REGISTRATION RIGHTS, STANDSTILL
AND VOTING AGREEMENT
This REGISTRATION
RIGHTS, STANDSTILL AND VOTING AGREEMENT (this “
Agreement ”), dated as of August 31, 2005, is by
and between Precision Drilling Corporation, an Alberta corporation
(“ Precision ”) and Weatherford International
Ltd., a Bermuda exempted company (“ Weatherford
”). Certain capitalized terms used herein are defined in
Section 7 below. Capitalized terms not otherwise defined
herein have the meaning ascribed to them in the Stock Purchase
Agreement (as hereinafter defined).
WHEREAS, Precision
and Weatherford have entered into a Stock Purchase Agreement, dated
as of June 6, 2005 (the “ Stock Purchase
Agreement ”), that provides, subject to the terms and
conditions thereof, for the purchase by Weatherford of 100% of the
issued and outstanding shares of capital stock of certain
subsidiaries of Precision (the “ Stock Purchase
”);
WHEREAS, as part
of the consideration to be paid in the Stock Purchase, Precision
will acquire 26,000,000 common shares (the “ Acquired
Shares ”), par value $1.00 per share, of Weatherford (the
“ Common Shares ”), which Common Shares is
listed on the New York Stock Exchange;
WHEREAS, in order
to induce Precision to consummate the transactions under the Stock
Purchase Agreement, Weatherford has agreed to provide certain
registration rights on the terms and subject to the conditions set
forth herein;
WHEREAS, in order
to induce Weatherford to consummate the transactions under the
Stock Purchase Agreement, Precision has agreed to be bound by
certain standstill and voting provisions on the terms and subject
to the conditions set forth herein; and
WHEREAS, it is a
condition to the closing of the transactions under the Stock
Purchase Agreement that Precision and Weatherford enter into this
Agreement;
NOW, THEREFORE, in
consideration of the premises and the covenants and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby
agree as follows:
SECTION 1. REGISTRATION UNDER THE
SECURITIES ACT.
As promptly as
possible after the date that Precision gives Weatherford notice of
Precision’s intent to distribute all of the Registrable
Shares to its shareholders pro rata either as a dividend or
pursuant to a distribution that is not exempt under the Securities
Act and is not a distribution of exempted securities (within the
meaning of the Securities Act), and in any event prior to the date
that is thirty (30) business days following the date of any
such notice, Weatherford shall prepare and file with the Securities
and Exchange Commission (the “ SEC ”)
a
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Registration
Statement on the appropriate form for the purpose of registering
under the Securities Act all of the Registrable Shares for
distribution by Precision to its shareholders in the manner as set
forth in such notice (the “ Registration Statement
”). The registration effected pursuant to this Section l.1 is
referred to herein as the “ Registration .”
Weatherford agrees to use its reasonable best efforts to cause the
Registration Statement to be declared effective as soon as
practicable after the filing thereof with the SEC. Weatherford
shall keep the Registration Statement effective (including through
the filing of any required post-effective amendments) until the
earlier to occur of (i) the date after which all of the
Registrable Shares registered thereunder shall have been
distributed by Precision pro rata as a dividend to the shareholders
of Precision and (ii) 60 days after the effective date of
the Registration Statement; provided, that such date shall be
extended by the amount of time of any period during which Precision
may not use the Registration Statement pursuant to the terms of
Section 1.2(e) below or as a result of a breach by Weatherford
of its obligations hereunder. Thereafter, Weatherford shall be
entitled to withdraw the Registration Statement and, upon such
withdrawal, Precision shall have no further right to distribute any
of the Registrable Shares pursuant to the Registration Statement
(or any prospectus relating thereto).
1.2
Registration Procedures. Subject to the terms and conditions
hereof, whenever any Registrable Securities are required to be
registered pursuant to this Agreement, Weatherford shall use its
reasonable best efforts to effect the registration and the sale or
distribution of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto
Weatherford shall as expeditiously as practicable:
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(a)
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promptly prepare and file with the
SEC a registration statement with respect to such Registrable
Securities (and any amendment, including any post-effective
amendment, to such registration statement Weatherford deems to be
necessary) and use its reasonable best efforts to cause such
registration statement to become effective and to comply with the
provisions of the Securities Act applicable to it (provided that
before filing a registration statement or prospectus or any
amendments or supplements thereto, Weatherford shall furnish to
counsel for Precision copies of all such documents proposed to be
filed so as to provide Precision and its counsel a reasonable
opportunity to review and comment on such documents, and such
documents shall be subject to the review and comment of Precision
and its counsel);
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(b)
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furnish to Precision such number of
copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as Precision may reasonably request in order to
facilitate the distribution of the Registrable Securities owned by
Precision to its shareholders pro rata as a dividend;
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(c)
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make such filings of the preliminary
and final prospectus, and any amended or supplemented prospectus,
as may be required under Rule 424 and keep the registration
statement with respect to such Registrable Securities effective for
the time periods specified in Section 1.1 in order to permit
the prospectus forming a
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part thereof to be usable for the
offer and sale or distribution of the Registrable Securities owned
by Precision to its shareholders pro rata as a dividend;
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(d)
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use
its reasonable best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as Precision (or any other holder whose securities
are included in a registration statement on which Registrable
Securities are registered) reasonably requests and do any and all
other acts and things which may be reasonably necessary or
advisable to enable Precision to consummate the disposition in such
jurisdictions of the Registrable Securities owned by Precision
(provided that Weatherford shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection,
(ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such
jurisdiction);
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(e)
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notify Precision, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act (i) when a registration statement or any
post-effective amendment has become effective under the Securities
Act, (ii) of the happening of any event as a result of which
the prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading (whereupon Precision shall
immediately cease any offers, sales or other distribution of
Registrable Securities thereunder), and, at the request of
Precision, Weatherford shall prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the
shareholders of Precision in connection with the distribution of
such Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
(iii) of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any of the Registrable Securities
included in such registration statement for sale or distribution in
any jurisdiction;
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(f)
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cause all such Registrable
Securities to be listed on each securities exchange on which
similar securities issued by Weatherford are then listed and, if
not so listed, to be listed on a securities exchange or on the NASD
automated quotation system and, if listed on the NASD automated
quotation system, use its reasonable best efforts to secure
designation of all such Registrable Securities covered by such
registration statement as a NASDAQ “national market system
security” within the meaning of Rule 11Aa2-1 of the Exchange
Act or, failing that, to secure NASDAQ authorization for such
Registrable Securities;
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(g)
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provide a transfer agent and
registrar for all such Registrable Securities not later than the
effective date of such registration statement;
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(h)
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otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as
reasonably practicable, an earning statement covering the period of
at least twelve months beginning with the first day of
Weatherford’s first full fiscal quarter after the effective
date of the registration statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
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(i)
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permit Precision, if Precision is an
underwriter or controlling person of Weatherford, to participate in
the preparation of such registration or comparable statement and to
require the insertion therein of material relating to the Precision
or the plan of distribution of the Registrable Securities,
furnished to Weatherford in writing, which in the reasonable
judgment of Precision and its counsel should be
included;
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(j)
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in
the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any Registrable Securities included
in such registration statement for sale or distribution in any
jurisdiction, Weatherford shall use its reasonable best efforts
promptly to obtain the withdrawal of such order and shall prepare
and file an amended or supplemented prospectus, if required;
and
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(k)
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use
its reasonable best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may
be necessary to enable Precision to consummate the distribution of
such Registrable Securities to its shareholders pro rata as a
dividend.
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(a)
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Registration Expenses. All
Registration Expenses shall be borne by Weatherford.
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(b)
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Selling Expenses. All fees and
expenses of counsel for Precision, state securities or blue sky
fees and expenses, fees and expenses of Precision’s transfer
agent, and any broker or dealer discounts or commissions
attributable to the sale or distribution of Registrable Securities
shall be borne solely by Precision.
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SECTION 2. LOCKUP
AGREEMENT.
2.1 Except
for distributions by Precision to its shareholders pro rata either
as a dividend or other distribution method pursuant to the
Registration Statement, Precision hereby agrees to not effect any
public sale or distribution (including any sales pursuant to
Rule 144) of equity securities of Weatherford, or any
securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 90-day period
beginning on the effective date of any underwritten registered
public offering of equity securities of Weatherford or securities
convertible or exchangeable into or exercisable for equity
securities of Weatherford (except as part of such underwritten
registration), unless the underwriters managing
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the registered
public offering otherwise agree, and Precision will deliver an
undertaking to the managing underwriters (if requested) consistent
with this covenant. Precision shall not be obligated to comply the
provisions of this Section 2.1 more than two times in any
12-month period.
SECTION 3.
INDEMNIFICATION.
3.1
Indemnification by Weatherford. Weatherford agrees to indemnify, to
the extent permitted by law, Precision, its officers and directors
and each Person who controls Precision (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities,
and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus
or preliminary prospectus, or any amendment thereof
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