<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 21, 1996
ENSCO INTERNATIONAL INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-8097 76-0232579
(Commission File Number) (IRS Employer Identification No.)
2700 Fountain Place, 1445 Ross Avenue, Dallas, Texas 75202-2792
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (214) 922-1500<PAGE>
ITEM 7. EXHIBITS
EXHIBIT
- -------
99.6 Press release dated March 22, 1996
99.7 Agreement and plan of merger, dated March 21, 1996, between
ENSCO International Incorporated, DDC Acquisition Company
and Dual Drilling Company
99.8 Voting Agreement, dated March 21, 1996, between ENSCO
International Incorporated and Dual Invest AS<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
ENSCO INTERNATIONAL INCORPORATED
By: /s/ H. E. Malone
----------------------------
H. E. Malone, Controller
and Chief Accounting Officer
Date: April 1, 1996
---------------<PAGE>
<PAGE>
NEWS RELEASE
ENSCO INTERNATIONAL INCORPORATED
___________________________________________________________________________
Contact: Richard A. LeBlanc
(214) 922-1500
ENSCO SIGNS DEFINITIVE AGREEMENT TO ACQUIRE
DUAL DRILLING COMPANY
Dallas, Texas, March 22, 1996....ENSCO International Incorporated
(NYSE: ESV) and DUAL DRILLING COMPANY (NASDAQ: DUAL) announced that they
have signed a definitive agreement for the acquisition of DUAL by ENSCO.
The agreement follows a letter of intent signed by the two companies at the
end of January which was previously announced. Under the agreement, DUAL's
common stockholders will receive 0.625 shares of ENSCO common stock for
each share of DUAL common stock. ENSCO will issue approximately 10 million
shares of ENSCO common stock to DUAL's stockholders in the transaction,
increasing ENSCO's total common shares outstanding to approximately 70.5
million. ENSCO intends to apply purchase accounting principles to the
acquisition.
ENSCO also announced that it had received early termination of the
waiting period for the transaction under applicable U.S. antitrust laws.
DUAL's financial advisors, Simmons & Company International, have rendered a
fairness opinion on the transaction for the benefit of DUAL's shareholders,
and DUAL's board has resolved to recommend the transaction to its
stockholders at a special stockholders' meeting that is expected to take
place in May. DUAL's majority stockholder, Dual Invest AS, has agreed to
vote in favor of the acquisition. ENSCO stockholder approval of the
acquisition and the related issuance of ENSCO common stock is not required.
The Companies expect to complete the merger soon after the acquisition is
approved at the special meeting of DUAL stockholders.
Completion of the merger will constitute a change of control
allowing the holders of DUAL's 9 7/8% Senior Subordinated Notes due 2004
(the "Notes"), the option to put the Notes to DUAL at a price equal to 101%
of the principal amount of the Notes. Assuming the Notes continue to trade
at a significant premium to the put option price, ENSCO expects that the
Notes will remain outstanding following the acquisition as a separate
obligation of DUAL, which would then be a wholly owned subsidiary of ENSCO.
The acquisition will further strengthen ENSCO's position in the
premium jackup rig market, and will expand the Company's operations into
the Asian/Pacific region. The combined company will have a fleet of 54
offshore drilling rigs and 37 oilfield support vessels.<PAGE>
ENSCO, headquartered in Dallas, Texas, is a leading provider of
contract drilling and marine transportation services to the international
petroleum industry. DUAL, also headquartered in Dallas, Texas, operates a
modern fleet of ten premium jackup rigs and ten self-contained platform
rigs.<PAGE>
<PAGE>
___________________________________________________________________________
___________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
Among
ENSCO INTERNATIONAL INCORPORATED,
DDC ACQUISITION COMPANY
and
DUAL DRILLING COMPANY
Dated March 21, 1996
___________________________________________________________________________
___________________________________________________________________________<PAGE>
TABLE OF CONTENTS
----------------
SECTION PAGE
- ------- ----
ARTICLE I
THE MERGER
1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Effective Time; Closing . . . . . . . . . . . . . . . . . . . 2
1.03. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . 2
1.04. Certificate of Incorporation; Bylaws . . . . . . . . . . . . . 2
1.05. Directors and Officers . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities . . . . . . . . . . . . . . . . . . . 3
2.02. Exchange of Certificates . . . . . . . . . . . . . . . . . . . 4
2.03. Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . 6
2.04. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TARGET
3.01. Organization and Qualification; Subsidiaries . . . . . . . . . 7
3.02. Certificate of Incorporation and Bylaws . . . . . . . . . . . 8
3.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 8
3.04. Authority Relative to This Agreement . . . . . . . . . . . . . 9
3.05. No Conflict; Required Filings and Consents . . . . . . . . . . 9
3.06. Permits; Compliance . . . . . . . . . . . . . . . . . . . . . 10
3.07. SEC Filings; Financial Statements . . . . . . . . . . . . . . 10
3.08. Absence of Certain Changes or Events . . . . . . . . . . . . . 11
3.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . 13
3.10. Employee Benefit Matters . . . . . . . . . . . . . . . . . . . 13
3.11. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 18
3.12. Intellectual Property . . . . . . . . . . . . . . . . . . . . 18
3.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . 19
3.15. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . 21
3.16. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . 21
3.17. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.18. Tangible Property . . . . . . . . . . . . . . . . . . . . . . 21
3.19. Bareboat Charter . . . . . . . . . . . . . . . . . . . . . . . 21
3.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . 21
3.21. Parachute Payments . . . . . . . . . . . . . . . . . . . . . . 22
3.22. Certain Business Practices . . . . . . . . . . . . . . . . . . 22
3.23. Real Property and Leases . . . . . . . . . . . . . . . . . . . 22
3.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.25. Accounting and Tax Matters . . . . . . . . . . . . . . . . . . 24
3.26. Board Recommendation . . . . . . . . . . . . . . . . . . . . . 24
3.27. Change in Control . . . . . . . . . . . . . . . . . . . . . . 24
3.28. Target Drilling Rigs . . . . . . . . . . . . . . . . . . . . . 25<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
- ------- ----
3.29. Sime-Dual Sdn Bhd . . . . . . . . . . . . . . . . . . . . . . 26
3.30. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR SUB
4.01. Corporate Organization and Qualification . . . . . . . . . . . 27
4.02. Certificate of Incorporation and Bylaws . . . . . . . . . . . 27
4.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 28
4.04. Authority Relative to This Agreement . . . . . . . . . . . . . 28
4.05. No Conflict; Required Filings and Consents . . . . . . . . . . 29
4.06. SEC Filings; Financial Statements . . . . . . . . . . . . . . 29
4.07. Absence of Certain Changes or Events . . . . . . . . . . . . . 30
4.08. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by the Target Pending the Merger . . . . . 32
5.02. Conduct of Business by Acquiror Pending the Merger . . . . . . 33
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Registration Statement; Proxy Statement . . . . . . . . . . . 33
6.02. Target Stockholder Meeting . . . . . . . . . . . . . . . . . . 35
6.03. Appropriate Action; Consents; Filings . . . . . . . . . . . . 35
6.04. Access to Information; Confidentiality . . . . . . . . . . . . 37
6.05. No Solicitation of Transactions. . . . . . . . . . . . . . . . 37
6.06. Directors' and Officers' Indemnification . . . . . . . . . . . 38
6.07. Obligations of Acquiror Sub . . . . . . . . . . . . . . . . . 39
6.08. Public Announcements . . . . . . . . . . . . . . . . . . . . . 39
6.09. Delivery of SEC Documents . . . . . . . . . . . . . . . . . . 39
6.10. Environmental Assessment . . . . . . . . . . . . . . . . . . . 39
6.11. Notification of Certain Matters . . . . . . . . . . . . . . . 39
6.12. Further Action . . . . . . . . . . . . . . . . . . . . . . . . 40
6.13. Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 40
6.14. Affiliates; Accounting and Tax Treatment . . . . . . . . . . . 44
6.15. Certain Employees . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
CONDITIONS TO THE MERGER<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
- ------- ----
7.01. Conditions to the Obligations of Each Party . . . . . . . . . 45
7.02. Conditions to the Obligations of Acquiror and Acquiror Sub . . 45
7.03. Conditions to the Obligations of the Target . . . . . . . . . 47
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.02. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 49
8.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and Agreements . . 51
9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . 52
9.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.05. Assignment; Binding Effect; Benefit . . . . . . . . . . . . . 53
9.06. Incorporation of Schedules . . . . . . . . . . . . . . . . . . 53
9.07. Specific Performance . . . . . . . . . . . . . . . . . . . . . 54
9.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 54
9.09. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.11. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 54
9.12. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 54
EXHIBIT A - Certificate of Incorporation
EXHIBIT B - Affiliate Agreement
EXHIBIT C - Legal Opinion for Counsel for the Target
EXHIBIT D - Legal Opinion for Counsel for Acquiror<PAGE>
DEFINED TERMS
TERM LOCATION
---- --------
Acquiror Recitals
Acquiror Common Stock 2.01(a)(i)
Acquiror Disclosure Schedules Article IV
Acquiror Preferred Stock 4.03
Acquiror SEC Reports 4.06(a)
Acquiror Sub Recitals
Acquiror Sub Common Stock 2.01(a)(iii)
Acquiror Subsidiary 4.03
affiliate 9.03(a)
Affiliate Agreements 6.14
Agreement Recitals
AICPA Statement 7.02(b)
Alternative Proposal Fee 8.02(a)
Average Trading Price 2.02(e)
beneficial owner 9.03(b)
Benefit Restoration Plan 6.13(e)
Board 6.05(iii)
Blue Sky Laws 3.05(b)(i)
Business Combination Transaction 8.02(a)
Business Combination Transaction Proposal 8.01(d)
business day 9.03(c)
Cancelable Shares 2.01(a)(i)
Certificate of Merger 1.02
Certificates 2.02(b)
Claim 6.06(b)
Closing 2.02
Closing Agreement 6.13(a)(ii)
COBRA Coverage 6.13(b)<PAGE>
TERM LOCATION
---- --------
Code Recitals
Confidentiality Agreement 9.13
control 9.03(d)
controlled by 9.03(d)
Delaware Law Recitals
DOL 6.13(n)
Dual Medical Plan 6.13(b)
Dual Unit Plan 6.13(j)
Effective Time 1.02
Employee Severance Plans 6.13(h)
Environmental Claims 3.14(b)(viii)
Environmental Laws 3.14(a)(ii)
Environmental Permits 3.14(b)(ii)
Exchange Act 3.05(b)(i)
Exchange Agent 2.02(a)
Exchange Fund 2.02(a)
Exchange Ratio 2.01(a)(i)
ERISA 3.10
First Amendment 3.29(i)
401(k) Plan 6.13(a)(i)
401(k) Plan Amendment 6.13(a)(i)
Governmental Authority 3.06
Group Insurance Plans 6.13(b)
Hazardous Substances 3.14(a)(i)
HSR Act 3.05(b)(i)
IRS 3.10(c)
Joint Bareboat Charter 3.29(vii)
Joint Operating Agreement 3.29(vi)
Laws 3.05(a)(y)(ii)
Long-Term Options 2.04(a)(i)<PAGE>
TERM LOCATION
---- --------
Material Adverse Effect 3.01
Material Contract 3.20
Merger Recitals
NASD 6.08(b)
1995 Balance Sheet 3.07(c)
Non-Employee Options 2.04(b)
NYSE 2.02(E)
Officer Incentive Plan 6.13(g)
Order 7.01(b)
Original Agreement 3.29(i)
PBGC 3.10(c)
person 9.03(e)
Plans 3.10(i)
Post-Employment Benefits 3.10(k)(iv)
Pre-Merger Period 3.25(a)(i)
Prior Thrift Plan 6.13(a)(i)
Proxy Statement 6.01(a)
Registration Statement 6.01(a)
Retiree Medical Plan 6.13(c)
Sale 3.25(b)
SD 3.29(i)
SDD 3.29(i)
SEC 3.07(a)(ii)
Secretary 1.02
SERP 6.13(d)(i)
Securities Act 3.05(b)(i)
Shareholders Agreement 3.29(i)
Specified Expenses 8.02(d)
Sime-Dual 3.29(i)
Stockholder Plan 3.25(b)<PAGE>
TERM LOCATION
---- --------
Subsidiary 3.01
subsidiary 9.03(f)
subsidiaries 9.03(f)
Surviving Corporation 1.01
Target Recitals
Target Affiliate 6.14
Target Banker 3.16
Target Common Stock 2.01(a)(i)
Target Disclosure Schedule Article III
Target Drilling Rigs 3.19
Target Employment Contracts 3.10(ii)
Target Options 2.04(h)
Target Permits 3.06
Target Preferred Stock 3.03
Target SEC Reports 3.07(a)
Target s Stockholder Meeting 6.02
Terminating Acquiror Breach 8.01(f)
Terminating Target Breach 8.01(f)
Third Party Provisions 9.05
Transactions Recitals
Trust 6.13(f)(i)
Trustee 6.13(f) (i)
under common control 9.03(d)
U.S. GAAP 3.07(b)
Vessels 3.28(a)<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of March 21, 1996 (this
"Agreement"), by and among ENSCO International Incorporated, a Delaware
corporation ("Acquiror"), DDC Acquisition Company, a Delaware corporation
and a direct, wholly owned subsidiary of Acquiror ("Acquiror Sub"), and
DUAL DRILLING COMPANY, a Delaware corporation (the "Target").
WHEREAS, Acquiror Sub, upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law ("Delaware Law"), will merge with and into the Target (the
"Merger");
WHEREAS, the Board of Directors of the Target (i) has determined
that the Merger is in the best interests of the Target and its stockholders
and approved and adopted this Agreement and the transactions contemplated
hereby ("Transactions") and (ii) has unanimously recommended approval and
adoption of this Agreement and approval of the Merger by, and directed that
this Agreement and the Merger be submitted to a vote of, the stockholders
of the Target;
WHEREAS, the Boards of Directors of Acquiror and Acquiror Sub
have determined that the Merger is in the best interests of Acquiror,
Acquiror Sub and their stockholders and have unanimously approved and
adopted this Agreement and the Transactions; and
WHEREAS, Acquiror and the Target intend that the Merger
constitute a tax-free "reorganization" within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986 (the "Code") by reason of
Section 368(a)(2)(E) of the Code.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, Acquiror, Acquiror Sub and the Target hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware
Law, at the Effective Time (as hereinafter defined), Acquiror Sub shall be
merged with and into the Target. As a result of the Merger, the separate
corporate existence of Acquiror Sub shall cease and the Target shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). The name of the Surviving Corporation shall be Dual Holding
Company.
SECTION 1.02. EFFECTIVE TIME; CLOSING. As promptly as
practicable and in no event later than the first business day following the
satisfaction or waiver of the conditions set forth in Article VII (or such
other date as may be agreed in writing by each of the parties hereto), the
parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware (the "Secretary") in such form as is
required by, and executed in accordance with the relevant provisions of,
Delaware Law. The term "Effective Time" means the date and time of the<PAGE>
filing of the Certificate of Merger with the Secretary (or such later time
as may be agreed in writing by each of the parties hereto and specified in
the Certificate of Merger). Immediately prior to the filing of the
Certificate of Merger, a closing (the "Closing") will be held at the
offices of Baker & McKenzie, 2001 Ross Avenue, Suite 4500, Dallas, Texas
(or such other place and time as the parties may agree).
SECTION 1.03. EFFECT OF THE MERGER. The effect of the Merger
shall be as provided in the applicable provisions of Delaware Law.
SECTION 1.04. CERTIFICATE OF INCORPORATION; BYLAWS. (a) At the
Effective Time, the Certificate of Incorporation of the Target, as in
effect immediately prior to the Effective Time, shall be amended as of the
Effective Time by operation of this Agreement and by virtue of the Merger
without any further action by the stockholders or directors of the
Surviving Corporation to read in its entirety as set forth in EXHIBIT A
attached hereto.
(b) At the Effective Time, the Bylaws of Acquiror Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Acquiror
Sub immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation until
a successor is elected or appointed and has qualified or until the earliest
of such director's death, resignation, removal or disqualification, and the
officers of Acquiror Sub immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified, or as
otherwise provided in the Bylaws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. CONVERSION OF SECURITIES. At the Effective Time,
by virtue of the Merger and without any action on the part of Acquiror Sub,
the Target or the holders of any of the following shares of capital stock:
(a) Subject to the other provisions of this Section 2.01 and to
Section 2.02:
(i) each share of common stock, $0.01 par value, of the
Target ("Target Common Stock") issued and outstanding immediately
prior to the Effective Time (excluding any shares held by the
Target, Acquiror or Acquiror Sub or any other direct or indirect
wholly owned subsidiary of Acquiror or the Target immediately
prior to the Merger (the "Cancelable Shares")) shall be converted
into the right to receive .625 shares (the "Exchange Ratio") of
common stock, $0.10 par value ("Acquiror Common Stock"), of
Acquiror. At the Effective Time, all such shares of Target
Common Stock shall no longer be outstanding and automatically
shall be canceled and cease to exist, and each certificate<PAGE>
previously evidencing any such shares shall thereafter represent
the right to receive a certificate representing the shares of
Acquiror Common Stock into which such shares of Target Common
Stock were converted in the Merger. The holders of certificates
previously evidencing such shares of Target Common Stock
outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such shares of Target Common
Stock except as otherwise provided herein or by Delaware Law.
Such certificates previously evidencing shares of Target Common
Stock shall be exchanged for certificates representing whole
shares of Acquiror Common Stock issued in consideration therefor
upon the surrender of such certificates in accordance with the
provisions of Section 2.02. No fractional shares of Acquiror
Common Stock shall be issued, and, in lieu thereof, a cash
payment shall be made pursuant to Section 2.02(e);
(ii) each Cancelable Share shall automatically be canceled
and cease to exist, and no consideration shall be paid or payable
in respect of such shares; and
(iii) each share of common stock, par value $.01 per
share, of Acquiror Sub ("Acquiror Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) If between the date of this Agreement and the Effective Time
the outstanding shares of Acquiror Common Stock or Target Common Stock
shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, reclassification,
recapitalization, split, division, combination or exchange of shares,
the Exchange Ratio shall be correspondingly adjusted to reflect such
stock dividend, reclassification, recapitalization, split, division,
combination or exchange of shares.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT.
As of or before the Effective Time, Acquiror shall deposit, or shall cause
to be deposited, with a bank or trust company organized under the laws of,
and having an office in, the United States or any state thereof and
designated by Acquiror and approved by Target, which approval shall not be
unreasonably withheld (the "Exchange Agent"), for the benefit of the
holders of shares of Target Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, certificates representing the
whole shares of Acquiror Common Stock issuable pursuant to Section 2.01 in
exchange for outstanding shares of Target Common Stock and cash in an
amount sufficient to permit payment of cash payable in lieu of fractional
shares pursuant to Section 2.02(e) (such certificates for shares of
Acquiror Common Stock, together with any dividends or distributions with
respect thereto, and cash, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions
from Acquiror, deliver the Acquiror Common Stock and cash contemplated to
be issued pursuant to Section 2.01 out of the Exchange Fund.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Acquiror will instruct the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time evidenced outstanding shares of Target Common<PAGE>
Stock (other than Cancelable Shares) (the "Certificates") (i) a letter of
transmittal and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates evidencing shares of Acquiror
Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole shares
of Acquiror Common Stock which such holder has the right to receive in
respect of the shares of Target Common Stock formerly represented by such
Certificate (after taking into account all shares of Target Common Stock
then held by such holder), together with cash in lieu of fractional shares
of Acquiror Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or distributions to which such holder is
entitled pursuant to Section 2.02(c), and the Certificate so surrendered
shall forthwith be canceled. Subject to Section 2.02(h), under no
circumstances will any holder of a Certificate be entitled to receive any
part of the shares of Acquiror Common Stock into which the shares of Target
Common Stock were converted in the Merger until such holder shall have
surrendered such Certificate. In the event of a transfer of ownership of
shares of Target Common Stock which is not registered in the transfer
records of the Target, the shares of Acquiror Common Stock into which such
shares of Target Common Stock were converted in the Merger may be issued in
accordance with this Article II to the transferee if the Certificate
evidencing such shares of Target Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive upon such surrender the certificate
representing the number of whole shares of Acquiror Common Stock which the
holder has the right to receive in respect of the shares of Target Common
Stock formerly represented by such Certificate (after taking into account
all shares of Target Common Stock then held by such holder), together with
cash in lieu of fractional shares of Acquiror Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and any dividends or
distributions to which such holder is entitled pursuant to Section 2.02(c).
Acquiror agrees, from and after the Effective Time, to treat the holders of
certificates formerly representing shares of Target Common Stock as holding
of record the whole number of shares of Acquiror Common Stock for purposes
of voting and determinations of quorums for voting.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF ACQUIROR
COMMON STOCK. No dividends or other distributions declared or made after
the Effective Time with respect to Acquiror Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Acquiror Common Stock into which
such shares of Target Common Stock were converted in the Merger, until the
holder of such Certificate shall surrender such Certificate for exchange as
provided herein. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of
such Certificate, in addition to the certificates representing shares of
Acquiror Common Stock as provided in 2.02(b), without interest, the amount
of dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to the whole shares of Acquiror Common
Stock evidenced by such Certificate.<PAGE>
(d) NO FURTHER RIGHTS IN TARGET COMMON STOCK. All shares of
Acquiror Common Stock delivered upon conversion of the shares of Target
Common Stock in accordance with the terms hereof (including any cash paid
or other distributions pursuant to Section 2.02(c) and (e)) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
shares of Target Common Stock.
(e) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of Acquiror Common Stock shall be issued upon the
surrender for exchange of Certificates, but in lieu thereof each holder of
shares of Target Common Stock who would otherwise be entitled to receive a
fraction of a share of Acquiror Common Stock, after aggregating all shares
of Acquiror Common Stock which such holder would be entitled to receive
under Section 2.01, shall receive an amount equal to the Average Trading
Price multiplied by the fraction of a share of Acquiror Common Stock to
which such holder would otherwise be entitled, without interest. The
"Average Trading Price" shall be the average of the closing sale prices of
the Acquiror Common Stock on the New York Stock Exchange ("NYSE") or, if
not listed on the NYSE, any exchange on which the Acquiror Common Stock may
then be principally listed (as reported by The Wall Street Journal or, if
not reported thereby, by another authoritative source) over the ten
business days immediately preceding the Effective Time.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Target Common Stock for
one year after the Effective Time shall be delivered to Acquiror, upon
demand, and, subject to Section 2.02(g), any holders of Target Common Stock
who have not theretofore complied with this Article II shall thereafter
look only to Acquiror for the shares of Acquiror Common Stock, any cash in
lieu of fractional shares of Acquiror Common Stock and any dividends or
other distributions to which they are entitled pursuant to this Section
2.02.
(g) NO LIABILITY. Neither Acquiror nor the Surviving
Corporation shall be liable to any holder of shares of Target Common Stock
for any shares of Acquiror Common Stock or cash (or dividends or
distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(h) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Acquiror Common Stock, cash
in lieu of fractional shares of Acquiror Common Stock and unpaid dividends
and distributions on shares of Acquiror Common Stock deliverable in respect
thereof pursuant to this Agreement.
SECTION 2.03. STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Target shall be closed and there shall be no
further registration of transfers of shares of Target Common Stock
thereafter on the records of the Target. At or after the Effective Time,
any Certificates presented to the Exchange Agent or Acquiror for any reason
shall be converted into the right to receive shares of Acquiror Common<PAGE>
Stock, cash in lieu of fractional shares of Acquiror Common Stock and any
dividends or other distributions to which they are entitled pursuant to
Section 2.02.
SECTION 2.04. STOCK OPTIONS. (a) Pursuant to the Dual Drilling
Company 1993 Long-Term Incentive Plan, all outstanding options issued
thereunder (the "Long-Term Options") shall be surrendered as of the
Effective Time, automatically and without any action on the part of the
holder thereof, and the Surviving Corporation shall within two (2) Business
Days following the Effective Time, pay to each holder of a Long-Term Option
an amount of cash equal to (A) the excess, if any, of (i) the average of
the closing prices of Acquiror Common Stock on the NYSE for the five
Business Days immediately preceding the Effective Time multiplied by the
Exchange Ratio over (ii) the exercise price under such Long-Term Option,
(B) multiplied by the number of shares covered by such Long-Term Option.
(b) On or before the Effective Time, the Target will endeavor to
enter into one or more agreements with the holders of all outstanding
options under the Dual Drilling Company Non-Employee Director Stock Option
Plan (the "Non-Employee Options" and, together with the Long-Term Options,
the "Target Options"), pursuant to which such holders shall surrender all
such Non-Employee Options to the Target no later than two business days
prior to the Effective Time. Pursuant to each such agreement and as
consideration for such surrender, the Surviving Corporation shall within
two (2) Business Days following the Effective Time pay to the holder of any
Non-Employee Option an amount in cash equal to (A) the excess, if any, of
(i) the average of the closing prices of Acquiror Common Stock on the NYSE
for the five Business Days immediately preceding the Effective Time
multiplied by the Exchange Ratio over (ii) the exercise price under such
Non-Employee Option, (B) multiplied by the number of shares covered by such
Non-Employee Option.
(c) In performing its obligations pursuant to this Section 2.04,
the Target shall fully comply with the terms and conditions of the Dual
Drilling Company 1993 Long-Term Incentive Plan and the Dual Drilling
Company Non-Employee Director Stock Option Plan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TARGET
Except as set forth in the Disclosure Schedule delivered by the
Target and signed by the Target and Acquiror for identification prior to
the execution and delivery of this Agreement (the "Target Disclosure
Schedule"), which shall identify exceptions by specific section references,
the Target hereby represents and warrants to Acquiror and Acquiror Sub
that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
Target is a corporation, and each subsidiary of the Target (a "Subsidiary")
is a corporation or limited partnership (or in the case of the Sime-Dual, a
Malaysian company), in each case duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and
has the requisite corporate or partnership power and authority to own,
lease and operate its properties and to carry on its business as it is now
being conducted. The Target and each Subsidiary are duly qualified or<PAGE>
licensed as a foreign corporation or limited partnership to do business,
and are in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by them or the nature of their
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Material Adverse Effect. As
used in this Agreement, the term "Material Adverse Effect" means with
respect to any person, any change or effect that is or is reasonably likely
to be materially adverse to the financial condition, business or results of
operations of such person and its subsidiaries, taken as a whole. As of
the date hereof, a true and correct list of all Subsidiaries, together with
the jurisdiction of organization of each Subsidiary and the percentage of
the outstanding capital stock or other equity interests of each Subsidiary
owned by the Company and each other Subsidiary, is set forth in Section
3.01 of the Target Disclosure Schedule. Except as disclosed in Section
3.01 of the Target Disclosure Schedule, the Target does not directly or
indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BYLAWS. The
Target has heretofore furnished or made available to Acquiror a complete
and correct copy of the Certificate of Incorporation and Bylaws or
equivalent organizational documents, each as amended to date, of the Target
and each Subsidiary. Neither the Target nor any Subsidiary is in violation
of any provision of its Certificate of Incorporation, Bylaws or equivalent
organizational documents.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of
the Target consists of 50,000,000 shares of Target Common Stock and
10,000,000 shares of preferred stock, $.01 par value ("Target Preferred
Stock"). As of December 31, 1995 (a) 15,765,713 shares of Target Common
Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable and not subject to preemptive rights, (b) 41,499
shares of Target Common Stock were held in the treasury of the Target or
held by the Subsidiaries, and (c) 1,059,000 shares of Target Common Stock
were issuable pursuant to outstanding Target Options. No shares of Target
Preferred Stock are issued and outstanding, and, except as set forth in
Section 3.01 of the Target Disclosure Schedule, no shares of capital stock
of, or other equity interests in, the Target or any Subsidiary have been
acquired by the Target or any Subsidiary since December 31, 1995. Except
as set forth in Section 3.03 of the Target Disclosure Schedule and in the
Target SEC Reports (as herein defined), there are no options, warrants or
other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of, or other equity
interests in, the Target or any Subsidiary obligating the Target or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Target or any Subsidiary. Between December 31, 1995 and
the date of this Agreement, no shares of Target Common Stock have been
issued by the Target, except pursuant to the exercise of the stock options
described above that were outstanding on December 31, 1995 in each case in
accordance with their respective terms. All shares of Target Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of the Target or any Subsidiary to<PAGE>
repurchase, redeem or otherwise acquire any shares of Target Common Stock
or any capital stock of, or any equity interest in, any Subsidiary. Except
as described in Section 3.03 of the Target Disclosure Schedule, each
outstanding share of capital stock of, or other equity interest in, each
Subsidiary is duly authorized, validly issued, fully paid and nonassessable
and each such share or interest owned by the Target or another Subsidiary
is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Target's
or such other Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Target
has all necessary corporate power and authority to execute and deliver this
Agreement and, with respect to the Merger, upon the approval and adoption
of this Agreement by the Target's stockholders in accordance with this
Agreement and Delaware Law, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement
by the Target and the consummation by the Target of the Transactions have
been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Target are necessary to
authorize this Agreement or to consummate the Transactions (other than,
with respect to the Merger, the approval and adoption of this Agreement by
the holders of a majority of the then outstanding shares of Target Common
Stock and the filing and recordation of an appropriate Certificate of
Merger with the Secretary as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by the Target and, assuming
the due authorization, execution and delivery of this Agreement by Acquiror
and Acquiror Sub, constitutes a legal, valid and binding obligation of the
Target, enforceable against the Target in accordance with its terms.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
The execution and delivery of this Agreement by the Target do not, and the
performance of this Agreement by the Target will not, subject to, (x) with
respect to the Merger, obtaining the requisite approval and adoption of
this Agreement by the Target's stockholders in accordance with this
Agreement and Delaware Law, and (y) obtaining the consents, approvals,
authorizations and permits and making the filings described in Section
3.05(b) and Section 3.05(b) of the Target Disclosure Schedule, (i) conflict
with or violate the Certificate of Incorporation, Bylaws or equivalent
organizational documents of the Target or any Subsidiary, (ii) conflict
with or violate any domestic (federal, state or local) or foreign law,
rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to the Target or any Subsidiary or by which any property or
asset of the Target or any Subsidiary is bound or affected, or (iii) except
as specified in Section 3.05(a)(iii) of the Target Disclosure Schedule,
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any right of termination, unilateral amendment, acceleration or
cancellation of, or give to others any right to invalidate or terminate any
purchase or other right to acquire property under, or result in the
creation of a lien or other encumbrance on any property or asset of the
Target or any Subsidiary or require the consent of any third party pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Target or any Subsidiary is a party or by which the Target or any
Subsidiary or any property or asset of the Target or any Subsidiary is
bound or affected, except for such conflicts, violations, breaches,<PAGE>
defaults, rights, liens and consents which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
Target.
(b) Except for notification relating to environmental agencies,
the execution and delivery of this Agreement by the Target do not, and the
performance of this Agreement by the Target will not, require any consent,
approval, authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic, foreign or
supranational, except (i) pursuant to the Securities Exchange Act of 1934,
as amended (the"Exchange Act"), the Securities Act of 1933, as amended
(the"Securities Act"), state securities or "blue sky" laws ("Blue Sky
Laws"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the United States Maritime Administration
("MARAD") and the rules and regulations promulgated thereunder, and filing
and recordation of an appropriate Certificate of Merger with the Secretary
as required by Delaware Law, (ii) as specified in Section 3.05(b) of the
Target Disclosure Schedule and (iii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent the Target from timely performing its obligations under
this Agreement.
SECTION 3.06. PERMITS; COMPLIANCE. Except as disclosed in
Section 3.06 of the Target Disclosure Schedule, each of the Target and the
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any United States (federal, state or
local) or foreign government, or governmental, regulatory or administrative
authority, agency or commission or court of competent jurisdiction
("Governmental Authority") necessary for the Target or any Subsidiary to
own, lease and operate its properties or to carry on its business as it is
now being conducted, except for those which the failure to possess would
not individually or in the aggregate reasonably be expected to have a
Material Adverse Effect on Target (the "Target Permits") and, as of the
date hereof, no suspension or cancellation of any of the Target Permits is
pending or, to the knowledge of the Target, threatened. Except as
disclosed in Section 3.06 of the Target Disclosure Schedule, neither the
Target nor any Subsidiary is in conflict with, or in default or violation
of, or, with the giving of notice or the passage of time, would be in
conflict with, or in default or violation of, (i) any Law applicable to the
Target or any Subsidiary or by which any property or asset of the Target or
any Subsidiary is bound or affected, or (ii) any of the Target Permits.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The
Target has filed all forms, reports and documents required to be filed by
it with the Securities and Exchange Commission (collectively, the "Target
SEC Reports"). The Target SEC Reports (i) were prepared in all material
respects in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations thereunder
and (ii) did not, at the time they were filed (or at the effective date
thereof in the case of registration statements), contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Subsidiary is currently required to file any form, report
or other document with the Securities and Exchange Commission ("SEC").<PAGE>
(b) Each of the financial statements (including, in each case,
any notes thereto) contained in the Target SEC Reports was prepared in
accordance with United States generally accepted accounting principles
applied on a consistent basis ("U.S. GAAP") throughout the periods
indicated (except as may be indicated in the notes thereto and except that
financial statements included with quarterly reports on Form 10-Q do not
contain all U.S. GAAP notes to such financial statements) and each fairly
presented in all material respects the financial position, results of
operations and changes in stockholders' equity and cash flows of the Target
as at the respective dates thereof and for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected,
individually or in the aggregate, to have a Material Adverse Effect).
(c) Except (i) to the extent set forth on the balance sheet of
the Target and the consolidated Subsidiaries as at December 31, 1995,
including the notes thereto (the "1995 Balance Sheet"), (ii) as set forth
in Section 3.07(c) of the Target Disclosure Schedule or (iii) as disclosed
in any SEC Report filed by the Target after December 31, 1995, neither the
Target nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto,
prepared in accordance with U.S. GAAP, except for liabilities and
obligations incurred in the ordinary course of business consistent with
past practice since December 31, 1995, which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Target.
(d) The Target has heretofore furnished to Acquiror complete and
correct copies of all amendments and modifications (if any) that have not
been filed by the Target with the SEC to all agreements, documents and
other instruments that previously had been filed by the Target as exhibits
to the Target SEC Reports and are currently in effect.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
December 31, 1995, except as contemplated by, or disclosed pursuant to,
this Agreement including Section 3.08 of the Target Disclosure Schedule, or
disclosed in any Target SEC Report filed since December 31, 1995 and prior
to the date of this Agreement, each of the Target and the Subsidiaries has
conducted its business only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1995, there has not
been (a) any amendment or other change to the Certificate of Incorporation
or Bylaws or other equivalent organizational documents of the Target or
any Subsidiary, (b) any issuance, sale, pledge, disposal, grant,
encumbrance, or authorization of the issuance, sale, pledge, disposition,
grant or encumbrance by the Target or any Subsidiary of (i) any shares of
their capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of the Target or any Subsidiary (except
for the issuance of shares of capital stock issuable pursuant to Target
Options outstanding on January 25, 1996), or (ii) any of their assets other
than in the ordinary course of business consistent with past practice, (c)
any declaration, setting aside, making or payment of any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of their capital stock by the Target or any Subsidiary, (d) any
reclassification, combination, split or division by the Target or any<PAGE>
Subsidiary of any of their capital stock or redemption, purchase or other
acquisition, directly or indirectly, of any of their capital stock or
securities or obligations convertible into or exchangeable or exercisable
for such capital stock, (e) any commitment or incurrence by the Target or
any Subsidiary of any capital expenditure in excess of $500,000, (f) any
mobilization of, or any agreement entered into by the Target or any
Subsidiary which would provide for the mobilization of, any drilling rig to
any area of the world other than such area in which such drilling rig was
located on December 31, 1995, (g) any drilling contract entered into by
the Target or any Subsidiary with a rate fixed for a period in excess of
six months, (h) any incurrence of any indebtedness for borrowed money or
issuance of any debt securities or assumption, guarantee or endorsement, or
otherwise becoming responsible as an accommodation, for the obligations of
any person, or making of any loans or advances, (i) acquisition by the
Target or any Subsidiary (including, without limitation, by merger,
consolidation or acquisition of stock or assets) of any interest in any
corporation, partnership, other business organization or any division
thereof or any assets, other than the acquisition of assets in the ordinary
course of business consistent with past practice, (j) any contract or
agreement (other than those covered by subparagraph (g) above) entered into
or amended by the Target or any Subsidiary material to their businesses,
results of operations or financial condition, (k) any increase in the
compensation payable or to become payable to any director, officer or other
employee, or consultant or advisor, of the Target or any Subsidiary, or
grant of any bonus to, or grant of any severance or termination pay to, or
any employment or severance agreement entered into with, any director,
officer or other employee, or consultant or advisor, of the Target or any
Subsidiary or any collective bargaining agreement entered into or amended,
(l) any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation or other plan,
trust or fund established, adopted, entered into or amended for the benefit
of any director, officer or class of employees of the Target or any
Subsidiary, (m) any settlement or compromise by the Target or any
Subsidiary of any pending or threatened litigation which would reasonably
be expected to have a Material Adverse Effect on Target or which relates to
the Transactions, (n) any event or events (whether or not covered by
insurance), individually or in the aggregate, having a Material Adverse
Effect, or (o) any change by the Target or any Subsidiary in its accounting
methods, principles or practices.
SECTION 3.09. ABSENCE OF LITIGATION. Section 3.09 of the Target
Disclosure Schedule sets forth each instance in which any of the Target and
the Subsidiaries (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party or, to the knowledge of
the Target and the Subsidiaries, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator, which has not
otherwise been disclosed in the Target SEC Reports and which would
reasonably be expected to have a Material Adverse Effect on Target. Neither
the Target nor any Subsidiary nor any property or asset of the Target or
any Subsidiary is in violation of any order, writ, judgment, injunction,
decree, determination or award.
SECTION 3.10. EMPLOYEE BENEFIT MATTERS. (a) Set forth in
Section 3.10(a) of the Target Disclosure Schedule is a true, complete and
correct list of (i) all "employee benefit plans" as defined in Section 3(3)<PAGE>
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not subject to ERISA, and any other employee profit-
sharing, bonus, incentive or deferred compensation, welfare, pension,
retirement, termination, retention, change of control, stock option, stock
appreciation, stock purchase, phantom stock or other equity-based,
performance, group insurance or other employee benefit plan, retiree
benefit or compensation plan, program, arrangement, agreement, policy,
practice or understanding, whether written or unwritten, that provides or
may provide benefits or compensation with respect to any employee or former
employee employed or formerly employed by the Target, or the beneficiaries
or dependents of any such employee or former employee, or to any director,
officer, stockholder or consultant of the Target or under which any such
individual is or may become eligible to participate or derive a benefit
(excluding social security, Medicare, Medicaid, national health care or any
similar or analogous program or plan sponsored by a foreign or domestic
governmental entity) and either (A) is or has been maintained or
established by the Target or any other trade or business, whether or not
incorporated, which, together with the Target is or would have been at any
date of determination occurring within the preceding six years treated as a
single employer under Section 414 of the Code or Section 4001(b)(1) of
ERISA (such other trades and businesses collectively, the "Related
Persons"), or (B) to which the Target or any Related Person contributes or
is or has been obligated or required to contribute or, to the Target's
knowledge, with respect to which the Target or any Related Person may have
any liability or obligation (collectively, the "Plans") which are not
disclosed in the Target SEC Reports and (ii) all written contracts and
agreements relating to employment and all severance agreements with any of
the directors, officers or employees of the Target or the Subsidiaries
(other than, in each case, any such contract or agreement that is
terminable by the Target or any Subsidiary at will without penalty or other
adverse consequence) (the "Target Employment Contracts") which are not
disclosed in the Target SEC Reports. Except as set forth in Section
3.10(a) of the Target Disclosure Schedule and the Target SEC Reports and
except for any liabilities arising out of any defects that are or will be
the subject of the procedures or submissions described in Section 6.13(a),
6.13(m) and 6.13(n), to the knowledge of the Target and the Related
Persons, there are no material liabilities, including fines and penalties
of the Target or any Subsidiary, with respect to any plans, arrangements or
practices of the type described in the preceding sentence that were
terminated or discontinued prior to the date of this Agreement and
previously maintained or contributed to by the Target or any Related
Person, or to which the Target or any Related Person previously had an
obligation to contribute.
(b) Section 3.10(b) of the Target Disclosure Schedule sets forth the
name of each officer or employee of the Target or any of the Subsidiaries
with a current annual base compensation greater than $100,000 and the
annual base compensation applicable to each such officer or employee.
(c) The Target previously has delivered to Acquiror complete and
correct copies of each of the Plans and Target Employment Contracts,
including all amendments thereto, and any other documents or other
instruments applying and relating thereto that are reasonably requested by
Acquiror, including descriptions of all unwritten Plans; all trust
agreements, insurance contracts or other funding arrangements; the three
most recent actuarial and trust reports; the three most recently filed
Forms 5500 and all schedules thereto; the most recent determination letter<PAGE>
from the Internal Revenue Service ("IRS"); any documents submitted to the
IRS concerning a pending request for a determination letter; current
summary plan descriptions; all material communications received from or
sent to the IRS, the Pension Benefit Guaranty Corporation ("PBGC") or the
Department of Labor during the three-year period preceding the Effective
Time (including a written description of any oral communication) that could
reasonably be expected to result in material liability or obligation on the
part of the Target or any Subsidiary or disqualification of any Plan
intended to be qualified under Section 401(a) of the Code; and all
amendments and modifications to any such document.
(d) Except as set forth in Section 3.10(d) of the Target Disclosure
Schedule, (i) each of the Plans and Target Employment Contracts is being,
and has been, maintained, operated and administered in all material
respects in accordance with its respective terms, (ii) each of the Plans
and Target Employment Contracts has been maintained, operated and
administered in all material respects in compliance with all applicable
laws, including but not limited to the Age Discrimination in Employment
Act, as amended, Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1986, as amended, ERISA and the Code, and (iii) no material
liability or obligation has been incurred (and is unsatisfied) or is
expected to be incurred by the Target or any Subsidiary (either directly or
indirectly, including as a result of an indemnification obligation, but
excluding the penalties that are or will be payable pursuant to Section
6.13(a), (m) and (n)) under or pursuant to any applicable law, including
Titles I and IV of ERISA and the penalty, excise tax or joint and several
liability provisions of the Code relating to employee benefit plans.
(e) The Target and the Related Persons have not within the past six
years had an obligation to contribute to a qualified "defined benefit plan"
as defined in Section 3(35) of ERISA and covered by Part 3 of Title I of
ERISA, a pension plan subject to the minimum funding standards of Section
302 of ERISA or Section 412 of the Code, or a "multiemployer plan" as
defined in Section 3(37) of and covered by ERISA or Section 414(f) of the
Code or a "multiple employer plan" within the meaning of Section 210(a) of
and covered by ERISA or Section 413(c) of the Code. Except as set forth in
Section 3.10(e) of Target Disclosure Schedule, no other trade or business
is, or, at any time within the past six years, has been treated, together
with the Target and the Related Persons, as a single employer under Section
414 of the Code or Section 4001 of ERISA.
(f) Except with respect to those defects which are or will be the
subject of the procedures and submissions described in Section 6.13(a),
each Plan intended to be qualified under Section 401(a) of the Code, and
the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS as to its qualification under the Code
and to the effect that each such trust is exempt from taxation under
Section 501(a) of the Code or an application for determination under
Section 401(a) of the Code has been submitted to the IRS prior to the
expiration of the applicable remedial amendment period, all amendments
necessary to maintain qualification of each such Plan have been made within
the time allowed by the Code and ERISA and, to the knowledge of the Target
and all Related Persons, no event has occurred or condition exists that
could adversely affect such determination or pending application for
determination of qualification or tax-exempt status, including any
compliance problems resulting from failures to follow the terms of the plan
documents for any Plan, and no such determination has been revoked and no<PAGE>
application for determination has been denied, nor has any Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(g) Except as set forth in Section 3.10(g) of the Target Disclosure
Schedule, to the knowledge of the Target and all Related Persons, there
have been no prohibited transactions as defined in Section 406 of ERISA or
Section 4975 of the Code or breaches of any of the duties imposed on
"fiduciaries" (within the meaning of Section 3(21) of ERISA) by ERISA with
respect to the Plans that could result in the Target or any Subsidiary
becoming liable directly or indirectly (by indemnification or otherwise)
for any material liability for any excise tax, penalty or other liability
under ERISA or the Code.
(h) Except as set forth in Section 3.10(h) of the Target Disclosure
Schedule and except with respect to liabilities arising out of any defects
that are or will be the subject of the procedures or submissions described
in Section 6.13(a), 6.13(m) and 6.13(n), there are no actions, suits,
arbitrations or claims (other than routine claims for benefits), pending
or, to the knowledge of the Target or any Related Person, threatened, with
respect to any Plan or Target Employment Contract, any trust which is a
part of any Plan or Target Employment Contract, any trustee, fiduciary,
custodian, administrator or other person holding or controlling assets of
any Plan or Target Employment Contract, and, to the knowledge of the Target
and all Related Persons, no basis to anticipate any such action, suit,
arbitration or claim exists (other than routine claims for benefits), and
there are no investigations or audits of any Plan or Target Employment
Contract by any governmental authority currently pending and there have
been no such investigations or audits that have been concluded that
resulted in any liability of the Target or any Related Person that has not
been fully discharged. Except with respect to the procedure and submission
described in Section 6.13(a) hereof, no closing agreement with the IRS is
being, or has been, negotiated with respect to any Plan, and no Plan has
been submitted to the IRS pursuant to the Voluntary Compliance Resolution
Program as described in Revenue Procedures 92-89 and 93-36.
(i) Except as set forth in Section 3.10(i), there are no unpaid or
overdue (i) insurance premiums required to be paid with respect to, (ii)
benefits, expenses, and other amounts due and payable under, and (iii)
contributions, transfers or payments required to be made to, any Plan or
Target Employment Contract have been made on or before their due dates.
With respect to any insurance policy providing funding for benefits under
any Plan or Target Employment Contract (i) there is no material liability
of the Target or any Related Person in the nature of a retroactive or
retrospective rate adjustment, loss sharing arrangement, or other actual or
contingent liability, nor would there be any such liability if such
insurance policy was terminated on the date hereof except as set forth in
Section 3.10(i) of the Target Disclosure Schedule, and (ii) to the
knowledge of the Target and all Related Persons, no insurance company
issuing any such policy is in receivership, conservatorship, liquidation or
similar proceeding and no such proceedings with respect to any insurer are
imminent.
(j) With respect to any Plan that is an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA, except as disclosed in Section
3.10(j) of the Target Disclosure Schedule, (i) no such Plan is unfunded or<PAGE>
funded through a "welfare benefit fund", as such term is defined in Section
419(e) of the Code, (ii) to the knowledge of the Target and all Related
Persons, each such Plan that is a "group health plan", as such term is
defined in Section 5000(b)(1) of the Code, is in compliance in all material
respects with the applicable requirements of Section 4980B(f) of the Code,
and (iii) to the knowledge of the Target and all Related Persons, each such
Plan (including any such Plan covering retirees or former employees) may be
amended or terminated subject to the provisions of any applicable
collective bargaining agreement, without material liability to the Target
and the Subsidiaries.
(k) Section 3.10(k) of the Target Disclosure Schedule contains a
separate identification of each Plan and Target Employment Contract other
than those set forth in Section 3.10(l) of the Target Disclosure Schedule
that provides benefits, including, without limitation, death or medical
benefits, beyond termination of employment or retirement other than (i)
coverage mandated by law, (ii) death or retirement benefits under any
qualified Plan, (iii) deferred compensation benefits fully reflected on the
1995 Balance Sheet or (iv) benefits, the full cost of which is borne by the
employee (or the employee's beneficiary) (the "Post-Employment Benefits");
such balance sheets accurately reflect the liabilities relating to the
Post-Employment Benefits and an actuarial study of the Post-Employment
Benefits has been delivered to Acquiror.
(l) Except as set forth in Section 3.10(l) of the Target Disclosure
Schedule, the execution, delivery and performance of this Agreement will
not, solely in and of itself and without regard to any subsequent events,
(i) constitute an event under any Plan or Target Employment Contract that
will result in any payment (whether of severance pay or otherwise) becoming
due from the Target or any Related Person to any present or former officer,
employee, director, stockholder or consultant (or dependents), (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any present or former officer, employee, director,
stockholder or consultant of the Target or any Related Person, or (iii)
constitute a "deemed severance" or "deemed termination" under any Plan or
Target Employment Contract or under any applicable law.
(m) Neither the Target nor any Related Person has any obligation in
connection with any Plan pursuant to the terms of a collective bargaining
agreement.
(n) The Target and all Related Persons have made or will make all
contributions required under GAAP to be made by the Target or any Related
Person under each Plan and Target Employment Contract for all periods
through and including the Effective Time or adequate accruals therefor have
been or will be provided.
(o) Except as otherwise provided in Section 3.10(o) of the Target
Disclosure Schedule and except with respect to the submissions and filings
contemplated by Section 6.13(a), 6.13(m) and 6.13(n) hereof, all returns,
reports and filings required by any governmental agency or which must be
furnished to any person with respect to each of the Plans and Target
Employment Contracts have been timely filed or furnished. The Target and
all Subsidiaries shall cooperate in full with Acquiror with any reasonably
necessary action to ensure compliance with any federal or state law
applicable to the Plans and Target Employment Contracts, whether such
action occurs prior to, on, or after the Effective Time.<PAGE>
(p) Except as set forth in Section 3.10(p) of the Target Disclosure
Schedule and except as provided in Section 6.13(a), the Target and the
Related Persons have not agreed or committed (orally or in writing) to make
any amendments to any Plan or Target Employment Contract not already
embodied in the documents comprising the Plans and Target Employment
Contracts, other than any amendments required by law, or to establish or
implement any other employee or retiree benefit or compensation
arrangement.
(q) To the knowledge of Target and all Related Persons, the Target
and the Subsidiaries have not incurred any liability under, and have
complied in all respects with, the Worker Adjustment Retraining
Notification Act and, to the knowledge of Target, no fact or event exists
that could give rise to liability under such act, except for such
occurrences, noncompliances and liabilities as would not, individually or
in the aggregate, have a Material Adverse Effect.
SECTION 3.11. LABOR MATTERS. Neither the Target nor any
Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Target or any
Subsidiary.
SECTION 3.12. INTELLECTUAL PROPERTY. Target and the
Subsidiaries own or have valid, binding and enforceable rights to use each
patent, invention, industrial model, process, design and all registrations
and applications for any of the foregoing used, employed or exploited in
the business of the Target or any Subsidiary without any known conflict
with the rights of others.
SECTION 3.13. TAXES. (a) The Target and each of the
Subsidiaries have (i) filed all federal, state, local and foreign tax
returns required to be filed by them prior to the date of this Agreement
(taking into account extensions) and all of such returns were true and
correct in all material respects when filed and in compliance with
applicable law, (ii) paid or accrued all taxes shown to be due on such
returns and paid all applicable ad valorem and value added taxes as are due
and (iii) paid or accrued all taxes for which a notice of assessment or
collection has been received (other than amounts being contested in good
faith by appropriate proceedings), except in the case of clause (i), (ii)
or (iii) for any such filings, payments or accruals which would not,
individually or in the aggregate, have a Material Adverse Effect. Except
as set forth in Section 3.13(a) of the Target Disclosure Schedule, neither
the Internal Revenue Service nor any other federal, state, local or foreign
taxing authority has asserted any claim for taxes, or to the best knowledge
of the Target, is threatening to assert any claims for taxes, which claims,
individually or in the aggregate, could have a Material Adverse Effect.
The Target has open years for federal, state and foreign income tax returns
only as set forth in Section 3.13(a) of the Target Disclosure Schedule.
The Target and each Subsidiary have withheld or collected and paid over to
the appropriate governmental authorities (or are properly holding for such
payment) all taxes required by law to be withheld or collected, except for
amounts which would not, individually or in the aggregate, have a Material
Adverse Effect. Neither the Target nor any Subsidiary has made an election
under Section 341(f) of the Code. There are no liens for taxes upon the
assets of the Target or any Subsidiary (other than liens for taxes that are
not yet due or that are being contested in good faith by appropriate
proceedings), except for liens which would not, individually or in the<PAGE>
aggregate, have a Material Adverse Effect. Target and each Subsidiary have
complied with all federal, state, local and foreign tax laws in all
material respects. Except as disclosed in Section 3.13(a) of the Target
Disclosure Schedule, neither the Target nor any Subsidiary (i) has executed
any waiver to extend the time for assessment of any federal, state, local
or foreign tax, or (ii) filed, or has pending, any request or application
for ruling, whether federal, state, local or foreign.
(b) Neither the Target nor any Subsidiary has taken or agreed to
take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the
Code.
(c) The 1995 Balance Sheet includes appropriate reserves for all
federal, state, local and foreign taxes and other liabilities incurred as
of such date but not yet payable.
(d) The net operating losses and other carryovers available to
the Target and each Subsidiary as of the date hereof are described in
Section 3.13 of the Target Disclosure Schedule and as of the date hereof
the ability of Target and each Subsidiary to use such carryovers will not
have been affected by Section 382, 383 or 384 of the Code or by the
separate return limitation year or consolidated return change of ownership
limitations of Treas. Regs. Section 1.1502-21 or 1.1502.22.
(e) Neither Target or any Subsidiary is a U. S. real property
holding company under Section 897 of the Code.
SECTION 3.14. ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) those substances defined in or regulated
under the following federal statutes and their state counterparts, as each
may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic
Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act, the
Toxic Substances Control Act and the Clean Air Act; (B) petroleum and
petroleum products, byproducts and breakdown products including crude oil
and any fractions thereof; (C) natural gas, synthetic gas, and any mixtures
thereof; (D) polychlorinated biphenyls; (E) any other chemicals, materials
or substances defined or regulated as toxic or hazardous or as a pollutant
or contaminant or as a waste under any applicable Environmental Law; and
(F) any substance with respect to which a federal, state or local agency
requires environmental investigation, monitoring, reporting or remediation;
and (ii) "Environmental Laws" means any federal, state, foreign, or local
law, rule or regulation, now or hereafter in effect and as amended, and any
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to pollution
or protection of the environment, health, safety or natural resources,
including without limitation, those relating to (A) releases or threatened
releases of Hazardous Substances or materials containing Hazardous
Substances or (B) the manufacture, handling, transport, use, treatment,
storage or disposal of Hazardous Substances or materials containing
Hazardous Substances.<PAGE>
(b) Except as described in Section 3.14 of the Target Disclosure
Schedule or as would not individually or in the aggregate result in or be
likely to result in any fine, tax, assessment, penalty, loss, cost, damage,
liability, expense or other payment related thereto in excess of $250,000:
(i) the Target and each Subsidiary are and have been in compliance with all
applicable Environmental Laws; (ii) the Target and each Subsidiary have
obtained all permits, approvals, identification numbers, licenses or other
authorizations required under any applicable Environmental Laws
("Environmental Permits") and are and have been in compliance with their
requirements; (iii) such Environmental Permits are transferable to the
Surviving Corporation pursuant to the Merger without the consent of any
Governmental Authority; (iv) there are no underground or aboveground
storage tanks or any surface impoundments, septic tanks, pits, sumps or
lagoons in which Hazardous Substances are being or have been treated,
stored or disposed of on any owned or leased real property or on any real
property formerly owned, leased or occupied by the Target or any
Subsidiary; (v) there is, to the best knowledge of the Target, no asbestos
or asbestos-containing material on any owned or leased real property in
violation of applicable Environmental Laws; (vi) the Target and the
Subsidiaries have not released, discharged or disposed of Hazardous
Substances on any owned or leased real property or on any real property
formerly owned, leased or occupied by the Target or any Subsidiary in an
amount requiring remediation and none of such property is contaminated with
any Hazardous Substances in an amount requiring remediation; (vii) other
than routine operational matters neither the Target nor any of the
Subsidiaries is undertaking, and neither the Target nor any of the
Subsidiaries has completed, any investigation or assessment or remedial or
response action relating to any such release, discharge or disposal of or
contamination with Hazardous Substances at any site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority
or the requirements of any Environmental Law; (viii) there are no pending
or, to the knowledge of Target, past or threatened actions, suits, demands,
demand letters, claims, liens, notices of non-compliance or violation,
notices of liability or potential liability, investigations, proceedings,
consent orders or consent agreements relating in any way to Environmental
Laws, any Environmental Permits or any Hazardous Substances ("Environmental
Claims") against the Target or any Subsidiary or any of their property, and
there are no circumstances that can reasonably be expected to form the
basis of any such Environmental Claim, including without limitation with
respect to any off-site disposal location presently or formerly used by the
Target or any Subsidiaries or any of their predecessors; and (ix) the
Target and each Subsidiary have satisfied and are currently in compliance
with all financial responsibility requirements applicable to their
operations and imposed by the U.S. Coast Guard or Minerals Management
Service pursuant to the Oil Pollution Act of 1990, as amended, or by any
other governmental authority under any other Environmental Law, and the
Target and the Subsidiaries have not received any notice of noncompliance
with any such financial responsibility requirements.
(c) The Target and the Subsidiaries have provided Acquiror or
Acquiror Sub with copies of any environmental reports, studies or analyses
in its possession or under its control relating to owned or leased real
property or the operations of the Target or the Subsidiaries.
SECTION 3.15. OPINION OF FINANCIAL ADVISOR. The Target has
received the written opinion of Simmons & Company International ("Target
Banker") on the date of this Agreement to the effect that the consideration<PAGE>
to be paid by Acquiror in the Merger is fair from a financial point of view
to the Target's stockholders as of the date thereof. A copy of the Target
Banker engagement letter, dated October 17, 1995, has previously been
delivered to Acquiror.
SECTION 3.16. VOTE REQUIRED. The affirmative vote of the
holders of a majority of the then outstanding shares of Target Common Stock
is the only vote of the holders of any class or series of capital stock of
the Target necessary to approve the Merger.
SECTION 3.17. BROKERS. No broker, finder or investment banker
(other than Target Banker) is entitled to any brokerage, finder's or other
fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Target or any Subsidiary. The
Target has heretofore furnished to Acquiror a correct copy of all
agreements between the Target and Target Banker pursuant to which such firm
would be entitled to any payment relating to the Transactions. The total
fee due to Target Banker as a result of the Transactions, including
expenses, shall not exceed $3,000,000.
SECTION 3.18. TANGIBLE PROPERTY. The Target and its
Subsidiaries have good and marketable title to, or a valid leasehold
interest in, the properties and assets used by them or shown on the 1995
Balance Sheet or acquired after the date thereof, other than all drilling
rigs owned, leased, chartered or managed by the Target or any Subsidiary on
the date hereof (the "Target Drilling Rigs"), are free and clear of any
mortgage, pledge, lien, encumbrance, charge, or other security interest,
other than (a) mechanic's, materialmen's, and similar liens, (b) liens for
taxes not yet due and payable or for taxes that the taxpayer is contesting
in good faith through appropriate proceedings, (c) purchase money liens and
liens securing rental payments under capital lease arrangements, and (d)
liens and encumbrances identified and reflected on the 1995 Balance Sheet,
except for properties and assets disposed of in the ordinary course of
business.
SECTION 3.19. BAREBOAT CHARTER. Target has exercised in
accordance with the terms of that certain Bareboat Charter dated March 15,
1991 between Balboa Marine Limited Partnership and Dual Offshore, Ltd., as
amended, its option for the First Option Term (as defined therein) and the
First Option Term shall expire on September 4, 1996. Neither Mosvold
Shipping AS nor Dual Invest AS nor any of either of their affiliates (other
than Target and the Subsidiaries) has any right, title or interest
(including profits interest) in or with respect to such bareboat charter
agreement.
SECTION 3.20. MATERIAL CONTRACTS. Section 3.20 of the Target
Disclosure Schedule lists each contract which (i) is required by its terms
or is currently expected to result in the payment or receipt by the Target
or any Subsidiary of more than $500,000 and which is not terminable by the
Target without the payment of any penalty or fine on not more than three
months' notice, or (ii) contains any terms or provisions which restrict, or
would restrict if terminated, the ability of the Target or any Subsidiary
from the operation, charter, leasing or operation of offshore drilling rigs
in any geographic area of the world without the consent or joint
participation of, or payment of any kind to, a third party (a "Material
Contract") to which the Target or any Subsidiary is a party, other than
contracts which have been filed as an exhibit to or have been incorporated<PAGE>
by reference in any Target SEC Report. Each Material Contract is in full
force and effect and, to the knowledge of Target, is enforceable against
the parties thereto (other than the Target or any such Subsidiary) in
accordance with its terms and no condition or state of facts exists that,
with notice or the passage of time, or both, would constitute a default by
the Target or any Subsidiary or, to the best knowledge of the Target, any
third party under such Material Contracts, except for such defaults which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on Target. The Target or the applicable Subsidiary
has duly complied in all material respects with the provisions of each
Material Contract to which it is a party.
SECTION 3.21. PARACHUTE PAYMENTS. Except as disclosed in
Section 3.21 of the Target Disclosure Schedule, neither the Target nor any
Subsidiary has entered into any agreement that would result in the making
of "parachute payments," as defined in Section 280G of the Code, to any
person and none of such agreements requires the Target or any Subsidiary to
gross-up or otherwise pay the amount of any taxes due in respect of such
parachute payments.
SECTION 3.22. CERTAIN BUSINESS PRACTICES. As of the date of
this Agreement, neither the Target nor any Subsidiary, nor any director,
officer, or, to the knowledge of the Target, any agent or employee of the
Target or any Subsidiary has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (iii) made any other unlawful payment, or (iv) violated
any of the provisions of Section 999 of the Code or Section 8 of the Export
Administration Act, as amended.
SECTION 3.23 REAL PROPERTY AND LEASES. (a) Section 3.23 of the
Target Disclosure Schedule lists and describes briefly all real property
that any of the Target and each Subsidiary owns. With respect to each such
parcel of owned real property and except as noted in Section 3.23 of the
Target Disclosure Schedule: (i) the identified owner has good and
marketable title to the parcel of real property, free and clear of any
liens or encumbrances, easement, covenant, or other restriction, except for
installments of special assessments not yet delinquent, recorded easements,
covenants, and other restrictions, and utility easements, building
restrictions, zoning restrictions, and other easements and restrictions
existing generally with respect to properties of a similar character which
do not affect materially and adversely the current use, occupancy, or
value, or the marketability of title, of the property subject thereto; (ii)
there are no leases, subleases, licenses, concessions, or other agreements,
written or oral, granting to any party or parties the right of use or
occupancy of any portion of the parcel of real property; and (iii) there
are no outstanding options or rights of first refusal to purchase, lease or
occupy the parcel of real property, or any portion thereof or interest
therein.
(b) Section 3.23 of the Target Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of the
Target and any Subsidiary. With respect to each lease and sublease (i) the
lease or sublease is legal, valid, binding, enforceable, and in full force
and effect in all material respects; (ii) to the knowledge of Target, no<PAGE>
party to the lease or sublease is in material breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
material breach or default or permit termination, modification, or
acceleration thereunder; (iii) to the knowledge of Target, no party to the
lease or sublease has repudiated any material provision thereof; (iv) there
are no material disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease; (v) none of the Target or any
Subsidiary has assigned, transferred, conveyed, mortgaged, deeded in trust,
or encumbered any interest in the leasehold or subleasehold; and (vi) all
facilities leased or subleased thereunder have received all approvals of
governmental authorities (including material licenses and permits) required
in connection with the operation thereof, and have been operated and
maintained in accordance with applicable laws, rules, and regulations in
all material respects.
SECTION 3.24. INSURANCE. Section 3.24 of the Target Disclosure
Schedule sets forth a list of each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage
and bond and surety arrangements) to which any of the Target or any
Subsidiary has been a party, a named insured, or otherwise the beneficiary
of coverage at any time within the past three years. With respect to each
such insurance policy designated as "current": (i) the policy is in full
force and effect; (ii) Target has not received notice from any insurance
carrier of the intention of such carrier to discontinue any such policy;
(iii) neither any of the Target or any Subsidiary nor, to the knowledge of
Target, any other party to the policy is in breach or default (including
with respect to the payment of premiums or the giving of notices), and no
event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (iv) no party to the policy has
repudiated any provision thereof. Section 3.24 of the Target Disclosure
Schedule lists any self-insurance arrangements affecting any of the Target
and the Subsidiaries. All material assets and risks of the Target and each
Subsidiary are covered by valid and currently effective insurance policies
in such types and amounts as are consistent with customary practices and
standards of companies engaged in businesses and operations similar to
those of the Target or such Subsidiary.
SECTION 3.25. ACCOUNTING AND TAX MATTERS. (a) Except as set
forth in Section 3.25(a) of the Target Disclosure Schedule, the Target has
no knowledge of any plan or intention on the part of the Target's
stockholders (a "Stockholder Plan") to engage in a sale, exchange,
transfer, distribution (including, without limitation, a distribution by a
partnership to its partners or by a corporation to its stockholders),
pledge, disposition or any other transaction which results in a reduction
in the risk of ownership or a direct or indirect disposition (a "Sale") of
a number of shares of Acquiror Common Stock to be issued to such
stockholders in the Merger, sufficient to reduce the Target's stockholders'
ownership of Acquiror Common Stock to a number of shares having an
aggregate fair market value, as of the Effective Time of the Merger, of
less than fifty percent (50%) of the aggregate fair market value,
immediately prior to the Merger, of all outstanding shares of Target Common
Stock. For purposes of this paragraph, shares of Target Common Stock (i)
with respect to which a Target stockholder receives consideration in the
Merger other than Acquiror Common Stock (including, without limitation,
cash received in lieu of fractional shares of Acquiror Common Stock) and/or
(ii) with respect to which a Sale occurs prior to and in contemplation of<PAGE>
the Merger, shall be considered shares of outstanding Target Common Stock
exchanged for Acquiror Common Stock in the Merger and then disposed of
pursuant to a Stockholder Plan.
(b) Neither the Target nor any Subsidiary is an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(c) As of the Effective Time, the fair market value of the
assets of the Target and the Subsidiaries will exceed the sum of its
liabilities, plus the amount of other liabilities, if any, to which its
assets are subject.
(d) Neither the Target nor any Subsidiary is under the
jurisdiction of a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
SECTION 3.26. BOARD RECOMMENDATION. At a meeting duly called
and held in compliance with Delaware Law, the Board of Directors of the
Target has unanimously adopted a resolution (i) approving the Merger, based
on a determination that the Merger offers the best value reasonably
available to the stockholders of Target and is in the best interests of
such Target stockholders and (ii) approving and adopting this Agreement and
the Transactions and recommending approval and adoption of this Agreement
and the Transactions by the stockholders of the Target.
SECTION 3.27. CHANGE IN CONTROL. Except as set forth in Section
3.27 of the Target Disclosure Schedule, neither the Target nor any
Subsidiary is a party to any contract, agreement or understanding which
contains a "change in control," "potential change in control" or similar
provision. Except as set forth in Section 3.27 of the Target Disclosure
Schedule, the consummation of the Transactions will not (either alone or
upon the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from the Target or any
Subsidiary to any person.
SECTION 3.28. TARGET DRILLING RIGS. (a) Section 3.28 of the
Target Disclosure Schedule sets forth a list of the Target Drilling Rigs
and, if applicable, the name of the nation under which each drilling rig is
documented and flagged and indicates all drilling rigs that are laid up or
being held for sale on the date hereof. With respect to the owned Target
Drilling Rigs, the Target or a Subsidiary has good title to each such
drilling rig, free and clear of all mortgages, pledges, liens,
encumbrances, charges, or other security interests except for such as are
disclosed in Section 3.28 of the Target Disclosure Schedule and in the
Target SEC Reports.
(b) With respect to each Target Drilling Rig that is operated by the
Target or any Subsidiary under lease or charter, (i) the Target or such
Subsidiary has a valid right to charter or a valid leasehold interest in
such drilling rig; (ii) such charter agreement or lease is in full force
and effect in accordance with its terms; (iii) all rents, charter payments
and other similar monetary amounts that have become due and payable
thereunder have been paid in full; (iv) no waiver, indulgence or
postponement of the obligations thereunder has been granted by the other
party thereof; (v) there exists no material default (or an event that, with
notice or lapse of time or both would constitute a material default) on the
part of the Target, or to the knowledge of the Target, any other person<PAGE>
under such charter agreement or lease; (vi) the Target or such Subsidiary
has not violated any of the terms or conditions under any such charter
agreement or lease and to the knowledge of the Target there are no
conditions or covenants to be observed or performed by any other party
under such charter agreement or lease that have not been observed or
performed in all material respects; and (vii) the transactions described in
this Agreement will not constitute a default under or cause for termination
or modification of any terms of such charter agreement or lease.
(c) Section 3.28 of the Target Disclosure Schedule contains a list of
all leases or charters providing for the use by the Target or any
Subsidiary of a Target Drilling Rig. Complete and correct copies of each
lease or charter have been delivered to Acquiror.
(d) With respect to each Target Drilling Rig: (i) if applicable, such
Target Drilling Rig is lawfully documented under the flag of the nation
listed on Section 3.28 of the Target Disclosure Schedule for such Target
Drilling Rig; (ii) if applicable, such Target Drilling Rig is afloat and
in satisfactory operating condition for charter hire; (iii) such Target
Drilling Rig holds in full force and effect all certificates, licenses,
permits and rights required for operation in the manner drilling rigs of
its kind are being operated in the geographical area in which such Target
Drilling Rig is presently being operated which the failure to hold would
reasonably be expected to have a Material Adverse Effect on Target; (iv) no
event has occurred and no condition exists that would endanger the
maintenance of the classification of such Target Drilling Rig, (v) such
Target Drilling Rig which is a jack-up drilling rig is considered by the
American Bureau of Shipping to be in class as a Maltese Cross A1 Self-
Elevating Drilling Unit and free of any recommendations and average damages
affecting class, and (vi) there exists no outstanding requirements or
recommendations resulting from any inspections by, or rules or regulations
of, the U.S. Coast Guard, the U.S. Minerals Management Service, the U.S.
Occupational Safety and Health Administration, or any nation under which
any of the Target Drilling Rigs are flagged which would reasonably be
expected to have a Material Adverse Effect on Target.
(e) Section 3.28 of the Target Disclosure Schedule contains a list of
the geographical location in which each Target Drilling Rig is being
operated as of the date hereof. Each Target Drilling Rig can be removed
from such geographical location and transported to the United States
without the payment, liability or imposition of any material tax, duty,
impost or other payment of any kind to any foreign governmental authority.
SECTION 3.29. SIME-DUAL SDN BHD. Section 3.29 of the Target
Disclosure Schedule lists all agreements in respect of Sime-Dual Drilling
Sdn Bhd, a Malaysian company ("Sime-Dual"). Target represents and warrants
that (i) the Shareholders Agreement dated October 24, 1994 by and among SD
Holdings Berhad, a Malaysian company ("SD"), Target and Sime-Dual (the
"Original Agreement"), as amended pursuant to that certain First Amendment
to the Shareholders Agreement dated June 5, 1995 by and among SD, Sime
Darby Drilling Sdn Bhd, a Malaysian company ("SDD"), Target, DAI and Sime-
Dual (the "First Amendment") (the Original Agreement and the First
Amendment are collectively referred to as, the "Shareholders Agreement")
has not been amended (other than the First Amendment) and remains in full
force and effect and to the knowledge of the Target there exists no Event
of Default (as defined in the Shareholders Agreement), or facts or events
which with the passage of time or the giving or notice would constitute an<PAGE>
Event of Default, and no waivers of performance have been granted by Target
or DAI of any of SD's or SDD's obligations thereunder, (ii) neither a Dual
Triggering Event or a SD Triggering Event (as those terms are defined in
the Shareholders Agreement) has occurred, (iii) there have been no
guaranties given by either Target or, to the knowledge of the Target, SDD
as described in Sub-Clause 6.3 of the First Amendment, (iv) there have been
no notices provided by SDD or SD to trigger the put option described in
Clause 19.5 of the Original Agreement, (v) the Joint Operating Agreement
dated June 5, 1995 by and among SDD and DAI (the "Joint Operating
Agreement") has not been amended and remains in full force and effect and
to the knowledge of the Target there exists no material defaults, or facts
or events which with the passage of time or the giving or notice would
constitute a material default, and no waivers of performance have been
granted by Target or DAI of any of SD's or SDD's obligations thereunder,
(vi) no Sale Notice (as defined in the Joint Operating Agreement) has been
given by DAI or SDD, and (vii) the Joint Bareboat Charter Agreement dated
June 5, 1995 by and among SDD, DAI and Sime-Dual (the "Joint Bareboat
Charter") has not been amended and remains in full force and effect and to
the knowledge of the Target there exists no material defaults, or facts or
events which with the passage of time or the giving or notice would
constitute a material default, and no waivers of performance have been
granted by Sime-Dual of any of SDD's or DAI's obligations thereunder.
SECTION 3.30. ACCOUNTS RECEIVABLE. All of the accounts receivable
reflected in the 1995 Balance Sheet or created thereafter to the best of
the Target s knowledge are valid receivables subject to no setoffs or
counterclaims, are current and collectible and will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth in the 1995 Balance Sheet as adjusted for
operations and transactions through the Effective Time in accordance with
the past custom and practice of the Target and the Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR SUB
Except as set forth in the Disclosure Schedules delivered by
Acquiror to the Target and signed by the Target and Acquiror for
identification prior to the execution and delivery of this Agreement (the
"Acquiror Disclosure Schedules"), which shall identify exceptions by
specific section references, Acquiror and Acquiror Sub hereby, jointly and
severally, represent and warrant to the Target that:
SECTION 4.01. CORPORATE ORGANIZATION AND QUALIFICATION.
Acquiror and Acquiror Sub are corporations duly organized, validly existing
and in good standing under the laws of the jurisdiction of their
incorporation and have the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate their properties
and to carry on their respective businesses as they are now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect. Acquiror and Acquiror Sub are duly qualified or
licensed as a foreign corporation to do business, and are in good standing,
in each jurisdiction where the character of the properties owned, leased or
operated by them or the nature of their respective businesses makes such<PAGE>
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing as would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BYLAWS. Acquiror
has heretofore furnished or made available to the Target a complete and
correct copy of the Certificate of Incorporation and Bylaws of Acquiror,
and the Certificate of Incorporation and Bylaws of Acquiror Sub, each as
amended to date. Neither Acquiror nor Acquiror Sub is in violation of any
provision of its Certificate of Incorporation or Bylaws.
SECTION 4.03. CAPITALIZATION. As of the date of this Agreement,
the authorized capital stock of Acquiror consists of 125,000,000 shares of
Acquiror Common Stock, 5,000,000 shares of First Preferred Stock, $1.00 par
value, and 15,000,000 shares of Serial Preferred Stock, $1.00 par value,
1,250,000 of which have been designated as Series A Junior Participating
Preferred Stock (collectively, "Acquiror Preferred Stock"). As of December
31, 1995, (a) 60,605,772 shares of Acquiror Common Stock were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable, (b) 6,285,448 shares of Acquiror Common Stock were held in
the treasury of Acquiror, (c) 1,120,850 shares of Acquiror Common Stock
were reserved for future issuance pursuant to outstanding stock options
granted pursuant to Acquiror's stock option plan, and (d) no shares of
Acquiror Preferred Stock were outstanding. The authorized capital stock of
Acquiror Sub consists of 10,000 shares of Acquiror Sub Common Stock, of
which, as of the date of this Agreement, 1,000 shares are issued and
outstanding and held by Acquiror. Except as contemplated by this Agreement
or that certain Rights Agreement (herein so called) dated February 21, 1995
or as set forth in Section 4.03 of the Acquiror Disclosure Schedule or the
Acquiror SEC Reports, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock of
Acquiror or any subsidiary of Acquiror, including Acquiror Sub ("Acquiror
Subsidiary"), obligating Acquiror or any Acquiror Subsidiary to issue or
sell any shares of capital stock of, or other equity interests in, Acquiror
or any Acquiror Subsidiary. Between December 31, 1995 and the date of this
Agreement, no shares of Acquiror Common Stock have been issued by Acquiror,
except pursuant to the options, warrants or other rights, agreements,
arrangements and commitments described in this Section 4.03 or Section 4.03
of the Acquiror Disclosure Schedule, in each case, in accordance with their
respective terms. There are no outstanding contractual obligations of
Acquiror or any Acquiror Subsidiary to repurchase, redeem or otherwise
acquire any shares of Acquiror Common Stock, or any capital stock of, or
any equity interests in, any Acquiror Subsidiary. The shares of Acquiror
Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights created by statute, Acquiror's Certificate of Incorporation or
Bylaws or any agreement to which Acquiror is a party or by which Acquiror
is bound and will, when issued, except with respect to shares to be issued
to Dual Invest AS, be registered under the Securities Act and the Exchange
Act and registered or exempt from registration under applicable Blue Sky
Laws.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Acquiror and Acquiror Sub has all necessary corporate power and authority
to execute and deliver this Agreement and, with respect to the Merger, to
perform its obligations hereunder and to consummate the Transactions. The<PAGE>
execution and delivery of this Agreement by Acquiror and Acquiror Sub and
the consummation by Acquiror and Acquiror Sub of the Transactions have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Acquiror or Acquiror Sub are necessary
to authorize this Agreement or to consummate the Transactions (other than,
with respect to the issuance of Acquiror Common Stock pursuant to the
Merger, the applicable rules and regulations of NYSE, and with respect to
the Merger, the filing and recordation of an appropriate Certificate of
Merger with the Secretary as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Acquiror and Acquiror Sub
and, assuming the due authorization, execution and delivery of this
Agreement by the Target, constitutes a legal, valid and binding obligation
of each of Acquiror and Acquiror Sub enforceable against each of Acquiror
and Acquiror Sub in accordance with its terms.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
The execution and delivery of this Agreement by Acquiror and Acquiror Sub
do not, and the performance of this Agreement by Acquiror and Acquiror Sub
will not, subject to obtaining the consents, approvals, authorizations and
permits and making the filings described in Section 4.05(b) and Section
4.05(b) of the Acquiror Disclosure Schedule, (i) conflict with or violate
the Certificate of Incorporation or Bylaws of either Acquiror or any
Acquiror Subsidiary, (ii) conflict with or violate any Law applicable to
Acquiror or any Acquiror Subsidiary or by which any property or asset of
any of them is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of
Acquiror or any Acquiror Subsidiary or require the consent of any third
party pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Acquiror or any Acquiror Subsidiary is a party or by
which Acquiror or any Acquiror Subsidiary or any property or asset of any
of them is bound or affected, except for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in
the aggregate, have a Material Adverse Effect on Acquiror or prevent
Acquiror and Acquiror Sub from timely performing their respective
obligations under this Agreement and consummating the Transactions.
(b) The execution and delivery of this Agreement by Acquiror and
Acquiror Sub do not, and the performance of this Agreement by Acquiror and
Acquiror Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) pursuant to the
Exchange Act, the Securities Act, Blue Sky Laws and the HSR Act and filing
and recordation of an appropriate Certificate of Merger with the Secretary
as required by Delaware Law, (ii) as specified in Section 4.05(b) of the
Acquiror Disclosure Schedule, and (iii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a Material Adverse Effect on Acquiror and
would not prevent or delay consummation of the Transactions, or otherwise
prevent Acquiror or Acquiror Sub from performing their respective
obligations under this Agreement.
SECTION 4.06. SEC FILINGS; FINANCIAL STATEMENTS. (a) Acquiror
has filed all forms, reports and documents required to be filed by it with<PAGE>
the SEC since December 31, 1992 (collectively, the "Acquiror SEC Reports").
The Acquiror SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations thereunder and (ii)
did not, at the time they were filed (or at the effective date thereof in
the case of registration statements), contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. No
Acquiror Subsidiary is currently required to file any form, report or other
document with the SEC under Section 12 of the Exchange Act.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Acquiror SEC Reports was
prepared in accordance with U.S. GAAP throughout the periods indicated
(except as may be indicated in the notes thereto and except that financial
statements included with interim reports do not contain all U.S. GAAP notes
to such financial statements) and each fairly presented in all material
respects the consolidated financial position, results of operations and
changes in stockholders' equity and cash flows of Acquiror and its
consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and
are not expected, individually or in the aggregate, to have a Material
Adverse Effect on Acquiror).
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
December 31, 1995, except as contemplated by, or disclosed pursuant to,
this Agreement including Section 4.07 of the Acquiror Disclosure Schedule,
or disclosed in any Acquiror SEC Report filed since December 31, 1995 and
prior to the date of this Agreement, Acquiror and each Acquiror Subsidiary
has conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1995, there has not
been (a) any event or events (whether or not covered by insurance),
individually or in the aggregate, having a Material Adverse Effect on
Acquiror, (b) any material change by Acquiror in its accounting methods,
principles or practices, (c) any entry by Acquiror or any Acquiror
Subsidiary into any commitment or transaction material to Acquiror or any
Acquiror Subsidiary, except in the ordinary course of business and
consistent with past practice, (d) any declaration, setting aside or
payment of any dividend or distribution in respect of any capital stock of
Acquiror or any redemption, purchase or other acquisition of any of its
securities or (e) other than pursuant to Acquiror's benefit plans, any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, except in the ordinary course of
business consistent with past practice.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the Transactions and except for this Agreement and any
other agreements or arrangements contemplated by this Agreement, Acquiror
Sub has not and will not have incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.<PAGE>
SECTION 4.08. BROKERS. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of Acquiror or any Acquiror Subsidiary.
SECTION 4.09. TAXES. (a) Acquiror and each Acquiror Subsidiary
has (i) filed all federal, state, local and foreign tax returns required to
be filed by them prior to the date of this Agreement (taking into account
extensions) and all of such returns were true and correct in all material
respects when filed and in compliance with applicable law, (ii) paid or
accrued all taxes shown to be due on such returns and paid all applicable
ad valorem and value added taxes as are due and (iii) paid or accrued all
taxes for which a notice of assessment or collection has been received
(other than amounts being contested in good faith by appropriate
proceedings), except in the case of clause (i), (ii) or (iii) for any such
filings, payments or accruals which would not, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth in Section
4.09(a) of the Acquiror Disclosure Schedule, neither the Internal Revenue
Service nor any other federal, state, local or foreign taxing authority has
asserted any claim for taxes, or to the best knowledge of Acquiror, is
threatening to assert any claims for taxes, which claims, individually or
in the aggregate, could have a Material Adverse Effect. Acquiror has open
years for federal, state and foreign income tax returns only as set forth
in Section 4.09(a) of the Acquiror Disclosure Schedule, and neither
Acquiror nor any Acquiror Subsidiary (i) has executed any waiver to extend
the time for assessment of any federal, state, local or foreign tax, or
(ii) filed, or has pending, any request or application for ruling, whether
federal, state, local or foreign. Acquiror and each Acquiror Subsidiary
have withheld or collected and paid over to the appropriate governmental
authorities (or are properly holding for such payment) all taxes required
by law to be withheld or collected, except for amounts that would not,
individually or in the aggregate, have a Material Adverse Effect. Neither
Acquiror nor any Acquiror Subsidiary has made an election under Section
341(f) of the Code. There are no liens for taxes upon the assets of
Acquiror or any Acquiror Subsidiary (other than liens for taxes that are
not yet due or that are being contested in good faith by appropriate
proceedings), except for liens which would not, individually or in the
aggregate, have a Material Adverse Effect. Acquiror and each Acquiror
Subsidiary have complied with all federal, state, local and foreign tax
laws except where such failure would not result in a Material Adverse
Effect.
(b) Neither Acquiror nor any Acquiror Subsidiary has taken or agreed
to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the
Code.
(c) The financial statements included in the Acquiror SEC Reports as
of December 31, 1995 includes appropriate reserves for all federal, state,
local and foreign taxes and other liabilities incurred as of such date but
not yet payable.
(d) The net operating losses and other carryovers available to
Acquiror and each Acquiror Subsidiary as of the date hereof are described
in Section 4.09 of the Acquiror Disclosure Schedule or the Acquiror SEC
Reports and as of the date hereof the ability of Acquiror and each Acquiror
Subsidiary to use such carryovers will not have been affected by Section<PAGE>
382, 383, or 384 of the Code or by the separate return limitation year or
consolidated return charge of ownership limitations of Treas. Regs. Section
1.1502-21 or 1.1502-22.
(e) Acquiror is not a U.S. real property holding company under
Section 897 of the Code.
(f) Neither Acquiror nor Acquiror Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(g) Neither Acquiror nor any Acquiror Subsidiary is under the
jurisdiction of a court in Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
(h) Neither Acquiror or any Acquiror Subsidiary holds stock of the
Target and will not hold stock of the Target prior to the Merger.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY THE TARGET PENDING THE
MERGER. The Target covenants and agrees that, between the date of this
Agreement and the Effective Time, except as set forth in Section 5.01 of
the Target Disclosure Schedule or as contemplated by any other provision of
this Agreement, unless Acquiror shall otherwise agree in writing (which
agreement shall not be unreasonably withheld), (i) the business of the
Target and the Subsidiaries shall be conducted only in, and the Target and
the Subsidiaries shall not take any action except in, the ordinary course
of business consistent with past practice and in accordance with all
applicable laws, (ii) the Target shall use all reasonable efforts to
preserve substantially intact its business organization, to keep available
the services of the current officers, employees and consultants of the
Target and the Subsidiaries and to preserve the current relationships of
the Target and the Subsidiaries with customers, suppliers and other persons
with which the Target or any Subsidiary has significant business relations,
(iii) the Target shall not and shall not permit any Subsidiary to engage in
any practice, take any action, or enter into any transaction of the sort
described in Section 3.08 above, and (iv) the Target and each Subsidiary
shall cause to be maintained in full force and effect, and without
modification or amendment, or any lapse of coverage under, all insurance
polices described in Section 3.24 of the Target Disclosure Schedule.
SECTION 5.02. CONDUCT OF BUSINESS BY ACQUIROR PENDING THE
MERGER. Acquiror covenants and agrees that, between the date of this
Agreement and the Effective Time, except as set forth in Section 5.02 of
the Acquiror Disclosure Schedule or as contemplated by any other provision
of this Agreement, unless the Target shall otherwise agree in writing
(which agreement will not be unreasonably withheld), (i) the businesses of
Acquiror and Acquiror Sub shall be conducted only in, and the Acquiror
shall not, and shall cause Acquiror Sub not to, take any action except in,
the ordinary course of business consistent with past practice and in
accordance with all applicable Laws, and (ii) Acquiror will not (a) amend
or otherwise change its Certificate of Incorporation or Bylaws, (b)
declare, set aside, make or pay any dividend or other distribution, payable<PAGE>
in cash, stock, property or otherwise, with respect to any of its capital
stock, or (c) reclassify, combine, split or divide its capital stock or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock or securities or obligations convertible into or exchangeable
for such capital stock.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. REGISTRATION STATEMENT; PROXY STATEMENT. (a) As
promptly as practicable after the execution of this Agreement, Acquiror
shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "Registration Statement")
including therein a combined proxy statement to be sent to the stockholders
of the Target (the "Proxy Statement") and Prospectus, in connection with
the registration under the Securities Act of the shares of Acquiror Common
Stock to be issued to the stockholders of the Target pursuant to the
Merger. Acquiror and the Target each shall use all reasonable efforts to
cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration
Statement, Acquiror shall take all or any action required under any
applicable federal or state securities laws in connection with the issuance
of shares of Acquiror Common Stock pursuant to the Merger. Each of the
Target and Acquiror shall pay its own expenses incurred in connection with
the Registration Statement, Proxy Statement and the Target's Stockholders'
Meeting, including, without limitation, the fees and disbursements of their
respective counsel, accountants and other representatives, except that the
Target and Acquiror each shall pay one-half of any printing, filing and
other fees and expenses incurred in connection therewith. The Target shall
furnish all information concerning the Target as Acquiror may reasonably
request in connection with such actions and the preparation of the
Registration Statement and Proxy Statement. As promptly as practicable
after the Registration Statement shall have become effective, the Target
shall mail the Proxy Statement to its stockholders. The Proxy Statement
shall include the unanimous recommendation of the Board of Directors of the
Target in favor of the Merger.
No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Acquiror or the Target without the
approval of the other party, which shall not be unreasonably withheld.
Acquiror and the Target each will advise the other, promptly after it
receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the
Acquiror Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
Proxy Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
Acquiror shall promptly prepare and submit to the NYSE a listing
application covering the shares of Acquiror Common Stock issuable in the
Merger, and shall use its reasonable best efforts to obtain, prior to the
Effective Time, approval for the listing of such Acquiror Common Stock,
subject to official notice of issuance, and the Target shall cooperate with
Acquiror with respect to such listing.<PAGE>
(b) Acquiror represents, warrants and agrees that the
information supplied by Acquiror for inclusion in the Registration
Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed
to the stockholders of the Target, (iii) the time of the Target's
Stockholder Meeting (as hereinafter defined), and (iv) the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it is made, is false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein, or
necessary in order to make the statements therein not false or misleading.
If at any time prior to the Effective Time any event or circumstance
relating to Acquiror or Acquiror Subsidiary, or their respective officers
or directors, should be discovered by Acquiror which should be set forth in
an amendment or a supplement to the Registration Statement or Proxy
Statement, Acquiror shall promptly inform the Target. Notwithstanding the
foregoing, Acquiror and Acquiror Sub make no representation or warranty
with respect to any information supplied by the Target or any of its
representatives which is contained in the Registration Statement or Proxy
Statement. All documents that Acquiror is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as
to form and substance in all material aspects with the applicable
requirements of the Securities Act and the rules and regulations
promulgated thereunder and the Exchange Act and the rules and regulations
promulgated thereunder.
(c) The Target represents, warrants and agrees that the
information supplied by the Target for inclusion in the Registration
Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed
to the stockholders of the Target, (iii) the time of the Target's
Stockholder Meeting, and (iv) the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact, or omit to
state any material fact required to be stated therein, or necessary in
order to make the statements therein not false or misleading. If at any
time prior to the Effective Time any event or circumstance relating to the
Target, or its officers or directors, should be discovered by the Target
which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, the Target shall promptly inform
Acquiror. Notwithstanding the foregoing, the Target makes no
representation or warranty with respect to any information supplied by
Acquiror or Acquiror Sub or any of their representatives in the
Registration Statement or Proxy Statement. All documents that the Target
is responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder and the Exchange Act and the
rules and regulations promulgated thereunder.
(d) The Target, Acquiror and Acquiror Sub each hereby (i)
consents to the use of its name and, on behalf of its subsidiaries and
affiliates, the names of such subsidiaries and affiliates and to the
inclusion of financial statements and business information relating to such
party and its subsidiaries and affiliates (in each case, to the extent
required by applicable securities laws) in the Registration Statement and<PAGE>
the Proxy Statement; (ii) agrees to use all reasonable efforts to obtain
the written consent of any person or entity retained by it which may be
required to be named (as an expert or otherwise) in the Registration
Statement or the Proxy Statement; and (iii) agrees to cooperate, and agrees
to use all reasonable efforts to cause its subsidiaries and affiliates to
cooperate, with any legal counsel, investment banker, accountant or other
agent or representative retained by any of the parties specified in clause
(i) above in connection with the preparation of any and all information
required, as determined after consultation with each party s counsel, to be
disclosed by applicable securities laws in the Registration Statement or
the Proxy Statement.
SECTION 6.02. TARGET STOCKHOLDER MEETING. The Target shall call
and hold a meeting of its stockholders (the "Target's Stockholder Meeting")
as promptly as practicable for the purpose of voting upon the approval of
this Agreement and the Merger, and the Target shall use all commercially
reasonable efforts to hold the Target's Stockholder Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective. The Target shall use all commercially reasonable efforts to
solicit from its stockholders proxies in favor of the approval of this
Agreement and the Merger and shall take all other action reasonably
necessary or advisable to secure the vote or consent of stockholders
required by Delaware Law to obtain such approvals (including unanimously
recommending such approval).
SECTION 6.03. APPROPRIATE ACTION; CONSENTS; FILINGS. (a) The
Target, Acquiror and Acquiror Sub shall use their best efforts to (i) take,
or cause to be taken, all appropriate action, and do, or cause to be done,
all things necessary, proper or advisable under applicable Law or required
to be taken by any Governmental Authority or otherwise to consummate and
make effective the Transactions as promptly as practicable, (ii) obtain
from any Governmental Authorities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by
Acquiror or the Target or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Transactions, including, without limitation, the
Merger, and (iii) as promptly as practicable, make all necessary filings,
and thereafter make any other required submissions, with respect to this
Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities Laws,
(B) the rules and regulations of the NYSE, (C) Delaware Law, (D) the HSR
Act and any related governmental request thereunder, and (E) any other
applicable Law; provided that Acquiror and the Target shall cooperate with
each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing party and its
advisors prior to filing and, if requested, accepting all reasonable
additions, deletions or changes suggested in connection therewith. The
Target and Acquiror shall use reasonable best efforts to furnish to each
other all information required for any application or other filing to be
made pursuant to the rules and regulations of any applicable Law (including
all information required to be included in the Proxy Statement and the
Registration Statement) in connection with the transactions contemplated by
this Agreement.
(b) (i) Each of Acquiror and the Target shall give (or shall
cause their respective subsidiaries to give) any notices to third parties,
and use, and cause their respective subsidiaries to use, their commercially<PAGE>
reasonable efforts to obtain any third party consents (including those set
forth in Section 3.05(a)(iii)), (A) necessary to consummate the
Transactions, (B) disclosed or required to be disclosed in the Target
Disclosure Schedule or the Acquiror Disclosure Schedule or (C) required to
prevent a Material Adverse Effect from occurring prior to or after the
Effective Time.
(ii) In the event that Acquiror or the Target shall fail to
obtain any third party consent described in subsection (b)(i) above, it
shall use its best efforts, and shall take any such actions reasonably
requested by the other party, to minimize any adverse effect upon the
Target and Acquiror, their respective subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result after
the Effective Time, from the failure to obtain such consent.
(iii) The Target agrees to cooperate with Acquiror prior to
the Effective Time to clarify the terms of any agreements which the Target
or any Subsidiary is currently a party which might restrict the Target or
any Subsidiary from the conduct of the operation, charter or leasing of
drilling rigs in any area of the world so that from and after the Effective
Time Acquiror and the Target will obtain the benefits of the current
practice under such agreements whereby Acquiror and the Target will not be
so restricted in their operations.
(c) From the date of this Agreement until the Effective Time,
each party shall promptly notify the other party of any pending, or to the
best knowledge of the first party, threatened, action, proceeding or
investigation by or before any Governmental Authority or any other person
(i) challenging or seeking material damages in connection with the Merger
or the conversion of the Target Common Stock into Acquiror Common Stock
pursuant to the Merger or (ii) seeking to restrain or prohibit the
consummation of the Merger or otherwise limit the right of Acquiror or, to
the knowledge of such first party, Acquiror Subsidiary to own or operate
all or any portion of the businesses or assets of the Target, which in
either case is reasonably likely to have a Material Adverse Effect on the
Target prior to the Effective Time, or a Material Adverse Effect on
Acquiror and the Acquiror Sub (including the Surviving Corporation) after
the Effective Time.
SECTION 6.04. ACCESS TO INFORMATION; CONFIDENTIALITY. Subject
to the Confidentiality Agreement (as hereinafter defined), from the date
hereof to the Effective Time, Acquiror and the Target will each provide to
the other, during normal business hours and upon reasonable notice, access
to all information and documents which the other may reasonably request
regarding the business, assets, liabilities, employees and other aspects of
the other party, other than information and documents that in the opinion
of such other party's counsel may not be disclosed under applicable Law.
SECTION 6.05. NO SOLICITATION OF TRANSACTIONS. The Target shall
not, directly or indirectly, negotiate with any person other than Acquiror
with respect to the acquisition of the Target or the shares of the Target
Common Stock owned by Dual Invest AS and it will not, and will not permit
any of its officers, directors, employees, agents or representatives
(including without limitation, investment bankers, attorneys and
accountants) to (i) initiate contact with, (ii) make, solicit or encourage
any inquiries or proposals, (iii) enter into, or participate in, any
discussions or negotiations with, (iv) disclose, directly or indirectly,<PAGE>
any information not customarily disclosed concerning the business and
properties of the Target or any Subsidiary to or (v) afford any access to
any of the Target s or any Subsidiary s properties, books and records to
any person in connection with any possible proposal relating to (a) the
disposition of their respective businesses or substantially all or their
assets,(b) the acquisition of equity or debt securities of the Target
including equity or debt securities owned by Dual Invest AS, or (iii) the
merger, share exchange or business combination, or similar acquisition
transaction of or involving Target or any Subsidiary with any person other
than Acquiror; provided, however, that nothing contained in this Section
6.05 shall prohibit the Board of Directors of the Target (the "Board") from
taking and disclosing to the stockholders of the Target a position in
accordance with Rules 14d-9 and 14e-2 under the Exchange Act with respect
to a tender offer or an exchange offer for share of Target Common Stock
commenced by a third party. The Target shall notify Acquiror promptly if
any proposal or offer, or any inquiry or contact with any person with
respect thereto, is made and shall, in any such notice to Acquiror,
indicate in reasonable detail the identity of the person making such
proposal, offer, inquiry or contact and the terms and conditions of such
proposal, offer, inquiry or contact. The Target agrees not to release any
third party from, or waive any provision of, any confidentiality or
standstill agreement to which the Target is a party. The Target
immediately shall cease and cause to be terminated all existing discussions
or negotiations with any parties conducted heretofore with respect to any
of the foregoing.
SECTION 6.06. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) The
Certificate of Incorporation and Bylaws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than
are set forth in Article VIII of the Bylaws of the Target, which provisions
shall not be amended, repealed or otherwise modified for a period of six
(6) years from the Effective Time in any manner that would affect adversely
the rights thereunder of individuals who at any time prior to the Effective
Time were directors, officers or employees of the Target or any of its
Subsidiaries, unless such modification shall be required by Delaware Law.
(b) From and after the Effective Time and for a period of six
(6) years thereafter, the Surviving Corporation shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the
date of this Agreement or who becomes prior to the Effective Time, an
officer or director of Target or any of the Subsidiaries, or an employee of
Target or any of the Subsidiaries who acts as a fiduciary under any
employee benefit plans of Target or any of the Subsidiaries (collectively,
the "Indemnified Parties") against all losses, expenses (including
reasonable attorneys fees), claims, damages, liabilities or amounts that
are paid in settlement of, with the approval of the Surviving Corporation
(which approval shall not unreasonably be withheld), or otherwise in
connection with, any threatened or actual claim, action, suit, proceeding
or investigation (a "Claim"), based in whole or in part on or arising in
whole or in part out of the fact that the Indemnified Party (or the Person
controlled by the Indemnified Party) is or was a director, officer or such
an employee of Target or any of the Subsidiaries and pertaining to any
matter existing or arising out of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, any Claim
arising out of this Agreement or any of the transactions contemplated
hereby), whether asserted or claimed prior to, at or after the Effective
Time, in each case to the fullest extent permitted under Delaware Law, and
shall pay any expenses, as incurred, in advance of the final disposition of<PAGE>
any such action or proceeding to each Indemnified Party to the fullest
extent permitted under Delaware Law. Without limiting the foregoing, in
the event any such claim is brought against any of the Indemnified Parties,
(i) such Indemnified Parties may retain counsel (including local counsel)
satisfactory to them and which shall be reasonably satisfactory to Acquiror
and the Surviving Corporation shall pay all reasonable fees and expenses of
such counsel for such Indemnified Parties; and (ii) the Surviving
Corporation shall use all reasonable efforts to assist in the defense of
any such Claim, provided that the Surviving Corporation shall not be liable
for any settlement effected without its written consent, which consent,
however, shall not be unreasonably withheld. The Indemnified Parties as a
group shall retain only one law firm (plus appropriate local counsel) to
represent them with respect to each such Claim unless there is, as
determined by counsel to the Indemnified Parties, under applicable
standards of professional conduct, a conflict or a reasonable likelihood of
a conflict on any significant issue between the positions of any two or
more Indemnified Parties at the expense of the Surviving Corporation.
(c) For a period of six (6) years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors and officers liability insurance maintained by
Target and the Subsidiaries covering all of the individuals currently
covered thereby (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions which are no less advantageous to such officers and
directors) with respect to claims arising from facts or events which
occurred before the Effective Time; provided, however, the Surviving
Corporation shall not be required to pay premiums for such insurance in
excess of $275,000 in the aggregate.
SECTION 6.07. OBLIGATIONS OF ACQUIROR SUB. Acquiror shall take
all action necessary to cause Acquiror Sub to perform its obligations under
this Agreement and to consummate the Merger on the terms and subject to
conditions set forth in this Agreement.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. (a) Acquiror and the Target
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such
public statement prior to such consultation and (b) prior to the Effective
Time, the Target will not issue any other press release or otherwise make
any public statements regarding its business, except as may be required by
Law or any listing agreement with the National Association of Securities
Dealers, Inc. (the "NASD") to which the Target is a party.
SECTION 6.09. DELIVERY OF SEC DOCUMENTS. Each of the Target and
Acquiror shall promptly deliver to the other true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of
this Agreement.
SECTION 6.10. ENVIRONMENTAL ASSESSMENT. The Target agrees that
Acquiror may perform or have performed on its behalf an environmental
assessment of its owned or leased real property. The Target will give
Acquiror and the officers, directors, employees, agents, consultants and
representatives of Acquiror access to the owned or leased real property,
including without limitation, access to enter upon and investigate and
collect air, surface water, groundwater and soil samples, in order to<PAGE>
conduct the environmental assessment. The Target will cooperate with
Acquiror in connection with such assessment, including without limitation
scheduling site visits as necessary to complete the assessment prior to the
Effective Time. The environmental assessment conducted by Acquiror or on
Acquiror's behalf shall be satisfactory to Acquiror in its sole and
absolute discretion.
SECTION 6.11. NOTIFICATION OF CERTAIN MATTERS. The Target shall
give prompt notice to Acquiror, and Acquiror shall give prompt notice to
the Target, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Target, Acquiror or Acquiror Sub, as
the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 6.11
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.12. FURTHER ACTION. At any time and from time to
time, each party to this Agreement agrees, subject to the terms and
conditions of this Agreement, to take such actions and to execute and
deliver such documents as may be necessary to effectuate the purposes of
this Agreement at the earliest practicable time.
SECTION 6.13. EMPLOYEE BENEFITS. (a) On or before March 31,
1996, the Target shall (i) amend the Dual Drilling Company Employees Tax
Deferred/Thrift Savings Plan and Trust (the "401(k) Plan") to (A) provide
for the limitation on compensation that may be considered under the 401(k)
Plan imposed by Section 401(a)(17) of the Code, as amended by the Omnibus
Budget Reconciliation Act of 1993, Publ. L. No. 103-66 effective January 1,
1994 and (B) amend the 401(k) Plan to provide clarification that the 401(k)
Plan, as amended and restated effective January 1, 1991, also constitutes
an amendment and restatement of the separate plan documents governing the
401(k) Plan and the Dual Drilling Company Employees Thrift Plan and Trust
that was merged into the 401(k) Plan effective January 1, 1991 (the "Prior
Thrift Plan") to the extent required for both the 401(k) Plan and Prior
Thrift Plan to constitute qualified plans within the meaning of Sections
401(a) and 501(a) of the Code for their plan years 1987 through 1990
(collectively the "401(k) Plan Amendment"), and (ii) file the 401(k) Plan
Amendment with the Dallas Key District of the Internal Revenue Service for
the purpose of entering into a closing agreement with the Internal Revenue
Service regarding the 401(k) Plan Amendment pursuant to Rev. Proc 94-16,
1994-1 C.B. 576, as modified by the Memorandum from Internal Revenue
Service Assistant Commissioner (Employee Plans and Exempt Organizations)
James McGovern to Field Offices Outlining Procedures for Processing
Employee Plans not Amended Timely Under Tax Reform Act of 1986, Released
October 26, 1995 (the "Closing Agreement"). Target shall timely pay any
monetary sanction assessed by the Internal Revenue Service pursuant to the
Closing Agreement. Subject to the Target taking the action required by the
two preceding sentences and the Internal Revenue Service entering into the
Closing Agreement, Acquiror agrees to (i) assume sponsorship of the 401(k)
Plan as of the Effective Time, (ii) upon entering into the Closing
Agreement, file the 401(k) Plan Amendment with the Internal Revenue Service
for the purpose of obtaining a determination letter from the Internal
Revenue Service that both the 401(k) Plan and the Prior Thrift Plan are
qualified within the meaning of Sections 401(a) and 501(a) of the Code<PAGE>
retroactive to the 1987 plan year of each plan and (iii) upon issuance by
the Internal Revenue Service of a favorable determination letter as
described in clause (ii) of this sentence, merge the 401(k) Plan into the
ENSCO Savings Plan as soon as administratively practicable thereafter.
Amounts payable under the 401(k) Plan to employees whose employment is
terminated for any reason prior to December 31, 1996 shall be paid promptly
after any such termination and not after the end of the 1996 plan year if
requested by the employee and such payment is permitted by the terms of the
401(k) Plan.
(b) Effective as of the Effective Time, Acquiror agrees to assume or,
alternatively, cause the Surviving Corporation to assume, the Dual Drilling
Company Employee Health Benefit Plan (the "Dual Medical Plan"), the Dual
Drilling Company Group Life Insurance Plan, the Dual Drilling Company Long-
Term Disability Plan, the Dual Drilling Company Group Travel Accident
Insurance Plan, the Voluntary Personal Accident Insurance Plan, the Long-
Term Disability Plan for Third Country Nationals, and the Premium
Conversion Cafeteria Plan unless any such plan has been terminated by the
Target as directed by Acquiror prior to the Effective Time (collectively,
the "Group Insurance Plans"). Acquiror agrees to provide to former
employees of the Target and its Subsidiaries under the plans continued or
to be established by Acquiror continuation group health coverage under
Section 4980B of the Code and Sections 601 to 608 of ERISA ("COBRA
Coverage") for any individuals receiving COBRA Coverage under the Dual
Medical Plan as of the Effective Time and for any employees of the Target
and its Subsidiaries and their dependents who become eligible for and elect
COBRA Coverage as a result of the Transactions contemplated by the
Agreement; provided, however, nothing contained herein shall obligate
Acquiror to extend COBRA Coverage beyond its normal expiration period. As
soon as practicable after the Effective Time, the Target shall transfer to
Acquiror or, if directed by Acquiror, to the Surviving Corporation, any
assets, including any insurance policies, held by the Target or a
Subsidiary supporting the payment of benefits under the Group Insurance
Plans. Acquiror and the Target agree that Acquiror may direct the Target
to take such action as Acquiror deems appropriate to terminate any Group
Insurance Plan conditioned upon the occurrence of and as of the Effective
Time, liquidate the assets of any trust or funding arrangement for any such
plan and settle all claims for benefits under any such plan.
(c) Effective as of the Effective Time, the Target shall take all
such action necessary (i) to amend the terms of the post-retirement medical
coverage provided by the Target under the Dual Medical Plan (the "Retiree
Medical Plan") to provide that no employee of the Target or any Subsidiary,
or any beneficiary or dependent of any such employee, may become entitled
to post-retirement medical coverage under the Retiree Medical Plan due to a
retirement or other termination of employment after the Effective Time and
(ii) to terminate the Retiree Medical Plan. Effective as of the Effective
Time, Acquiror agrees to provide post-retirement medical coverage under the
ENSCO Medical Plan to any former employee of the Target or any Subsidiary
who as of the Effective Time is receiving post-retirement medical coverage
under the Retiree Medical Plan, provided that such coverage under the ENSCO
Medical Plan shall be on the same terms and conditions and shall provide
the same benefits as currently available to retired former employees of
Acquiror under the ENSCO Medical Plan, but without regard to the age and
service provisions of the ENSCO Medical Plan that determine initial
eligibility for post-retirement medical coverage and without regard to any
preexisting condition limitations contained in the ENSCO Medical Plan. Any<PAGE>
employee of the Target or any Subsidiary who is not entitled to post-
retirement medical coverage under the Retiree Medical Plan as of the
Effective Time will be eligible for post-retirement medical coverage under
the ENSCO Medical Plan only if the terms and conditions for such coverage
under the ENSCO Medical Plan are satisfied.
(d) Effective as of the day before the Effective Time, the Target
shall take all such action necessary (i) to amend the provisions of the
Dual Drilling Company Supplemental Executive Retirement Plan (the "SERP")
to freeze all benefits under the SERP as of the day before the Effective
Time and to permit Acquiror or the Surviving Corporation, as successor to
the Target's rights under the SERP, to distribute the determined benefit
under the SERP payable to each participant covered by the SERP in one lump
sum payment in the sole discretion of Acquiror at any time from and after
January 1, 1997, (ii) to determine the benefits payable thereunder to each
participant, and (iii) to terminate the SERP effective as of the day before
the Effective Time.
(e) Effective as of the day before the Effective Time, the Target
shall take all such action necessary (i) to amend the provisions of the
Dual Drilling Company Benefit Restoration Plan (the "Benefit Restoration
Plan") to freeze all benefits under the Benefit Restoration Plan, (ii) to
determine the benefits payable thereunder to each participant, and (iii) to
terminate the Benefit Restoration Plan effective as of the day before the
Effective Time.
(f) To facilitate the payment of benefits from the Benefit
Restoration Plan and, if directed by Acquiror to facilitate the payment of
benefits under the SERP, the Target shall take all such action necessary
(i) to provide a schedule of benefits payable under the Benefit Restoration
Plan and, if applicable, the SERP, to the Trust Company of Texas in its
capacity as trustee (the "Trustee") of the Umbrella Trust evidenced by that
certain Trust Agreement dated October 1, 1994 by and between Dual Drilling
Company and Trust Company of Texas (the "Trust"), (ii) to direct the
Trustee to make payment from the assets of the Trust of all benefits
payable under the Benefit Restoration Plan or the SERP, and (iii) to cause
the Trustee to liquidate the assets of the Trust, except as otherwise
determined by Acquiror, provided that such actions are consistent with the
terms of the SERP, Benefit Restoration Plan and Trust, each as amended.
(g) Effective as of the day before the Effective Time, the Target
shall take all such action necessary to freeze all benefits under the
Discontinued Executive and Manager Team Incentive Program ("Team Incentive
Program") maintained by the Target and Acquiror agrees to assume the
benefit payment obligations of the Target under the Team Incentive Plan,
and after all such benefit payments have been made, the Team Incentive
Program shall be deemed terminated and Acquiror shall take such other
action as it deems appropriate to accomplish such termination.
(h) Effective as of the Effective Time, Acquiror shall assume the
Dual Drilling Company Severance Pay Plan for Office Employees, the Dual
Drilling Company Severance Pay Plan for Key Operating and Support Staff
Employees and the Dual Drilling Company Severance Pay Plan for Key
Operating and Engineering Managers (collectively, the "Employee Severance
Plans"), provided that Acquiror shall not be obligated to continue the
Employee Severance Plans for any specified period of time.<PAGE>
(i) Effective as of the day before the Effective Time, the Target
shall take all such action necessary to freeze all benefits under the
Employee Incentive Plan, the Safety Bonus Plan, and the Pro-Performance
Bonus Plan for Toolpushers maintained by the Target and Acquiror agrees to
assume the benefit payment obligations of the Target under such plans and
cause such payments to be made after the Effective Time, and after all such
payments have been made, the plans shall be deemed terminated and Acquiror
shall take such other action as it deems appropriate to accomplish such
termination.
(j) Acquiror agrees to assume the benefit payment obligations of the
Target under the Dual Special Performance Unit Plan, effective August 21,
1995 (as amended, the Dual Unit Plan ), maintained by the Target and
cause such payments to be made, and after all such payments have been made,
the Dual Unit Plan shall be deemed terminated and Acquiror shall take such
other action as it deems appropriate to accomplish such termination.
Target agrees that the aggregate amount of the Performance Bonus Pool (as
defined in the Dual Unit Plan) plus the amount payable to David W. Skarke
as a performance bonus calculated based on the amount of the Performance
Bonus Pool pursuant to that certain letter agreement dated October 2, 1995
(the "Letter Agreement") shall be $2,000,000. The Target shall take all
required actions prior to the Effective Time to amend the terms of the Dual
Unit Plan and the Letter Agreement so that the aggregate amounts payable
thereunder shall be $2,000,000.
(k) The Target agrees to terminate the Annual Incentive Plan as of
the date of the commencement of such plan and accordingly no benefits shall
accrue thereunder.
(l) Nothing in this Section 6.13 is intended or shall be construed to
limit Acquiror's right to modify, change, terminate or otherwise alter any
of the provisions of, or benefits provided under, any new plans or plans
established by Acquiror or the plans described in this Section 6.13 that
are assumed by Acquiror or the Surviving Corporation, or to create any
vested rights for participants in the benefits provided under such plans.
(m) Prior to the Effective Time, the Target shall file with the
Internal Revenue Service, all Annual Reports, Form 5500, and the applicable
Schedule F, required to be filed under Section 6039(d) of the Code, with
respect to the Premium Conversion Cafeteria Plan for each plan year since
the inception of the Premium Conversion Cafeteria Plan.
(n) Prior to the Effective Time, the Target shall, pursuant to the
requirements of the Delinquent Filer Voluntary Compliance Program described
in the Department of Labor ("DOL") Notice published in 59 Fed. Reg. 20873
(April 27, 1995), as a condition of relief from the annual reporting
requirements, (i) elect to file the one-time statement required under DOL
Reg. section 2520-104-23 with respect to (A) the SERP and (B) the Target
Employment Contracts applicable to L.H. Dick Robertson, W. Allen Parks and
Dudley M. Haralson, (ii) file with the DOL, the first page of the Form
5500, Annual Report, with the applicable items completed, (iii) pay to the
DOL the Two Thousand Five Hundred Dollar ($2,500) penalty applicable to
such Form 5500 filings, and (iv) file with the DOL the applicable one-time
statements required with respect to the SERP and such Target Employment
Contracts.<PAGE>
(o) All of the employment agreements listed on Schedule 6.13(o) of
the Target Disclosure Schedule will be terminated by the Target as of the
Effective Time. Notwithstanding the foregoing, Acquiror may offer
employment prior to the Effective Time to persons who have such employment
agreements and the terms of such employment, if accepted by such employee
of the Target, may affect the Target's obligations to the affected
employee.
SECTION 6.14. AFFILIATES; ACCOUNTING AND TAX TREATMENT. (a)
Section 6.14 of the Target Disclosure Schedule lists the names and
addresses of those persons who are, in the Target's reasonable judgment,
"affiliates" of the Target within the meaning of Rule 145 under the
Securities Act (each, a "Target Affiliate"). The Target shall use all
commercially reasonable efforts to obtain Affiliate Agreements in the form
of EXHIBIT B hereto ("Affiliate Agreements") from (i) at least 30 days
prior to the Effective Time, each of the officers, directors and
stockholders (other than Dual Invest AS) of the Target specified in Section
6.14 of the Target Disclosure Schedule and (ii) any person who may be
deemed to have become an affiliate of the Target (under Rule 145 under the
Securities Act) after the date of this Agreement and on or prior to the
Effective Time as soon as practicable after the date on which such person
attains such status. Each party hereto shall use its best efforts to cause
the Merger to qualify, and shall not take any actions which would (or fail
to take any actions the failure of which would) prevent the Merger from
qualifying, as a reorganization qualifying under the provisions of Section
368(a) of the Code, including, without limitation, that Acquiror agrees
that it will cause Target, in its new capacity as a subsidiary of Acquiror,
to (i) continue the Target s historic business and (ii) use a significant
portion of its historic business assets in such business.
(b) The Target shall provide to Acquiror for inclusion in the Proxy
Statement a written opinion from Akin, Gump, Strauss, Hauer & Feld, L.L.P.
dated as of the date that the Proxy Statement is first mailed to
stockholders of the Target to the effect that (i) the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code; (ii) Acquiror, Acquiror Sub and the
Target will each be a party to that reorganization within the meaning of
Section 368(b) of the Code; and (iii) the stockholders of the Target shall
not recognize any gain or loss for U.S. federal income tax purposes as a
result of the Merger, other than to the extent such stockholders receive
cash in lieu of fractional shares.
SECTION 6.15. CERTAIN EMPLOYEES. The Target agrees to terminate the
employment of any executive officer (as that term is defined in Rule 405
promulgated under the Exchange Act) of the Target identified by Acquiror at
least one day prior to the Effective Time. Such termination shall not
adversely affect any Long-Term Options, severance or other benefits such
executive officers shall be entitled to receive.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Target, Acquiror and Acquiror Sub to consummate the
Merger are subject to the satisfaction of the following conditions:<PAGE>
(a) this Agreement and the Transactions contemplated hereby
shall have been approved and adopted by the affirmative vote of the
stockholders of the Target in accordance with Delaware Law and the
Target's Certificate of Incorporation and Bylaws and the rules of the
NASD;
(b) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay,
decree, judgment or injunction (each an"Order") or statute, rule or
regulation which is in effect and which has the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger;
(c) the Registration Statement shall have been declared
effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect;
(d) Acquiror and the Target shall have received from the NYSE
evidence that the shares of Acquiror Common Stock to be issued to the
stockholders of the Target in the Merger shall be listed on the NYSE
immediately following the Effective Time; and
(e) any applicable waiting period under the HSR Act relating to
the Merger shall have expired or been terminated.
SECTION 7.02. CONDITIONS TO THE OBLIGATIONS OF ACQUIROR AND
ACQUIROR SUB. The obligations of Acquiror and Acquiror Sub to consummate
the Merger are subject to the satisfaction of the following further
conditions:
(a) the Target shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with by it at or prior to the Effective
Time and each of the representations and warranties of the Target
contained in this Agreement shall be true and correct in all material
respects as of the Effective Time as though made on and as of the
Effective Time, except that those representations and warranties which
address matters only as of a particular date shall remain true and
correct as of such date and Acquiror shall have received a certificate
of an executive officer of the Target to that effect;
(b) Acquiror shall have received from each Target Affiliate and
any other person who may be deemed to have become an affiliate of the
Target (under Rule 145 under the Securities Act) after the date of
this Agreement and at or prior to the Effective Time a signed
Affiliate Agreement;
(c) since the date of this Agreement, no material adverse change
in the financial condition, results of operations or business of the
Target and the Subsidiaries, taken as a whole, shall have occurred,
and neither the Target nor any Subsidiary shall have suffered any
damage, destruction or loss materially affecting the business or
properties of the Target and the Subsidiaries, taken as a whole;
(d) the Target and each Subsidiary shall have delivered to
Acquiror, each dated as of a date not earlier than thirty days prior
to the Effective Time, (i) copies of the certificates of incorporation
or other organizational documents, including all amendments thereto,<PAGE>
certified by the appropriate government official, of the Target and
each Subsidiary, (ii) to the extent issued by such jurisdiction,
certificates from the appropriate governmental official to the effect
that Target and each Subsidiary is in good standing in such
jurisdiction and listing all organizational documents of Target and
each Subsidiary on file, (iii) to the extent issued by such
jurisdiction, a certificate from the appropriate governmental official
in each jurisdiction in which the Target and each Subsidiary is
qualified to do business to the effect that such member is in good
standing in such jurisdiction, (iv) to the extent issued by such
jurisdiction, certificates indicating all taxes are current for the
Target and each Subsidiary in its jurisdiction of organization and
each jurisdiction in which such member is qualified to do or
conducting business, (v) to the extent issued by such jurisdiction,
certificates from the appropriate governmental official to the effect
that each Target Drilling Rig is documented and flagged in the
jurisdiction described in Section 3.28 of the Target Disclosure
Schedule, and (vi) Confirmation of Class Certificates from the
American Bureau of Shipping indicating that each of the Target
Drilling Rigs that is a jack-up drilling rig is in class and free of
any recommendations; and
(e) Acquiror shall have received from Akin, Gump, Strauss, Hauer
& Feld, L.L.P., a written opinion dated as of the date of the Closing
covering the matters set forth on EXHIBIT C hereto in form and
substance reasonably acceptable to counsel for Acquiror.
SECTION 7.03. CONDITIONS TO THE OBLIGATIONS OF THE TARGET. The
obligations of the Target to consummate the Merger are subject are subject
to the satisfaction of the following further conditions:
(a) Acquiror and Acquiror Sub shall have performed or complied
in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them at or prior to
the Effective Time and each of the representations and warranties of
Acquiror and Acquiror Sub contained in this Agreement shall be true
and correct in all material respects as of the Effective Time, as
though made on and as of the Effective Time, except that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date and the
Target shall have received a certificate of an executive officer of
Acquiror to that effect;
(b) since the date of this Agreement, no material adverse change
in the financial condition, results of operations or business of
Acquiror and the Acquiror Subsidiaries, taken as a whole, shall have
occurred, and Acquiror and the Acquiror Subsidiaries shall not have
suffered any damage, destruction or loss materially affecting the
business or properties of Acquiror and the Acquiror Subsidiaries,
taken as a whole; and
(c) the Target shall have received from Baker & McKenzie a
written opinion dated as of the date of the Closing covering the
matters set forth on EXHIBIT D hereto in form and substance reasonably
acceptable to counsel for the Target.
ARTICLE VIII<PAGE>
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated and
the Merger and the other Transactions may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of
this Agreement and the Transactions, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Acquiror, Acquiror Sub and the Target;
(b) by either Acquiror or the Target, if either (i) the
Effective Time shall not have occurred on or before July 31, 1996;
provided, however, that the right to terminate this Agreement under
this Section 8.01(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or
before such date; or (ii) there shall be any Order which is final and
nonappealable preventing the consummation of the Merger, except if the
party relying on such Order has not complied with its obligations
under Section 6.03(a);
(c) by Acquiror, if a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of the Target is
commenced, and the Board of Directors of the Target fails to recommend
against the stockholders of the Target tendering their shares into
such tender offer or exchange offer;
(d) by Acquiror, if the stockholders of the Target shall have
failed to approve and adopt this Agreement, the Merger and other
Transactions at a meeting duly convened therefor;
(e) by Acquiror, upon a breach of any representation, warranty,
covenant or agreement on the part of the Target set forth in this
Agreement, or if any representation or warranty of the Target shall
have become untrue, in either case such that the conditions set forth
in Section 7.02(a) would not be satisfied (a "Terminating Target
Breach"); provided, however, that, if such Terminating Target Breach
is curable by the Target through the exercise of its best efforts and
for so long as the Target continues to exercise such best efforts,
Acquiror may not terminate this Agreement under this Section 8.01(e);
or
(f) by the Target, upon breach of any representation, warranty,
covenant or agreement on the part of Acquiror set forth in this
Agreement, or if any representation or warranty of Acquiror shall have
become untrue, in either case such that the conditions set forth in
Section 7.03 would not be satisfied ("Terminating Acquiror Breach");
provided, however, that, if such Terminating Acquiror Breach is
curable by Acquiror through best efforts and for so long as Acquiror
continues to exercise such best efforts, the Target may not terminate
this Agreement under this Section 8.01(f).
SECTION 8.02. FEES AND EXPENSES. (a) The Target shall pay
Acquiror a fee (an "Alternative Proposal Fee") of $5,000,000, which amount
is inclusive of all of Specified Expenses (as hereinafter defined), if:
(i) this Agreement is terminated pursuant to Section 8.01(c); or<PAGE>
(ii) this Agreement is terminated pursuant to Section 8.01(d) as
a result of the failure of the stockholders of the Target to approve
the Merger and a Business Combination Transaction Proposal shall have
been made prior to such termination, and any Business Combination
Transaction is thereafter consummated within 12 months of such
termination.
As used herein, the term "Business Combination Transaction" shall mean any
of the following involving the Target: (1) any merger, consolidation,
share exchange, business combination or other similar transaction (other
than the Transactions); (2) any sale, lease, exchange, transfer or other
disposition (other than a pledge or mortgage) of 25% or more of the assets
of the Target and the Subsidiaries, taken as a whole, in a single
transaction or series of transactions; or (3) the acquisition by a person
or entity or any "group" (as such term is defined under Section 13(d) of
the Exchange Act and the rules and regulations thereunder) of beneficial
ownership of 33 1/3% or more of the shares of Target Common Stock, whether
by tender offer, exchange offer or otherwise.
(b) Acquiror shall be entitled to receive its Specified Expenses
(but not the Alternative Proposal Fee) in immediately available funds in
the event that this Agreement is terminated pursuant to Section 8.01(b)
(subject to the proviso thereof) or Section 8.01(e). Target shall be
entitled to receive its Specified Expenses in immediately available funds
in the event that this Agreement is terminated pursuant to Section 8.01(f).
(c) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to Section 8.01, all obligations of the
parties hereto shall terminate except the obligations of the parties
pursuant to this Section 8.02 and Sections 8.03, 8.04, 9.02, 9.03, 9.04,
9.05, 9.06, 9.07, 9.08, 9.10 and 9.11 and pursuant to the Confidentiality
Agreement. No termination of this Agreement pursuant to Section 8.01(e) or
8.01(f) shall prejudice the ability of a non-breaching party from seeking
damages from any other party for any breach of this Agreement, including,
without limitation, attorneys' fees and the right to pursue any remedy at
law or in equity. Notwithstanding the foregoing, if Acquiror is required
to file suit to seek the Alternative Proposal Fee or either Acquiror or the
Target is required to file suit to seek its Specified Expenses, and it
ultimately succeeds on the merits, it shall be entitled to all expenses,
including attorneys' fees, which it has incurred in enforcing its rights
under this Section 8.02.
(d) As used herein, "Specified Expenses" means all out-of-pocket
expenses and fees actually incurred or accrued by a Person or on its behalf
in connection with the Transactions prior to the termination of this
Agreement (including, without limitation, all fees and expenses of counsel,
financial advisors, banks or other entities providing financing to such
Person (including financing, commitment and other fees payable thereto),
accountants, environmental and other experts and consultants to such Person
and its affiliates, and all printing and advertising expenses) and in
connection with the negotiation, preparation, execution, performance and
termination of this Agreement, the structuring of the Transactions, any
agreements relating thereto and any filings to be made in connection
therewith.<PAGE>
(e) The Target agrees that from and after the Effective Time it
shall reimburse Acquiror for all out-of-pocket expenses and fees actually
incurred or accrued by Acquiror in connection with the Transaction.
(f) Except as set forth in this Section and Section 6.01, all
costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses, whether or
not any Transaction is consummated.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however,
that, after the approval and adoption of this Agreement and the
Transactions by the stockholders of the Target, no amendment may be made
which would violate Delaware Law. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
SECTION 8.04. WAIVER. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any agreement or
condition contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this
Agreement and any certificate delivered pursuant hereto by any person shall
terminate at the Effective Time, except that the agreements set forth in
Articles I and II and Sections 6.06 and 6.07 shall survive the Effective
Time indefinitely.
SECTION 9.02. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, facsimile, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this
Section 9.02):<PAGE>
if to Acquiror or Acquiror Sub:
ENSCO International Incorporated
1445 Ross Avenue, Suite 2700
Dallas, Texas 75202
Attention: C. Christopher Gaut
Facsimile: 214/855-0300
with a copy to:
Daniel W. Rabun
Baker & McKenzie
2001 Ross Avenue
4500 Trammell Crow Center
Dallas, Texas 75201
Facsimile: 214/978-3096/99
if to the Target:
DUAL DRILLING COMPANY
5956 Sherry Lane, Suite 1500
Dallas, Texas 75225
Attention: David W. Skarke
Facsimile: 214/373-0533
with a copy to:
David S. Peterman
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
7900 Pennzoil Place - South Tower
711 Louisiana Street
Houston, Texas 77002
Facsimile: 713/236-0823
SECTION 9.03. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliate" of a specified person means a person who,
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified
person;
(b) "beneficial owner" with respect to any shares means a person
who shall be deemed to be the beneficial owner of such shares (i)
which such person or any of its affiliates or associates (as such term
is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or understanding,
(iii) which are beneficially owned, directly or indirectly, by any
other persons with whom such person or any of its affiliates or
associates or any person with whom such person or any of its<PAGE>
affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any such shares, or (iv) pursuant to Section 13(d) of the
Exchange Act and any rules or regulations promulgated thereunder;
(c) "business day" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which
banks are not required or authorized to close in the New York, New
York;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation,
a "person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either alone or through or together with any other
subsidiary), owns or has rights to acquire, directly or indirectly,
more than 50% (or 49% in the case of Sime-Dual) of the stock or other
equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of
such corporation or other legal entity.
SECTION 9.04. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any
manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible
in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.05. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, except for the provisions of Article II and Sections 6.06
(collectively, the "Third Party Provisions"), nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement. <PAGE>
SECTION 9.06. INCORPORATION OF SCHEDULES. The Target Disclosure
Schedule and the Acquiror Disclosure Schedule referred to herein and signed
for identification by the parties hereto are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein.
SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or equity.
SECTION 9.08. GOVERNING LAW. EXCEPT TO THE EXTENT THAT DELAWARE
LAW IS MANDATORILY APPLICABLE TO THE MERGER AND THE RIGHTS OF THE
STOCKHOLDERS OF THE TARGET AND ACQUIROR SUB, THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS WITHOUT REGARD TO THE RULES OF CONFLICTS OF LAW THEREOF. ALL ACTIONS
AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE HEARD
AND DETERMINED IN ANY COURT SITTING IN THE CITY OF DALLAS, TEXAS.
SECTION 9.09. HEADINGS. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. Each of Acquiror, the
Target and Acquiror Sub hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or the
actions of Acquiror, the Target or Acquiror Sub in the negotiation,
administration, performance and enforcement thereof.
SECTION 9.12. ENTIRE AGREEMENT. This Agreement, the Target
Disclosure Schedule, the Acquiror Disclosure Schedule, the confidentiality
agreement, dated November 2, 1995, (the "Confidentiality Agreement"),
between the Target and Acquiror, the confidentiality agreement, dated
February 5, 1996, between the Target and Acquiror, and any documents
delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.<PAGE>
IN WITNESS WHEREOF, Acquiror, Acquiror Sub and the Target have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
ENSCO INTERNATIONAL INCORPORATED
By /s/ C. Christopher Gaut
--------------------------------------
C. Christopher Gaut,Vice President and
Chief Financial Officer
DDC ACQUISITION COMPANY
By /s/ C. Christopher Gaut
-------------------------------------
C. Christopher Gaut, President
DUAL DRILLING COMPANY
By /s/ David W. Starke
-------------------------------------
David W. Skarke, Chairman<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
DDC Acquisition Company
ARTICLE I
The name of the corporation is DDC Acquisition Company (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
the authority to issue is Ten Thousand (10,000) shares of Common Stock, par
value $0.10 per share.
ARTICLE V
The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Albert G. McGrath, Jr. 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
ARTICLE VI
The powers of the incorporator are to terminate upon the filing of
this certificate of incorporation, and the name and mailing address of the
persons who are to serve as the board of directors until the first annual
meeting of the stockholders or until their successors are elected and
qualified are as follows:<PAGE>
NAMES OF DIRECTORS MAILING ADDRESS
------------------ ---------------
William S. Chadwick, Jr. 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
C. Christopher Gaut 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
H. E. Malone 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
ARTICLE VII
Elections of directors need not be by written ballot unless the bylaws
of the Corporation shall so provide.
ARTICLE VIII
The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal bylaws of the Corporation, but the stockholders may
make additional bylaws and may alter or repeal any bylaw whether adopted by
them or otherwise.
ARTICLE IX
No contract or transaction between the Corporation and one or more of
its directors, officers, or stockholders or between the Corporation and any
person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its
directors, officers, or stockholders are directors, officers, or
stockholders, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the board or committee which
authorizes the contract or transaction, or solely because his, her, or
their votes are counted for such purpose, if: (i) the material facts as to
his or her relationship or interest and as to the contract or transaction
are disclosed or are known to the board of directors or the committee, and
the board of directors or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
or (ii) the material facts as to his or her relationship or interest and as
to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii)
the contract or transaction is fair as to the Corporation as of the time it
is authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be<PAGE>
counted in determining the presence of a quorum at a meeting of the board
of directors or of a committee which authorizes the contract or
transaction.
ARTICLE X
The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of
the Corporation or (ii) while a director or officer of the Corporation, is
or was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article X is in effect. Any repeal
or amendment of this Article X shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities
prior to any such repeal or amendment to this Article X. Such right shall
include the right to be paid by the Corporation expenses incurred in
defending any such proceeding in advance of its final disposition to the
maximum extent permitted under the Delaware General Corporation Law, as the
same exists or may hereafter be amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Corporation
within sixty (60) days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the
expenses of prosecuting such claim. It shall be a defense to any such
action that such indemnification or advancement of costs of defense are not
permitted under the Delaware General Corporation Law, but the burden of
proving such defense shall be on the Corporation. Neither the failure of
the Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible
shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the
death of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights
conferred above shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, bylaw, resolution of
stockholders or directors, agreement, or otherwise.
3<PAGE>
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an
action, suit, or proceeding, and any inquiry or investigation that could
lead to such an action, suit, or proceeding.
ARTICLE XI
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
this Corporation under the provisions of Section 291 of the General
Corporation Law of the State of Delaware or on the application of trustees
in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of the General Corporation
Law of the State of Delaware, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value
of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court
to which the said application has been made, be binding on all of the
creditors or class of creditors, and/or on all of the stockholders or class
of stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE XII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, as the same exists or
hereafter may be amended, or (iv) for any transaction from which the
director derived an improper personal benefit. If the General Corporation
Law of the State of Delaware is amended after the date of filing of this
certificate of incorporation to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation, in addition to the limitation
on personal liability provided herein, shall be limited to the fullest
extent permitted by the amended General Corporation Law of the State of
Delaware. Any repeal or modification of this Article XII by the
stockholders of the Corporation shall be prospective only, and shall not
4<PAGE>
adversely affect any limitation on the personal liability of a director of
the Corporation existing at the time of such repeal or modification.
The undersigned incorporator under penalties of perjury hereby
acknowledges that the foregoing certificate of incorporation is his act and
deed and that the facts stated therein are true.
-------------------------------
Albert G. McGrath, Jr.
5<PAGE>
EXHIBIT B
AFFILIATE AGREEMENT
ENSCO International Incorporated
1445 Ross Avenue, Suite 2700
Dallas, Texas 75202
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Dual Drilling Company, a Delaware corporation
("Dual"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"). Pursuant to the
terms of the Agreement and Plan of Merger dated March ___, 1996 (the
"Agreement"), between ENSCO International Incorporated, a Delaware
corporation ("ENSCO"), ______________, a Delaware corporation and a wholly
owned subsidiary of ENSCO ("Acquiror Sub"), and Dual, Acquiror Sub will be
merged with and into Dual (the "Merger").
In connection with the transactions contemplated by the Agreement, I
may receive shares of Common Stock, par value $.10 per share, of ENSCO (the
"ENSCO Securities").
I represent, warrant and covenant to ENSCO that in the event I receive
any ENSCO Securities as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the ENSCO Securities in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
the ENSCO Securities to the extent I felt necessary with my counsel or
counsel for Dual.
C. I have been advised that the issuance of ENSCO Securities to
me in connection with the transactions contemplated by the Agreement
has been registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised
that, since at the time the Merger and the Agreement were submitted
for a vote of the stockholders of Dual, I may be deemed to have been
an affiliate of Dual and the distribution by me of the ENSCO
Securities has not been registered under the Act, I may be prohibited
from selling, transferring or otherwise disposing of the ENSCO
Securities issued to me in connection with the transactions
contemplated by the Agreement unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in conformity with Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion<PAGE>
of counsel reasonably acceptable to ENSCO, or a "no action" letter
obtained by the undersigned from the staff of the Commission, such
sale, transfer or other disposition is otherwise exempt from
registration under the Act.
D. I understand that ENSCO is under no obligation to register
the sale, transfer or other disposition of the ENSCO Securities by me
or on my behalf under the Act or to take any other action necessary in
order to make compliance with an exemption from such registration
available.
It is understood and agreed that prior to any transfer of any of the
ENSCO Securities, I will give written notice to ENSCO of my intention to
effect such offer, sale or transfer, describing the proposed transaction in
sufficient detail to enable ENSCO and its counsel to determine that the
proposed transaction will not violate the Act.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Dual as described in the first paragraph
of this letter or as a waiver of any rights I may have to object to any
claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
___________________________________
Name:
Accepted this _____ day of
March, 1996 by
ENSCO INTERNATIONAL INCORPORATED
By:
-------------------------------
William Chadwick, Secretary
2<PAGE>
EXHIBIT C
LEGAL OPINION FOR COUNSEL FOR THE TARGET
[COUNSEL FOR TARGET LETTERHEAD]
______________, 1996
ENSCO International Incorporated
1445 Ross Avenue, Suite 2700
Dallas, Texas 57202
To whom it may concern:
We have acted as counsel to Dual Drilling Company, a Delaware
corporation (the "Target"), in connection with the execution and delivery
of the Agreement and Plan of Merger (the "Agreement"), dated as of March
__, 1996, among ENSCO International Incorporated, a Delaware corporation
("Acquiror"), Dual Acquisition Company, a Delaware corporation and a
wholly-owned subsidiary of Acquiror ("Acquiror Sub"), and the Target
providing for the merger of Acquiror Sub with and into the Target (the
"Merger"). This opinion letter is being furnished to you pursuant to
Section 7.02 of the Agreement. Unless otherwise defined herein or the
context hereof otherwise requires, each term used herein with its initial
letter capitalized has the meaning given to such term in the Agreement.
We have made such legal and factual examinations and inquiries,
including an examination of the originals, or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and
other instruments as we have deemed necessary or appropriate for the
purposes of this opinion, including (i) the Agreement, (ii) the Certificate
of Merger dated as of _____________, 1996 between the Target and Acquiror
Sub, and (iii) the Certificate of Incorporation and Bylaws, or equivalent
organizational documents, of Target and each Subsidiary.
We have relied, to the extent we deem appropriate, upon oral advice of
Staff of the Securities and Exchange Commission and, as to matters of fact,
upon representations made by the Target in the Agreement, certificates of
the Target or its officers and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Target. We have assumed that
the signatures on all documents examined by us are genuine, that all
documents submitted to us as originals are accurate and complete, and that<PAGE>
all documents submitted to us as copies are true and correct copies of the
originals thereof. We are members of the State Bar of Texas. We call your
attention to the fact that, in rendering our opinion, we are expressing our
views only as to the laws of the State of Texas and the federal laws of the
United States of America.
Based upon the foregoing and subject to the qualifications and
limitations set forth herein, we are of the opinion that:
1. The Target is a corporation, and each U.S. Subsidiary is a
corporation or limited partnership, in each case duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate or partnership power and
authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Target and each U.S. Subsidiary
are duly qualified or licensed as a foreign corporation or limited
partnership to do business, and are in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by them or
the nature of their business makes such qualification or licensing
necessary, except for such failures to be qualified or licensed and in good
standing that would not, individually or in the aggregate, have a Material
Adverse Effect.
2. The Target has all necessary corporate power and authority to
execute and deliver the Agreement and, with respect to the Merger, to
perform its obligations thereunder and to consummate the Transactions. The
execution and delivery of the Agreement by the Target and the consummation
by the Target of the Transactions have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the
part of the Target are necessary to authorize the Agreement or to
consummate the Transactions (other than the filing and recordation of an
appropriate Certificate of Merger with the Secretary as required by
Delaware Law).
3. The Agreement has been duly and validly executed and delivered by
the Target and, assuming the due authorization, execution and delivery of
the Agreement by Acquiror and Acquiror Sub, constitutes a legal, valid and
binding obligation of the Target, enforceable against the Target in
accordance with its terms, except as may be (1) limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or other
laws affecting enforcement of creditors' rights generally, and (2) subject
to general principles of equity, regardless of whether enforcement is
considered in a proceeding at law or in equity.
4. The execution and delivery of the Agreement by the Target do not,
and the performance of the Agreement by the Target will not (1) conflict
with or violate the Certificate of Incorporation, Bylaws or equivalent
organizational documents of the Target or any U.S. Subsidiary, (2) conflict
with or violate Delaware Law or any Laws of the State of Texas or the
United States of America, or to the best of our knowledge, any other Laws
applicable to the Target or any, U.S. Subsidiary or by which any property
or asset of the Target or any U.S. Subsidiary is bound or affected, or (3)
to the best of our knowledge, result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any right of termination,
2<PAGE>
amendment, acceleration or cancellation of, or give to others any right to
invalidate or terminate any purchase or other right to acquire property
under, or result in the creation of a lien or other encumbrance on any
property or asset of the Target or any Subsidiary or require the consent of
any third party pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Target or any Subsidiary is a party or by which the
Target or any Subsidiary or any property or asset of the Target or any
Subsidiary is bound or affected.
5. The execution and delivery of the Agreement by the Target do not,
and the performance of the Agreement by the Target will not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any domestic governmental or regulatory authority, except
the filing and recordation of an appropriate Certificate of Merger with the
Secretary as required by Delaware Law.
6. To our knowledge, except as set forth in the Target Disclosure
Schedule (as may have been updated), no actions, suits or proceedings are
pending or threatened against Target or any Subsidiary seeking to prevent
or delay the transactions contemplated by the Agreement or challenging any
of the terms or provisions of the Agreement or seeking material damages in
connection therewith.
7. The authorized capital stock of the Target and each U.S.
Subsidiary is as set forth in Section 3.03 of the Agreement.
8. Upon the issuance of a Certificate of Merger by the Secretary of
State of the State of Delaware, the Merger will become effective in
accordance with the Agreement and the Delaware Law, and each issued and
outstanding share of Company Common Stock (other than any Cancelable
Shares) will be converted into the consideration provided in Section 2.01
of the Agreement.
We have participated in conferences with officers and other
representatives of Acquiror, Acquiror Sub and the Target, and the
representatives of the independent auditors of Acquiror, Acquiror Sub and
the Target, at which the contents of the Registration Statement on Form S-4
(File No. 33-[_______]) declared effective by the SEC on [_______], 1996,
(the "Registration Statement"), the Proxy Statement/Prospectus dated
[_______], 1996 included in the Registration Statement (the "Proxy
Statement") and related matters were discussed. Although we do not pass
upon, and are not assuming any responsibility for and have not
independently verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Proxy Statement,
on the basis of the foregoing (relying as to materiality to a large extent
upon statements and representations of officers and other representatives
of the Target, Acquiror and Acquiror Sub), no facts have come to our
attention which lead us to believe that the Registration Statement (except
for (i) the financial statements and related schedules contained therein,
including the notes thereto and the independent auditors' reports thereon,
(ii) the other financial and statistical data contained therein and (iii)
the exhibits thereto, as to which we do not comment), at the time it became
effective contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
3<PAGE>
the statements therein not misleading, or that the Proxy Statement (except
for (i) the financial statements and related schedules contained therein,
including the notes thereto and the independent auditors' reports thereon,
and (ii) the other financial and statistical data contained therein, as to
which we do not comment), as of the date thereof, contained any untrue
statement of a material fact or omitted to state a material fact necessary
in order to make statements therein, in the light of the circumstances
under which they were made, not misleading.
The preceding opinions and "negative assurance" statements are subject
to the following qualifications and limitations:
A. In connection with statements herein qualified by "to our
knowledge" or as to matters that have "come to our attention," our
examination has been limited to discussions with the officers and other
representatives of the Target and each Subsidiary by, and those
statements refer only to what is in the actual current consciousness of,
attorneys in the Dallas, Houston and Washington D.C. offices of this
Firm who have been involved in the representation of the Target and each
Subsidiary in connection with the transactions described in the
Agreement, and we have made no independent investigations as to the
accuracy or completeness of any of the representations, warranties, data
or other information, written or oral, made or furnished by Acquiror or
Acquiror Sub to us or to you.
B. This opinion letter is limited in all respects to the laws
of the State of Texas, the federal laws of the United States of America
and the General Corporation Law of the State of Delaware, and we assume
no responsibility as to the applicability or the effect of any other
laws. No opinion is expressed herein with respect to any laws,
ordinances, statutes or regulations of any county, city or other
political subdivision of the State of Texas.
C. The opinions and statements expressed herein are limited to
the matters specifically addressed, and no opinion or statement is
implied or may be inferred beyond the matters so specifically addressed.
D. With respect to the opinion expressed in Paragraph 6, we
have not conducted any search of any indexes, dockets or other records
of any court or other Governmental Entity.
E. The opinions and statements expressed herein are rendered as
of the time immediately preceding the Effective Time, and we hereby
disclaim any obligation to advise you of, or to supplement any of our
opinions or statements because of, any changes in fact or laws which
might affect any of those opinions or statements.
F. This opinion letter is solely for your benefit in connection
with the transactions described in the Agreement and may not be relied
upon, quoted or otherwise used by any other person or entity or for any
other purpose without our express written consent.
Very truly yours,
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
4<PAGE>
EXHIBIT D
LEGAL OPINION FOR COUNSEL FOR ACQUIROR
[COUNSEL FOR ACQUIROR LETTERHEAD]
______________, 1996
DUAL DRILLING COMPANY
5956 Sherry Lane, Suite 1500
Dallas, Texas 75225
We have acted as counsel to ENSCO International Incorporated, a Delaware
corporation ("Acquiror"), and Dual Acquisition Company, a Delaware
corporation and a wholly-owned subsidiary of Acquiror ("Acquiror Sub"), in
connection with the execution and delivery of the Agreement and Plan of
Merger (the "Agreement"), dated as of February __, 1996, among DUAL
DRILLING COMPANY, a Delaware corporation (the "Target"), Acquiror and
Acquiror Sub, providing for the merger of Acquiror Sub with and into the
Target (the "Merger"). This opinion letter is being furnished to you
pursuant to Section 7.03 of the Agreement. Unless otherwise defined herein
or the context hereof otherwise requires, each term used herein with its
initial letter capitalized has the meaning given to such term in the
Agreement.
We have examined and are familiar with originals or copies, certified or
otherwise authenticated to our satisfaction, of such documents and records
of Acquiror and Acquiror Sub, and such statutes, regulations and
instruments as we have deemed necessary or advisable for the purposes of
this opinion letter, including, without limitation, (i) the Agreement, (ii)
the Certificate of Merger dated as of _____________, 1996 between the
Target and Acquiror Sub, (iii) the Certificate of Incorporation and Bylaws
of Acquiror, and (iv) the Certificate of Incorporation and Bylaws of
Acquiror Sub.
As to certain facts material to our opinions herein, we have assumed the
accuracy of the representations of Acquiror and Acquiror Sub in the
Agreement and of one or more officers of Acquiror or Acquiror Sub. In
addition, we have assumed that all signatures on all documents presented to
us are genuine, that all documents submitted to us as originals are
accurate and complete, that all documents submitted to us as copies are
true and complete copies of the originals thereof, that all information
submitted to us was accurate and complete, and that all persons executing
and delivering originals or copies of documents examined by us were
competent to execute and deliver such documents. We have also assumed the
due authorization, execution and delivery by the Target of the Agreement<PAGE>
and the Certificate of Merger and that the Agreement and the Certificate of
Merger constitute legal, valid and binding obligations of the Target
enforceable against the Target in accordance with their terms.
We have also considered applicable provisions of the Code and Department of
Treasury regulations promulgated under the Code (whether proposed,
temporary or final) now in effect (collectively, "Treasury Regulations"),
pertinent judicial authorities regarding applicable provisions of the Code
and Treasury Regulations, interpretive rulings of the IRS and such other
federal tax-related authorities as we have considered relevant.
Based upon the foregoing and subject to the qualifications and limitations
set forth below, we are of the opinion that:
1. Each of Acquiror and Acquiror Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to
own, lease and operate its properties as now owned, leased and operated and
to carry on its business as is now being conducted.
2. Each of Acquiror and Acquiror Sub has all necessary corporate
power and authority to execute and deliver the Agreement and, with respect
to the Merger, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of the Agreement by Acquiror and
Acquiror Sub and the consummation by Acquiror and Acquiror Sub of the
Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Acquiror
or Acquiror Sub are necessary to authorize the Agreement or to consummate
the Transactions (other than the filing and recordation of an appropriate
Certificate of Merger with the Secretary as required by Delaware Law).
3. The Agreement has been duly and validly executed and delivered by
Acquiror and Acquiror Sub and, assuming the due authorization, execution
and delivery of the Agreement by the Target, constitutes a legal, valid and
binding obligation of each of Acquiror and Acquiror Sub enforceable against
each of Acquiror and Acquiror Sub in accordance with its terms, except as
may be (i) limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws affecting enforcement of
creditors rights generally, and (ii) subject to general principles of
equity, regardless of whether enforcement is considered in a proceeding at
law or in equity.
4. The execution and delivery of the Agreement by Acquiror and
Acquiror Sub do not, and the performance of the Agreement by Acquiror and
Acquiror Sub will not (i) conflict with or violate the Certificate of
Incorporation or Bylaws of either Acquiror or any Acquiror Subsidiary, (ii)
conflict with or violate any Law applicable to Acquiror or any Acquiror
Subsidiary or by which any property or asset of any of them is bound or
affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Acquiror or any Acquiror Subsidiary
or require the consent of any third party pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
2<PAGE>
or other instrument or obligation to which Acquiror or any Acquiror
Subsidiary is a party or by which Acquiror or any Acquiror Subsidiary or
any property or asset of any of them is bound or affected and which is
identified in the Officer's Certificate attached hereto as Exhibit A (the
"Officer's Certificate").
5. The execution and delivery of the Agreement by Acquiror and
Acquiror Sub do not, and the performance of this Agreement by Acquiror and
Acquiror Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except pursuant to the filing
and recordation of an appropriate Certificate of Merger with the Secretary
as required by Delaware Law.
6. Upon the issuance of a Certificate of Merger by the Secretary of
State of the State of Delaware, the Merger will become effective in
accordance with the Agreement and the Delaware Law, and each issued and
outstanding share of Company Common Stock (other than any Cancelable
Shares) will be converted into the consideration provided in Section 2.01
of the Agreement.
7. To our knowledge, except as set forth in the Acquiror Disclosure
Schedule (as may have been updated), no actions, suits or proceedings are
pending or threatened against Acquiror or Acquiror Sub seeking to prevent
or delay the transactions contemplated by the Agreement or challenging any
of the terms or provisions of the Agreement or seeking material damages in
connection therewith.
8. The authorized capital stock of Acquiror and Acquiror Sub is as
set forth in Section 4.03 of the Agreement.
9. The shares of Acquiror Common Stock to be issued in the Merger
have been duly authorized and, when issued and delivered pursuant to the
terms of the Agreement, will be validly issued, fully paid, non-assessable
and free of preemptive rights.
We have participated in conferences with officers and other representatives
of Acquiror, Acquiror Sub and the Target, and representatives of the
independent auditors for the Target and Acquiror, at which the contents of
the Registration Statement on Form S-4 (File No. 33-___________) declared
effective by the SEC on ____________, 1996 (the "Registration Statement"),
the Proxy Statement/Prospectus dated _____________, 1996 included in the
Registration Statement (the "Proxy Statement") and related matters were
discussed. We are not passing upon, do not assume any responsibility for
and have not, and shall not be deemed to have, independently verified the
accuracy, completeness, or fairness of the statements contained in the
Registration Statement and the Proxy Statement; however, on the basis of
our participation in the preparation of the Proxy Statement and the
Registration Statement and our participation in discussions relating to the
contents thereof, no facts have come to our attention which lead us to
believe that the information with respect to Acquiror and Acquiror Sub
contained in the Registration Statement or the Proxy Statement (except for
the financial information, financial statements, financial schedules and
other financial or statistical data contained therein, as to which we
express no opinion), on the date such Registration Statement became
3<PAGE>
effective under the Securities Act, on the date such Proxy Statement was
first mailed to stockholders of the Target, on the date of the Target
Stockholders' Meeting convened to consider the Merger, or on the date
hereof, contained or contains any untrue statement of a material fact or
omitted or omits 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.
The preceding opinions and "negative assurance" statements are subject to
the following qualifications and limitations:
A. In connection with statements herein qualified by "to our
knowledge" or as to matters that have "come to our attention," our
examination has been limited to discussions with the officers and other
representatives of Acquiror and Acquiror Sub by, and those statements refer
only to what is in the actual current consciousness of, attorneys in the
Dallas, Chicago and Washington D.C. offices of this Firm who have been
involved in the representation of Acquiror and Acquiror Sub in connection
with the transactions described in the Agreement, and we have made no
independent investigations as to the accuracy or completeness of any of the
representations, warranties, data or other information, written or oral,
made or furnished by Acquiror or Acquiror Sub to us or to you.
B. This opinion letter is limited in all respects to the laws of the
State of Texas, the federal laws of the United States of America and the
General Corporation Law of the State of Delaware, and we assume no
responsibility as to the applicability or the effect of any other laws. No
opinion is expressed herein with respect to any laws, ordinances, statutes
or regulations of any county, city or other political subdivision of the
State of Texas.
C. The opinions and statements expressed herein are limited to the
matters specifically addressed, and no opinion or statement is implied or
may be inferred beyond the matters so specifically addressed.
D. With respect to the opinion expressed in Paragraph 7, we have not
conducted any search of any indexes, dockets or other records of any court
or other Governmental Entity.
E. The opinions and statements expressed herein are rendered as of
the time immediately preceding the Effective Time, and we hereby disclaim
any obligation to advise you of, or to supplement any of our opinions or
statements because of, any changes in fact or law which might affect any of
those opinions or statements.
F. This opinion letter is solely for your benefit in connection with
the transactions described in the Agreement and may not be relied upon,
quoted or otherwise used by any other person or entity or for any other
purpose without our express written consent.
Very truly yours,
4<PAGE>
AGREEMENT
This Agreement, dated as of March 21, 1996, is between ENSCO
International Incorporated, a Delaware corporation ("ENSCO"), and Dual
Invest AS, a Norwegian corporation (the "Stockholder").
WHEREAS, concurrently herewith, ENSCO, ENSCO Acquisition Company, a
Delaware corporation and a wholly-owned subsidiary of ENSCO ("Acquiror
Sub"), and DUAL DRILLING COMPANY, a Delaware corporation (the "Company"),
are entering into an Agreement and Plan of Merger (the "Merger Agreement";
capitalized terms used without definition herein having the meanings
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder is the record and beneficial owner of
9,382,354 shares of Target Common Stock (the "Block Shares");
WHEREAS, approval of the Merger Agreement and the Merger by the
Company s stockholders is a condition to the consummation of the Merger;
and
WHEREAS, as a condition to its entering into the Merger Agreement,
ENSCO has required that the Stockholder agree, and the Stockholder has
agreed, to enter into this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:
Section 1. VOTING AGREEMENT AND GRANT OF PROXY. From the date of
this Agreement until July 31, 1996:
(a) The Stockholder hereby agrees that at any meeting of the
stockholders of the Company, however called, and any action by consent of
the stockholders of the Company, the Stockholder shall vote the Block
Shares, and any other voting securities of the Company, whether issued
heretofore or hereafter, which are held of record or beneficially by the
Stockholder, (i) in favor of the Merger and the Merger Agreement, (ii) in
favor of adoption and approval of the Dual Special Performance Unit Plan,
effective August 21, 1995, as amended as contemplated by the Merger
Agreement, and (iii) against any proposal for any recapitalization, merger
(other than the Merger), sale of assets or other business combination
between the Company and any person or entity (other than ENSCO or Acquiror
Sub) or any other action or agreement that ENSCO notifies the Stockholder
in writing before any vote would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which could result in any of the
conditions to the Merger Agreement not being fulfilled.
(b) Except as provided in this Section 1 and except for transfers to
the Stockholder from an affiliate, the Stockholder hereby agrees that it
shall not, and shall not offer or agree to, sell, transfer, tender, assign,
hypothecate or otherwise dispose of, or create or permit to exist any
pledge, lien, security interest, mortgage, charge, claim, option, proxy,
voting restriction, right of first refusal, limitation on disposition, or
encumbrance of any kind on or with respect to the Block Shares or other<PAGE>
voting securities of the Company, whether issued heretofore or hereafter,
which are held of record or beneficially by the Stockholder.
(c) The Stockholder, by this Agreement, with respect to the Block
Shares and any other voting securities of the Company, whether issued
heretofore or hereafter, which are held of record by the Stockholder, does
hereby constitute and appoint ENSCO and Acquiror Sub, or any nominee of
ENSCO and Acquiror Sub, with full power of substitution, from the date
hereof to the earlier to occur of July 31, 1996 or the Effective Time, as
its true and lawful attorney and proxy (its "Proxy"), for and in its name,
place and stead, to demand that the Secretary of the Company call a special
meeting of the stockholders of the Company for the purpose of considering
any actions related to the Merger Agreement and to vote each of the Block
Shares and any other voting securities of the Company, whether issued
heretofore or hereafter, which are held of record by the Stockholder, at
every annual, special or adjourned meeting of the stockholders of the
Company, including the right to sign its name (as stockholder) to any
consent, certificate or other document relating to the Company that the law
of the State of Delaware may permit or require:
(i) in favor of the Merger and the Merger Agreement;
(ii) in favor of adoption and approval of the Dual Special
Performance Unit Plan, effective August 21, 1995, as amended
as contemplated by the Merger Agreement; and
(iii) against any proposal for any recapitalization, merger (other
than the Merger), sale of assets or other business
combination between the Company and any person or entity
(other than ENSCO or Acquiror Sub) or any other action or
agreement that ENSCO notifies the Stockholder in writing
before any vote would result in a breach of any covenant,
representation or warranty or any other obligation or agree-
ment of the Company under the Merger Agreement or could
result in any of the conditions to the Merger Agreement
not being fulfilled.
THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN
INTEREST. The Stockholder acknowledges receipt and review of a copy of the
Merger Agreement. The Stockholder hereby revokes all proxies heretofore
made by it that are inconsistent with this Section 1.
(d) The Stockholder shall perform such further acts and execute such
further documents and instruments as may reasonably be required to vest in
ENSCO and Acquiror Sub the power to carry out and give effect to the
provisions of this Agreement.
(e) The Company will cause each certificate of the Stockholder
evidencing the Block Shares outstanding during the period that this Section
1 is in effect to bear a legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF AN AGREEMENT DATED
MARCH 21, 1996, AS IT MAY BE AMENDED, AMONG DUAL DRILLING
COMPANY, ENSCO INTERNATIONAL INCORPORATED AND THE REGISTERED<PAGE>
HOLDER OF THIS CERTIFICATE, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
Upon the expiration of the period during which this Section 1 is in effect
or in the event that the Block Shares otherwise cease to be subject to the
restrictions on transfer set forth in this Agreement, the Company shall,
upon the written request of the Stockholder, issue to the Stockholder a new
certificate evidencing such shares without the legend required by this
Section 1(e).
(f) The Stockholder agrees that until July 31, 1996 it will not vote
any of the Block Shares at any annual, special or adjourned meeting of the
stockholders of the Company, including the right to sign its name (as
stockholder) to any consent, certificate or other document relating to the
Company that the law of the State of Delaware may permit or require, (i) to
approve of the adoption and approval of the Dual Special Performance Unit
Plan, effective August 21, 1995 in any manner except as contemplated by the
Merger Agreement, or (ii) in any manner that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the transactions contemplated by the Merger
Agreement.
Section 2. SECURITIES ACT COVENANTS AND REPRESENTATIONS. Subject
to ENSCO's obligations under Section 3.1, the Stockholder hereby agrees and
represents to ENSCO as follows:
(a) The Stockholder has been advised that the offer, sale and
delivery of the Acquiror Common Stock to the Stockholder pursuant to the
Merger may not be registered under the Securities Act, despite ENSCO's
obligations to use commercially reasonable efforts to effect such
registration. The Stockholder has been advised that if the offer, sale and
delivery of the Acquiror Common Stock to the Stockholder pursuant to the
Merger has not been registered under the Securities Act, then such shares
(the "Merger Shares") may not be offered, sold, pledged, hypothecated or
otherwise transferred unless subsequently registered under the Securities
Act or an exemption from such registration is available. The Stockholder
has also been advised that even if the sale and delivery to the stockholder
of the Merger Shares is registered under the Securities Act, to the extent
the Stockholder is considered an "affiliate" of the Company at the time the
Merger Agreement is submitted for a vote of the stockholders of the
Company, any public offering or sale by the Stockholder of the Merger
Shares will, under current law, require either (i) the further registration
under the Securities Act of the Merger Shares, which ENSCO is obligated
under Section 3.1 to use commercially reasonable efforts to effect, (ii)
compliance with Rule 145 promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act or (iii) the
availability of another exemption from such registration under the
Securities Act.
(b) The Stockholder has read this Agreement and the Merger Agreement
and has discussed their requirements and other applicable limitations upon
its ability to sell, transfer or otherwise dispose of the Merger Shares, to
the extent the Stockholder believed necessary, with its counsel or counsel
for the Company.
(c) The Stockholder also understands that stop transfer instructions
will be given to ENSCO's transfer agents with respect to the Merger Shares<PAGE>
and that a legend will be placed on the certificates for the Merger Shares
issued to the Stockholder, to the extent the Stockholder is considered an
"affiliate" of the Company at the time the Merger Agreement is submitted
for a vote of the stockholders of the Company.
Section 3. REGISTRATION OF MERGER SHARES.
(a) ENSCO shall use all commercially reasonable efforts on or before
the Effective Time to effect the registration under the Securities Act, on
an appropriate form, of the transfer of the Merger Shares to the
Stockholder and the Stockholder s subsequent transfer of such Merger Shares
to the security holders of the Stockholder in the manner contemplated on
Exhibit A and the resale of the Merger Shares by the Stockholder or by B.
Skaugen Shipping AS and its affiliates (collectively, Skaugen )(all
persons who receive Merger Shares and whose resales are covered by this
Section 3(a) shall be referred to herein as the "Selling Stockholders")
unless ENSCO shall have provided to Skaugen a no-action letter, or opinion
of counsel reasonably acceptable to Skaugen, concluding that Skaugen will
not be restricted in any way in its ability absent such registration to
resell Merger Shares received by Skaugen from the Stockholder. ENSCO shall
be required to file only one such registration statement and shall keep
such registration continuously effective until such time as the Merger
Shares have been disposed of by the Selling Stockholders but in no event
for a period of longer than twelve months after the date of the Effective
Time. For purposes of this Section 3, "Registration Statement" means the
registration statement covering the Merger Shares filed pursuant hereto,
including, to the extent applicable, the prospectus (the "Prospectus")
included in any such registration statement, all amendments and supplements
to any such registration statement (including post-effective amendments),
all exhibits to any such registration statement and all material
incorporated by reference in any such registration statement.
(b) In connection with ENSCO's registration obligations pursuant to
Section 3(a) and, except as provided in Section 3(b)(i), ENSCO shall keep
continuously effective the Registration Statement for the period of time
provided in Section 3(a), to permit the sale of the Merger Shares pursuant
to the Registration Statement in accordance with the intended method or
methods of distribution thereof specified by the Stockholder in Section
3(a) above and in Exhibit A, and shall:
(i) notify the Selling Stockholders, promptly (A) when a new
Registration Statement, Prospectus or supplement thereto or post-
effective amendment has been filed, and, with respect to a new
Registration Statement or post-effective amendment when it has become
effective, (B) of any request by the Commission for amendments or
supplements to any Registration Statement or Prospectus or for
additional information, (C) of the issuance by the Commission of any
comments with respect to any filing and of any stop order suspending
the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose, (D) of the receipt by ENSCO of any
notification with respect to the suspension of the qualification of
the Merger Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (E) of the happening
of any event that makes any statement made in any Registration
Statement, Prospectus or any document incorporated therein by
<PAGE>
reference untrue or that requires the making of any changes in any
Registration Statement, Prospectus or any document incorporated
therein by reference in order to make the statements therein not
misleading, and (F) of ENSCO's determination that a post-effective
amendment to a Registration Statement would be appropriate;
(ii) furnish to the Selling Stockholders, without charge, as many
conformed copies of the Registration Statement and any amendments
thereto as may reasonably be requested by the Selling Stockholders;
(iii) deliver to the Selling Stockholders, without charge, as
many copies of the Prospectus covering the Merger Shares and any
amendments or supplements thereto as the Stockholder or the Selling
Stockholders may reasonably request;
(iv) register, qualify, or obtain an exemption therefrom, in
connection with the registration or qualification or exemption
therefrom of the Merger Shares for offer and sale under the securities
or blue sky laws of New York and, as the Stockholder reasonably
requests, any other jurisdictions within the United States and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Merger Shares covered by the
Registration Statement; provided, however, that ENSCO shall not be
required to qualify as a dealer in securities or as a foreign
corporation, or otherwise subject itself to taxation in connection
with such activities, or to execute a general consent to service of
process in any jurisdiction;
(v) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission relating to such registration
and the distribution of the securities being offered, and make
generally available to its securities holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act no
later than 90 days after the end of any 12-month period (or 120 days
if such period is a fiscal year) beginning with the first month of the
first fiscal quarter commencing after the effective date of such
Registration Statement, which earning statements shall cover such 12-
month periods;
(vi) in no event later than ten business days before filing any
Registration Statement or Prospectus, or any amendment or supplement
(other than any amendment or supplement made solely as a result of
incorporation by reference of documents) to any thereof (or, in the
case of any Prospectus supplement or post-effective amendment relating
to a proposed shelf draw-down, three Business Days before the filing
thereof), furnish to the Stockholder copies of all such documents
proposed to be filed, which documents shall be subject to the
reasonable review of the Stockholder;
(vii) promptly after the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the Stockholder; and
<PAGE>
(viii) use all commercially reasonable efforts to take all
action necessary or advisable to effect such registration in the
manner contemplated by this Agreement.
(c) The Stockholder and each Selling Stockholder shall furnish to
ENSCO such information regarding the Stockholder and each Selling
Stockholder and the plan of distribution of the Merger Shares as ENSCO may
from time to time reasonably request.
(d) The Stockholder and each Selling Stockholder agrees that upon
receipt of any notice from ENSCO of the happening of any event of the kind
described in Sections 3(b)(i)(B), 3(b)(i)(C), 3(b)(i)(D), 3(b)(i)(E) or
3(b)(i)(F), it shall forthwith discontinue disposition of the Merger Shares
pursuant to the Prospectus until (A) it is advised in writing by ENSCO that
a new Registration Statement covering the offer of the Merger Shares has
become effective under the Securities Act or (B) it receives copies of a
supplemented or amended Prospectus, or (C) until it is advised in writing
by ENSCO that the use of the Prospectus may be resumed. ENSCO shall
promptly take all such action as may be necessary or appropriate,
including, without limitation, the filing of a new Registration Statement
or an amendment to the then current Registration Statement and/or the
filing of an amended Prospectus, to limit the duration of any
discontinuance with respect to the disposition of the Merger Shares
pursuant to this Section 3(d).
(e) The Stockholder and each Selling Stockholder shall cooperate with
ENSCO in all reasonable respects in connection with the preparation and
filing of the Registration Statement; provided, however, that the
Stockholder and each Selling Stockholder shall not be required to incur any
material out-of-pocket cost or expense when providing such cooperation.
(f) The Stockholder and any Selling Stockholder agrees at any time
beginning not earlier than six (6) months after the Effective Time not to
effect any public sale or distribution of any of ENSCO's securities during
the period beginning 10 days prior to and ending 90 days after, the closing
of an underwritten offering of securities by ENSCO if the managing
underwriter in such offering determines the sale of the Merger Shares would
have an adverse effect on an orderly public distribution of securities in
the underwritten offering or would have an adverse effect on the price of
the securities offered in the underwritten offering; provided that if the
Stockholder or any Selling Stockholder is prevented from selling or
distributing ENSCO's securities during any period pursuant to this Section
3(f), then the registration provided for in Section 3(a) shall be kept
continuously effective for at least 90 days after the end of any such
period notwithstanding the limitation provided in Section 3(a) that such
registration shall in no event be required to be kept effective for a
period of longer than 12 months after the date of the Effective Time;
(g) All expenses incident to ENSCO's performance of or compliance
with this Agreement, including without limitation all registration and
filing fees, fees and expenses for compliance with securities or blue sky
laws (including fees and disbursements of ENSCO's counsel in connection
with blue sky qualifications or registrations (or the obtaining of
exemptions therefrom) of the Merger Shares), printing expenses (including
expenses of printing Prospectuses), messenger and delivery expenses,
<PAGE>
internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), fees
and disbursements of its counsel and its independent certified public
accountants, fees and expenses of any special experts retained by ENSCO in
connection with any registration hereunder, and fees and expenses of other
persons retained by ENSCO, but excluding fees and disbursements of counsel
retained by the Stockholder, any fees and expenses of any underwriters and
transfer taxes, if any, relating to the Merger Shares, shall be borne by
ENSCO.
(h) ENSCO shall indemnify and hold harmless, to the full extent
permitted by law, the Stockholder, its officers, directors, employees,
representatives and agents, and each Person who controls (within the
meaning of the Securities Act) the Stockholder, and each other Selling
Stockholder against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) resulting
from any untrue or alleged untrue statement of a material fact contained in
any Registration Statement or any Prospectus, or any amendment or
supplement thereto, or any omission or alleged omission to state in any
thereof a material fact required to be stated therein or necessary to make
the statements therein not misleading, except in each case insofar, but
only insofar, as the same arises out of or is based upon an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in such Registration Statement,
Prospectus, amendment or supplement, as the case may be, made or omitted,
as the case may be, in reliance upon and in conformity with written
information furnished to ENSCO by a Selling Stockholder expressly for use
therein.
(i) The Stockholder and each Selling Stockholder each with respect
only to written information furnished by it to ENSCO expressly for use in
any Registration Statement, any Prospectus, or any amendment or supplement
thereto shall indemnify and hold harmless, to the full extent permitted by
law, ENSCO, its officers, directors, employees, representatives and agents,
and each Person who controls (within the meaning of the Securities Act)
ENSCO, against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) resulting
from any untrue or alleged untrue statement of a material fact contained in
such Registration Statement, any Prospectus, or any amendment or supplement
thereto, or any omission or alleged omission to state in any thereof a
material fact required to be stated therein or necessary to make the
statements therein not misleading, as the same arises out of or is based
upon an untrue statement or alleged untrue statement of a material fact or
an omission or alleged omission to state a material fact in such
Registration Statement, Prospectus, amendment or supplement, as the case
may be, made or omitted, as the case may be, in reliance upon and in
conformity with such written information.
(j) Each party entitled to indemnification under this Section 3 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided, that
counsel for the Indemnifying Party, who will conduct the defense of such
<PAGE>
claim or litigation, is approved by the Indemnified Party (whose approval
will not be unreasonably withheld or delayed); and provided, further, that
the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations except to the
extent that its defense of the claim or litigation involved is prejudiced
by such failure. The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party shall
pay such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential conflicts of interest between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of any claim or litigation, and
no Indemnified Party will consent to entry of any judgment or settle any
claim or litigation without the prior written consent of the Indemnifying
Party. Each Indemnified Party shall furnish such information regarding
himself or itself and the claim in question as the Indemnifying Party may
reasonably request and as shall be reasonably required in connection with
the defense of such claim and litigation resulting therefrom.
(k) If for any reason the indemnification provided for in this
Section 3 from an Indemnifying Party is unavailable to an Indemnified Party
hereunder or insufficient to hold it harmless as contemplated by this
Section 3, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of an Indemnifying Party and Indemnified Party in connection with the
actions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact, has been made by, or relates to information supplied by, an
Indemnifying Party or Indemnified Party, and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 3(j), any legal
or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this
Section 3(k) were determined by pro rata allocation or by any other method
of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Section 4. TAX REPRESENTATION. The Stockholder represents and
warrants to ENSCO that, except as set forth on Exhibit A hereto, it has no
<PAGE>
present plan or intention to sell, exchange, transfer by gift, or otherwise
dispose of the Merger Shares.
Section 5. HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976.
In connection with the Merger, to the extent required by applicable law,
the Stockholder agrees promptly and timely to file, or cause to be filed,
all notifications, including responses to requests for information,
required to be filed by it by the HSR Act. The Stockholder agrees to
cooperate with ENSCO, Acquiror Sub and the Company to the extent necessary
to permit them to prepare their separate filings and to supply any
additional information that may be submitted to the Federal Trade
Commission or the Department of Justice relating to the transactions
contemplated by the Merger Agreement under the antitrust laws.
Section 6. DISCLOSURE. The Stockholder will consult with ENSCO
and allow ENSCO a reasonable time to consider and comment on any press
release or public disclosure by the Stockholder of matters related to this
Agreement, the Merger Agreement or the Merger, except to the extent
required by applicable law and based on the advice of counsel. ENSCO
agrees to provide the Stockholder a copy of any press release or public
disclosure of any matters relating to this Agreement, the Merger Agreement
or the Merger. ENSCO will consult with the Stockholder and allow it a
reasonable time to consider and comment on any press release or public
disclosure by ENSCO of matters related to this Agreement, the Merger
Agreement or the Merger, except to the extent required by applicable law
and based on the advice of counsel.
Section 7. NO SOLICITATION. The Stockholder agrees that until July
31, 1996, it will not negotiate with any person other than ENSCO with
respect to the acquisition of the Company or the Target Common Stock owned
by the Stockholder and it will not, and will not permit any of its
officers, directors, employees, agents or representatives (including
without limitation, investment bankers, attorneys and accountants) to
(a) initiate contact with, (b) make, solicit or encourage any inquiries or
proposals, (c) enter into or participate in any discussions or negotiations
with, (d) disclose, directly or indirectly, any information not customarily
disclosed concerning the business and properties of the Company or
Stockholder's interest in the Company under the control of Stockholder to
or (e) afford any access to the Company s properties, books and records in
its possession or under its control to any person in connection with any
possible proposal relating to (i) the disposition of the Company s or the
Stockholder's businesses or substantially all of their respective assets,
(ii) the acquisition of equity or debt securities of the Company or the
Stockholder, including equity or debt securities in the Company owned by
the Stockholder, or (iii) the merger, share exchange or business
combination, or similar acquisition transaction of or involving the Company
or the Stockholder with any person other than ENSCO. Until July 31, 1996,
the Stockholder will immediately notify ENSCO orally, and subsequently
confirm in writing, all the relevant details relating to all inquiries and
proposals which it may receive relating to any such matters. Until July
31, 1996, the Stockholder will not, and will not permit any of its
representatives, at any time, to enter into or participate in any
discussions or negotiations regarding, or accept, any proposal for such a
transaction received by them from a third party or that a third party
expresses a desire to communicate to it.
<PAGE>
Section 8. FURTHER ASSURANCES. Each party shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out
and comply with all of their obligations under this Agreement. Without
limiting the generality of the foregoing, none of the parties hereto shall
enter into any agreement or arrangement (or alter, amend or terminate any
existing agreement or arrangement) if such action would materially impair
the ability of any party to effectuate, carry out or comply with all the
terms of this Agreement. If requested by ENSCO, the Stockholder and each
Selling Stockholder agrees to execute a letter to ENSCO representing that
the Stockholder and/or Selling Stockholder executing such letter has
complied with its obligations hereunder as of the date of such letter.
Section 9. REPRESENTATIONS AND WARRANTIES OF ENSCO. ENSCO
represents and warrants to the Stockholder as follows: Each of this
Agreement and the Merger Agreement has been approved by the Board of
Directors of ENSCO, and the Merger Agreement has been approved by the Board
of Directors of Acquiror Sub and by ENSCO as the sole stockholder of
Acquiror Sub, in each case representing all necessary corporate action on
the part of ENSCO and Acquiror Sub (no action by the stockholders of ENSCO
being required). Each of this Agreement and the Merger Agreement has been
duly executed and delivered by a duly authorized officer of ENSCO and, in
the case of the Merger Agreement, Acquiror Sub. Each of this Agreement and
the Merger Agreement constitutes a valid and binding agreement of ENSCO
and, in the case of the Merger Agreement, Acquiror Sub, enforceable against
ENSCO and, in the case of the Merger Agreement, Acquiror Sub in accordance
with its terms.
Section 10. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to ENSCO as follows: This Agreement has
been duly executed and delivered by the Stockholder and constitutes the
valid and binding agreement of the Stockholder, enforceable against the
Stockholder in accordance with its terms. The Block Shares are the only
voting securities of the Company owned (beneficially or of record) by the
Stockholder, and, except as provided in this Agreement, the Block Shares
are not subject to any voting trust, voting agreement or similar
arrangement whatsoever.
Section 11. EFFECTIVENESS AND TERMINATION. It is a condition
precedent to the effectiveness of this Agreement that the Merger Agreement
shall have been executed and delivered. In the event the Merger Agreement
is terminated in accordance with its terms, this Agreement shall
automatically terminate and be of no further force or effect. Upon such
termination, except for any rights any party may have in respect of any
breach by any other party of its obligations hereunder, none of the parties
hereto shall have any further obligation or liability hereunder.
Section 12. MISCELLANEOUS.
(a) NOTICES, ETC. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement
shall be in writing and shall be deemed to have been duly given to any
party when delivered personally (by courier service or otherwise), when
delivered by telecopy and confirmed by return telecopy, or seven days after
<PAGE>
being mailed by first-class mail, postage prepaid, in each case to the
applicable addresses set forth below:
If to ENSCO:
ENSCO International Incorporated
2700 Fountain Place
1445 Ross Avenue
Dallas, TX 75202-2792
Attn: C. Christopher Gaut
Telecopy: (214) 855-0300
with a copy to:
Daniel W. Rabun, Esq.
Baker & McKenzie
2001 Ross Avenue, Suite 4500
Dallas, TX 75201
Telecopy: (214) 978-3099
If to the Stockholder:
Dual Invest AS
P. O. Box 1611
Vika 0119
Oslo, Norway
with a copy to:
Martin B. McNamara
Gibson, Dunn & Crutcher
1717 Main Street, Suite 5400
Dallas, TX 75201-4605
or to such other address as such party shall have designated by notice so
given to each other party.
(b) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by
an instrument in writing signed by ENSCO and the Stockholder.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns, including without limitation in the case
of any corporate party hereto any corporate successor by merger or
otherwise.
(d) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding among the parties relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to such
subject matter. There are no representations, warranties or covenants by
the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement. Notwithstanding the foregoing, in
no event shall this Agreement or the execution and delivery of the Merger
Agreement affect the Stockholder's obligations under Section 2 of that
<PAGE>
certain letter agreement between ENSCO and the Stockholder dated January
25, 1996.
(e) SEVERABILITY. If any term of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable
to any extent, the remainder of this Agreement and the application of such
term to the other parties or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by applicable law,
provided that in such event the parties shall negotiate in good faith in an
attempt to agree to another provision (in lieu of the term or application
held to be invalid or unenforceable) that will be valid and enforceable and
will carry out the parties intentions hereunder.
(f) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or
beginning of the exercise of any thereof by any party shall not preclude
the simultaneous or later exercise of any other such right, power or remedy
by such party.
(g) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or
other right, power or remedy or to demand such compliance.
(h) THIRD PARTY BENEFICIARIES. Except for the Selling Stockholders
and those persons for whom indemnification is provided, this Agreement is
not intended to be for the benefit of and shall not be enforceable by any
person or entity which is not a party hereto. The Selling Stockholders and
those persons for whom indemnification is provided, however, may enforce
this Agreement.
(i) GOVERNING LAW. This Agreement is governed by and construed in
accordance with the laws of the State of Delaware (without regard to
conflict of laws principles).
(j) ARBITRATION. (i) Any dispute arising out of or related to this
Agreement shall be finally settled by arbitration in accordance with the
Rules of the London Court of International Arbitration ("LCIA"), which
rules are deemed to be incorporated by reference into this clause. Unless
the parties otherwise agree, the arbitration shall take place in London,
England. The parties hereby agree to exclude any right of application or
appeal to the courts of said jurisdiction in connection with any question
of law arising in the course of reference out of the award, in particular
the right of appeal under Section 1 of the Arbitration Act 1979 in relation
to any award made by the arbitrators and the right to apply to the High
Court under Section 2 of the Arbitration Act 1979 for the determination of
any question of law arising in the course of any arbitration proceedings
hereunder. Each of the parties shall appoint one arbitrator and the two so
nominated shall in turn choose a third arbitrator. If the arbitrators
chosen by the parties cannot agree on the choice of the third arbitrator
<PAGE>
within a period of fourteen (14) days after their nomination, then the
third arbitrator shall be appointed by the Court of the LCIA.
(ii) The arbitration shall be conducted in the English language.
Relevant documents in other languages shall be translated into English if
the arbitrators so direct. In arriving at their award, the arbitrators
shall give effect insofar as possible to the desire of the parties that the
dispute or controversy be resolved in accordance with good commercial
practice and principles of fairness and equity, and shall make every effort
to find a solution to the dispute in the provisions of this Agreement and
shall give full effect to all parts hereof. In particular, the parties
acknowledge that money damages are not an adequate remedy for violations of
Section 1 of this Agreement and ENSCO may, in its sole discretion, apply to
the arbitral tribunal for specific performance in order to enforce Section
1 of this Agreement and, to the extent permitted by applicable law, each
party waives any objection to the imposition of such relief.
(iii) To the extent a solution cannot be found in the
provisions of this Agreement, the arbitrators shall apply the law of
Delaware.
(iv) The parties agree that after either has filed a Request for
Arbitration, they shall, upon request, make discovery and disclosure of all
written materials relevant to the subject of the dispute. The arbitrators
shall make the final determination as to any discovery disputes between the
parties. Examination of witnesses at the hearings by the parties, their
legal counsel and by the arbitrators shall be permitted. A written
transcript of the hearing may be ordered by either of the parties at its
own expense.
(v) The award of a majority of the arbitrators shall be final
and binding upon the parties, and shall be the exclusive remedy of the
parties for all claims, counterclaims, issues or accountings presented or
pled to the arbitrators. Any award (other than specific performance) shall
be granted and paid in U.S. Dollars exclusive of any deduction or offset
and shall include interest from the date of breach or other violations of
this Agreement until the award is fully paid, computed at the prime
commercial lending rate announced from time to time by Citibank, N.A.,
adjusted daily. The arbitrators shall have the authority to order that all
or a part of the legal or other costs, fees and expenses of a party,
including fees paid to the LCIA and the arbitrators and the reasonable
attorneys' fees, be paid by another party. Judgment upon the award may be
entered in any court having jurisdiction. An application may be made to any
such court for a judicial acceptance of the award and an order for
enforcement.
(vi) Nothing in this section shall be construed to preclude any
party from seeking provisional remedies at any stage of the negotiation,
conciliation or arbitration proceedings, including but not limited to
temporary restraining orders or preliminary injunctions from any court of
competent jurisdiction which such party in good faith deems reasonably
necessary for the protection of its rights. Such preliminary relief shall
not be sought as a means of avoiding conciliation or arbitration.
<PAGE>
(l) NAME, CAPTIONS, GENDER. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and
shall not affect the interpretation or construction hereof. Whenever the
context may require, any pronoun used herein shall include the
corresponding masculine, feminine or neuter forms.
(m) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together constitute an instrument. Each counterpart may consist of a
number of copies each signed by less that all, but together signed by all,
the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
ENSCO INTERNATIONAL INCORPORATED
By: /s/ C. Christopher Gaut
-------------------------------------
C. Christopher Gaut, Vice President
and Chief Financial Officer
DUAL INVEST AS
By: /s/ Magne Kristiansen
-------------------------------------
Magne Kristiansen
Managing Director
The Company by execution of this Agreement acknowledges that the execution,
delivery and performance of this Agreement, as it may be amended from time
to time, has been approved by its Board of Directors, and agrees to perform
all of its obligations under Section 1(e) of this Agreement.
DUAL DRILLING COMPANY
By: /s/ David W. Skarke, Chairman
-----------------------------
David W. Skarke, Chairman
B. Skaugen Shipping AS by execution of this Agreement agrees to perform all
of its obligations as a Selling Stockholder under this Agreement.
B. SKAUGEN SHIPPING AS
By: /s/ Richard Arnesen
------------------------------
Richard Arnesen
Managing Director
Exhibit A
(1) The Stockholder may dispose of the Block Shares in the following manner:
(a) Sale of the Block Shares, from time to time, directly or through
broker-dealers or underwriters who may act solely as agents or may
acquire shares of Common Stock as principals, in all cases as
designated by the Stockholder.
(b) Distributions of the Block Shares to the stockholders of the Stock-
holder, including Skaugen.
(2) Skaugen may dispose of the Block Shares acquired from the Stockholder,
from time to time, directly or through broker-dealers or underwriters
who may act solely as agents or may acquire shares of Common Stock as
principals, in all cases as designated by Skaugen.
<PAGE>
