar Laws outside of the United States) required to be obtained or made by Rowan, Ensco or any of their respective Subsidiaries in connection with the Transaction or the taking of any
action contemplated by this Agreement, and (iv) the execution and delivery of any additional instruments necessary to consummate the Transaction and to fully carry out the purposes of this
Agreement. Additionally, Rowan and Ensco shall use reasonable best efforts to fulfill all conditions precedent to the Transaction and shall not take any
action after the date of this Agreement that would reasonably be expected to materially delay the obtaining of, or result in not obtaining, any permission, approval or consent from any such
Governmental Entity necessary to be obtained prior to Closing. To the extent that transfers of any Permits issued by any Governmental Entity are required as a result of the execution of this Agreement
or the consummation of the Transaction (including Permits required pursuant to Environmental Laws), the Parties hereto shall use reasonable best efforts to effect such transfers.
(b) In
furtherance and not in limitation of the other covenants contained in this
Section 5.9
, each of Ensco and Rowan
shall use its reasonable best efforts to take, or cause to be taken, any and all steps and to make, or cause to be made any and all undertakings necessary to resolve objections, if any, that any
Relevant Authority may assert under the HSR Act and any other federal, state or foreign Law designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint
of trade or reduction of competition (collectively, "
Antitrust Laws
") or that regulates foreign investment ("
Foreign Investment
Laws
"), with respect to this Agreement, and to avoid or eliminate each and every impediment under any Antitrust Law or Foreign Investment Laws that may be asserted by any
Relevant Authority with respect to this Agreement, in each case, so as to enable the Closing to occur as promptly as practicable including (i) proposing, negotiating, committing to and
effecting, by consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of any businesses, assets, equity interests, product lines or properties of Ensco and Rowan (or
any of their respective Subsidiaries) or any equity interest in any joint venture held by Ensco and Rowan (or any of their respective Subsidiaries), other than, or related to, the ARO JV,
(ii) creating, terminating, or divesting relationships, ventures, contractual rights or obligations of Ensco and Rowan or their respective Subsidiaries, other than the ARO JV and
(iii) otherwise taking or committing to take any action that would limit Ensco's or Rowan's freedom of action with respect to, or its ability to retain or hold, directly or indirectly, any
businesses, assets, equity interests, product lines or properties of Ensco and Rowan (including any of their respective Subsidiaries) or any equity interest in any joint venture held by Ensco and
Rowan (or any of their respective Subsidiaries), other than, or related to, the ARO JV, in each case as may be required in order to obtain all approvals and consents required directly or indirectly
under any Antitrust Law or Foreign Investment Laws, or to avoid the commencement of any action to prohibit the Closing of the Transaction under any Antitrust Law or Foreign Investment Laws, or to
avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any action or proceeding seeking to prohibit the Closing or delay the Closing beyond
the End Date,
provided
,
however
, that,
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notwithstanding
the foregoing, neither Ensco nor Rowan shall be required to take, or agree to take, any actions under this
Section 5.9
(i) that would reasonably be expected to, individually or in the aggregate, result in a one year loss of revenues as measured by fiscal year 2018 of more than $400.0 million on a
combined basis for both Rowan and its Subsidiaries and Ensco and its Subsidiaries or (ii) with respect to its business or operations unless the effectiveness of such agreement or action is
conditioned upon the Closing;
provided further
,
however
, that notwithstanding the foregoing, each of
Ensco and Rowan reserves the right, for so long as there is mutual agreement between Ensco and Rowan to do so, to oppose any request or requirement of any Governmental Entity to sell, divest or
otherwise dispose of any businesses, assets, equity interests, product lines or properties of Ensco and Rowan (or any of their respective Subsidiaries) or any equity interest in any joint venture held
by Ensco and Rowan (or any of their respective Subsidiaries) prior to the End Date, including through litigation, if necessary.
(c) Except
as prohibited by applicable Law, Rowan and Ensco shall each keep the other apprised of the status of matters relating to the completion of the Transaction and
work cooperatively in connection with obtaining all required consents, authorizations, Orders or approvals of, or any exemptions by, any Governmental Entity undertaken pursuant to the provisions of
this
Section 5.9
. In that regard, prior to the Closing, each Party shall promptly consult with one another with respect to, and, except as
prohibited by applicable Law, provide any necessary information with respect to (and, in the case of correspondence, provide the other Party (or its counsel) copies of), all filings made by such Party
with any Governmental Entity or any other information supplied by such Party to, or correspondence with, a Governmental Entity in connection with this Agreement and the Transaction. Each Party shall
promptly inform the other Party, and if in writing, furnish the other Party (or its counsel) with copies of (or, in the case of oral communications, advise the other Party (or its counsel) orally of)
any communication from any Governmental Entity regarding the Transaction, and permit the other Party to review and discuss in advance, and consider in good faith the views of the other Party in
connection with, any proposed communication with any such Governmental Entity. If any Party or any Representative of such Party receives a request for additional information or documentary material,
or other request for information, from any Governmental Entity with respect to the Transaction, then such Party will use reasonable best efforts to make, or cause to be made, promptly and after
consultation with the other Party, an appropriate response in substantial compliance with such request. Neither Party shall participate in any meeting or teleconference with any Governmental Entity
where material issues would likely be discussed in connection with this Agreement and the Transaction unless, so long as reasonably practicable and permitted by applicable Law, it consults with the
other Party in advance and, to the extent permitted by such Governmental Entity, gives the other Party the opportunity to attend and participate thereat. Each Party shall furnish the other Party with
copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between it and any such Governmental Entity with respect to this Agreement and the
Transaction, and furnish the other Party with such necessary information and reasonable assistance as the other Party may reasonably request in connection with its preparation of necessary filings or
submissions of information to any such Governmental Entity;
provided
,
however
, that materials provided
pursuant to this
Section 5.9
may be redacted (i) to remove references concerning the valuation of Rowan or Ensco and the Transaction or
other confidential information, (ii) as necessary to comply with contractual arrangements, and (iii) as necessary to address reasonable privilege concerns.
(d) Rowan
and Ensco shall use reasonable best efforts to (i) file, as promptly as practicable, but in any event no later than ten business days after the date of this
Agreement, all notifications required under the HSR Act; and (ii) make any other required foreign filings as promptly as practicable. In the event that the Parties receive a request for
information or documentary material pursuant to the HSR Act or other request for information from any Governmental Entity, the
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Parties
will use their respective reasonable best efforts to respond to such request as promptly as practicable or as otherwise instructed by Ensco, and counsel for both Parties will closely cooperate
during the entirety of any such response process.
(e) In
furtherance and not in limitation of the other covenants contained in this
Section 5.9
, each of Ensco and Rowan
shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under any applicable Laws to make, or cause
to be made, a draft CFIUS Notice in accordance with 31 C.F.R. Part 800 and the DPA, and after prompt resolution of all questions and comments received from CFIUS on such draft, preparing and
submitting the final CFIUS Notice, which shall in any event be made promptly after the date all questions and comments received from CFIUS on such draft have been resolved or after CFIUS staff shall
have indicated to the Parties that it has no questions or comments. Such reasonable best efforts shall also include providing any information requested by CFIUS or any other agency or branch of the
U.S. government in connection with the CFIUS review or investigation of the Transaction, within the time periods specified by 31 C.F.R. §800.403(a)(3), as modified by applicable provisions
of FIRRMA, or otherwise specified by the CFIUS staff. Each of Ensco and Rowan shall, in connection with the efforts to obtain the CFIUS Clearance, (i) cooperate in all respects and consult with
each other in connection with the CFIUS Notice, including by allowing the other Party to have a reasonable opportunity to review in advance and comment on drafts of filings and submissions;
(ii) promptly inform the other Party of any communication received by such Party from, or given by such Party to, CFIUS, by promptly providing copies to the other Party of any such written
communications, except for any exhibits to such communications providing the personal identifying information required by 31 C.F.R. §800.402(c)(6)(vi); and (iii) permit the other
parties to review in advance any communication that it gives to, and consult with each other in advance of any meeting or teleconference with CFIUS, and to the extent not prohibited by CFIUS, give the
other parties the opportunity to attend and participate in any meeting or teleconference with CFIUS, in each of clauses (i), (ii) and (iii) of this
Section 5.9(e)
subject to
confidentiality considerations contemplated by the DPA or required by CFIUS, or to preserve business confidential
information.
(f) Notwithstanding
anything to the contrary contained herein, the Parties agree that they will jointly devise the strategy for all filings, notifications, submissions and
communications in connection with any filing, notice, petition, statement, registration, submission of information, application or similar filing subject to this
Section 5.9
.
Section 5.10
Takeover Statutes
.
If any "moratorium," "control share acquisition," "fair price," "supermajority," "affiliate transactions," or "business combination statute or regulation" or other similar state or other
anti-takeover Laws and regulations may become, or may purport to be, applicable to the Transaction or any other transactions contemplated hereby, each of Rowan and Ensco shall grant such approvals and
take such actions as are reasonably necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act
to eliminate or minimize the effects of such statute or regulation on the transactions contemplated hereby.
Section 5.11
Public Announcements
.
Rowan and Ensco shall use reasonable best efforts to develop a joint communications plan and each Party shall use reasonable best efforts to ensure that all press releases and other
public statements with respect to the transactions contemplated hereby, to the extent they have not been previously issued or disclosed, shall be consistent with such joint communications plan. Unless
otherwise required by applicable Law or by obligations pursuant to any listing agreement with or rules of any securities exchange, each Party shall consult with each other before issuing any press
release or public statement with respect to the Transaction and, subject to the requirements of applicable Law (in the reasonable determination in good faith of such Party, after consultation with
outside legal counsel) or the rules of any securities exchange (in the reasonable
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determination
in good faith of such Party, after consultation with outside legal counsel), shall not issue any such press release or public statement prior to such consultation. Rowan and Ensco agree
to issue a mutually acceptable initial joint press release announcing this Agreement.
Section 5.12
Indemnification and Insurance
.
(a) Ensco
agrees that, to the fullest extent permitted under applicable Law, all rights to exculpation, indemnification and advancement of expenses for acts or omissions
occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, existing as at the date of this Agreement in favor of the current or former managers,
directors, officers or employees, as the case may be, of Ensco, Rowan or their respective Subsidiaries as provided in their respective articles of association or other organizational documents or in
any agreement or deed of indemnity shall survive the Transaction and shall continue in full force and effect in accordance with their terms. For a period of six years from the Effective Time, to the
fullest extent permitted under applicable Law, Ensco shall maintain in effect any and all exculpation, indemnification and advancement of expenses provisions of the articles of association or similar
organizational documents of Ensco, Rowan and their
respective Subsidiaries in effect as at the date of this Agreement or in any indemnification agreements of Ensco, Rowan or their respective Subsidiaries with any of their respective current or former
directors, officers or employees in effect as at the date of this Agreement, and to the fullest extent permitted under applicable Law shall not amend, repeal or otherwise modify any such provisions or
the exculpation, indemnification or advancement of expenses provisions of the organizational documents of Ensco, Rowan or their respective Subsidiaries in any manner that would adversely affect the
rights thereunder of any individuals who immediately before the Effective Time were current or former managers, directors, officers or employees of Rowan or any of its Subsidiaries;
provided
,
however
, that all rights to exculpation, indemnification and advancement of expenses in
respect of any Action pending or asserted or any claim made within such period shall continue until the disposition of such Action or resolution of such claim.
(b) Ensco
shall, to the fullest extent permitted under applicable Law, indemnify and hold harmless (and advance funds in respect of each of the foregoing) each current and
former manager, director, officer or employee of Ensco, Rowan or any of their respective Subsidiaries and each person who served as a manager, director, officer, member, trustee or fiduciary of
another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such service was at the request or for the benefit of Ensco, Rowan or any of their
respective Subsidiaries (each, together with such person's heirs, executors or administrators, an "
Indemnified Party
"), in each case against any costs
or expenses (including advancing attorneys' fees and expenses in advance of the final disposition of any claim, suit, proceeding or investigation to each Indemnified Party to the fullest extent
permitted by applicable Law;
provided
,
however
, that the Indemnified Party to whom expenses are advanced
provides an undertaking consistent with applicable Law and the Ensco Organizational Documents or Rowan Organizational Documents, as applicable, to repay such amounts if it is ultimately determined
that such person is not entitled to indemnification), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or investigative (an "
Action
"), arising out of, relating to or in connection
with any action or omission by them in their capacities as such occurring or alleged to have occurred whether before or after the Effective Time (including acts or omissions in connection with such
Indemnified Party serving as an officer, director, employee or other fiduciary of any entity if such service was at the request or for the benefit of Ensco or Rowan). In the event of any such Action,
Ensco shall cooperate with the Indemnified Party in the defense of any such Action.
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(c) For
a period of six years from the Effective Time, Ensco shall cause to be maintained in effect the coverage provided by the policies of directors' and officers'
liability insurance and fiduciary liability insurance in effect as of the date hereof by Rowan and its Subsidiaries with respect to matters existing or arising on or before the Effective Time
(
provided
that Ensco may substitute these for policies with a carrier with reasonably comparable credit ratings to the existing carrier of at least the
same coverage and amounts and containing terms and conditions that it reasonably considers are no less favorable to the insured);
provided
,
however
, that
Ensco shall not be required to pay annual premiums in excess of 300% of the last annual premium paid by Rowan prior to the date hereof in
respect of the coverages (the "
Maximum Amount
") required to be obtained pursuant hereto, but in such case shall purchase as much coverage as reasonably
practicable for such amount. If Rowan or Ensco elects, then Rowan or
Ensco, as applicable, may, prior to the Effective Time, purchase a "tail policy" with respect to acts or omissions occurring or alleged to have occurred prior to the Effective Time that were committed
or alleged to have been committed by such Indemnified Parties in their capacity as such;
provided
that in no event shall the cost of such policy, if
purchased by Rowan, exceed six times the Maximum Amount and, if such a "tail policy" is purchased, Ensco shall have no further obligations under this
Section 5.12(c)
so long as such "tail policy"
remains in full force and effect during the six-year period following the date hereof.
(d) Ensco
shall, to the fullest extent permitted under applicable Law, pay all reasonable expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided in this
Section 5.12
.
(e) The
rights of each Indemnified Party under this
Section 5.12
shall be in addition to, and not in limitation of,
any other rights such Indemnified Party may have under the articles of association or other organizational documents of Ensco, Rowan or any of their respective Subsidiaries or, any other
indemnification arrangement, the Companies Act or otherwise.
(f) The
obligations of Ensco under this
Section 5.12
shall not be terminated, amended or modified in any manner so as
to adversely affect any Indemnified Party (including their successors, heirs and legal representatives) to whom this
Section 5.12
applies without
the consent of such Indemnified Party. It is expressly agreed that, notwithstanding any other provision of this Agreement that may be to the contrary, (i) the Indemnified Parties to whom this
Section 5.12
applies shall be third-party beneficiaries of this
Section 5.12
, and
(ii) this
Section 5.12
shall survive consummation of the Transaction and shall be enforceable by such Indemnified Parties and their
respective successors, heirs and legal representatives against Ensco and its successors and assigns.
Section 5.13
Control of Operations
.
Without in any way limiting any Party's rights or obligations under this Agreement, the Parties understand and agree that (a) nothing contained in this Agreement shall give Rowan
or Ensco, directly or indirectly, the right to control or direct the other Party's operations prior to the Effective Time and (b) prior to the Effective Time, each of Rowan and Ensco shall
exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations.
Section 5.14
Section 16 Matters
.
Prior to the Effective Time, Rowan and Ensco shall take all such steps as may be required to cause any dispositions of Rowan Ordinary Shares (including derivative securities with respect
to Rowan Ordinary Shares) or acquisitions of Ensco Ordinary Shares (including derivative securities with respect to Ensco Ordinary Shares) resulting from the transactions contemplated by this
Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Rowan or will become subject to such reporting requirements with
respect to Ensco, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
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Section 5.15
Transaction Litigation
.
Each of Rowan and Ensco shall promptly notify and give the other Party the opportunity to participate in the defense or settlement of any shareholder litigation against Rowan and/or its
directors or executive officers or Ensco and/or its directors or executive officers, as the case may be, relating to the transactions contemplated by this Agreement, including the Transaction. Each of
Rowan and Ensco agree that it shall not settle or offer to settle any litigation commenced prior to or after the date of this Agreement against Rowan or Ensco, as the case may be, or its directors,
executive officers or similar persons by any shareholder of Rowan or Ensco, as the case may be, relating to this Agreement, the Transaction or any other transaction contemplated hereby without the
prior written consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed).
Section 5.16
Listing Matters
.
(a) Ensco
shall use its reasonable best efforts to cause the New Ensco Shares to be issued in the Transaction and such other shares of Ensco to be reserved for issuance in
connection with the
Transaction (or, if the Consolidation is effected, the Consolidated Ensco Shares to which those New Ensco Shares correspond) to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date.
(b) Each
of Rowan and Ensco agrees to cooperate with the other Party in taking, or causing to be taken, all action necessary to delist the Rowan Ordinary Shares from the
NYSE and terminate its registration under the Exchange Act, provided that such delisting and termination shall not be effective until the Effective Time.
Section 5.17
United Kingdom Stamp Taxes
.
(a) The Parties shall, as soon as reasonably practicable, apply for such written confirmations from HMRC in relation to United Kingdom stamp duty or stamp duty reserve tax
("
SDRT
") that DTC reasonably requests in connection with the issuance, delivery and/or future trading of the New Ensco Shares, and (b) Ensco
shall apply for confirmation from HMRC that neither the Court Order nor any instrument of transfer transferring the Rowan Ordinary Shares held within DTC to any DR Nominee is subject to United Kingdom
stamp duty or SDRT and that the only instrument or agreement subject to UK stamp duty or SDRT will be the stock transfer form(s) which transfer shares not held within DTC to Ensco. For the avoidance
of doubt, a failure to obtain any confirmations to be applied for pursuant to this
Section 5.17
shall not constitute any breach of the
obligations of any Party under this Agreement. Rowan shall promptly provide Ensco with such information as it reasonably requests in order to fulfil its obligations under this
Section 5.17
.
Section 5.18
Scheme Implementation by Way of Offer
.
(a) Ensco
may, upon receipt of the written consent of Rowan (in its sole discretion), elect to implement the Transaction by way of a contractual takeover offer (as defined
in section 974 of the Companies Act) (the "
Offer
"), whether or not the Scheme Document has been published,
provided
that the Offer is made in
accordance with the terms and conditions set out in this Agreement (with any additions, deletions, modifications or
amendments to such terms and conditions as may be necessary as a result of a switch from the Scheme of Arrangement to the Offer) and
provided
that Ensco
shall comply with clauses (b) through (d) below. If the Parties agree to implement the Transaction by way of an Offer in accordance with this
Section 5.18(a)
,
Section 5.5
and
5.6
shall
cease to have any effect, and the terms and conditions set out in this Agreement shall be deemed to be modified or amended in so far as is necessary as a result of the switch from the Scheme of
Arrangement to the Offer.
(b) In
the event that the Transaction is implemented by way of an Offer pursuant to and in accordance with clause (a) above, Ensco shall prepare the document to be
dispatched to (amongst others) the Rowan Shareholders under which any Offer would be made (the "
Offer Document
")
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and
shall consult with Rowan in relation to the preparation thereof. Ensco agrees to submit, or procure the submission of, drafts and revised drafts of the Offer Document to Rowan for review and
comment and, where necessary, to discuss any comments with Rowan for the purposes of preparing revised drafts. Ensco shall afford Rowan sufficient time to consider the drafts and revised drafts of the
Offer Document and include in the Offer Document all comments reasonably proposed by Rowan.
(c) Rowan
shall afford all such cooperation and assistance as may reasonably be requested of it by Ensco in respect of the preparation and verification of any document
required for the implementation of the Offer, including the provision to Ensco of such information and confirmations relating to it, its Subsidiaries and any of its or their respective directors or
employees as Ensco may reasonably request (including for the purposes of preparing the Offer Document or the Prospectus and any amendments or supplements to either the Offer Document or the
Prospectus) and to do so in a timely manner; and shall review and provide comments (if any) in a reasonably timely manner on all such documentation submitted to it.
(d) If
the Transaction is implemented by way of an Offer pursuant to and in accordance with clause (a) above and such Offer is to be registered under the Securities
Act, Ensco shall prepare a registration statement on Form S-4 with respect to the New Ensco Shares (the "
Registration Statement
") and Ensco's and
Rowan's obligations in clauses (b) and (c) above shall equally apply to the process for preparation of such Registration Statement.
(e) If
the Transaction is implemented by way of an Offer pursuant to and in accordance with clause (a) above:
(i) the
acceptance condition to the Offer shall be set at not less than 90% (or such lesser percentage as Rowan and Ensco may agree) of the Rowan Ordinary Shares to which
the Offer relates;
(ii) Ensco
shall ensure that, unless the Parties agree otherwise in writing, the only conditions of the Offer shall be those set out in
Article VI
(the "
Conditions
") (with any additions, deletions, modifications or amendments to such
conditions as the Parties agree are necessary or desirable as a result of a switch from the Scheme of Arrangement to the Offer);
(iii) Ensco
shall keep Rowan informed, on a regular basis and in any event as soon as reasonably practicable following a request by Rowan or its Representatives, of the
number of Rowan Shareholders that have validly returned their acceptance or withdrawal forms or incorrectly completed their acceptance or withdrawal forms and the identity of such shareholders;
(iv) except
where the Board of Directors of Rowan has effected a Rowan Adverse Recommendation Change pursuant to and in accordance with
Section 5.3
, (A) the Board of Directors of Rowan shall duly and
validly adopt a resolution declaring that the Board of Directors of Rowan
has resolved that it will unanimously and unqualifiedly recommend that the Rowan Shareholders accept the Offer and such recommendation shall be deemed to be the Rowan Board Recommendation;
(B) Rowan agrees that the Rowan Board Recommendation shall be included within the Offer Document; and (C) neither the Board of Directors of Rowan nor any committee thereof shall
withhold, withdraw or modify in a manner adverse to Ensco the Rowan Board Recommendation; and
(v) any
failure to provide the Rowan Board Recommendation in accordance with clause
(iv)
above shall be deemed
to be a Rowan Adverse Recommendation Change.
(f) In
the event that the Transaction is implemented by way of an Offer pursuant to and in accordance with
Section 5.18(a)
, Ensco shall (i) prepare a prospectus in respect of the Offer (the
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"
Prospectus
") in accordance with part VI of the Financial Services and Markets Act 2000 and the Prospectus Directive (2003/71/EC) and shall
consult with Rowan in relation to the preparation thereof and (ii) subject to Rowan's compliance with its obligations pursuant to clause (c) above, use its reasonable best efforts to
obtain the final approval from the UK Financial Conduct Authority (or any successor thereof) of the Prospectus in connection with section 85 of the Financial Services and Markets Act 2000.
Section 5.19
Securities Act Exemption
.
For so long as the Transaction is being implemented by way of the Scheme of Arrangement, the Parties shall use their reasonable best efforts to cause the New Ensco Shares issued to Rowan
Shareholders upon the Scheme of Arrangement becoming effective to be issued in reliance on the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) of
the Securities Act and in reliance on exemptions from registration under state "blue sky" or securities laws.
Section 5.20
Tax-Free Reorganization Treatment
.
(a) Ensco
and Rowan intend that, for U.S. federal income tax purposes, the Transaction shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Code. From and after the execution of this Agreement through the Closing Date, each of Ensco and Rowan (i) shall, and shall cause each of its respective Subsidiaries to, use its reasonable best
efforts to cause the Transaction to so qualify, including by using its reasonable best efforts in not taking or failing to take any action that would reasonably be expected to prevent or impede the
Transaction from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code, and (ii) shall use reasonable best efforts to execute certificates at such time or
times as may be reasonably requested by Tax counsel to Rowan that are in form and substance acceptable to such Tax counsel, containing appropriate and customary representations to Tax counsel
regarding facts as of the date of such certificate in connection with such Tax counsel's delivery to Rowan of an opinion or opinions rendered in connection with the Transaction (including on the
qualification of the Transaction as a "reorganization" within the meaning of Section 368(a) of the Code). After the Closing, each of Ensco and Rowan shall file all Tax Returns consistent with,
and take no position inconsistent with (whether in audits, Tax proceedings, Tax Returns, or otherwise), such "reorganization" treatment unless required to do so by applicable Law. For the avoidance of
doubt, any action taken or not taken by Ensco or Rowan that is specifically required or contemplated by this Agreement to be, as applicable, taken or not taken shall not constitute a breach of this
Section 5.20(a)
.
(b) Ensco
and Rowan hereby adopt this Agreement as well as any other agreements entered into pursuant to this Agreement as a "plan of reorganization" within the meaning of
Treasury Regulations Section 1.368-2(g) and 1.368-3(a).
Section 5.21
Post-Closing Benefits Program
.
(a) The
Parties agree to cooperate in good faith to establish a comprehensive employee benefits program for Rowan Employees and Ensco Employees as a collective group subject
to Collective Bargaining Agreements that are in effect as of the date of this Agreement (the "
Post-Closing Benefits Program
"). The Parties intend that
the Post-Closing Benefits Program will equitably treat similarly situated Rowan Employees and Ensco Employees.
(b) With
respect to any employee benefit plans established under the Post-Closing Benefits Program, Ensco shall (i) recognize all service of Rowan Employees and Ensco
Employees with Rowan, Ensco or any of their respective Subsidiaries or predecessor entities, as the case may be, for purposes of determining eligibility to participate, vesting, accruals, and
entitlement to benefits where length of service is relevant (other than benefit accruals under a defined benefit pension plan) to the extent such service is recognized under the corresponding Benefit
Plan, (ii) use
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commercially
reasonable efforts to seek to waive any pre-existing condition limitations, eligibility waiting periods and evidence of insurability requirements and (iii) use commercially
reasonable efforts to provide credit for any co-payments and deductibles incurred prior to the Effective Time in the plan year in which the Effective Time occurs for purposes of satisfying any
applicable deductible, out-of-pocket or similar requirements under any such employee benefit plans established under the Post-Closing Benefits Program that may apply as of or following the Effective
Time.
(c) Effective
as of the day prior to the Closing Date but contingent upon the Closing, Rowan shall cause to be approved board resolutions terminating the Rowan
Companies, Inc. Savings and Investment Plan (the "
Rowan 401(k) Plan
") unless Ensco provides written notice to Rowan that the Rowan 401(k) Plan
shall not be terminated. Unless Ensco provides such written notice to Rowan, Rowan shall provide Ensco copies of such board resolutions. Effective as of, or as soon as administratively practicable
following, the Closing, each Rowan Employee shall be eligible to participate in a tax-qualified defined contribution plan established or designated by Ensco (the "
Ensco 401(k)
Plan
"), subject to the terms and conditions of the Ensco 401(k) Plan. As soon as practicable after the Closing and to the extent not prohibited under applicable Law, Ensco
shall take all action necessary to provide that each Rowan Employee may elect to rollover his or her full account balance (including cash, notes (in the case of loans) or a combination thereof) in the
Rowan 401(k) Plan to the Ensco 401(k) Plan.
(d) Except
for any Assumed CiC Agreements, the CEO Employment Agreement, any grants made under the Rowan Retention Program through the Closing, and the Rowan Protection
Plan, Rowan shall terminate all of its current severance plans, programs and policies on or prior to the Closing Date. Effective for any employee terminations that occur from the Closing Date through
the 12-month anniversary of the Closing Date, Ensco shall provide (or shall ensure that one or more of its affiliates provides) each onshore Rowan Employee that is employed as of the Closing Date and
who is not otherwise subject to a change in control agreement, with severance benefits that are no less favorable in the aggregate than those described in the Rowan Retention Program (as and to the
extent then applicable to any such individual) and the Rowan Protection Plan, a copy of each of which has been provided to Ensco prior to the date hereof.
(e) Without
limiting the generality of foregoing, nothing in this
Section 5.21
, express or implied: (i) is
intended to confer any rights, benefits or, remedies under this Agreement upon any person (including any Rowan Employee or Ensco Employee) to continued employment, service or any severance or other
benefits from Rowan or Ensco or any of their respective affiliates; (ii) is intended to require any Party (or any affiliate thereof) to maintain any specific level of benefits for any Rowan
Employees or Ensco Employees for any specific period of time; (iii) shall be construed as an amendment to any employee benefit plan or similar arrangement; or (iv) shall constitute a
limitation on the Parties' rights to amend,
modify or terminate, either before or after the Closing, any employee benefit plan or similar arrangement.
Section 5.22
Cooperation
.
Ensco and Rowan shall in good faith reasonably cooperate with each other (i) to arrange with commercial banks for an increase in the capacity of Ensco's revolving credit facility
or otherwise secure additional borrowing capacity as the Parties agree to be desirable to operate the business of Ensco following the Transaction and (ii) regarding any debt incurrence or
refinancing transaction permitted by
Section 5.1(b)(xii)
.
Section 5.23
Change in Control Arrangements
.
As of the Effective Time, Ensco shall automatically assume each Change in Control Agreement listed on
Section 5.23
of the Rowan
Disclosure Schedule (the "
Assumed CiC Agreements
") and, following the Effective Time, shall perform each Assumed CiC Agreement in the manner and to the
extent that Rowan would have been required to perform such agreement had no assumption taken place.
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ARTICLE VI.
CONDITIONS TO THE TRANSACTION
Section 6.1
Conditions to Each Party's Obligation to Effect the Transaction
.
The respective obligations of each Party to effect the Transaction shall be subject to the fulfillment (or waiver by all Parties, to the extent permissible under applicable Law) at or
prior to the Effective Time of the following conditions:
(a) The
Rowan Shareholder Approval shall have been obtained.
(b) The
Scheme of Arrangement shall have been sanctioned by the Court with or without modification (but subject to any such modification being acceptable to both Parties)
and a copy of the Court Order shall have been delivered to the Registrar of Companies in England and Wales.
(c) The
resolution referred to in clause (a) of the definition of the Ensco Shareholder Resolutions shall have been passed.
(d) The
New Ensco Shares (or, if the Consolidation is effected, the Consolidated Ensco Shares to which those New Ensco Shares correspond) shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(e) No
order, injunction, decree or other legal restraint by any court or other tribunal of competent jurisdiction or Governmental Entity shall have been entered and shall
continue to be in effect and no Law shall have been adopted or be effective, in each case that prohibits, prevents, restrains or renders illegal the consummation of the Transaction. No Governmental
Entity shall have commenced and not withdrawn any proceeding seeking to enjoin, restrain or otherwise prohibit the consummation of the Transaction or any of the transactions contemplated by this
Agreement.
(f) All
waiting periods applicable to the Transaction under the HSR Act, including any secondary acquisition notifications pursuant to 16 C.F.R. § 801.4,
shall have expired or been terminated.
(g) All
consents of, or filings with, the Governmental Entities set forth in
Section 6.1(g)
of the Ensco Disclosure
Schedule shall have been obtained and any applicable waiting period with respect thereto shall have expired or been terminated, as the case may be.
(h) The
CFIUS Clearance shall have been obtained and shall be in full force and effect.
Section 6.2
Conditions to Obligation of Rowan to Effect the Transaction
.
The obligation of Rowan to effect the Transaction is further subject to the fulfillment (or waiver by Rowan) at or prior to the Effective Time of the following conditions:
(a) The
representations and warranties of Ensco set forth in (i) this Agreement (other than in
Sections 4.1(c)
,
4.1(d)
,
4.2(a)
and
4.7(b)
) shall be true and correct
both at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except to the extent that any such representation and warranty expressly is
made as of an earlier date, in which
case such representation and warranty shall be true and correct as of such date), except where such failures to be so true and correct (without regard to "materiality," Ensco Material Adverse Effect
and similar qualifiers contained in such representations and warranties) would not, individually or in the aggregate, have an Ensco Material Adverse Effect,
(ii)
Sections 4.1(c)
,
4.1(d)
and
4.2(a)
shall be true and correct at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except to the extent that any such representation and
warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such date), except for any
de
minimis
inaccuracies, and (iii)
Section 4.7(b)
shall be true and correct both at
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and
as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except to the extent that any such representation and warranty expressly is made as
of an earlier date, in which case such representation and warranty shall be true and correct as of such date).
(b) Ensco
shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it at
or prior to the Effective Time.
(c) Ensco
shall have approved and adopted the Corporate Governance Policy, and the Corporate Governance Policy shall not have been amended, modified or terminated in
contravention of
Section 1.8(b)
.
(d) Ensco
shall have delivered to Rowan a certificate, dated the Closing Date and signed by the Chief Executive Officer or another senior officer, certifying to the effect
that the conditions set forth in
Section 6.2(a)
,
Section 6.2(b)
and
Section 6.2(c)
have been
satisfied.
Section 6.3
Conditions to Obligation of Ensco to Effect the Transaction
.
The obligation of Ensco to effect the Transaction is further subject to the fulfillment (or the waiver by Ensco) at or prior to the Effective Time of the following conditions:
(a) The
representations and warranties of Rowan set forth in (i) this Agreement (other than in
Sections 3.1(c)
,
3.1(d)
,
3.2(a)
and
3.7(b)
) shall be true and correct
both at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except to the extent that any such representation and warranty expressly is
made as of an earlier date, in which case such representation and warranty shall be true and correct as of such date), except where such failures to be so true and correct (without regard to
"materiality," Rowan Material Adverse Effect and similar qualifiers contained in such representations and warranties) would not, individually or in the aggregate, have a Rowan Material Adverse Effect,
(ii)
Sections 3.1(c)
,
3.1(d)
and
3.2(a)
shall be true and correct at and as of the date of this Agreement and, with the exception of
Section 3.1(d)(ii)
, at and as of the Closing Date as
though made at and as of the Closing Date (except to the extent that any such representation and warranty expressly is made as of an earlier date, in which case such representation and warranty shall
be true and correct as of such date), except for any
de minimis
inaccuracies, and
(iii)
Section 3.7(b)
shall be true and correct both at and as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date (except to the extent that any such representation and warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true
and correct as of such date).
(b) Rowan
shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it at
or prior to the Effective Time.
(c) Rowan
shall have delivered to Ensco a certificate, dated the Closing Date and signed by its Chief Executive Officer or another senior officer, certifying to the effect
that the conditions set forth in
Section 6.3(a)
and
Section 6.3(b)
have been satisfied.
(d) No
Law shall have been adopted after the date hereof that would require or would be reasonably expected to result in (i) the dissolution of the ARO JV,
(ii) the sale or other disposal of Rowan's interest in the ARO JV to any person or (iii) the forfeiture or nationalization of Rowan's equity interests in the ARO JV or the ARO JV's
assets.
Section 6.4
Frustration of Closing Conditions
.
Neither Rowan nor Ensco may rely, either as a basis for not consummating the Transaction or terminating this Agreement and abandoning the Transaction, on the failure of any condition set
forth in
Section 6.1
,
Section 6.2
or
Section 6.3
, as the
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case
may be, to be satisfied if such failure was caused by such Party's willful and intentional material breach of any material provision of this Agreement.
ARTICLE VII.
TERMINATION
Section 7.1
Termination or Abandonment
.
Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated and the Transaction abandoned at any time prior to the Effective Time (notwithstanding that
the Rowan Shareholder Approval and the resolution referred to in clause (a) of the definition of Ensco Shareholder Resolutions may have been obtained prior to such termination) by written
notice of the terminating Party (acting through such Party's Board of Directors) to the other Party:
(a) by
the mutual written consent of Rowan and Ensco;
(b) by
either Rowan or Ensco, if the Transaction shall not have been consummated on or prior to twelve months after the date of this Agreement (the
"
End Date
");
provided
,
however
, that:
(i) if
all of the conditions to Closing, other than the conditions set forth in
Section 6.1(f)
,
Section 6.1(g)
, or
Section 6.1(h)
, shall have been satisfied or shall be capable of being
satisfied at such time, the End Date may be extended by either Rowan or Ensco; or
(ii) if
all of the conditions to Closing shall have been satisfied or shall be capable of being satisfied at such time, but Rowan has not sought the sanction of the Scheme
of Arrangement by the Court or has not delivered the Court Order to the Registrar of Companies in England and Wales to make the Scheme of Arrangement effective, the End Date may be extended by Ensco,
in
both cases from time to time by written notice to the other Party up to a date not beyond sixteen months after the date of this Agreement, the latest of any of which dates shall thereafter be
deemed to be the End Date; and
provided further
that the right to terminate this Agreement pursuant to this
Section 7.1(b)
shall not be available to a
Party if the failure of the Closing to occur by such date shall be due to the material breach by such
Party of any representation, warranty, covenant or other agreement of such Party set forth in this Agreement;
(c) by
either Rowan or Ensco, if a court or other Governmental Entity of competent jurisdiction shall have issued an Order permanently restraining, enjoining or otherwise
prohibiting the consummation of the Transaction and such Order shall have become final and nonappealable;
provided
,
however
, that the right to terminate
this Agreement under this
Section 7.1(c)
shall not be
available to a Party if such Order was due to the failure of such Party to perform any of its obligations under this Agreement;
(d) by
either Rowan or Ensco, if the Scheme Meeting and the Rowan GM (including, in each case, any postponements or adjournments thereof) shall have been completed and the
Rowan Shareholder Approval shall not have been obtained and the Parties have not agreed to implement the Transaction by way of an Offer in accordance with
Section 5.18
within fifteen business days
of the relevant meeting;
provided
,
however
, that the right to terminate this Agreement under this
Section 7.1(d)
shall not be
available to a Party where the failure to obtain the Rowan Shareholder Approval is proximately caused by the material breach by such Party of any covenant or other agreement of such Party set forth in
this Agreement;
(e) by
either Rowan or Ensco, if the Ensco Shareholder Meeting (including any postponements or adjournments thereof) shall have been completed and the resolution referred to
in clause
(a)
of the definition of the Ensco Shareholder Resolutions shall not have been passed;
provided
,
however
, that the right to terminate this Agreement under this
Section 7.1(e)
shall not be
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available
to a Party where the failure to pass the relevant resolution is proximately caused by the material breach by such Party of any covenant or other agreement of such Party set forth in this
Agreement;
(f) by
Rowan, if Ensco shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition set forth in
Section 6.2(a)
or
Section 6.2(b)
and (ii) by its nature, cannot be cured prior to
the End Date or, if such breach or failure is capable of being cured by the End Date, Ensco does not diligently attempt or ceases to diligently attempt to cure such breach or failure after receiving
written notice from Rowan describing such breach or failure in reasonable detail (
provided
that Rowan is not then in breach of any representation,
warranty, covenant or other agreement contained herein such that the conditions set forth in
Section 6.3(a)
and
Section 6.3(b)
shall not be
satisfied);
(g) by
Rowan, (i) in the event of an Ensco Adverse Recommendation Change occurring prior to the passing of the resolution referred to in clause (a) of the
definition of the Ensco Shareholder Resolutions or (ii) upon any Willful Breach by Ensco of its obligations under
Section 5.4
;
(h) by
Ensco, if Rowan shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition set forth in
Section 6.3(a)
or
Section 6.3(b)
and (ii) by its nature, cannot be cured prior to
the End Date or, if such breach or failure is capable of being cured by the End Date, Rowan does not diligently attempt or ceases to diligently attempt to cure such breach or failure after receiving
written notice from Ensco describing such breach or failure in reasonable detail (
provided
that Ensco is not then in breach of any representation,
warranty, covenant or other agreement contained herein such that the conditions set forth in
Section 6.2(a)
and
Section 6.2(b)
shall not be
satisfied);
(i) by
Ensco, (i) in the event of a Rowan Adverse Recommendation Change occurring prior to receipt of the Rowan Shareholder Approval or (ii) upon any Willful
Breach by Rowan of its obligations under
Section 5.3
;
(j) by
either Rowan or Ensco, if the Court declines or refuses to sanction the Scheme of Arrangement (or an appeal of such decline or refusal by the Court is lost or
abandoned), unless both Parties agree in writing either (i) that the decision of the Court shall be appealed, or (ii) to implement the Transaction by way of an Offer in accordance with
Section 5.18
;
(k) subject
to Rowan's compliance with
Section 5.3
, by Rowan at any time prior to the time Rowan Shareholder Approval
is obtained, if (i) the Rowan Board of Directors authorizes Rowan to enter into one or more acquisition agreements with respect to a Rowan Superior Proposal; (ii) immediately prior to or
substantially concurrently with the termination of this Agreement, Rowan enters into one or more acquisition agreements with respect to a Rowan Superior Proposal; and (iii) Rowan immediately
prior to or substantially concurrently with such termination pays to Ensco or its designees the Termination Fee in accordance with
Section 7.3(b)
; or
(l) subject
to Ensco's compliance with
Section 5.4
, by Ensco at any time prior to the passing of the resolution
referred to in clause (a) of the definition of the Ensco Shareholder Resolutions, if (i) the Ensco Board of Directors authorizes Ensco to enter into one or more acquisition agreements
with respect to an Ensco Superior Proposal; (ii) immediately prior to or substantially concurrently with the termination of this Agreement, Ensco enters into one or more acquisition agreements
with respect to an Ensco Superior Proposal; and (iii) Ensco immediately prior to or
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substantially
concurrently with such termination pays to Rowan or its designees the Termination Fee in accordance with
Section 7.3(d)
.
Section 7.2
Effect of Termination
.
In the event of termination of this Agreement pursuant to
Section 7.1
, this Agreement shall terminate (except for the provisions of
this
Section 7.2
,
Section 7.3
and
Article VIII
), and there shall be no other liability on the
part of Rowan or Ensco to the other except as provided in
Section 7.3
and liability arising out of, or the result of, fraud or any Willful Breach of this Agreement occurring prior to termination or
as
provided for in the Confidentiality Agreement, in which case the aggrieved Party shall be entitled to all rights and remedies available at Law or in equity.
Section 7.3
Termination Fee; Expenses
.
(a) If
this Agreement is terminated by Ensco pursuant to
Section 7.1(h)
or
Section 7.1(i)
, Rowan shall pay to Ensco the Termination Fee by way of
compensation, by wire transfer (to an account designed by Ensco) in
immediately available funds on the day that is three business days after the date of termination of this Agreement.
(b) If
this Agreement is terminated by Rowan pursuant to
Section 7.1(k)
, Rowan shall pay to Ensco the Termination Fee
by way of compensation, by wire transfer (to an account designated by Ensco) in immediately available funds immediately prior to or substantially concurrently with such termination.
(c) If
this Agreement is terminated by Rowan pursuant to
Section 7.1(f)
or
Section 7.1(g)
, Ensco shall pay to Rowan the Termination Fee by way of
compensation, by wire transfer (to an account designed by Rowan) in
immediately available funds on the day that is three business days after the date of termination of this Agreement.
(d) If
this Agreement is terminated by Ensco pursuant to
Section 7.1(l)
, Ensco shall pay to Rowan the Termination Fee
by way of compensation, by wire transfer (to an account designated by Rowan) in immediately available funds immediately prior to or substantially concurrently with such termination.
(e) If
this Agreement is terminated by Rowan or Ensco pursuant to
Section 7.1(d)
, Rowan shall as promptly as
practicable (but in any event within three business days) pay to Ensco by wire transfer (to an account designed by Ensco) in immediately available funds $15,000,000 for costs, fees and expenses
(including legal and other third party advisors fees and expenses) in connection with the transactions contemplated by this Agreement;
provided
,
however,
that the amount of any such payment under this
Section 7.3(e)
shall be credited against
any obligation of Rowan to pay the Termination Fee pursuant to this
Section 7.3
.
(f) If
this Agreement is terminated by Rowan or Ensco pursuant to
Section 7.1(e)
, Ensco shall as promptly as
practicable (but in any event within three business days) pay to Rowan by wire transfer (to an account designed by Rowan) in immediately available funds $15,000,000 for costs, fees and expenses
(including legal and other third party advisors fees and expenses) in connection with the transactions contemplated by this Agreement;
provided
,
however
,
that the amount of any such payment under this
Section 7.3(f)
shall be credited against
any obligation of Rowan to pay the Termination Fee pursuant to this
Section 7.3
.
(g) "
Termination Fee
" shall mean a cash amount equal to $24,000,000. Notwithstanding anything to the contrary in this
Agreement, if the Termination Fee shall become due and payable in accordance with this
Section 7.3
, from and after such termination and
acceptance of payment of the Termination Fee by the Party entitled to the Termination Fee pursuant to and in accordance with this
Section 7.3
,
the Party paying the Termination Fee shall have no further liability of any kind for any reason in connection with this Agreement or the termination contemplated hereby other than as provided under
this
Section 7.3
, except in the case of fraud or a Willful Breach by
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such
Party of this Agreement. Each of the Parties hereto agrees and acknowledges that the Termination Fee is not a penalty and that it will not be entitled to argue that the Termination Fee is
unenforceable or should be reduced in any manner, but rather liquidated damages in a reasonable amount that will compensate, and are proportionate to the legitimate interests of, a Party in the
circumstances in which such Termination Fee is due and payable and which do not involve fraud or Willful Breach of this Agreement, in view of the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be
impossible to calculate with precision. In no event shall Rowan or Ensco be entitled to more than one payment of the Termination Fee in connection with a termination of this Agreement pursuant to
which the Termination Fee is payable.
(h) Each
of Rowan and Ensco acknowledges that the agreements contained in this
Section 7.3
are an integral part of the
transactions contemplated hereby, and that, without these agreements, Rowan and Ensco would not enter into this Agreement. Accordingly, if Rowan or Ensco fails to pay in a timely manner any amount due
pursuant to this
Section 7.3
, then (i) Rowan or Ensco, as applicable, shall reimburse the Party entitled to such amounts for all costs and
expenses (including disbursements and reasonable fees of counsel) incurred in the collection of such overdue amount, including in connection with any related Actions commenced and (ii) Rowan or
Ensco, as applicable, shall pay to the Party entitled to such amounts interest on such amount from and including the date payment of such amount was due to but excluding the date of actual payment at
the prime rate set forth in The Wall Street Journal in effect on the date such payment was required to be made plus 2%.
(i) The
Termination Fee shall be inclusive of VAT. The Parties anticipate, and shall take the position and use their reasonable best efforts to ensure that it is accepted
for the relevant tax purposes, that the Termination Fee is outside the scope of VAT and is not treated for VAT purposes as consideration for a taxable supply. If, however, the Termination Fee is
treated by any tax authority in whole or part as the consideration for a taxable supply then (i) where the Termination Fee is determined to be the whole or part consideration for a taxable
supply in respect of which the recipient of the Termination Fee (or the representative member of the VAT group of which that Party is a member) is liable to account for VAT, then to the extent that
such VAT is recoverable from the relevant Tax authority by the payer of the Termination Fee (or such representative member), the amount of the Termination Fee shall be increased such that, less any
such recoverable VAT in respect thereof, it equals the amount of the Termination Fee before taking into account any adjustment under this
Section 7.3(i)
and (ii) where the Termination Fee is
determined to be the whole or part consideration for a taxable supply in respect of
which the payer of the Termination Fee (or the representative member of the VAT group of which that Party is a member) is liable to account for VAT, then to the extent that such VAT is recoverable
from the relevant Tax authority by the payer of the Termination Fee (or such representative member), the amount of the Termination Fee shall be reduced (or the relevant part of the Termination Fee
reimbursed) such that the aggregate amount of the adjusted Termination Fee and any irrecoverable VAT in respect thereof equals the amount of the Termination Fee before taking into account any
adjustment under this
Section 7.3(i)
. The Parties shall provide each other with such invoices, information, and assistance as shall be reasonably
requested for the purposes of determining (to the reasonable satisfaction of both Parties) the amount of any adjustments which are required to be made pursuant to this
Section 7.3(i)
, and for the
purposes of enabling the relevant Party to recover any VAT to which it is entitled to recover. Any such additional
amounts in respect of VAT shall be paid no later than the date falling 10 days before the date on which the Party receiving the Termination Fee (or the representative member of the VAT group of
which that Party is a member) is liable to account for such VAT (the "
Due Date
") or, if later, the date falling five days after the Party receiving the
Termination Fee has notified the other Party in writing of the Due Date.
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ARTICLE VIII.
MISCELLANEOUS
Section 8.1
No Survival
.
None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Transaction, except for:
(a) the covenants and agreements of both Parties in
Section 5.2(b)
,
Section 7.2
,
Section 7.3
and this
Article VIII
; (b) the covenants and agreements of Ensco in
Section 1.8
and
Section 5.12(d)
; and (c) any other covenants and agreements which
contemplate performance after the Effective Time or otherwise expressly by their terms survive the Effective Time.
Section 8.2
Expenses
.
Except as set forth in
Section 7.3
, whether or not the Transaction is consummated, all costs and expenses incurred in connection
with the Transaction, this Agreement and the transactions contemplated hereby shall be paid by the Party incurring or required to incur such expenses;
provided
,
however
, that each of Rowan and Ensco shall pay and bear one-half of all filing fees required
under the HSR Act or for the CFIUS Notice or for other antitrust, competition, foreign investment or similar Laws outside of the United States. Except as otherwise provided in this Agreement, all
transfer, documentary, sales, use, stamp, registration and other substantially similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement (collectively,
"
Transfer Taxes
") shall be paid by Ensco when due save for any VAT that is due on a Termination Fee to be paid by Rowan, and Ensco shall, at its own
expense, file all necessary documentation with respect to all such Transfer Taxes.
Section 8.3
Counterparts; Effectiveness
.
This Agreement may be executed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by telecopy, electronic delivery or otherwise) to the other Parties.
Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in "portable document format" ("
.pdf
") form, or by any other
electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 8.4
Governing Law
.
This Agreement is to be governed by and construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this Agreement, whether contractual or
non-contractual, is to be governed by and determined in accordance with English law. Notwithstanding the foregoing, any interpretation of the terms "Ensco Material Adverse Effect" or "Rowan Material
Adverse Effect" and the determination of whether an Ensco Material Adverse Effect or Rowan Material Adverse Effect has occurred or whether an event, state of facts, circumstance, change, effect,
development, occurrence or combination constitutes an Ensco Material Adverse Effect or Rowan Material Adverse Effect shall be construed and determined in accordance with the Laws of the State of
Delaware.
Section 8.5
Jurisdiction; Remedies
.
The courts of England are to have exclusive jurisdiction to settle any dispute, whether contractual or non-contractual, arising out of or in connection with this Agreement. Any
proceeding, suit or action arising out of or in connection with this Agreement or the negotiation, existence, validity or enforceability of this Agreement
("
Proceedings
") shall be brought only in the courts of England. Each Party waives (and agrees not to raise) any objection, on the ground of forum non
conveniens or on any other ground, to the taking of Proceedings in the courts of England. Each Party also agrees that a judgment against it in Proceedings brought in England shall be conclusive and
binding upon it and may be enforced in any other jurisdiction. Each Party irrevocably submits and agrees to submit to the jurisdiction of the courts of England. No delay or omission by any Party in
exercising any right, power or remedy provided by law or under this Agreement shall (i) affect that right, power or remedy; or (ii) operate as a waiver of it. The single or partial
exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further
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exercise
of it or the exercise of any other right, power or remedy. The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies
provided by law. Without prejudice to any other rights and remedies which either Party may have, each Party acknowledges and agrees that damages may not be an adequate remedy for any breach by either
Party of the provisions of this Agreement and either Party shall be entitled to seek the remedies of injunction, specific performance and other equitable remedies (and neither of the Parties shall
contest the appropriateness or availability thereof), for any threatened or actual breach of any such provision of this Agreement by either Party and no proof or special damages shall be necessary for
the enforcement by either Party of the rights under this Agreement.
Section 8.6
WAIVER OF JURY TRIAL
.
EACH OF THE PARTIES HERETO TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING, DIRECTLY OR
INDIRECTLY, OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ROWAN OR ENSCO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Section 8.7
Notices
.
All notices and other communications hereunder shall be in writing and shall be deemed given (a) upon personal delivery to the Party to be notified; (b) when received when
sent by email by the Party to be notified,
provided
,
however
, that notice given by email shall not be
effective unless either (i) a duplicate copy of such email notice is promptly given by one of the other methods described in this
Section 8.7
or (ii) the receiving Party delivers a
written confirmation of receipt for such notice by email or any other method described
in this
Section 8.7
; or (c) when delivered by a courier (with confirmation of delivery); in each case to the Party to be notified at the
following address:
|
|
|
To Rowan:
|
Rowan Companies plc
|
2800 Post Oak Blvd., Suite 5450
|
Houston, Texas 77056-6189
|
Attention:
|
|
Thomas P. Burke
President and Chief Executive Officer
|
with copies (which shall not constitute notice) to:
|
Kirkland & Ellis LLP
|
609 Main Street
|
Houston, Texas 77002
|
Attention:
|
|
Sean T. Wheeler, P.C.
Douglas E. Bacon, P.C.
Ryan D. Gorsche
|
Email:
|
|
sean.wheeler@kirkland.com
douglas.bacon@kirkland.com
ryan.gorsche@kirkland.com
|
Kirkland & Ellis International LLP
|
30 St Mary Ave
|
London, EC3A 8AF
|
Attention:
|
|
David Higgins
David Holdsworth
|
Email:
|
|
david.higgins@kirkland.com
david.holdsworth@kirkland.com
|
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|
|
|
To Ensco:
|
Ensco plc
|
|
|
6 Chesterfield Gardens
|
London, England W1J 5BQ
|
Attention:
|
|
Michael T. McGuinty
Senior Vice PresidentGeneral Counsel and Secretary
|
with copies (which shall not constitute notice) to:
|
Gibson, Dunn & Crutcher LLP
|
811 Main Street, Suite 3000
|
Houston, Texas 77002
|
Attention:
|
|
Tull R. Florey
|
Email:
|
|
tflorey@gibsondunn.com
|
Slaughter and May
|
One Bunhill Row
|
London, United Kingdom EC1Y 8YY
|
Attention:
|
|
Hywel Davies
Christian Boney
|
Email:
|
|
hywel.davies@slaughterandmay.com
christian.boney@slaughterandmay.com
|
or
to such other address as any Party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated or personally delivered. Any
Party may notify any other Party of any changes to the address or any of the other details specified in this paragraph;
provided
,
however
, that such
notification shall only be effective on the date specified in such notice or five business days after the notice is given, whichever
is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
Section 8.8
Assignment; Binding Effect
.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by a Party hereto without the prior written consent of the other Party.
Subject to the first sentence of this
Section 8.8
, this Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective successors and assigns. Any purported assignment not permitted under this
Section 8.8
shall be null and void.
Section 8.9
Severability
.
Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is enforceable.
Section 8.10
Entire Agreement
.
This Agreement together with the exhibits hereto, schedules hereto and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the Parties, or any of them, with respect to the subject matter hereof and thereof, and, subject to
Section 5.12
, this Agreement is not intended to
grant standing to any person other than the Parties hereto.
Section 8.11
Amendments; Waivers
.
At any time prior to the Effective Time, whether before or after receipt of the Rowan Shareholder Approval or the passing of the Ensco Shareholder Resolutions, any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Rowan and Ensco;
provided
,
however
, that after receipt of the Rowan Shareholder Approval or the passing of the Ensco
Shareholder Resolutions,
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if
any such amendment or waiver shall by applicable Law or in accordance with the rules and regulations of the NYSE require further approval of the Rowan Shareholders or the Ensco Shareholders, as the
case may be, the effectiveness of such amendment or waiver shall be subject to the approval of the Rowan Shareholders or the Ensco Shareholders, as the case may be. Notwithstanding the foregoing, no
failure or delay by any Party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any
other right hereunder.
Section 8.12
Headings
.
Headings of the Articles and Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretive effect whatsoever. The table of contents
to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 8.13
No Third-Party Beneficiaries
.
(a) Each
of Rowan and Ensco agrees that (i) their respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of the
other Party hereto, in accordance with and subject to the terms of this Agreement, and (ii) except for the provisions of
Section 1.8
and
Section 5.12
(the "
Third Party Rights Clauses
"), this Agreement is not intended to, and does not,
confer upon any person other than the Parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
(b) The
Third Party Rights Clauses confer a benefit on the Designated Ensco Directors and the Designated Rowan Directors pursuant to
Section 1.8
and the Indemnified Parties pursuant to
Section 5.12
, in each case, who are
not a Party (each for the purposes of this clause, "
Third Party
") and, subject to the remaining provisions of this clause, are intended to be
enforceable by the Third Party by virtue of the Contracts (Rights of Third Parties) Act 1999.
(c) The
Parties do not intend that any term of this Agreement, apart from the Third Party Rights Clauses which are enforceable by the applicable Third Party, should be
enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a Party.
(d) Notwithstanding
the provisions of clauses (a) and (b) above, save in respect of the Third Party Rights Clauses, this Agreement may be rescinded or varied
in any way and at any time by the Parties without the consent of any Third Party.
Section 8.14
Interpretation
.
When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context otherwise requires. If this Agreement
requires the Parties to "agree" or requires an "agreement" between the Parties, such "agreements" must be in writing, unless specifically indicated otherwise. All terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References in this Agreement to specific Laws or to specific
provisions of Laws shall include all rules and regulations promulgated thereunder, and any statute defined or referred to herein or in any agreement or instrument referred to herein shall mean such
statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. Each of the Parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the Parties, and no presumption or burden of
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proof
shall arise favoring or disfavoring any Party by virtue of authorship of any of the provisions of this Agreement.
Section 8.15
Definitions
.
(a)
General Definitions.
References in this Agreement to
"
Subsidiaries
" of any Party means any corporation, partnership, limited liability company, association, trust or other form of legal entity of which
(i) more than fifty percent (50%) of the voting power of the outstanding voting securities are on the date hereof directly or indirectly owned by such Party or (ii) such Party or any
Subsidiary of such Party is a general partner on the date hereof. References in this Agreement (except as specifically otherwise defined) to
"
affiliates
" means, as to any person, any other person which, directly or indirectly, controls, or is controlled by, or is under common control with,
such person. As used in this definition, "
control
" (including, with its correlative meanings, "
controlled
by
" and "
under common control with
") means the possession, directly or indirectly, of the power to direct or cause the direction
of management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. References in this Agreement (except as
specifically otherwise defined) to "
person
" means an individual, a public limited company, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity, group (as such term is used in Section 13 of the Exchange Act) or organization, including a Governmental Entity, and any
permitted successors and assigns of such person. As used in this Agreement, "
knowledge
" means (i) with respect to Rowan and its Subsidiaries, the
actual knowledge of the individuals listed on
Section 8.15(a)
of the Rowan Disclosure Schedule and (ii) with respect to Ensco and its
Subsidiaries, the actual knowledge of the individuals listed in
Section 8.15(a)
of the Ensco Disclosure Schedule. As used in this Agreement,
"
business day
" means any day other than a Saturday, Sunday or other day on which the banks in New York are authorized by Law or executive order to
remain closed. As used in this Agreement, a reference to a document being "in the agreed form" means in the form agreed between Ensco and Rowan prior to the date of this Agreement.
(b)
Certain Specified Definitions.
As used in this Agreement:
(i) "
Award Agreement
" means any award agreement or other written agreement between Rowan and a Rowan Equity Award holder
that governs the terms and conditions of a Rowan Equity Award held by such Rowan Equity Award holder.
(ii) "
Benefit Plan
" means an Ensco Benefit Plan or a Rowan Benefit Plan, as applicable.
(iii) "
CFIUS
" means the Committee on Foreign Investment in the United States.
(iv) "
CFIUS Clearance
" means that any of the following shall have occurred: (i) the 45 day review period under
the DPA commencing on the date that the CFIUS Notice is accepted by CFIUS shall have expired and the parties shall have received written notice from CFIUS that such review has been concluded and that
either the Transaction does not constitute a "covered transaction" under the DPA or there are no unresolved national security concerns; (ii) an investigation shall have been commenced after
such 45 day review period and CFIUS shall have determined to conclude all deliberative action under the DPA without sending a report to the President of the United States, and the parties shall
have received written notice from CFIUS that either the Transaction does not constitute a "covered transaction" under the DPA or there are no unresolved national security concerns, and all action
under the DPA is concluded with respect to the Transaction; or (iii) CFIUS shall have sent a report to the President of the United States requesting the President's decision and either
(A) the period under the DPA during which the President may announce his decision to take action to suspend, prohibit or place any limitations on the Transaction shall have expired without any
such action being threatened, announced or taken or (B) the President shall have
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announced
a decision not to take any action to suspend, prohibit or place any limitations on the Transaction.
(v) "
CFIUS Notice
" means a joint voluntary notice with respect to the this Agreement and transactions contemplated hereby
prepared by Ensco and Rowan and submitted to CFIUS in accordance with the requirements of the DPA.
(vi) "
Code
" means the United States Internal Revenue Code of 1986, as amended.
(vii) "
Collective Bargaining Agreement
" means any collective bargaining agreement, labor union contract, trade union
agreement, or agreements, customs, practices or arrangements (whether legally binding or not) for collective bargaining or recognition with any trade union, works council, staff association or other
representative body.
(viii) "
Companies Act
" means the Companies Act 2006.
(ix) "
Corporate Governance Policy
" means the Corporate Governance Policy to be adopted by Ensco in accordance with
Section 1.8
and appended to this Agreement as
Annex III
.
(x) "
Derivative Transaction
" means a derivative transaction within the coverage of Statement of Financial Accounting Standard
No. 133, including any swap transaction, option, hedge, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to
one or more currencies, commodities, bonds, equity securities, loans, interest rates, credit-related events or conditions or any indexes, or any other similar transaction (including any option with
respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments
evidencing or embedding any such types of transactions, and any related credit support, collateral, transportation or other similar arrangements related to such transaction.
(xi) "
DPA
" means Section 721 of Title VII of the Defense Production Act of 1950, as amended, including the amendments
under the Omnibus Trade and Competitiveness Act of 1988 and the Foreign
Investment and National Security Act of 2007 (codified at 50 U.S.C. 4565), the FIRRMA, and including the regulations of CFIUS promulgated thereunder, codified at 31 C.F.R.
Part 800, et seq.
(xii) "
DTC
" means The Depository Trust Company.
(xiii) "
Ensco Class A Ordinary Shares
" means, as the context permits, the Existing Ensco Class A Ordinary
Shares or the Consolidated Ensco Shares.
(xiv) "
Ensco Class B Ordinary Shares
" means the Class B Ordinary Shares in the share capital of Ensco, each
with a nominal value of £1.00 per share.
(xv) "
Ensco Financial Statements
" means the consolidated financial statements (including all related notes and schedules
thereto) of Ensco included in the Ensco SEC Documents.
(xvi) "
Ensco IT Assets
" means the computers, software, servers, routers, hubs, switches, circuits, networks, data
communications lines and all other information technology infrastructure and equipment of Ensco and its Subsidiaries that are required in connection with the current operation of the business of Ensco
and its Subsidiaries.
(xvii) "
Ensco Material Adverse Effect
" means an event, state of facts, circumstance, change, effect, development, occurrence
or combination of the foregoing that has had, or would be reasonably likely to have, a material adverse effect on (A) the ability of Ensco to consummate the Transaction and the other
transactions contemplated by this Agreement or
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(B) the
business, condition (financial or otherwise) or results of operations of Ensco and its Subsidiaries, taken as a whole, excluding for purposes of this clause (B) any effect
resulting from or arising out of: (1) changes in general economic, financial or other capital market conditions (including prevailing interest rates and access to capital markets),
(2) any changes or developments generally in the industries in which Ensco or any of its Subsidiaries conducts its business, (3) the announcement or the existence of, compliance with or
performance under, this Agreement or the transactions contemplated hereby
(including, subject to the following proviso, the impact thereof on the relationships, contractual or otherwise, of Ensco or any of its Subsidiaries with employees, labor unions, customers, suppliers
or partners, and including any lawsuit, action or other proceeding by shareholders or otherwise with respect to the Transaction or any of the other transactions contemplated by this Agreement)
(
provided
,
however
, that the exceptions in this clause (3) shall not apply to any representation
or warranty contained in
Section 4.2
or
Section 4.19
(or any portion thereof) to the
extent that the purpose of such representation or warranty (or portion thereof) is to address the consequences resulting from the execution and delivery of this Agreement or the performance of
obligations or satisfaction of conditions under this Agreement), (4) any taking of any action at the request of Rowan, (5) any changes or developments in prices for oil, natural gas or
other commodities, (6) any adoption, implementation, promulgation, repeal or modification following the date of this Agreement of any rule, regulation, ordinance, Order, protocol or any other
Law of or by any national, regional, state or local Governmental Entity, or market administrator, (7) any changes in GAAP or accounting standards following the date of this Agreement,
(8) earthquakes, any weather-related event, natural disasters or outbreak or escalation of hostilities or acts of war or terrorism, (9) any failure by Ensco in and of itself to meet any
financial projections or forecasts or estimates of revenues, earnings or other financial metrics for any period (
provided
that the exception in this
clause (9) shall not prevent or otherwise affect a determination that any event, change, effect, development or occurrence underlying such failure has resulted in, or contributed to, an Ensco
Material Adverse Effect so long as it is not otherwise excluded by this definition), or (10) any changes in the share price or trading volume of Ensco Ordinary Shares
(
provided
that the exception in this clause (10) shall not prevent or otherwise affect a determination that any event, change, effect,
development or occurrence underlying such change has resulted in, or contributed to, an Ensco Material Adverse Effect so long as it is not otherwise excluded by this definition);
except
, in each case
with respect to clauses (1), (2), (6), (7) and (8) to the extent disproportionately affecting Ensco and its
Subsidiaries, taken as a whole, relative to other similarly situated companies in the industries in which Ensco and its Subsidiaries operate;
provided
,
for the avoidance of doubt, notwithstanding anything to the contrary above, any blowout, spill, explosion, or similar occurrence with respect to any equipment operated by Ensco may be taken into
account in determining whether there has been an Ensco Material Adverse Effect. Notwithstanding any of the foregoing, the failure of the Transaction to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Code shall not constitute an Ensco Material Adverse Effect.
(xviii) "
Ensco Ordinary Shares
" means the Ensco Class A Ordinary Shares and the Ensco Class B Ordinary Shares.
(xix) "
Ensco Permitted Lien
" means (A) any Lien for Taxes not yet due or delinquent or which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been established in the applicable financial statements in accordance with GAAP, (B) vendors', mechanics',
materialmens', carriers', workers', landlords', repairmen's, warehousemen's, construction and other similar Liens arising or incurred in the ordinary and usual course of business and consistent with
past practice or with respect to liabilities that are not yet due and payable or, if due, are not delinquent or are being contested in good faith by
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appropriate
proceedings and for which adequate reserves (based on good faith estimates of management) have been set aside for the payment thereof, (C) Liens imposed or promulgated by applicable
Law or any Governmental Entity with respect to real property, including zoning, building or similar restrictions, (D) pledges or deposits in connection with workers' compensation, unemployment
insurance, and other social security legislation, (E) Liens relating to intercompany borrowings among Ensco and its wholly owned Subsidiaries, (F) Liens securing interest rate protection
agreements or currency rate protection agreements incurred in the ordinary course of business consistent with past practice and not for speculative purposes, (G) banker's Liens and customary
rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository institution, or (H) other non-monetary Liens that do not, individually or in
the aggregate, materially interfere with the present use, or materially detract from the value of, the property encumbered thereby.
(xx) "
Ensco Shareholder
" means a holder of Ensco Class A Ordinary Shares from time to time.
(xxi) "
Ensco Shareholder Resolutions
" means the resolutions included in the Proxy Statement to (a) authorize the Board
of Directors of Ensco to allot and issue the New Ensco Shares under the Transaction, (b) authorize the Board of Directors of Ensco to effect the Consolidation conditional upon and immediately
(or as soon as practicable) following Closing and to deal with fractional entitlements in accordance with the terms of the resolution, (c) authorize the Board of Directors of Ensco to allot and
issue up to a nominal amount of Ensco Ordinary Shares representing approximately 33% of the enlarged share capital of Ensco immediately following Closing (whether or not the Consolidation has been
approved and effected), and up to a further same nominal amount of Ensco Ordinary Shares in connection with a pre-emptive offering of shares, and (d) authorize the Board of Directors of Ensco
to allot and issue up to a nominal amount of Ensco Ordinary Shares representing approximately 5% of the enlarged share capital of Ensco immediately following Closing (whether or not the Consolidation
has been approved and effected) for cash on a non-pre-emptive basis.
(xxii) "
Ensco Stock Plans
" means, collectively, the Ensco 2012 Long-Term Incentive Plan, the Ensco International Incorporated
2005 Long-Term Incentive Plan, the Pride International, Inc. 1998 Long-Term Incentive Plan, the Pride International, Inc. 2007 Long-Term Incentive Plan, the Atwood Amended and Restated
2007 Long-Term Incentive Plan and any other plans or arrangements of Ensco providing for the compensatory grant of awards of Ensco Ordinary Shares or awards denominated, in whole or in part, in Ensco
Ordinary Shares or options, share appreciation rights or similar awards relating to Ensco Ordinary Shares, including any and all such plans of predecessor or acquired entities that have been assumed
by Ensco.
(xxiii) "
Ensco Superior Proposal
" means a bona fide, unsolicited, written Ensco Takeover Proposal (A) that if
consummated would result in (x) a third party acquiring, directly or indirectly, more than 50% of the outstanding Ensco Ordinary Shares or more than 50% of the assets of Ensco and its
Subsidiaries, taken as a whole, for consideration consisting of cash and/or securities or (y) a merger, business combination, scheme of arrangement, consolidation, share exchange,
recapitalization or similar transaction that results in the shareholders of Ensco immediately prior to such transaction ceasing to own, directly or indirectly, at least 50% of the equity interests in
the acquiring, surviving or parent company resulting from such transaction, (B) that the Board of Directors of Ensco determines in good faith, after consultation with its outside financial
advisor and outside legal counsel, is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained
therein and the person making such Ensco Takeover Proposal and
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(C) that
the Board of Directors of Ensco determines in good faith after consultation with its outside financial advisor and outside legal counsel (taking into account any changes to this
Agreement proposed by Rowan in response to such Ensco Takeover Proposal, and all financial, legal, regulatory and other aspects of such Ensco Takeover Proposal, including all conditions contained
therein and the person making such proposal, and this Agreement), is more favorable from a financial point of view to the Ensco Shareholders than the Transaction.
(xxiv) "
Ensco Takeover Proposal
" means (A) any inquiry, proposal or offer for or with respect to (or expression by or
on behalf of any person that it is considering or may engage in) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution, joint venture,
scheme of arrangement or other similar transaction involving Ensco or any of its Subsidiaries whose assets, taken together, constitute 15% or more of Ensco's consolidated assets, (B) any
inquiry, proposal or offer (including tender or exchange offers) to (or expression by any person that it is considering or may seek to) acquire in any manner, directly or indirectly, in one or more
transactions, more than 15% of the outstanding Ensco Ordinary Shares or securities of Ensco representing more than 15% of the voting power of Ensco or (C) any inquiry, proposal or offer to (or
expression by any person that it is considering or may seek to) acquire in any manner (including the acquisition of equity securities in any Subsidiary of Ensco), directly or indirectly, in one or
more transactions, assets or businesses of Ensco or its Subsidiaries, including pursuant to a joint venture, representing more than 15% of the consolidated assets, revenues or net income of Ensco, in
each case, other than the Transaction.
(xxv) "
Environmental Law
" means any Law relating to the pollution, protection, preservation or restoration of the environment
(including air, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or any exposure to
or release of, or the management of (including the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production or disposal of) any Hazardous Materials,
in each case as in effect as of or prior to the Closing Date.
(xxvi) "
ERISA
" means the Employee Retirement Income Security Act of 1974, as amended.
(xxvii) "
Existing DU Award
" means each award of restricted share units (whether or not deferred) that has been granted to a
non-employee member of Rowan's Board of Directors under the Rowan Stock Plans that is outstanding immediately prior to the Effective Time.
(xxviii) "
Existing Ensco Class A Ordinary Shares
" means the Class A ordinary shares in the share capital of
Ensco, each with a nominal value of $0.10 per share.
(xxix) "
Existing Option
" means each award of share options that has been granted under the Rowan Stock Plans that is
outstanding and unexercised immediately prior to the Effective Time.
(xxx) "
Existing PU Award
" means each award of performance units that has been granted under the Rowan Stock Plans that is
outstanding immediately prior to the Effective Time.
(xxxi) "
Existing RSU Award
" means each award of restricted share units that has been granted under the Rowan Stock Plans that
is outstanding immediately prior to the Effective Time.
(xxxii) "
Existing SAR
" means each award of share appreciation rights that has been granted under the Rowan Stock Plans that
is outstanding and unexercised immediately prior to the Effective Time.
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(xxxiii) "
Export Control Laws
" means all Laws and regulations related to the regulation of imports, exports, re-exports,
transfers, releases, shipments, transmissions or any other provision or receipt of goods, technology, software or services, including (a) the United States International Traffic in Arms
Regulations administered by the United States State Department's Directorate of Defense Trade Controls; (b) the Export Administration Regulations administered by the United States Commerce
Department (including the antiboycott regulations administered by the Office of Antiboycott
Compliance); (c) nuclear export regulations administered by the United States Nuclear Regulatory Commission and the United States Department of Energy; (d) United States customs
regulations administered by the United States Customs and Border Protection; (e) the EU Dual-Use Regulation, Council Regulation (EC) No 428/2009 (and associated amendments); and (f) all
other applicable import and export controls in the countries in which the Party conducts business.
(xxxiv) "
FIRRMA
" means the 2018 Foreign Investment Risk Review Modernization Act.
(xxxv) "
good and defensible title
" means such title that is free from reasonable doubt to the end that a prudent person with
knowledge of all of the facts and their legal bearing would be willing to accept the same acting reasonably.
(xxxvi) "
Hazardous Materials
" means all substances, materials or wastes for which liability or standards of conduct may be
imposed under any Environmental Law, including any substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law, including any regulated pollutant or contaminant (including any constituent, raw
material, product or by-product thereof), petroleum or natural gas hydrocarbons or any liquid or fraction thereof, asbestos or asbestos-containing material, polychlorinated biphenyls, lead paint, any
hazardous, industrial or solid waste, and any toxic, radioactive or hazardous substance, material or agent.
(xxxvii) "
Intervening Event
", with respect to Rowan or Ensco, as applicable, means a material event, fact, circumstance,
development or occurrence that is not known or reasonably foreseeable by Rowan's Board of Directors or Ensco's Board of Directors (as applicable) as of the date of this Agreement (or, if known, the
magnitude or consequences of which were not known or reasonably foreseeable by Rowan's Board of Directors or Ensco's Board of Directors (as applicable) as of the date of this Agreement), which event,
fact, circumstance, development, occurrence, magnitude or consequence becomes known to or by Rowan's Board of Directors or Ensco's Board of Directors (as applicable) prior to the Rowan Shareholder
Approval being obtained or the passing of the resolution referred to in clause (a) of the definition of the Ensco Shareholder Resolutions (as applicable). Notwithstanding the foregoing, in no
event shall any of the following constitute an Intervening Event that would permit a Rowan Adverse Recommendation Change under
Section 5.3(e)
:
(i) the receipt, existence of or terms of any Rowan Takeover Proposal or any inquiry relating thereto or the consequences thereof; (ii) any change in the price or trading volume of Rowan
Ordinary Shares or Ensco Class A Ordinary Shares (it being acknowledged, however, that any underlying cause thereof may be taken into account for purposes of determining whether an Intervening
Event has occurred); (iii) any event, fact, circumstance, development, occurrence, magnitude or consequence that has had or would reasonably be expected to have an adverse effect on the
business or financial condition of Ensco or any of its Subsidiaries unless such event, fact, circumstance, development, occurrence, magnitude or consequence constitutes an Ensco Material Adverse
Effect; and (iv) Rowan or Ensco meeting, failing to meet or exceeding projections (it being acknowledged, however, that any underlying cause thereof may be taken into account for purposes of
determining whether an Intervening Event has occurred). Further notwithstanding the foregoing, in no event shall any of the following
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constitute
an Intervening Event that would permit an Ensco Adverse Recommendation Change under
Section 5.4(e)
: (i) the receipt, existence
of or terms of any Ensco Takeover Proposal or any inquiry relating thereto or the consequences thereof; (ii) any change in the price or trading volume of Rowan Ordinary Shares or Ensco
Class A Ordinary Shares (it being acknowledged, however, that any underlying cause thereof may be taken into account for purposes of determining whether an Intervening Event has occurred);
(iii) any event, fact, circumstance, development, occurrence, magnitude or consequence that has had or would reasonably be expected to have an adverse effect on the business or financial
condition of Rowan or any of its Subsidiaries constitute an Intervening Event unless such event, fact, circumstance, development, occurrence, magnitude or consequence constitutes a Rowan Material
Adverse Effect; and (iv) Rowan or Ensco meeting, failing to meet or exceeding projections (it being acknowledged, however, that any underlying cause thereof may be taken into account for
purposes of determining whether an Intervening Event has occurred).
(xxxviii) "
Key Employee
" means with respect to Ensco or Rowan, any executive officer of such Party or any employee of such
Party that reports directly to the board of directors of such Party or to the Chief Executive Officer or Chief Operating Officer of such Party.
(xxxix) "
New Ensco Shares
" means the new Ensco Class A Ordinary Shares to be issued credited as fully paid to Rowan
Shareholders pursuant to the Transaction.
(xl) "
Order
" means any charge, order, writ, injunction, judgment, decree, ruling, determination, directive, award or
settlement, whether civil, criminal or administrative and whether formal or informal.
(xli) "
Permitted Refinancing Debt
" means any modification, extension, refinancing, renewal or replacement of the Rowan 2019
Senior Notes ("new Debt") to the extent that (i) such new Debt constitutes "Permitted Refinancing Debt" as defined in the Rowan 2018 Credit Agreement as in effect on the date hereof,
(ii) the terms of such new Debt (or the documents governing such new Debt) do not provide for any default or event of default, change of control put or any other mandatory prepayment (including
any acceleration of such new Debt) that, in each case, would occur upon the consummation of (or as a result of) the Transaction and (iii) the terms of such new Debt (or the documents governing
such new Debt) do not contain any financial maintenance covenants or any limitations on the ability of Rowan or its Subsidiaries to make dividends or distributions, and otherwise satisfy the
requirements set forth on
Section 8.15(b)
of the Rowan Disclosure Schedule.
(xlii) "
Release
" means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, or
leaching of Hazardous Materials into the environment (including ambient air, surface water, groundwater and surface or subsurface strata).
(xliii) "
Relevant Authority
" means the United States Department of Justice, the U.S. Federal Trade Commission, and any United
States, foreign or supranational, federal, state or local governmental commission, board, body, bureau, or other regulatory authority, agency, including courts and other judicial bodies, or any
competition, antitrust or supervisory body, central bank or other governmental, trade or regulatory agency or body, securities exchange or any self-regulatory body or authority.
(xliv) "
Rights
" means rights granted in accordance with a Rights Plan for the purposes of article 6.4 of the Rowan
Articles of Association.
(xlv) "
Rights Plan
" means a shareholder rights plan for the purposes of article 6.3 of the Rowan Articles of
Association.
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Table of Contents
(xlvi) "
Rowan 2018 Credit Agreement
" means that certain Credit Agreement dated as of May 22, 2018 among Rowan Holdings
Luxembourg S.à r.l., as borrower, Rowan Companies plc, as parent, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent.
(xlvii) "
Rowan 2019 Senior Notes
" means those senior notes due 2019, issued pursuant to that certain First Supplemental
Indenture, dated as of July 2009, by and between Rowan Companies, Inc. and U.S. Bank National Association, as trustee.
(xlviii) "
Rowan Class B Shares
" means the Class B ordinary shares in the share capital of Rowan, each with a
nominal value £1.00 per share.
(xlix) "
Rowan Financial Statements
" means the consolidated financial statements (including all related notes and schedules
thereto) of Rowan included in the Rowan SEC Documents.
(l) "
Rowan GM
" means the general meeting of the Rowan Shareholders (and any adjournment or postponement thereof) to be
convened in connection with the Scheme of Arrangement, expected to be convened as soon as the preceding Scheme Meeting shall have been concluded or adjourned or postponed (it being understood that if
the Scheme Meeting is adjourned or postponed, the Rowan GM shall be correspondingly adjourned).
(li) "
Rowan IT Assets
" means the computers, software, servers, routers, hubs, switches, circuits, networks, data
communications lines and all other information technology infrastructure and equipment of Rowan and its Subsidiaries that are required in connection with the current operation of the business of Rowan
and its Subsidiaries.
(lii) "
Rowan Material Adverse Effect
" means an event, state of facts, circumstance, change, effect, development, occurrence
or combination of the foregoing that has had, or would be reasonably likely to have, a material adverse effect on (A) the ability of Rowan to consummate the Transaction and the other
transactions contemplated by this Agreement or (B) the business, condition (financial or otherwise) or results of operations of Rowan and its Subsidiaries, taken as a whole, excluding for
purposes of this clause (B) any effect resulting from or arising out of: (1) changes in general economic, financial or other capital market conditions (including prevailing interest
rates and access to capital markets), (2) any changes or developments generally in the industries in which Rowan or any of its Subsidiaries conducts its business, (3) the announcement or
the existence of, compliance with or performance under, this Agreement or the transactions contemplated hereby (including, subject to the following proviso, the impact thereof on the relationships,
contractual or otherwise, of Rowan or any of its Subsidiaries with employees, labor unions, customers, suppliers or partners, and including any lawsuit, action or other proceeding by shareholders or
otherwise with respect to the Transaction or any of the other transactions contemplated by this Agreement) (
provided
,
however
, that the exceptions in this
clause (3) shall not apply to any representation or warranty contained in
Section 3.2
or
Section 3.19
(or any portion thereof) to the extent
that the purpose of
such representation or warranty (or portion thereof) is to address the consequences resulting from the execution and delivery of this Agreement or the performance of obligations or satisfaction of
conditions under this Agreement), (4) any taking of any action at the request of Ensco, (5) any changes or developments in prices for oil, natural gas or other commodities,
(6) any adoption, implementation, promulgation, repeal or modification following the date of this Agreement of any rule, regulation, ordinance, Order, protocol or any other Law of or by any
national, regional, state or local Governmental Entity, or market administrator, (7) any changes in GAAP or accounting standards following the date of this Agreement, (8) earthquakes,
any weather-related event, natural disasters or outbreak or escalation of hostilities or acts of war or terrorism, (9) any failure by Rowan in and of itself to
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meet
any financial projections or forecasts or estimates of revenues, earnings or other financial metrics for any period (
provided
that the exception in
this clause (9) shall not prevent or otherwise affect a determination that any event, change, effect, development or occurrence underlying such failure has resulted in, or contributed to, a
Rowan Material Adverse Effect so long as it is not otherwise excluded by this definition), or (10) any changes in the share price or trading volume of Rowan Ordinary Shares
(
provided
that the exception in this clause (10) shall not prevent or otherwise affect a determination that any event, change, effect,
development or occurrence underlying such change has resulted in, or contributed to, a Rowan Material Adverse Effect so long as it is not otherwise excluded by this definition);
except
, in each case
with respect to clauses (1), (2), (6), (7) and (8) to the extent disproportionately affecting Rowan and its
Subsidiaries, taken as a whole, relative to other similarly situated companies in the industries in which Rowan and its Subsidiaries operate;
provided
that, for the avoidance of doubt, notwithstanding anything to the contrary above, any blowout, spill, explosion, or similar occurrence with respect to any equipment operated by Rowan may be taken into
account in determining whether there has been a Rowan Material Adverse Effect. Notwithstanding any of the foregoing, the failure of the Transaction to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Code shall not constitute a Rowan Material Adverse Effect.
(liii) "
Rowan Ordinary Shares
" means the Class A ordinary shares in the share capital of Rowan, each with a nominal
value $0.125 per share.
(liv) "
Rowan Permitted Liens
" means (A) any Lien for Taxes not yet due or delinquent or which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been established in the applicable financial statements in accordance with GAAP, (B) vendors', mechanics',
materialmens', carriers', workers', landlords', repairmen's, warehousemen's, construction and other similar Liens arising or incurred in the ordinary and usual course of business and consistent with
past practice or with respect to liabilities that are not yet due and payable or, if due, are not delinquent or are being contested in good faith by appropriate proceedings and for which adequate
reserves (based on good faith estimates of management) have been set aside for the payment thereof, (C) Liens imposed or promulgated by applicable Law or any Governmental Entity with respect to
real property, including zoning, building or similar restrictions, (D) pledges or deposits in connection with workers' compensation, unemployment insurance, and other social security
legislation, (E) Liens relating to intercompany borrowings among Rowan and its wholly owned Subsidiaries, (F) Liens securing interest rate protection agreements or currency rate
protection agreements incurred in the ordinary course of business consistent with past practice and not for speculative purposes, (G) banker's Liens and customary rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a depository institution, or (H) other non-monetary Liens that do not, individually or in the aggregate, materially
interfere with the present use, or materially detract from the value of, the property encumbered thereby.
(lv) "
Rowan Protection Plan
" means the Rowan Companies plc Protection Plan, effective as of October 7, 2018.
(lvi) "
Rowan Retention Program
" means the Rowan Companies plc Retention Program, effective as of October 7,
2018, and all bonus agreements made thereunder.
(lvii) "
Rowan Shareholder
" means a holder of Rowan Ordinary Shares from time to time.
(lviii) "
Rowan Shareholder Approval
" means (i) the approval of the Scheme of Arrangement by a resolution of a majority
in number of the Rowan Shareholders representing three-fourths (75%) or more in value of the Rowan Ordinary Shares held by such holders, in
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each
case present and voting either in person or by proxy, at the Scheme Meeting (or at any adjournment or postponement of such meeting) and (ii) the Rowan Shareholder Resolutions being duly
passed by the requisite majority of Rowan Shareholders at the Rowan GM (or at any adjournment or postponement of such meeting).
(lix) "
Rowan Shareholder Resolutions
" means the resolutions to alter the Rowan Articles of Association and such other matters
as may be necessary to facilitate the implementation of the Transaction and/or the Scheme of Arrangement.
(lx) "
Rowan Stock Plans
" means, collectively, the Amended and Restated 2013 Rowan Incentive Plan, the 2013 Rowan Incentive
Plan, as amended, the 2009 Rowan Incentive Plan, as amended, the 2005 Rowan Long-Term Incentive Plan, as amended, and any other plans or arrangements of Rowan providing for the compensatory grant of
awards of Rowan Ordinary Shares or awards denominated, in whole or in part, in Rowan Ordinary Shares or options, share appreciation rights or similar awards relating to Rowan Ordinary Shares,
including any and all such plans of predecessor or acquired entities that have been assumed by Rowan.
(lxi) "
Rowan Subscriber Shares
" means the Subscriber Shares in the share capital of Rowan, each with a nominal value
£1 per share.
(lxii) "
Rowan Superior Proposal
" means a bona fide, unsolicited, written Rowan Takeover Proposal (A) that if
consummated would result in (x) a third party acquiring, directly or indirectly, more than 50% of the outstanding Rowan Ordinary Shares or more than 50% of the assets of Rowan and its
Subsidiaries, taken as a whole, for consideration consisting of cash and/or securities or (y) a merger, business combination, scheme of arrangement, consolidation, share exchange,
recapitalization or similar transaction that results in the shareholders of Rowan immediately prior to such transaction ceasing to own, directly or indirectly, at least 50% of the equity interests in
the acquiring, surviving or parent company resulting from such transaction, (B) that the Board of Directors of Rowan determines in good faith, after consultation with its outside financial
advisor and outside legal counsel, is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained
therein and the person making such Rowan Takeover Proposal and (C) that the Board of Directors of Rowan determines in good faith after consultation with its outside financial advisor and
outside legal counsel (taking into account any changes to this Agreement proposed by Ensco in response to such Rowan Takeover Proposal, and all financial, legal, regulatory and other aspects of such
Rowan Takeover Proposal, including all conditions contained therein and the person making such proposal, and this Agreement), is more favorable from a financial point of view to the Rowan Shareholders
than the Transaction.
(lxiii) "
Rowan Takeover Proposal
" means (A) any inquiry, proposal or offer for or with respect to (or expression by or
on behalf of any person that it is considering or may engage in) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution, joint venture,
scheme of arrangement or other similar transaction involving Rowan or any of its Subsidiaries whose assets, taken together, constitute 15% or more of Rowan's consolidated assets, (B) any
inquiry, proposal or offer (including tender or exchange offers) to (or expression by any person that it is considering or may seek to) acquire in any manner, directly or indirectly, in one or more
transactions, more than 15% of the outstanding Rowan Ordinary Shares or securities of Rowan representing more than 15% of the voting power of Rowan or (C) any inquiry, proposal or offer to (or
expression by any person that it is considering or may seek to) acquire in any manner (including the acquisition of equity securities in any Subsidiary of Rowan), directly or indirectly, in one or
more transactions, assets or businesses of Rowan or its Subsidiaries, including pursuant to a joint
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Table of Contents
venture,
representing more than 15% of the consolidated assets, revenues or net income of Rowan, in each case, other than the Transaction.
(lxiv) "
Scheme Meeting
" means such meeting(s) of the Rowan Shareholders as the Court may direct in relation to the Scheme of
Arrangement.
(lxv) "
Scheme of Arrangement
" means the proposed scheme of arrangement of Rowan under Part 26 of the Companies Act to
effect the Transaction pursuant to this Agreement, in all material respects in the form set out in
Annex II
subject to any amendment thereof that
the Parties agree in accordance with
Section 5.8(b)
.
(lxvi) "
Tax
" or "
Taxes
" means any and all federal, state, local or foreign
taxes, imposts, levies, duties, fees or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, and other taxes of any kind
whatsoever, including any and all interest, penalties, additions to tax or additional amounts imposed by any Governmental Entity with respect thereto.
(lxvii) "
Tax Return
" means any return, report or similar filing (including any attached schedules, supplements and additional
or supporting material) filed or required to be filed with respect to Taxes, including any information return, claim for refund, or declaration of estimated Taxes (and including any amendments with
respect thereto).
(lxviii) "
Trade Sanctions
" means economic or trade sanctions administered by OFAC, the U.S. Department of State, the United
Nations Security Council, the European Union, or Her Majesty's Treasury.
(lxix) "
Treasury Regulations
" means the regulations (including temporary regulations) promulgated by the U.S. Department of
Treasury with respect to the Code.
(lxx) "
VAT
" means (A) any Tax imposed in compliance with the council directive of 28 November 2006 on the
common system of value added tax (EC Directive 2006/112), (B) to the extent not included in clause (A), any value added tax imposed by Value Added Tax Act 1994 and legislation and
regulations supplemental thereto, and (C) any other Tax of a similar nature to the Taxes referred to in clauses (A) or (B), whether imposed in a member state of the EU in substitution
for, or levied in addition to, the Taxes referred to in clauses (A) or (B) or imposed elsewhere.
(lxxi) "
Willful Breach
" means a breach that is a consequence of an act or omission undertaken by the breaching Party with the
knowledge that the taking of, or failure to take, such act would, or would reasonably be expected to, cause or constitute a material breach of this Agreement; it being acknowledged and agreed, without
limitation, that any failure by any party to consummate the Transaction and the other transactions contemplated by this Agreement in accordance with the terms of
this Agreement after the applicable conditions thereto have been satisfied or waived shall constitute a Willful Breach of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
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Table of Contents
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
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ENSCO PLC
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By:
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/s/ CARL G. TROWELL
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Name:
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Carl G. Trowell
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Title:
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President and Chief Executive Officer
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ROWAN COMPANIES PLC
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By:
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/s/ THOMAS P. BURKE
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Name:
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Thomas P. Burke
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Title:
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President and Chief Executive Officer
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[Signature
Page to Transaction Agreement]
Table of Contents
ANNEX I
INDEX OF DEFINED TERMS
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Action
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Section 5.12(b)
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affiliates
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Section 8.15(a)
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Agreement
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Preamble
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Antitrust Laws
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Section 5.9(b)
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ARO JV
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Section 3.1(d)
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Assumed CiC Agreements
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Section 5.23
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Award Agreement
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Section 8.15(b)(i)
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Benefit Plan
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Section 8.15(b)(ii)
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Bribery Act
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Section 3.21
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business day
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Section 8.15(a)
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CEO Employment Agreement
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Recitals
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CFIUS
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Section 8.15(b)(iii)
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CFIUS Clearance
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Section 8.15(b)(iv)
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CFIUS Notice
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Section 8.15(b)(v)
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Closing
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Section 1.2
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Closing Date
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Section 1.2
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Code
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Section 8.15(b)(vi)
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Collective Bargaining Agreement
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Section 8.15(b)(vii)
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Companies Act
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Section 8.15(b)(viii)
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Conditions
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Section 5.18(e)(ii)
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Confidentiality Agreement
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Section 5.2(b)
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Consolidation
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Recitals
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Contract
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Section 3.19
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control
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Section 8.15(a)
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Converted DU Award
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Section 2.3(e)
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Corporate Governance Policy
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Section 8.15(b)(ix)
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Court
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Section 1.3
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Court Documentation
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Section 5.5(a)(v)
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Court Order
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Section 1.3
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Derivative Transaction
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Section 8.15(b)(x)
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Designated Ensco Directors
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Section 1.4(a)
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Designated Rowan Directors
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Section 1.4(a)
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DPA
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Section 8.15(b)(xi)
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DTC
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Section 8.15(b)(xii)
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Due Date
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Section 7.3(i)
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Effective Time
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Section 1.3
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End Date
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Section 7.1(b)
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Ensco
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Preamble
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Ensco 401(k) Plan
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Section 5.21(c)
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Ensco Acceptable Confidentiality Agreement
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Section 5.4(b)
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Ensco Adverse Recommendation Change
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Section 5.4(d)
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Ensco Approvals
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Section 4.2(b)
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Ensco Articles of Association
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Section 1.4(d)
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Ensco Benefit Plan
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Section 4.16(a)
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Ensco Board Recommendation
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Section 4.2(a)
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Ensco Class A Ordinary Shares
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Section 8.15(b)(xiii)
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Ensco Class B Ordinary Shares
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Section 8.15(b)(xiv)
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Ensco Disclosure Schedule
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Article IV
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Annex I-1
Table of Contents
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Ensco Employee
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Section 4.15(a)
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Ensco Equity Awards
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Section 4.1(c)
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Ensco Financial Statements
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Section 8.15(b)(xv)
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Ensco Fleet Report
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Section 4.13(a)
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Ensco Intellectual Property
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Section 4.11(a)
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Ensco IT Assets
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Section 8.15(b)(xvi)
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Ensco Leased Real Property
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Section 4.12(a)
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Ensco Material Adverse Effect
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Section 8.15(b)(xvii)
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Ensco Material Contracts.
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Section 4.19
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Ensco Material Subsidiaries
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Section 4.1(b)
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Ensco Ordinary Shares
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Section 8.15(b)(xviii)
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Ensco Organizational Documents
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Section 4.1(b)
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Ensco Permits
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Section 4.6(b)
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Ensco Permitted Lien
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Section 8.15(b)(xix)
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Ensco SEC Documents
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Section 4.3(a)
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Ensco Shareholder
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Section 8.15(b)(xx)
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Ensco Shareholder Meeting
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Section 5.7(b)
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Ensco Shareholder Resolutions
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Section 8.15(b)(xxi)
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Ensco Stock Plans
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Section 8.15(b)(xxii)
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Ensco Superior Proposal
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Section 8.15(b)(xxiii)
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Ensco Takeover Proposal
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Section 8.15(b)(xxiv)
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Ensco Transaction Documents
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Section 4.2(a)
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Environmental Law
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Section 8.15(b)(xxv)
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ERISA
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Section 8.15(b)(xxvi)
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Exchange Act
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Section 3.2(b)
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Exchange Ratio
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Section 2.2(a)
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Executive Chairman Agreement
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Recitals
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Existing DU Award
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Section 8.15(b)(xxvii)
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Existing Ensco Class A Ordinary Shares
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Section 8.15(b)(xxviii)
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Existing Option
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Section 8.15(b)(xxix)
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Existing PU Award
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Section 8.15(b)(xxx)
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Existing RSU Award
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Section 8.15(b)(xxxi)
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Existing SAR
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Section 8.15(b)(xxxii)
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Export Control Laws
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Section 8.15(b)(xxxiii)
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FCPA
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Section 3.21
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FIRRMA
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Section 8.15(b)(xxxiv)
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Foreign Investment Laws
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Section 5.9(b)
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Forms of Proxy
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Section 5.5(a)(v)
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GAAP
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Section 3.3(b)
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good and defensible title
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Section 8.15(b)(xxxv)
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Governance Period
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Section 1.8(b)
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Governmental Entity
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Section 3.2(b)
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Hazardous Materials
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Section 8.15(b)(xxxvi)
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HSR Act
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Section 3.2(b)
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Indemnified Party
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Section 5.12(b)
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Intervening Event
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Section 8.15(b)(xxxvii)
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Key Employee
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Section 8.15(b)(xxxviii)
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knowledge
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Section 8.15(a)
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Law or Laws
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Section 3.6(a)
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Lien
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Section 3.2(c)
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Maximum Amount
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Section 5.12(c)
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Annex I-2
Table of Contents
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New Ensco Shares
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Section 8.15(b)(xxxix)
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NYSE
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Section 3.2(b)
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OFAC
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Section 3.22(a)
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Offer
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Section 5.18(a)
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Offer Document
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Section 5.18(b)
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Order
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Section 8.15(b)(xl)
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Parties
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Preamble
|
Permits
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Section 4.6(b)
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Permitted Refinancing Debt
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Section 8.15(b)(xli)
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person
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Section 8.15(a)
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Post-Closing Benefits Program
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Section 5.21(a)
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Proceedings
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Section 8.5
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Proxy Statement
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Section 5.7(a)
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Qualified Plan
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Section 3.16(b)
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Registration Statement
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Section 5.18(d)
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Release
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Section 8.15(b)(xlii)
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Relevant Authority
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Section 8.15(b)(xliii)
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Remaining Stock Plan Shares
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Section 2.3(h)
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Remedies Exceptions
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|
Section 3.2(a)
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Representatives
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|
Section 5.3(a)
|
Rights
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|
Section 8.15(b)(xliv)
|
Rights Plan
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|
Section 8.15(b)(xlv)
|
Rowan
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|
Preamble
|
Rowan 2018 Credit Agreement
|
|
Section 8.15(b)(xlvi)
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Rowan 2019 Senior Notes
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|
Section 8.15(b)(xlvii)
|
Rowan 401(k) Plan
|
|
Section 5.21(c)
|
Rowan Acceptable Confidentiality Agreement
|
|
Section 5.3(b)
|
Rowan Adverse Recommendation Change
|
|
Section 5.3(d)
|
Rowan Approvals
|
|
Section 3.2(b)
|
Rowan Articles of Association
|
|
Section 3.1(b)
|
Rowan Benefit Plan
|
|
Section 3.16(a)
|
Rowan Board Recommendation
|
|
Section 3.2(a)
|
Rowan Class B Shares
|
|
Section 8.15(b)(xlviii)
|
Rowan Disclosure Schedule
|
|
Article III
|
Rowan Employee
|
|
Section 3.15(a)
|
Rowan Equity Awards
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|
Section 2.3(g)
|
Rowan Financial Statements
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|
Section 8.15(b)(xlix)
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Rowan Fleet Report
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|
Section 3.13(a)
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Rowan GM
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Section 8.15(b)(l)
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Rowan Intellectual Property
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Section 3.11(a)
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Rowan IT Assets
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Section 8.15(b)(li)
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Rowan Leased Real Property
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Section 3.12(a)
|
Rowan Material Adverse Effect
|
|
Section 8.15(b)(lii)
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Rowan Material Contracts.
|
|
Section 3.19
|
Rowan Material Subsidiaries
|
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Section 3.1(b)
|
Rowan Ordinary Shares
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Section 8.15(b)(liii)
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Rowan Organizational Documents
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|
Section 3.1(b)
|
Rowan Permits
|
|
Section 3.6(b)
|
Rowan Permitted Liens
|
|
Section 8.15(b)(liv)
|
Rowan Protection Plan
|
|
Section 8.15(b)(lv)
|
Rowan Retention Program
|
|
Section 8.15(b)(lvi)
|
Annex I-3
Table of Contents
|
|
|
Rowan SEC Documents
|
|
Section 3.3(a)
|
Rowan Shareholder
|
|
Section 8.15(b)(lvii)
|
Rowan Shareholder Approval
|
|
Section 8.15(b)(lviii)
|
Rowan Shareholder Resolutions
|
|
Section 8.15(b)(lix)
|
Rowan Stock Plans
|
|
Section 8.15(b)(lx)
|
Rowan Subscriber Shares
|
|
Section 8.15(b)(lxi)
|
Rowan Superior Proposal
|
|
Section 8.15(b)(lxii)
|
Rowan Takeover Proposal
|
|
Section 8.15(b)(lxiii)
|
Rowan Transaction Documents
|
|
Section 3.2(a)
|
Sarbanes-Oxley Act
|
|
Section 3.3(a)
|
Scheme Document
|
|
Section 5.5(a)(i)
|
Scheme Meeting
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|
Section 8.15(b)(lxiv)
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Scheme of Arrangement
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Section 8.15(b)(lxiv)
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Scheme Supplemental Document
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Section 5.5(a)(v)
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SDRT
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Section 5.17
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SEC
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Section 3.1(b)
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Securities Act
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Section 3.2(b)
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Subsidiaries
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Section 8.15(a)
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Tax or Taxes
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Section 8.15(b)(lxvi)
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Tax Return
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Section 8.15(b)(lxvii)
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Termination Date
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Section 5.1(a)
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Termination Fee
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Section 7.3(g)
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Third Party
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Section 8.13(b)
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Third Party Rights Clause
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Section 8.13(a)
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Trade Sanctions
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Section 8.15(b)(lxviii)
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Transaction
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Recitals
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Transfer Taxes
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Section 8.2
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Treasury Regulations
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Section 8.15(b)(lxix)
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VAT
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Section 8.15(b)(lxx)
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Willful Breach
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Section 8.15(b)(lxxi)
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Annex I-4
Table of Contents
Annex B
October 6,
2018
Board
of Directors
Ensco plc
6 Chesterfield Gardens
London, England W1J 5BQ
Members
of the Board:
We
understand that Rowan Companies plc (the "Company") and Ensco plc ("Ensco"), propose to enter into a Transaction Agreement, substantially in the form of the draft dated
October 5, 2018 (the "Transaction Agreement"), which provides, among other things, for the acquisition of all of the outstanding Class A ordinary shares, nominal value $0.125 per share,
of the Company (the "Company Ordinary Shares") by Ensco pursuant to a scheme of arrangement (the "Scheme") under Part 26 of the UK Companies Act 2006 (the "Transaction"). Pursuant to the
Transaction and the Scheme, each outstanding share of the Company Ordinary Shares will be transferred to Ensco or its nominee in exchange for 2.215 shares (the "Exchange Ratio") of Class A
ordinary shares, nominal value $0.10 per share, of Ensco (the "Ensco Ordinary Shares"), subject to adjustment in certain circumstances. The terms and conditions of the Transaction are more fully set
forth in the Transaction Agreement.
You
have asked for our opinion as to whether the Exchange Ratio pursuant to the Transaction Agreement is fair from a financial point of view to Ensco.
For
purposes of the opinion set forth herein, we have:
-
1)
-
Reviewed
certain publicly available financial statements and other business and financial information of the Company and Ensco, respectively;
-
2)
-
Reviewed
certain internal financial statements and other financial and operating data concerning the Company and Ensco, respectively;
-
3)
-
Reviewed
certain financial projections prepared by the management of Ensco with respect to the future financial performance of the Company and Ensco;
-
4)
-
Reviewed
certain financial projections prepared by the management of the Company with respect to the future financial performance of the Company;
-
5)
-
Reviewed
information relating to certain strategic, financial and operational benefits anticipated from the Transaction, prepared by the management of Ensco;
-
6)
-
Discussed
the past and current operations and financial condition and the prospects of Ensco, including information relating to certain strategic, financial and
operational benefits anticipated from the Transaction, with senior executives of Ensco;
-
7)
-
Reviewed
the pro forma impact of the Transaction on Ensco's earnings per share, cash flow, consolidated capitalization and certain financial ratios;
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8)
-
Reviewed
the reported prices and trading activity for the Company Ordinary Shares and Ensco Ordinary Shares;
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9)
-
Compared
the financial performance of the Company and Ensco and the prices and trading activity of the Company Ordinary Shares and Ensco Ordinary Shares with that of
certain other
B-1
Table of Contents
We
have assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to
us by the Company and Ensco, and formed a substantial basis for this opinion. With respect to the financial projections, including information relating to certain strategic, financial and operational
benefits anticipated from the Transaction, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective
managements of the Company and Ensco of the future financial performance of the Company and Ensco. For purposes of our analysis, we have, at the direction of Ensco, relied on financial projections
relating to the Company and Ensco, in each case prepared by the management of Ensco. We have been advised by Ensco and have assumed, with Ensco's consent, that the projections prepared by the
management of Ensco are a reasonable basis upon which to evaluate the business and financial prospects of Ensco and the Company. We express no view as to such projections or the assumptions on which
they were based. We have relied upon, without independent verification, the assessment by the management of Ensco of: (i) the strategic, financial and other benefits expected to result from the
Transaction; (ii) the timing and
risks associated with the integration of the Company and Ensco; and (iii) Ensco's ability to retain key employees of the Company and Ensco, respectively. In addition, we have assumed that the
Transaction will be consummated in accordance with the terms set forth in the Transaction Agreement without any waiver, amendment or delay of any terms or conditions, including, among other things,
that the Transaction will be treated as a tax-free reorganization, pursuant to the Internal Revenue Code of 1986, as amended, and that the definitive Transaction Agreement will not differ in any
material respect from the draft thereof furnished to us. Morgan Stanley has assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents
required for the proposed Transaction, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived
in the proposed Transaction. We are not legal, tax or regulatory advisors. We are financial advisors only and have relied upon, without independent verification, the assessment of Ensco and the
Company and their legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. We express no opinion with respect to the fairness of the amount or nature of the compensation to
any of the Company's officers, directors or employees, or any class of such persons, relative to the consideration to be paid to the holders of Company Ordinary Shares in the Transaction. We have not
made any independent valuation or appraisal of the assets or liabilities of the Company or Ensco, nor have we been furnished with any such valuations or appraisals. Our opinion does not address the
relative merits of the Transaction as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Our opinion
is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof may
affect this opinion and the assumptions used in preparing it, and we do not assume any obligation to update, revise or reaffirm this opinion.
We
have acted as financial advisor to the Board of Directors of Ensco in connection with the Transaction and will receive a fee for our services, a portion of which is payable upon
rendering of this
B-2
Table of Contents
opinion
and a substantial portion of which is contingent upon the closing of the Transaction. In the two years prior to the date hereof, we have provided financial advisory and financing services for
Ensco and financing services for the Company and have received fees in connection with such services. As of the date hereof, Morgan Stanley is a lender under Ensco's revolving credit facility. Morgan
Stanley may also seek to provide financial advisory and financing services to Ensco and the Company and their respective affiliates in the future and would expect to receive fees for the rendering of
these services.
Please
note that Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Our securities business
is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and
financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance
positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of its customers, in debt or
equity securities or loans of Ensco, the Company, or any other company, or any currency or commodity, that may be involved in the Transaction, or any related derivative instrument.
This
opinion has been approved by a committee of Morgan Stanley investment banking and other professionals in accordance with our customary practice. This opinion is for the information
of the Board of Directors of Ensco and may not be used for any other purpose or disclosed without our prior written consent, except that a copy of this opinion may be included in its entirety, and a
summary of this opinion that is acceptable to Morgan Stanley, may be disclosed in any filing Ensco is required to make with the U.S. Securities and Exchange Commission in connection with the
Transaction if such inclusion is required by applicable law. In addition, this opinion does not in any manner address the prices at which Ensco Ordinary Shares will trade following consummation of the
Transaction or at any time and Morgan Stanley expresses no opinion or recommendation as to how the shareholders of Ensco and the Company should vote at the shareholders' meetings to be held in
connection with the Transaction.
Based
on and subject to the foregoing, we are of the opinion on the date hereof that the Exchange Ratio pursuant to the Transaction Agreement is fair from a financial point of view to
Ensco.
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Very truly yours,
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MORGAN STANLEY & CO. LLC
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By:
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/s/ MICHAEL HARRIS
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Michael Harris
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Managing Director
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B-3
Table of Contents
Annex C
PERSONAL AND CONFIDENTIAL
October 7,
2018
Board
of Directors
Rowan Companies plc
2800 Post Oak Blvd, Suite 5450
Houston, Texas 77056
Lady
and Gentlemen:
You
have requested our opinion as to the fairness from a financial point of view to the holders (other than Ensco plc ("Ensco") and its affiliates) of the outstanding
Class A ordinary shares, par value $0.125 per share (the "Company Ordinary Shares"), of Rowan Companies plc (the "Company") of the Exchange Ratio (as defined below) to be paid to such
holders pursuant to the Transaction Agreement, dated as of October 7, 2018, by and between Ensco and the Company (the "Agreement"). The Agreement (i) provides that pursuant to the Scheme
of Arrangement (as defined in the Agreement), each outstanding Company Ordinary Share will be acquired by Ensco (and/or its DR Nominee (as defined in the Agreement), as applicable) and the holder
thereof will have the right to receive 2.215 Class A ordinary shares (the "Exchange Ratio") in the share capital of Ensco, par value $0.10 per share (the "Ensco Ordinary Shares") and
(ii) permits, effective immediately following the Closing (as defined in the Agreement), every four issued and outstanding Ensco Ordinary Shares shown in the register of members of Ensco
immediately following the update of such register to give effect to the provisions of the Scheme of Arrangement or completion of any Offer (as defined in the Agreement), as the case may be, to be
consolidated into one Ensco Ordinary Share, with a nominal value of $0.40 per Ensco Ordinary Share, as to which consolidation we express no opinion. The Agreement further provides that the Scheme of
Arrangement may be switched to an Offer in accordance with the terms set out in the Agreement.
Goldman
Sachs & Co. LLC and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment
management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs & Co. LLC and its affiliates and employees, and funds or
other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments
in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Ensco and any of their respective affiliates and third parties, or any
currency or commodity that may be involved in the transaction contemplated by the Agreement (the "Transaction"). We have acted as financial advisor to the Company in connection with, and have
participated in certain of the negotiations leading to, the Transaction. We expect to receive fees for our services in connection with the Transaction, the principal portion of which is contingent
upon consummation of the Transaction, and the Company has agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. We
have provided certain financial advisory and/or underwriting services to the Company and/or its affiliates from time to time for which our Investment Banking Division has received, and may receive,
compensation, including having acted as financial advisor to the Company in connection with the formation of a joint venture by the Company and the Saudi Arabian Oil Company in November 2016 and as
joint book runner with respect to the Company's offering of 7.375% senior unsecured notes due 2025 (aggregate principal amount $500,000,000) in December 2016. We may also in the
future provide financial advisory and/or underwriting services to the Company, Ensco and their respective affiliates for which our Investment Banking Division may receive compensation.
In
connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to shareholders and Annual Reports on Form 10-K of the Company and Ensco for
the five years ended December 31, 2017; certain interim reports to shareholders and Quarterly Reports on Form 10-Q of the Company and Ensco; certain other communications from the Company
and Ensco to
Table of Contents
their
respective shareholders; certain publicly available research analyst reports for the Company and Ensco; and certain internal financial analyses and forecasts for the Company prepared by its
management, certain internal financial analyses and forecasts for Ensco stand alone prepared by its management, as adjusted by the management of the Company, and certain financial analyses and
forecasts for Ensco pro forma for the Transaction prepared by the management of the Company, in each case as approved for our use by the Company (the "Forecasts"), including certain operating
synergies projected by the management of the Company to result from the Transaction (the "Synergies"). We have also held discussions with members of the senior managements of the Company and Ensco
regarding the past and current business operations, financial condition and future prospects of Ensco and have held discussions with members of senior management of the Company regarding the past and
current business operations, financial condition and future prospects of the Company and their assessment of the strategic rationale for, and the potential benefits of, the Transaction; reviewed the
reported price and trading activity for the Company Ordinary Shares and the Ensco Ordinary Shares; compared certain financial and stock market information for the Company and Ensco with similar
information for certain other companies the securities of which are publicly traded; and performed such other studies and analyses, and considered such other factors, as we deemed appropriate.
For
purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and
other information provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the
Forecasts, including the Synergies, have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. We have not made an
independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or Ensco or any of their
respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the
consummation of the Transaction will be obtained without any adverse effect on the Company or Ensco or on the expected
benefits of the Transaction in any way meaningful to our analysis. We have assumed that the Transaction will be consummated on the terms set forth in the Agreement, without the waiver or modification
of any term or condition the effect of which would be in any way meaningful to our analysis.
Our
opinion does not address the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic
alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. We were not requested to solicit, and did not solicit, interest from other
parties with respect to an acquisition of, or other business combination with, the Company or any other alternative transaction. This opinion addresses only the fairness from a financial point of view
to the holders of Company Ordinary Shares (other than Ensco and its affiliates) of the Exchange Ratio pursuant to the Agreement. We do not express any view on, and our opinion does not address, any
other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into or amended in connection with the
Transaction, including, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies
of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or class of such persons, in
connection with the Transaction, whether relative to the Exchange Ratio pursuant to the Agreement or otherwise. We are not expressing any opinion as to the prices at which the Ensco Ordinary Shares
will trade at any time or as to the impact of the Transaction on the solvency or viability of the Company or Ensco or the ability of the Company or Ensco to pay their respective obligations when they
come due. Our opinion is necessarily
C-2
Table of Contents
based
on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we assume no responsibility for updating, revising or
reaffirming this opinion based on circumstances, developments or events occurring after the date hereof. Our advisory services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of the Company in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of Company
Ordinary Shares should vote with respect to the Scheme, whether to tender Company Ordinary Shares pursuant to an Offer or any other matter. This opinion has been approved by a fairness committee of
Goldman Sachs & Co. LLC.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio pursuant to the Agreement is fair from a financial point of view to the holders
(other than Ensco and its affiliates) of Company Ordinary Shares.
Very
truly yours,
/s/
GOLDMAN SACHS & CO. LLC
(GOLDMAN SACHS & CO. LLC)
C-3
PROXY
ENSCO PLC
GENERAL MEETING OF SHAREHOLDERS
[
·
], 2019, [A/P].M.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Carl G. Trowell, Jonathan H. Baksht and Michael T. McGuinty, or any one of them, as proxies, each with the power to appoint a substitute, and hereby authorizes each of them or their appointed substitutes to represent and to vote, as designated below, all the Class A ordinary shares, nominal value $0.10 per share (the "Ensco ordinary shares"), of Ensco plc ("Ensco"), held of record by the undersigned as of the close of business on [
·
], 2018, at the general meeting of shareholders of Ensco to be held on [
·
], 2019 or any adjournment or postponement thereof.
ORDINARY RESOLUTIONS
1.
Ensco Transaction Consideration Proposal:
To authorize, in addition to all subsisting authorities, the allotment and issuance of Ensco ordinary shares, to shareholders of Rowan Companies plc ("Rowan"), pursuant to the Transaction Agreement, dated as of October 7, 2018, by and between Ensco and Rowan, as such agreement may be amended from time to time, which provides for, among other things, the acquisition of the entire issued and to be issued Class A ordinary share capital of Rowan pursuant to a scheme of arrangement (the "Scheme of Arrangement") under Part 26 of the UK Companies Act 2006 in consideration for the issuance by Ensco to the Rowan shareholders who are Scheme Shareholders (as such term is defined in "The Scheme of Arrangement" section of the joint proxy statement relating to the general meeting of shareholders of Ensco) of 2.215 new Ensco ordinary shares for each Rowan Class A ordinary share (a "Rowan ordinary share") that is subject to the terms of the Scheme of Arrangement.
o
FOR
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o
AGAINST
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o
ABSTAIN
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2.
Ensco Reverse Stock Split Proposal
: To authorize a consolidation (being a reverse stock split under English law) of Ensco ordinary shares whereby, conditional upon and effective immediately (or as soon as practicable) following the Scheme of Arrangement becoming effective, every four existing Ensco ordinary shares, each with a nominal value of $0.10, shown in the register of members of Ensco following the updating of such register to give effect to the provisions of the Scheme of Arrangement shall be consolidated into one Ensco ordinary share with a nominal value of $0.40 per share.
o
FOR
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o
AGAINST
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o
ABSTAIN
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3.
Ensco General Allotment Authority Proposal:
To authorize, conditional upon and effective immediately following the Scheme of Arrangement becoming effective, the allotment and issuance up to a nominal amount of Ensco ordinary shares, which represents approximately 33% of the expected enlarged share capital of Ensco immediately following the Scheme of Arrangement becoming effective, and up to a further same nominal amount of Ensco ordinary shares in connection with a pre-emptive offering of shares. If approved, subject to the Scheme of Arrangement becoming effective, these authorities will replace the authorities granted pursuant to resolution 10 passed at the annual general meeting of Ensco shareholders held on May 21, 2018 (the "Ensco 2018 Annual General Meeting").
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
4.
Ensco Transaction-Related Compensation Proposal:
To approve, in accordance with Section 14A of the Securities Exchange Act of 1934, as amended, on a non-binding advisory basis, the compensation payable, or that may become payable, in connection with the transaction to the named executive officers of Ensco, as well as specific compensatory arrangements between Ensco and such individuals.
o
FOR
|
o
AGAINST
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o
ABSTAIN
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SPECIAL RESOLUTIONS
5.
Ensco General Disapplication of Pre-Emptive Rights Proposal:
To authorize, conditional upon and effective immediately following the Scheme of Arrangement becoming effective, the allotment and issuance up to a nominal amount of Ensco ordinary shares for cash on a non-pre-emptive basis, which represents approximately 5% of the expected enlarged share capital of Ensco immediately following the Scheme of Arrangement becoming effective. If approved, subject to the Scheme of Arrangement becoming effective, this authority will replace the authority granted pursuant to resolution 11 passed at the Ensco 2018 Annual General Meeting.
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
6.
Ensco Specified Disapplication of Pre-Emptive Rights Proposal:
To authorize, conditional upon and effective immediately following the Scheme of Arrangement becoming effective, the allotment and issuance up to a nominal amount of Ensco ordinary shares for cash on non-pre-emptive basis, which represents approximately 5% of the expected enlarged share capital of Ensco immediately following the Scheme of Arrangement becoming effective, such authority to be used only for the purposes of financing (or refinancing, if the power is to be used within six months after the relevant transaction) a transaction which the board of directors of Ensco deems to be an acquisition or other capital investment. If approved, subject to the Scheme of Arrangement becoming effective, this authority will replace the authority granted pursuant to resolution 12 passed at the Ensco 2018 Annual General Meeting.
o
FOR
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o
AGAINST
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o
ABSTAIN
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(see reverse side)
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE GENERAL MEETING OF SHAREHOLDERS OF ENSCO TO BE HELD ON [
·
], 2019.
A COPY OF THE JOINT PROXY STATEMENT AND THIS FORM OF PROXY ARE AVAILABLE AT
www.proxyvote.com.
If no direction is made, the proxy will be voted in accordance with the recommendations of the board of directors of Ensco with respect to each of the resolutions described on the reverse side of this proxy card and in the proxy's discretion upon such other business as may properly come before the meeting or any adjournment thereof. The board of directors of Ensco recommends a vote
"
FOR" each of the resolutions described on the reverse side of this proxy card.
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Please sign exactly as name appears hereon.
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SIGNATURE (Please sign within box)
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DATE
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SIGNATURE (Joint Owners)
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DATE
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NOTE: When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Joint owners should each sign personally. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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PLEASE MARK IN BLUE OR BLACK INK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.