prer14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
þ Preliminary
Proxy Statement
o Confidential,
for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
o Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§ 240.14a-12
WEATHERFORD INTERNATIONAL LTD.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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,
200
Dear Fellow Shareholder:
You are cordially invited to join us at a special meeting of the
shareholders of Weatherford International Ltd. beginning at
9:00 a.m.
on ,
2009. The meeting will be held at our offices located at 515
Post Oak Blvd., Room 604, in Houston, Texas.
We will be asking you to approve a proposal to change
Weatherford International Ltd.s place of incorporation
from Bermuda to Switzerland. Changing our place of incorporation
from Bermuda to Switzerland, including relocating our principal
executive offices to Switzerland, will establish a corporate
headquarters that is more centrally located within our area of
worldwide operations, will locate us in a country with a stable
and developed legal and tax regime with established standards of
corporate governance, including provisions for the rights of
shareholders, and should improve our ability to maintain a
competitive worldwide effective corporate tax rate.
Changing our place of incorporation to Switzerland will not
change the number of shares you hold in Weatherford or your
percentage ownership in Weatherford. We will continue to conduct
our business as we do now, and we expect that our common shares
will continue to be listed on the New York Stock Exchange under
the same symbol we currently use (WFT). We also will
remain subject to the governance and reporting standards of an
NYSE-listed company and will continue to report our financial
results in U.S. dollars using U.S. generally accepted
accounting principles.
Your board of directors has unanimously approved the transaction
and recommends that you vote to approve the proposal. The notice
of the meeting and the proxy statement that follow this letter
describe the proposal in detail and the other business to be
conducted at the meeting. We encourage you to read the attached
documents carefully. You should carefully consider Risk
Factors beginning on page 14 for a discussion of
risks related to the proposals before voting.
Your vote is very important. Whether or not you plan to attend
the meeting, we strongly encourage you to provide your proxy by
telephone, the internet or by completing, signing and returning
the enclosed proxy card at your earliest convenience.
Thank you for your cooperation and support.
Sincerely,
Bernard J. Duroc-Danner
Chairman of the Board, President and
Chief Executive Officer
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
securities to be issued in the transaction described in the
accompanying proxy statement or determined if the accompanying
proxy statement is truthful or complete. Any representation to
the contrary is a criminal offense.
The accompanying proxy statement is
dated ,
200 and, together with the accompanying proxy card,
is first being mailed to shareholders on or
about ,
200 .
NOTICE OF COURT MEETING OF
SHAREHOLDERS
IN THE SUPREME COURT OF BERMUDA
CIVIL JURISDICTION
(COMMERCIAL COURT)
2008: NO. 310
IN THE
MATTER OF WEATHERFORD INTERNATIONAL LTD.
AND IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT
1981
NOTICE OF MEETING OF
WEATHERFORD INTERNATIONAL LTD.
SHAREHOLDERS TO BE HELD
ON ,
2009
To the holders of common shares of Weatherford International
Ltd.:
Notice is hereby given that, by an order dated December 18,
2008 made in the above matter, the Supreme Court of Bermuda has
directed a meeting to be convened of the holders of common
shares of Weatherford International Ltd., an exempted company
incorporated with limited liability under the laws of Bermuda,
which we refer to as
Weatherford-Bermuda,
at our corporate offices at 515 Post Oak Blvd., Room 604,
Houston, Texas, beginning at 9:00 a.m., local time,
on ,
2009 to vote on the following proposals:
1. to approve the share exchange transaction to be effected
by the scheme of arrangement attached as Annex B to the
accompanying proxy statement, which we refer to as the Scheme of
Arrangement, in connection with the share exchange agreement
attached as Annex A to the accompanying proxy statement,
which we refer to as the Share Exchange Agreement, between
Weatherford-Bermuda and Weatherford International Ltd., a
corporation newly incorporated under the laws of Switzerland and
a direct, wholly-owned subsidiary of Weatherford-Bermuda, which
we refer to as Weatherford-Switzerland, pursuant to which each
holder of common shares of Weatherford-Bermuda issued and
outstanding immediately before the transaction will transfer
such common shares to Weatherford-Switzerland solely in exchange
for (through a nominee acting on behalf and for the account of
the shareholders) the same number of shares of
Weatherford-Switzerland. As a result of the Scheme of
Arrangement, Weatherford-Bermuda will become a direct,
wholly-owned subsidiary of Weatherford-Switzerland;
2. on a motion to adjourn the meeting to a later date to
solicit additional proxies if there are insufficient votes at
the time of the meeting to approve the Scheme of Arrangement
described above; and
3. on any other matters that properly come before the
meeting and any adjournments or postponements of the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR ALL OF THE PROPOSALS, WHICH
PROPOSAL 2 IS NOT A CONDITION TO PROPOSAL 1.
We have established the close of business on December 15,
2008 as the record date for determining the shareholders of
Weatherford-Bermuda entitled to notice of and to vote at the
meeting or any adjournments or postponements of the meeting.
You are cordially invited to join us at the meeting. However, to
ensure your representation at the meeting, we request that you
provide your proxy by telephone, the Internet or by signing and
returning the enclosed proxy card in the enclosed postage-paid
envelope at your earliest convenience, whether or not you plan
to attend. If you are present at the meeting, you may revoke
your proxy and vote in person.
By the order referenced above, the Supreme Court of Bermuda has
appointed Mr. Bernard Duroc-Danner or failing him
Mr. Burt M. Martin, or failing him any director or
executive officer as of the date of the order to act as the
chairman of the meeting and has directed the chairman of the
meeting to report the results thereof to the Supreme Court of
Bermuda. The Scheme of Arrangement will be subject to a
subsequent application seeking the sanction of the Supreme Court
of Bermuda which shall be heard on or
about ,
2009.
This notice incorporates the accompanying proxy statement.
By Order of the Board of Directors
Burt M. Martin
Secretary
,
200
This proxy statement incorporates documents by reference. See
Where You Can Find More Information beginning on
page 72 for a listing of documents incorporated by
reference. These documents are available to any person,
including any beneficial owner, upon request directed to
Investor Relations, Weatherford International Ltd., 515 Post Oak
Blvd., Houston, Texas 77027, telephone
(713) 693-4000.
To ensure timely delivery of these documents, any request should
be made
by , 2009.
The exhibits to these documents will generally not be made
available unless they are specifically incorporated by reference
in this proxy statement.
TABLE OF
CONTENTS
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11
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12
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iii
PROXY
STATEMENT
Important Notice Regarding the Availability of Proxy
Materials: This proxy statement and our 2007
Annual Report are available on our website at
http://www.weatherford.com/weatherford/groups/public/documents/aboutwft/ir-annual-reports.asp.
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Meeting:
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Date: ,
2009
Time: 9:00 a.m., Houston time
Place: 515 Post Oak Blvd., Room 604
Houston, Texas 77027
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General Information:
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Our principal U.S. office is located at 515 Post Oak Boulevard,
Houston, Texas 77027. Our telephone number is (713)
693-4000.
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Agenda:
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Two proposals:
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Proposal 1 Approval of the Scheme of
Arrangement that would result in you holding shares in a Swiss
corporation rather than a Bermuda company; and
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Proposal 2 If necessary, approval of a motion
to adjourn the meeting to a later date to solicit additional
proxies if there are insufficient votes at the time of the
meeting to approve Proposal 1.
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Board Recommendation:
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Your Board of Directors recommends you vote
For all of the proposals.
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Who Can Vote:
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All holders of record of our common shares at the close of
business on December 15, 2008, are entitled to vote at the
meeting. Holders of our common shares are entitled to one vote
per share on each proposal.
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Proxies Solicited By:
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Your vote and proxy are being solicited by our Board of
Directors for use at the meeting. This proxy statement and
enclosed proxy card are being sent on behalf of our Board of
Directors to our shareholders beginning on or
about ,
200 .
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Voting:
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By completing, signing and returning your proxy card, you will
authorize the persons named on the proxy card to vote your
shares according to your instructions. You may also authorize
the persons named on the proxy card to vote your shares via the
Internet at the Internet address of www.voteproxy.com, or
telephonically by calling 1-800-PROXIES (1-800-776-9437). Please
have your proxy card available if you decide to appoint a proxy
by the Internet or by telephone because the proxy card contain
more detailed instructions. Proxies submitted by Internet or
telephone must be received by 11:59 p.m. New York time
on ,
2009. If you give your proxy by the Internet or telephone,
please do not mail your proxy card. Shareholders who hold their
shares through a broker or other nominee (in street
name) must vote their shares in the manner prescribed by
their broker or other nominee.
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Proxies:
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If you properly give a proxy but do not indicate how you wish to
vote, the persons named on the proxy card will vote your shares
as recommended by the Board of Directors.
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Revoking Your Proxy:
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You can revoke your proxy by:
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writing to the Secretary at 515 Post Oak
Blvd., Houston, Texas 77027 before the meeting;
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submitting a later-dated proxy via mail,
the Internet or telephone prior to the meeting; or
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casting your vote in person at the
meeting.
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You may not revoke a proxy simply by attending a meeting. To
revoke a proxy, you must take one of the actions described
above.
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1
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Quorum:
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As of December 15, 2008, there were 728,704,487 common
shares issued and entitled to vote, including
40,951,836 shares held by subsidiaries of the Company.
Although shares held by our subsidiaries may be counted for
purposes of determining whether a quorum is present, we abstain
from voting these shares. The presence of two or more persons in
person at the start of a meeting and representing in person or
by proxy in excess of 50% of the total issued voting shares
throughout the meeting will constitute a quorum. If you have
properly given a proxy by mail, Internet or telephone, your
shares will count toward the quorum for the meeting, and the
persons named on the proxy card will vote your shares as you
have instructed.
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Pursuant to Bermuda law, (1) common shares represented at a
meeting for which votes are withheld on any matter, (2) common
shares that are represented by broker non-votes
(i.e., common shares held by brokers that are represented
at the meeting but with respect to which the broker is not
empowered to vote on a particular proposal) and (3) common
shares for which the holder abstains from voting on any matter
are not included in the determination of the common shares
voting on a matter but are counted for determining a quorum.
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If you are a beneficial shareholder and your broker holds your
shares in its name, the broker is not permitted to vote your
shares if the broker does not receive voting instructions from
you.
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Multiple Proxy Cards:
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If you receive multiple proxy cards, this indicates that your
shares are held in more than one account, such as two brokerage
accounts, and are registered in different names. You should
complete and return each of the proxy cards to ensure that all
of your shares are voted.
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Cost of Proxy Solicitation:
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We have retained Georgeson Shareholder Communications Inc. to
solicit proxies from our shareholders at an estimated fee of
$8,000, plus expenses. Some of our directors, officers and
employees may also solicit proxies personally, without any
additional compensation, by telephone or mail. Proxy materials
also will be furnished without cost to brokers and other
nominees to forward to the beneficial owners of shares held in
their names. All costs of proxy solicitation will be borne by
the Company.
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Questions:
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You may call our proxy solicitor, Georgeson Shareholder
Communications, at (800) 509-1078, or our Investor Relations
Department at (713) 693-4000 or email us at
investor.relations@weatherford.com if you have any
questions or need directions to be able to attend the meeting
and vote in person.
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PLEASE
VOTE YOUR VOTE IS IMPORTANT.
2
SUMMARY
This summary highlights selected information appearing
elsewhere in this proxy statement and does not contain all the
information that you should consider in making your voting
decision. You should read this summary together with the more
detailed information, including our financial statements and the
related notes, elsewhere in this proxy statement and the
documents incorporated by reference herein. The Share Exchange
Agreement and the Scheme of Arrangement attached as Annex A
and Annex B to this proxy statement, respectively, are the
legal documents that govern the Transaction. The articles of
association and organizational regulations of
Weatherford-Switzerland, in the forms attached as Annex E
and Annex F to this proxy statement, respectively, will
govern Weatherford-Switzerland after the completion of the
Transaction. You should read this proxy statement, including the
documents attached as annexes, in its entirety. References in
this proxy statement to $ and USD are to
United States dollars and references to CHF are to
Swiss francs. The information included in this proxy statement
has been adjusted for the two-for-one share split of our common
shares distributed on May 23, 2008 to shareholders of
record on May 9, 2008.
The
Redomestication
We are seeking your approval at the shareholders meeting of the
Scheme of Arrangement under Bermuda law providing for a share
exchange transaction that will change our place of incorporation
from Bermuda to Switzerland, which we refer to as the
Transaction. In this proxy statement, we refer to this
Transaction and the other transactions contemplated by the
Scheme of Arrangement and the Share Exchange Agreement as the
redomestication. We sometimes refer to Weatherford-Bermuda prior
to the redomestication and Weatherford-Switzerland following the
redomestication as we, our,
Weatherford or the Company.
The redomestication involves several steps. First, we have
formed a new Swiss corporation registered in Zug, Switzerland
named Weatherford International Ltd., which we refer to as
Weatherford-Switzerland, as a direct, wholly-owned subsidiary of
Weatherford International Ltd., the Bermuda company whose shares
you currently own, which we refer to as Weatherford-Bermuda.
Following the shareholders meeting to be
held ,
2009 and a hearing of the Supreme Court of Bermuda scheduled
for ,
2009, assuming we have obtained the necessary shareholder
approval and court sanction, shareholders of Weatherford-Bermuda
will transfer all of their shares to Weatherford-Switzerland
solely in exchange for (through a nominee acting on behalf and
for the account of the shareholders) the same number of shares
of Weatherford-Switzerland. As a result of the redomestication,
Weatherford-Bermuda will become a direct, wholly-owned
subsidiary of Weatherford-Switzerland.
In the Transaction, Weatherford-Switzerland will issue one share
of Weatherford-Switzerland in exchange for each share of
Weatherford-Bermuda. Weatherford-Switzerland will assume
Weatherford-Bermudas existing obligation to deliver shares
under our equity incentive plans, warrants or other rights
pursuant to the terms thereof. See The
Redomestication Share Compensation Plans.
Immediately after the Transaction, Weatherford-Switzerland will
have issued the same number of shares as there were issued
shares of Weatherford-Bermuda immediately before the completion
of the Transaction, plus approximately 86,000 shares
representing the share capital issued to Weatherford-Bermuda in
connection with the formation of Weatherford-Switzerland, which
we refer to as the Formation Shares. See Description of
Weatherford-Switzerland Shares Capital
Structure. As of December 15, 2008, the record date
for the shareholders meeting, there were 728.7 million
common shares of Weatherford-Bermuda issued, including
41.0 million held by subsidiaries.
In connection with the redomestication, we also plan to relocate
our principal executive offices from Houston, Texas to Zug,
Switzerland with a branch office in Geneva, Switzerland. We
expect that most of our executive officers, including our Chief
Executive Officer, and other key decision makers will relocate
to Switzerland. For a more complete description of the
redomestication, see The Redomestication beginning
on page 20.
3
Questions
and Answers
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What is the redomestication proposal? |
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You are being asked to vote on a proposed Scheme of Arrangement
under Bermuda law providing for a share exchange transaction for
the purpose of changing our place of incorporation from Bermuda
to Switzerland. As a result of the Transaction,
Weatherford-Bermuda will become a direct, wholly-owned
subsidiary of Weatherford-Switzerland, and you will become a
shareholder of Weatherford-Switzerland. |
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You are also being asked to vote on a proposal to adjourn the
meeting to a later date to solicit additional proxies if there
are insufficient votes at the time of the meeting to approve the
proposed Scheme of Arrangement. Approval of this proposal is not
a condition to the Scheme of Arrangement. |
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Why do you want to change Weatherfords place of
incorporation from Bermuda to Switzerland? |
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Our planned change of our place of incorporation from Bermuda to
Switzerland and relocation of our principal executive offices to
Zug, Switzerland with a branch office in Geneva, Switzerland
will establish a corporate headquarters that is more centrally
located within our area of worldwide operations, will locate us
in a country with a stable and developed legal and tax regime
with established standards of corporate governance, including
provisions for the rights of shareholders, and should improve
our ability to maintain a competitive worldwide effective
corporate tax rate, among other anticipated benefits. Please see
The Redomestication Background and Reasons for
the Redomestication for more information. We cannot assure
you that we will realize the anticipated benefits of the
redomestication. In addition to the potential benefits described
above, the redomestication will expose you and us to certain
risks. Please see the discussion under Risk Factors.
Our board of directors has considered both the potential
advantages of the redomestication and these risks and has
unanimously approved the Transaction and recommended that you
vote for the Transaction. |
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Why was Switzerland selected as the place of domicile for
Weatherford-Switzerland? |
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Switzerland is more centrally located than our current executive
offices to our worldwide operations, in terms of both time zone
overlap and travel time. Switzerland has established standards
of corporate governance, including provisions for the rights of
shareholders. Switzerland also has numerous tax treaties with
many taxing jurisdictions throughout the world and a developed
and stable tax regime. |
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Will the redomestication affect our current or future
operations? |
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A: |
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We currently believe that the redomestication should have no
material impact on how we conduct our
day-to-day
operations. The location of our future operations will depend on
the needs of our business, independent of our legal domicile.
However, please read Risk Factors The
anticipated benefits of moving our principal executive offices
to Switzerland may not be realized, and difficulties in
connection with moving our principal executive offices could
have an adverse effect on us. |
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Will the redomestication dilute my economic interest? |
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The redomestication will not dilute your economic interest in
us. Immediately after the redomestication, the number of
outstanding shares of Weatherford-Switzerland will be the same
as the number of issued and outstanding shares of
Weatherford-Bermuda immediately before the completion of the
redomestication, plus approximately 86,000 Formation Shares,
which will be held by Weatherford-Bermuda.
Weatherford-Switzerland will assume Weatherford-Bermudas
existing obligation to deliver shares under its equity incentive
plans, warrants or other rights. Because Weatherford-Bermuda
will be a direct, wholly-owned subsidiary of
Weatherford-Switzerland after the completion of the
redomestication, your economic interest will not be diluted by
the issuance to, or retention by, Weatherford-Bermuda of
Weatherford-Switzerland shares in the redomestication. |
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Q: |
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What are the material tax consequences of the Transaction? |
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A: |
|
Please read the following four questions and answers regarding
some of the potential tax consequences resulting from the
Transaction. Please refer to Material Tax
Considerations beginning on page 28 for a |
4
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description of certain material U.S. federal, Swiss and Bermuda
tax consequences of the Transaction to Weatherford-Bermuda
shareholders. Determining the actual tax consequences of the
Transaction to you may be complex and will depend on your
specific situation. You should consult your own tax advisors
regarding the particular U.S. (federal, state and local), Swiss,
Bermuda and other
non-U.S. tax
consequences of the Transaction and ownership and disposition of
the Weatherford-Switzerland shares in light of your particular
situation. |
|
Q: |
|
Is the Transaction taxable to me? |
|
A: |
|
Under U.S. federal income tax law, holders of shares of
Weatherford-Bermuda generally should not recognize gain or loss
on the exchange of such shares for shares of
Weatherford-Switzerland in the Transaction. Certain five percent
or greater shareholders may, however, be required to timely
enter into and maintain a gain recognition agreement to avoid
recognizing gain on the exchange of shares. Under Swiss tax law,
no tax is due for non-Swiss holders of Weatherford-Bermuda
shares on the exchange of Weatherford-Bermuda shares for
Weatherford-Switzerland shares in the Transaction. |
|
Q: |
|
Is the Transaction a taxable transaction for either of
Weatherford-Bermuda or
Weatherford-Switzerland? |
|
A: |
|
No. The Transaction should not be a taxable transaction for
Weatherford-Bermuda or
Weatherford-Switzerland. |
|
Q: |
|
When do you expect the redomestication to be completed? |
|
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A: |
|
We are working towards completing the redomestication as quickly
as possible and, assuming the Transaction is approved by the
requisite shareholder vote and the Scheme of Arrangement is
sanctioned by the Supreme Court of Bermuda, we expect to do so
as soon as practicable following the sanction of the Scheme of
Arrangement by the Supreme Court of Bermuda. We currently expect
to complete the redomestication in February, 2009. See
The Redomestication Effective Time and
Annex D for an expected timetable. However, our board of
directors may abandon or delay the Transaction for any reason at
any time before the Transaction becomes effective, even after
our shareholders have approved the Scheme of Arrangement. |
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Q: |
|
What will I receive for my Weatherford-Bermuda shares? |
|
A: |
|
After the redomestication, you will hold one
Weatherford-Switzerland share for each
Weatherford-Bermuda
share you held immediately prior to the completion of the
redomestication. |
|
Q: |
|
Do I have to take any action to exchange my
Weatherford-Bermuda shares? |
|
A: |
|
If you hold Weatherford-Bermuda common shares in uncertificated
book-entry form, at the effective time of the Transaction, your
Weatherford-Bermuda common shares will be exchanged for
Weatherford-Switzerland shares without any action on your part. |
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If you hold Weatherford-Bermuda share certificates, soon after
the closing of the Transaction, you will be sent a letter of
transmittal, which is to be used to surrender your
Weatherford-Bermuda share certificates and to apply for
enrollment in Weatherford-Switzerlands share register as
shareholders with voting rights. The letter of transmittal will
contain instructions explaining the procedure for surrendering
Weatherford-Bermuda share certificates and enrolling in
Weatherford-Switzerlands share register as a shareholder
with voting rights. YOU SHOULD NOT RETURN SHARE CERTIFICATES
WITH THE ENCLOSED PROXY CARD. Although shareholders who hold
share certificates in Weatherford-Bermuda will automatically
continue to be entitled to dividends, preferential subscription
rights and liquidation proceeds, such shareholders will not be
able to exercise any voting rights, prove their ownership
interest in Weatherford-Switzerland, transfer their shares or
exercise other shareholder rights until they surrender their
share certificates and register as shareholders entitled to
voting rights. Beneficial holders of shares held in street
name will not be required to take any action. |
5
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Q: |
|
Can I trade Weatherford-Bermuda shares between the date of
this proxy statement and the effective time of the
Transaction? |
|
A: |
|
Yes. The Weatherford-Bermuda shares will continue to trade
during this period. |
|
Q: |
|
After the Transaction, where can I trade
Weatherford-Switzerland shares? |
|
A: |
|
We intend to make application so that, immediately following the
redomestication, the shares of Weatherford-Switzerland will be
listed on the New York Stock Exchange, which we refer to as the
NYSE, under the symbol WFT, the same symbol under
which the Weatherford-Bermuda common shares are currently listed. |
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Q: |
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Will there be Swiss withholding tax on future share
repurchases, if any, by
Weatherford-Switzerland? |
|
A: |
|
Under present Swiss tax law, repurchases of shares for the
purposes of capital reduction are treated as a partial
liquidation subject to 35% Swiss withholding tax. The repurchase
of shares for purposes other than capital reduction, such as to
retain as treasury shares for use in connection with equity
incentive plans, warrants, convertible debt or other instruments
within certain periods, will generally not be subject to Swiss
withholding tax. In addition, for shares repurchased for capital
reduction, the portion of the repurchase price attributable to
the par value of the shares repurchased will not be subject to
the Swiss withholding tax. Beginning on January 1, 2011,
subject to the adoption of implementing regulations and
amendments to Swiss corporate law, which are expected to set
forth the conditions in which paid-in capital may be paid back
to shareholders, the portion of the repurchase price
attributable to the qualifying additional paid-in capital for
Swiss statutory reporting purposes of the shares repurchased
will also not be subject to the Swiss withholding tax. Upon
completion of the Transaction, we expect
Weatherford-Switzerland
to have a par value and qualifying additional paid-in capital
for Swiss statutory reporting purposes, such that the
combination of the two should approximate the market
capitalization of Weatherford-Bermuda immediately prior to the
completion of the Transaction. Because of the exemption from
Swiss withholding tax to the distribution of qualifying paid-in
capital, which applies from January 1, 2011, we plan to
seek a tax ruling from the Swiss tax authorities to confirm that
the shares of Weatherford-Bermuda may be contributed at their
fair market value and that the contribution value may be split
between par value and qualifying paid-in capital as mentioned
above. If the Swiss tax authorities do not agree, the
contribution of the shares of Weatherford-Bermuda may have to be
made at a lower value or part of the qualifying paid-in capital
recorded as free distributable reserves. Accordingly, the amount
of the nominal share capital that can be repatriated free of
withholding tax and/or qualifying paid-in capital that can be
repatriated free of withholding tax as of January 1, 2011,
may be lower. |
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In most instances, Swiss companies listed on the SIX Swiss
Exchange, or SIX (formerly the SWX Swiss Exchange, or SWX),
carry out share repurchase programs through a second
trading line on the SIX. Swiss institutional investors
typically purchase shares from shareholders on the open market
and then sell the shares on this second trading line back to the
company. The Swiss institutional investors are generally able to
receive a full refund of the withholding tax. Due to, among
other things, the time delay between the sale to the company and
the institutional investors receipt of the refund, the
price companies pay to repurchase their shares has historically
been slightly higher (but less than 1.0%) than the price of such
companies shares in ordinary trading on the SIX first
trading line. |
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We do not expect to be able to use the SIX second trading line
process to repurchase our shares because we do not intend to
list our shares on the SIX. We do, however, intend to follow an
alternative process whereby we expect to be able to repurchase
our shares in a manner that should allow Swiss institutional
market participants selling the shares to us to receive a refund
of the Swiss withholding tax and, therefore, accomplish the same
purpose as share repurchases on the second trading line at
substantially the same cost to us and such market participants
as share repurchases on a second trading line. However, there is
a risk that the Swiss Federal tax administration could
nevertheless decide to levy the Swiss withholding tax on the
repurchase of our shares if institutional investors or other
parties able to benefit from the full Swiss withholding tax
relief purchased our shares to resell them shortly to us. |
6
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|
Q: |
|
Will there be Swiss withholding tax on future dividends, if
any, by Weatherford-Switzerland? |
|
A: |
|
A Swiss withholding tax of 35% is due on dividends and similar
distributions to Weatherford-Switzerland shareholders from
Weatherford-Switzerland, regardless of the place of residency of
the shareholder, subject to the exceptions discussed below.
Weatherford-Switzerland will be required to withhold at such
rate and remit on a net basis any payments made to a holder of
Weatherford-Switzerland shares and pay such withheld amounts to
the Swiss federal tax authorities. |
|
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Under present Swiss tax law, distributions to shareholders in
relation to a reduction of par value are exempt from Swiss
withholding tax. Beginning on January 1, 2011, subject to
the adoption of implementing regulations and amendments to Swiss
corporate law, distributions to shareholders out of qualifying
additional paid-in capital for Swiss statutory purposes will be
exempt from the Swiss withholding tax. |
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Upon completion of the Transaction, we expect
Weatherford-Switzerland to have a par value and qualifying
additional paid-in capital per share for Swiss statutory
reporting purposes, such that the combination of the two should
approximate the market capitalization of Weatherford-Bermuda
immediately prior to the completion of the Transaction. Because
of the exemption from Swiss withholding tax to the distribution
of qualifying paid-in capital, which applies from
January 1, 2011, we plan to seek a tax ruling from the
Swiss tax authorities to confirm that the shares of
Weatherford-Bermuda may be contributed at their fair market
value and that the contribution value may be split between par
value and qualifying paid-in capital as mentioned above. If the
Swiss tax authorities do not agree, the contribution of the
shares of Weatherford-Bermuda may have to be made at a lower
value or part of the qualifying paid-in capital recorded as free
distributable reserves. Accordingly, the amount of the nominal
share capital that can be repatriated free of withholding tax
and/or qualifying paid-in capital that can be repatriated free
of withholding tax as of January 1, 2011, may be lower.
Assuming (1) the Swiss tax authorities confirm that the
contribution of the shares of Weatherford-Bermuda may be made at
fair market value, (2) the Transaction became effective
December 15, 2008, (3) a price of $10.31 per common
share of Weatherford-Bermuda (which was the closing price of the
Weatherford-Bermuda common shares reported on the New York Stock
Exchange on December 15, 2008), (4) a par value of
1.16 Swiss francs per Weatherford-Switzerland share,
(5) capital of CHF100,000 from the issuance of the
Formation Shares and (6) a foreign exchange rate of 1.16
Swiss francs to $1.00 (the rate on December 15, 2008), the
aggregate amount of par value and qualifying additional paid-in
capital of Weatherford-Switzerlands outstanding shares
would be $ million, after the
completion of the Transaction. Assuming the price of
Weatherford-Bermudas common shares were $1.00 higher than
the closing price on December 15, 2008, the aggregate
amount of par value and qualifying additional paid-in capital
would increase by $ million.
Conversely, assuming the price of Weatherford-Bermudas
common shares were $1.00 lower than the closing price on
December 15, 2008, the aggregate amount of par value and
qualifying additional paid-in capital would decrease by
$ million. For each $1.00
that the price of Weatherford-Bermuda common shares is higher
than $10.31 per share, the aggregate par value would remain
unchanged and the aggregate qualifying additional paid-in
capital would increase by
$ million. |
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Q: |
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What is qualifying additional paid-in capital? |
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A: |
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Under Swiss statutory reporting requirements, qualifying
additional paid-in capital per share represents the amount by
which the issue price of a share exceeds its par value.
Following approval by shareholders of a reclassification of
qualifying additional paid-in capital as freely distributable
reserves, qualifying additional paid-in capital may, subject to
the restrictions described under Description of
Weatherford-Switzerland
Shares Dividends and Description of
Weatherford-Switzerland Shares Repurchases of
Registered Shares, be returned to shareholders, including
through dividends and share repurchases. Beginning on
January 1, 2011, subject to the adoption of implementing
regulations and amendments to Swiss corporate law, which are
expected to set forth the conditions in which qualifying paid-in
capital may be paid back to shareholders, distributions to
shareholders out of qualifying additional paid-in capital should
be exempt from Swiss withholding tax. Currently, only
distributions in relation to a reduction of par value are exempt
from Swiss withholding tax. Please note that qualifying
additional paid-in capital for Weatherford-Switzerlands
statutory reporting purposes will not be the same as additional |
7
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paid-in capital reflected on Weatherford-Switzerlands
consolidated financial statements prepared in accordance with
U.S. GAAP. |
|
Q: |
|
How will qualifying additional paid-in capital for Swiss
statutory reporting purposes be determined? |
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|
A: |
|
Qualifying additional paid-in capital in our Swiss statutory
parent company financial statements will represent the issue
price of Weatherford-Switzerland shares less their aggregate par
value. This issue price will be determined based on the market
price of Weatherford-Bermuda shares immediately prior to the
effective time of the redomestication. As a result of the
redomestication, qualifying additional paid-in capital will
represent the market capitalization of Weatherford-Bermuda
immediately prior to the effective time of the redomestication
less the aggregate par value of the Weatherford-Switzerland
issued shares (including the Formation Shares). The following
table presents shareholders equity, as adjusted, in
accordance with Swiss statutory reporting requirements as if the
redomestication had occurred on December 15, 2008 (assuming
a Weatherford-Bermuda share price of $10.31 and a foreign
exchange rate of 1.16 Swiss francs to $1.00, the closing market
price and foreign exchange rate on December 15, 2008, and a
par value of 1.16 Swiss francs per Weatherford-Switzerland
share) (in millions, except share and per share amounts): |
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At December 15,
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2008, as adjusted
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Shareholders equity:
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Shares, 1.16 Swiss francs par value, 728,790,694 issued(a)
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$
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Qualifying additional paid-in capital
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Special reserves(b)
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0.1
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Retained earnings
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Total shareholders equity
|
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$
|
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(a) Shares issued includes
(1) 687.8 million shares outstanding at
December 15, 2008, (2) 41.0 million shares held
by affiliates of Weatherford-Bermuda as treasury shares and
(3) 86,207 Formation Shares representing the share capital
issued to Weatherford-Bermuda in connection with the formation
of Weatherford-Switzerland, assuming a par value of 1.16 Swiss
francs per Weatherford-Switzerland share. The actual par value
per Weatherford-Switzerland share at the completion of the
redomestication will be the Swiss franc equivalent of
US $1.00.
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(b) Special reserves, in the amount of 100,000 Swiss
francs, representing the purchase price paid by
Weatherford-Bermuda to acquire the Formation Shares (equal to
the aggregate par value of Weatherford-Switzerlands
shares, without giving effect to the redomestication).
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|
Q: |
|
What vote of Weatherford-Bermuda shareholders is required to
approve the Scheme of Arrangement? |
|
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|
A: |
|
The affirmative vote of a majority in number of shareholders
present and voting either in person or by proxy at the meeting
representing at least three fourths in value of shareholders
present and voting either in person or by proxy at the meeting,
is required to approve the Scheme of Arrangement. The
affirmative vote of holders of at least a majority of the
Weatherford-Bermuda common shares present in person or by proxy
at the meeting and entitled to vote on the matter is required to
approve the adjournment proposal. Please see The
Shareholders Meeting Record Date; Voting Rights;
Quorum; Vote Required for Approval. |
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|
Q: |
|
What vote does the board of directors recommend? |
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A: |
|
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
PROPOSALS AND UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS
VOTE FOR THE SCHEME OF ARRANGEMENT AND
FOR THE MOTION FOR ADJOURNMENT. |
8
Parties
to the Redomestication
Weatherford-Bermuda. We are one of the
worlds leading providers of equipment and services used
for the drilling, evaluation, completion, production and
intervention of oil and natural gas wells. We were originally
incorporated in Delaware in 1972 and, in 2002, we reincorporated
in Bermuda. We operate in approximately 100 countries through
approximately 800 service, sales and manufacturing locations,
which are located in nearly all of the oil and natural gas
producing regions in the world.
Weatherford-Switzerland. Weatherford-Switzerland
is a newly formed Swiss corporation and is currently wholly
owned by Weatherford-Bermuda. Weatherford-Switzerland has only
nominal assets and capitalization and has not engaged in any
business or other activities other than in connection with its
formation and the proposed redomestication. As a result of the
redomestication, Weatherford-Switzerland will become the parent
holding company of Weatherford-Bermuda.
The principal executive offices of Weatherford-Bermuda are
located at 515 Post Oak Blvd., Houston, Texas 77027. The
telephone number of each party at the U.S. address is
(713) 693-4000.
The principal executive offices of Weatherford-Switzerland are
currently located at Alpenstrasse 15, 6300 Zug, Switzerland, and
the telephone number at that address is +41-41-729-4242. The
principal executive offices of Weatherford-Switzerland are
expected to be located in Zug, Switzerland with a branch office
in Geneva, Switzerland following the completion of the
redomestication.
The
Redomestication (see page 19)
The redomestication will change our place of incorporation from
Bermuda to Zug, Switzerland. In connection with the
redomestication, we also plan to relocate our principal
executive offices from Houston, Texas to Zug, Switzerland with a
branch office in Geneva, Switzerland. We expect that most of our
executive officers, including our Chief Executive Officer, and
other key decision makers will relocate to Switzerland.
The redomestication involves several steps. First, we have
formed Weatherford-Switzerland. Following the shareholders
meeting to be held
on ,
2009 and a hearing of the Supreme Court of Bermuda scheduled
for ,
2009, assuming we have obtained the necessary shareholder
approval and court sanction, shareholders of Weatherford-Bermuda
will transfer all of their shares to Weatherford-Switzerland
solely in exchange for (through a nominee acting on behalf and
for the account of the shareholders) the same number of shares
of Weatherford-Switzerland. Weatherford-Switzerland will assume
Weatherford-Bermudas existing obligation to deliver shares
under our equity incentive plans, warrants or other rights
pursuant to the terms thereof. As a result of the
redomestication, Weatherford-Bermuda will become a direct,
wholly-owned subsidiary of Weatherford-Switzerland.
After the redomestication, you will continue to own an interest
in a parent company that will continue to conduct the same
business operations as conducted by Weatherford-Bermuda before
the redomestication. The number of shares you will own in
Weatherford-Switzerland will be the same as the number of shares
you owned in Weatherford-Bermuda immediately prior to the
redomestication, and your relative economic interest in us will
remain unchanged.
The completion of the redomestication will change the governing
law that applies to our shareholders from Bermuda law to Swiss
law. There are differences between Bermuda law and Swiss law,
some of which are material. See Comparison of Rights of
Shareholders for a summary of some of these differences.
Upon completion of the redomestication, we will remain subject
to the U.S. Securities and Exchange Commission, which we
refer to as the SEC, reporting requirements, the mandates of the
Sarbanes-Oxley Act of 2002 and the applicable corporate
governance rules of the NYSE, and we will continue to report our
financial results in U.S. dollars and under
U.S. generally accepted accounting principles, which we
refer to as U.S. GAAP.
The Transaction will be effected pursuant to the Scheme of
Arrangement and in accordance with the Share Exchange Agreement,
which are the legal documents that govern the Transaction.
Copies of those documents are attached to and are a part of this
proxy statement as Annex A and Annex B.
9
Assuming we obtain the requisite shareholder approval, we
anticipate that the Transaction will become effective as soon as
practicable following sanction of the Scheme of Arrangement by
the Supreme Court of Bermuda at the hearing scheduled
for ,
2009 upon the registration with the commercial register in the
Canton of Zug, Switzerland of the capital increase covering the
Weatherford-Switzerland registered shares to be issued in
connection with the Scheme of Arrangement and our filing of the
court order sanctioning the Scheme of Arrangement with the
Bermuda Registrar of Companies.
Reasons
for the Redomestication (see page 19)
Our planned change of our place of incorporation from Bermuda to
Switzerland and relocation of our principal executive offices to
Zug, Switzerland with a branch office in Geneva, Switzerland
will establish a corporate headquarters that is more centrally
located within our area of worldwide operations, will locate us
in a country with a stable and developed legal and tax regime
with established standards of corporate governance, including
provisions for the rights of shareholders, and should improve
our ability to maintain a competitive worldwide effective
corporate tax rate, among other anticipated benefits.
Regulatory
Matters (see page 24)
We are not aware of any other governmental approvals or actions
that are required to complete the redomestication other than
compliance with U.S. federal and state securities laws and
Bermuda and Swiss corporate law (including sanction by the
Supreme Court of Bermuda).
Tax
Considerations (see page 28)
For U.S. federal income tax purposes, holders of shares of
Weatherford-Bermuda generally should not recognize gain or loss
on the exchange of such shares for shares of
Weatherford-Switzerland in the Transaction. Certain five percent
or greater shareholders may, however, be required to timely
enter into and maintain a gain recognition agreement to avoid
recognizing gain on the exchange of shares. Under Swiss tax law,
no tax is due for non-Swiss holders of Weatherford-Bermuda
shares on the exchange of Weatherford-Bermuda shares for
Weatherford-Switzerland shares in the Transaction. Please refer
to Material Tax Considerations for a description of
certain material U.S. federal, Swiss and Bermuda tax
consequences of the Transaction to Weatherford-Bermuda
shareholders. Determining the actual tax consequences of the
Transaction to you may be complex and will depend on your
specific situation. You should consult your own tax advisors
regarding the particular U.S. (federal, state and local),
Swiss, Bermuda and other
non-U.S. tax
consequences of the Transaction and ownership and disposition of
the Weatherford-Switzerland shares in light of your particular
situation.
Rights of
Shareholders (see page 48)
Many of the principal attributes of Weatherford-Bermudas
common shares and Weatherford-Switzerlands registered
shares will be similar. However, there are differences between
your rights under Bermuda law and Swiss law, some of which are
material. In addition, there are differences between
Weatherford-Bermudas memorandum of association and
bye-laws and Weatherford-Switzerlands proposed articles of
association and organizational regulations, some of which are
material. We discuss these differences in detail under
Description of Weatherford-Switzerland Shares and
Comparison of Rights of Shareholders. Copies of
Weatherford-Switzerlands proposed articles of association
and organizational regulations are attached as Annex E and
Annex F to this proxy statement, respectively.
Stock
Exchange Listing (see page 26)
We intend to make application so that, immediately following the
redomestication, the shares of Weatherford-Switzerland will be
listed on the NYSE under the symbol WFT, the same
symbol under which the Weatherford-Bermuda common shares are
currently listed.
10
Market
Price and Dividend Information (see page 70)
On December 10, 2008, the last trading day before the
public announcement of the proposed redomestication, the closing
price of the Weatherford-Bermuda common shares on the NYSE was
$11.02 per share.
On ,
200 , the most recent practicable date before the
date of this proxy statement, the closing price of the
Weatherford-Bermuda common shares was
$ per share.
Court
Sanction of the Scheme of Arrangement (see
page 22)
We cannot complete the redomestication without the sanction of
the Scheme of Arrangement by the Supreme Court of Bermuda.
Subject to the shareholders of Weatherford-Bermuda approving the
Scheme of Arrangement, a Supreme Court hearing will be required
to sanction the Scheme of Arrangement. At the hearing, the
Supreme Court of Bermuda may impose such conditions as it deems
appropriate in relation to the Scheme of Arrangement but may not
impose any material changes without the joint consent of
Weatherford-Bermuda and Weatherford-Switzerland. In determining
whether to exercise its discretion and sanction the Scheme of
Arrangement, the Supreme Court of Bermuda, among other things,
must be satisfied that shareholders have been notified of the
meeting to approve the Scheme of Arrangement and have been
provided with sufficient explanatory information about the
Scheme of Arrangement and that the Scheme of Arrangement is fair
and reasonable.
No
Appraisal Rights (see page 25)
Under Bermuda law, the shareholders of Weatherford-Bermuda do
not have any right to an appraisal of the value of their shares
or payment for them in connection with the redomestication.
Accounting
Treatment of the Redomestication (see page 26)
Under U.S. GAAP, the redomestication represents a
transaction between entities under common control. Assets and
liabilities transferred between entities under common control
are accounted for at cost. Accordingly, the assets and
liabilities of Weatherford-Switzerland will be reflected at
their carrying amounts in the accounts of Weatherford-Bermuda at
the effective time of the redomestication.
Shareholders
Meeting to Approve the Scheme of Arrangement (see
page 64)
Time, Place, Date and Purpose. The
shareholders meeting to approve the Scheme of Arrangement will
be held
on ,
2009 at 9:00 a.m., local time, at 515 Post Oak Blvd.,
Room 604, Houston, Texas. At the meeting, our board of
directors will ask the shareholders to vote to approve:
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the Scheme of Arrangement, which will be effected in connection
with the Share Exchange Agreement, pursuant to which each issued
and outstanding common share of Weatherford-Bermuda would be
transferred to Weatherford-Switzerland solely in exchange for
(through a nominee acting on behalf and for the account of the
shareholders) one share of Weatherford-Switzerland;
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a motion to adjourn the meeting to a later date to solicit
additional proxies if there are insufficient votes at the time
of the meeting to approve the Scheme of Arrangement; and
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any other matters that properly come before the meeting and any
adjournments or postponements of the meeting.
|
Record Date. Only holders of record of
Weatherford-Bermuda common shares on December 15, 2008 are
entitled to notice of and to vote at the meeting or any
adjournment or postponement of the meeting.
Quorum. The presence, in person or by proxy,
of two persons or more at the start of the meeting and
representing a majority of the total issued and outstanding
voting shares of Weatherford-Bermuda throughout the meeting is
required to constitute a quorum at the shareholders meeting. A
majority in number of those present at the meeting may adjourn
the meeting if a quorum is present, and if not present, the
meeting will be
11
adjourned. Abstentions and broker non-votes will be
counted as present for purposes of determining whether there is
a quorum at the meeting.
Recommendation of the Board of Directors. OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS
VOTE FOR THE SCHEME OF ARRANGEMENT. OUR BOARD
OF DIRECTORS ALSO UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS
VOTE FOR THE ADJOURNMENT PROPOSAL, WHICH IS
NOT A CONDITION TO THE SCHEME OF ARRANGEMENT.
Required Vote. The Scheme of Arrangement
requires the affirmative vote of a majority in number of
shareholders present and voting either in person or by proxy at
the meeting representing at least three fourths in value of
shareholders present and voting either in person or by proxy at
the meeting. The affirmative vote of holders of at least a
majority of the Weatherford-Bermuda common shares voting on the
matter is required to approve the adjournment proposal. An
abstention or broker non-vote on either proposal has the effect
of a vote not being cast with respect to the relevant shares in
relation to the proposal. As a consequence, such shares will
have no effect when determining whether either proposal has
received the required approval, but will be counted as present
for purposes of determining whether there is a quorum at the
meeting. See The Shareholders Meeting Record
Date; Voting Rights; Quorum; Vote Required for Approval
and The Shareholders Meeting Proxies.
Proxies
(see page 65)
General. A proxy card regarding the meeting to
approve the Scheme of Arrangement is being sent to each
shareholder as of the record date. If you properly received the
proxy card, you may grant a proxy to vote on the proposals by
marking your proxy card appropriately, signing it in the space
provided, dating it and returning it to us. If you hold your
shares in the name of a bank, broker or other nominee, you
should follow the instructions provided by your bank, broker or
nominee when voting your shares. If you have timely submitted a
properly executed proxy card or provided your voting
instructions by telephone or on the Internet and clearly
indicated your votes, your shares will be voted as indicated.
Revocation. You may revoke your proxy card at
any time before it is voted by:
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giving written notice of the revocation to our Secretary;
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appearing at the meeting, notifying our Secretary and voting in
person;
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revoking the proxy by telephone or the Internet; or
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properly completing and signing a later-dated proxy with respect
to the meeting and delivering it to our Secretary at or before
the meeting.
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However, your attendance at the meeting alone will not revoke
your proxy.
If you have instructed a broker to vote your shares, you must
follow the procedure provided by your broker to change those
instructions.
12
Selected
Historical Financial Data
The following table presents selected consolidated financial
data for Weatherford-Bermuda. We derived the statement of
operations data for each of the years in the five-year period
ended December 31, 2007, and the balance sheet data as of
December 31, 2007, 2006, 2005, 2004 and 2003, from
Weatherford-Bermudas audited consolidated financial
statements. We derived the statement of operations data for the
nine months ended September 30, 2008 and 2007, and the
balance sheet data as of September 30, 2008 and 2007, from
Weatherford-Bermudas unaudited interim consolidated
financial statements. We prepared the unaudited interim
consolidated financial statements on the same basis as the
audited consolidated financial statements and included all
adjustments, consisting of normal recurring adjustments, that we
consider necessary for a fair presentation of
Weatherford-Bermudas financial position and results of
operations for the unaudited interim periods. The historical
financial information may not be indicative of
Weatherford-Switzerlands future performance. Results of
operations for the nine months ended September 30, 2008,
may not be indicative of the results of operations that may be
achieved for the entire year. The data should be read in
conjunction with the sections entitled Managements
Discussion and Analysis of Financial Condition and Results of
Operations included in Weatherford-Bermudas Annual
Report on
Form 10-K
for the year ended December 31, 2007, and in
Weatherford-Bermudas Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008, and
Weatherford-Bermudas financial statements, related notes
and other financial information incorporated by reference in
this proxy statement.
We have included no data for Weatherford-Switzerland because
that entity was not in existence during any of the periods shown
below.
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Nine Months Ended
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September 30,
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Years Ended December 31,
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2008
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2007
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2007
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2006
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2005
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2004
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2003
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(Unaudited)
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(In millions, except per share data and percentages)
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Statement of operations data:
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Operating revenues
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$
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6,965,938
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$
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5,640,221
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$
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7,832,062
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$
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6,578,928
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$
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4,333,227
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$
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3,131,774
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$
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2,562,034
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Operating income
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1,447,198
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1,162,744
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1,624,336
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1,354,687
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570,598
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402,995
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279,365
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Net income
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1,005,785
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739,595
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1,070,606
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896,369
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467,420
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330,146
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143,352
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Basic earnings per share
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$
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1.48
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$
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1.09
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$
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1.58
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$
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1.29
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$
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0.78
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$
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0.62
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$
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0.28
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Diluted earnings per share
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$
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1.44
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$
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1.06
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$
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1.54
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$
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1.26
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$
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0.74
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$
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0.57
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$
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0.27
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Balance sheet data (at end of period):
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Total assets
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$
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16,198,911
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$
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12,439,402
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$
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13,190,957
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$
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10,139,248
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$
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8,580,304
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$
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5,543,482
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$
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4,994,324
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Debt due within one year
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1,074,000
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431,051
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774,220
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648,736
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954,766
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22,235
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207,342
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Long-term debt
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4,544,110
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3,064,508
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3,066,335
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1,564,600
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632,071
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1,404,431
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1,379,611
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Total shareholders equity
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8,383,278
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7,081,764
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7,406,719
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6,174,799
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5,666,817
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3,313,389
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2,708,068
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Other financial data:
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Cash provided by operating activities
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$
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584,356
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$
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521,438
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$
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872,506
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$
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1,087,019
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$
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503,094
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$
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503,479
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$
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285,402
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Cash used in investing activities
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(2,211,483
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)
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(1,636,985
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)
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(2,233,048
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)
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(1,242,499
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)
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(1,254,908
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)
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(105,289
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)
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(377,015
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)
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Cash provided by (used in) financing activities
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1,792,959
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1,115,258
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1,401,629
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145,112
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570,109
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(139,609
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)
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94,638
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Capital expenditures
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1,821,813
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1,097,470
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1,635,041
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1,051,100
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522,841
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310,868
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302,502
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Operating margin
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21
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%
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21
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%
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21
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%
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21
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%
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13
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%
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13
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%
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11
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%
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Pro forma financial statements for Weatherford-Switzerland are
not included in this proxy statement because no significant pro
forma adjustments are required to be made to the historical
condensed consolidated statement of operations and balance sheet
of Weatherford-Bermuda for the nine months ended and as of
September 30, 2008 and to the historical consolidated
statement of operations of Weatherford-Bermuda for the year
ended December 31, 2007. Those financial statements are
included in Weatherford-Bermudas Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 and in its Annual
Report on
Form 10-K
for the year ended December 31, 2007.
13
RISK
FACTORS
You should consider carefully the following risk factors, in
addition to the other information contained in this proxy
statement and the documents incorporated by reference, including
our annual report on
Form 10-K
for the year ended December 31, 2007, and our subsequent
filings with the SEC, including our quarterly reports on
Form 10-Q
for the quarters ended March 31, 2008, June 30, 2008
and September 30, 2008.
The
anticipated benefits of moving our principal executive offices
to Switzerland may not be realized, and difficulties in
connection with moving our principal executive offices could
have an adverse effect on us.
In connection with the redomestication, we plan to relocate our
principal executive offices from Houston, Texas to Zug,
Switzerland with a branch office in Geneva, Switzerland. We
expect that most of our executive officers, including our Chief
Executive Officer, and other key decision makers will relocate
to Switzerland. We may face significant challenges in relocating
our executive offices to a different country, including
difficulties in retaining and attracting officers, key personnel
and other employees and challenges in maintaining principal
executive offices in a country different from the country where
other employees, including corporate support staff, are located.
Employees may be uncertain about their future roles within our
organization pending or following the completion of the
redomestication. Management may also be required to devote
substantial time to the redomestication and related matters,
which could otherwise be devoted to focusing on ongoing business
operations and other initiatives and opportunities. In addition,
we may not realize the benefits we anticipate from the
redomestication, including the benefit of moving to a location
that is more centrally located within our area of worldwide
operations. See The Redomestication Background
and Reasons for the Redomestication. Any such difficulties
could have an adverse effect on our business, results of
operations or financial condition.
Your
rights as a shareholder will change as a result of the
redomestication.
Because of differences between Swiss law and Bermuda law and
differences between the governing documents of
Weatherford-Switzerland and Weatherford-Bermuda, your rights as
a shareholder will change if the redomestication is completed.
For a description of these differences, see Description of
Weatherford-Switzerland Shares and Comparison of
Rights of Shareholders.
Following
the redomestication, registered holders who hold share
certificates must surrender their share certificates and apply
for enrollment in our share register as shareholders with voting
rights in order to exercise voting and certain other
rights.
Once the redomestication is completed, our shareholders will own
one registered share of Weatherford-Switzerland for each common
share of Weatherford-Bermuda held before the redomestication.
Although shareholders who hold share certificates in
Weatherford-Bermuda will automatically continue to be entitled
to dividends, preferential subscription rights and liquidation
proceeds, such shareholders will not be able to exercise any
voting rights, prove their ownership interest in
Weatherford-Switzerland, transfer their shares or exercise other
shareholder rights until they surrender their certificates and
apply for enrollment in our share register as shareholders with
voting rights. However, beneficial holders of shares held in
street name will not be required to take any action.
The
market for the Weatherford-Switzerland shares may differ from
the market for the
Weatherford-Bermuda
shares, and Weatherford-Switzerlands shares may be removed
as a component of the Standard & Poors 500 Index
and other indices or certain other funds.
We intend to make application so that, immediately following the
redomestication, the shares of Weatherford-Switzerland will be
listed on the NYSE under the symbol WFT, the same
symbol under which the Weatherford-Bermuda common shares are
currently listed. The market price, trading volume or volatility
of the Weatherford-Switzerland shares could be different than
those of the Weatherford-Bermuda shares.
Weatherford-Bermudas common shares are currently a
component of the Standard & Poors 500 Index and
other indices. S&P has considered Weatherford-Bermuda and a
number of other offshore registered companies
domestic companies for purposes of inclusion in the S&P
500. S&P may decide to remove
14
Weatherford-Switzerlands shares as a component of the
S&P 500, and, while we are uncertain as to when S&P
will make its determination, this determination may not be made
until after the shareholders meeting. S&P has removed the
shares of another offshore registered company that has recently
redomesticated from the Cayman Islands to Switzerland. Similar
issues could arise with respect to whether
Weatherford-Switzerlands shares will continue to be
included as a component in other indices or funds that may
impose a variety of qualifications that could be affected by the
redomestication. If Weatherford-Switzerlands shares are
removed as a component of the S&P 500 or other indices or
no longer meet the qualifications of such funds, institutional
investors attempting to track the performance of the S&P
500 or such other indices or the funds that impose those
qualifications would likely sell their shares, which could
adversely affect the price of the Weatherford-Switzerland
shares. Any such adverse impact on the price of the
Weatherford-Switzerland shares could be magnified by the current
heightened volatility in the financial markets.
Weatherford-Switzerland
will have less flexibility than Weatherford-Bermuda with respect
to certain aspects of capital management.
Upon the completion of the redomestication, the par value of
Weatherford-Switzerlands shares will be the equivalent of
US$1.00, or approximately 1.16 Swiss francs per share. Under
Swiss law, Weatherford-Switzerland generally may not issue its
shares below par value. As of December 15, 2008, the
closing price of Weatherford-Bermudas common shares on the
NYSE was $10.31, equivalent to 11.96 Swiss francs based on a
foreign exchange rate of CHF 1.16 to $1.00 on that date. In the
event Weatherford-Switzerland needs to raise common equity
capital at a time when the trading price of its shares is below
the par value of the shares, Weatherford-Switzerland will need
to obtain approval of shareholders to decrease the par value of
its shares or issue another class of shares with a lower par
value. We cannot assure you that Weatherford-Switzerland would
be able to obtain such shareholder approval. In addition,
obtaining shareholder approval would require filing a proxy
statement with the SEC and convening a meeting of shareholders,
which would delay any capital raising plans. Furthermore, any
reduction in par value would decrease
Weatherford-Switzerlands par value available for future
repayment of share capital not subject to Swiss withholding tax.
See Weatherford-Switzerland may not be able to
make distributions or repurchase shares without subjecting you
to Swiss withholding tax.
As a
result of increased shareholder approval requirements,
Weatherford-Switzerland will have less flexibility than
Weatherford-Bermuda with respect to certain aspects of capital
management.
Under Bermuda law, Weatherford-Bermudas directors may
issue, without shareholder approval, any common shares
authorized in Weatherford-Bermudas memorandum of
association that are not issued or reserved. Bermuda law also
provides substantial flexibility in establishing the terms of
preferred shares. In addition, Weatherford-Bermudas board
of directors has the right, subject to statutory limitations, to
declare and pay dividends on Weatherford-Bermudas common
shares without a shareholder vote. Swiss law allows
Weatherford-Switzerlands shareholders to create authorized
share capital that can be issued by the board of directors
without shareholder approval, but this authorization is limited
to 50% of the existing registered share capital and must be
renewed by the shareholders every two years. Additionally,
subject to specified exceptions, Swiss law grants preferential
subscription rights to existing shareholders to subscribe for
new issuances of shares. Swiss law also does not provide as much
flexibility in the various terms that can attach to different
classes of shares. Swiss law also reserves for approval by
shareholders many corporate actions over which
Weatherford-Bermudas board of directors currently has
authority. For example, dividends must be approved by
shareholders. We cannot assure you that situations will not
arise where flexibility that is otherwise available under
Bermuda law and would have provided substantial benefits to our
shareholders is not available under Swiss law.
The
redomestication will result in additional costs to us, some of
which will be incurred whether or not the redomestication is
completed.
The completion of the redomestication will result in an increase
in some of our ongoing expenses and require us to incur some new
expenses. Some costs, including those related to employees in
our Swiss offices
15
and our holding board meetings in Switzerland, are expected to
be higher than would be the case if our principal executive
offices were not relocated to Switzerland. We also expect to
incur new expenses, including professional fees to comply with
Swiss corporate and tax laws. In addition, we will incur certain
transaction costs in connection with the redomestication whether
or not the redomestication is completed. The redomestication may
also result in indirect costs by diverting attention of
management and employees from our business and therefore
increasing administrative costs and expenses.
Weatherford-Switzerland
may not be able to make distributions or repurchase shares
without subjecting you to Swiss withholding tax.
A Swiss withholding tax will be levied on dividends and similar
distributions made by Weatherford-Switzerland to its
shareholders at the statutory rate of 35% if we cannot structure
the distributions as distributions made to shareholders in
relation to a reduction of par value or number of shares, which
would be exempt from Swiss withholding tax. Furthermore,
effective January 1, 2011, distributions of qualifying
additional paid-in capital will, as a matter of principle and
subject to regulations still to be promulgated by the competent
Swiss authorities, be exempt from the Swiss withholding tax. The
Swiss withholding tax will also be levied at the statutory rate
of 35% if, beginning on January 1, 2011, we cannot
structure the distribution as a distribution in relation to a
reduction of qualifying additional paid in capital. See
Material Tax Consideration Swiss Tax
Considerations Consequences to Shareholders of
Weatherford-Switzerland Subsequent to the
Transaction Swiss Withholding Tax
Distributions to Shareholders and
Exemption from Swiss Withholding
Tax Distributions to Shareholders.
A repurchase of shares for the purposes of capital reduction is
treated as a partial liquidation subject to the 35% Swiss
withholding tax to be levied on the difference (i) between
par value and redemption price, and (ii) beginning on
January 1, 2011, subject to the adoption of implementing
regulations and amendments to Swiss corporate law, between par
value plus the portion of the repurchase price attributable to
the qualifying additional paid-in capital for Swiss statutory
reporting purposes of the shares repurchased and the redemption
price. Although we plan to repurchase, when possible, our shares
from Swiss institutional market participants able to receive a
full refund of the Swiss withholding tax, there is risk that the
Swiss federal tax administration could decide to levy the Swiss
withholding tax on the repurchase of our shares if institutional
investors or other parties able to benefit from the full Swiss
withholding tax relief purchased our shares to resell them
shortly to us. See Material Tax Consideration
Swiss Tax Considerations Consequences to
Shareholders of Weatherford-Switzerland Subsequent to the
Transaction Exemption from Swiss Withholding
Tax Distributions to Shareholders and
Repurchases of Shares.
For a discussion of the conditions for Swiss Holders and
non-Swiss Holders to obtain a full or partial relief or refund
under Swiss tax law or under bilateral treaties for the
avoidance of double taxation, see Material Tax
Consideration Swiss Tax Considerations
Consequences to Shareholders of Weatherford-Switzerland
Subsequent to the Transaction Refund of Swiss
Withholding Tax on Dividends and Other Distributions.
The
redomestication may not allow us to maintain a competitive
worldwide effective corporate tax rate.
We believe that the redomestication should improve our ability
to maintain a competitive worldwide effective tax rate. However,
we cannot provide any assurances as to what our effective tax
rate will be after the redomestication because of, among other
things, uncertainty regarding the amount of business activities
in any particular jurisdiction in the future and the tax laws of
such jurisdictions, as well as changes in U.S. and other
tax laws. Our actual effective tax rate may vary from our
expectation and that variance may be material. Additionally, the
tax laws of Switzerland and other jurisdictions could change in
the future, and such changes could cause a material change in
our worldwide effective tax rate.
16
CAUTIONARY
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement and the documents incorporated by reference
in this proxy statement contain both historical and
forward-looking statements. All statements other than statements
of historical fact are, or may be deemed to be, forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, which we refer to as the
Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended, which we refer to as the Exchange Act.
Forward-looking statements include statements about the
following subjects:
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benefits, effects or results of the redomestication;
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operations and results after the redomestication;
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business strategies;
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expected financial position;
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expected results of operations;
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future cash flows;
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dividends, share repurchases and other distributions;
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plans and objectives of management;
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timing and timeline of the redomestication;
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tax treatment of the redomestication;
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accounting treatment of the redomestication;
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transaction-related expenses;
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performance of contracts;
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outcomes of legal proceedings;
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compliance with applicable laws;
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adequacy of insurance; and
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any other statements regarding future growth, future cash needs,
future operations, business plans and future financial results,
and any other statements that are not historical facts.
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Forward-looking statements in this proxy statement are
identifiable by use of the following words and other similar
expressions, among others:
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anticipate;
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believe;
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budget;
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could;
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estimate;
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expect;
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forecast;
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intend;
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may;
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might;
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plan;
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17
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predict;
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project;
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|
schedule; and
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|
|
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should.
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The following factors could affect our future results of
operations and could cause those results to differ materially
from those expressed in the forward-looking statements included
in this proxy statement or incorporated by reference:
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|
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an inability to realize expected benefits from the
redomestication or the occurrence of difficulties in connection
with the redomestication;
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any unanticipated costs in connection with the redomestication;
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an inability to obtain any necessary waivers from our lenders in
connection with the redomestication;
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material changes in oil and natural gas supply and demand, oil
and natural gas prices, rig count or other market trends;
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the volatility of the oil and natural gas industry;
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changes in the level of drilling and production activity;
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a shortage of available skilled labor;
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increases in the prices and availability of our raw materials;
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an inability to commercialize new products and services;
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an inability to realize expected benefits from our acquisitions;
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the cyclical nature of or a prolonged downturn in our industry;
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adverse weather conditions affecting our operations;
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political disturbances, war, or terrorist attacks and changes in
global trade policies;
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governmental and internal investigations;
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risks of international operations and compliance with foreign
laws;
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compliance with or breach of environmental laws;
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labor relations and wage negotiations with unions;
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operating hazards;
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political and other uncertainties inherent in
non-U.S. operations,
including exchange and currency fluctuations;
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compliance with the Foreign Corrupt Practices Act;
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the impact of governmental laws and regulations;
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the adequacy of sources of liquidity;
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the availability of adequate insurance at a reasonable cost and
risks of uninsured or self-insured losses;
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changes in the tax laws;
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the effect of litigation and contingencies; and
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fluctuations in the value of our shares.
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The above factors are in addition to those factors discussed:
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under Risk Factors and the The
Redomestication Background and Reasons for the
Redomestication and elsewhere in this proxy
statement; and
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in the documents that we incorporate by reference into this
proxy statement, including in the Risk Factors
section of our Annual Report on
Form 10-K
for the year ended December 31, 2007 and our Quarterly
Reports on
Form 10-Q
for the quarters ended March 31, 2008, June 30, 2008
and September 30, 2008, and subsequent SEC filings.
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All subsequent written and oral forward-looking statements
attributable to us or to persons acting on our behalf are
expressly qualified in their entirety by reference to these
risks and uncertainties. You should not place undue reliance on
forward-looking statements. Each forward-looking statement
speaks only as of the date of the particular statement, and we
do not undertake any obligation to publicly update or revise any
forward-looking statements except as required by law.
THE
REDOMESTICATION
Our board of directors has unanimously approved and recommends
that you approve the proposed Scheme of Arrangement providing
for a share exchange transaction to change our place of
incorporation from Bermuda to Switzerland. The redomestication
involves several steps.
First, we have formed Weatherford-Switzerland. Following the
shareholders meeting to be held
on ,
2009 and a hearing of the Supreme Court of Bermuda scheduled
for ,
2009 and the filing of the corresponding court order with the
Bermuda Registrar of Companies, assuming we have obtained the
necessary shareholder approval and court sanction, shareholders
of Weatherford-Bermuda will transfer all of their shares to
Weatherford-Switzerland. In exchange for each share of
Weatherford-Bermuda, Weatherford-Switzerland will issue one
share of Weatherford-Switzerland, which will be transferred to
each shareholder by American Stock Transfer &
Trust Company, LLC, as nominee acting on behalf and for the
account of the shareholders, which we refer to as the Nominee.
As a result, Weatherford-Bermuda will become a direct,
wholly-owned subsidiary of Weatherford-Switzerland.
Weatherford-Switzerland will assume Weatherford-Bermudas
existing obligation to deliver shares under our equity incentive
plans, warrants or other rights pursuant to the terms thereof.
The Transaction will be effected pursuant to the Scheme of
Arrangement and in accordance with the Share Exchange Agreement,
which are the legal documents that govern the Transaction.
Copies of those documents are attached to and are a part of this
proxy statement as Annex A and Annex B. We encourage
you to read these documents carefully.
After the redomestication, you will continue to own an interest
in a parent company that will continue to conduct the same
business operations as conducted by Weatherford-Bermuda before
the redomestication. The number of shares you will own will be
the same as the number of shares you owned in
Weatherford-Bermuda immediately prior to the redomestication,
and your relative economic interest in us will remain unchanged.
Immediately after the redomestication, Weatherford-Switzerland
will have outstanding the same number of shares as were
outstanding for Weatherford-Bermuda immediately before the
redomestication, plus the Formation Shares. As of
December 15, 2008, the record date for the shareholders
meeting, there were 728.7 million common shares of
Weatherford-Bermuda issued, including 41.0 million held by
subsidiaries. For a description of the shares of
Weatherford-Switzerland, see Description of
Weatherford-Switzerland Shares.
In connection with the redomestication, we also plan to relocate
our principal executive offices from Houston, Texas to Zug,
Switzerland with a branch office in Geneva, Switzerland. We
expect that most of our executive officers, including our Chief
Executive Officer, and other key decision makers will relocate
to Switzerland.
Background
and Reasons for the Redomestication
Our planned change of our place of incorporation from Bermuda to
Switzerland and relocation of our principal executive offices to
Zug, Switzerland with a branch office in Geneva, Switzerland
will establish a corporate headquarters that is more centrally
located within our area of worldwide operations, will locate us
in
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a country with a stable and developed legal and tax regime with
established standards of corporate governance, including
provisions for the rights of shareholders, and should improve
our ability to maintain a competitive worldwide effective
corporate tax rate, among other anticipated benefits.
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Switzerland is more centrally located than our current executive
offices to our worldwide operations, in terms of both time zone
overlap and travel time. We expect that relocating our executive
team to a more central location will permit them to coordinate
and interact with worldwide operations during their normal
business hours. Thus, the relocation will allow us to better
support our worldwide operations and improve executive oversight
of these operations.
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We conduct a significant part of our business operations
internationally, including in Europe, the Middle East, Africa,
the Asia Pacific region and the Commonwealth of Independent
States. A significant majority of our business is conducted
outside of the United States. Our revenues from
non-U.S. operations
constituted
62-63% of
our worldwide revenues for each of the years 2005, 2006 and
2007, and 64% of our revenues for the first three quarters of
2008. Based on global oil and gas activity, we anticipate that
we will derive an increasing percentage of our future revenues
from
non-U.S. operations.
The redomestication is intended to position our company to
further benefit from these growth opportunities and allow our
management to more effectively implement our global strategy and
increase our focus on customer development in these areas by
positioning our headquarters closer to these areas.
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Switzerland has a stable and well-developed legal system that we
believe encourages high standards of corporate governance and
provides shareholders with substantial rights. Generally, the
rights of a shareholder of a Swiss company are substantially
similar to, and in some cases more favorable to shareholders
than, the rights of a shareholder of a Bermuda company. See
Description of Weatherford-Switzerland Shares and
Comparison of Shareholder Rights. We believe that,
on the whole, the perception of a Swiss company among regulatory
authorities, investors, creditors and customers is generally
more favorable than of a Bermuda company.
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Switzerland has numerous tax treaties with many taxing
jurisdictions throughout the world. Bermuda has no comprehensive
income tax treaties. Switzerland has a developed and stable tax
regime. We believe that the redomestication will improve our
global tax position and substantially lower our risk related to
possible changes in tax and other laws, possible changes in tax
treaties and disputes with tax and other authorities. As such,
we believe the redomestication will provide greater
predictability and improve our ability to maintain a competitive
worldwide effective corporate tax rate.
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It is important to the effective execution of our global
strategy to be a multinational company. Our workforce is global
in its composition, and we have operations in approximately 100
different countries. We believe that our relocation to Zug,
Switzerland with a branch office in Geneva, Switzerland reflects
the multinational nature of our company. Geneva is considered
one of the most multinational cities in the world, being the
location of the headquarters or key offices of the United
Nations and many international non governmental organizations
and companies.
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In addition to the potential benefits described above, the
redomestication will expose us and our shareholders to some
risks. Please see the discussion under Risk Factors.
Our board of directors has considered both the potential
advantages of the redomestication and these risks and has
unanimously approved the Scheme of Arrangement and recommended
that our shareholders vote for the Scheme of Arrangement. We
cannot assure you, however, that the anticipated benefits of the
redomestication will be realized.
The
Scheme of Arrangement and the Share Exchange Agreement
There are several steps to the redomestication contemplated by
the Scheme of Arrangement and the Share Exchange Agreement,
including the following:
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Weatherford-Bermuda has formed Weatherford-Switzerland;
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assuming we obtain the necessary shareholder approval at the
meeting
on ,
2009 and assuming the Supreme Court of Bermuda sanctions the
Scheme of Arrangement at a hearing scheduled
for ,
2009, we will file the Courts order with the Bermuda
Registrar of Companies, at which time all common shares of
Weatherford-Bermuda will be transferred to
Weatherford-Switzerland;
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Weatherford-Switzerland will deliver to the Nominee, acting on
behalf and for the account of the shareholders, one share of
Weatherford-Switzerland in exchange for each share of
Weatherford-Bermuda;
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immediately thereafter, the Nominee, acting on behalf and for
the account of the shareholders, will transfer to each
shareholder one new share of Weatherford-Switzerland as the sole
consideration and in exchange for each share of
Weatherford-Bermuda; and
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Weatherford-Switzerland will assume Weatherford-Bermudas
existing obligation to deliver shares under our equity incentive
plans, warrants or other rights.
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Additional
Agreement
Weatherford-Bermuda will indemnify the directors and officers of
Weatherford-Bermuda and its subsidiaries for at least six years
after the effective time of the redomestication.
Amendment
or Termination
The Share Exchange Agreement may be amended, modified or
supplemented at any time before or after the Scheme of
Arrangement is approved by our shareholders. However, after the
Scheme of Arrangement is approved by our shareholders, no
amendment, modification or supplement may be made to the Share
Exchange Agreement that requires further approval by our
shareholders without obtaining that approval.
Our board of directors may terminate the Share Exchange
Agreement and abandon the redomestication at any time before the
Scheme of Arrangement becomes effective without obtaining
shareholder approval.
Nominee
Following the shareholders meeting
on ,
2009 and a hearing of the Supreme Court of Bermuda scheduled
for ,
2009, assuming we have obtained the necessary shareholder
approval and court sanction, American Stock Transfer &
Trust Company, LLC will be appointed to act as nominee on
behalf and for the account of the shareholders to assist in
effecting the Transaction, as described in The
Scheme of Arrangement and the Share Exchange Agreement and
Court Sanction of the Scheme of
Arrangement. The Nominee will sign a subscription
agreement for the shares of Weatherford-Switzerland to be
transferred to the shareholders. It will own bare legal title to
these shares upon the issuance thereof solely for the account
and benefit of the shareholders and will act as trustee for the
shareholders for the instant in time that it holds bare legal
title to the shares. The Nominee is required to act in such
capacity in order for the Transaction to comply with certain
procedural provisions of Swiss law, and the Nominee has no power
to dispose of the shares of Weatherford-Switzerland other than
pursuant to the Transaction. Shareholder approval of the Scheme
of Arrangement will also constitute shareholder approval of the
appointment of the Nominee.
Conditions
to Completion of the Transaction
The Transaction will not be completed unless, among other
things, the following conditions are satisfied or, if allowed by
law, waived:
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the Scheme of Arrangement is approved by our shareholders;
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there is no decree, order or injunction that prohibits the
completion of the redomestication;
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the capital increase covering the Weatherford-Switzerland
registered shares to be issued under the terms of the Scheme of
Arrangement and the articles of association of
Weatherford-Switzerland, in the form attached as Annex E to
this proxy statement, is registered with the commercial register
in the Canton of Zug, Switzerland;
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the requisite court order sanctioning the Scheme of Arrangement
has been obtained from the Supreme Court of Bermuda and filed
with the Registrar of Companies of Bermuda;
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the Weatherford-Switzerland shares to be issued under the terms
of the Scheme of Arrangement are authorized for listing on the
NYSE, subject to official notice of issuance;
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we receive an opinion from Baker & McKenzie LLP
confirming, as of the effective date of the Scheme of
Arrangement, the material U.S. federal income tax
consequences of the Transaction, receiving
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distributions on Weatherford-Switzerland shares, and disposing
of Weatherford-Switzerland shares, each as described under
Material Tax Considerations U.S. Federal
Income Tax Considerations; and
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we receive an opinion from Baker & McKenzie Geneva
confirming, as of the effective date of the Scheme of
Arrangement, the matters discussed under Material Tax
Considerations Swiss Tax Considerations.
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We are a party to certain credit agreements that require
consents from third-party lenders prior to implementing the
redomestication. See Credit Facilities
for more information.
Court
Sanction of the Scheme of Arrangement
Pursuant to section 99 of the Companies Act 1981, as
amended, of Bermuda, which we refer to as the Companies Act, the
Scheme of Arrangement must be sanctioned by the court in
Bermuda. This requires Weatherford-Bermuda to file a petition in
the Supreme Court of Bermuda. Prior to the mailing of this proxy
statement, Weatherford-Bermuda obtained directions from the
Supreme Court of Bermuda providing for the convening of the
shareholders meeting to approve the Scheme of Arrangement and
other procedural matters regarding that meeting and the Supreme
Court of Bermuda proceeding, including a date upon which the
Supreme Court of Bermuda will hear the petition. A copy of the
Supreme Courts order is attached as Annex C to this
proxy statement. Subject to our shareholders approving the
Scheme of Arrangement, a subsequent Supreme Court of Bermuda
hearing will be required to hear the petition and seek the
sanction of the Scheme of Arrangement, which we refer to as the
sanction hearing. The Supreme Court has fixed the date of the
sanction hearing at 9:30 a.m.
on ,
2009 at the courthouse in Hamilton, Bermuda. At the sanction
hearing, the Supreme Court of Bermuda may impose such conditions
as it deems appropriate in relation to the Scheme of Arrangement
but may not impose any material changes without the joint
consent of Weatherford-Bermuda and Weatherford-Switzerland. In
determining whether to exercise its discretion and sanction the
Scheme of Arrangement, the Supreme Court will determine, among
other things, whether the Scheme of Arrangement is fair and
reasonable. If you are a shareholder, you may appear or be
represented and present evidence or arguments at the sanction
hearing. In addition, the Supreme Court of Bermuda has wide
discretion to hear from interested parties. See The
Shareholders Meeting for more information. In accordance
with its terms, the Scheme of Arrangement will become effective
as soon as a copy of the Order of the Supreme Court of Bermuda
sanctioning the Scheme of Arrangement has been delivered to the
Registrar of Companies in Bermuda as required by section 99
of the Companies Act. See Conditions to
Completion of the Transaction for more information on
these conditions.
The Scheme of Arrangement, which would effect the
redomestication, is attached as Annex B to this proxy
statement and sets forth the specific terms of the
redomestication. At the shareholders meeting, our shareholders
will be asked to approve the Scheme of Arrangement. If the
shareholders approve the Scheme of Arrangement, then we will ask
the Supreme Court to sanction the Scheme of Arrangement. We
encourage you to read the Scheme of Arrangement in its entirety
for a complete description of its terms and conditions.
Once the Scheme of Arrangement is effective, the Supreme Court
will have exclusive jurisdiction to hear and determine any suit,
action or proceeding and to settle any dispute which arises out
of or is connected with the terms of the Scheme of Arrangement
or their implementation or out of any action taken or omitted to
be taken under the Scheme of Arrangement or in connection with
the administration of the Scheme of Arrangement. A shareholder
who wishes to enforce any rights under the Scheme of Arrangement
after such time must notify us in writing of its intention at
least ten business days prior to commencing a new proceeding.
After the effective time of the Scheme of Arrangement, no
shareholder may commence a proceeding against
Weatherford-Switzerland or Weatherford-Bermuda in respect of or
arising from the Scheme of Arrangement except to enforce its
rights under the Scheme of Arrangement where a party has failed
to perform its obligations under the Scheme of Arrangement.
When, under any provision of the Scheme of Arrangement after its
effective time, a matter is to be determined by us, then we will
have discretion to interpret those matters under the Scheme of
Arrangement in a manner that we consider fair and reasonable,
and our decisions will be binding on all concerned.
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We may consent to any modification of the Scheme of Arrangement
on behalf of the shareholders which the Supreme Court may think
fit to approve or impose.
Federal
Securities Law Consequences; Resale Restrictions
The issuance of Weatherford-Switzerland shares to our
shareholders in connection with the redomestication will not be
registered under the Securities Act. Section 3(a)(10) of
the Securities Act exempts securities issued in exchange for one
or more outstanding securities from the general requirement of
registration where the terms and conditions of the issuance and
exchange of such securities have been approved by any court of
competent jurisdiction, after a hearing upon the fairness of the
terms and conditions of the issuance and exchange at which all
persons to whom such securities will be issued have a right to
appear and to whom adequate notice of the hearing has been
given. At the sanction hearing, at which shareholders may
appear, the Supreme Court will consider whether the terms and
conditions of the redomestication are fair. The
Weatherford-Switzerland shares issued to our shareholders in
connection with the redomestication will be freely transferable,
except for restrictions applicable to certain
affiliates of Weatherford-Bermuda under the
Securities Act, and as follows:
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Persons who were not affiliates of Weatherford-Bermuda at the
date of the redomestication and have not been affiliates within
90 days prior to such date will be permitted to sell any
Weatherford-Switzerland shares received in the redomestication
without regard to Rule 144 under the Securities Act.
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Persons who were affiliates of Weatherford-Bermuda at the date
of the redomestication or were affiliates within 90 days
prior to such date will be permitted to resell any
Weatherford-Switzerland shares they receive in the
redomestication in the manner permitted by Rule 144. In
computing the holding period of the Weatherford-Switzerland
shares for the purposes of Rule 144(d), such persons will
be permitted to tack the holding period of their
Weatherford-Bermuda shares held prior to the effective time of
the redomestication.
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Persons whose shares of Weatherford-Bermuda bear a legend
restricting transfer will receive shares of
Weatherford-Switzerland that are subject to the same
restrictions.
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Persons who may be deemed to be affiliates of
Weatherford-Bermuda and Weatherford-Switzerland for these
purposes generally include individuals or entities that control,
are controlled by, or are under common control with,
Weatherford-Bermuda and Weatherford-Switzerland, and would
include shareholders who are executive officers, directors or
significant shareholders of Weatherford-Bermuda and
Weatherford-Switzerland.
We have not filed a registration statement with the SEC covering
any resales of the Weatherford-Switzerland shares to be received
by our shareholders in the redomestication.
Weatherford-Switzerland will file certain post-effective
amendments to existing effective registration statements of
Weatherford-Bermuda concurrently with the completion of the
redomestication.
Effective
Time
If the Scheme of Arrangement is approved by the requisite
shareholder vote and sanctioned by the Supreme Court of Bermuda,
we anticipate that the Scheme of Arrangement itself will become
effective as soon as practicable following sanction of the
Scheme of Arrangement by the Supreme Court of Bermuda at the
hearing scheduled
for ,
2009. The redomestication will be completed upon the later of:
(i) our filing of the court order sanctioning the Scheme of
Arrangement with the Bermuda Registrar of Companies and
(ii) the registration with the commercial register in the
Canton of Zug, Switzerland of the capital increase covering the
Weatherford-Switzerland registered shares to be issued in
connection with the Scheme of Arrangement and the transfer of
the shares in Weatherford-Bermuda to Weatherford-Switzerland. We
currently expect to complete the redomestication in February,
2009.
If the conditions to the redomestication are not satisfied, the
redomestication may be abandoned or delayed, even after our
shareholders approve the Scheme of Arrangement. In addition, our
board of directors may abandon or delay the redomestication for
any reason at any time before the Scheme of Arrangement becomes
effective, even after our shareholders have approved the Scheme
of Arrangement.
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Management
of Weatherford-Switzerland
The executive officers and directors of Weatherford-Bermuda
immediately prior to the completion of the redomestication will
be the executive officers and directors of
Weatherford-Switzerland. Weatherford-Bermudas directors
will carry their terms of office over to the
Weatherford-Switzerland board of directors.
Interests
of Certain Persons in the Redomestication
You should be aware that some of our executive officers have
interests in the redomestication that are different from, or in
addition to, the interests of our other shareholders.
We expect that most of our executive officers, including our
Chief Executive Officer, and other key decision makers will
relocate to Switzerland. We expect to provide certain allowances
and reimbursements to these relocating executive officers, such
as cost of living, housing, car, moving and dependent schooling
allowances. The terms and conditions of these relocation
allowances and reimbursements will be determined prior to the
relocation of any of our executive officers.
Weatherford-Switzerland plans to enter into indemnification
agreements with each of its directors and executive officers
upon the completion of the redomestication that will provide for
indemnification and expense advancement and include related
provisions meant to facilitate the indemnitees receipt of
such benefits. See The Scheme of Arrangement
and the Share Exchange Agreement Additional
Agreement and Comparison of Rights of
Shareholders Indemnification of Directors and
Officers; Insurance.
In connection with the redomestication, Weatherford-Switzerland
will enter into employment and other agreements (such as the
nonqualified executive retirement plan) with each of our
executive officers that are similar to the agreements and other
agreements that each executive officer has with
Weatherford-Bermuda. For our executive officers who relocate to
Switzerland, their employment agreements and other benefit
arrangements and plans will be modified for compliance with
applicable Swiss law.
We will provide tax equalization to the executive officers who
become subject to Swiss income, social and wealth taxes. The
terms and conditions of these tax equalization arrangements will
be determined prior to the relocation of any executive officer.
In general, each of the executive officers will be responsible
for their theoretical tax reflecting
U.S. income and social security tax rates on their
compensation, other than certain expatriate benefits and
allowances which will be provided on a fully grossed up basis.
Each of the executive officers will be fully reimbursed for any
obligation such officer may have to pay Swiss wealth tax. A tax
equalization settlement for each executive officer will be
completed annually following the preparation of the applicable
tax returns.
Required
Vote; Board Recommendation
The Scheme of Arrangement requires the affirmative vote of a
majority in number of shareholders present and voting either in
person or by proxy at the meeting representing at least
three fourths in value of shareholders present and voting
either in person or by proxy at the meeting. See The
Shareholders Meeting Record Date; Quorum; Voting
Rights; Vote Required for Approval.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TRANSACTION
AND UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE
FOR PROPOSAL TO APPROVE THE SCHEME OF
ARRANGEMENT.
Regulatory
Matters
We are not aware of any other governmental approvals or actions
that are required to complete the redomestication other than
compliance with U.S. federal and state securities laws and
compliance with Bermuda and Swiss corporate law (including
sanction by the Supreme Court of Bermuda).
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No
Appraisal Rights
Under Bermuda law, none of the shareholders of
Weatherford-Bermuda has any right to an appraisal of the value
of their shares or payment for them in connection with the
redomestication.
Exchange
of Shares
If you hold Weatherford-Bermuda common shares in uncertificated
book-entry form, at the effective time of the redomestication
your Weatherford-Bermuda common shares will be exchanged solely
for Weatherford-Switzerland shares without any action on your
part. Your Weatherford-Switzerland shares will also be issued in
uncertificated book-entry form.
We will appoint American Stock Transfer &
Trust Company, LLC as agent to handle the surrender of
Weatherford-Bermuda shares. If you hold Weatherford-Bermuda
share certificates, soon after the closing of the Transaction
you will be sent a letter of transmittal, which is to be used to
surrender Weatherford-Bermuda share certificates and to apply
for enrollment in Weatherford-Switzerlands share register
as a shareholder with voting rights. The letter of transmittal
will contain instructions explaining the procedure for
surrendering Weatherford-Bermuda share certificates and
enrolling in Weatherford-Switzerlands share register as
shareholders with voting rights. YOU SHOULD NOT RETURN SHARE
CERTIFICATES WITH THE ENCLOSED PROXY CARD.
Weatherford-Bermuda shareholders who surrender their share
certificates, together with a properly completed letter of
transmittal, will become registered holders of the
Weatherford-Switzerland shares to which they are entitled on the
basis of the
one-for-one
exchange. After the redomestication, each certificate that
previously represented shares of Weatherford-Bermuda common
shares will represent only the right to receive shares of
Weatherford-Switzerland. Although shareholders who hold share
certificates in Weatherford-Bermuda will automatically continue
to be entitled to dividends, preferential subscription rights
and liquidation proceeds, such shareholders will not be able to
exercise any voting rights, prove their ownership interest in
Weatherford-Switzerland, transfer their shares or exercise other
shareholder rights until they surrender their share certificates
and register as shareholders entitled to voting rights in
Weatherford Switzerlands share register. Beneficial
holders of shares held in street name will not be
required to take any action.
Dividend
Policy
We have not declared or paid cash dividends since 1984. Any
future declaration and payment of any cash dividends by
Weatherford-Switzerland following the completion of the
redomestication will:
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depend upon our results of operations, financial condition, cash
requirements and other relevant factors;
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be subject to shareholder approval;
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be subject to restrictions contained in our credit facilities
and other debt covenants; and
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be subject to restrictions on dividends imposed by Swiss law.
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For a description of restrictions on dividends imposed by Swiss
law, see Description of Weatherford-Switzerland
Shares Dividends, Description of
Weatherford-Switzerland Shares Repurchases of
Registered Shares and Material Tax
Considerations Swiss Tax Considerations
Consequences to Shareholders of Weatherford-Switzerland
Subsequent to the Transaction.
Share
Compensation Plans
We have a variety of equity incentive plans, deferred
compensation plans, and other plans, agreements, awards and
arrangements outstanding that provide for options, restricted
shares or other rights to purchase or receive shares of
Weatherford-Bermuda (or the right to receive benefits or amounts
by reference to those shares). We refer to these plans,
agreements, awards and arrangements as our equity incentive
plans. Some of our equity incentive plans are sponsored by
Weatherford-Bermuda, and others are sponsored by some of our
subsidiaries or affiliates. In furtherance of the
redomestication, our equity incentive plans require amendments
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or other modifications. For instance, if the redomestication is
completed, Weatherford-Switzerland will assume
Weatherford-Bermudas existing obligations to deliver
shares under our equity incentive plans pursuant to those
plans terms (as they may be amended or modified to take
into account the redomestication). As explained in more detail
in the Share Exchange Agreement, to the extent
Weatherford-Bermuda currently sponsors those equity incentive
plans, Weatherford-Switzerland will assume or adopt those equity
incentive plans. At the same time, equity incentive plans
sponsored by Weatherford subsidiaries or other affiliates are
expected to continue to be sponsored by those or other
affiliates, even though Weatherford-Switzerland may have to
assume some obligations under those equity incentive plans. The
amendments or other modifications will be necessary, among other
things to: (1) facilitate the assumption or adoption by
Weatherford-Switzerland of the various equity incentive plans it
will sponsor or various rights, duties or obligations under the
equity incentive plans; (2) provide that shares of
Weatherford-Switzerland will be issued, acquired, purchased,
held, available or used to measure benefits or calculate amounts
as appropriate under the equity incentive plans, instead of
shares of Weatherford-Bermuda; and (3) provide for the
appropriate substitution of Weatherford-Switzerland in place of
references to Weatherford-Bermuda under the equity incentive
plans. Shareholder approval of the Scheme of Arrangement will
also constitute shareholder approval of these amendments or
modifications and the relevant adoption and assumption of the
equity incentive plans by Weatherford-Switzerland.
Stock
Exchange Listing
Weatherford-Bermudas common shares are currently listed on
the NYSE. There is currently no established public trading
market for the shares of Weatherford-Switzerland. We intend to
make application so that, immediately following the
redomestication, the shares of Weatherford-Switzerland will be
listed on the NYSE under the symbol WFT, the same
symbol under which the Weatherford-Bermuda common shares are
currently listed.
Accounting
Treatment of the Redomestication
Under U.S. GAAP, the redomestication represents a
transaction between entities under common control. Assets and
liabilities transferred between entities under common control
are accounted for at cost. Accordingly, the assets and
liabilities of Weatherford-Switzerland will be reflected at
their carrying amounts in the accounts of Weatherford-Bermuda at
the effective time of the transaction.
Treatment
of Warrants
If the redomestication is completed, any outstanding warrants to
purchase common shares of
Weatherford-Bermuda
will be assumed by Weatherford-Switzerland and the warrant
agreements and all of the rights and obligations of
Weatherford-Bermuda thereunder shall immediately be assigned to
Weatherford-Switzerland in accordance with the terms of the
warrant agreements.
Guarantees
of Senior Notes
If the redomestication is completed, Weatherford-Switzerland
will fully and unconditionally guarantee the obligations of
Weatherford-Bermuda and Weatherford-Delaware under:
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Weatherford-Bermudas 4.95% senior notes due 2013,
5.15% senior notes due 2013, 5.50% senior notes due
2016, 6.00% senior notes due 2018, 6.50% senior notes
due 2036, 7.00% senior notes due 2038, and notes issued
under our commercial paper programs; and
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Weatherford-Delawares 6.625% senior notes due 2011,
5.95% senior notes due 2012, 6.35% senior notes due
2017, and 6.80% senior notes due 2037.
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Credit
Facilities
The credit agreements governing our $1.5 billion credit
facility and our $250 million credit facility require that
we obtain consent for the redomestication to Switzerland from
lenders under the credit
26
agreements, which consent may not be unreasonably withheld. The
credit agreement governing our new $500 million credit
facility does not require lender consent for the redomestication
to Switzerland. We are seeking the necessary consents from our
lenders in connection with the redomestication. If the
redomestication is completed, Weatherford-Switzerland will fully
and unconditionally guarantee the obligations of
Weatherford-Bermuda under each of our credit facilities.
Effect of
the Redomestication on Potential Future Status as a Foreign
Private Issuer
Upon completion of the redomestication, we will remain subject
to SEC reporting requirements, the mandates of the
Sarbanes-Oxley Act of 2002 and the corporate governance rules of
the NYSE, and we will continue to report our financial results
in U.S. dollars and under U.S. GAAP.
We do not currently believe that Weatherford-Switzerland will
qualify as a foreign private issuer within the
meaning of the rules promulgated under the Exchange Act upon
completion of the redomestication. The definition of a
foreign private issuer has two parts one
based on a companys percentage of U.S. resident
shareholders and the other on its business contacts with the
U.S. An organization incorporated under the laws of a
foreign country qualifies as a foreign private issuer if either
part of the definition is satisfied. We do not expect to qualify
as a foreign private issuer under the shareholder test because
we currently expect that more than 50% of
Weatherford-Switzerlands outstanding voting securities
will continue to be held by U.S. residents after the
completion of the redomestication. However, under the business
contacts test, if after the redomestication (1) more than
50% of Weatherford-Switzerlands assets were located
outside the United States,
(2) Weatherford-Switzerlands business was not
administered principally in the U.S. and (3) a
majority of Weatherford-Switzerlands executive officers
and directors were neither U.S. citizens nor
U.S. residents, then Weatherford-Switzerland would qualify
as a foreign private issuer. We do not expect that
Weatherford-Switzerland will meet the requirements of
clause (3) of this test upon the completion of the
redomestication, as we believe a majority of
Weatherford-Switzerlands executive officers and directors
will continue to be U.S. citizens or U.S. residents.
However, Weatherford-Switzerland may satisfy this element of the
test some time in the future and, as a result, qualify for
status as a foreign private issuer at such later date. If and
when that occurs, Weatherford-Switzerland would be exempt from
certain requirements applicable to U.S. public companies,
including:
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the rules requiring the filing of Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K
with the SEC;
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the SECs rules regulating proxy solicitations;
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the provisions of Regulation FD;
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the filing of reports of beneficial ownership under
Section 16 of the Exchange Act (although beneficial
ownership reports may be required under Section 13 of the
Exchange Act); and
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short-swing trading liability imposed on insiders
who purchase and sell securities within a six-month period.
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In addition, Weatherford-Switzerland would then be allowed to:
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file annual reports within six months after the end of a fiscal
year;
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include more limited compensation disclosure in its filings with
the SEC;
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apply accounting principles other than U.S. GAAP to its
financial statements, although reconciliation to U.S. GAAP
would be required if International Financial Reporting
Standards, or IFRS, is not used; and
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choose which reporting currency to use in presenting its
financial statements.
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27
MATERIAL
TAX CONSIDERATIONS
This section contains a general discussion of certain material
tax consequences of (1) the Transaction,
(2) post-Transaction ownership and disposition of
Weatherford-Switzerland shares and (3) post-Transaction
operations of Weatherford-Switzerland.
The discussion under the caption U.S. Federal Income
Tax Considerations addresses certain material
U.S. federal income tax consequences to U.S. holders
and
non-U.S. holders
(each as defined below) of (1) exchanging
Weatherford-Bermuda shares for Weatherford-Switzerland shares in
the Transaction and (2) owning and disposing of
Weatherford-Switzerland shares received in the Transaction, and
to Weatherford-Bermuda and Weatherford-Switzerland of the
Transaction.
The discussion under the caption Swiss Tax
Considerations addresses certain material Swiss tax
consequences (1) to shareholders resident for tax purposes
in a country other than Switzerland of the Transaction and of
ownership and disposition of the Weatherford-Switzerland shares
and (2) to Weatherford-Switzerland of the Transaction and
subsequent operations.
The discussion under the caption Bermuda Tax
Considerations addresses the Bermuda income tax
consequences of the Transaction.
The below discussion is not a substitute for an individual
analysis of the tax consequences of the Transaction,
post-Transaction ownership and disposition of
Weatherford-Switzerland shares or post-Transaction operations of
Weatherford-Switzerland. You should consult your own tax
advisors regarding the particular U.S. (federal, state and
local), Swiss, Bermuda and other
non-U.S. tax
consequences of these matters in light of your particular
situation.
U.S.
Federal Income Tax Considerations
Scope
of Discussion
This discussion generally does not address any aspects of
U.S. taxation other than U.S. federal income taxation,
is not a complete analysis or listing of all potential tax
consequences of the Transaction or of holding and disposing of
Weatherford-Switzerland shares, and does not address all tax
considerations that may be relevant to Weatherford-Bermuda
shareholders. In particular, the below discussion addresses tax
consequences to holders that hold their Weatherford-Bermuda
shares, and whom will hold their Weatherford-Switzerland shares,
solely as capital assets. The below discussion does not address
any tax consequences to Weatherford-Bermuda or
Weatherford-Switzerland shareholders, as applicable, who, for
U.S. federal tax purposes, are subject to special rules,
such as:
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banks, financial institutions or insurance companies;
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tax-exempt entities;
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persons who hold shares as part of a straddle, hedge, integrated
transaction or conversion transaction;
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persons who have been, but are no longer, citizens or residents
of the United States;
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persons holding shares through a partnership or other fiscally
transparent person;
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dealers or traders in securities, commodities or currencies;
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grantor trusts;
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persons subject to the alternative minimum tax;
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U.S. persons whose functional currency is not
the U.S. dollar;
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regulated investment companies and real estate investment trusts;
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persons who received the Weatherford-Bermuda shares through the
exercise of employee share options or otherwise as compensation
or through a tax qualified retirement plan;
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28
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persons who, at any time within the five-year period ending on
the date of the Transaction, have owned (directly or through
attribution) 10% or more of the total combined voting power of
all classes of shares entitled to vote of
Weatherford-Bermuda; or
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persons who, immediately after the Transaction, own (directly or
through attribution) 10% or more of the total combined voting
power of all classes of shares entitled to vote of
Weatherford-Switzerland.
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This discussion is based on the U.S. Internal Revenue Code
of 1986, as amended, which we refer to as the Code, the Treasury
regulations promulgated thereunder, which we refer to as a the
Treasury Regulations, judicial and administrative
interpretations thereof and the Convention Between the United
States of America and the Swiss Confederation for the Avoidance
of Double Taxation with respect to Taxes on Income (the
Swiss-U.S. Tax Treaty), in each case as in effect
and available on the date of this proxy statement. All of the
foregoing are subject to change, which change could apply with
retroactive effect and could affect the tax consequences
described in this proxy. The discussion assumes, as is the case
under current law, that Weatherford-Bermuda is treated as a
foreign person for U.S. federal tax purposes and will be so
treated as of and after the effective time of the Transaction.
Neither Weatherford-Bermuda nor Weatherford-Switzerland will
request a ruling from the United States Internal Revenue
Service, which we refer to as the IRS, as to the
U.S. federal tax consequences of the Transaction,
post-Transaction ownership and disposition of
Weatherford-Switzerland shares or any other matter. There can be
no assurance that the IRS will not challenge any of the
U.S. federal tax consequences described below.
For purposes of this discussion, a U.S. holder
is a beneficial owner of Weatherford-Bermuda shares or, after
the completion of the Transaction, Weatherford-Switzerland
shares, that for U.S. federal income tax purposes is:
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an individual citizen or resident alien of the United States;
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a corporation or other entity taxable as a corporation created
or organized in or under the laws of the United States or any
state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust, if such trust validly has elected to be treated as a
U.S. person for U.S. federal income tax purposes or if
(1) a U.S. court can exercise primary supervision over
its administration and (2) one or more U.S. persons
have the authority to control all of the substantial decisions
of such trust.
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A
non-U.S. holder
is a beneficial owner of Weatherford-Bermuda shares or, after
the completion of the Transaction, Weatherford-Switzerland
shares, other than a U.S. holder or an entity or
arrangement treated as a partnership for U.S. federal
income tax purposes, which we refer to as a Partnership. If a
Partnership is a beneficial owner of Weatherford-Bermuda shares
or Weatherford-Switzerland shares, the tax treatment of a
partner in that Partnership will generally depend on the status
of the partner and the activities of the Partnership. Holders of
Weatherford-Bermuda shares or Weatherford-Switzerland shares
that are Partnerships and partners in such Partnerships should
consult their tax advisor regarding the U.S. federal income
tax consequences to them of the Transaction and the ownership
and disposition of Weatherford-Switzerland shares. For purposes
of this discussion, holder or
shareholder means either a U.S. holder or a
non-U.S. holder
or both, as the context may require.
Material
Tax Consequences of the Transaction to Weatherford-Bermuda and
Weatherford-Switzerland
Weatherford-Bermuda and
Weatherford-Switzerland. Neither
Weatherford-Bermuda nor Weatherford-Switzerland should be
subject to U.S. federal income tax as a result of the
Transaction. The receipt by Weatherford-Bermuda shareholders of
Weatherford-Switzerland shares in exchange for their
Weatherford-Bermuda shares in the Transaction should constitute
a reorganization under Section 368(a)(1)(B)
and/or an
exchange under Section 351 of the Code. The below
discussion describes the general consequences to
U.S. holders and
non-U.S. holders
of the Transaction qualifying under Section 368(a)(1)(B)
and/or
Section 351 of the Code.
29
Material
Tax Consequences to U.S. Holders
The
Transaction
U.S. Holders Owning Less Than Five Percent of
Weatherford-Switzerland. Under
Section 367(a) of the Code and the Treasury Regulations
thereunder, U.S. holders who own (applying ownership
attribution rules) less than five percent of the shares of
Weatherford-Switzerland immediately after the Transaction will
recognize no gain or loss upon the exchange of
Weatherford-Bermuda shares for Weatherford-Switzerland shares in
the Transaction. U.S. holders whose tax basis in their
Weatherford-Bermuda shares exceeds the fair market value of such
shares at the time of the Transaction will be able to carry over
the tax basis (and thus the inherent loss) of their
Weatherford-Bermuda shares to their Weatherford-Switzerland
shares. Thus, subject to any subsequent changes in the fair
market value of the Weatherford-Switzerland shares, any loss
will be preserved. The tax basis of the Weatherford-Switzerland
shares received by U.S. holders in exchange for their
Weatherford-Bermuda shares will be equal to the tax basis of
their Weatherford-Bermuda shares exchanged. The holding period
of the Weatherford-Switzerland shares received by
U.S. holders will include the period those holders held
their Weatherford-Bermuda shares. U.S. holders who hold
their Weatherford-Bermuda shares with differing tax bases or
holding periods are urged to consult their tax advisor with
regard to identifying the tax bases and holding periods of the
particular Weatherford-Switzerland shares received in the
Transaction.
U.S. Holders Owning Five Percent or More of
Weatherford-Switzerland. Under
Section 367(a) of the Code and the Treasury Regulations
thereunder, U.S. holders who own (applying ownership
attribution rules) five percent or more of the shares of
Weatherford-Switzerland immediately after the Transaction
generally will be required to timely file and maintain with the
IRS a Gain Recognition Agreement and related materials, which we
refer to as a GRA, in order to defer gain, if any, realized upon
the exchange of their Weatherford-Bermuda shares for
Weatherford-Switzerland shares. Such U.S. holders should
consult their own tax advisor to determine whether and when to
file a GRA and the tax implications thereof. Five percent or
greater U.S. holders whose tax basis in their
Weatherford-Bermuda shares exceeds the fair market value of such
shares at the time of the Transaction will carry over the tax
basis (and thus the inherent loss), as well as the
holding period, of their Weatherford-Bermuda shares to their
Weatherford-Switzerland shares. Thus, subject to any subsequent
changes in the fair market value of the Weatherford-Switzerland
shares, any loss will be preserved. Provided five percent or
greater U.S. holders with gain in their Weatherford-Bermuda
shares at the time of the Transaction timely file and maintain a
GRA, (1) the tax basis of the Weatherford-Switzerland
shares received by the U.S. holders in exchange for their
Weatherford-Bermuda shares will be equal to the tax basis of
their Weatherford-Bermuda shares exchanged and (2) the
holding period of the Weatherford-Switzerland shares received by
U.S. holders will include the period those holders held
their Weatherford-Bermuda shares. Five percent or greater
U.S. holders who hold their Weatherford-Bermuda shares with
differing tax bases or holding periods, or who recognize gain in
the Transaction as a result of not timely filing or maintaining
a GRA, are urged to consult their tax advisor with regard to
identifying the tax bases and holding periods of the particular
Weatherford-Switzerland shares received in the Transaction.
Receiving Distributions on Weatherford-Switzerland
Shares. Subject to the discussion below under
Passive Foreign Investment Company
Provisions, U.S. holders will be required to include
in gross income the gross amount of any distribution received on
the Weatherford-Switzerland shares to the extent that the
distribution is paid out of Weatherford-Switzerlands
current or accumulated earnings and profits as determined for
U.S. federal income tax purposes, which we refer to as a
dividend. With respect to non-corporate U.S. holders,
certain dividends received in taxable years beginning before
January 1, 2011 from a qualified foreign corporation will
be subject to U.S. federal income tax at a maximum rate of
15%. As long as the Weatherford-Switzerland shares are listed on
the New York Stock Exchange (or certain other stock exchanges)
and/or
Weatherford-Switzerland qualifies for benefits under the
Swiss-U.S. Tax Treaty, Weatherford-Switzerland will be treated
as a qualified foreign corporation for this purpose. This
reduced rate will not be available in all situations, and
U.S. holders should consult their own tax advisor regarding
the application of the relevant rules to their particular
circumstances. Dividends from Weatherford-Switzerland will not
be eligible for the dividends-received deduction, which is
generally allowed to U.S. corporate shareholders on
dividends received from certain domestic and foreign
corporations.
30
Distributions in excess of the current and accumulated earnings
and profits of Weatherford-Switzerland will be applied first to
reduce the U.S. holders tax basis in its
Weatherford-Switzerland shares, and thereafter will constitute
gain from the sale or exchange of such shares. In the case of a
non-corporate U.S. holder, the maximum U.S. federal
income tax rate applicable to such gain is 15% under
current law if the holders holding period for such
Weatherford-Switzerland shares exceeds twelve months. This
reduced rate is scheduled to expire effective for taxable years
beginning after December 31, 2010. Special rules not here
described may apply to U.S. holders who do not have a
uniform tax basis and holding period in all of their
Weatherford-Switzerland shares, and any such U.S. holders
are urged to consult their own tax advisor with regard to such
rules.
Subject to complex limitations, Swiss withholding tax on
dividends paid will be treated for U.S. federal tax
purposes as a creditable foreign tax against the
U.S. federal income tax liability of a U.S. holder. At
least a portion of dividends paid by Weatherford-Switzerland
generally would be U.S. source income if, and to the extent
that, more than a de minimis amount of the earnings and
profits of Weatherford-Switzerland out of which the dividends
are paid is from sources within the United States. At least a
portion of dividends paid by Weatherford-Switzerland could also
be U.S. source income under certain other circumstances
that Weatherford considers unlikely to arise. The rules relating
to the determination of the foreign tax credit are complex, and
you should consult your own tax advisor to determine whether and
to what extent a credit would be available. In lieu of claiming
a foreign tax credit, U.S. holders may claim a deduction of
foreign taxes paid in the taxable year.
Dispositions of Weatherford-Switzerland
Shares. Subject to the discussion below under
Passive Foreign Investment Company
Provisions, U.S. holders of Weatherford-Switzerland
shares generally should recognize capital gain or loss for
U.S. federal income tax purposes on the sale, exchange or
other taxable disposition of Weatherford-Switzerland shares in
an amount equal to the difference between the amount realized
from such sale, exchange or other taxable disposition and the
U.S. holders tax basis in such shares. In the case of
a non-corporate U.S. holder, the maximum U.S. federal
income tax rate applicable to such gain is 15% under current law
if the holders holding period for such
Weatherford-Switzerland shares exceeds twelve months. This
reduced rate is scheduled to expire effective for taxable years
beginning after December 31, 2010. The deductibility of
capital losses are subject to limitations.
Passive Foreign Investment Company
Provisions. The treatment of U.S. holders of
Weatherford-Switzerland shares in some cases could be materially
different from that described above if, at any relevant time,
Weatherford-Bermuda
or Weatherford-Switzerland were a passive foreign investment
company, which we refer to as a PFIC.
For U.S. tax purposes, a foreign corporation is classified
as a PFIC for any taxable year if either (1) 75% or more of
its gross income is passive income (as defined for
U.S. federal income tax purposes) or (2) the average
percentage of assets held by such corporation which produce
passive income or which are held for the production of passive
income is at least 50%. For purposes of applying the tests in
the preceding sentence, the foreign corporation is deemed to own
its proportionate share of the assets, and to receive directly
the proportionate share of the income, of any other corporation
of which the foreign corporation owns, directly or indirectly,
at least 25% by value of the stock. Weatherford believes that
Weatherford-Bermuda it is not a PFIC, and has not been a PFIC in
any prior taxable year. Weatherford further believes that
Weatherford-Switzerland will not be a PFIC following the
Transaction.
The tests for determining PFIC status are applied annually, and
it is difficult to accurately predict future income and assets
relevant to this determination. Accordingly, Weatherford cannot
assure U.S. holders that Weatherford-Switzerland will not
become a PFIC. If Weatherford-Switzerland should determine in
the future that it is a PFIC, it will endeavor to so notify
U.S. holders of Weatherford-Switzerland shares, although
there can be no assurance that it will be able to do so in a
timely and complete manner. U.S. holders of
Weatherford-Switzerland shares should consult their own tax
advisor about the PFIC rules, including the availability of
certain elections.
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Material
Consequences to
Non-U.S.
Holders
Consequences of the Transaction. A
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax on gain realized, if any, on the exchange of
Weatherford-Bermuda shares for Weatherford-Switzerland shares.
Consequences of Owning and Disposing of
Weatherford-Switzerland Shares. A
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax on dividends from Weatherford-Switzerland
unless: (1) the dividends are effectively connected with
the holders conduct of a trade or business in the United
States (or, if a tax treaty applies, the dividends are
attributable to a permanent establishment or fixed place of
business maintained by the
non-U.S. holder
in the United States); or (2) such
non-U.S. holder
is subject to backup withholding.
In addition, a
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax on any gain recognized on the sale, exchange or
other disposition of Weatherford-Switzerland shares unless:
(1) such gain is effectively connected with the conduct by
the
non-U.S. holder
of a trade or business within the United States (or, if a tax
treaty applies, is attributable to a permanent establishment or
fixed place of business maintained by the
non-U.S. holder
in the United States); (2) in the case of certain capital
gains recognized by a
non-U.S. holder
that is an individual, such individual is present in the United
States for 183 days or more during the taxable year in
which the capital gain is recognized and certain other
conditions are met; or (3) the
non-U.S. holder
is subject to backup withholding.
Information
Reporting and Backup Withholding
U.S. holders that own at least five percent of
Weatherford-Bermuda immediately before the Transaction will be
required to file certain Section 368(a) reorganization
and/or
Section 351 statements. Other information reporting
could also apply to the Transaction. Shareholders of
Weatherford-Bermuda should consult their own tax advisor about
the information reporting requirements that could be applicable
to the exchange of Weatherford-Bermuda shares for
Weatherford-Switzerland shares in the Transaction.
Dividends on Weatherford-Switzerland shares paid within the
United States or through certain
U.S.-related
financial intermediaries are subject to information reporting
and may be subject to backup withholding (currently at a 28%
rate) unless the holder (1) is a corporation or other
exempt recipient (including generally
non-U.S. holders
who establish such foreign status) or (2) provides a
taxpayer identification number and satisfies certain
certification requirements. Information reporting requirements
and backup withholding may also apply to the payment of proceeds
from a sale of Weatherford-Switzerland shares within the United
States. Any amounts withheld under the backup withholding rules
may be allowed as a refund or a credit against the holders
U.S. federal income tax liability, provided that the holder
furnishes certain required information to the IRS. Holders
should consult their tax advisor regarding the application of
information reporting and backup withholding to their particular
situations.
If a U.S. holder of Weatherford-Switzerland shares does not
provide us (or our paying agent) with the holders correct
taxpayer identification number or other required information,
the holder may be subject to penalties imposed by the IRS.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE
ARE FOR GENERAL INFORMATION ONLY. EACH WEATHERFORD-BERMUDA
SHAREHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE
PARTICULAR CONSEQUENCES THAT MAY APPLY TO SUCH SHAREHOLDER.
Swiss Tax
Considerations
Scope
of Discussion
The discussion below does not generally address any aspects of
Swiss taxation other than federal, cantonal and communal income
taxation, federal withholding taxation, and federal stamp duty.
This discussion is not a complete analysis or listing of all of
the possible tax consequences of the Transaction or of holding
32
and disposing of Weatherford-Switzerland shares and does not
address all tax considerations that may be relevant to you.
Special rules that are not discussed in the general descriptions
below may also apply to you.
This discussion is based on the laws of the Confederation of
Switzerland, including the Federal Income Tax Act of 2001, the
Federal Harmonization of Cantonal and Communal Income Tax Act of
1990, The Federal Withholding Tax Act of 1965, the Federal Stamp
Duty Act of 1973, as amended, which we refer to as the
Swiss tax law, existing and proposed regulations
promulgated thereunder, published judicial decisions and
administrative pronouncements and the Swiss-U.S. Tax Treaty,
each as in effect on the date of this proxy statement or with a
known future effective date. These laws may change, possibly
with retroactive effect. The Federal Harmonization of Cantonal
and Communal Income Tax Act of 1990 is intended to harmonize
cantonal tax legislations and contains provisions that the Swiss
cantons have to incorporate in their cantonal tax acts. It is
however possible that certain cantonal tax acts or specific
cantonal tax practices differ in certain respects from the
Federal Harmonization of Cantonal and Communal Income Tax Act.
For purposes of this discussion, a Swiss holder is
any beneficial owner of Weatherford-Bermuda shares, or, after
the completion of the Transaction, Weatherford-Switzerland
shares, that for Swiss federal income tax purposes is:
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an individual resident of Switzerland or otherwise subject to
unlimited or limited Swiss taxation under article 3, 4 or 5
of the Federal Income Tax Act of 2001, as amended, or
article 3 or 4 of the Federal Harmonization of Cantonal and
Communal Income Tax Act of 1990, as amended;
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a corporation or other entity taxable, on an unlimited or
limited basis, as a corporation organized under the laws of the
Switzerland under article 50 or 51 of the Federal Income
Tax Act of 2001, as amended, or article 20 or 21 of the
Federal Harmonization of Cantonal and Communal Income Tax Act of
1990, as amended; or
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an estate or trust, the income of which is subject to Swiss
income taxation regardless of its source.
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A non-Swiss holder of Weatherford-Bermuda shares,
or, after the completion of the Transaction,
Weatherford-Switzerland shares, is a holder that is not a Swiss
holder. For purposes of this summary, holder or
shareholder means either a Swiss holder or a
non-Swiss holder or both, as the context may require.
Consequences
of the Transaction
Shareholder
Tax Consequences
No Swiss tax will be due for non-Swiss holders upon the exchange
of Weatherford-Bermuda shares for Weatherford-Switzerland shares
in the Transaction. If Swiss holders are beneficial owners of
Weatherford-Bermuda shares or Weatherford-Switzerland shares,
they are urged to consult their tax advisors regarding the Swiss
tax consequences to them of the Transaction.
Swiss
Corporate Tax Consequences
Under Swiss tax law as it applies to corporations, the
Transaction will be considered to be a tax neutral restructuring
for Weatherford-Bermuda and Weatherford-Switzerland. Therefore,
no Swiss income taxes will be due with respect to these
companies as a result of the Transaction. As a tax neutral
restructuring, the Transaction will also be exempt from the
Swiss withholding tax and issuance stamp tax.
Taxation
of Weatherford-Switzerland Subsequent to the
Transaction
Income
Tax
A Swiss resident company is subject to income tax at federal,
cantonal and communal levels on its worldwide income (with the
exception of tax on income generated in relation to Swiss real
estate). However, a holding company, such as
Weatherford-Switzerland, is exempt from cantonal and communal
income tax. Because Weatherford-Switzerland also plans to
relocate certain management group functions in the canton of
Geneva, it will have a taxable permanent establishment in the
canton of Geneva, and it is planned to seek a tax ruling in the
canton of Geneva. Weatherford-Switzerland shall also be subject
to Swiss federal income tax.
33
However, participation relief will be granted to
Weatherford-Switzerland at the federal level on dividend income
and capital gains from qualifying investments. Due to the
applicable formula to compute the federal participation relief,
which does not consist in a straight exemption, there could be a
risk of marginal taxation of dividend income and capital gains
from qualifying investments.
Cantonal
and Municipal Equity Tax
As holding company, Weatherford-Switzerland will be subject to
an annual cantonal and municipal capital tax levied on equity at
the place of its incorporation. A portion of the taxable equity
could be allocated to the permanent establishment that
Weatherford-Switzerland would have in the canton of Geneva.
Issuance
Stamp Tax
Swiss issuance stamp tax is a federal tax levied on the issuance
of shares and increases in the equity of Swiss corporations. The
applicable tax rate is 1% of the fair market value of the assets
contributed to equity. Exemptions are available in tax neutral
restructuring transactions. As a result, any future issuance of
shares by Weatherford-Switzerland may be subject to the issuance
stamp tax unless the shares are issued in the context of a
merger or other qualifying restructuring transaction.
The issuance stamp tax is also levied on the issuance of certain
debt instruments. In such case, the rate would amount to 0.06%
to 0.12% of nominal value per year of duration of the instrument
(the rate depending on the instrument). No Swiss issuance stamp
tax (at the rate described above) would be due on debt
instruments issued by non-Swiss subsidiaries of
Weatherford-Switzerland, if Weatherford-Switzerland does not
guarantee the debt instruments, or if such a guarantee is
provided, the proceeds from the issuance by the non-Swiss
subsidiary are not used for financing activities in Switzerland.
Although Weatherford-Switzerland intends to guarantee debt of
its subsidiary Weatherford-Bermuda, none of the proceeds has
been or is expected to be used for financing activities in
Switzerland. Consequently, no issuance stamp tax should be due.
Transfer
Stamp Tax
Weatherford-Switzerland will qualify as a Swiss securities
dealer and be subject to the federal transfer stamp tax on any
acquisition or sale of taxable securities against consideration
to which it acts as a party (seller or purchaser) or as an
intermediary. The current transfer stamp tax rate is 0.15% on
the transfer of Swiss securities and 0.3% on the transfer of
foreign (non-Swiss) securities. A Swiss securities dealer must
pay 50% of the transfer stamp tax for its own account and the
other 50% for the account of the other party, if the other party
does not qualify as a Swiss securities dealer. There are,
however, many exceptions under which the transfer stamp tax is
not levied (transfers in the course of tax neutral
restructuring, transfer within the groups), and
Weatherford-Switzerland intends to organize its operations in
such a way as to avoid entering into transactions subject to the
transfer stamp tax.
Swiss
Withholding Tax on Certain Interest Payments
A federal withholding tax is levied on the interest payments of
certain debt instruments (such as bonds, debentures and bank
deposits). For Swiss withholding tax purposes, the definition of
bonds, debentures and bank deposits is more extensive than the
legal definition. For instance, the Swiss withholding tax could
apply on interest payments if a Swiss entity borrows from more
than 20 (in specific cases from more than 10) creditors.
In such case, the rate would amount to 35% of the gross interest
payment to the debtholders. Weatherford-Switzerland, however,
does not plan on entering into debt instruments which could
subject it to Swiss withholding tax.
Consequences
to Shareholders of Weatherford-Switzerland Subsequent to the
Transaction
The tax consequences discussed below are not a complete analysis
or listing of all the possible tax consequences that may be
relevant to you. You should consult your own tax advisor in
respect of the tax
34
consequences related to receipt, ownership, purchase or sale or
other disposition of Weatherford-Switzerland shares and the
procedures for claiming a refund of withholding tax.
Swiss
Income Tax on Dividends and Similar Distributions
A non-Swiss holder will not be subject to Swiss income taxes on
dividend income and similar distributions in respect of
Weatherford-Switzerland shares, unless the shares are
attributable to a permanent establishment or a fixed place of
business maintained in Switzerland by such non-Swiss holder.
However, dividends and similar distributions are subject to
Swiss withholding tax. See Swiss Withholding
Tax Distributions to Shareholders.
Swiss
Wealth Tax
A non-Swiss holder will not be subject to Swiss wealth taxes,
which are levied by the cantons and the municipalities, unless
the holders Weatherford-Switzerland shares are
attributable to a permanent establishment or a fixed place of
business maintained in Switzerland by such non-Swiss holder.
Swiss
Capital Gains Tax upon Disposal of Weatherford-Switzerland
Shares
A non-Swiss holder will not be subject to Swiss income taxes for
capital gains unless the holders shares are attributable
to a permanent establishment or a fixed place of business
maintained in Switzerland by such non-Swiss holder. In such
case, the non-Swiss holder is required to recognize capital
gains or losses on the sale of such shares, which will be
subject to cantonal, communal and federal income tax.
Swiss
Withholding Tax Distributions to
Shareholders
A Swiss withholding tax of 35% is due on dividends and similar
distributions to Weatherford-Switzerland shareholders from
Weatherford-Switzerland, regardless of the place of residency of
the shareholder (subject to the exceptions discussed under
Exemption from Swiss Withholding
Tax Distributions to Shareholders below).
Weatherford-Switzerland will be required to withhold at the rate
of 35% and remit on a net basis any payments made to a holder of
Weatherford-Switzerland shares and pay such withheld amounts to
the Swiss federal tax authorities. Please see
Refund of Swiss Withholding Tax on Dividends
and Other Distributions.
Exemption
from Swiss Withholding Tax Distributions to
Shareholders
Under present Swiss tax law, distributions to shareholders in
relation to a reduction of par value are exempt from Swiss
withholding tax. Beginning on January 1, 2011,
distributions to shareholders of qualifying paid-in capital
shall, as a matter of principle, be exempt from the Swiss
withholding tax. The particulars of this general principle are,
however, subject to regulations still to be promulgated by the
competent Swiss authorities; it will further require that the
current draft corporate law bill, which proposes an overhaul of
certain aspects of Swiss corporate law, be modified in the
upcoming legislative process to reflect the recent change in the
tax law.
Upon completion of the Transaction, we expect
Weatherford-Switzerland to have a par value and qualifying
additional paid-in capital for Swiss statutory reporting
purposes, such that the combination of the two should
approximate the market capitalization of Weatherford-Bermuda
immediately prior to the completion of the Transaction. Because
of the exemption from Swiss withholding tax to the distribution
of qualifying paid-in capital, which applies from
January 1, 2011, we plan to seek a tax ruling from the
Swiss tax authorities to confirm that the shares of
Weatherford-Bermuda may be contributed at their fair market
value and that the contribution value may be split between par
value and qualifying paid-in capital as mentioned above. If the
Swiss tax authorities do not agree, the contribution of the
shares of Weatherford-Bermuda may have to be made at a lower
value or part of the qualifying paid-in capital recorded as free
distributable reserves. Accordingly, the amount of the nominal
share capital that can be repatriated free of withholding tax
and/or
qualifying paid-in capital that can be repatriated free of
withholding tax as of January 1, 2011, may be lower.
Assuming (1) the Swiss tax authorities confirm that the
contribution of the shares of Weatherford-Bermuda
35
may be made at fair market value, (2) the Transaction
became effective December 15, 2008, (3) a price of
$10.31 per common share of Weatherford-Bermuda (which was
the closing price of the Weatherford-Bermuda common shares
reported on the New York Stock Exchange on December 15,
2008), (4) a par value of 1.16 Swiss francs per
Weatherford-Switzerland share, (5) Capital of CHC 100,000
from the issuance of the Formation Shares and (6) a foreign
exchange rate of 1.16 Swiss francs to $1.00 (the rate on
December 15, 2008), the aggregate amount of par value and
qualifying additional paid-in capital of
Weatherford-Switzerlands outstanding shares would be
$ million, respectively,
after the completion of the Transaction. Assuming the price of
Weatherford-Bermudas common shares were $1.00 higher than
the closing price on December 15, 2008, the aggregate
amount of par value and qualifying additional paid-in capital
would increase by $ million.
Conversely, assuming the price of Weatherford-Bermudas
common shares were $1.00 lower than the closing price on
December 15, 2008, the aggregate amount of par value and
qualifying additional paid-in capital would decrease by
$ million. For each $1.00
that the price of Weatherford-Bermuda common shares is higher
than $10.31 per share, the aggregate par value would remain
unchanged and the aggregate qualifying additional paid-in
capital would increase by
$ million. Consequently,
Weatherford-Switzerland expects that a substantial amount of any
potential future distributions may be exempt from Swiss
withholding tax. For a description of how qualifying additional
paid-in capital can be distributed under the Swiss Code of
Obligations, which we refer to as the Swiss Code, as in effect
as of the date of this proxy statement, see Description of
Weatherford-Switzerland Shares Dividends.
Repurchases
of Shares
Under present Swiss tax law, repurchases of shares for the
purposes of capital reduction are treated as a partial
liquidation subject to the 35% Swiss withholding tax. However,
for shares repurchased for capital reduction, the portion of the
repurchase price attributable to the par value of the shares
repurchased will not be subject to the Swiss withholding tax.
Beginning on January 1, 2011, subject to the adoption of
implementing regulations and amendments to Swiss corporate law
(see above remarks under the section Exemption
from Swiss Withholding Tax Distributions to
Shareholders), the portion of the repurchase price
attributable to the qualifying additional paid-in capital for
Swiss statutory reporting purposes of the shares repurchased
will also not be subject to the Swiss withholding tax.
Weatherford-Switzerland would be required to withhold at such
rate the tax from the difference between the repurchase price
and the related amount of par value and, beginning on
January 1, 2011, subject to the adoption of implementing
regulations and amendments to Swiss corporate law, the related
amount of qualifying additional paid-in capital.
Weatherford-Switzerland would be required to remit on a net
basis the purchase price with the Swiss withholding tax deducted
to a holder of Weatherford-Switzerland shares and pay the
withholding tax to the Swiss federal tax authorities.
With respect to the refund of Swiss withholding tax from the
repurchase of shares, see Refund of Swiss
Withholding Tax on Dividends and Other Distributions below.
In most instances, Swiss companies listed on the SIX Swiss
Exchange, or SIX, carry out share repurchase programs through a
second trading line on the SIX. Swiss institutional
investors typically purchase shares from shareholders on the
open market and then sell the shares on the second trading line
back to the company. The Swiss institutional investors are
generally able to receive a full refund of the withholding tax.
Due to, among other things, the time delay between the sale to
the company and the institutional investors receipt of the
refund, the price companies pay to repurchase their shares has
historically been slightly higher (but less than 1.0%) than the
price of such companies shares in ordinary trading on the
SIX first trading line.
We do not expect to be able to use the SIX second trading line
process to repurchase our shares because we do not intend to
list our shares on the SIX. We do, however, intend to follow an
alternative process whereby we expect to be able to repurchase
our shares in a manner that should allow Swiss institutional
market participants selling the shares to us to receive a refund
of the Swiss withholding tax and, therefore, accomplish the same
purpose as share repurchases on the second trading line at
substantially the same cost to us and such market participants
as share repurchases on a second trading line. There is,
however, a risk that the Swiss federal tax administration could
nevertheless decide to levy the Swiss withholding tax on the
repurchase of our shares if institutional investors or other
parties able to benefit from the full Swiss withholding tax
relief purchased our shares to resell them shortly to us.
36
The repurchase of shares for purposes other than capital
reduction, such as to retain as treasury shares for use in
connection with equity incentive plans, warrants, convertible
debt or other instruments within certain periods, will generally
not be subject to Swiss withholding tax; provided that
Weatherford-Switzerland does not exceed the maximum threshold of
10% of the registered share capital that it can repurchase as
required by the Swiss Code of Obligations (see Description
of Weatherford-Switzerland Shares Repurchases of
Registered Shares below) and the shares are resold within
certain periods prescribed by Swiss law. See Comparison of
Rights of Shareholders for a discussion on the limitations
on the amount of repurchased shares that can be held as treasury
shares.
Refund of
Swiss Withholding Tax on Dividends and Other
Distributions
Swiss Holders. A Swiss tax resident,
corporate or individual, can recover the withholding tax in full
if such resident is the beneficial owner of the
Weatherford-Switzerland shares at the time the dividend or other
distribution becomes due and provided that such resident reports
the gross distribution received on such residents income
tax return, or in the case of an entity, includes the taxable
income in such residents income statement.
Non-Swiss Holders. If the shareholder
that receives a distribution from Weatherford-Switzerland is not
a Swiss tax resident, does not hold the Weatherford-Switzerland
shares in connection with a permanent establishment or a fixed
place of business maintained in Switzerland, and resides in a
country that has concluded a treaty for the avoidance of double
taxation with Switzerland for which the conditions for the
application and protection of and by the treaty are met, then
the shareholder may be entitled to a full or partial refund of
the withholding tax described above. You should note that the
procedures for claiming treaty refunds (and the time frame
required for obtaining a refund) may differ from country to
country.
Switzerland has entered into bilateral treaties for the
avoidance of double taxation with respect to income taxes with
numerous countries, including the United States, whereby under
certain circumstances all or part of the withholding tax may be
refunded.
As of January 1, 2008, Switzerland has entered into
bilateral treaties for the avoidance of double taxation with
respect to income taxes with the following countries, whereby
under certain circumstances all or a part of the above-mentioned
withholding tax may be refunded:
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Albania
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Lithuania
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Argentina
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Luxembourg
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Armenia
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Macedonia
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Azerbaijan
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Malaysia
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Australia
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Mexico
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Austria
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Moldova
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Belarus
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Mongolia
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Belgium
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Montenegro
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Bulgaria
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Morocco
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Canada
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The Netherlands
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Cote dIvoire
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New Zealand
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Croatia
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Norway
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Czech Republic
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Pakistan
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Denmark
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Peoples Republic of China
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Ecuador
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Philippines
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Egypt
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Poland
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Estonia
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Portugal
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Finland
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Romania
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France
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Russia
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Germany
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Serbia
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Greece
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Singapore
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Hungary
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Slovak Republic
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Iceland
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Slovenia
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India
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South Africa
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Indonesia
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Spain
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Republic of Ireland
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Sri Lanka
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Israel
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Sweden
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Italy
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Thailand
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Jamaica
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Trinidad and Tobago
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Japan
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Tunisia
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Kazakhstan
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Ukraine
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Republic of Korea (South Korea)
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United Kingdom
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Kyrgyzstan
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United States
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Kuwait
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Uzbekistan
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Latvia
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Venezuela
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Vietnam
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37
U.S. Holders. The
Swiss-U.S. Tax Treaty provides that, for
U.S. residents eligible for benefits under the treaty, the
Swiss withholding tax on dividends cannot exceed 15%. According
to the Swiss federal ordinance to the treaty,
Weatherford-Switzerland must levy the Swiss withholding tax at
the statutory rate of 35% and the holders must apply for a
refund of the portion exceeding the appropriate treaty ratio.
Please refer to the discussion under
U.S. Federal Income Tax
Considerations Material Tax Consequences to
U.S. Holders Receiving Distributions on
Weatherford-Switzerland Shares for applicability of
U.S. foreign tax credits for any net withholding taxes paid.
As a general rule, the refund will be granted under the
Swiss-U.S. Tax Treaty if the U.S. resident can show
evidence of:
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beneficial ownership;
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U.S. tax residency; and
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meeting the Swiss-U.S. Tax Treatys limitation on benefits
requirements.
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The claim for refund must be filed with the Swiss federal tax
authorities (Eigerstrasse 65, 3003 Berne, Switzerland) no later
than December 31 of the third year following the year in which
the dividend payments became due. The relevant Swiss tax form is
Form 82C for companies, 82E for other entities and 82I for
individuals. These forms can be obtained from any Swiss
Consulate General in the United States or from the Swiss federal
tax authorities at the address mentioned above or on the
following website:
http://www.estv.admin.ch/e/vst/dokumentation/form_ausland.htm.
Each form needs to be filled out in triplicate, with each copy
duly completed and signed before a notary public in the United
States. You must also include evidence that the withholding tax
was withheld at the source.
Stamp Duties in Relation to the Transfer of
Weatherford-Switzerland Shares. The purchase or
sale of Weatherford-Switzerland shares may be subject to Swiss
federal stamp taxes on the transfer of securities irrespective
of the place of residency of the purchaser or seller if the
transaction takes place through or with a Swiss bank or other
Swiss securities dealer, as those terms are defined in the Swiss
Federal Stamp Tax Act and no exemption applies in the specific
case. If a purchase or sale is not entered into through or with
a Swiss bank or other Swiss securities dealer, then no stamp tax
will be due. The applicable stamp tax rate is 0.075% for each of
the two parties to a transaction and is calculated based on the
purchase price or sale proceeds. If the transaction does not
involve cash consideration, the transfer stamp duty is computed
on the basis of the market value of the consideration.
Bermuda
Tax Considerations
The Transaction will not result in any income tax consequences
under Bermuda law to Weatherford-Bermuda,
Weatherford-Switzerland or their shareholders.
38
DESCRIPTION
OF WEATHERFORD-SWITZERLAND SHARES
The following description of Weatherford-Switzerlands
share capital is a summary. This summary is not complete and is
subject to the complete text of Weatherford-Switzerlands
proposed articles of association and organizational regulations
(the latter being analogous to bye-laws) attached as
Annex E and Annex F, respectively, to this proxy
statement. Except where otherwise indicated, the description
below reflects Weatherford-Switzerlands articles of
association and organizational regulations as those documents
will be in effect upon completion of the redomestication. We
encourage you to read those documents carefully.
Capital
Structure
Immediately after the redomestication, Weatherford-Switzerland
will only have one class of shares outstanding, so all
references to voting rights in this
Description of Weatherford-Switzerland Shares will
mean the voting rights of Weatherford-Switzerlands
registered shares, par value equivalent to US$1.00, or
approximately 1.16 Swiss francs per share, unless another class
of shares is subsequently created. Likewise, a majority of
the par value of the registered shares will mean a
majority of the par value of Weatherford-Switzerlands
registered shares, par value equivalent to US$1.00, or
approximately 1.16 Swiss francs per share.
Issued Share Capital. Immediately prior to the
redomestication, the registered share capital of
Weatherford-Switzerland will amount to 100,000 Swiss francs,
comprised of 10.0 million registered shares with a par
value of .01 Swiss francs per share. In the
redomestication, Weatherford-Switzerland will issue one
registered share for each Weatherford-Bermuda common share.
Prior to such issuance, the registered shares with a par value
of .01 Swiss francs per share will be consolidated into
registered shares with a par value of equivalent to US$1.00, or
approximately 1.16 Swiss francs per share.
Weatherford-Switzerland will assume Weatherford-Bermudas
existing obligation to deliver shares under our equity incentive
plans, warrants or other rights pursuant to the terms thereof.
Upon completion of the redomestication, the registered share
capital of Weatherford-Switzerland is expected to be
approximately 845.4 million Swiss francs, comprised of
approximately 728.8 million registered shares with a par
value of equivalent to US$1.00, or approximately 1.16 Swiss
francs per share, including 41.0 million treasury shares
and the Formation Shares held by Weatherford-Bermuda.
Authorized Share Capital. Immediately prior to
the redomestication, Weatherford-Switzerland will not have any
share capital authorized for future issuance. Upon completion of
the redomestication, the board of directors will be authorized
to issue new registered shares at any time during a two-year
period and thereby increase the share capital, by a maximum
amount of 50% of the share capital registered in the commercial
register (which is expected to be approximately
845.4 million Swiss francs, or approximately
728.8 million registered shares) without obtaining
additional shareholder approval. After the expiration of the
initial two-year period, and each subsequent two-year period,
authorized share capital will be available to the board of
directors for issuance of additional registered shares only if
new authorized capital is created to that effect by the
shareholders.
The board of directors determines the time of the issuance, the
issuance price, the manner in which the new registered shares
have to be paid in, the date from which the new registered
shares carry the right to dividends and the conditions for the
exercise of the preferential subscription rights with respect to
the issuance and the allotment of preferential subscription
rights that are not exercised. The board of directors may allow
preferential subscription rights that are not exercised to
expire, or it may place such rights or registered shares, the
preferential subscription rights of which have not been
exercised, at market conditions or use them otherwise in the
interest of Weatherford-Switzerland.
In an authorized capital increase, Weatherford-Switzerland
shareholders would have preferential subscription rights to
obtain newly issued registered shares in an amount proportional
to the par value of the registered shares they already hold.
However, the board of directors may withdraw or limit these
preferential subscription rights in certain circumstances as set
forth in Weatherford-Switzerlands articles of association.
For further details on these circumstances, see
Preferential Subscription Rights and Advance
Subscription Rights.
39
Conditional Share Capital. Immediately prior
to the redomestication, Weatherford-Switzerland will not have
any conditional share capital. Upon completion of the
redomestication, Weatherford-Switzerlands articles of
association will provide for a conditional share capital that
will allow the issuance of additional registered shares up to a
maximum amount of 50% of the share capital registered in the
commercial register (which is expected to be approximately 728.8
million registered shares) without obtaining additional
shareholder approval. These registered shares may be issued:
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through the exercise of conversion, exchange, option, warrant or
similar rights for the subscription of shares granted to third
parties or shareholders in connection with bonds, options,
warrants or other securities newly or already issued in national
or international capital markets or new or already existing
contractual obligations by or of the company, one or more of its
subsidiaries, or any of their respective predecessors; or
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through the issuance of registered shares, options or other
share-based awards to directors, employees, contractors,
consultants or other persons providing services to
Weatherford-Switzerland or its subsidiaries.
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The advance subscription rights and preferential subscription
rights of shareholders shall be excluded in connection with the
issuance of any shares or rights entitling their holders to
receive or acquire any shares out of the companys
conditional capital as set forth in
Weatherford-Switzerlands articles of association. See
Preferential Subscription Rights and Advance
Subscription Rights below.
Other Classes or Series of Shares. The board
of directors may not create shares with increased voting powers
without the affirmative resolution adopted by shareholders
holding at least
662/3%
of the voting rights and a majority of the par value of the
registered shares represented at a general meeting. The
shareholders may create preferred shares with a relative
majority of the votes cast at a general meeting.
Preferential
Subscription Rights and Advance Subscription Rights
Under the Swiss Code, the prior approval of a general meeting of
shareholders is required to authorize, for later issuance, the
issuance of registered shares, or rights to subscribe for, or
convert into, registered shares (which rights may be connected
to debt instruments or other obligations). In addition, the
existing shareholders will generally have preferential
subscription rights in relation to such registered shares for
authorized share capital and conditional share capital or
advance subscription rights in relation to such rights for
conditional share capital in proportion to the respective par
values of their holdings.
If the general meeting of shareholders has approved the creation
of authorized capital, it thereby delegates the decision whether
to withdraw or limit the preferential subscription rights for
cause to the board of directors. Weatherford-Switzerlands
articles of association provide for this delegation with respect
to Weatherford-Switzerlands authorized share capital in
the circumstances described below under
Authorized Share Capital. Furthermore,
the advance subscription rights and preferential subscription
rights of shareholders shall be excluded in connection with the
issuance of any shares or rights with respect to
Weatherford-Switzerlands conditional share capital in the
circumstances described below under
Conditional Share Capital.
Authorized Share Capital. The board of
directors is authorized to withdraw or limit the preferential
subscription rights with respect to the issuance of registered
shares from the authorized capital for cause, in particular if:
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the issue price of the new registered shares is determined by
reference to the then-prevailing market conditions;
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the registered shares are issued in connection with the
acquisition of an enterprise or business or any part of an
enterprise or business, the financing or refinancing of any such
transactions or the financing of new investment plans of
Weatherford-Switzerland;
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the registered shares are issued in connection with the intended
broadening of the shareholder constituency of the company in
certain financial or investor markets, for the purposes of the
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participation of strategic partners, or in connection with the
listing of the registered shares on domestic or foreign stock
exchanges;
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in connection with a placement or sale of registered shares, the
grant of an over-allotment option (including options with
respect to any security convertible into shares, such as
convertible debt securities or otherwise) of up to 20% of the
total number of registered shares in a placement or sale of
registered shares to the initial purchasers or underwriters;
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for the participation in a benefit or other plan by directors,
employees, contractors, consultants and other persons performing
services for the benefit of Weatherford-Switzerland or any of
its subsidiaries; or
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if the shares to be issued will be issued for any consideration
(including debt, equity or assets of another company) other than
for cash consideration.
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Conditional Share Capital. In connection with
the issuance of bonds, notes, warrants or other financial
instruments or contractual obligations convertible into or
exercisable or exchangeable for Weatherford-Switzerland
registered shares, the advance subscription rights and the
preferential subscription rights of shareholders are excluded
with respect to registered shares issued from
Weatherford-Switzerlands conditional share capital and to
the relevant bond, note or other right issued by the company.
Dividends
Under Swiss law, dividends may be paid out only if the
corporation has sufficient distributable profits from the
previous fiscal year, or if the corporation has freely
distributable reserves, each as will be presented on the audited
annual stand-alone statutory balance sheet. Payments out of the
registered share capital (in other words, the aggregate par
value of Weatherford-Switzerlands registered share
capital) in the form of dividends are not allowed; however,
payments out of registered share capital may be made by way of a
capital reduction. The freely distributable reserves
of a Swiss corporation consist of the portion of its general
reserves, other free reserves, retained earnings and current net
profits which is in excess of its restricted equity
(the concept of restricted equity covering primarily
(1) the corporations share capital and (2) its
general reserve up to an amount equal to one half of the share
capital or 20% in case of holding companies). See
Reduction of Share Capital for more
information. Qualifying additional paid-in capital may only be
paid out as dividends to shareholders following approval by the
shareholders of a reclassification of such qualifying additional
paid-in capital as freely distributable reserves (to the extent
permissible under the Swiss Code). Weatherford-Switzerland may
seek to reclassify part of its qualifying additional paid-in
capital to freely distributable reserves, to the extent that it
exceeds 50% of its share capital, as early as its first general
meeting following completion of the redomestication. The
affirmative vote of shareholders representing a relative
majority of the votes cast at a general meeting must approve
reserve reclassifications and distributions of dividends. The
board of directors may propose to shareholders that a dividend
be paid but cannot itself authorize the dividend.
Under the Swiss Code, if Weatherford-Switzerlands general
reserves amount to less than 20% of the share capital recorded
in the commercial register (i.e., 20% of the aggregate
par value of Weatherford-Switzerlands registered capital),
then at least 5% of Weatherford-Switzerlands annual profit
must be retained as general reserves. The Swiss Code and
Weatherford-Switzerlands articles of association permit
Weatherford-Switzerland to accrue additional general reserves.
In addition, Weatherford-Switzerland is required to create a
special reserve on its stand-alone annual statutory balance
sheet in the amount of the purchase price of registered shares
it or any of its subsidiaries repurchases, which amount may not
be used for dividends or subsequent repurchases.
Swiss companies generally must maintain a separate company,
stand-alone statutory balance sheet for the purpose
of, among other things, determining the amounts available for
the return of capital to shareholders, including by way of a
distribution of dividends. Weatherford-Switzerlands
auditor must confirm that a dividend proposal made to
shareholders conforms with the requirements of the Swiss Code
and Weatherford-Switzerlands articles of association.
Dividends are usually due and payable shortly after the
shareholders have
41
passed a resolution approving the payment.
Weatherford-Switzerlands articles of association provide
that dividends that have not been claimed within five years
after the due date become the property of
Weatherford-Switzerland and are allocated to the general
reserves. For information about deduction of the withholding tax
from dividend payments, see Material Tax
Considerations Swiss Tax Considerations.
Weatherford-Switzerland will be required under Swiss law to
declare any dividends and other capital distributions in Swiss
francs. Weatherford-Switzerland intends to make any dividend
payments to holders of Weatherford-Switzerland shares in
U.S. dollars, unless the holders provide notice to our
transfer agent, American Stock Transfer &
Trust Company, LLC, that they wish to receive dividend
payments in Swiss francs. American Stock Transfer &
Trust Company, LLC will be responsible for paying the
U.S. dollars or Swiss francs to registered holders of
shares, less amounts subject to withholding for taxes.
Repurchases
of Registered Shares
The Swiss Code limits a companys ability to hold or
repurchase its own registered shares. Weatherford-Switzerland
and its subsidiaries may only repurchase shares if and to the
extent that sufficient freely distributable reserves are
available, as described above under
Dividends. The aggregate par value of
all Weatherford-Switzerland registered shares held by
Weatherford-Switzerland and its subsidiaries may not exceed 10%
of the registered share capital. However,
Weatherford-Switzerland may repurchase its own registered shares
beyond the statutory limit of 10% if the shareholders have
passed a resolution at a general meeting of shareholders
authorizing the board of directors to repurchase registered
shares in an amount in excess of 10% and the repurchased shares
are dedicated for cancellation. Any registered shares
repurchased pursuant to such an authorization will then be
cancelled at the next general meeting upon the approval of
shareholders representing a relative majority of the votes cast
at the general meeting. Repurchased registered shares held by
Weatherford-Switzerland or its subsidiaries do not carry any
rights to vote at a general meeting of shareholders but are
entitled to the economic benefits generally associated with the
shares. For information about Swiss withholding tax and share
repurchases, see Material Tax Considerations
Swiss Tax Considerations.
Reduction
of Share Capital
Capital distributions may also take the form of a distribution
of cash or property that is based upon a reduction of
Weatherford-Switzerlands share capital recorded in the
commercial register. Such a capital reduction requires the
approval of shareholders representing a relative majority of the
votes cast at the general meeting. A special audit report must
confirm that creditors claims remain fully covered despite
the reduction in the share capital recorded in the commercial
register. Upon approval by the general meeting of shareholders
of the capital reduction, the board of directors must give
public notice of the capital reduction resolution in the Swiss
Official Gazette of Commerce three times and notify creditors
that they may request, within two months of the third
publication, satisfaction of or security for their claims.
General
Meetings of Shareholders
The general meeting of shareholders is
Weatherford-Switzerlands supreme corporate body. Ordinary
and extraordinary shareholders meetings may be held. The
following powers will be vested exclusively in the shareholders
meeting:
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adoption and amendment of Weatherford-Switzerlands
articles of association;
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election of members of the board of directors and the auditor;
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approval of the annual business report, the stand-alone
statutory financial statements and the consolidated financial
statements;
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payments of dividends and any other distributions of capital to
shareholders (excluding share repurchases below 10% of the
registered share capital, to the extent that sufficient freely
distributable reserves are available);
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discharge of the members of the board of directors from
liability for business conduct during the previous fiscal
year; and
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any other resolutions that are submitted to a general meeting of
shareholders pursuant to law, Weatherford-Switzerlands
articles of association or by voluntary submission by the board
of directors (unless a matter is within the exclusive competence
of the board of directors pursuant to the Swiss Code).
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Under the Swiss Code and Weatherford-Switzerlands articles
of association, Weatherford-Switzerland must hold an annual,
ordinary general meeting of shareholders within six months after
the end of its fiscal year for the purpose, among other things,
of approving the annual financial statements and the annual
business report, and the annual election of directors for the
class whose term has expired. The invitation to general meetings
must be published in the Swiss Official Gazette of Commerce and
sent to the shareholders of record at least 20 calendar days
prior to the relevant general meeting of shareholders. The
notice of a meeting must state the items on the agenda and the
proposals of the board of directors and of the shareholders who
demanded that a shareholders meeting be held or that an item be
included on the agenda and, in case of elections, the names of
the nominated candidates. No resolutions may be passed at a
shareholders meeting concerning agenda items for which proper
notice was not given. This does not apply, however, to proposals
made during a shareholders meeting to convene an extraordinary
shareholders meeting or to initiate a special investigation. No
previous notification will be required for proposals concerning
items included on the agenda or for debates as to which no vote
is taken.
Annual general meetings of shareholders may be convened by the
board of directors or, under certain circumstances, by the
auditor. A general meeting of shareholders can be held anywhere.
An extraordinary general meeting of Weatherford-Switzerland may
be called upon the resolution of the board of directors or,
under certain circumstances, by the auditor. In addition, the
board of directors is required to convene an extraordinary
general meeting of shareholders if so resolved by the general
meeting of shareholders, or if so requested by shareholders
holding an aggregate of at least 10% of the registered shares,
specifying the items for the agenda and their proposals, or if
it appears from the stand-alone annual statutory balance sheet
that half of the companys share capital and reserves are
not covered by the companys assets. In the latter case,
the board of directors must immediately convene an extraordinary
general meeting of shareholders and propose financial
restructuring measures.
Under Weatherford-Switzerlands articles of association,
any shareholder satisfying the formal requirements of the Swiss
Code may request that an item be included on the agenda of a
general meeting of shareholders. Such shareholder may also
nominate one or more directors for election.
Shareholder proposals to be included in the proxy materials for
an annual general meeting must comply with
Rule 14a-8
promulgated by the SEC to be considered for inclusion in the
proxy statement for that meeting. For any matters submitted
outside the process of
Rule 14a-8,
a request for inclusion of an item on the agenda or a nominee
must be in writing and requested at least 60 and no more than 90
calendar days prior to the scheduled and announced date of the
next general meeting of shareholders. The request must specify
the relevant agenda items and motions, together with evidence of
the required shares recorded in the share register, as well as
any other information as would be required to be included in a
proxy statement pursuant to the rules of the SEC.
Under the Swiss Code, a general meeting of shareholders for
which a notice of meeting has been duly published or
communicated may not be adjourned without publishing or
communicating a new notice of meeting.
Weatherford-Switzerlands annual report and auditors
report must be made available for inspection by the shareholders
at Weatherford-Switzerlands place of incorporation no
later than 20 days prior to the meeting. Each shareholder
is entitled to request immediate delivery of a copy of these
documents free of charge. Shareholders of record will be
notified of this in writing.
43
Voting
Each Weatherford-Switzerland registered share carries one vote
at a general meeting of shareholders. Voting rights may be
exercised by shareholders registered in
Weatherford-Switzerlands share register or by a duly
appointed proxy of a registered shareholder, which proxy need
not be a shareholder. Weatherford-Switzerlands articles of
association do not limit the number of registered shares that
may be voted by a single shareholder.
Treasury shares, whether owned by Weatherford-Switzerland or one
of its majority-owned subsidiaries, will not be entitled to vote
at general meetings of shareholders.
Pursuant to Weatherford-Switzerlands articles of
association, the shareholders generally take resolutions and
decide elections upon a relative majority of the votes cast at
the general meeting of shareholders (broker non
votes, abstentions and blank and invalid ballots and withdrawals
shall be disregarded), unless otherwise provided by law or
Weatherford-Switzerlands articles of association. If the
number of directors nominated for election is greater than the
number of directors to be elected, the persons receiving the
most votes (up to the number of directors to be elected) will be
elected as directors. Weatherford-Switzerlands articles of
association do not provide for cumulative voting for election of
directors.
The acting chair may direct that elections be held by use of an
electronic voting system. Electronic resolutions and elections
are considered equal to resolutions and elections taken by way
of a written ballot.
The Swiss Code
and/or
Weatherford-Switzerlands articles of association require
the affirmative vote of at least two-thirds of the voting rights
and a majority of the par value of the registered shares, each
as represented at a general meeting to approve the following
matters:
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the amendment to or the modification of the purpose of
Weatherford-Switzerland;
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the creation or cancellation of shares with privileged voting
rights;
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the restriction on the transferability of shares and any
amendment in relation thereto;
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the restriction on the exercise of the right to vote and any
amendment in relation thereto;
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an authorized or conditional increase in the nominal share
capital;
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an increase in the nominal share capital through (1) the
conversion of capital surplus, (2) a contribution in kind
for an acquisition of assets, or (3) a grant of special
privileges;
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the limitation or withdrawal of preferential subscription rights
or advance subscription rights;
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a change in the place of incorporation of
Weatherford-Switzerland;
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the conversion of registered shares into bearer shares and vice
versa;
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the dissolution of Weatherford-Switzerland; and
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the removal of a member of the board of directors.
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The same supermajority voting requirements apply to resolutions
in relation to transactions among corporations based on
Switzerlands Federal Act on Mergers, Demergers,
Transformations and the Transfer of Assets, which we refer to as
the Merger Act, including a merger, demerger or conversion of a
corporation (other than a cash-out or certain squeeze-out
mergers, in which minority shareholders of the company being
acquired may be compensated in a form other than through shares
of the acquiring company, for instance, through cash or
securities of a parent company of the acquiring company or of
another company in such a merger, an affirmative
vote of 90% of the outstanding registered shares is required).
Swiss law may also impose this supermajority voting requirement
in connection with the sale of all or substantially all of
its assets by Weatherford-Switzerland. See
Appraisal Rights and Compulsory
Acquisitions.
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Quorum
for General Meetings
The presence of shareholders, in person or by proxy, holding at
least two thirds of the registered shares recorded in
Weatherford-Switzerlands share register and generally
entitled to vote at a meeting, is a quorum for the transaction
of the following business:
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the adoption of a resolution with respect to the removal of a
serving director; and
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the adoption of a resolution to amend
Article 21 which sets forth the quorum at a
general meeting required for certain matters, Articles 18 and
20 which set forth the level of shareholder approval
required for certain matters, Article 23 which
sets forth the term of office of a director and
Article 24 which sets forth the organization
and remuneration of the board of directors.
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The presence of shareholders, in person or by proxy, holding at
least one-third of the registered shares recorded in
Weatherford-Switzerlands share register and generally
entitled to vote at a meeting, is a quorum for the transaction
of any other business.
Under the Swiss Code, the board of directors has no authority to
waive quorum requirements stipulated in the articles of
association.
Inspection
of Books and Records
Under the Swiss Code, a shareholder has a right to seek
information from the board of directors with regard to the
information in the share register concerning his own shares and
otherwise to the extent necessary to exercise his shareholder
rights. No other person has a right to inspect the share
register. The books and correspondence of a Swiss company may be
inspected with the express authorization of the general meeting
of shareholders or by resolution of the board of directors and
subject to the safeguarding of the companys business
secrets. At a general meeting of shareholders, any shareholder
is entitled to request information from the board of directors
concerning the affairs of the company. Shareholders may also ask
the auditor questions regarding its audit of the company. The
board of directors and the auditor must answer
shareholders questions to the extent necessary for the
exercise of shareholders rights and subject to prevailing
business secrets or other material interests of
Weatherford-Switzerland.
Special
Investigation
If the shareholders inspection and information rights as
outlined above prove to be insufficient, any shareholder may
propose to the general meeting of shareholders that specific
facts be examined by a special commissioner in a special
investigation. If the general meeting of shareholders approves
the proposal, Weatherford-Switzerland or any shareholder may,
within 30 calendar days after the general meeting of
shareholders, request the court at
Weatherford-Switzerlands registered office to appoint a
special commissioner. If the general meeting of shareholders
rejects the request, one or more shareholders representing at
least 10% of the share capital or holders of registered shares
in an aggregate par value of at least 2 million Swiss
francs may request the court to appoint a special commissioner.
The court will issue such an order if the petitioners can
credibly establish that the board of directors, any member of
the board or an officer of Weatherford-Switzerland infringed the
law or Weatherford-Switzerlands articles of association
and thereby damaged the company or the shareholders. The costs
of the investigation would generally be allocated to
Weatherford-Switzerland and only in exceptional cases to the
petitioners.
Appraisal
Rights and Compulsory Acquisitions
Business combinations and other transactions that are binding on
all shareholders are governed by the Merger Act. A statutory
merger or demerger requires that at least
662/3%
of the registered shares and a
45
majority of the par value of the registered shares represented
at the general meeting of shareholders vote in favor of the
transaction. Under the Merger Act, a demerger may
take two forms:
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a legal entity may divide all of its assets and transfer such
assets to other legal entities, with the shareholders of the
transferring entity receiving equity securities in the acquiring
entities and the transferring entity dissolving upon
deregistration in the commercial register; or
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a legal entity may transfer all or a portion of its assets to
other legal entities, with the shareholders of the transferring
entity receiving equity securities in the acquiring entities.
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If a transaction under the Merger Act receives all of the
necessary consents, all shareholders would be compelled to
participate in the transaction. See
Voting.
Swiss companies may be acquired by an acquirer through the
direct acquisition of the share capital of the Swiss company.
With respect to corporations limited by shares, such as
Weatherford-Switzerland, the Merger Act provides for the
possibility of a so-called cash-out or
squeeze-out merger if the acquirer controls 90% of
the outstanding registered shares. In these limited
circumstances, minority shareholders of the company being
acquired may be compensated in a form other than through shares
of the acquiring company (for instance, through cash or
securities of a parent company of the acquiring company or of
another company). For business combinations effected in the form
of a statutory merger or demerger and subject to Swiss law, the
Merger Act provides that if the equity rights have not been
adequately preserved or compensation payments in the transaction
are unreasonable, a shareholder may request the competent court
to determine a reasonable amount of compensation.
In addition, under Swiss law, the sale of all or
substantially all of its assets by Weatherford-Switzerland
may require a resolution of the general meeting of shareholders
passed by holders of at least two-thirds of the voting rights
and a majority of the par value of the registered shares, each
as represented at the general meeting of shareholders. Whether
or not a shareholder resolution is required depends on the
particular transaction, including whether the following test is
satisfied:
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the company sells a core part of its business, without which it
is economically impracticable or unreasonable to continue to
operate the remaining business;
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the companys assets, after the divestment, are not
invested in accordance with the companys statutory
business purpose; and
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the proceeds of the divestment are not earmarked for
reinvestment in accordance with the companys business
purpose but, instead, are intended for distribution to
shareholders or for financial investments unrelated to the
companys business.
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If all of the foregoing apply, a shareholder resolution would
likely be required.
Anti-Takeover
Provisions
Weatherford-Switzerlands articles of association have
provisions that could have an anti-takeover effect. These
provisions are intended to enhance the likelihood of continuity
and stability in the composition of the board of directors and
in the policies formulated by the board of directors, and may
have the effect of discouraging actual or threatened changes of
control by limiting certain actions that may be taken by a
potential acquirer prior to its having obtained sufficient
control to adopt a special resolution amending
Weatherford-Switzerlands articles of association.
Under the Swiss Code, directors may at any time, with or without
cause, be removed from office by resolution of the shareholders
at a general meeting of shareholders, provided that a proposal
for such resolution has been put on the agenda for the meeting
in accordance with the requirements of the Swiss Code and
Weatherford-Switzerlands articles of association.
Weatherford-Switzerlands articles of association provide
that a decision of the shareholders at a general meeting to
remove a director requires the vote of shareholders holding at
least
662/3%
of the voting rights and the absolute majority of the registered
shares represented at
46
that meeting as well as a quorum of at least two-thirds of the
registered shares recorded in Weatherford-Switzerlands
share register.
Under Swiss law, there is generally no prohibition of business
combinations with interested shareholders. However, in certain
circumstances, shareholders and members of the board of
directors of Swiss companies, as well as certain persons
associated with them, must refund any payments they receive that
are not made on an arms length basis.
Upon completion of the redomestication,
Weatherford-Switzerlands articles of association will
include an authorized share capital, according to which the
board of directors is authorized, at any time during a maximum
two-year period, to issue a number of registered shares up to
50% of the share capital registered in the commercial register
and to limit or withdraw the preferential subscription rights of
the existing shareholders for a proper cause.
For other provisions that could be considered to have an
anti-takeover effect, in addition to
Preferential Subscription Rights and Advance
Subscription Rights General Meetings of
Shareholders and Voting above, see
Comparison of Rights of Shareholders Other
Anti-Takeover Measures below.
Legal
Name; Formation; Fiscal Year; Registered Office
The legal and commercial name of Weatherford-Switzerland is
Weatherford International Ltd. Weatherford-Switzerland was
initially formed, and its articles of association registered on
November 26, 2008. Weatherford-Switzerland is incorporated
and domiciled in Zug, Canton of Zug, Switzerland, and operates
under the Swiss Code as a stock corporation
(Aktiengesellschaft). Weatherford-Switzerland is recorded in the
Commercial Register of the Canton of Zug with the registration
number CH-170.3.032 888-3. Weatherford-Switzerlands
fiscal year is the calendar year.
The address of Weatherford-Switzerlands registered office
is Weatherford International Ltd., Alpenstrasse 15, 6300 Zug,
Switzerland, and the telephone number at that address is
+41-41-729-4242.
Corporate
Purpose
Currently, Weatherford-Switzerland is a subsidiary of
Weatherford-Bermuda, and its business purpose is to acquire,
hold, administer and transfer participations in entities in
Switzerland and abroad, either directly or indirectly, in
particular in entities which are active in the field of services
providing with respect to the acquisition and production of
natural energy and of the financing of such activities. Upon
completion of the redomestication, Weatherford-Switzerland will
become the new holding company of Weatherford-Bermuda and its
subsidiaries. Weatherford-Switzerlands amended business
purpose will be to acquire, hold, administer and transfer
participations in entities in Switzerland and abroad, either
directly or indirectly, in particular in entities which are
active in the field of services providing with respect to the
acquisition and production of natural energy and of the
financing of such activities. Weatherford-Switzerland may also
acquire, administer and transfer patents, trademarks and
technical and industrial know-how as well as real estate assets,
and engage in any commercial, financial or other activities
which are directly or indirectly related to these purposes.
Weatherford-Switzerland may also participate in the financing,
including by providing of guarantees and sureties, of affiliates
of the company.
Duration;
Dissolution; Rights upon Liquidation
Weatherford-Switzerlands duration is unlimited.
Weatherford-Switzerland may be dissolved at any time with the
approval of shareholders holding two-thirds of the voting rights
and a majority of the par value of the registered shares
represented at a general meeting. Dissolution by court order is
possible if Weatherford-Switzerland becomes bankrupt, or for
cause at the request of shareholders holding at least 10% of
Weatherford-Switzerlands share capital. Under Swiss law,
any surplus arising out of liquidation, after the settlement of
all claims of all creditors, will be distributed to shareholders
in proportion to the
paid-up par
value of registered shares held, subject to Swiss withholding
tax requirements.
47
Certificated
and Uncertificated Shares
Weatherford-Switzerland is authorized to issue registered shares
in certificated or uncertificated form.
Stock
Exchange Listing
We intend to make application so that, immediately following the
redomestication, the shares of Weatherford-Switzerland will be
listed on the NYSE under the symbol WFT, the same
symbol under which the Weatherford-Bermuda common shares are
currently listed.
No
Sinking Fund
The registered shares have no sinking fund provisions.
No
Liability for Further Calls or Assessments
The registered shares to be issued in the redomestication will
be duly and validly issued and fully paid.
No
Redemption and Conversion
The registered shares are not convertible into shares of any
other class or series or subject to redemption either by
Weatherford-Switzerland or the holder of the shares.
Transfer
and Registration of Shares
Weatherford-Switzerland has not imposed any restrictions
applicable to the transfer of Weatherford-Switzerland registered
shares. Weatherford-Switzerlands share register will
initially be kept by American Stock Transfer &
Trust Company, LLC, which acts as transfer agent and
registrar. The share register reflects only record owners of
Weatherford-Switzerland shares. Swiss law does not recognize
fractional share interests.
COMPARISON
OF RIGHTS OF SHAREHOLDERS
Your rights as a shareholder of Weatherford-Bermuda are governed
by Bermuda law and Weatherford-Bermudas memorandum of
association and bye-laws. After the redomestication, you will
become a shareholder of Weatherford-Switzerland, and your rights
will be governed by Swiss law and Weatherford-Switzerlands
articles of association and organizational regulations (the
latter being analogous to bye-laws).
Many of the principal attributes of Weatherford-Bermudas
common shares and Weatherford-Switzerlands registered
shares will be similar. However, there are differences between
your rights under Swiss law and under Bermuda law. In addition,
there are differences between Weatherford-Bermudas
memorandum of association and bye-laws and
Weatherford-Switzerlands articles of association and
organizational regulations. The following discussion is a
summary of material changes in your rights resulting from the
redomestication. This summary is not complete and does not cover
all of the differences between Swiss law and Bermuda law
affecting companies and their shareholders or all the
differences between Weatherford-Bermudas memorandum of
association and bye-laws and Weatherford-Switzerlands
articles of association and organizational regulations. We
believe this summary is accurate. It is, however, subject to the
complete text of the relevant provisions of the Swiss Code of
Obligations, in particular articles 620 through 763 of the
Swiss Code, and Switzerlands Federal Act on Mergers,
Demergers, Transformations and the Transfer of Assets, which we
refer to as the Merger Act, the Companies Act 1981, as amended,
of Bermuda, which we refer to as the Companies Act,
Weatherford-Bermudas memorandum of association and
bye-laws and Weatherford-Switzerlands articles of
association and organizational regulations. We encourage you to
read those laws and documents. Weatherford-Switzerlands
proposed articles of association and organizational regulations
are attached to this proxy statement as Annex E and
Annex F, respectively. For information as to how you can
obtain Weatherford-Bermudas memorandum of association and
bye-laws, see Where You Can Find More Information.
48
Capitalization
Weatherford-Bermuda. The authorized share
capital of Weatherford-Bermuda is comprised of 1,000,000,000
common shares, par value $1.00 per share, and 10,000,000
undesignated preference shares, par value $1.00 per share. The
board of directors of Weatherford-Bermuda may authorize the
issuance of additional shares up to the amount of the authorized
capital without obtaining additional shareholder approval.
Weatherford-Switzerland. Upon completion of
the redomestication, the registered share capital of
Weatherford-Switzerland is expected to be approximately 845.4
million Swiss francs, comprised of approximately 728.8 million
registered shares with a par value of approximately 1.16 Swiss
francs per share. Shares with increased voting powers may only
be issued with the affirmative resolution adopted by
shareholders holding at least
662/3%
of the voting rights and a majority of the par value of the
registered shares represented at a general meeting. Preferred
shares may only be issued with the approval of a relative
majority of the votes cast at a general meeting. Immediately
after the redomestication, Weatherford-Switzerland will only
have one class of shares outstanding, so all references to
voting rights in this Comparison of Rights of
Shareholders will mean the voting rights of
Weatherford-Switzerlands registered shares, par value
equivalent to US $1.00, or approximately 1.16 Swiss francs, per
share, unless another class of shares is subsequently created.
Likewise, a majority of the par value of the registered
shares will mean a majority of the par value of
Weatherford-Switzerlands registered shares, par value
equivalent to US $1.00, or approximately 1.16 Swiss francs, per
share.
Immediately prior to the redomestication,
Weatherford-Switzerland will not have any share capital
authorized for future issuance. Upon completion of the
redomestication, the board of directors will be authorized to
issue new registered shares at any time during a two-year period
and thereby increase the share capital, without additional
shareholder approval, by a maximum amount of 50% of the share
capital registered in the commercial register, which is expected
to be approximately 845.4 million Swiss francs, or approximately
728.8 million registered shares. After the expiration of the
initial two-year period, and each subsequent two-year period,
authorized share capital will be available to the board of
directors for issuance of additional registered shares only if
new authorized capital is created to that effect by the
shareholders.
In an authorized capital increase, Weatherford-Switzerland
shareholders would have preferential subscription rights to
obtain newly issued registered shares in an amount proportional
to the par value of the registered shares they already hold.
However, the board of directors may withdraw or limit these
preferential subscription rights in certain circumstances as set
forth in Weatherford-Switzerlands articles of association.
For further details on these circumstances, see
Preferential Subscription Rights and Advance
Subscription Rights.
Immediately prior to the redomestication,
Weatherford-Switzerland will not have any conditional share
capital. Upon completion of the redomestication,
Weatherford-Switzerlands articles of association will
provide for a conditional capital that will allow the board of
directors to authorize the issuance of additional registered
shares up to a maximum amount of 50% of the share capital
registered in the commercial register (which is expected to be
approximately 728.8 million registered shares) without obtaining
additional shareholder approval. These registered shares may be
issued:
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through the exercise of conversion, exchange, option, warrant or
similar rights for the subscription of shares granted to third
parties or shareholders in connection with bonds, options,
warrants or other securities newly or already issued in national
or international capital markets or new or already existing
contractual obligations by or of the company, one or more of its
subsidiaries, or any of their respective predecessors; or
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through the issuance of registered shares, options or other
share-based awards to directors, employees, contractors,
consultants or other persons providing services to
Weatherford-Switzerland or its subsidiaries.
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The preferential subscription rights and advance subscription
rights of shareholders is excluded in connection with the
issuance of bonds, notes, warrants or other financial
instruments or contractual obligations convertible into or
exercisable or exchangeable for Weatherford-Switzerland
registered shares. See Preferential
Subscription Rights and Advance Subscription Rights below.
49
Preferential
Subscription Rights and Advance Subscription Rights
Weatherford-Bermuda. Holders of
Weatherford-Bermuda common shares have no preemptive or
preferential right to purchase any securities of
Weatherford-Bermuda. As a result, as described below under
Other Anti-Takeover Measures, the board
of directors may authorize the issuance of securities that could
discourage a takeover or other transaction without offering the
securities to each holder of Weatherford-Bermuda common shares.
Weatherford-Switzerland. Under the Swiss Code,
the prior approval of a general meeting of shareholders is
required to authorize, for later issuance, the issuance of
registered shares, or rights to subscribe for, or convert into,
registered shares (which rights may be connected to debt
instruments or other obligations). In addition, the existing
shareholders will generally have preferential subscription
rights in relation to such registered shares for authorized
share capital and conditional share capital or advance
subscription rights in relation to such rights for conditional
share capital in proportion to the respective par values of
their holdings.
The board of directors is authorized to withdraw or limit the
preferential subscription rights with respect to the issuance of
registered shares from the authorized capital for cause,
including if:
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the issue price of the new registered shares is determined by
reference to the then-prevailing market conditions;
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the registered shares are issued in connection with the
acquisition of an enterprise or business or any part of an
enterprise or business, the financing or refinancing of any such
transactions or the financing of new investment plans of
Weatherford-Switzerland;
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the registered shares are issued in connection with the intended
broadening of the shareholder constituency of the company in
certain financial or investor markets, for the purposes of the
participation of strategic partners, or in connection with the
listing of the shares on domestic or foreign stock exchanges;
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in connection with a placement or sale of registered shares, the
grant of an over-allotment option (including options with
respect to any security convertible into shares, such as
convertible debt securities or otherwise) of up to 20% of the
total number of registered shares in a placement or sale of
registered shares to the initial purchasers or underwriters;
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for the participation in a benefit or other plan by directors,
employees, contractors, consultants and other persons performing
services for the benefit of Weatherford-Switzerland or any of
its subsidiaries; or
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if the shares to be issued will be issued for any consideration
(including debt, equity or assets of another company) other than
for cash consideration.
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In connection with the issuance of bonds, notes, warrants or
other financial instruments or contractual obligations
convertible into or exercisable or exchangeable for
Weatherford-Switzerland registered shares, the advance
subscription rights and the preferential subscription rights of
shareholders are excluded with respect to registered shares
issued from Weatherford-Switzerlands conditional share
capital and to the relevant bond, note or other right issued by
the company.
Distributions
and Dividends; Repurchases and Redemptions
Weatherford-Bermuda. Weatherford-Bermuda is
not required to present proposed dividends to its shareholders
for approval or adoption. However, the board of directors is
prohibited from declaring or paying dividends, or making
distributions out of contributed surplus, if there are
reasonable grounds for believing that:
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the company is, or would after the payment be, unable to pay its
liabilities as they become due; or
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the realizable value of the companys assets would thereby
be less than the aggregate of its liabilities, its issued share
capital and its share premium accounts.
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Pursuant to Weatherford-Bermudas bye-laws, its board of
directors may exercise its powers to purchase all or any part of
its own shares pursuant to the Companies Act. Any issued shares
may be purchased by Weatherford-Bermuda, to the extent not
prohibited by applicable law, by action of the board. Upon
purchase by Weatherford-Bermuda, such shares will be cancelled.
Weatherford-Switzerland. Under Swiss law,
dividends may be paid out only if the corporation has sufficient
distributable profits from the previous fiscal year, or if the
corporation has freely distributable reserves, each as will be
presented on the audited annual stand-alone statutory balance
sheet. Payments out of the registered share capital (in other
words, the aggregate par value of Weatherford-Switzerlands
registered share capital) in the form of dividends are not
allowed; however, payments out of registered share capital may
be made by way of a capital reduction, as described below.
Qualifying additional paid-in capital may only be paid out as
dividends to shareholders following approval by the shareholders
of a reclassification of such qualifying additional paid-in
capital as freely distributable reserves (to the extent
permissible under the Swiss Code). Weatherford-Switzerland may
seek to reclassify its qualifying additional paid-in capital to
freely distributable reserves as early as its first general
meeting following completion of the redomestication. The
affirmative vote of shareholders representing a relative
majority of the votes cast at a general meeting must approve
reserve reclassifications and distributions of dividends. The
board of directors may propose to shareholders that a dividend
be paid but cannot itself authorize the dividend.
Under the Swiss Code, if Weatherford-Switzerlands general
reserves amount to less than 20% of the share capital recorded
in the commercial register (i.e., 20% of the aggregate par value
of Weatherford-Switzerlands registered capital), then at
least 5% of Weatherford-Switzerlands annual profit must be
retained as general reserves. The Swiss Code and
Weatherford-Switzerlands articles of association permit
Weatherford-Switzerland to accrue additional general reserves.
In addition, Weatherford-Switzerland is required to create a
special reserve on its stand-alone annual statutory balance
sheet in the amount of the purchase price of registered shares
it or any of its subsidiaries repurchases, which amount may not
be used for dividends or subsequent repurchases.
Swiss companies generally must maintain a separate company,
stand-alone statutory balance sheet for the purpose
of, among other things, determining the amounts available for
the return of capital to shareholders, including by way of a
distribution of dividends. Weatherford-Switzerlands
auditor must confirm that a dividend proposal made to
shareholders conforms with the requirements of the Swiss Code
and Weatherford-Switzerlands articles of association.
Dividends are usually due and payable shortly after the
shareholders have passed a resolution approving the payment.
Weatherford-Switzerlands articles of association provide
that dividends that have not been claimed within five years
after the due date become the property of
Weatherford-Switzerland and are allocated to the general
reserves. For information about deduction of the withholding tax
from dividend payments, see Material Tax
Considerations Swiss Tax Considerations.
The Swiss Code limits a companys ability to hold or
repurchase its own registered shares. Weatherford-Switzerland
and its subsidiaries may only repurchase shares if and to the
extent that sufficient freely distributable reserves are
available, as described above. The aggregate par value of all
Weatherford-Switzerland registered shares held by
Weatherford-Switzerland and its subsidiaries may not exceed 10%
of the registered share capital. However,
Weatherford-Switzerland may repurchase its own registered shares
beyond the statutory limit of 10% if the shareholders have
passed a resolution at a general meeting of shareholders
authorizing the board of directors to repurchase registered
shares in an amount in excess of 10% and the repurchased shares
are dedicated for cancellation. Any registered shares
repurchased pursuant to such an authorization will then be
cancelled at the next general meeting upon the approval of
shareholders representing a relative majority of the votes cast
at the general meeting. Repurchased registered shares held by
Weatherford-Switzerland or its subsidiaries do not carry any
rights to vote at a general meeting of shareholders but are
entitled to the economic benefits generally associated with the
shares. For information about withholding tax and share
repurchases, see Material Tax Considerations
Swiss Tax Considerations.
Capital distributions may also take the form of a distribution
of cash or property that is based upon a reduction of
Weatherford-Switzerlands share capital recorded in the
commercial register. Such a capital reduction requires the
approval of shareholders representing a relative majority of the
votes cast at the general
51
meeting. A special audit report must confirm that
creditors claims remain fully covered despite the
reduction in the share capital recorded in the commercial
register. Upon approval by the general meeting of shareholders
of the capital reduction, the board of directors must give
public notice of the capital reduction resolution in the Swiss
Official Gazette of Commerce three times and notify creditors
that they may request, within two months of the third
publication, satisfaction of or security for their claims.
Weatherford-Switzerland will be required under Swiss law to
declare any dividends and other capital distributions in Swiss
francs. Weatherford-Switzerland intends to make any dividend
payments to holders of Weatherford-Switzerland shares in
U.S. dollars, unless the holders provide notice to our
transfer agent, American Stock Transfer &
Trust Company, LLC, that they wish to receive dividend
payments in Swiss francs. American Stock Transfer &
Trust Company, LLC will be responsible for paying the
U.S. dollars or Swiss francs to registered holders of
shares, less amounts subject to withholding for taxes.
Shareholder
Approval of Business Combinations
Weatherford-Bermuda. The amalgamation of a
Bermuda company with another company or corporation (other than
certain affiliated companies) requires the amalgamation
agreement to be approved by the companys board of
directors and by its shareholders. Unless the companys
bye-laws provide otherwise, the approval of 75% of the
shareholders voting at a meeting is required to approve the
amalgamation agreement, and the quorum for such meeting must be
two persons holding or representing more than one-third of the
issued shares of the company.
Under Bermuda law, in the event of an amalgamation of a Bermuda
company with another company or corporation, a shareholder of
the Bermuda company who did not vote in favor of the
amalgamation and who is not satisfied that fair value has been
offered for such shareholders shares may, within one month
of notice of the shareholders meeting, apply to the Supreme
Court of Bermuda to appraise the fair value of those shares.
Weatherford-Bermudas bye-laws contain provisions regarding
Business Combinations, which include amalgamations,
mergers, consolidations and similar transactions involving us.
Pursuant to our bye-laws, Weatherford-Bermuda can not engage in
a Business Combination unless the Business Combination has been
approved by our board of directors and by a resolution of the
holders of a majority of the shares entitled to vote on the
resolution.
Weatherford-Switzerland. Business Combinations
and other transactions that are binding on all shareholders are
governed by the Merger Act. A statutory merger or demerger
requires that at least
662/3%
of the registered shares and a majority of the par value of the
registered shares represented at the general meeting of
shareholders vote in favor of the transaction. Under the Merger
Act, a demerger may take two forms:
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a legal entity may divide all of its assets and transfer such
assets to other legal entities, with the shareholders of the
transferring entity receiving equity securities in the acquiring
entities and the transferring entity dissolving upon
deregistration in the commercial register; or
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a legal entity may transfer all or a portion of its assets to
other legal entities, with the shareholders of the transferring
entity receiving equity securities in the acquiring entities.
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If a transaction under the Merger Act receives all of the
necessary consents, all shareholders would be compelled to
participate in the transaction. See Voting
Rights.
Swiss companies may be acquired by an acquirer through the
direct acquisition of the share capital of the Swiss company.
With respect to corporations limited by shares, such as
Weatherford-Switzerland, the Merger Act provides for the
possibility of a so-called cash-out or
squeeze-out merger if the acquirer controls 90% of
the outstanding registered shares entitled to vote at a general
meeting. In these limited circumstances, minority shareholders
of the company being acquired may be compensated in a form other
than through shares of the acquiring company (for instance,
through cash or securities of a parent company of the acquiring
company or of another company). Under the Merger Act, a
shareholder has the right to request a court to review the
adequacy of the compensation. For more information, see
Appraisal Rights and Compulsory
Acquisitions.
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In addition, under Swiss law, the sale of all or
substantially all of its assets by Weatherford-Switzerland
may require a resolution of the general meeting of shareholders
passed by holders of at least two-thirds of the voting rights
and a majority of the par value of the registered shares, each
as represented at the general meeting of shareholders. Whether
or not a shareholder resolution is required depends on the
particular transaction, including whether the following test is
satisfied:
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the company sells a core part of its business, without which it
is economically impracticable or unreasonable to continue to
operate the remaining business;
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the companys assets, after the divestment, are not
invested in accordance with the companys statutory
business purpose; and
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the proceeds of the divestment are not earmarked for
reinvestment in accordance with the companys business
purpose but, instead, are intended for distribution to
shareholders or for financial investments unrelated to the
companys business.
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If all of the foregoing apply, a shareholder resolution would
likely be required.
Other
Anti-Takeover Measures
Weatherford-Bermuda. Weatherford-Bermuda does
not have a shareholder rights plan, but the ability to adopt a
shareholder rights plan has been upheld by Bermuda courts. In
addition, the board of directors of Weatherford-Bermuda is
authorized, without obtaining any vote or consent of the holders
of any class or series of shares unless expressly provided by
the terms of a class or series, to issue from time to time any
other classes or series of shares with the designations and
relative powers, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or terms or
conditions of redemption as it considers fit. The board of
directors could authorize the issuance of preference shares with
terms and conditions that could discourage a takeover or other
transaction that holders of some or a majority of the common
shares might believe to be in their best interests or in which
holders might receive a premium for their shares over the then
market price of the shares. No preference shares have been
established as of the date of this proxy statement.
For other provisions that could be considered to have an
anti-takeover effect, in addition to
Preferential Subscription Rights and Advance
Subscription Rights, see Special
Meetings of Shareholders, Election of
Directors; Terms of Directors, Removal
of Directors, Amendment of Governing
Documents and Director Nominations;
Proposals of Shareholders below.
Weatherford-Switzerland. Weatherford-Switzerland
does not have a shareholder rights plan. Rights plans generally
discriminate in the treatment of shareholders by imposing
restrictions on any shareholder who exceeds a level of ownership
interest without the approval of the board of directors.
Anti-takeover measures such as rights plans that are implemented
by the board of directors would be restricted under Swiss
corporate law by the principle of equal treatment of
shareholders and the general rule that new shares may only be
issued based on a shareholders resolution. However, upon
completion of the redomestication,
Weatherford-Switzerlands articles of association will
include an authorized share capital, according to which the
board of directors is authorized, at any time during a maximum
two-year period, to issue a number of registered shares of up to
50% of the share capital registered in the commercial register
and to limit or withdraw the preferential subscription rights of
the existing shareholders for a proper cause.
For other provisions that could be considered to have an
anti-takeover effect, in addition to
Preferential Subscription Rights and Advance
Subscription Rights, see Special
Meetings of Shareholders, Election of
Directors; Terms of Directors, Removal
of Directors, Amendment of Governing
Documents and Director Nominations;
Proposals of Shareholders below.
Appraisal
Rights and Compulsory Acquisitions
Weatherford-Bermuda. Under Bermuda law in the
event of an amalgamation of a Bermuda company with another
company or corporation, a shareholder of the Bermuda company who
is not satisfied that fair value has been offered for such
shareholders shares may apply to a Bermuda court within
one month of notice
53
of the shareholders meeting to appraise the fair value of those
shares. In addition, if the holders of 95% or more of a Bermuda
companys shares, or a class thereof, seek to compulsorily
acquire the shares of the remaining minority shareholders, a
minority shareholder may apply to a Bermuda court to appraise
the fair value of its shares.
Weatherford-Switzerland. For business
combinations effected in the form of a statutory merger or
demerger and subject to Swiss law, the Merger Act provides that
if the equity rights have not been adequately preserved or
compensation payments in the transaction are unreasonable, a
shareholder may request a competent court to determine a
reasonable amount of compensation.
Election
of Directors; Terms of Directors
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that the board will consist of no less than
three nor more than 18 directors. The board has the power
to set the exact number of directors within that range. The
board currently has seven directors.
With respect to the election of directors, each holder of common
shares entitled to vote at the election has the right to vote,
in person or by proxy, the number of shares held by him for as
many persons as there are directors to be elected.
Weatherford-Bermudas bye-laws do not provide for
cumulative voting in the election of directors.
Weatherford-Bermudas bye-laws provide that directors may
be elected at a general meeting by a plurality of the votes cast
by the shareholders present in person or by proxy at the meeting.
Weatherford-Switzerland. Weatherford-Switzerlands
articles of association provide for the same range in the number
of directors as Weatherford-Bermuda. Upon completion of the
redomestication, Weatherford-Switzerland will have the same
directors as Weatherford-Bermuda. The board has the power to set
the exact number of directors within the range, subject to
election of the directors by the general meeting of shareholders.
With respect to the election of directors, each holder of
registered shares entitled to vote at the general meeting has
the right to vote, in person or by proxy, the number of
registered shares held by him for as many persons as there are
directors to be elected. If the number of directors nominated
for election is greater than the number of directors to be
elected, the persons receiving the most votes (up to the number
of directors to be elected) will be elected as directors.
Weatherford-Switzerlands articles of association do not
provide for cumulative voting for election of directors.
Under the Swiss Code, board members may at any time, with or
without cause and with immediate effect, resign from office.
Vacancies
on Board of Directors
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that a vacancy or a newly created directorship
may be filled by the decision of a majority of the remaining
directors.
Weatherford-Switzerland. The Swiss Code
provides that a vacancy or a newly created directorship as
proposed by Weatherford-Switzerlands board of directors
may only be filled upon approval by shareholders at a general
meeting.
Removal
of Directors
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that a director may be removed, only with
cause, by the shareholders, provided notice is given to the
director of the shareholders meeting convened for the
purpose of removing the director. The notice must contain a
statement of the intention to remove the director and a summary
of the facts justifying the removal and must be served on the
director not less than 14 days before the meeting. The
director is entitled to attend the meeting and be heard on the
motion for his removal.
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Weatherford-Switzerland. Under the Swiss Code,
directors may at any time, with or without cause, be removed
from office by resolution of the shareholders at a general
meeting of shareholders, provided that a proposal for such
resolution has been put on the agenda for the meeting in
accordance with the requirements of the Swiss Code and
Weatherford-Switzerlands articles of association.
Weatherford-Switzerlands articles of association provide
that a decision of the shareholders at a general meeting to
remove a director requires the vote of shareholders holding at
least
662/3%
of the voting rights and the absolute majority of the par value
of the registered shares represented at that meeting as well as
a quorum of at least two thirds of the registered shares
recorded in the share register of the company.
Duties of
the Board of Directors
Weatherford-Bermuda. Bermuda law does not
impose an all-embracing code of conduct on directors. Many of
the duties and obligations of a director are statutory, while
others are found only in common law. The Companies Act requires
a director, in the exercise of his powers and in the discharge
of his duties to act honestly and in good faith with a view to
the best interests of the company and to exercise the care,
diligence and skill that a reasonably prudent person would
exercise in comparable circumstances. In addition, at common law
a director owes two types of duty to the company: fiduciary
duties and a duty of skill and care. The fiduciary duties
include a duty to act in good faith, a duty to exercise powers
for a proper purpose, a duty not to put himself in a position
where he has a conflict of interest and a duty not to profit
from any opportunities that result from the directorship (unless
the bye-laws provide otherwise). The duty of skill and care
requires that a director exercise the skill that may reasonably
be expected from a person of like knowledge and experience and
display the reasonable care that an ordinary person would be
expected to take in the same circumstances on his own behalf.
Weatherford-Switzerland. A director of a Swiss
company is bound to performance standards as specified in the
Swiss Code. Under these standards, a director must act in
accordance with the duties imposed by statutory law, in
accordance with the companys articles of association and
in the best interest of the company. A director is generally
disqualified from participating in a decision that directly
affects him. A director must generally safeguard the interest of
the company in good faith, adhere to a duty of loyalty and a
duty of care and, absent special circumstances, extend equal
treatment to all shareholders in like circumstances. The test
for the duty of care is primarily objective: a director is
required to apply the care a reasonable person would apply under
the same circumstances. To some extent, particular skills and
functions of a board member may be taken into consideration. The
members of the board of directors of Weatherford-Switzerland are
liable to Weatherford-Switzerland, its shareholders and, in
bankruptcy, its creditors for damage caused by the violation of
their duties.
To the extent that the Swiss Code allows the delegation by the
board of directors to executive management, and such delegation
is actually made by virtue of Weatherford-Switzerlands
organizational regulations, the responsibility of the board of
directors is limited to the due election, instruction and
supervision of the executive management.
The members of the board of directors, officers and other
persons authorized by the board of directors to represent
Weatherford-Switzerland have joint signature powers, as
determined from time to time by the board of directors.
Indemnification
of Directors and Officers; Insurance
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that the companys directors and officers
will be indemnified against all actions, costs, charges, losses,
damages and expenses which they incur or sustain by reason of
any act done, concurred in or omitted in or about the execution
of their duty or in their respective offices, provided that this
indemnity does not extend to any matter in respect of any fraud
or dishonesty which may attach to any of such persons. The
bye-laws also provide that, subject to the Companies Act,
expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to the
bye-laws will be paid by Weatherford-Bermuda in advance of the
final disposition of
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such action if the indemnified party undertakes to repay such
amount in the event it is ultimately determined that the
indemnified party was not entitled to be indemnified.
Under the Companies Act, any indemnification of a director or
officer against liability for his fraud or dishonesty shall be
void (unless a court grants relief pursuant to section 281
of the Companies Act).
Under Weatherford-Bermudas bye-laws, each shareholder
waives any claim, whether on his behalf or on behalf of the
company, against any director or officer for any action taken by
the director or officer, or the failure of the director or
officer to take any action in the performance of his duties,
provided that this waiver does not extend to any matter
involving any fraud or dishonesty on the part of the director or
officer.
The indemnification provided for in the bye-laws is not
exclusive of other rights to which a director or officer may be
entitled, including rights provided pursuant to the memorandum
of association, bye-laws, any agreement, any insurance purchased
by Weatherford-Bermuda, vote of shareholders, or otherwise,
provided that indemnification does not extend to fraud and
dishonesty.
Weatherford-Switzerland. We believe, based on
the interpretation of leading Swiss legal scholars, which is a
persuasive authority in Switzerland, that under Swiss law the
company may indemnify its directors and officers unless the
indemnification results from a breach of their duties that
constitutes gross negligence or intentional breach of duty of
the director or officer concerned.
Weatherford-Switzerlands articles of association make
indemnification of directors and officers and advancement of
expenses to defend claims against directors and officers
mandatory on the part of Weatherford-Switzerland to the fullest
extent allowed by law. Under Weatherford-Switzerlands
articles of association, a director or officer may not be
indemnified if such person is found, in a final judgment or
decree not subject to appeal, to have committed an intentional
or grossly negligent breach of his or her statutory duties as a
director or officer. Swiss law permits the company, or each
director or officer individually, to purchase and maintain
insurance on behalf of such directors and officers.
Weatherford-Switzerland may obtain such insurance from one or
more third party insurers or captive insurance companies.
Weatherford-Switzerland also plans to enter into indemnification
agreements with each of its directors and executive officers
upon the completion of the redomestication that will provide for
indemnification and expense advancement and include related
provisions meant to facilitate the indemnitees receipt of
such benefits. The agreements will be substantially similar to
the agreements our officers and directors currently have in
place with Weatherford-Bermuda. The agreements will provide that
Weatherford-Switzerland will indemnify each such director and
executive officer, except in case of gross negligence or willful
intent. The agreements provide that expense advancement is
provided subject to an undertaking by the indemnitee to repay
amounts advanced if it is ultimately determined that he is not
entitled to indemnification. The disinterested members of the
board of directors of Weatherford-Switzerland or an independent
counsel will determine whether indemnification payment should be
made in any particular instance. In making such determination,
the board or the independent counsel, as the case may be, must
presume that the indemnitee is entitled to such indemnification,
and Weatherford-Switzerland has the burden of proof in seeking
to overcome such presumption. If the board or the independent
counsel determines that the director or executive officer is not
entitled to indemnification, the agreements provide that such
person is entitled to seek an award in arbitration with respect
to his right to indemnification under his agreement.
Limitation
on Director Liability
Weatherford-Bermuda. In addition to the
indemnification discussed above under
Indemnification of Directors and Officers;
Insurance, unless a director is fraudulent or dishonest,
his liability for damages will be proportionate to the extent to
which he caused or contributed to the loss, as determined by the
court.
Weatherford-Switzerland. Swiss law does not
permit a company to exempt any member of its board of directors
from any liability for damages suffered by the company, the
shareholders or the companys creditors caused by
intentional or negligent violation of that directors
duties. However, the general meeting of shareholders may pass a
resolution discharging the members of the board of directors
from liability for certain limited actions. Such release is
effective only for facts that have been disclosed to the
shareholders and only vis-à-vis the company and those
shareholders who have consented to the resolution or who
acquired shares subsequently with knowledge of the resolution.
The right to claim damages on behalf of the company for
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shareholders who do not consent to the release expires six
months after the shareholders pass a resolution approving the
release.
Directors
Conflicts of Interest
Weatherford-Bermuda. As a matter of the common
law applied in Bermuda, the director of a Bermuda company should
seek to avoid placing himself in a position where there is a
conflict, or a possible conflict, between the duties he owes to
the company and either his personal interest or other duties
that he owes to a third party. Pursuant to the Companies Act, if
a director is interested in a material contract or a proposed
material contract with the company or any of its subsidiaries,
or has a material interest in any party to such a contract or
proposed contract, he must declare the nature and extent of that
interest to the other directors at the first opportunity. The
duty to avoid conflicting interests extends to contracts with
the company, the use of information or opportunities that come
to him by virtue of his directorship and actions competing with
the company.
A director shall be at liberty to vote in respect of any
contract or arrangement in which he is so interested, provided
the nature of the interest of the director in any such contract
or arrangement is disclosed by him as required by the Companies
Act prior to any vote on the matter (unless disqualified by the
chairman of the meeting).
Weatherford-Switzerland. Swiss law does not
have a general provision on conflicts of interest. However,
under the Swiss Code a director is required to safeguard the
interests of the company and to adhere to a duty of loyalty and
a duty of care. This requirement generally disqualifies a
director from participating in decisions directly affecting him.
Breach of these principles may also entail personal liability of
the directors to the company. In addition, the Swiss Code
requires a director to return to the company payments made to a
director if such payments are not made on an arms length
basis or if the recipient of the payment was acting in
bad faith.
Shareholders
Suits
Weatherford-Bermuda. Class actions and
derivative actions are generally not available to shareholders
under Bermuda law. The Bermuda courts, however, would ordinarily
be expected to permit a shareholder to commence an action in the
name of a company to remedy a wrong to the company where the act
complained of is alleged to be beyond the corporate power of the
company or is illegal or would result in the violation of the
companys memorandum of association or bye-laws.
Furthermore, consideration would be given by a Bermuda court to
acts that are alleged to constitute a fraud against the minority
shareholders or, for instance, where an act requires the
approval of a greater percentage of the companys
shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner
which is oppressive or prejudicial to the interests of some part
of the shareholders, one or more shareholders may apply to a
Bermuda court, which may make such order as it sees fit,
including an order regulating the conduct of the companys
affairs in the future or ordering the purchase of the shares of
any shareholders by other shareholders or by the company.
If the shareholder, based upon the factual and legal situation,
had sufficient cause to file an action, the judge has discretion
to impose all costs the plaintiff incurred in prosecuting the
action on the company.
Weatherford-Switzerland. Under Swiss law, each
shareholder is entitled to file an action for damage caused to
the company. The claim of the shareholder is for performance to
the company. If the shareholder, based upon the factual and
legal situation, had sufficient cause to file an action, the
judge has discretion to impose all costs the plaintiff incurred
in prosecuting the action on the company.
Shareholders who suffer a direct loss due to an intentional or
grossly negligent breach of a directors or senior
officers duties may sue in their personal capacity for
monetary compensation.
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Shareholder
Consent to Action Without Meeting
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that shareholders may take action by written
consent provided that it obtains 100% shareholder consent
required.
Weatherford-Switzerland. Under Swiss corporate
law, shareholders are not permitted to act by written consent in
lieu of a general meeting of shareholders.
Annual
Meetings of Shareholders
Weatherford-Bermuda. Under
Weatherford-Bermudas bye-laws, a general meeting of
shareholders is required to be held at least annually.
Weatherford-Bermudas bye-laws provide that at the annual
meeting elections will be held for directors and such other
business may be transacted as may properly be brought before
such meeting. The annual meeting may be held anywhere.
Weatherford-Switzerland. Under the Swiss Code
and Weatherford-Switzerlands articles of association,
Weatherford-Switzerland must hold an annual, ordinary general
meeting of shareholders within six months after the end of its
fiscal year for the purpose, among other things, of approving
the annual financial statements and the annual business report,
and the annual election of directors for the class whose term
has expired. The invitation to general meetings must be
published in the Swiss Official Gazette of Commerce and sent to
the shareholders of record at least 20 calendar days prior to
the relevant general meeting of shareholders. Annual general
meetings of shareholders may be convened by the board of
directors or, under certain circumstances, by the auditor. A
general meeting of shareholders can be held anywhere.
Special
Meetings of Shareholders
Weatherford-Bermuda. Under
Weatherford-Bermudas bye-laws, a special general meeting
of Weatherford-Bermuda may be called by the chairman or the
board of directors, and at least 10 days notice of such
meeting is required.
Weatherford-Switzerland. An extraordinary
general meeting of Weatherford-Switzerland may be called upon
the resolution of the board of directors or, under certain
circumstances, by the auditor. In addition, the board of
directors is required to convene an extraordinary general
meeting of shareholders if so resolved by the general meeting of
shareholders, or if so requested by shareholders holding an
aggregate of at least 10% of the registered shares, specifying
the items for the agenda and their proposals, or if it appears
from the stand-alone annual statutory balance sheet that half of
the companys share capital and reserves are not covered by
the companys assets. In the latter case, the board of
directors must immediately convene an extraordinary general
meeting of shareholders and propose financial restructuring
measures. Any shareholder satisfying the formal requirements set
out in the Swiss Code may request that an item be included on
the agenda of a general meeting of shareholders. See
Director Nominations; Proposals of
Shareholders for more information.
Director
Nominations; Proposals of Shareholders
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that all shareholder nominations for nominees
for election to the board of directors must be made following
written notice to the Secretary of Weatherford-Bermuda
accompanied by certain background and other information
specified in the bye-laws. Written notice of a
shareholders intention to make such nominations must be
received by the Secretary at Weatherford-Bermudas
principal executive offices and its registered office in Bermuda
(1) in connection with any annual general meeting, not less
than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual general
meeting, provided that in the event that the annual general
meeting is called for a date that is not within 60 days
before or after such anniversary date, not later than the
7th day following the day on which such notice of the date
of the annual general meeting was mailed or public disclosure of
the date of the annual general meeting was made, whichever
occurs first, and (2) in connection with a special general
meeting, not later than the 7th day following the day on
which such notice of the date
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of the special general meeting was mailed or public disclosure
of the date of the special general meeting was made, whichever
occurs first.
In order for a shareholder to bring other business before an
annual general meeting of shareholders, timely notice must be
received by the Secretary of Weatherford-Bermuda within the time
limits described above. The notice must include a description of
the proposed item and other specified matters. These
requirements are separate from and in addition to the
requirements a shareholder must meet to have a proposal included
in Weatherford-Bermudas proxy statement. The foregoing
time limits also apply in determining whether notice is timely
for purposes of rules adopted by the Securities Exchange
Commission relating to the exercise of discretionary voting
authority. These time limits are separate from those which apply
to the shareholder requisition rights under the Companies Act.
Weatherford-Switzerland. Under
Weatherford-Switzerlands articles of association, any
shareholder satisfying the formal requirements set out in the
Swiss Code may request that an item be included on the agenda of
a general meeting of shareholders. Such shareholder may also
nominate one or more directors for election. Shareholder
proposals to be included in the proxy materials for an annual
general meeting must comply with
Rule 14a-8
promulgated by the SEC to be considered for inclusion in the
proxy statement for that meeting. For any matters submitted
outside the process of
Rule 14a-8,
a request for inclusion of an item on the agenda or a nominee
must be in writing and requested at least 60 and no more than 90
calendar days prior to the scheduled and announced date of the
next general meeting of shareholders. The request must specify
the relevant agenda items and motions, together with evidence of
the required shares recorded in the share register, as well as
any other information as would be required to be included in a
proxy statement pursuant to the rules of the SEC.
Adjournment
of Shareholder Meetings
Weatherford-Bermuda. Weatherford-Bermudas
bye-laws provide that the chairman of any general meeting at
which a quorum is present may, with the consent of a majority of
the shareholders present and entitled to vote at the meeting
(and shall if directed by such majority), adjourn the meeting.
The chairman may also adjourn the meeting without such consent
or direction if it appears to the chairman that:
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it is likely to be impracticable to hold or continue that
meeting because of the number of shareholders wishing to attend
who are not present;
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the unruly conduct of persons attending the meeting prevents, or
is likely to prevent, the orderly continuation of the business
of the meeting; or
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an adjournment is otherwise necessary so that the business of
the meeting may be properly conducted.
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Unless the meeting is adjourned to a specific date and time,
fresh notice of the date, time and place for the resumption of
the adjourned meeting shall be given to each shareholder.
Weatherford-Switzerland. Under the Swiss Code,
a general meeting of shareholders for which a notice of meeting
has been duly published or communicated may not be adjourned
without publishing or communicating a new notice of meeting.
Voting
Rights
Weatherford-Bermuda. Under Bermuda law, a
companys bye-laws can make provision for a specific
majority in voting on a particular matter at shareholder
meetings, but, in the absence of such a provision, the general
rule is that any matter proposed for consideration by the
meeting is decided by a simple majority of votes cast. There
are, however, certain matters in respect of which the Companies
Act provides that another specified majority is required. These
include the following:
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the re-registration of a limited liability company as an
unlimited liability company must be approved by all shareholders;
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the variation of the rights of a particular class of shares must
be approved by the written consent of 75% of the issued shares
of that class or by a resolution passed by a simple majority of
votes cast at a separate general meeting of the holders of the
shares of that class, at which meeting the quorum is one-third
of the issued shares of that class (unless the bye-laws
otherwise provide);
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an amalgamation (other than with certain affiliated companies)
requires the approval of 75% of those voting at a meeting at
which the quorum is at least two persons holding or representing
by proxy more than one-third of the issued shares;
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a scheme of arrangement or a compromise between a company and
its shareholders requires the approval of a majority in number
of shareholders present and voting either in person or by proxy
at the meeting representing at least three fourths in value of
the shareholders present and voting either in person or by proxy
at the meeting;
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the removal of a companys auditor requires the approval of
at least two-thirds of the votes cast;
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a loan by a company to one of its directors or to a director of
its own holding company, or a guarantee or security in
connection with such a loan, requires the approval of at least
90% of the total voting rights of all shareholders.
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Weatherford-Switzerland. Each
Weatherford-Switzerland registered share carries one vote at a
general meeting of shareholders. Voting rights may be exercised
by shareholders registered in Weatherford-Switzerlands
share register or by a duly appointed proxy of a registered
shareholder, which proxy need not be a shareholder.
Weatherford-Switzerlands articles of association do not
limit the number of registered shares that may be voted by a
single shareholder.
Treasury shares, whether owned by Weatherford-Switzerland or one
of its majority-owned subsidiaries, will not be entitled to vote
at general meetings of shareholders.
Pursuant to the Swiss Code, registered shareholders have the
exclusive right to determine the following matters:
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adoption and amendment of Weatherford-Switzerlands
articles of association;
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election of members of the board of directors and the auditor;
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approval of the annual business report, the stand-alone
statutory financial statements and the consolidated financial
statements;
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payments of dividends and any other distributions of capital to
shareholders (excluding share repurchases below 10% of the
registered share capital);
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discharge of the members of the board of directors from
liability for previous business conduct to the extent such
conduct is known to the shareholders; and
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any other resolutions that are submitted to a general meeting of
shareholders pursuant to law, Weatherford-Switzerlands
articles of association or by voluntary submission by the board
of directors (unless a matter is within the exclusive competence
of the board of directors pursuant to the Swiss Code).
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Pursuant to Weatherford-Switzerlands articles of
association, the shareholders generally take resolutions and
decide elections of directors upon the relative majority of the
votes cast at the general meeting of shareholders (broker
non-votes, abstentions, withdrawals and blank and invalid
ballots shall be disregarded), unless otherwise provided by law
or Weatherford-Switzerlands articles of association. See
Election of Directors; Terms of
Directors for a discussion of voting for the election of
directors. The acting chair may direct that elections be held by
use of an electronic voting system. Electronic resolutions and
elections are considered equal to resolutions and elections
taken by way of a written ballot.
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The Swiss Code
and/or
Weatherford-Switzerlands articles of association require
the affirmative vote of at least two-thirds of the voting rights
and an absolute majority of the par value of the registered
shares, each as represented at a general meeting to approve the
following matters:
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the amendment to or the modification of the purpose of
Weatherford-Switzerland;
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the creation or cancellation of shares with privileged voting
rights;
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the restriction on the transferability of shares and any
amendment in relation thereto;
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the restriction on the exercise of the right to vote and any
amendment in relation thereto;
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an authorized or conditional increase in the nominal share
capital;
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an increase in the nominal share capital through (1) the
conversion of capital surplus, (2) a contribution in kind
or in exchange for an acquisition of assets, or (3) a grant
of special privileges;
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the limitation or withdrawal of preferential subscription rights
and advance subscription rights;
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a change in the place of incorporation of
Weatherford-Switzerland;
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the conversion of registered shares into bearer shares and vice
versa;
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the dissolution of Weatherford-Switzerland; and
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the removal of a member of the board of directors.
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The same supermajority voting requirements apply to resolutions
in relation to transactions among corporations based on the
Merger Act, including a merger, demerger or conversion of a
corporation (other than a cash-out or certain squeeze-out
mergers, in which minority shareholders of the company being
acquired may be compensated in a form other than through shares
of the acquiring company, for instance, through cash or
securities of a parent company of the acquiring company or of
another company in such a merger, an affirmative
vote of 90% of the outstanding registered shares is required).
Swiss law may also impose this supermajority voting requirement
in connection with the sale of all or substantially all of
its assets by Weatherford-Switzerland. See
Appraisal Rights and Compulsory
Acquisitions and Shareholder Approval of
Business Combinations.
Amendment
of Governing Documents
Weatherford-Bermuda. Bermuda law provides that
the memorandum of association of a company may be amended by a
resolution passed at a general meeting of shareholders of which
due notice has been given.
Under Bermuda law, the holders an aggregate of not less than 20%
in par value of the companys issued share capital have the
right to apply to the Bermuda courts for an annulment of any
amendment of the memorandum of association adopted by
shareholders at any general meeting, other than an amendment
which alters or reduces a companys share capital as
provided in the Companies Act. Where such an application is
made, the amendment becomes effective only to the extent that it
is confirmed by the Bermuda court. An application for an
annulment of an amendment of the memorandum of association must
be made within twenty-one days after the date on which the
resolution altering the companys memorandum of association
is passed and may be made on behalf of persons entitled to make
the application by one or more of their number as they may
appoint in writing for the purpose. No application may be made
by shareholders voting in favor of the amendment.
Weatherford-Bermudas bye-laws provide that no bye-law
shall be rescinded, altered or amended, and no new bye-law shall
be made, unless it shall have been approved by a resolution of
Weatherford-Bermudas board of directors and by a
resolution of the shareholders. In the case of the bye-law
setting out the amendment or repeal of the majority necessary to
approve a business combination, any rescission, alteration or
amendment must be approved by a resolution of the shareholders
holding a majority of the shares entitled to vote on such
business combination.
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Weatherford-Switzerland. Under the Swiss Code
and Weatherford-Switzerlands articles of association,
Weatherford-Switzerlands articles of association may only
be amended by a resolution of its shareholders at a general
meeting. See Voting Rights.
Weatherford-Switzerlands board of directors may not effect
amendments to Weatherford-Switzerlands articles of
association on its own, other than to reflect an increase in
registered share capital after an issuance of shares out of
authorized share capital or conditional share capital. Under
Weatherford-Switzerlands articles of association, the
board of directors may pass and amend organizational
regulations. Under Swiss law, shareholders may not pass or amend
organizational regulations but may pass resolutions amending the
articles of association to effectively supersede provisions in
the organizational regulations.
Quorum
Requirements
Weatherford-Bermuda. Two or more persons
present in person at the beginning of the meeting and
representing in person or by proxy in excess of 50% of the total
issued voting shares throughout the meeting constitutes a
quorum. At any meeting duly called, a majority in number of
those present at the meeting may direct the chairman to adjourn
the meeting if a quorum is present, and if not present, the
meeting shall be adjourned.
Weatherford-Switzerland. The presence of
shareholders, in person or by proxy, holding at least two thirds
of the registered shares recorded in
Weatherford-Switzerlands share register and generally
entitled to vote at a meeting, is a quorum for the transaction
of the following business:
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the adoption of a resolution with respect to the removal of a
serving director; and
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the adoption of a resolution to amend
Article 21 which sets forth the quorum at a
general meeting required for certain matters, Articles 18 and
20 which set forth the level of shareholder approval
required for certain matters, Article 23 which
sets forth the term of office of a director and
Article 24 which sets forth the organization
and remuneration of the board of directors.
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The presence of shareholders, in person or by proxy, holding at
least one-third of the registered shares recorded in
Weatherford-Switzerlands share register and generally
entitled to vote at a meeting, is a quorum for the transaction
of any other business.
Under the Swiss Code, the board of directors has no authority to
waive quorum requirements stipulated in the articles of
association.
Inspection
of Books and Records; Special Investigation
Weatherford-Bermuda. Members of the general
public have a right to inspect the public documents of a company
available at the office of the Registrar of Companies in
Bermuda. These documents include the companys memorandum
of association and registered charges. The shareholders have the
additional right to inspect the bye-laws of the company, minutes
of general meetings and the companys audited financial
statements, which must be presented to the annual general
meeting. The register of members of a company is also open to
inspection by shareholders and by members of the general public
without charge. The register of members is required to be open
for inspection for not less than two hours in any business day
(subject to the ability of a company to close the register of
members for not more than thirty days in a year). A company is
required to maintain its share register in Bermuda but may,
subject to the provisions of the Companies Act, establish a
branch register outside of Bermuda. A company is required to
keep at its registered office a register of directors and
officers that is open for inspection for not less than two hours
in any business day by members of the public without charge.
Bermuda law does not, however, provide a general right for
shareholders to inspect or obtain copies of any other corporate
records.
Weatherford-Switzerland. Under the Swiss Code,
a shareholder has a right to inspect the share register with
regard to his own shares and otherwise to the extent necessary
to exercise his shareholder rights. No other person has a right
to inspect the share register. The books and correspondence of a
Swiss company may be inspected with the express authorization of
the general meeting of shareholders or by resolution of the
board of directors and subject to the safeguarding of the
companys business secrets. At a general meeting of
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shareholders, any shareholder is entitled to request information
from the board of directors concerning the affairs of the
company. Shareholders may also ask the auditor questions
regarding its audit of the company. The board of directors and
the auditor must answer shareholders questions to the
extent necessary for the exercise of shareholders rights
and subject to prevailing business secrets or other material
interests of Weatherford-Switzerland.
In addition, if the shareholders inspection and
information rights as outlined above prove to be insufficient,
any shareholder may propose to the general meeting of
shareholders that specific facts be examined by a special
commissioner in a special investigation. If the general meeting
of shareholders approves the proposal, Weatherford-Switzerland
or any shareholder may, within 30 calendar days after the
general meeting of shareholders, request the court at
Weatherford-Switzerlands registered office to appoint a
special commissioner. If the general meeting of shareholders
rejects the request, one or more shareholders representing at
least 10% of the share capital or holders of registered shares
in an aggregate par value of at least two million Swiss francs
may request the court to appoint a special commissioner. The
court will issue such an order if the petitioners can credibly
establish that the board of directors, any member of the board
or an officer of Weatherford-Switzerland infringed the law or
Weatherford-Switzerlands articles of association and
thereby damaged the company or the shareholders. The costs of
the investigation would generally be allocated to
Weatherford-Switzerland and only in exceptional cases to the
petitioners.
Transfer
and Registration of Shares
Weatherford-Bermuda. Under
Weatherford-Bermudas bye-laws, its board may in its
absolute discretion refuse to register the transfer of a share
which is not fully paid. The Board shall refuse to register a
transfer unless all applicable consents, authorizations and
permissions of any governmental body or agency in Bermuda have
been obtained. If the board refuses to register a transfer of
any share, the Secretary shall, within three months after the
date on which the transfer was lodged with Weatherford-Bermuda,
send to the transferor and transferee notice of the refusal.
Weatherford-Bermudas bye-laws also expressly provide for
the issuance of fractional shares.
Weatherford-Switzerland. No restrictions apply
to the transfer of Weatherford-Switzerland registered shares.
Weatherford-Switzerlands share register will initially be
kept by American Stock Transfer & Trust Company,
LLC, which acts as transfer agent and registrar. The share
register reflects only record owners of Weatherford-Switzerland
shares. Swiss law does not recognize fractional share interests.
Rights
upon Liquidation
Weatherford-Bermuda. In the event of
Weatherford-Bermudas liquidation, dissolution or winding
up, the holders of its common shares are entitled to share
equally and ratably in Weatherford-Bermudas assets, if
any, remaining after the payment of all of
Weatherford-Bermudas debts and liabilities, subject to any
liquidation preference on any issued and outstanding preference
shares.
Weatherford-Switzerland. Weatherford-Switzerlands
duration is unlimited. Weatherford-Switzerland may be dissolved
at any time with the approval of shareholders holding two-thirds
of the voting rights and a majority of the par value of the
registered shares represented at a general meeting. Dissolution
by court order is possible if Weatherford-Switzerland becomes
bankrupt, or for cause at the request of shareholders holding at
least 10% of Weatherford-Switzerlands share capital. Under
Swiss law, any surplus arising out of liquidation, after the
settlement of all claims of all creditors, will be distributed
to shareholders in proportion to the
paid-up par
value of registered shares held, subject to Swiss withholding
tax requirements.
Enforcement
of Civil Liabilities Against Foreign Persons
Weatherford-Bermuda. The rights of
shareholders of a Bermuda company are governed by Bermuda law
and the companys memorandum of association and bye-laws.
If some of the companys directors are not residents of the
United States, or a substantial portion of its assets are
located outside the United States, it may be difficult to effect
service of process on those persons in the United States or to
enforce in the United States judgments obtained in
U.S. courts against the company or those directors based on
the civil liability provisions
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of the U.S. securities laws. It is doubtful whether courts
in Bermuda will enforce judgments obtained in other
jurisdictions, including the United States, against a Bermuda
companys directors or officers under the securities laws
of those jurisdictions or entertain actions in Bermuda against a
Bermuda companys directors or officers under the
securities laws of other jurisdictions.
Weatherford-Switzerland. Switzerland and the
United States do not have a treaty providing for reciprocal
recognition and enforcement of judgments in civil and commercial
matters. The recognition and enforcement of a judgment of the
courts of the United States in Switzerland is governed by the
principles set forth in the Swiss Federal Act on Private
International Law. This statute provides in principle that a
judgment rendered by a non-Swiss court may be enforced in
Switzerland only if:
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the foreign court had jurisdiction pursuant to the Swiss Federal
Act on Private International Law;
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the judgment of such foreign court has become final and
non-appealable;
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no reason for refusal in the sense of Article 27 Swiss
Federal Act on Private International Law is given (in
particular, but not limited to, the decision does not contravene
Swiss public policy); and
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the court procedures and the service of documents leading to the
judgment were in accordance with the due process of law, legal
precedent and similar requirements.
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THE
SHAREHOLDERS MEETING
We are furnishing this proxy statement to our shareholders in
connection with the solicitation of proxies by our board of
directors for use at the shareholders meeting to consider the
Scheme of Arrangement and any adjournment or postponement of
that meeting.
Time,
Place and Date
The shareholders meeting will be held
on ,
2009 at 9:00 a.m., local time, at 515 Post Oak Blvd.,
Room 604, Houston, Texas.
Purpose
of the Meeting
At the meeting, Weatherford-Bermudas board of directors
will ask the shareholders to vote to approve:
1. the Scheme of Arrangement attached as Annex B to
this proxy statement, pursuant to which each shareholder of
Weatherford-Bermuda will transfer all of their common shares to
Weatherford-Switzerland solely in exchange for (through the
Nominee on behalf and for the account of the shareholders) the
same number of shares of Weatherford-Switzerland;
2. a motion to adjourn the meeting to a later date to
solicit additional proxies if there are insufficient votes at
the time of the meeting to approve the Scheme of
Arrangement; and
3. any other matters that properly come before the meeting
and any adjournments or postponements of the meeting.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
PROPOSALS AND UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS
VOTE FOR THE PROPOSALS.
Record
Date; Voting Rights; Quorum; Vote Required for
Approval
The board has fixed the close of business on December 15,
2008 as the record date for the shareholders meeting. Only
holders of record of Weatherford-Bermuda common shares on the
record date are entitled to notice of and to vote at the meeting
or any adjournment or postponement of the meeting. You will not
be the holder of record of shares that you hold in street
name. Instead, your bank, broker or other nominee will be
the holder of record of such shares. On the record date,
approximately 728.7 million Weatherford-Bermuda common
shares were issued and entitled to be voted at the meeting,
including 41.0 million shares held by
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subsidiaries of Weatherford-Bermuda. Although shares held by
our subsidiaries may be counted for purposes of determining
whether a quorum is present, we abstain from voting these shares.
Each Weatherford-Bermuda common share entitles the holder to one
vote on each proposal. Two persons or more present in person at
the start of the meeting representing a majority of the total
issued and outstanding voting shares of Weatherford-Bermuda
throughout the meeting constitutes a quorum for a meeting of
shareholders under Bermuda law. Abstentions and broker
non-votes will be counted as present for purposes of
determining whether there is a quorum at the meeting.
Assuming the presence of a quorum at the meeting, the Scheme of
Arrangement (Proposal 1) must be approved by the
affirmative vote of a majority in number of shareholders present
and voting either in person or by proxy at the meeting
representing at least three fourths in value of the shareholders
present and voting either in person or by proxy at the meeting,
and the adjournment proposal (Proposal 2) requires the
affirmative vote of holders of Weatherford-Bermuda common shares
representing at least a majority of shares voted on the matter.
Our directors and executive officers have indicated that they
intend to vote their shares in favor of the proposals. On the
record date, our directors and executive officers and their
affiliates beneficially owned approximately 1.8 percent of
the issued and outstanding Weatherford-Bermuda common shares.
No
Appraisal Rights
Under Bermuda law, none of the shareholders of
Weatherford-Bermuda has any right to an appraisal of the value
of their shares or payment for them in connection with the
redomestication.
Proxies
A proxy card is being sent to each shareholder as of the record
date for the meeting. If you are a record shareholder, you may
authorize the persons named on the proxy card to vote your
shares according to your instructions by completing, signing and
returning your proxy card. You may also authorize the persons
named on the proxy card to vote your shares via the Internet at
the Internet address of www.voteproxy.com, or
telephonically by calling 1-800-PROXIES
(1-800-776-9437).
Please have your proxy card available if you decide to appoint a
proxy by the Internet or by telephone because the proxy card
contains more detailed instructions. Proxies submitted by
Internet or telephone must be received by
11:59 p.m. New York time
on ,
2009. If you give your proxy by the Internet or telephone,
please do not mail your proxy card. Shareholders who hold their
shares through a broker or other nominee (in street
name) must vote their shares in the manner prescribed by
their broker or other nominee
If you have timely submitted properly executed a proxy card or
provided your voting instructions by telephone or on the
Internet and clearly indicated your votes, your shares will be
voted as indicated. If you have timely submitted properly
executed a proxy card or appointed a proxy by telephone or on
the Internet and have not clearly indicated your votes, your
shares will be voted FOR the proposals. If any
other matters properly come before the meeting, the persons
named in the proxy card or appointed by telephone or on the
Internet will vote the shares represented by all properly
executed/submitted proxies in accordance with their best
judgment, unless authority to do so is withheld in the proxy.
You may abstain on any or all of the proposals by marking
ABSTAIN with respect to any or all of the proposals.
Under NYSE rules, brokers who hold shares in street name for
customers have the authority to vote on routine
proposals when they have not received instructions from
beneficial owners, but are precluded from exercising their
voting discretion with respect to proposals for
non-routine matters. Proxies submitted by brokers
without instructions from customers for these non-routine
matters are referred to as broker non-votes. Each of
Proposal 1 and Proposal 2 is a non-routine matter
under NYSE rules.
An abstention or broker non-vote on any of the proposals has the
effect of a vote not being cast with respect to the relevant
shares in relation to the proposal. As a consequence, such
shares will have no effect
65
when determining whether any proposal has received the required
approval of shareholders, but will be counted as present for
purposes of determining whether there is a quorum at the meeting.
You may revoke your proxy at any time prior to its exercise by:
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giving written notice of the revocation to our Secretary;
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appearing at the meeting, notifying our Secretary and voting in
person;
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revoking the proxy by telephone or the Internet; or
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properly completing and signing a later-dated proxy and
delivering it to our Secretary at or before the meeting.
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Your presence without voting at the meeting will not
automatically revoke your proxy, and any revocation during the
meeting will not affect votes previously taken. If you hold your
shares in the name of a bank, broker or other nominee, you
should follow the instructions provided by your bank, broker or
nominee in revoking your previously granted proxy.
If you do not appoint a proxy and you do not vote at a meeting,
you will still be bound by the outcome of that meeting. You are
therefore strongly urged to attend and vote at the meeting in
person or by proxy.
The accompanying proxy is being solicited on behalf of our board
of directors. We will bear the expenses of preparing, printing
and mailing the proxy materials used in the solicitation. In
addition to solicitation by mail, we will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries
to send the proxy materials to beneficial owners, and we will,
upon request, reimburse those brokerage houses and custodians
for their reasonable related expenses. We have retained
Georgeson Shareholder Communications Inc. for a fee of $8,000,
plus expenses, to assist us in soliciting proxies from our
shareholders and to verify certain records related to the
solicitations. We or our proxy solicitor may solicit the return
of proxies by personal interview, mail, telephone, facsimile,
Internet or other means of electronic transmission. The extent
to which this will be necessary depends upon how promptly
proxies are returned. We urge you to send in your proxy without
delay.
66
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
This table shows information for each person known by us to
beneficially own 5% or more of the outstanding common shares of
Weatherford-Bermuda as of December 15, 2008.
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Percentage of
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Name and Address of Beneficial Owner
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Number of Shares(1)
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Outstanding Shares(2)
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ClearBridge Advisors, LLC(3)
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68,175,662
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9.9
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%
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Smith Barney Fund Management LLC
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399 Park Avenue
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New York, New York 10022
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FMR LCC(4)
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36,791,638
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5.3
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%
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Edward C. Johnson 3d
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82 Devonshire Street
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Boston, Massachusetts 02109
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Wellington Management Company, LLP(5)
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35,594,068
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5.2
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%
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75 State Street
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Boston, Massachusetts 02109
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(1) |
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This information is based on information as of December 31,
2007 furnished by each shareholder or contained in filings made
by the shareholder with the Securities and Exchange Commission,
as adjusted for the two-for-one share split of our common shares
distributed on May 23, 2008 to shareholders of record on
May 9, 2008. |
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(2) |
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The percentages are calculated based on a total of 687,752,651
common shares of Weatherford-Bermuda issued and outstanding as
of December 15, 2008. |
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(3) |
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The beneficial owners have shared voting and dispositive power
over 57,918,122 shares and do not have sole voting or
dispositive power over any shares. |
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(4) |
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The beneficial owners have sole voting power over
3,580,622 shares and sole dispositive power over all
shares. The beneficial owners do not have shared voting or
dispositive power over any shares. |
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(5) |
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Voting power over 20,143,818 shares is shared. The
beneficial owner does not have sole voting power over any
shares. Dispositive power over all shares is shared. |
67
SECURITY
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
This table shows the number and percentage of common shares
beneficially owned by each of our directors, each of the
executive officers and former executive officers named in the
Summary Compensation Table that appears under Executive
Compensation in this proxy statement and all of our
directors and executive officers and the former executive
officers as a group. Share ownership information of our
directors and current executive officers is as of
December 15, 2008, and the percentages of ownership are
calculated based on a total of 687,752,651 common shares issued
and outstanding as of December 15, 2008. Share ownership
information of our former executive officers is based on
information obtained from the most recent publicly available
filings with the Securities and Exchange Commission made by or
on behalf of those former executive officers and corporate
records, as adjusted for the two-for-one share split of our
common shares distributed on May 23, 2008 to shareholders
of record on May 9, 2008. Each person has sole voting and
investment power for the shares shown below, unless otherwise
noted.
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Amount and Nature of Shares
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Beneficially Owned
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Percentage of
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Number of
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Right to
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Outstanding
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Name
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Shares Owned
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Acquire(1)
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Shares
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Bernard J. Duroc-Danner(2)
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1,372,453
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2,243,738
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*
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Nicholas F. Brady(3)
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770,064
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5,216
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*
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David J. Butters(4)
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226,988
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364,422
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*
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William E. Macaulay(5)
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361,732
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864,733
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*
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Robert B. Millard(6)
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638,730
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862,785
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*
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Robert K. Moses, Jr.(7)
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557,264
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10,842
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*
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Robert A. Rayne(8)
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51,116
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501,167
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*
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Andrew P. Becnel(9)
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294,850
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723,523
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*
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Stuart E. Ferguson(10)
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185,512
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139,761
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*
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Burt M. Martin(11)
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384,032
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485,014
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*
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Keith R. Morley(12)
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212,676
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441,743
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*
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Hazel A. Brown(13)
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0
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0
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*
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E. Lee Colley, III(14)
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277,224
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0
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*
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All directors, officers and former officers as a group
(15 persons)
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5,763,155
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6,847,140
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1.8%
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(1) |
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Includes common shares that can be acquired through share
options exercisable through February 13, 2009. Also
includes common shares that can be acquired as a result of
distributions pursuant to our Non-Employee Director Deferred
Compensation Plan, our Executive Deferred Compensation Stock
Ownership Plan or our Foreign Executive Deferred Compensation
Stock Plan, as applicable, based on the number of units
allocated to each participants account as of
December 15, 2008. |
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(2) |
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Includes 19,989 shares held under our 401(k) Savings Plan,
180,824 shares held by a family limited partnership and
480,836 restricted shares that are subject to vesting schedules
and forfeiture risk. |
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(3) |
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Includes 422,344 shares held in a trust and 16,666
restricted shares that are subject to vesting schedules and
forfeiture risk. |
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(4) |
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Includes 55,088 shares held by Mr. Butters wife,
over which he has no voting or dispositive power and as to which
he disclaims beneficial ownership, and 16,666 restricted shares
that are subject to vesting schedules and forfeiture risk. |
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(5) |
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Includes 26,472 shares held by Mr. Macaulays
wife and 15,504 shares held in the name of or in trust for
Mr. Macaulays adult daughters, over which he has no
voting or dispositive power and as to which he disclaims
beneficial ownership. Also includes 16,666 restricted shares
that are subject to vesting schedules and forfeiture risk. |
68
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(6) |
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Includes 9,978 shares held by a charitable foundation
controlled by Mr. Millard and his wife, 79,252 shares
held by Mr. Millards wife, and 388,496 shares
held in trusts. Also includes 16,666 restricted shares that are
subject to vesting schedules and forfeiture risk. |
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(7) |
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Includes 16,666 restricted shares that are subject to vesting
schedules and forfeiture risk. 500,000 shares are pledged
to a bank as security. |
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(8) |
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Includes 16,666 shares that are subject to vesting
schedules and forfeiture risk. Excludes 1,640,000 shares
beneficially owned by LMS Capital, of which Mr. Rayne
serves as Chief Executive Officer and director. Mr. Rayne
disclaims beneficial ownership of all of the shares beneficially
owned by LMS Capital. |
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(9) |
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Includes 218,606 restricted shares that are subject to vesting
schedules and forfeiture risk. |
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(10) |
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Includes 114,164 restricted share units that are subject to
vesting schedules and forfeiture risk. |
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(11) |
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Includes 238,886 restricted shares that are subject to vesting
schedules and forfeiture risk. |
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(12) |
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Includes 139,164 restricted shares that are subject to vesting
schedules and forfeiture risk. |
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(13) |
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Information based on a Form 4 filed on behalf of
Ms. Brown on February 1, 2007 and information provided
by Ms. Brown, as adjusted for the two-for-one share split
of our common shares distributed on May 23, 2008 to
shareholders of record on May 9, 2008. |
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(14) |
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Information based on a Form 4 filed on behalf of
Mr. Colley on June 29, 2007 and information provided
by Mr. Colley, as adjusted for the two-for-one share split
of our common shares distributed on May 23, 2008 to
shareholders of record on May 9, 2008. |
69
MARKET
PRICE AND DIVIDEND INFORMATION
The following table presents the high and low sales prices of
Weatherford-Bermuda common shares for the periods indicated, as
reported on the NYSE composite tape. Our board of directors
approved a two-for-one share split of our common shares in the
form of a bonus issue, i.e., share dividend, to
shareholders of record on May 9, 2008, which was
distributed on May 23, 2008. All prices presented in the
following table have been adjusted to give retroactive effect to
the share split. No cash dividends were declared on
Weatherford-Bermuda common shares during the periods presented
in the table.
Weatherford-Bermudas common shares are listed on the NYSE
under the symbol WFT. As of December 15, 2008
the record date for determining holders of Weatherford-Bermuda
common shares, there
were holders of
record of Weatherford-Bermuda common shares.
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Price of Weatherford-Bermuda
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Common Shares
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Calendar Year
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High
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Low
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2006
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First quarter
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$
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23.10
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$
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18.25
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Second quarter
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|
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29.36
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22.02
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Third quarter
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25.85
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18.54
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Fourth quarter
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23.52
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19.12
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2007
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First quarter
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$
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23.51
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$
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17.95
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Second quarter
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29.52
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22.52
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Third quarter
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35.50
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24.31
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Fourth quarter
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36.11
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28.18
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2008
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First quarter
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$
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36.82
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$
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25.91
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Second quarter
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|
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49.98
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34.96
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Third quarter
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|
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49.98
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|
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22.26
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Fourth quarter (through December 17, 2008)
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24.69
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7.75
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On December 10, 2008, the last full trading day before we
announced the proposed redomestication, our common shares closed
at $11.02 per share. Shareholders are encouraged to obtain
recent price quotes for our common shares.
We intend to make application so that, immediately following the
redomestication, the shares of Weatherford-Switzerland will be
listed on the NYSE under the symbol WFT, the same
symbol under which the Weatherford-Bermuda common shares are
currently listed.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of Weatherford-Bermuda
appearing in Weatherford-Bermudas Annual Report
(Form 10-K)
for the year ended December 31, 2007 (including a schedule
appearing therein), and the effectiveness of
Weatherford-Bermudas internal control over financial
reporting as of December 31, 2007, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon, and
incorporated herein by reference.
LEGAL
MATTERS
Certain Swiss tax matters will be passed upon for us by
Baker & McKenzie Geneva, Switzerland.
Baker & McKenzie LLP, Houston, Texas, will pass upon
certain U.S. federal income tax consequences of the
Transaction.
70
FUTURE
SHAREHOLDER PROPOSALS
Shareholder proposals to be included in the proxy materials for
our Annual General Meeting to be held in 2009 must be received
by us by December 29, 2008, and must otherwise comply with
Rule 14a-8
promulgated by the Securities and Exchange Commission to be
considered for inclusion in our proxy statement for that year.
If you do not comply with
Rule 14a-8,
we will not be required to include the proposal in our proxy
statement and the proxy card mailed to our shareholders.
If you desire to bring a matter before an annual meeting and the
proposal is submitted outside the process of
Rule 14a-8,
you must follow the procedures set forth in
Weatherford-Switzerlands articles of association, if the
Scheme of Arrangement has become effective, or
Weatherford-Bermudas memorandum of association and
bye-laws, if the Scheme of Arrangement has not become effective.
You may obtain a copy of the memorandum of association or
bye-laws of Weatherford-Bermuda or the articles of association
or organizational regulations of Weatherford-Switzerland, in
which these procedures are set forth, upon written request to
our Investor Relations Department at 515 Post Oak Blvd.,
Houston, Texas 77027.
Weatherford-Switzerlands proposed articles of association
provide generally that, if you desire to propose any business at
an annual meeting, you must give us written notice at least 60
and no more than 90 calendar days prior to the scheduled and
announced date of the next general meeting of shareholders. The
deadline under Weatherford-Switzerlands articles of
association for submitting proposals is expected to be
April 3, 2009 for the 2009 annual meeting. The request
must specify the relevant agenda items and motions, together
with evidence of the required shareholdings recorded in the
share register, as well as any other information as would be
required to be included in a proxy statement pursuant to the
rules of the SEC.
If the Scheme of Arrangement has not become effective, you may
use the procedures set forth in Weatherford-Bermudas
bye-laws to have a proposal that is not included in our proxy
materials brought before the 2009 annual general meeting for
consideration by our shareholders. Our bye-laws set forth
procedures to be followed by shareholders or beneficial owners
of our shares who wish to nominate candidates for election to
our board of directors or bring other business before an annual
or special general meeting of shareholders. If a shareholder
desires to nominate candidates for election to our board of
directors or bring other business before our 2009 annual general
meeting, we must receive notice from the shareholder or
beneficial owner not less than 60 days nor more than
90 days prior to June 2, 2009 (no earlier than
March 4, 2009 and no later than April 3, 2009).
However, if our 2009 annual general meeting is called for a date
that is not within 60 days before or after June 2,
2009, we must receive such notice not later than the
7th day following the day on which notice of the date of
the 2009 annual general meeting was mailed or public disclosure
of the date of the 2009 annual general meeting was made,
whichever occurs first. Any such notice from a shareholder or
beneficial owner also must contain the information specified in
our bye-laws, including, in the case of a nomination, certain
background information, and in the case of other business, a
description of such business and reasons for conducting such
business at the annual general meeting. Additionally, under
Bermuda law, shareholders holding not less than 5% of the total
voting rights or 100 or more shareholders together may require
us to give notice to our shareholders of a proposal which may
properly be moved and is intended to be moved at an annual
general meeting. Generally, notice of such a proposal must be
received by us at our registered office in Bermuda (located at
Clarendon House, 2 Church Street, Hamilton HM11, Bermuda) not
less than six weeks before the date of the meeting and must
otherwise comply with the requirements of Bermuda law.
Any shareholder proposal, whether or not to be included in our
proxy materials, must be sent to our Secretary at 515 Post Oak
Blvd., Houston, Texas 77027.
71
HOUSEHOLDING
The SEC permits a single proxy statement to be sent to any
household at which two or more shareholders reside if they
appear to be members of the same family. Each shareholder
continues to receive a separate proxy card. This procedure,
referred to as householding, reduces the volume of duplicate
information shareholders receive and reduces mailing and
printing expenses. A number of brokerage firms have instituted
householding.
As a result, if you hold your shares through a broker and you
reside at an address at which two or more shareholders reside,
you will likely be receiving only one proxy statement unless any
shareholder at that address has given the broker contrary
instructions. However, if any such beneficial shareholder
residing at such an address wishes to receive a separate proxy
statement in the future, or if any such beneficial shareholder
that elected to continue to receive separate proxy statement
wishes to receive a single proxy statement in the future, that
shareholder should contact their broker or send a request to our
Investor Relations Department at 515 Post Oak Blvd., Houston,
Texas 77027. Telephone requests may be directed to
(713) 693-4000.
We will deliver, promptly upon written or oral request to our
Investor Relations Department, a separate copy of this proxy
statement to a beneficial shareholder at a shared address to
which a single copy of the documents was delivered.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SECs public reference rooms
located at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms. These SEC
filings are also available to the public on the SECs web
site at:
http://www.sec.gov.
Copies of these reports, proxy statements and other
information can also be inspected at the offices of the NYSE at
20 Broad Street, New York, New York 10005.
Our web site is located at
http://www.weatherford.com.
Our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and other filings with the SEC are available, free of charge,
through our web site, as soon as reasonably practicable after
those reports or filings are electronically filed with or
furnished to the SEC. Information on our web site or any other
web site is not incorporated by reference in this proxy
statement and does not constitute a part of this proxy statement.
SEC rules and regulations permit us to incorporate by
reference the information we file with the SEC. This means
that we can disclose important information to you by referring
you to those documents. Some documents or information, such as
the information provided under Items 2.02 or 7.01 of
Form 8-K,
are deemed furnished and not filed in accordance with SEC rules.
None of those documents and none of that information is
incorporated by reference into this proxy statement. The
information incorporated by reference is considered to be part
of this proxy statement. Information that we file later with the
SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and any
filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act (excluding any
information furnished but not filed)
following the date of this document, but prior to the date of
the shareholder meeting. The documents incorporated by reference
are:
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|
|
|
|
Our annual report on
Form 10-K
for the year ended December 31, 2007;
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|
|
|
Our quarterly reports on
Form 10-Q
for the quarters ended March 31, 2008, June 30, 2008
and September 30, 2008; and
|
|
|
|
Our current reports on
Form 8-K
filed with the SEC on February 8, 2008, March 6, 2008,
March 18, 2008, March 25, 2008, April 21, 2008
(Item 8.01 only), October 24, 2008, December 2,
2008 and December 10, 2008 (Item 1.01 only).
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You can request a free copy of the above filings or any filings
subsequently incorporated by reference into this proxy statement
by writing or calling:
Weatherford International Ltd.
515 Post Oak Blvd.
Houston, Texas 77027
Attn: Investor Relations
Telephone requests may be directed to
(713) 693-4000.
We have not authorized anyone to give any information or make
any representation about the Scheme of Arrangement or about us
that differs from or adds to the information in this proxy
statement or in the documents incorporated by reference.
Therefore, you should not rely upon any information that differs
from or is in addition to the information contained in this
proxy statement or in the documents incorporated by reference.
The information contained in this proxy statement speaks only as
of the date on the cover, unless the information specifically
indicates that another date applies.
73
Annex A
SHARE
EXCHANGE AGREEMENT
by and between
WEATHERFORD INTERNATIONAL LTD.,
a company incorporated under the laws of Bermuda
and
WEATHERFORD INTERNATIONAL LTD.,
a Swiss joint-stock corporation
Dated as of December 10, 2008
TABLE OF
CONTENTS
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1. SHARE EXCHANGE BY WAY OF SCHEME OF ARRANGEMENT
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A-1
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1.1 EXCHANGE
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1.2 SCHEME OF ARRANGEMENT; EFFECTIVE TIME
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2. EXCHANGE AND ISSUANCE OF SHARES
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2.1 Exchange of Shares and Issuance of Shares in the
SHARE Exchange
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A-2
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2.2 EMPLOYEE BENEFIT AND COMPENSATION PLANS AND
AGREEMENTS
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A-2
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2.3 Warrant
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A-3
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3. CONDITIONS PRECEDENT
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3.1 Conditions To Each Partys Obligation To
Effect The SHARE Exchange
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4. TERMINATION, AMENDMENT AND WAIVER
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4.1 Termination
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4.2 Effect of Termination
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4.3 Amendment
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4.4 Waiver
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5. COVENANTS
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5.1 Rule 16b-3
Approval
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5.2 Indemnification
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5.3 Guarantees
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6. GENERAL PROVISIONS
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6.1 Assignment; Binding Effect; Benefit
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6.2 Entire Agreement
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6.3 Governing Law
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6.4 Counterparts
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6.5 Headings
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6.6 Severability
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EXHIBIT A
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A-9
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EXHIBIT B
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A-10
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A-i
SHARE
EXCHANGE AGREEMENT
This Share Exchange Agreement (this
Agreement) is made as of December 10,
2008 by and between Weatherford International Ltd., an exempted
company incorporated with limited liability under the laws of
Bermuda with registration number 31959
(Weatherford-Bermuda), and Weatherford
International Ltd., a corporation incorporated under the laws of
Switzerland, with its registered office in the Canton of Zug,
Switzerland, and with registered number CH-170.3.032.888-3, and
a direct, wholly-owned subsidiary of Weatherford-Bermuda
(Weatherford-Switzerland). Each of
Weatherford-Bermuda and Weatherford-Switzerland are referred to
in this Agreement individually as a party and
collectively as the parties.
PRELIMINARY
STATEMENTS
A. The Boards of Directors of each of Weatherford-Bermuda
and Weatherford-Switzerland have determined that it is in the
best interests of their respective shareholders to enter into a
transaction (the Share Exchange) by way of a
scheme of arrangement under Section 99 of the Companies Act
1981 of Bermuda (the Companies Act) in its
present form or with or subject to any modifications, additions
or conditions that are consented to by Weatherford-Bermuda and
that the Supreme Court of Bermuda (the Court)
may approve, impose or permit (the Scheme)
whereby Weatherford-Switzerland will become the parent holding
company of Weatherford-Bermuda as a result of the exchange of
Weatherford-Bermuda common shares for Weatherford-Switzerland
registered shares upon the terms set forth in this Agreement or
as otherwise required in the Scheme or under Swiss law.
B. The Boards of Directors of each of Weatherford-Bermuda
and Weatherford-Switzerland have approved the Share Exchange
upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding common share of
US$1.00 par value in the capital of Weatherford-Bermuda (a
Weatherford-Bermuda Common Share), will be
exchanged (based on an exchange rate determined by reference to
an internationally recognized exchange rate at or about the
Effective Time (as defined below), as determined by
Weatherford-Bermuda) for one share with a par value in Swiss
francs equivalent to US$1.00 per share in the capital of
Weatherford-Switzerland (a Registered Share).
C. The Scheme requires the affirmative vote of a majority
in number of the shareholders of Weatherford-Bermuda present and
voting either in person or by proxy at the meeting, representing
at least three fourths in value of the shareholders present and
voting either in person or by proxy at the meeting.
D. The parties intend for the Share Exchange to qualify as
a reorganization under Section 368(a)(1)(B)
and/or an
exchange under Section 351 of the U.S. Internal
Revenue Code of 1986, as amended (the Code),
and the Treasury regulations promulgated thereunder (the
Treasury Regulations).
E. The parties further intend for this Agreement to
constitute a plan of reorganization within the meaning of
Section 368 of the Code and the Treasury Regulations.
F. Capitalized terms in this Agreement have the meanings
set forth herein.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
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1.
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SHARE
EXCHANGE BY WAY OF SCHEME OF ARRANGEMENT
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1.1 EXCHANGE
In the Share Exchange, at the Effective Time as a result of the
operation of the Companies Act and the Scheme, and pursuant to
and in accordance with applicable Swiss law, each issued and
outstanding Weatherford-Bermuda Common Share will be exchanged
for the right to receive one Registered Share and
Weatherford-Switzerland will become the parent holding company
of Weatherford-Bermuda as described in Section 2.1.
A-1
1.2 SCHEME OF ARRANGEMENT; EFFECTIVE TIME
As soon as practicable after the date hereof and in accordance
with this Agreement, Weatherford-Bermuda will (i) issue
proceedings requesting the Court to summon such meetings of the
holders of the Weatherford-Bermuda Common Shares,
(ii) convene such meetings to obtain the approval required
under Section 99(2) of the Companies Act and, subject to
such approval being obtained, (iii) file a petition and
seek the sanction of the Share Exchange pursuant to
Section 99 of the Companies Act on the hearing of the
petition and file such other documents as are required to be
duly filed with the Court to effect the Share Exchange. As soon
as practicable after the date of this Agreement and in
accordance with this Agreement, Weatherford-Bermuda and
Weatherford-Switzerland will take any and all actions necessary
to effect the Share Exchange. Weatherford-Switzerland shall
undertake to the Court that, at or promptly after the Effective
Time, it shall issue, subject to the provisions of this
Agreement, the Registered Shares pursuant to
Section 2.1(a). As soon as practicable following the
satisfaction or waiver (subject to applicable laws) of the
conditions set forth in this Agreement, if this Agreement is not
terminated prior thereto as provided in Section 4.1,
Weatherford-Bermuda shall cause the order of the Court
sanctioning the Share Exchange pursuant to Section 99 of
the Companies Act (the Court Order) to be
filed with the Registrar of Companies of Bermuda. The Scheme
shall become effective as a matter of Bermuda law on the date
and time at which an office copy of the Court Order shall have
been delivered to the Registrar of Companies in Bermuda for
registration (the Effective Time), while it
shall become effective as a matter of Swiss law on the date and
time at which the application to register the capital increase
covering and including the Registered Shares shall be registered
with the Register of Commerce of Zug, Switzerland.
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2.
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EXCHANGE
AND ISSUANCE OF SHARES
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2.1 EXCHANGE OF SHARES AND ISSUANCE OF SHARES IN THE
SHARE EXCHANGE
(a) At the Effective Time, by virtue of the Scheme, each
holder (a Scheme Shareholder) of
Weatherford-Bermuda Common Shares issued and outstanding
immediately prior to the Effective Time (Scheme
Shares) (including any affiliates and subsidiaries of
Weatherford-Bermuda holding any Weatherford-Bermuda Common
Shares) shall have the right to receive one validly issued and
fully paid Registered Share in exchange for each Scheme Share.
All Scheme Shares shall be transferred to
Weatherford-Switzerland. At the Effective Time, the Scheme
Shareholders shall thereafter cease to have any rights with
respect to such Weatherford-Bermuda Common Shares, except the
right to receive, without interest, Registered Shares in
accordance with this Section 2.1.
(b) At or about the Effective Time, Weatherford-Switzerland
shall issue and allot to American Stock Transfer &
Trust Company, LLC (or such other person or entity as
Weatherford-Bermuda may determine in its sole discretion) as
nominee acting on behalf and for the account of the Scheme
Shareholders (the Nominee) one new validly
issued and fully paid Registered Share in accordance with
applicable Swiss law as consideration and in exchange for each
Scheme Share.
(c) Immediately thereafter and as a result thereof, the
Nominee shall transfer and allot to each Scheme Shareholder one
new Registered Share as consideration and in exchange for each
Scheme Share. The Registered Shares shall be issued in
uncertificated book-entry form.
As a result of the foregoing, Weatherford-Bermuda will become a
wholly owned subsidiary of Weatherford-Switzerland.
2.2 EMPLOYEE BENEFIT AND COMPENSATION PLANS AND
AGREEMENTS
(a) Each of Weatherford-Bermuda and Weatherford
International, Inc., a Delaware corporation and a wholly owned
subsidiary of Weatherford-Bermuda
(Weatherford-Delaware), maintains and
sponsors a variety of equity compensation-related plans, and
certain other plans, agreements, awards and arrangements,
providing for the grant or award to its directors, officers and
employees and other persons (collectively, the Stock
Plans) of (i) options, restricted shares or other
rights to purchase or receive Weatherford-Bermuda Common Shares
or (ii) the right to receive benefits or other amounts by
reference to Weatherford-Bermuda Common Shares (individually, an
Award and collectively, the
Awards). Weatherford-Delaware currently
maintains
A-2
and sponsors the plans listed on Exhibit A attached
hereto (the Delaware Stock Plans) and
Weatherford-Bermuda currently maintains and sponsors the plans
listed on Exhibit B attached hereto (the
Bermuda Stock Plans). At the Effective Time,
the Delaware Stock Plans and Bermuda Stock Plans, together with
any other employee benefit and compensation plans and agreements
of Weatherford-Bermuda or its affiliates as determined by the
management of Weatherford-Bermuda in its sole discretion, shall
be assumed
and/or
adopted by and become plans and agreements of
Weatherford-Switzerland (collectively, the Assumed
Plans); provided, however, that
Weatherford-Delaware (or other applicable Weatherford-Bermuda
affiliate) shall continue to maintain
and/or
sponsor the Stock Plans further described on
Exhibit A or Exhibit B as continuing to
be maintained
and/or
sponsored by Weatherford-Delaware (or other applicable
Weatherford-Bermuda affiliate). Weatherford-Switzerland shall,
pursuant to the terms hereof and thereof, assume the rights and
obligations of Weatherford-Bermuda under the Assumed Plans.
(b) To the extent any Stock Plan (whether or not an Assumed
Plan) provides for the issuance, acquisition, holding or
purchase of, or otherwise relates to or references,
Weatherford-Bermuda Common Shares, then, pursuant to the terms
hereof and thereof, after the Effective Time, such Stock Plan
shall be deemed to provide for the issuance, acquisition,
purchase or holding of, or otherwise relate to or reference,
Registered Shares (or benefits or other amounts determined in
accordance with the Assumed Plans). In furtherance thereof, all
references in the Stock Plans to Weatherford-Bermuda or its
predecessors shall be amended to be references to
Weatherford-Switzerland. Such amendments deemed necessary or
appropriate by Weatherford-Bermuda and Weatherford-Switzerland
to effect the Scheme and related transactions, including to
facilitate the assignment to, and assumption
and/or
adoption by, Weatherford-Switzerland of the Assumed Plans or the
actions contemplated hereby (subject to this
Section 2.2), shall be adopted and entered into with
respect to the Assumed Plans or any other Stock Plan. Such
assumption
and/or
adoption may take place, among others, by execution of an
Assumption and Assignment Agreement between Weatherford-Bermuda
and Weatherford-Switzerland. The vote of the Scheme Shareholders
at the meeting of the holders of Weatherford-Bermuda Common
Shares convened at the direction of the Court at which the
Scheme will be voted upon shall, pursuant to the terms hereof
and of the Stock Plans, be deemed to satisfy any requirement of
shareholder approval of such amendments and the assignment to,
and assumption
and/or
adoption by, Weatherford-Switzerland of the Assumed Plans
and/or
Awards or the actions contemplated hereby with respect to any
other Stock Plan.
(c) All outstanding Awards or any other benefits available
which are based on Weatherford-Bermuda Common Shares and which
have been granted under the Stock Plans (including, as
applicable, any Weatherford-Bermuda Common Shares exchanged
pursuant to Section 2.1) shall remain outstanding
and, after the Effective Time, pursuant to the terms thereof, be
deemed to provide for the issuance, acquisition, purchase or
holding of, or otherwise relate to or reference, Registered
Shares. In furtherance thereof, as of the Effective Time, all
references to Weatherford-Bermuda or any of its predecessors in
any Award or any related document or agreement shall be deemed
to be references to Weatherford-Switzerland. Each Award assumed
by Weatherford-Switzerland shall thereafter, pursuant to the
terms thereof, be exercisable, issuable, held, available or vest
upon the same terms and conditions as under the applicable Stock
Plan (including Assumed Plans) and the applicable Award document
or agreement issued thereunder, except that upon the exercise,
issuance, holding, availability or vesting of such Awards,
Registered Shares shall be issuable or available, or benefits or
other amounts determined, in lieu of Weatherford-Bermuda Common
Shares. For the avoidance of doubt, the number of Registered
Shares issuable or available upon the exercise or issuance of an
Award immediately after the Effective Time and, if applicable,
the exercise price of each such Award, shall be the same number
of shares and the exercise price as in effect immediately prior
to the Effective Time. Each Award that is a stock option shall
be assumed by Weatherford-Switzerland in such manner that
Weatherford-Switzerland would be a corporation assuming a
stock option in a transaction to which section 424(a)
applies within the meaning of Section 424 of the
Code, were Section 424 of the Code applicable to such
Award, with regard to the requirements of Treasury Regulation
Section 1.424-1(a)(5)(iii)
for options that are intended to qualify under Section 422
of the Code, and with regard to the requirements of Treasury
Regulation Section 1.409A-1(b)(5)(v)(D)
for other options.
2.3 WARRANT
At the Effective Time, the outstanding warrants to purchase
Weatherford-Bermuda Common Shares issued pursuant to the Amended
and Restated Warrant Agreement dated July 12, 2006 between
Weatherford-Bermuda
A-3
and Shell Technology Ventures Inc. (as assigned to other
parties) (the Warrant Agreement) shall,
pursuant to the terms thereof, be assumed by, and the Warrant
Agreement and all of the rights and obligations of
Weatherford-Bermuda thereunder shall immediately be assigned to,
Weatherford-Switzerland in accordance with the terms of the
Warrant Agreement.
3.1 CONDITIONS TO EACH PARTYS OBLIGATION TO EFFECT
THE SHARE EXCHANGE
The respective obligation of each party to effect the Share
Exchange is subject to the satisfaction or waiver of the
following conditions:
(a) The Scheme shall have been adopted and approved by the
affirmative vote of a majority in number of the Scheme
Shareholders present and voting either in person or by proxy on
the Scheme representing at least three fourths in value of the
Scheme Shareholders present and voting either in person or by
proxy on the Scheme.
(b) The definitive proxy statement of Weatherford-Bermuda
on Schedule 14A relating to the meeting of the holders of
Weatherford-Bermuda Common Shares at which the Scheme will be
voted upon (the Proxy Statement) shall have
been filed with the U.S. Securities and Exchange Commission.
(c) None of the parties hereto shall be subject to any
decree, order or injunction of a court of competent
jurisdiction, domestic or foreign, which prohibits the
consummation of the Share Exchange.
(d) The Registered Shares to be issued in connection with
the Share Exchange shall have been authorized for listing on the
New York Stock Exchange, subject to official notice of issuance.
(e) The capital increase covering/including the Registered
Shares to be issued in connection with the Scheme shall have
been registered with the commercial register in the Canton of
Zug, Switzerland.
(f) The Scheme shall have been sanctioned by the Court and
the Court Order shall have been filed with the Registrar of
Companies of the Bermuda Islands and shall be effective.
(g) Weatherford-Bermuda shall have received an opinion from
Baker & McKenzie LLP confirming, as of the effective
date of the Share Exchange, the material U.S. federal
income tax consequences of the Share Exchange, receiving
distributions on Registered Shares, and disposing of Registered
Shares, each as described under Material Tax
Considerations U.S. Federal Income Tax
Considerations in the Proxy Statement (or such other
matters as Weatherford-Bermuda may determine).
(h) Weatherford-Bermuda shall have received an opinion from
Baker & McKenzie Geneva confirming, as of the
effective date of the Share Exchange, the matters discussed
under Material Tax Considerations Swiss Tax
Considerations in the Proxy Statement (or such other
matters as Weatherford-Bermuda may determine).
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4.
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TERMINATION,
AMENDMENT AND WAIVER
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4.1 TERMINATION
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the
shareholders of Weatherford-Bermuda or sanction of the Court of
matters presented in connection with this Agreement, by action
of the Board of Directors of Weatherford-Bermuda.
4.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in
Section 4.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on
the part of Weatherford-Bermuda or Weatherford-Switzerland.
A-4
4.3 AMENDMENT
This Agreement may be amended by the parties hereto at any time
before or after any required approval of matters presented in
connection with this Agreement by the shareholders of
Weatherford-Bermuda or sanction of such matters by the Court;
provided, however, that after any such approval or
sanction, there shall be made no amendment that by law requires
further approval by such shareholders until such further
approval has been obtained. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
the parties hereto.
4.4 WAIVER
At any time prior to the Effective Time, a party may waive
compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the
part of a party to any such waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
5.1 RULE 16B-3
APPROVAL
Weatherford-Bermuda and Weatherford-Switzerland shall take all
such steps as may be required to cause the transactions
contemplated by Section 2.1 and any other
dispositions of Weatherford-Bermuda equity securities (including
derivative securities) or acquisitions of
Weatherford-Switzerland equity securities (including derivative
securities) in connection with the Scheme by each individual who
is a director or officer of Weatherford-Bermuda or
Weatherford-Switzerland to be exempt under
Rule 16b-3
promulgated under the U.S. Securities Exchange Act of 1934,
as amended.
5.2 INDEMNIFICATION
(a) From and after the Effective Time, Weatherford-Bermuda
shall indemnify each person who is now, or has been at anytime
prior to the Effective Time, a director, officer, employee,
agent or fiduciary of
Weatherford-Bermuda
(or any subsidiary thereof) and each person who served at the
request of
Weatherford-Bermuda
as a director, officer, employee, agent or fiduciary of another
company, corporation, partnership, limited liability company,
joint venture, trust, employee benefit plan or other entity or
enterprise (each, an Indemnitee) if such
Indemnitee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit, arbitration,
alternative dispute resolution mechanism, investigation,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative and whether formal or
informal (including, but not limited to, the investigation,
defense, settlement or appeal thereof) (a
Proceeding) and whether commenced, asserted
or claimed before or after the Effective Time, including a
Proceeding brought by or in the right of Weatherford-Bermuda, by
reason of the fact that Indemnitee is or was a director,
officer, employee, agent, or fiduciary of Weatherford-Bermuda or
is or was serving at the request of Weatherford-Bermuda as a
director, officer, employee, agent, or fiduciary of any other
company, corporation, partnership, limited liability company,
joint venture, trust, employee benefit plan or other entity or
enterprise or by reason of anything done or not done by
Indemnitee in any such capacity. All reasonable expenses
incurred by Indemnitee (including attorneys fees,
retainers and advances of disbursements required of Indemnitee)
shall be paid by Weatherford-Bermuda in advance of the final
disposition of any Proceeding at the request of Indemnitee as
promptly as possible, and in any event within 20 days after
the receipt by Weatherford-Bermuda of a statement or statements
from Indemnitee requesting such advance or advances from time to
time. Indemnitees entitlement to such expenses shall
include those incurred in connection with any Proceeding by
Indemnitee seeking an adjudication or award in arbitration
pursuant to this Agreement. Such statement or statements shall
reasonably evidence the expenses incurred by Indemnitee in
connection therewith and shall include or be accompanied by an
undertaking by or on behalf of Indemnitee to repay such amount
if it is ultimately determined that Indemnitee is not entitled
to be indemnified against such expenses by Weatherford-Bermuda
as provided by this Agreement or otherwise. Notwithstanding the
foregoing or anything else to the contrary, the indemnity
provided in this Section 5.2 shall not indemnify the
Indemnitee against, or exempt the Indemnitee
A-5
from, any liability in respect of Indemnitees fraud or for
any action or inaction for which indemnification is prohibited
under Bermuda law.
(b) With respect to any such Proceeding:
(i) Weatherford-Bermuda will be entitled to participate
therein at its own expense; and (ii) except as otherwise
provided below, to the extent that it may wish,
Weatherford-Bermuda jointly with any other indemnifying party
similarly notified will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to Indemnitee.
After notice from Weatherford-Bermuda to Indemnitee of its
election so to assume the defense thereof, Weatherford-Bermuda
will not be liable to Indemnitee under this Agreement for any
legal or other expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than reasonable costs
of investigation or as otherwise provided below. Indemnitee
shall have the right to employ Indemnitees own counsel in
such Proceeding, but the fees and expenses of such counsel
incurred after notice from Weatherford-Bermuda of its assumption
of the defense thereof shall be at the expense of Indemnitee and
not subject to indemnification hereunder unless: (i) the
employment of counsel by Indemnitee has been authorized by
Weatherford-Bermuda; (ii) in the reasonable opinion of
counsel to Indemnitee there is or may be a conflict of interest
between Weatherford-Bermuda and Indemnitee in the conduct of the
defense of such Proceeding; or (iii) Weatherford-Bermuda
shall not in fact have employed counsel to assume the defense of
such action, in each of which cases, the fees and expenses of
counsel shall be at the expense of Weatherford-Bermuda. Neither
Weatherford-Bermuda nor the Indemnitee shall settle any claim
without the prior written consent of the other (which shall not
be unreasonably withheld).
(b) The parties agree that the rights to indemnification,
including provisions relating to advances of expenses incurred
in defense of any Proceeding, in the organizational documents of
Weatherford-Bermuda and similar organizational documents of its
subsidiaries with respect to matters occurring through the
Effective Time, shall survive the Scheme and shall continue in
full force and effect for a period of six years from the
Effective Time; provided, however, that all rights
to indemnification in respect of any Proceeding pending or
asserted within such period shall continue until the disposition
or resolution of such Proceeding.
(c) The rights of Indemnitees hereunder shall be in
addition to any other rights such Indemnitee may have under
(i) the bye-laws of Weatherford-Bermuda, (ii) the
articles of association or other organizational documents of
Weatherford-Switzerland, (iii) similar organizational
documents of Weatherford-Bermudas subsidiaries or the laws
of its subsidiaries jurisdictions of organization,
(iv) separate agreements (including indemnity agreements in
existence on the date hereof or entered into in the future),
(v) a vote of Weatherford-Bermudas shareholders,
(vi) a vote of Weatherford-Bermudas Board of
Directors, (vii) a vote of the Weatherford-Bermudas
directors who are not a party to a Proceeding in respect of any
Indemnitees, (viii) the laws of Bermuda or Switzerland or
(ix) otherwise. The provisions of this
Section 5.2 shall survive the consummation of the
Scheme and expressly are intended to benefit each Indemnitee.
(d) In the event Weatherford-Bermuda or any of its
successors or assigns (i) amalgamates, consolidates with or
merges into (or enters into any other business combination
with), including by way of a scheme of arrangement or a share
exchange, any other person and shall not be the continuing or
surviving corporation or entity in such amalgamation,
consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person,
then and in either such case, proper provision shall be made so
that the successors and assigns of Weatherford-Bermuda assume
the obligations set forth in this Section 5.2.
5.3 GUARANTEES
At or immediately prior to the Effective Time,
Weatherford-Switzerland agrees to guaranty the following debt of
Weatherford-Bermuda, Weatherford-Delaware and their affiliates:
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Weatherford-Bermudas 4.95% senior notes due 2013;
5.15% senior notes due 2013; 5.50% senior notes due
2016; 6.00% senior notes due 2018; 6.50% senior notes
due 2036; 7.00% senior notes due 2038; notes issued under
Weatherford-Bermudas commercial paper program; and notes
issued under Weatherford-Bermudas affiliates
commercial paper program; and
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Weatherford-Delawares 6.625% senior notes due 2011;
5.95% senior notes due 2012; 6.35% senior notes due
2017; and 6.80% senior notes due 2037; and
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Any debt outstanding or to be borrowed in the future under the
Second Amended and Restated Credit Agreement dated as of
May 2, 2006, among Weatherford-Bermuda,
Weatherford-Delaware and certain of their affiliates, JPMorgan
Chase Bank, N.A., as administrative agent, and the lender
parties thereto; the Credit Agreement, dated as of
March 19, 2008, among Weatherford-Bermuda,
Weatherford-Delaware, Deutsche Bank AG Cayman Islands Branch, as
administrative agent, and the lender parties thereto; and the
Credit Agreement, dated as of October 20, 2008, among
Weatherford-Bermuda, Weatherford-Delaware, UBS AG, Stamford
Branch, as administrative agent, and the lender parties thereto.
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6.1 ASSIGNMENT; BINDING EFFECT; BENEFIT
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by the parties hereto
(whether by operation of law or otherwise) without the prior
written consent of the other party. 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, nothing in this Agreement,
expressed or implied, is intended to confer on any person other
than the parties hereto or their respective successors,
executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except for the provisions of Section 5.2 (which may
be enforced by the beneficiaries thereof).
6.2 ENTIRE AGREEMENT
This Agreement 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.
6.3 GOVERNING LAW
Except to the extent that the laws of the jurisdiction of
organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to the Share Exchange or to matters
arising under or in connection with this Agreement, this
Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, U.S.A. without regard to its
rules of conflict of laws.
6.4 COUNTERPARTS
This Agreement may be executed by the parties hereto in separate
counterparts, including facsimile or .pdf documents, each of
which when so executed and delivered shall be an original, but
all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all
of the parties hereto.
6.5 HEADINGS
Headings of the Sections of this Agreement are for the
convenience of the parties only and shall be given no
substantive or interpretative effect whatsoever.
6.6 SEVERABILITY
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
(Remainder
of page intentionally left blank)
A-7
The parties have executed and delivered this Agreement as of the
date indicated in the first sentence of this Agreement.
WEATHERFORD INTERNATIONAL LTD.,
a company incorporated under the laws of Bermuda
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By:
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/s/ Bernard
J. Duroc-Danner
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Name: Bernard J. Duroc-Danner
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Title:
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Chief Executive Officer
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WEATHERFORD INTERNATIONAL LTD.,
a Swiss joint-stock corporation
Name: Burt M. Martin
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Title:
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Authorized Signatory
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A-8
EXHIBIT A
Delaware
Stock Plans
1. Weatherford International, Inc. Executive Deferred
Compensation Stock Ownership Plan
2. Weatherford International, Inc. Foreign Executive
Deferred Compensation Stock Plan
3. Weatherford International, Inc. 1998 Employee Stock
Option Plan
A-9
EXHIBIT B
Bermuda
Stock Plans
1. Weatherford International Ltd. Deferred Compensation
Plan for Non-Employee Directors
2. Weatherford International Ltd. 2006 Omnibus Incentive
Plan
3. Weatherford International Ltd. Restricted Share Plan
4. Stock Option Agreement dated September 8, 1998, as
amended, between Weatherford International Ltd. and each of
Sheldon B. Lubar, William E. Macaulay and Robert Millard.
5. Stock Option Agreement dated July 5, 2000 between
Weatherford International Ltd. and each of David J. Butters,
Sheldon B. Lubar, William E. Macaulay, Robert Millard and Robert
A. Rayne.
6. Stock Option Agreement dated September 26, 2001
between Weatherford International Ltd. and each of David J.
Butters, Sheldon B. Lubar, William E. Macaulay, Robert Millard
and Robert A. Rayne.
A-10
Annex B
SCHEME OF ARRANGEMENT
IN THE
SUPREME COURT OF BERMUDA
CIVIL JURISDICTION
(COMMERCIAL COURT)
2008: No. 310
IN THE MATTER OF WEATHERFORD INTERNATIONAL LTD.
and
IN THE MATTER OF THE COMPANIES ACT 1981
SCHEME OF ARRANGEMENT
(under section 99 of the Companies Act 1981)
Between
WEATHERFORD INTERNATIONAL LTD.
(an exempted company incorporated with limited liability and
registered under
the laws of Bermuda with registration number 31959)
and
THE SCHEME SHAREHOLDERS
(as hereinafter defined)
PART I
PRELIMINARY
Recitals
DEFINITIONS
A In this Scheme, unless the context otherwise
requires or unless otherwise expressly provided for, the
following expressions shall bear the following meanings:
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Allowed Proceeding |
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Any proceeding by the Scheme Shareholder to enforce its rights
under this Scheme where any party fails to perform its
obligations under this Scheme. |
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Business Day |
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Any day on which banks are open for business in Houston, Geneva
and Bermuda. |
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Companies Act |
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The Companies Act 1981 of Bermuda. |
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Effective Time |
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The date and time at which an office copy of the Order of the
Supreme Court sanctioning this Scheme and making such
facilitating orders as are appropriate pursuant to
Section 99 of the Companies Act shall have been delivered
to the Registrar of Companies in Bermuda for registration, at
which time this Scheme shall become effective. |
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Exchange Agent |
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American Stock Transfer & Trust Company or such
other party reasonably satisfactory to Weatherford. |
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Exchange Agreement |
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The Exchange Agreement among Weatherford and Weatherford
Switzerland dated as of 10 December 2008. |
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Latest Practicable Date |
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5 December 2008, being the latest date upon which it was
practicable to ascertain certain information contained herein. |
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Proceeding |
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Any process, suit, action, legal or other proceeding including
without limitation any arbitration, mediation, alternative
dispute resolution, judicial review, adjudication, demand,
execution, restraint, forfeiture, reentry, seizure, lien,
enforcement of judgment, enforcement of any security or
enforcement of any letters of credit. |
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Prohibited Proceeding |
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Any proceeding against Weatherford or Weatherford Switzerland or
their property in any jurisdiction whatsoever other than an
Allowed Proceeding. |
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Proxy Statement |
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The Proxy Statement of Weatherford on Schedule 14A
initially filed on 10 December 2008 with the U.S.
Securities and Exchange Commission pursuant to
Section 14(a) of the U.S. Securities Exchange Act of 1934,
as such Proxy Statement may be amended, restated and/or filed in
definitive form, in connection with this Scheme representing the
Explanatory Statement issued pursuant to section 100 of the
Companies Act and including a notice of the Scheme Meeting. |
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Record Date |
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The close of business (Houston time) on 15 December 2008 or
such later date as may be determined and properly announced by
Weatherford. |
B-1
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Register of Members |
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Weatherfords branch register of members kept in accordance
with section 65 of the Companies Act by American Stock
Transfer & Trust Company, Weatherfords
branch registrar. |
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Registered Share |
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One registered share with a par value in Swiss francs equivalent
to US$1.00 in the capital of Weatherford Switzerland (based on
an exchange rate determined by Weatherford). |
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Scheme |
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This scheme of arrangement in respect of Weatherford under
section 99 of the Companies Act in its present form or with
or subject to any modifications, additions or conditions that
are consented to by Weatherford and that the Supreme Court may
approve, impose or permit. |
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Scheme Consideration |
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One Registered Share to be issued and allotted by Weatherford
Switzerland in exchange for each Scheme Share held immediately
prior to the Effective Time by a Scheme Shareholder. |
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Scheme Meeting |
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The meeting of the holders of Weatherford Common Shares proposed
to be convened at the direction of the Supreme Court at which
the Scheme will be voted upon or any postponement or adjournment
thereof. |
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Scheme Shareholders |
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The holders of Weatherford Common Shares appearing on the
Register of Members immediately prior to the Effective Time. |
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Scheme Shares |
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All the Weatherford Common Shares in issue (including any
Weatherford Common Shares held by Weatherford affiliates and
subsidiaries) immediately prior to the Effective Time. |
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Supreme Court |
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The Supreme Court of Bermuda. |
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US$ |
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United States dollars, the lawful currency of the United States
of America. |
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Weatherford |
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Weatherford International Ltd., an exempted company incorporated
with limited liability under the laws of Bermuda with
registration number 31959. |
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Weatherford Common Share |
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One common share of US$1.00 par value in the capital of
Weatherford. |
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Weatherford Switzerland |
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Weatherford International Ltd., a corporation incorporated under
the laws of Switzerland, with its registered office in the
Canton of Zug, Switzerland, and with registered number
CH-170.3.032.888-3. |
INTERPRETATION
B In this Scheme, unless the context otherwise
requires or otherwise expressly provides:
(1) references to Recitals, Parts, clauses and sub-clauses
are references to the Recitals, Parts, clauses and sub-clauses
respectively of this Scheme;
(2) references to a person include references
to an individual, firm, partnership, company, corporation, other
legal entity, unincorporated body of persons or any state or
state agency;
(3) references to a statute or a statutory provision
include the same as subsequently modified, amended or re-enacted
from time to time;
B-2
(4) references to an agreement, deed or document shall be
deemed also to refer to such agreement, deed or document as
amended, supplemented, restated, verified, replaced
and/or
novated (in whole or in part) from time to time and to any
agreement, deed or document executed pursuant thereto;
(5) the singular includes the plural and vice versa and
words importing one gender shall include all genders;
(6) headings to Recitals, Parts, clauses and sub-clauses
are for ease of reference only and shall not affect the
interpretation of this Scheme; and
(7) to the extent that there shall be any conflict or
inconsistency between the terms of this Scheme and the Proxy
Statement then the terms of this Scheme shall prevail.
C Weatherford was incorporated with limited liability
in Bermuda on 2 April 2002 as an exempted limited liability
company with registration number 31959.
D On the Latest Practicable Date, Weatherford had an
authorized share capital of US$1,010,000,000, consisting of
1,000,000,000 common shares of US$1.00 par value each, of
which 728,634,172 had been issued and were fully paid up or
credited as fully paid up, and the remainder remained unissued,
and 10,000,000 preference shares, all of which remain unissued.
E Together with its affiliates, Weatherford maintains
and sponsors a variety of equity compensation-related plans, and
certain other plans, agreements, awards and arrangements,
providing for the grant or award to its directors, officers and
employees and other persons (collectively, the Share
Plans) of (i) options, restricted shares or other
rights to purchase or receive Weatherford Common Shares or
(ii) the right to receive benefits or other amounts by
reference to Weatherford Common Shares (each, an
Award). The Share Plans are listed on
Exhibit A and Exhibit B to the Exchange
Agreement. As described in more detail in the Exchange
Agreement: (a) at the Effective Time, the Share Plans, and
other employee benefit and compensation plans and agreements of
Weatherford or its affiliates as determined by the management of
Weatherford in its sole discretion, shall be assumed
and/or
adopted by and become plans and agreements of Weatherford
Switzerland (collectively, the Assumed Plans)
other than certain Share Plans that shall not so be treated. In
furtherance of the Scheme, Weatherford Switzerland shall assume
the rights and obligations of Weatherford under the Assumed
Plans; (b) to the extent any Stock Plan (whether or not an
Assumed Plan) provides for the issuance, acquisition, holding or
purchase of, or otherwise relates to or references, Weatherford
Common Shares, then, after the Effective Time, such Stock Plan
shall be deemed to provide for the issuance, acquisition,
purchase or holding of, or otherwise relate to or reference,
Registered Shares (or benefits or other amounts determined in
accordance with the Share Plans), and such amendments deemed
necessary or appropriate by Weatherford and Weatherford
Switzerland to effect the Scheme and related transactions,
including to facilitate the assignment to, and assumption
and/or
adoption by, Weatherford Switzerland of the Assumed Plans, or
the other actions contemplated hereby with respect to any other
Stock Plan, shall be adopted and entered into with respect to
the Assumed Plans or such other Stock Plan; and (c) all
outstanding Awards or any other benefits available which are
based on Weatherford Common Shares and which have been granted
under the Share Plans (including, as applicable, any Weatherford
Common Shares exchanged pursuant to the Scheme) shall remain
outstanding and, after the Effective Time, pursuant to the terms
thereof, be deemed to provide for the issuance, acquisition,
purchase or holding of, or otherwise relate to or reference,
Registered Shares. Each Award assumed by Weatherford Switzerland
shall thereafter, pursuant to the terms thereof, be exercisable,
issuable, held, available or vest upon the same terms and
conditions as under the applicable Stock Plan and the applicable
Award document or agreement issued thereunder, except that upon
the exercise, issuance, holding, availability or vesting of such
Awards, Registered Shares shall be issuable or available, or
benefits or other amounts determined, in lieu of Weatherford
Common Shares. For the avoidance of doubt, the number of
Registered Shares issuable or available upon the exercise or
issuance of an Award immediately after the Effective Time and,
if applicable, the exercise price of each such Award, shall be
the same number of shares and the exercise price as in effect
immediately prior to the Effective Time.
B-3
THE
PURPOSE OF THIS SCHEME
F The purpose of this Scheme is to effect the
exchange of each issued Weatherford Common Share for one issued
and fully paid Registered Share. At the Effective Time, all
Scheme Shares shall be transferred to Weatherford Switzerland
and as a result thereof Weatherford Switzerland shall become the
owner of Weatherford. In furtherance of the Scheme and at or
about the Effective Time, Weatherford shall procure that
Weatherford Switzerland shall issue and allot to American Stock
Transfer & Trust Company, LLC (or such other
person or entity as Weatherford may determine in its sole
discretion) as nominee acting on behalf and for the account of
the Scheme Shareholders (the Nominee) one new
validly issued and fully paid Registered Share as consideration
and in exchange for each Scheme Share. Immediately thereafter,
the Nominee shall transfer and allot to each Scheme Shareholder
one new Registered Share as consideration and in exchange for
each Scheme Share held by such Scheme Shareholder immediately
prior to the Effective Time.
G Weatherford Switzerland has agreed to appear at the
hearing of the petition to sanction this Scheme and undertake to
be bound by its terms.
PART II
THE SCHEME
Application
and effectiveness of this Scheme
1. The compromise and arrangement effected by this Scheme
shall apply to all Scheme Shares and shall be binding on all
Scheme Shareholders.
Effect of
this Scheme
2. At the Effective Time all of the right, title and
interest of the Scheme Shareholders in the Scheme Shares shall
be subject to the arrangement implemented by the mechanism set
out in clause 3 of this Part II. At the Effective
Time, until the Scheme Shares have been transferred to
Weatherford Switzerland, there shall be no further registration
of transfers on the register of members or the branch register
of members of Weatherford of the Weatherford Common Shares which
were issued and outstanding immediately prior to the Effective
Time.
Compromise
and Arrangement with Scheme Shareholder
3. At the Effective Time, in consideration of the rights of
the Scheme Shareholders under this Scheme and in exchange for
each Scheme Share and notwithstanding any term of any relevant
document to the contrary, the following shall occur:
a. the Scheme Shares shall be transferred to Weatherford
Switzerland;
b. in exchange for the Scheme Shares, Weatherford shall
procure that Weatherford Switzerland shall issue and allot the
Scheme Consideration to the Nominee, acting on behalf of and for
the account of the Scheme Shareholders, namely one Registered
Share for each Scheme Share held immediately prior to the
Effective Time by a Scheme Shareholder;
c. immediately thereafter, the Nominee shall transfer and
allot to each Scheme Shareholder one new Registered Share as
consideration and in exchange for each Scheme Share.
PART III
IDENTIFICATION OF SCHEME SHAREHOLDERS
Record
Date
4. The holders of Weatherford Common Shares (including any
Weatherford Common Shares held by Weatherford affiliates and
subsidiaries) and the number of Weatherford Common Shares that
they hold for the purposes of voting at the Scheme Meeting shall
be determined as those recorded on the Register of Members as at
the Record Date.
B-4
PART IV
DISTRIBUTIONS
Distribution
To Scheme Shareholders
5. At or about the Effective Time, Weatherford Switzerland
shall issue the Registered Shares comprising the Scheme
Consideration to the Nominee, who shall also act as Exchange
Agent (or such other person or entity as Weatherford may
determine in its sole discretion) acting on behalf of and for
the account of the Scheme Shareholders, and Weatherford and
Weatherford Switzerland shall procure that the Exchange Agent
shall transfer such Scheme Consideration to the Scheme
Shareholders without delay.
Rights of
Scheme Shareholders
6. With effect from and including the Effective Time, each
holder of Scheme Shares shall in accordance with the Scheme
cease to have any rights with respect to Scheme Shares, except
the right to receive the Scheme Consideration. At the Effective
Time, all existing Scheme Shares shall be transferred to
Weatherford Switzerland, and the Register of Members shall be
updated to reflect such transfers.
PART V
GENERAL SCHEME PROVISIONS
Effective
Time and Notification to Scheme Shareholder
7. This Scheme shall become effective at the Effective Time.
8. Weatherford Switzerland shall give notification of this
Scheme having become effective by filing a Current Report on
Form 8-K
with the U.S. Securities and Exchange Commission.
Authorization
9. The Nominee shall be authorized on behalf of the Scheme
Shareholders to:
a. accept the Scheme Consideration;
b. subscribe for the Registered Shares and enter into any
necessary agreement in connection therewith;
c. transfer and allot to each Scheme Shareholder one
Registered Share as consideration and in exchange for each
Scheme Share;
d. exchange any certificates representing Scheme Shares for
an equal number of Registered Shares or making notations or
book-entries as it relates to uncertificated shares; and
e. generally take such steps as are necessary to procure
that each Scheme Shareholder receives one Registered Share for
each Scheme Share held by such Scheme Shareholder.
Stay of
Prohibited Proceedings
10. None of the Scheme Shareholders shall commence a
Prohibited Proceeding in respect of or arising from this Scheme
after the Effective Time.
11. A Scheme Shareholder may commence an Allowed Proceeding
against Weatherford or Weatherford Switzerland after the
Effective Time provided that it has first given Weatherford and
Weatherford Switzerland 10 Business Days prior notice in
writing of its intention to do so.
B-5
Dividends
12. All mandates and other instructions in force at
9.00 a.m. Atlantic Daylight Time on the Effective Time
in relation to the Scheme Shares (including elections for
payment of dividends (if any)) shall cease to be valid as
effective mandates or instructions.
13. Each of Weatherford and Weatherford-Switzerland shall
pay in full all of its own costs, charges, expenses and
disbursements reasonably incurred by Weatherford in connection
with the negotiation, preparation and implementation of this
Scheme as and when they arise, including the costs of holding
the Scheme Meeting and the costs of obtaining the sanction of
the Supreme Court and the costs of placing the notices required
by this Scheme.
Existing
Instruments of Transfer and certificates
14. As from the Effective Time, all instruments of transfer
and certificates validly existing at the Record Date in respect
of a transfer or holding of any Scheme Shares shall, as from the
Effective Time, cease to have effect as documents or evidence of
transfer or title and every holder thereof shall be bound on the
request of Weatherford to deliver up to Weatherford the
certificates(s) in respect of its, his or her entire holding of
Scheme Shares.
Modifications
of this Scheme
15. Weatherford, at any hearing before the Supreme Court to
sanction this Scheme, may consent on behalf of all Scheme
Shareholders to any modification of this Scheme or any terms or
conditions which the Supreme Court may think fit to approve,
impose or permit.
Notice
16. Any notice or other written communication to be given
under or in relation to this Scheme other than pursuant to
clauses 8, 17 and 20 shall be given in writing and shall be
deemed to have been duly given if it is delivered by hand, or
electronic mail with confirmation of transmission by the
transmitting equipment (to the extent any required consent for
such communication has been obtained), or sent by post, to:
a. in the case of the Weatherford, at 515 Post Oak Blvd.,
Houston, Texas, marked for the attention of Burt M. Martin;
b. in the case of the Scheme Shareholder, its last address
known to Weatherford; and
c. in the case of any other person, any address set forth
for that person in any agreement entered into in connection with
this Scheme or the last address known to Weatherford, or by fax
or email to its last fax number or email address known to
Weatherford.
17. Any notice or other written communication to be given
under this Scheme shall be deemed to have been served in
accordance with the provisions of Bye-laws 79 81 of
Weatherfords Bye-laws.
18. Save in the case of the notice, written communication
or document required to be sent pursuant to clause 8, the
accidental omission to send any notice, written communication or
other document in accordance with clauses 16 and 17 or the
non-receipt of any such notice by the Scheme Shareholder, shall
not affect the provisions of this Scheme.
19. Weatherford shall not be responsible for any loss or
delay in the transmission of any notices, other documents or
payments posted by or to the Scheme Shareholder which shall be
posted at the risk of the Scheme Shareholder.
20. Any notice or other written communication that is
required to be given to all or substantially all Scheme
Shareholders may be effective by filing a Current Report on
Form 8-K
with the U.S. Securities and Exchange Commission and shall
be deemed to be served upon acceptance by the EDGAR system
thereof.
B-6
Exercise
of Discretion
21. When under any provision of this Scheme a matter is to
be determined by Weatherford, then it will have discretion to
interpret such matter under this Scheme in a manner that it
considers fair and reasonable, and its decisions will be binding
on all concerned. Weatherford may consent to any modification of
this Scheme on behalf of the its shareholders which the Supreme
Court may think fit to approve or impose.
Governing
Law
22. At and with effect from the Effective Time, the
operative terms of this Scheme shall be governed by, and
construed in accordance with, the laws of Bermuda and the Scheme
Shareholders hereby agree that the Courts of Bermuda shall have
exclusive jurisdiction to hear and determine any suit, action or
proceeding and to settle any dispute which arises out of or
connected with the terms of this Scheme or their implementation
or out of any action taken or omitted to be taken under this
Scheme or in connection with the administration of this Scheme
and for such purposes, the Scheme Shareholders irrevocably
submit to the jurisdiction of the Courts of Bermuda, provided,
however, that nothing in this clause shall affect the validity
of other provisions determining governing law and jurisdiction
as between Weatherford and the Scheme Shareholders, whether
contained in any contract or otherwise.
23. The terms of this Scheme and the obligations imposed on
Weatherford hereunder shall take effect subject to any
prohibition or condition imposed by any applicable law.
Pre-Conditions
to the Scheme
24. The effectiveness of this Scheme is conditional upon:
a. The definitive Proxy Statement shall have been filed
with the U.S. Securities and Exchange Commission;
b. As of the Effective Time, none of Weatherford or
Weatherford Switzerland shall be subject to any decree, order or
injunction of a court of competent jurisdiction, domestic or
foreign, which prohibits the consummation of this Scheme;
c. The Registered Shares to be issued in connection with
this Scheme shall have been authorized for listing on the New
York Stock Exchange, subject to official notice of issuance;
d. The capital increase covering/including the Registered
Shares to be issued in connection with this Scheme shall have
been registered with the commercial register in the Canton of
Zug, Switzerland; and
e. Weatherford receives legal opinions from U.S. and
Swiss counsel regarding certain tax consequences of the
transactions contemplated by the Scheme.
Expiry of
the Scheme
25. Unless the Effective Time shall have occurred on or
before 31 March 2009 or such later date, if any, as
Weatherford may agree and the Supreme Court may allow, this
Scheme shall lapse.
B-7
COURT
ORDER
IN THE
SUPREME COURT OF BERMUDA
CIVIL JURISDICTION
(COMMERCIAL COURT)
2008: NO. 310
IN THE
MATTER OF SECTION 99 OF THE COMPANIES ACT 1981
AND IN
THE MATTER OF WEATHERFORD INTERNATIONAL LTD.
ORDER FOR
DIRECTIONS
UPON THE APPLICATION BY Originating Summons of
Weatherford International Ltd. (Weatherford)
AND UPON HEARING Counsel for Weatherford.
AND UPON READING the First Affidavit of Burt M.
Martin made on 11th December 2008 and the exhibit thereto
IT IS HEREBY ORDERED as follows:
1. Weatherford do convene a meeting (the Weatherford
Scheme Meeting) of the Weatherford Common Shareholders as
at the Record Date, such Weatherford Scheme Meeting to be held
at 515 Post Oak Blvd., Houston, Texas at 9:00 a.m. (local
time) on 17th February 2009 or at such other time and date
within three months from the date of the Order as may be
determined by Weatherford, for the purpose of considering and if
thought fit approving (with or without modification) the
Weatherford Scheme and that, subject to this Order, the Court
Meeting shall be convened and held (and if so resolved,
adjourned) in accordance with the Bye-laws of Weatherford.
2. This Honourable Court appoints Mr. Bernard
Duroc-Danner or failing him Mr. Burt M. Martin, or failing
him any director or executive officer of Weatherford as of the
date hereof to act as chairman of the Weatherford Scheme Meeting.
3. The Petition herein be set down to be heard on the first
convenient date after the Weatherford Scheme Meeting.
AND IT IS DIRECTED that:
4. At least 30 clear days before the day appointed for the
Weatherford Scheme Meeting a Notice convening the Weatherford
Scheme Meeting in the form or substantially in the form of the
notice initialed by this Court for the purposes of
identification be inserted once each in The Royal Gazette and
the U.S. and international editions of The Wall Street
Journal.
5. At least 30 clear days before the day appointed for the
Weatherford Scheme Meeting a Notice convening the same and
enclosing:
a. a copy of the Weatherford Scheme and a copy of the Proxy
Statement and Explanatory Statement as is required to be
furnished pursuant to section 100 of the Companies Act 1981
of Bermuda, in each case in the form or substantially in the
form of the document produced to the Court; and
b. a form of proxy for use at the Weatherford Scheme
Meeting in the form or substantially in the form produced to the
Court;
be sent by hand, courier or pre-paid post (or by air mail, as
appropriate) addressed to each of the Weatherford shareholders
holding such shares at the address shown on the register of
members of
C-1
Weatherford as at the Record Date (as defined below), provided
that (i) the accidental omission to send to or serve any
Weatherford shareholder with notice of the Weatherford Scheme
Meeting, or the non-receipt by any Weatherford shareholder of
notice of the Weatherford Scheme Meeting, shall not invalidate
the proceedings at the Weatherford Scheme Meeting and
(ii) notwithstanding any of the foregoing it shall be
sufficient to prove that, in the case of delivery by courier,
such documents were delivered to a courier and in envelopes
addressed to the person or persons concerned at their said
addresses respectively.
6. Any registered Weatherford shareholder who holds his
Weatherford Common Shares on trust or as a nominee will be able
to vote any number of his shares for the Scheme and
vote the balance of his shares against the Scheme,
or to abstain from voting any such shares. The vote(s) (or
abstention(s)) represent the instruction to the trustee or
nominee from his underlying beneficiary(ies) or investor(s).
Subject to any reasonable objections as they might raise,
Weatherford shareholders voting in this manner shall, for the
purpose of the majority in number count, be counted
as one shareholder for the Scheme (as to the number
of his Weatherford Common Shares being voted for the
Scheme), and one shareholder against the Scheme (as
to the number of his Weatherford Common Shares being voted
against the Scheme).
7. The form of proxy in the form or substantially in the
form produced to the Court and the provisions to be made
permitting Weatherford Shareholders to vote, including by
telephone, electronically or otherwise, be approved for use at
the Weatherford Scheme Meeting.
8. The Chairman of the Weatherford Scheme Meeting (the
Chairman) is to be entitled to accept the warranty
on the said forms of proxy as to the authority of the signatory
to cast the votes thereby cast without further investigation.
9. The Chairman is to be at liberty to accept a faxed or
.pdf (including via email) copy of a form of proxy but may
require production of the original if he considers this to be
necessary or desirable for the purpose of verification.
10. Weatherford be at liberty to set a record date (the
Record Date) for determining the holders of
Weatherford Common Shares entitled to receive notice of, and to
vote at, the Weatherford Scheme Meeting.
11. In the case of joint registered holders of Weatherford
Common Shares, the vote of the senior holder who tenders the
vote shall be accepted to the exclusion of the votes of the
other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in
Weatherfords Register of Members.
12. The Chairman is to be at liberty to accept a form of
proxy and the figure for which any Weatherford shareholder seeks
to vote, notwithstanding that the form of proxy has not been
completed in accordance with the instructions contained therein,
provided that the Chairman considers that the information
contained therein is sufficient to establish the entitlement of
the Weatherford shareholder to vote.
13. Weatherford shall cause to be published a Notice (in
the form or substantially in the form of the notice initialed by
this Court for the purposes of identification) advertising the
date of hearing of the Petition herein. The Notice shall be
published in The Royal Gazette and also in the US and
international editions of The Wall Street Journal on or about
the date on which notice is mailed to proxyholders.
14. Within ten days of the Weatherford Scheme Meeting the
Chairman do report the result of the Weatherford Scheme Meeting
to the Court.
[The Seal of the Supreme Court of Bermuda]
Geoffery Bell, Puisne Judge
DATED this 18th day of December 2008.
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EXPECTED
TIMETABLE
|
|
|
Description
|
|
Proposed Date
|
|
Record date for determining the Weatherford-Bermuda shareholders
eligible to vote at the shareholders meeting
|
|
December 15, 2008
|
Proxy statement and proxy first mailed to Weatherford-Bermuda
shareholders
|
|
On or
about ,
200
|
Latest time for submitting forms of proxy:
|
|
|
via Internet or telephone
|
|
11:59 p.m. New York time
on ,
2009
|
via proxy card
|
|
Must be received at any time prior to the commencement of the
shareholders meeting
|
Shareholders meeting
|
|
9:00 a.m., local time
on ,
2009
|
Court hearing to sanction the Scheme of Arrangement
|
|
,
2009
|
Anticipated effective time of the Scheme of Arrangement
|
|
As soon as practicable after the court hearing
|
Issuance of the Weatherford-Switzerland shares to the
Weatherford-Bermuda shareholders
|
|
Promptly after the registration with the commercial register in
the Canton of Zug, Switzerland of the capital increase covering
the Weatherford-Switzerland registered shares to be issued and
the effective time of the Scheme of Arrangement
|
D-1
Articles
of Association of
Weatherford International Ltd.
as of
[ ]
ARTICLES OF
ASSOCIATION
OF
WEATHERFORD
INTERNATIONAL LTD.
Section 1: NAME,
PLACE OF INCORPORATION, PURPOSE AND DURATION OF THE COMPANY
Article 1
Name, Place
of Incorporation
Under the name Weatherford International Ltd. (the
Company) there exists a corporation with its place of
incorporation in Zug, Canton of Zug, Switzerland.
Unless otherwise defined in these Articles of Association,
capitalized terms shall have the meaning ascribed to such terms
in Article 35 hereof.
Article 2
Purpose
1 The purpose of the Company is to acquire, hold,
administer and transfer participations in entities in
Switzerland and abroad, either directly or indirectly, in
particular in entities which are active in the field of services
providing with respect to the acquisition and production of
natural energy and of the financing of such activities.
2 The Company may establish branch offices and
subsidiaries in Switzerland and abroad.
3 The Company may acquire, administer and transfer
patents, trademarks and technical and industrial know-how as
well as real estate assets. The Company may engage in any
commercial, financial or other activities which are directly or
indirectly related to the purpose of the Company.
4 The Company may also participate in the financing,
including by means of the providing of guarantees and sureties
of any kind, of other entities of the group to which the Company
belongs in the general interest of such group.
5 The Company may generally engage in all types of
transactions and may take all measures that appear appropriate
to promote the purpose of the Company or that are related
thereto.
Article 3
Duration
The duration of the Company is unlimited.
Section 2: SHARE
CAPITAL
Article 4
Share Capital
The share capital of the Company is CHF
[ ]
and is divided into
[ ]
fully paid up registered shares. Each registered share has a
par value of CHF
[ ](each
such registered share hereinafter a Share and
collectively the Shares).
E-1
Article 5
Authorized
Share Capital
1 The Board of Directors is authorized to increase
the share capital, at anytime until
[ ],by
a maximum amount of CHF
[ ]
by issuing a maximum of
[ ]fully
paid up Shares with a par value of CHF
[ ]
each.
2 The Board of Directors shall determine the time of
the issuance, the issue price, the manner in which the new
Shares have to be paid up, the date from which the Shares carry
the right to dividends, the conditions for the exercise of the
preferential subscription rights and the allotment of
preferential subscription rights that have not been exercised.
The Board of Directors may allow the preferential subscription
rights that have not been exercised to expire, or it may place
such rights or Shares, the preferential subscription rights of
which have not been exercised, at market conditions or use them
otherwise in the interest of the Company.
3 The Board of Directors is authorized to withdraw or
limit the preferential subscription rights of the shareholders,
and to allot them to third parties, for cause, which shall
include the following:
(a) if the issue price of the new Shares is determined by
reference to the market price; or
(b) for the acquisition of an enterprise, part(s) of an
enterprise or participations, or for the financing or
refinancing of any of such transactions, or for the financing of
new investment plans of the Company; or
(c) for purposes of broadening the shareholder constituency
of the Company in certain financial or investor markets, for
purposes of the participation of strategic partners, or in
connection with the listing of new Shares on domestic or foreign
stock exchanges; or
(d) for purposes of granting an over-allotment option
(including options with respect to any security convertible into
Shares, such as convertible debt securities or otherwise)
(Greenshoe) of up to 20% of the total number of Shares in
a placement or sale of Shares to the respective initial
purchaser(s) or underwriter(s); or
(e) for the participation in a benefit or other plan by
members of the Board of Directors, members of the executive
management, employees, contractors, consultants or other Persons
performing services for the benefit of the Company or any of its
subsidiaries; or
(f) if the Shares to be issued will be issued for any
consideration (including debt, equity or assets of another
company) other than for cash consideration.
4 The new Shares shall be subject to the limitations
for registration in the share register pursuant to
Articles 7 and 9.
Article 6
Conditional
Share Capital
1 The share capital may be increased in an amount not
to exceed CHF
[ ]through
the issuance of up to
[ ]
fully paid up Shares with a par value of CHF
[ ]
per Share through:
(a) the exercise of conversion, exchange, option, warrant
or similar rights for the subscription of Shares (hereinafter
the Rights) granted to third parties or shareholders in
connection with bonds, options, warrants or other securities
newly or already issued in national or international capital
markets or new or already existing contractual obligations by or
of the Company, one or more of its group companies, or any of
their respective predecessors (hereinafter collectively, the
Rights-Bearing Obligations); and/or
(b) the issuance of Shares (including shares of restricted
stock) or Rights-Bearing Obligations granted to members of the
Board of Directors, members of the executive management,
employees, contractors, consultants or other Persons providing
services to the Company or its subsidiaries.
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2 The preferential subscription rights and advance
subscription rights of the shareholders shall be excluded in
connection with the issuance of any Shares, Rights or
Rights-Bearing Obligations pursuant to Article 6 para 1(a)
and (b).
3 The new Shares acquired through the exercise of
Rights-Bearing Obligations shall be subject to the limitations
for registration in the share register pursuant to
Articles 7 and 9.
Article 7
Share
Register, Exercise of Rights, Restrictions on Registration,
Nominees,
Transfer Restrictions
1 The Company shall maintain, itself or through a
third party, a share register that lists the surname, first
name, address and citizenship (in the case of legal entities,
the company name and company seat) of the holders and
usufructuaries of the Shares as well as the nominees. A Person
recorded in the share register shall notify the share registrar
of any change in address. Until such notification shall have
occurred, all written communication from the Company to Persons
of record shall be deemed to have validly been made if sent to
the address recorded in the share register.
2 An acquirer of Shares shall be recorded upon
request in the share register as a shareholder with voting
rights; provided, however, that any such acquirer
expressly declares to have acquired the Shares in its own name
and for its own account, save that the Board of Directors may
record nominees who hold Shares in their own name, but for the
account of third parties, as shareholders of record in the share
register of the Company. Beneficial owners of Shares who hold
Shares through a nominee exercise the shareholders rights
through the intermediation of such nominee.
3 After hearing the registered shareholder concerned,
the Board of Directors may cancel the registration of such
shareholder as a shareholder with voting rights in the share
register with retroactive effect as of the date of registration,
if such registration was made based on false or misleading
information. The relevant shareholder shall be informed promptly
of the cancellation.
Article 8
Share
Certificates
1 A shareholder may at any time request an
attestation of the number of Shares held by it. The shareholder
is not entitled, however, to request that certificates
representing the Shares be printed and delivered.
2 The Company may at any time print and deliver
certificates for the Shares, and may, with the consent of the
shareholder, cancel issued certificates that are delivered to it
without replacement.
3 Uncertificated Shares and the appurtenant rights
associated therewith may be transferred only by written
assignment. For the assignment to be valid against the Company,
notification to the Company shall be required. If uncertificated
Shares are administered by a transfer agent, trust company, bank
or similar entity (the Transfer Agent), such Shares and
the appurtenant rights associated therewith may be transferred
only with the cooperation of the Transfer Agent or such other
Person or Persons as determined by the Board of Directors.
4 If uncertificated Shares are pledged in favor of
any Person other than the Transfer Agent, notification to such
Transfer Agent shall be required for the pledge to be effective.
5 If the Company decides to print and deliver share
certificates, the share certificates shall bear the signatures
of two duly authorized signatories of the Company, at least one
of which shall be a member of the Board of Directors. These
signatures may be facsimile signatures.
6 The Company may in any event issue share
certificates representing more than one Share.
E-3
7 The Board of Directors or any officer of the
Company to whom the Board of Directors has delegated authority
may authorize any Transfer Agent to issue, and any registrar of
the Company to register, at any time and from time to time
unless otherwise directed, a new certificate or certificates of
stock in place of a certificate or certificates theretofore
issued by the Company, alleged to have been lost or destroyed,
upon receipt by the Transfer Agent of evidence of such loss or
destruction, which may be the affidavit of the applicant; a bond
indemnifying the Company and any Transfer Agent and registrar of
the class of stock involved against claims that may be made
against it or them on account of the lost or destroyed
certificate or the issuance of a new certificate, of such kind
and in such amount as the Board of Directors shall have
authorized the Transfer Agent to accept generally or as the
Board of Directors or an authorized officer shall approve in
particular cases; and any other documents or instruments that
the Board of Directors or an authorized officer may require from
time to time to protect adequately the interest of the Company.
Article 9
Exercise of
Rights
1 The Company shall only accept one representative
per Share.
2 Voting rights and appurtenant rights associated
therewith may be exercised in relation to the Company by a
shareholder, usufructuary of Shares or nominee only to the
extent that such Person is recorded in the share register with
the right to exercise his voting rights.
Section 3: CORPORATE
BODIES
A. General Meeting of Shareholders
Article 10
Authority
The General Meeting of Shareholders is the supreme corporate
body of the Company.
Article 11
Annual
General Meeting
The Annual General Meeting shall be held each year within six
months after the close of the fiscal year of the Company. The
Annual Report and the Auditors Report shall be made
available for inspection by the shareholders at the registered
office of the Company no later than twenty calendar days prior
to the Annual General Meeting. Each shareholder is entitled to
request prompt delivery of a copy of the Annual Report and the
Auditors Report free of charge. Shareholders of record
will be notified of the availability of the Annual Report and
the Auditors Report in writing.
ARTICLE 12
Extraordinary
General Meetings
1 Extraordinary General Meetings shall be held in the
circumstances provided by law, in particular when deemed
necessary or appropriate by the Board of Directors or if so
requested by the Auditor.
2 An Extraordinary General Meeting shall further be
convened by the Board of Directors upon resolution of a General
Meeting of Shareholders or if so requested by one or more
shareholders who, in the aggregate, represent at least one-tenth
of the share capital recorded in the share register of the
Company and who submit (a)(1) a request signed by such
shareholder(s) that specifies the item(s) to be included on the
agenda, (2) the respective proposals of the shareholders
and (3) evidence of the required shareholdings recorded in
the share register and (b) such other information as would
be required to be included in a proxy statement pursuant to the
rules of the U.S. Securities and Exchange Commission
(SEC).
E-4
Article 13
Notice of
Shareholders Meeting
1 Notice of a General Meeting of Shareholders shall
be given by the Board of Directors or, if necessary, by the
Auditor, no later than 20 calendar days prior to the date of the
General Meeting of Shareholders.
2 Notice of the General Meeting of Shareholders shall
be given by way of a one-time announcement in the official means
of publication of the Company pursuant to Article 33. The
notice period shall be deemed to have been observed if notice of
the General Meeting of Shareholders is published in such
official means of publication, it being understood that the date
of publication is not to be included for purposes of computing
the notice period. Shareholders of record shall in addition be
informed of the General Meeting of Shareholders by ordinary mail
or such other means as determined by the Board of Directors,
which additional notification may contain such information as
determined by the Board of Directors.
3 The notice of a General Meeting of Shareholders
shall specify the items on the agenda and the proposals of the
Board of Directors and, subject to Articles 12 and 14, the
shareholder(s) who requested that a General Meeting of
Shareholders be held or an item be included on the agenda, and,
in the event of elections, the name(s) of the candidate(s) that
has or have been put on the ballot for election.
Article 14
Agenda
1 Any shareholder satisfying the requirements of
article 699 of the Swiss Code of Obligations (CO)
may request that an item be included on the agenda of a General
Meeting of Shareholders. An inclusion of an item on the agenda
must be requested in writing at least 60 and no more than 90
calendar days prior to the scheduled and announced date of the
next General Meeting of Shareholders and shall specify the
relevant agenda items and proposals, together with evidence of
the required shareholdings recorded in the share register.
2 No resolution may be passed at a General Meeting of
Shareholders concerning an agenda item in relation to which due
notice was not given. Proposals made during a General Meeting of
Shareholders to (i) convene an Extraordinary General
Meeting or (ii) initiate a special investigation in
accordance with article 697a CO are not subject to the due
notice requirement set forth herein.
3 No prior notice is required to bring motions
related to items already on the agenda or for the discussion of
matters on which no resolution is to be taken.
Article 15
Acting
Chair, Minutes, Vote Counters
1 At the General Meeting of Shareholders, the
Chairman of the Board of Directors or, in his absence, the
Vice-Chairman or any other person designated by the Board of
Directors shall take the chair.
2 The acting chair of the General Meeting of
Shareholders shall appoint the secretary and the vote counters,
none of whom need be shareholders. The minutes of the General
Meeting of Shareholders shall be signed by the acting chair and
the secretary.
3 The acting chair of the General Meeting of
Shareholders shall have all powers and authority necessary and
appropriate to ensure the orderly conduct of the General Meeting
of Shareholders.
E-5
Article 16
Right to
Participation and Representation
Each shareholder recorded in the share register as of the record
date for the meeting is entitled to participate at the General
Meeting of Shareholders and in any vote taken. The shareholders
may be represented by proxies who need not be shareholders. The
Board of Directors shall issue the particulars of the right to
representation and participation at the General Meeting of
Shareholders in procedural rules.
Article 17
Voting Rights
Each Share shall convey the right to one vote. The right to vote
is subject to the conditions of Articles 7 and 9.
Article 18
Resolutions
and Elections
1 Unless otherwise required by law or these Articles
of Association, the General Meeting of Shareholders shall take
resolutions and decide elections upon a relative majority of the
votes cast at the General Meeting of Shareholders (whereby
abstentions, broker nonvotes, blank or invalid ballots and
withdrawals shall be disregarded for purposes of establishing
the majority).
2 Where the number of persons validly proposed for
election as a member of the Board of Directors is greater than
the number of Directors to be elected, the persons receiving the
most votes (up to the number of Directors to be elected) shall
be elected as members of the Board of Directors. Votes against
any candidate, abstentions, broker nonvotes, blank or invalid
ballots and withdrawals shall have no impact on the election of
members of the Board of Directors.
3 For the removal of a serving member of the Board of
Directors, the voting requirement set forth in Article 20
para. 1(k) and the presence quorum set forth in Article 21
para. 1(a) shall apply.
4 Unless otherwise required by law, resolutions and
elections at General Meeting of Shareholders shall be decided by
a written ballot. The acting chair may also hold resolutions and
elections by use of an electronic voting system, which shall be
considered equal to resolutions and elections taken by way of a
written ballot.
Article 19
Powers of
the General Meeting of Shareholders
The following powers shall be vested exclusively in the General
Meeting of Shareholders:
(a) The adoption and amendment of these Articles of
Association;
(b) the election of the members of the Board of Directors
and the Auditor;
(c) the approval of the Annual Report and the Consolidated
Financial Statements;
(d) the approval of the Annual Statutory Financial
Statements of the Company and the resolution on the allocation
of profit shown on the Annual Statutory Balance Sheet, in
particular the determination of any dividend;
(e) the discharge from liability of the members of the
Board of Directors; and
(f) the adoption of resolutions on matters that are
reserved to the General Meeting of Shareholders by law, these
Articles of Association or, subject to article 716a CO,
that are submitted to the General Meeting of Shareholders by the
Board of Directors.
E-6
Article 20
Special Vote
1 The approval of at least two-thirds of the votes
and the absolute majority of the par value of Shares, each as
represented at a General Meeting of Shareholders, shall be
required for resolutions with respect to:
(a) The amendment or modification of the purpose of the
Company as described in Article 2;
(b) the creation and the cancellation of shares with
privileged voting rights;
(c) the restriction on the transferability of Shares and
the cancellation of such restriction;
(d) the restriction on the exercise of the right to vote
and the cancellation of such restriction;
(e) an authorized or conditional increase in share capital;
(f) an increase in share capital through (i) the
conversion of capital surplus, (ii) contribution in kind or
for purposes of an acquisition of assets, or (iii) the
granting of special privileges;
(g) the limitation on or withdrawal of preferential
subscription rights and advance subscription rights;
(h) the relocation of the place of incorporation of the
Company;
(i) the conversion of Shares into bearer shares and vice
versa;
(j) the dissolution of the Company; and
(k) a resolution with respect to the removal of a serving
member of the Board of Directors.
Article 21
Presence
Quorum
1 The matters set forth in para 1(a) and 1(b) below
require that a quorum of shareholders of record holding in
person or by proxy at least two-thirds of the share capital
recorded in the share register of the Company are present at the
time when the General Meeting of Shareholders proceeds to
business:
(a) The adoption of a resolution with respect to the
removal of a serving Director; and
(b) The adoption of a resolution to amend, vary, suspend
the operation of, disapply or cancel this Article 21 or
Articles 18, 20, 22, 23 or 24.
2 The adoption of any other resolution or election
requires that at least a one-third of all the Shares entitled to
vote be represented at the time when the General Meeting of
Shareholders proceeds to business.
B. Board of Directors
Article 22
Number of
Directors
The Board of Directors shall consist of no less than three and
no more than 18 members.
Article 23
Term of
Office
1 The Directors shall be elected at the Annual
General Meeting of Shareholders or at any General Meeting of
Shareholders called for the purpose of electing Directors.
Directors shall hold office for such term as the shareholders
may determine or, in the absence of such determination, until
the next Annual General Meeting of Shareholders or until their
successors are elected or their office is otherwise vacated.
E-7
2 If, before the expiration of his term of office, a
Director should be replaced for whatever reason, the term of
office of the newly elected member of the Board of Directors
shall expire at the end of the term of office of his predecessor.
Article 24
Organization
of the Board of Directors, Remuneration
1 The Board of Directors shall elect from among its
members a Chairman. It may elect one or more Vice-Chairmen. It
shall further appoint a Secretary, who need not be a member of
the Board of Directors. Subject to applicable law and these
Articles of Association, the Board of Directors shall establish
the particulars of its organization in organizational
regulations.
2 The members of the Board of Directors shall be
entitled to reimbursement of all expenses incurred in the
interest of the Company, as well as remuneration for their
services that is appropriate in view of their functions and
responsibilities. The amount of the remuneration shall be
determined by the Board of Directors upon recommendation by a
committee of the Board of Directors. Members of the Board of
Directors may also participate in the Companys benefit and
other plans.
3 The Company shall indemnify and hold harmless, to
the fullest extent permitted by law, the existing and former
members of the Board of Directors and officers, and their heirs,
executors and administrators, out of the assets of the Company
from and against all threatened, pending or completed actions,
suits or proceedings whether civil, criminal,
administrative or investigative and all costs,
charges, losses, damages and expenses which they or any of them,
their heirs, executors or administrators, shall or may incur or
sustain by or by reason of any act done or alleged to be done,
concurred or alleged to be concurred in or omitted or alleged to
be omitted in or about the execution of their duty, or alleged
duty, or by reason of the fact that he is or was a member of the
Board of Director or officer of the Company, or while serving as
a member of the Board of Director or officer of the Company is
or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise; provided,
however, that this indemnity shall not extend to any matter
in which any of said persons is found, in a final judgment or
decree of a court or governmental or administrative authority of
competent jurisdiction not subject to appeal, to have committed
an intentional or grossly negligent breach of his statutory
duties as a member of the Board of Director or officer.
4 Without limiting the foregoing paragraph 3 of
this Article 24, the Company shall advance court costs and
attorneys fees to the existing and former members of the
Board of Directors and officers. The Company may however recover
such advanced costs if any of said persons is found, in a final
judgment or decree of a court or governmental or administrative
authority of competent jurisdiction not subject to appeal, to
have committed an intentional or grossly negligent breach of his
statutory duties as a Director or officer.
5 The rights to indemnification and advancement of
expenses conferred in this Article 24 shall not be
exclusive of any other right which any person may have or
hereafter acquire under any statute or regulation, these
Articles of Association, any agreement, vote of the shareholders
or otherwise.
Article 25
Specific
Powers of the Board of Directors
1 The Board of Directors has the non-delegable and
inalienable duties as specified in article 716a CO, in
particular:
(a) the ultimate direction of the business of the Company
and the issuance of the required directives;
(b) the determination of the organization of the Company;
(c) the administration of the accounting system and of the
financial controls, as well as the financial planning to the
extent necessary to manage the Company;
E-8
(d) the appointment and removal of the persons responsible
for the management and representation of the Company;
(e) the ultimate supervision of the persons entrusted with
management duties, in particular with regard to compliance with
law, these Articles of Association, regulations and directives;
(f) the preparation of the annual business report and the
General Meeting of Shareholders and to carry out the resolutions
adopted by the General Meeting of Shareholders; and
(g) the notification of the court in case of insolvency.
2 In addition, the Board of Directors may pass
resolutions with respect to all matters that are not reserved to
the General Meeting of Shareholders by law or under these
Articles of Association.
3 The Board of Directors may submit benefit or
incentive plans of the Company to the General Meeting of
Shareholders for approval.
Article 26
Delegation
of Powers
Subject to Article 25 para. 1 and the applicable provisions
of the CO, the Board of Directors may delegate the management of
the Company in whole or in part to individual Directors, one or
more committees of the Board of Directors or to Persons other
than Directors pursuant to organizational regulations.
Article 27
Meeting of
the Board of Directors
1 Except as otherwise set forth in organizational
regulations of the Board of Directors, the attendance quorum
necessary for the transaction of the business of the Board of
Directors shall be the greater of two Directors, and not less
than one-third of the total number of Directors. No attendance
quorum shall be required for resolutions of the Board of
Directors providing for the confirmation of a capital increase
or for the amendment of the Articles of Association in
connection therewith.
2 The Board of Directors shall pass its resolutions
with the majority of the votes cast by the Directors present at
a meeting at which the attendance quorum of para. 1 of this
Article 27 is satisfied.
3 Resolutions of the Board of Directors may be passed
without a meeting by way of written consent by a majority of the
Directors, provided that no Director requests oral
deliberations. A resolution in writing (in one or more
counterparts) signed by the Directors that voted for such
resolution (including signed copies sent by facsimile or email)
shall be valid and effectual as if it had been passed at a
meeting of the Board of Directors, duly convened and held.
Article 28
Signature
Power
The due and valid representation of the Company by members of
the Board of Directors and other Persons shall be set forth in
organizational regulations.
C. Auditor
Article 29
Term, Powers
and Duties
1 The Board of Directors shall propose the nomination
of the Auditor of the Company for election by the General
Meeting of Shareholders. The Auditor shall have the powers and
duties vested in it by law.
E-9
2 The term of office of the Auditor shall be one
year, commencing on the day of election at an Annual General
Meeting of Shareholders and terminating on the day of the next
Annual General Meeting of Shareholders.
Section 4: ANNUAL
STATUTORY FINANCIAL STATEMENTS, CONSOLIDATED FINANCIAL
STATEMENTS AND PROFIT ALLOCATION
Article 30
Fiscal Year
The Board of Directors determines the fiscal year.
Article 31
Allocation
of Profit Shown on the Annual Statutory Balance Sheet, Reserves
1 The profit shown on the Annual Statutory Balance
Sheet shall be allocated by the General Meeting of Shareholders
in accordance with applicable law. The Board of Directors shall
submit its proposals to the General Meeting of Shareholders.
2 Further reserves may be taken in addition to the
reserves required by law.
3 Dividends that have not been collected within five
years after their payment date shall enure to the Company and be
allocated to the general statutory reserves.
Section 5: WINDING-UP
AND LIQUIDATION
Article 32
Winding-up
and Liquidation
1 The General Meeting of Shareholders may at any time
resolve on the
winding-up
and liquidation of the Company pursuant to applicable law and
the provisions set forth in these Articles of Association.
2 The liquidation shall be effected by the Board of
Directors, unless the General Meeting of Shareholders shall
appoint other Persons as liquidators.
3 The liquidation of the Company shall be effectuated
pursuant to the statutory provisions.
4 Upon discharge of all liabilities, the assets of
the Company shall be distributed to the shareholders pursuant to
the amounts paid in, unless these Articles of Association
provide otherwise.
Section 6: ANNOUNCEMENTS,
COMMUNICATIONS
Article 33
Announcements,
Communications
1 The official means of publication of the Company
shall be the Swiss Official Gazette of Commerce.
2 To the extent that individual notification is not
required by law, stock exchange regulations or these Articles of
Association, all communications to the shareholders shall be
deemed valid if published in the Swiss Official Gazette of
Commerce. Written communications by the Company to its
shareholders shall be sent by ordinary mail to the last address
of the shareholder or authorized recipient recorded in the share
register. Financial institutions holding Shares for beneficial
owners and recorded in such capacity in the share register shall
be deemed to be authorized recipients.
E-10
Section 7: ORIGINAL
LANGUAGE
Article 34
Original
Language
In the event of deviations between the German and English
version of these Articles of Association, the German text shall
prevail.
Section 8: DEFINITIONS
Article 35
1 CO
The term CO has the meaning assigned to it in
Article 14 para. 1. To the extent the CO is amended,
references herein to articles or provisions of the CO shall be
deemed to be references to the relevant replacement or amended
provisions of the CO.
2 Company
The term Company has the meaning assigned to it in
Article 1.
3 Person
Person means any individual, company, corporation,
limited liability company, partnership, unincorporated
association or other entity. When two or more Persons act as a
partnership, limited partnership, syndicate, or other group for
the purpose of acquiring, holding, or disposing of securities of
the Company, such syndicate or group shall be deemed a
Person for the purposes of this definition.
4 Rights
The term Rights has the meaning assigned to it in
Article 6 para. 1.
5 Rights-Bearing Obligations
The term Rights-Bearing Obligations has the meaning
assigned to it in Article 6 para. 1.
6 SEC
The term SEC has the meaning assigned to it in
Article 12 para. 2.
7 Share(s)
The term Share(s) has the meaning assigned to it in
Article 4.
8 Transfer Agent
The term Transfer Agent has the meaning assigned to it in
Article 8 para. 3.
Section 9: TRANSITIONAL
PROVISION
Article 36
Contribution
in Kind
In connection with the capital increase of
[ ] ,
and in accordance with the order issued by the Supreme Court of
Bermuda on
[ ]
sanctioning the scheme of arrangement between Weatherford
International Ltd., an exempted company with limited liability
under the laws of Bermuda (Weatherford Bermuda), and its
shareholders, as approved by the shareholders of Weatherford
Bermuda (the Scheme of Arrangement), the Company acquires
all of the common shares of Weatherford Bermuda, which have a
total value of CHF
[ ].
As consideration for this contribution, the Company issues to a
nominee, acting on behalf and for the account of the holders of
common shares of Weatherford Bermuda outstanding immediately
prior to the effectiveness of the Scheme of Arrangement, a total
of
[ ] Shares
with a total par value of CHF
[ ].
The difference between the aggregate par value of the issued
Shares and the total value of the contribution, in the amount of
CHF
[ ],
is allocated to the reserves of the Company.
E-11
ARTICLE 1
SCOPE AND
BASIS
Section 1.01. Basis. These
Organizational Regulations (the Organizational
Regulations) are enacted by the Board of Directors of
Weatherford International Ltd. (the Company) pursuant to
article 716b of the Swiss Code of Obligations (CO)
and Article 26 of the Companys articles of
association (the Articles of Association). The
Organizational Regulations govern the internal organization and
the duties, powers and responsibilities of the Board of
Directors, Board Committees and officers of the Company
(collectively, the Executive Bodies).
Section 1.02. Group
Companies. The Company is an operating and
holding company with international subsidiaries active in
businesses that are involved in providing equipment and related
services used for drilling, evaluation, completion, production
and intervention of oil and natural gas wells. The Executive
Bodies of the Company shall duly respect the legal independence
of all subsidiary companies and the local laws applicable to
them. To ensure proper functioning among the Company and its
subsidiaries, in the interests of the Company and its
shareholders and to comply with various requirements imposed by
relevant laws and regulatory authorities, the Board of Directors
shall supervise and, where necessary and appropriate, coordinate
the business of the Company and its subsidiaries by providing
overall guidance and support.
Section 1.03. Interpretation.
(a) Words importing the singular number shall also include
the plural number and vice-versa.
(b) Words importing the masculine gender shall also include
the feminine gender.
ARTICLE 2
CORPORATE
ORGANIZATION
The Company shall have the following functions and committees:
(a) the Board of Directors (the Board);
(b) the chairman of the Board (the Chairman);
(c) the board committees established from time to time
pursuant to these Organizational Regulations (the Board
Committees);
(d) the chief executive officer of the Company (the
Chief Executive Officer); and
(e) the officers and other management of the Company.
ARTICLE 3
THE BOARD
Section 3.01. Constitution. The
Board shall elect from among its members one Chairman. It may
elect one or more Vice-Chairmen. It shall further appoint a
Secretary who need not be a member of the Board. The Secretary
shall keep the minutes of the General Meetings of Shareholders
and the meetings of the Board and give notice of such meetings
and shall perform like duties for the committees of the Board
when so required. In the case of the absence or inability to act
of the Secretary, any Assistant Secretary (or, in the case of
keeping minutes of the General Meeting of Shareholders or the
meetings of the Board, any other person designated by the
presiding officer of such meeting) may act in the
Secretarys place.
Section 3.02. Board
Composition. In selecting candidates for
Board membership the Board shall give due consideration to the
governance framework set forth in the Corporate Governance
Principles of the Company.
F-1
Section 3.03. Powers
and Duties.
(a) The Board is the ultimate executive body of the Company
and shall determine the principles of the business strategy and
policies. The Board shall exercise its function as required by
law, the Articles of Association and these Organizational
Regulations.
(b) The Board shall be authorized to pass resolutions on
all matters that are not reserved to the General Meeting of
Shareholders or to other Executive Bodies by applicable law, the
Articles of Association or these Organizational Regulations.
(c) In particular, the Board has the following powers and
duties:
(i) the ultimate direction of the Company and the issuance
of the necessary guidelines in accordance with applicable law
and regulations;
(ii) the determination of the Companys organizational
structure, including the promulgation and the amendment of these
Organizational Regulations;
(iii) the determination of the Companys accounting
principles, financial control and financial planning;
(iv) the appointment and removal of the persons responsible
for the management and representation of the Company;
(v) the ultimate supervision of the persons entrusted with
the management of the Company, in particular with regard to
their compliance with applicable law, the Articles of
Association, these Organizational Regulations and other
applicable instructions and guidelines;
(vi) the review and approval of the business report and the
financial statements of the Company as well as the preparation
of the General Meeting of Shareholders and the implementation of
its resolutions;
(vii) the notification of the court if the liabilities of
the Company exceed the assets of the Company (article 725
CO);
(viii) the adoption of resolutions concerning an increase
in the share capital of the Company to the extent that such
power is vested in the Board (article 651 para. 4 CO) and
of resolutions concerning the confirmation of capital increases
and corresponding amendments to the Articles of Association, as
well as making the required report on the capital increase;
(ix) the establishment of the Companys dividend
policy;
(x) the proposal to the General Meeting of Shareholders of
candidates for election or re-election to the Board, upon
recommendation of the Corporate Governance and Nominating
Committee;
(xi) the response to any takeover offer for the Company;
(xii) the establishment of any code of ethics, code of
conduct and business practice;
(xiii) the determination of any membership and terms of
reference of any Board Committees;
(xiv) the approval of any agreements to which the Company
is a party relating to mergers, demergers, transformations
and/or
transfer of assets, to the extent required pursuant to the Swiss
Merger Act
and/or
unless approval by the General Meeting of Shareholders is
required pursuant to the Swiss Merger Act;
(xv) the appointment and removal of the Chairman (giving
due consideration to the Corporate Governance Guidelines of the
Company) and the Secretary, the members of Board Committees and
the officers, as well as the determination of their signatory
power (see Section 9.01);
(xvi) the approval of the annual investment and operating
budget;
(xvii) the approval of share buybacks of the
Company; and
F-2
(xviii) the determination for the Company to enter into new
areas of activity and withdrawal from existing areas of
business, each within the purpose of the Company as specified in
the Companys Articles of Association.
Section 3.04. Delegation
of Management. To the extent permitted by
applicable law and stock exchange rules and except as otherwise
provided herein, the Board herewith delegates, in the sense of
article 716b CO, all other duties, including the
implementation of the Board and committee resolutions as well as
the supervision of particular aspects of the business and the
management of the Company, to the Chief Executive Officer.
Subject to Section 3.07, Directors will have complete and
open access to the officers of the Company, including the Chief
Executive Officer.
Section 3.05. Meetings.
(a) The Board shall meet together for the transaction of
business, convening, adjourning and otherwise regulating its
meetings as it thinks fit. The Board shall give due
consideration to the governance framework set forth in the
Corporate Governance Guidelines of the Company.
(b) Regularly scheduled meetings of the Board may be held
at such time and at such place as shall from time to time be
determined by the Chairman. Special meetings of the Board may be
called by the Chairman or any two members of the Board. Any
member of the Board may request that the Chairman convene a
meeting as soon as practicable, subject to providing a reason
for so requesting a meeting.
(c) No notice need be given of any regular meeting of the
Board or of any adjourned meeting of the Board. No notice need
be given to any Director who signs a written waiver thereof or
who attends the meeting without protesting the lack of notice.
Notices need not state the purpose of the meeting. Attendance of
a Director at any meeting shall constitute a waiver of notice of
such meeting, except when a Director attends and makes it known
that he is attending for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is
not lawfully convened, and such purpose is duly recorded in the
minutes of such meeting.
(d) Notice of each special meeting of the Board shall be
given to each Director either by first class mail or by a mail
service equivalent to first class mail, at least three days
before the meeting, by overnight or other express
delivery service at least two days before the meeting, or by
telecopy, facsimile, personal written delivery,
e-mail (or
other electronic means of communication) or telephone at least
one day before the meeting. Any notice given by telephone shall
be immediately confirmed by telecopy, facsimile, or
e-mail (or
other electronic means of communication). Notices are deemed to
have been given: by mail, when deposited in the mail with
postage prepaid; by overnight or other express
delivery service, the day after sending; by telecopy or
facsimile, upon receipt of a transmittal confirmation; and by
personal delivery,
e-mail or
telephone, at the time of delivery. Written notices shall be
sent to a Director at the address or
e-mail
address designated by such Director for that purpose or, if none
has been so designated, at such Directors last known
residence, business or
e-mail
address.
(e) Any one or more Directors or any committee thereof may
participate in a meeting of the Board or committee by conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other,
and participation in a meeting by such means shall constitute
presence in person at such meeting.
Section 3.06. Attendance
Quorum; Resolutions and Minutes.
(a) The attendance quorum necessary for the transaction of
the business of the Board shall be the greater of two Directors,
and not less than one-third of the total number of Directors. No
attendance quorum shall be required for resolutions of the Board
providing for the confirmation of a capital increase or for the
amendment of the Articles of Association in connection therewith.
(b) The Board shall pass its resolutions with the majority
of the votes cast by the Directors present at a meeting at which
the attendance quorum of Section 3.06(a) above is
satisfied. The Chairman shall have the same vote as each other
Director.
F-3
(c) Resolutions of the Board may be passed without a
meeting by way of written consent by a majority of the whole
Board, provided that no member of the Board requests oral
deliberations. In such a case, a resolution in writing (in one
or more counterparts) signed by a majority the Directors or all
the members of a committee of the Directors (including signed
copies sent by facsimile or email) shall be as valid and
effectual as if it had been passed at a meeting of the Board or
committee, as the case may be, duly convened and held.
(d) The Board shall cause minutes to be made for the
purpose of recording the proceedings at all meetings of the
Company and the Directors and of committees of the Board. The
minutes of Board meetings shall be signed by the acting chairman
and the secretary and must be approved by the Board. The minutes
of committee meetings shall be signed by the acting chairman and
must be approved by such committee.
Section 3.07. Information
and Reporting.
(a) At Board meetings, each member of the Board is entitled
to request and receive from other Directors and from the Chief
Executive Officer information on all affairs of the Company.
(b) Outside of Board meetings, each Director may request
information from the Chief Executive Officer on the general
course of business and, upon approval of the Chairman, each
Director may obtain information on specific transactions
and/or
access to business documents.
Section 3.08. Compensation. Each
Director shall be entitled to receive as compensation for such
Directors services as a Director or committee member or
for attendance at meetings of the Board or committees, or both,
such amounts and type of compensation (if any) as shall be fixed
from time to time by the Board or the Compensation Committee. In
determining Directors compensation, the Board shall give
due consideration to the governance framework set forth in the
Corporate Governance Guidelines of the Company as well as the
recommendations of the Compensation Committee. Each Director
shall be entitled to reimbursement for reasonable traveling
expenses incurred by such Director in attending any such meeting.
Section 3.09. Conflicts
of Interest.
(a) Any Director, or any Directors firm, partner or
any company with whom any Director is associated, may act in a
professional capacity for the Company and such Director or such
Directors firm, partner or such company shall be entitled
to remuneration for professional services as if such Director
were not a Director, provided that nothing herein shall
authorize a Director or Directors firm, partner or company
to act as auditor of the Company.
(b) A Director who is directly or indirectly interested in
a contract or proposed contract or arrangement with the Company
shall disclose the nature of such interest as required by
applicable law.
(c) The Director facing a conflict of interests shall not
participate in the deliberations and resolutions on matters
involving such conflict of interests.
Section 3.010. Participation
by Non-Members. Persons who are not members
of the Board of Directors or committees of the Board may
participate in meetings of such bodies if their expertise is
required and they have been invited by the chairperson of such
body. Such persons shall not vote upon any resolutions.
ARTICLE 4
CHAIRMAN AND
VICE-CHAIRMAN
Section 4.01. Power
and Duties. The Chairman of the Board shall
preside at all meetings of the Board. Further, the Chairman has
the following powers and duties:
(a) contact with the officers and management of the Company
between Board meetings in order to be informed about important
business developments;
(b) preparing the agenda for the General Meetings of
Shareholders and Board meetings;
(c) presiding over the General Meetings of Shareholders and
Board meetings;
F-4
(d) informing the full Board without delay of material
extraordinary events; and
(e) any other matters reserved by law, the Articles of
Association or these Organizational Regulations to the Chairman.
Section 4.02. Authority. Should
the Chairman be unable or unavailable to exercise his functions,
his functions shall be assumed by the Vice-Chairman, if one has
been elected, or if the latter has not been elected or should be
unable or unavailable, another Director appointed by the Board.
ARTICLE 5
BOARD
COMMITTEES
Section 5.01. General.
(a) The Board may, by resolution passed by a majority of
the whole Board, designate one or more committees, each
committee to consist of one or more of the Directors, as
designated by the Board. The Board may designate one or more
alternate Directors as members of any committee, who may replace
any absent member at any meeting of the committee. In the
absence of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint
another member of the Board to act at the meeting in the place
of any such absent member. At all meetings of any committee, a
majority of its members (or the member, if only one) shall
constitute a quorum for the transaction of business, and the act
of a majority of the members present shall be the act of any
such committee, unless otherwise specifically provided by law,
the Articles of Association or these Organizational Regulations.
The Board shall have the power at any time to change the number
and members of any such committee, to fill vacancies and to
discharge any such committee.
(b) Sections 3.05 and 3.06(b) through (d) above
with respect to notice of, and participation in, meetings of the
Board shall apply also to meetings of committees, unless
different provisions shall be prescribed by the Board. Each
committee shall serve at the discretion of the Board. It shall
keep minutes of its meetings and report the same to the Board
when required and shall observe such procedures as are
prescribed by the Board.
(c) Any committee of the Board, to the extent provided by
the provisions set forth herein and in such committees
charter, but subject to any limitation imposed by the Swiss Code
of Obligations, shall have and may exercise of all the powers
and authority of the Board in the management of the affairs of
the Company that are assigned to it by the Board and may further
assist the Board in implementing its resolutions. The Board may
delegate to any such committee the necessary powers to that
effect pursuant to the provisions of such committees
charter.
(d) The committees have the right, at any time and in their
discretion, to make or request inquiries in all matters within
their responsibilities as specified in such committees
charter. They may hire independent legal advisors, auditors and
other experts, in particular to establish a comparison with
general principles of best practice or otherwise. The expenses
shall be borne by the Company.
Section 5.02. Individual
Committees. The committees of the Board shall
be the Audit Committee, the Compensation Committee, the
Corporate Governance and Nominating Committee and any other
committees designated by the Board.
ARTICLE 6
CHIEF
EXECUTIVE OFFICER
Section 6.01. Powers
and Duties. Subject to applicable law,
regulations and stock exchange rules, the day-to-day executive
management of the Company shall be the responsibility of the
Chief Executive Officer. If the President (as described below)
shall not be designated the Chief Executive Officer of the
Company, such President shall have such authority and perform
such duties as may be prescribed from time to time by the Board
or the Chief Executive Officer. The Chief Executive Officer
shall have the primary responsibility for the management of the
Company, and shall directly report to the Board.
F-5
Section 6.02. Reporting. The
Chief Executive Officer shall regularly inform the Board at the
Board meetings on the current course of business and all major
business matters of the Company.
ARTICLE 7
OFFICERS
Section 7.01. Composition. The
officers of the Company shall be chosen by the Board and shall
include a Chief Executive Officer, a President and one or more
Vice Presidents (who may be further classified by such
descriptions as Executive, Senior or
Assistant as determined by the Board), and such
other officers, as the Board may deem necessary or appropriate.
The Board may from time to time authorize any officer to appoint
and remove any other officer or agent and to prescribe such
persons authority and duties. Any person may hold at one
time two or more offices. Each officer shall have such authority
and perform such duties, in addition to those specified in these
Articles, as may be prescribed by the Board from time to time.
Section 7.02. Term
of Office. Each officer shall hold office for
the term for which appointed by the Board, and until the
persons successor has been appointed and qualified or
until such persons earlier resignation or removal. Any
officer may be removed by the Board, with or without cause. The
election or appointment of an officer shall not in and of itself
create contractual rights to bind the Company. Any officer may
resign at any time by giving written notice to the Board or the
Secretary. Any such resignation shall take effect at the time
specified therein or, if such time is not specified therein,
then upon receipt of such notice, and, unless otherwise
specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
ARTICLE 8
FISCAL YEAR
Section 8.01. Determination. The
fiscal year of the Company shall start on January 1 and end on
December 31.
ARTICLE 9
GENERAL
PROVISIONS
Section 9.01. Signatory
Power. The Directors, officers and other
persons authorized to represent the Company and its subsidiaries
have individual or joint signatory power, as determined
appropriate by the Board from time to time or as otherwise
required by applicable law.
Section 9.02. Insurance. The
Company may procure directors and officers liability
insurance for the Directors and for officers of the Company. Any
costs of insurance shall be charged to the Company or its
subsidiaries.
ARTICLE 10
FINAL
PROVISIONS
Section 10.01. Change
of or Amendments to these Organizational
Regulations. Any change of or amendment to
these Organizational Regulations shall only be valid if the
Board approved such change or amendment with the attendance
quorum and the majority as set forth in Section 3.06(a),
(b) and (c), respectively.
SO RESOLVED as
of ,
2009.
F-6
Annex G
WEATHERFORD-SWITZERLAND
STAND-ALONE STATUTORY FINANCIAL STATEMENTS
WEATHERFORD INTERNATIONAL LTD.,
A SWISS
CORPORATION
BALANCE SHEET
|
|
|
|
|
|
|
November 26,
|
|
|
|
2008
|
|
|
|
(In thousands, except share data)
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
Cash and cash equivalents
|
|
$
|
84
|
|
|
|
|
|
|
Total assets
|
|
$
|
84
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Shares, CHF 0.01 par value; 10,000,000 issued
|
|
$
|
84
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
84
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
84
|
|
|
|
|
|
|
See
accompanying note.
G-1
WEATHERFORD
INTERNATIONAL LTD.,
A SWISS
CORPORATION
NOTE TO
BALANCE SHEET
(Unaudited)
|
|
Note 1
|
Nature of
Business and Basis of Presentation
|
Registered on November 26, 2008, Weatherford International
Ltd., a Swiss corporation (Weatherford-Switzerland),
is incorporated and domiciled in Zug, Canton of Zug,
Switzerland. A wholly-owned subsidiary of Weatherford
International Ltd., a Bermuda exempted company,
Weatherford-Switzerland is a U.S. dollar functional
currency entity. Weatherford-Switzerland was formed to acquire,
hold, administer and transfer, participations in entities in
Switzerland and abroad, either directly or indirectly, in
particular entities which are active in the field of services
providing with respect to the use of natural energy and of the
financing of such activities. As of the date of formation,
Weatherford-Switzerland did not conduct operations.
The Weatherford-Switzerland balance sheet presents the financial
position, prepared in accordance with Swiss law.
G-2
Annex H
Report of
Independent Registered Public Accounting Firm
Shareholder
Weatherford International Ltd.
We have audited the accompanying balance sheet of Weatherford
International Ltd., a Swiss Corporation, as of November 26,
2008. This balance sheet is the responsibility of the
Companys management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of
material misstatement. We were not engaged to perform an audit
of the Companys internal control over financial reporting.
Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet, assessing the accounting
principles used and significant estimates made by management,
and evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a
reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position of
Weatherford International Ltd., a Swiss Corporation, at
November 26, 2008, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Houston, Texas
December 10, 2008
H-1
WEATHERFORD
INTERNATIONAL LTD.,
A SWISS
CORPORATION
BALANCE
SHEET
(In thousands, except share data)
|
|
|
|
|
|
|
November 26,
|
|
|
|
2008
|
|
|
ASSETS
|
Cash and cash equivalents
|
|
$
|
84
|
|
|
|
|
|
|
Total assets
|
|
$
|
84
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Shares, CHF 0.01 par value; 10,000,000 authorized, issued
and outstanding
|
|
$
|
84
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
84
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
84
|
|
|
|
|
|
|
See
accompanying note.
H-2
WEATHERFORD
INTERNATIONAL LTD.,
A SWISS
CORPORATION
NOTE TO
BALANCE SHEET
|
|
Note 1
|
Nature of
Business
|
Registered on November 26, 2008, Weatherford International
Ltd., a Swiss corporation (Weatherford-Switzerland),
is incorporated and domiciled in Zug, Canton of Zug,
Switzerland. A wholly-owned subsidiary of Weatherford
International Ltd., a Bermuda exempted company,
Weatherford-Switzerland is a U.S. dollar functional
currency entity. Weatherford-Switzerland was formed to acquire,
hold, administer and transfer, participations in entities in
Switzerland and abroad, either directly or indirectly, in
particular entities which are active in the field of services
providing with respect to the use of natural energy and of the
financing of such activities. As of the date of formation,
Weatherford-Switzerland did not conduct operations.
H-3
WEATHERFORD INTERNATIONAL LTD.
P R O X Y
SPECIAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, revoking any proxy heretofore given in connection with the meeting described
herein, hereby appoints Bernard J. Duroc-Danner, or, failing him, Burt M. Martin, as proxy, each
with full powers of substitution, to represent the undersigned at the meeting to be held at our
corporate offices at 515 Post Oak Blvd., Room 604, Houston, Texas, on
, 2009, commencing at 9:00 a.m.,
local time, and at any adjournment or postponement thereof, and to vote all common shares that the
undersigned would be entitled to vote if personally present on the
following matters as more particularly described in the Proxy
Statement dated
,
200 .:
The shares represented by this proxy, when properly executed and returned, will be voted as
directed herein. If this proxy is duly executed and returned, and no voting directions are given
herein, such shares will be voted FOR approval of Items 1 and 2 to be voted on at the meeting of
shareholders and in the proxy holders discretion on any other matters as may properly come before
the meeting. The undersigned hereby acknowledges receipt of notice of, and the proxy statement for,
the aforesaid meeting.
(Continued and to be signed on the other side)
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Please Mark your vote in
Black or Blue ink as shown here þ.
|
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Please Sign, Date
and Return Promptly
in the Enclosed
Envelope.
|
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Please Mark Here
for Address Change
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The Board of Directors Recommends a Vote FOR Approval of Items 1 and 2.
Item 1. Approval of the Scheme of Arrangement attached to the accompanying proxy statement as Annex B.
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FOR
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AGAINST
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ABSTAIN |
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o
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o
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Item 2. Approval of the motion to adjourn the meeting to a later date to solicit additional proxies if there are insufficient votes at the time of the meeting to approve the Scheme of Arrangement.
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FOR
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AGAINST
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ABSTAIN |
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o
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o
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Item 3. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the meeting.
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Signature
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Date
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Signature
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Sign exactly as name appears hereon. (If shares are held in joint names, both should sign. If
signing as Attorney, Executor, Administrator, Trustee or Guardian, please give your title as such.
If the signer is a corporation, please sign in full corporate name by duly authorized officer.)