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EXHIBIT 2.1
CONFORMED COPY
AMENDED AND RESTATED
ORGANIZATION AGREEMENT
BY AND AMONG
XXXXX INTERNATIONAL, INC.,
XXXXX INTERNATIONAL ACQUISITION CORP.,
M-I PURCHASE CORPORATION,
M-I L.L.C.,
XXXXX INTERNATIONAL CANADA LTD.,
M-I DRILLING FLUIDS CANADA, INC.,
SCHLUMBERGER LIMITED,
SCHLUMBERGER TECHNOLOGY CORPORATION
AND
SCHLUMBERGER MI, INC.
JULY 14, 1999
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TABLE OF CONTENTS
Article 1. DEFINITIONS AND GENERAL.......................................... 2
1.1 Definitions................................................................. 2
1.2 Construction................................................................ 9
1.3 References.................................................................. 9
1.4 Headings.................................................................... 9
Article 2. REORGANIZATION OF M-I AND CONTRIBUTION........................... 9
2.1 M-I Pre-Closing Reorganization.............................................. 9
2.2 Venture Entities' Charter Documents and Organization........................ 11
2.3 Ownership of the Venture Entities........................................... 11
2.4 Schlumberger Transfer of Assets and Liabilities ............................ 11
2.5 Schlumberger Purchase of Interest in Each Venture Entity ................... 12
2.6 Venture Entities' Names..................................................... 12
2.7 Management of Venture Entities.............................................. 12
2.8 M-I Mexico.................................................................. 13
Article 3. THE CLOSING...................................................... 13
3.1 Execution of the Amended Venture Entity Charter Documents................... 13
3.2 Payment of the Cash Purchase Price for the Venture Entity Interests......... 13
3.3 Execution of the Conveyance and Assumption Agreements....................... 13
3.4 Intellectual Property Licenses.............................................. 14
3.5 Failure of Consent.......................................................... 15
3.6 Closing Adjustment.......................................................... 16
3.7 Delivery.................................................................... 16
3.8 Adjusting Payments.......................................................... 17
3.9 Closing Statements.......................................................... 17
3.10 Closing Date, Effective Time and Second Closing............................. 17
Article 4. CERTAIN COVENANTS................................................ 18
4.1 Employees in General........................................................ 18
4.2 Payroll..................................................................... 18
4.3 Employees in Foreign Operations in General.................................. 20
4.4 Provisions Regarding USNewco Employees...................................... 23
4.5 Provisions Regarding Foreign Venture Entities' Employees.................... 25
4.6 USNewco Employee Benefit Programs........................................... 27
4.7 Foreign Venture Entities' Employee Benefit Programs......................... 30
4.8 Insurance and Warranty Service.............................................. 35
4.9 Bulk Sales Acts............................................................. 36
4.10 Accounts Receivable......................................................... 36
4.11 Further Actions............................................................. 37
4.12 Use of Certain Facilities................................................... 38
4.13 Expenses.................................................................... 38
4.14 Books of Account and Special Rights......................................... 39
4.15 Firewalls................................................................... 40
4.16 Technical and Environmental Committees...................................... 41
4.17 Post-Closing Technical Support.............................................. 41
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4.18 Venture Entity Audits....................................................... 42
4.19 Transfer Restrictions and Procedures........................................ 42
4.20 Special Option.............................................................. 44
4.21 Right of First Refusal...................................................... 45
4.22 No Dispositions............................................................. 47
Article 5. REPRESENTATIONS AND WARRANTIES................................... 47
5.1 Xxxxx....................................................................... 48
5.2 SIAC, MIPC and Xxxxx Canada................................................. 49
5.3 M-I and M-I Canada.......................................................... 50
5.4 Schlumberger................................................................ 58
5.5 Schlumberger MI............................................................. 64
Article 6. LIABILITIES AND INDEMNIFICATION.................................. 66
6.1 Venture Entity Indemnification.............................................. 66
6.2 Xxxxx Indemnification....................................................... 66
6.3 Schlumberger Indemnification................................................ 68
6.4 Product Liabilities......................................................... 69
6.5 Partner Cross-Indemnities................................................... 70
6.6 Settlement of Indemnities................................................... 70
6.7 Limitation on Liability..................................................... 73
Article 7. CONDITIONS PRECEDENT TO CLOSING.................................. 73
7.1 Conditions to Each Party's Closing Obligation............................... 73
7.2 Conditions to the Closing Obligation of Xxxxx............................... 73
7.3 Conditions to the Closing Obligation of Xxxxx............................... 73
Article 8. TERMINATION, AMENDMENT, WAIVER AND MODIFICATION.................. 73
8.1 Termination................................................................. 73
8.2 Effect of Termination....................................................... 73
8.3 Amendment................................................................... 73
8.4 Extension/Waiver............................................................ 74
Article 9. GENERAL PROVISIONS............................................... 74
9.1 Survival of Representations and Warranties and Certain
Indemnification Obligations............................................... 74
9.2 Governing Law............................................................... 76
9.3 Assignment.................................................................. 76
9.4 Counterparts................................................................ 76
9.5 Notices..................................................................... 76
9.6 Competition and Confidentiality............................................. 78
9.7 Litigation and Claim Support................................................ 80
9.8 Enforcement................................................................. 80
9.9 Mediation-Arbitration....................................................... 80
9.10 Entire Agreement............................................................ 81
9.11 Consents and Approval....................................................... 81
9.12 Obligations of Schlumberger................................................. 81
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AMENDED AND RESTATED
ORGANIZATION AGREEMENT
This Amended and Restated Organization Agreement (as may be
supplemented or amended in accordance with the provisions hereof, this
"Agreement") dated as of July 14, 1999, is by and among Xxxxx International,
Inc., a Delaware corporation ("Xxxxx"), Xxxxx International Acquisition Corp., a
Delaware corporation ("SIAC"), M-I Purchase Corporation, a Delaware corporation
("MIPC"), M-I L.L.C., a Delaware limited liability company ("M-I"), Xxxxx
International Canada Ltd., an Alberta corporation ("Xxxxx Canada"), M-I Drilling
Fluids Canada, Inc., an Alberta corporation ("M-I Canada"), Schlumberger
Limited, a Netherlands Antilles corporation ("Schlumberger"), Schlumberger
Technology Corporation, a Texas corporation ("STC"), and Schlumberger MI, Inc.,
a Delaware corporation ("Schlumberger MI").
WITNESSETH:
WHEREAS, pursuant to that certain Organization Agreement dated as of
February 5, 1999 (the "Original Agreement"), Xxxxx, SIAC, MIPC, M-I, Xxxxx
Canada, M-I Canada, Schlumberger and Schlumberger Technology Corporation agreed
to combine their businesses that are engaged in producing and marketing drilling
fluids, drilling fluids systems, completion fluids, completion fluids systems,
solids control, rig instrumentation, waste remediation and other related assets
and businesses (the "Drilling Fluids Business") into (a) a jointly owned limited
liability company formed under the laws of the State of Delaware ("USNewco");
(b) a jointly owned corporation formed under the laws of the British Virgin
Islands ("BVINewco"); (c) a jointly owned Besloten Vennootschap formed under the
laws of the Netherlands ("Dutchco"); and (d) M-I Canada, such that, upon
consummation of the transactions contemplated pursuant to the Original
Agreement, Xxxxx and Schlumberger would own, through various subsidiaries, 60%
and 40% ownership interests, respectively, in each of those respective entities;
and
WHEREAS, Schlumberger has decided to liquidate the assets that comprise
the United States portion of its Drilling Fluids Business (the "Schlumberger
U.S. Business"); and
WHEREAS, in accordance with Section 8.3 of the Original Agreement, the
parties desire to amend and restate the Original Agreement to, among other
things, exclude from this Agreement the Schlumberger U.S. Business; and
WHEREAS, all the parties agree that because the Drilling Fluids
Business of STC will not be transferred to USNewco as contemplated by the
Original Agreement, STC need not be a party to this Agreement going forward; and
WHEREAS, all the parties agree that Schlumberger MI shall be a party to
this Agreement because it will hold Schlumberger's 40% interest in USNewco
pursuant to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
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DEFINITIONS AND GENERAL
DEFINITIONS
The capitalized terms defined in this Section 1.1, whenever used in this
Agreement, shall have the following meanings for all purposes of this Agreement:
(1) "Accounting Date" means July 25, 1999.
(2) "Alternative Non-Monetary Consideration" has the meaning
given such term in Section 4.21.
(3) "Appraisal Notice" has the meaning given such term in
Section 4.21.
(4) "Appraiser" has the meaning given such term in Section
4.21.
(5) "Assumed Liabilities" means, collectively, the M-I
Assumed Liabilities and the Schlumberger Assumed Liabilities.
(6) "Bargaining Unit Employees" has the meaning given such
term in Section 4.4(b).
(7) "BVINewco" means a corporation to be formed under the
laws of the British Virgin Islands.
(8) "Canadian Employees" has the meaning given such term in
Section 4.7(a).
(9) "Change of Control Event" has the meaning given such term
in Section 4.20.
(10) "Charter Documents" means, with respect to any entity,
(a) the articles or certificate of formation, incorporation or
organization (or the equivalent organizational documents) of that
entity, (b) the bylaws or limited liability company agreement or
regulations (or the equivalent governing documents, including
shareholders agreements) of that entity and (c) each document setting
forth the designation, amount and relative rights, limitations and
preferences of any class or series of equity ownership in that entity
or any rights in respect of that entity's equity ownership interests.
(11) "Closing" means the closing of the transactions
contemplated to occur on the Closing Date.
(12) "Closing Date" has the meaning given such term in
Section 3.10(a).
(13) "Closing Statements" has the meaning given such term in
Section 3.9.
(14) "Code" means the United States Internal Revenue Code of
1986, as amended.
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(15) "Collective Agreements" has the meaning given such term
in Section 4.4(b).
(16) "CSI" has the meaning given such term in Section 4.7(a).
(17) "Damages" means and includes, as to any Person, any
loss, cost, expense, liability, penalty or interest, or other damage,
including reasonable counsel fees.
(18) "Disposing Party" has the meaning given such term in
Section 4.21.
(19) "Disposition" has the meaning given such term in Section
4.21.
(20) "Disposition Notice" has the meaning given such term in
Section 4.21.
(21) "DMP" has the meaning given such term in Section 4.7.
(22) "Domestic Plans Extension Period" has the meaning given
such term in Section 4.6.
(23) "Dresser" means Dresser Industries, Inc., which entity
was subsequently merged into Halliburton.
(24) "Dutchco" means a Besloten Vennootschap to be formed
under the laws of the Netherlands.
(25) "Effective Time" has the meaning given such term in
Section 3.10(a).
(26) "Environmental Committee" has the meaning given such
term in Section 4.16.
(27) "Environmental, Health and Safety Requirements" means any
U.S. or non-U.S., national, federal, state or local statute, law, rule,
regulation, ordinance, directive, code, or rule of common law in effect
and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment,
relating to pollution, exposure to oil, pollutants, hazardous or toxic
materials or wastes, or protection of the environment, including laws
relating to exposures, emissions, discharges, releases or threatened
releases of oil, pollutants, hazardous or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of oil, pollutants, hazardous
or toxic materials or wastes, or relating to the environment, health,
safety or hazardous materials, including CERCLA, 42 U.S.C. Sections
9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. Sections 1251 et seq.; the Toxic Substances Control Act, 15
U.S.C. Sections 2601 et seq.; the Clean Air Act, 42 U.S.C. Sections
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections 300f et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sections
5101 et seq.; the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.;
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Sections 136 et
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seq.; and the Occupational Safety and Health Act, 29 U.S.C. Sections
651 et seq. ("OSHA"), in each case as have been or may be amended from
time to time, and any other U.S. or non-U.S., national, federal, state
or local laws, ordinances, rules, regulations and publications now or
hereafter relating to the subject matter of this clause (27).
(28) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(29) "Exchange Act" means the United States Securities
Exchange Act of 1934, as amended.
(30) "Executive Committee" has the meaning given such term in
Section 2.7(b).
(31) "Exercise Notice" has the meaning given such term in
Section 4.21.
(32) "Expatriates" has the meaning given such term in Section
4.3.
(33) "Fair Market Value" has the meaning given such term in
Section 4.21.
(34) "Foreign Employees" has the meaning given such term in
Section 4.3.
(35) "Foreign Plans Extension Period" has the meaning given
such term in Section 4.7.
(36) "Foreign Venture Entities" has the meaning given such
term in Section 4.1.
(37) "Foreign Venture Entities' Employees" has the meaning
given such term in Section 4.5.
(38) "Foreign Venture Entities' Foreign Plans" has the
meaning given such term in Section 4.7.
(39) "Former M-I Domestic Employees" has the meaning given
such term in Section 4.2.
(40) "Former M-I Foreign Employees" has the meaning given
such term in Section 4.2.
(41) "Former Schlumberger Employees" has the meaning given
such term in Section 4.2.
(42) "GAAP" means generally accepted accounting principles as
in effect in the United States applied on a consistent basis.
(43) "Halliburton" means Halliburton Company.
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(44) "ICs" has the meaning given such term in Section 4.3.
(45) "Indemnified Party" has the meaning given such term in
Section 6.6.
(46) "Indemnifying Party" has the meaning given such term in
Section 6.6.
(47) "Initiating Party" has the meaning given such term in
Section 4.19.
(48) "Investment Canada Notification" means the post-Closing
filing required by Section 12 of the Investment Canada Act, Chapter
I-21.8 [R.S., 1985, c. 28 (1st Supp.)].
(49) "IRS" means the United States Internal Revenue Service.
(50) "Lien" means any mortgage, pledge, security interest,
encumbrance, lien, claim or other charge.
(51) "Material Adverse Effect" means any effect or change
that is or would adversely affect the business, operations, assets,
condition (financial or otherwise) or results of operations of an
entity by more than $1,000,000.
(52) "Mexican Tax Ruling" has the meaning given such term in
Section 2.8.
(53) "M-I Acquired Assets" means the assets being contributed
to USNewco, BVINewco and Dutchco pursuant to Section 2.1(a) and the
assets of M-I Canada, collectively.
(54) "M-I Assumed Liabilities" has the meaning given such
term in Section 2.1(b).
(55) "M-I Balance Sheet" has the meaning given such term in
Section 2.1(b).
(56) "M-I Domestic Business" has the meaning given such term
in Section 4.1.
(57) "M-I Drilling Fluids Business" means the business of M-I
and of M-I Canada comprised solely of the M-I Acquired Assets and the
M-I Assumed Liabilities.
(58) "M-I Foreign Business" has the meaning given such term
in Section 4.1.
(59) "M-I Foreign Plans " has the meaning given such term in
Section 4.7.
(60) "M-I Mexico" means M-I Drilling Fluids de Mexico, S.A.
de C.V., which is currently a wholly owned subsidiary of M-I.
(61) "M-I Profit-Sharing Plan" has the meaning given such
term in Section 4.6.
(62) "M-I Transferred Subsidiaries" has the meaning given
such term in Section 6.2.
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(63) "M-I/Venture Entity Environmental Liabilities" has the
meaning given such term in Section 6.2(b).
(64) "M-I/Venture Entity Product Liability Claim" has the
meaning given such term in Section 6.4(b).
(65) "Net Asset Value" means, as of any date, the net book
value of assets as set forth in the applicable Exhibits or Closing
Statements.
(66) "Non-Acquired Schlumberger Assets" means all assets of
Schlumberger and its subsidiaries other than the Schlumberger Acquired
Assets.
(67) "Non-Acquired Schlumberger Businesses" means all
products and services of Schlumberger and its subsidiaries other than
the Schlumberger Drilling Fluids Business.
(68) "Non-M-I Xxxxx Business" means all products and services
of Xxxxx and its subsidiaries other than those of M-I, the Venture
Entities and their respective subsidiaries.
(69) "Non-Monetary Consideration" has the meaning given such
term in Section 4.21.
(70) "Non-Public Information" means information not in the
public domain relating to costs, profits or profit margins; strategic
plans; plans for development of new products, services or
technologies; customer names; bids, pricing policies, prices, price
schedules or terms; proposed transactions; technology plans or status
of implementation; proposals; contracts; or marketing plans.
(71) "Non-U.S. Employees" has the meaning given such term in
Section 4.5.
(72) "Other Party" has the meaning given such term in Section
4.19.
(73) "Ownership Interest" has the meaning given such term in
Section 4.19.
(74) "Percentage Interest" means a Person's direct or
indirect ownership interest in each Venture Entity, which interest is,
with respect to (i) Schlumberger (through subsidiaries of
Schlumberger), 40%, and (ii) Xxxxx (through subsidiaries of Xxxxx),
60%.
(75) "Person" means any corporation, limited liability
company, individual, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country,
state or political subdivision thereof, trust, municipality or other
entity.
(76) "Prior Domestic Welfare Plans" has the meaning given
such term in Section 4.6.
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(77) "Prior Foreign Welfare Plans" has the meaning given such
term in Section 4.7.
(78) "Protocol" has the meaning given such term in Section
4.11.
(79) "Recipient Party" has the meaning given such term in
Section 4.21.
(80) "Response Notice" has the meaning given such term in
Section 4.19.
(81) "Retained Records" has the meaning given such term in
Section 4.14(b).
(82) "Retiree Medical" has the meaning given such term in
Section 4.6.
(83) "Returns" has the meaning given such term in Section
5.3(m)(i).
(84) "Schlumberger Acquired Assets" has the meaning given
such term in Section 2.4.
(85) "Schlumberger Assumed Liabilities" has the meaning given
such term in Section 2.4.
(86) "Schlumberger Drilling Fluids Business" means the
business of Schlumberger and its subsidiaries comprised solely of the
Schlumberger Acquired Assets and the Schlumberger Assumed Liabilities.
(87) "Schlumberger Environmental Liabilities" has the meaning
given such term in Section 6.3(b).
(88) "Schlumberger Foreign Business" has the meaning given
such term in Section 4.1.
(89) "Schlumberger Foreign Plans" has the meaning given such
term in Section 4.7.
(90) "Schlumberger Product Liability Claim" has the meaning
given such term in Section 6.4(a).
(91) "Schlumberger Transferred Subsidiaries" has the meaning
given such term in Section 6.3.
(92) "Schlumberger Warranties" means the warranties currently
used in the operations of the Schlumberger Drilling Fluids Business
and as are attached hereto as Exhibit 4.8(b).
(93) "Second Closing" has the meaning given such term in
Section 3.10(b).
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(94) "Taxes" means all federal, state, local, non-U.S. and
other taxes, charges, fees, levies, imposts, duties, licenses or other
assessments, together with any interest, penalties, additions to tax
or additional amounts imposed by any taxing authority.
(95) "Technical Committee" has the meaning given such term in
Section 4.16.
(96) "Transfer Document" has the meaning given such term in
Section 3.7.
(97) "Transfer Notice" has the meaning given such term in
Section 4.19.
(98) "U.K." means the United Kingdom.
(99) "Unassumed Foreign Plans" has the meaning given such
term in Section 4.3.
(100) "U.S. Employees" has the meaning given such term in
Section 4.4.
(101) "USNewco" means a limited liability company to be
formed under the laws of the State of Delaware.
(102) "USNewco Employees" has the meaning given such term in
Section 4.4.
(103) "USNewco Profit-Sharing Plan" has the meaning given
such term in Section 4.6.
(104) "USNewco Severance Plan" has the meaning given such
term in Section 4.6.
(105) "Venture Entities" means, collectively, USNewco,
BVINewco, Dutchco and M-I Canada.
(106) "Warranty and Warranty Service" means only repairs,
replacements or adjustments to products, installations and services
(including the labor and materials relating thereto): (i) that are
related to claims that arise under the Schlumberger Warranties and
that are asserted under the applicable warranty period; or (ii) that
arise in connection with "recalls" initiated prior to or after the
Effective Time.
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CONSTRUCTION. Words used in this Agreement, regardless of the number or gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context shall require.
REFERENCES. As used in this Agreement, unless expressly stated otherwise,
references to (a) "include" or "including" mean "including, without limitation,"
and (b) a "party" mean Xxxxx, SIAC, MIPC, M-I, Xxxxx Canada, M-I Canada,
Schlumberger or Schlumberger MI, and to the "parties" mean all of them. Unless
otherwise specified, all references in this Agreement to Articles, Sections and
Exhibits are deemed references to the corresponding Articles, Sections and
Exhibits in, to and of this Agreement.
HEADINGS. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
REORGANIZATION OF M-I AND CONTRIBUTION
M-I PRE-CLOSING REORGANIZATION.
(a) Subject to the terms and conditions of this Agreement,
prior to the Effective Time, SIAC and MIPC will form, acquire or cause
to be formed or acquired USNewco, BVINewco and Dutchco, and shall
contribute or cause to be contributed (1) to USNewco, all of the
assets and business of M-I that are associated with the conduct by M-I
of business in the United States (which shall comprise all of the
assets of M-I other than those reflected on Exhibit 2.1-1 and 2.1-2),
along with those liabilities that are included in the M-I Assumed
Liabilities and that are associated with such business, (2) to
BVINewco, all of the ownership interests indicated in Exhibit 2.1-1,
and (3) to Dutchco, all of the ownership interests indicated in
Exhibit 2.1-2. In order to effect such contributions, the appropriate
entities shall execute and deliver one or more General Conveyance of
Assets and Assumption of Liabilities Agreements in substantially the
form set forth in Exhibit 3.3.
(b) Attached hereto as Exhibit 2.1-3 is the consolidated
balance sheet of the M-I Drilling Fluids Business as of December 31,
1998 (the "M-I Balance Sheet"). The liabilities reflected on the M-I
Balance Sheet, as supplemented by the Closing Statement related to
M-I, and the liabilities related to the performance of the contracts
and agreements of the Drilling Fluids Business of M-I, including those
set forth on Exhibit 2.1-4, as supplemented by the Closing Statement
related to M-I, and only those liabilities,
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shall become liabilities of the Venture Entities immediately prior to the
Effective Time (the "M-I Assumed Liabilities").
(c) Attached hereto as Exhibit 2.1-4 is a list of all the
intellectual property and of the other material non-balance sheet
assets of the M-I Drilling Fluids Business such as material contracts,
licenses, leases and other agreements.
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VENTURE ENTITIES' CHARTER DOCUMENTS AND ORGANIZATION. The Charter Documents of
the Venture Entities as of the Effective Time shall be in substantially the
forms set forth in Exhibit 2.2-1 (USNewco), Exhibit 2.2-2 (BVINewco), Exhibit
2.2-3 (Dutchco) and Exhibit 2.2-4 (M-I Canada). The limited liability company
agreement of USNewco shall require USNewco, (a) upon the request of any
transferee of a membership interest in USNewco, to elect pursuant to Section 754
of the Code to adjust the basis of property as provided by Sections 734 and 743
of the Code and (b) to apply the principles of Treasury Regulations Section
1.704-3(d) in allocating gain, loss, amortization, depreciation and cost
recovery deductions attributable to property contributed to USNewco.
OWNERSHIP OF THE VENTURE ENTITIES. As of the Effective Time, the ownership of
each Venture Entity shall be as set forth in Exhibit 2.3.
SCHLUMBERGER TRANSFER OF ASSETS AND LIABILITIES. Subject to the terms and
conditions of this Agreement, as of the Effective Time, Schlumberger or
subsidiaries of Schlumberger shall transfer or cause to be transferred to the
Foreign Venture Entities, in exchange for an ownership interest in each Foreign
Venture Entity, the assets of the Schlumberger Drilling Fluids Business set
forth on Exhibit 2.4-1, as supplemented by the Closing Statement related to
Schlumberger (the "Schlumberger Acquired Assets"), and the associated
liabilities of the Schlumberger Drilling Fluids Business set forth on Exhibit
2.4-2, as supplemented by the Closing Statement related to Schlumberger. The
liabilities reflected on Exhibit 2.4-2, as supplemented by the Closing Statement
related to Schlumberger, and the liabilities related to the performance of the
contracts and agreements of the non-U.S. Drilling Fluids Business of
Schlumberger, including those set forth on Exhibit 2.4-1, as supplemented by the
Closing Statement related to Schlumberger, and only those liabilities (the
"Schlumberger Assumed Liabilities"), shall become liabilities of the Foreign
Venture Entities as of the Effective Time. At the election of Schlumberger, the
contribution of part or all of such assets may be effected in the form of a sale
of assets coupled with a reimbursement by Schlumberger or subsidiaries of
Schlumberger to the appropriate Foreign Venture Entity.
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SCHLUMBERGER PURCHASE OF INTEREST IN EACH VENTURE ENTITY. Subject to the terms
and conditions of this Agreement, as of the Effective Time, Schlumberger or
subsidiaries of Schlumberger shall transfer or cause to be transferred to
entities designated by Xxxxx, in exchange for ownership interests in the Venture
Entities, cash in a total amount of $280 million, which shall be allocated among
the recipient entities designated by Xxxxx in the manner designated by Xxxxx. In
making such designation, Xxxxx shall rely upon an evaluation performed by an
independent appraiser to be selected by agreement of the parties. In
consideration of the contributions of assets described in Section 2.4 and the
cash payments described in this Section 2.5, as adjusted for any cash payments
described in Section 3.8 and Section 3.10, Schlumberger or subsidiaries of
Schlumberger will acquire a 40% ownership interest in each Venture Entity.
VENTURE ENTITIES' NAMES. The names of the Venture Entities shall be as set forth
in the appropriate Charter Documents. Where necessary hereunder to reflect and
conform to the fact that certain transfers of assets and liabilities of the
parties will be made to one or more subsidiaries of a Venture Entity, rather
than to a Venture Entity directly, the terms "USNewco," "BVINewco," "Dutchco"
and "M-I Canada" shall be deemed to mean and include any such subsidiary or
subsidiaries of that Venture Entity.
MANAGEMENT OF VENTURE ENTITIES.
(d) The officers, directors, management committees or other
appropriate governing bodies of the Venture Entities as of the
Effective Time shall be as mutually agreed by Xxxxx and Schlumberger
prior to the Effective Time.
(e) The members of the committee (the "Executive Committee")
that shall set the overall policies, procedures and directions
relating to all of the Venture Entities shall be as mutually agreed by
Xxxxx and Schlumberger prior to the Effective Time. The Executive
Committee shall meet at least once per calendar year in mutually
agreed upon locations.
(f) The provisions of Section 4.15 shall apply to each person
and group described in this Section 2.7.
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M-I MEXICO. The transactions called for by this Agreement have been formulated
on the assumption that, prior to the Effective Time, Xxxxx shall have received a
favorable ruling from the appropriate Mexican tax authorities as to the transfer
of its ownership interest in M-I Mexico to Dutchco (the "Mexican Tax Ruling").
If the Mexican Tax Ruling shall not have been received prior to the Effective
Time, the parties will take such other actions as may be mutually agreed to
combine the M-I Drilling Fluids Business in Mexico with the Schlumberger
Drilling Fluids Business in Mexico in a manner that most closely achieves the
objectives contemplated by this Agreement.
THE CLOSING
EXECUTION OF THE AMENDED VENTURE ENTITY CHARTER DOCUMENTS. At the Closing and
upon the terms and subject to the conditions of this Agreement, Schlumberger and
Xxxxx shall execute and deliver, or cause to be executed and delivered, any
Charter Documents of the respective Venture Entities and any amendments thereto
as necessary to conform to the provisions of Section 2.2, and Xxxxx shall file
or cause to be filed those documents, as required, with the necessary
governmental authorities as soon as practicable and shall cause the Venture
Entities to deliver to the appropriate entities identified in Section 2.3
certificates or other evidence reflecting these entities' ownership interest in
each Venture Entity.
PAYMENT OF THE CASH PURCHASE PRICE FOR THE VENTURE ENTITY INTERESTS. At the
Closing and upon the terms and subject to the conditions of this Agreement,
Schlumberger or its subsidiaries shall make or cause to be made the cash
payments described in Section 2.5 in immediately available funds by wire
transfer to accounts designated in writing at least three business days prior to
the Closing Date by the recipient entities.
EXECUTION OF THE CONVEYANCE AND ASSUMPTION AGREEMENTS. At the Closing, the
appropriate entities shall execute and deliver, effective as of the Effective
Time, one or more General Conveyance of Assets and Assumption of Liabilities
Agreements in substantially the form set forth in Exhibit 3.3 to effect the
conveyances described in Section 2.4.
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INTELLECTUAL PROPERTY LICENSES.
(g) Each of the Venture Entities hereby grants to
Schlumberger or any subsidiary designated by Schlumberger, upon
transfer of the patents, patent applications and inventions included
in the Schlumberger Acquired Assets, a nontransferable, irrevocable,
royalty-free, worldwide license (with the right to sublicense only to
its subsidiaries and affiliates) to make, have made, use, sell and
offer for sale any invention covered by the claims of any patent or
patent application, including any reissue, division or continuation
thereof, subject to the provisions of Section 9.6.
(h) In the event that any Venture Entity fails to prepare,
file or prosecute a patent application relating to an invention
transferred to that Venture Entity by Schlumberger or any of its
subsidiaries or in the event that any Venture Entity decides not to
pursue or decides to discontinue preparation, filing or prosecution of
any such patent application or any continuations, divisions, reissues,
reexamination or counterpart thereof, or in the event that any Venture
Entity fails to pay any tax or other fee with respect to a patent or
patent application, that Venture Entity shall give timely and
sufficient notice thereof to Schlumberger, and Schlumberger or a
subsidiary thereof shall have the right to obtain and protect the
entire right, title and interest in and to such application or patent,
including the right to prepare, file, prosecute and maintain any such
application, continuation, division, reissue, reexamination or
counterpart thereof at the election and expense of Schlumberger or its
subsidiary, all without further compensation to that Venture Entity. A
Venture Entity shall, upon the request of Schlumberger or a subsidiary
thereof, promptly execute any and all assignments or other papers or
instruments and shall provide such assistance and do all acts that
Schlumberger or its subsidiary deems necessary or useful to accomplish
the above at the expense of Schlumberger or its subsidiary. In
consideration of such assignment, Schlumberger or its subsidiary
shall, upon request from a Venture Entity, grant to that Venture
Entity, at that Venture Entity's cost, a royalty-free, irrevocable,
nontransferable, nonexclusive license without the right to sublicense
under such patent or patent applications and in consideration for such
license, that Venture Entity shall reimburse Schlumberger for the
costs incurred by Schlumberger and its subsidiaries in connection with
obtaining and protecting their right, title and interest in such
discontinued patent or patent applications.
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FAILURE OF CONSENT. To the extent that the assignment or transfer of any shares
of stock, contracts, licenses, leases, commitments, sales orders, purchase
orders or other assets or rights to be transferred or assigned to a Venture
Entity or a subsidiary thereof, as provided herein, shall require the consent of
the other party or parties thereto, or the consent of any other Person, this
Agreement shall not constitute an agreement to transfer or assign the same if an
attempted assignment or transfer would constitute a breach thereof or violation
of law. Subject to any other provision or condition herein dealing with specific
consents, if such consent is not obtained, the parties will cooperate with the
appropriate Venture Entity or subsidiary thereof to secure a reasonable mutually
agreeable arrangement designed to provide that Venture Entity (or such
subsidiary) with the benefits of any such shares of stock, contracts, licenses,
leases, commitments, sales orders, purchase orders or other assets or rights,
including enforcement for the benefit of that Venture Entity (or such
subsidiary) of any and all rights of the party against the other party or
parties thereto arising out of the breach or cancellation by such other party or
parties or otherwise. If any such consent or other reasonable arrangement is not
obtained or secured on or before the last day of the 24th month following the
Effective Time, the party shall compensate the appropriate Venture Entity in
cash for the amount, if any, attributable to the assets, properties or rights
included in the Exhibits that cannot be transferred to that Venture Entity as
contemplated by this Agreement. The provisions of this Section 3.5 apply to the
transfers contemplated by Section 2.1 and Section 2.4.
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CLOSING ADJUSTMENT. Power and utility charges relating to facilities being
transferred to the Foreign Venture Entities by Schlumberger or any of its
subsidiaries hereunder, real and personal property taxes relating to property
being transferred to the Foreign Venture Entities by Schlumberger or any of its
subsidiaries hereunder and rents and other payments pertaining to leases and
contracts being assigned hereunder to the Foreign Venture Entities by
Schlumberger or any of its subsidiaries (exclusive of advance and progress
payments under purchase and similar contracts and commitments) shall be prorated
between the Foreign Venture Entities and Schlumberger as of the Accounting Date.
The prorations and adjustments made hereunder shall be made and paid in cash as
promptly as practicable following the Closing, and in any event within 45 days
thereafter, at such time and place as the Foreign Venture Entities and
Schlumberger shall mutually agree upon. The prorations and adjustments made
hereunder with respect to real and personal property taxes relating to property
being transferred to the Foreign Venture Entities by Schlumberger or any of its
subsidiaries hereunder shall be based upon the accruals for such taxes. As soon
as practicable after December 31, 1999, the parties hereto shall, if necessary,
make an additional adjustment with respect to such taxes in the manner provided
for in this Section 3.6 to the extent that the actual amount of such taxes does
not equal the accruals therefor.
DELIVERY. At or in connection with the Closing, the parties agree that
Schlumberger and the Foreign Venture Entities shall execute and deliver or cause
their affiliates to execute and deliver, as appropriate, to each other and/or
file or record all such assignments, deeds, bills of sale, conveyances,
endorsements, and other documents (any such document, a "Transfer Document") as
are required to effect the transfer and delivery to the Foreign Venture Entities
of the Schlumberger Acquired Assets and to effect the assumption of the
Schlumberger Assumed Liabilities by the Foreign Venture Entities.
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ADJUSTING PAYMENTS. If the Net Asset Value of the Schlumberger Acquired Assets
less the Schlumberger Assumed Liabilities does not equal 25% of the Net Asset
Value of the M-I Acquired Assets less the M-I Assumed Liabilities, Schlumberger
or its subsidiaries, or Xxxxx or its subsidiaries, as the case may be, shall
contribute additional cash in the amount of the deficiency to the appropriate
Venture Entity. Such contribution shall be made at the Closing on the basis of
Exhibit 2.4-1 and Exhibit 2.4-2 in the case of Schlumberger and Exhibit 2.1-3 in
the case of Xxxxx, and shall be adjusted after the Closing in the manner
prescribed by Section 3.10(b).
CLOSING STATEMENTS. As promptly as practicable following the Closing Date, and
in any event within 60 days after the Accounting Date, Schlumberger and Xxxxx
shall prepare, or shall cause the Venture Entities to prepare, and deliver to
the other parties a special purpose statement as of the Accounting Date (the
"Closing Statements"), which reflects the Schlumberger Acquired Assets, the
Schlumberger Assumed Liabilities, the M-I Acquired Assets, and the M-I Assumed
Liabilities as of the Accounting Date and accounts for any change in (a) the
assets or liabilities included therein or (b) the Net Asset Value of the assets
or liabilities included therein between the cutoff dates used in preparing
Exhibit 2.4-1, Exhibit 2.4-2, Exhibit 2.1-3 and Exhibit 2.1-4, as applicable,
and the Accounting Date that was incurred in the ordinary course of business.
The Closing Statements shall be prepared utilizing the same format and valuation
principles as were utilized in determining the Net Asset Value amounts reflected
in those Exhibits, except that foreign currencies shall be translated into
United States dollars in accordance with agreed exchange rates in effect as of
the Accounting Date. Xxxxx and Schlumberger shall each have the right to review
and audit the Closing Statements of the other parties and the underlying assets
and liabilities and to propose adjustments to those Closing Statements. The
parties agree to work together in good faith to finalize the Closing Statements
in time for the Second Closing.
CLOSING DATE, EFFECTIVE TIME AND SECOND CLOSING.
(i) Closing Date and Effective Time. Upon the terms and
subject to the conditions of this Agreement, the closing of the
transactions contemplated by this Agreement shall take place at the
offices of Xxxxx & Xxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx, at 1:00 p.m. on July 14, 1999, or at such other time and place
as the parties may mutually agree (the "Closing Date"); provided,
however, that, notwithstanding the contributions being made on the
Closing Date, the contributions of
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the Schlumberger Acquired Assets and the assumption of the
Schlumberger Assumed Liabilities shall be deemed to have taken place
and to be effective at 12:01 a.m. on the Closing Date (the "Effective
Time").
(j) Second Closing. A second closing shall be held at the
offices of Xxxxx & Xxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx, at 9:00 a.m. on September 25, 1999, or at such other time and
place as the parties may mutually agree (the "Second Closing"). If, as
of the Accounting Date, the Net Asset Value of the Schlumberger
Acquired Assets less the Schlumberger Assumed Liabilities does not
equal 25% of the Net Asset Value of the M-I Acquired Assets less the
M-I Assumed Liabilities, the parties shall recalculate the adjusting
payments made pursuant to Section 3.8 and if Xxxxx and its
subsidiaries or Schlumberger and its subsidiaries made an adjusting
payment pursuant to Section 3.8 that was too large, the appropriate
Venture Entity shall refund the overage to the payor at the Second
Closing. If after recalculation and refunding, if any, pursuant to the
previous sentence, Xxxxx or Schlumberger has a shortfall, Xxxxx and
its subsidiaries or Schlumberger and its subsidiaries shall contribute
sufficient cash to the appropriate Venture Entity to cure the
shortfall at the Second Closing.
CERTAIN COVENANTS
EMPLOYEES IN GENERAL.
(k) USNewco Employees. Employees of the portion of the M-I
Drilling Fluids Business contributed on behalf of Xxxxx to USNewco
("M-I Domestic Business") who are actively employed immediately prior
to the Effective Time shall become employees of USNewco effective as
of the Effective Time. Effective on or after the Effective Time,
USNewco shall have the right to terminate any of its employees, with
or without cause, except as otherwise may be agreed by M-I, Xxxxx and
Schlumberger, and subject to any applicable legal restrictions.
(l) Foreign Venture Entities' Employees. Employees of M-I
Canada and the portions of the M-I Drilling Fluids Business and the
portions of the Schlumberger Drilling Fluids Business contributed on
behalf of Xxxxx and Schlumberger, respectively, to BVINewco, Dutchco
and, in the case of Schlumberger or subsidiaries of Schlumberger, M-I
Canada (collectively, the "Foreign Venture Entities") ("M-I Foreign
Business" and "Schlumberger Foreign Business," respectively), who are
actively employed immediately prior to the Effective Time shall become
employees of the Foreign Venture Entities, as appropriate, effective
as of the Effective Time. Effective on or after the Effective Time,
the Foreign Venture Entities shall have the right to terminate any of
their employees, with or without cause, except as otherwise may be
agreed by Xxxxx and Schlumberger and subject to any applicable legal
restrictions.
PAYROLL.
(m) Payroll Processing Services by Schlumberger. For a period
not to exceed 90 days after the Effective Time or such longer period
as agreed to by Schlumberger and
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the Foreign Venture Entities, Schlumberger, acting as agent for, and
in the name of, the Foreign Venture Entities, shall provide payroll
processing services with respect to all employees of the Foreign
Venture Entities who were active employees of the Schlumberger
Drilling Fluids Business on the day before the Effective Time (the
"Former Schlumberger Employees"). As agent for the Foreign Venture
Entities, Schlumberger shall withhold any amounts required to be
withheld from the wages of the Former Schlumberger Employees, shall
properly and timely deposit taxes withheld on behalf of the Foreign
Venture Entities, shall properly and timely pay any employment taxes
due by the Foreign Venture Entities with respect to the Former
Schlumberger Employees, and as soon as administratively practicable
following each payroll date, shall pay to the appropriate Foreign
Venture Entities, or to their designees which have been identified to
Schlumberger in writing by the Foreign Venture Entities, any amounts
withheld from the wages of the Former Schlumberger Employees
representing contributions for employee benefit plans. Schlumberger,
as agent, shall furnish the Foreign Venture Entities with all
necessary information regarding wages paid to the Former Schlumberger
Employees, and the amounts withheld from such wages, by Schlumberger,
as agent, on or after the Effective Time.
(n) Payroll Processing Services by Xxxxx. For a period not to
exceed 90 days after the Effective Time or such longer period as
agreed to by Xxxxx and the appropriate Foreign Venture Entities,
Xxxxx, acting as agent for, and in the name of, the Foreign Venture
Entities, excluding M-I Canada, shall provide payroll processing
services with respect to all employees of the Foreign Venture Entities
who were active employees of the M-I Foreign Business on the day
before the Effective Time (the "Former M-I Foreign Employees"),
excluding, however, the Former M-I Foreign Employees of M-I Canada. As
agent for the Foreign Venture Entities, Xxxxx shall withhold any
amounts required to be withheld from the wages of the Former M-I
Foreign Employees, shall properly and timely deposit taxes withheld on
behalf of the Foreign Venture Entities, shall properly and timely pay
any employment taxes due by the Foreign Venture Entities with respect
to the Former M-I Foreign Employees, and as soon as administratively
practicable following each payroll date, shall pay to the appropriate
Foreign Venture Entities, or to their designees which have been
identified to Xxxxx in writing by the Foreign Venture Entities, any
amounts withheld from the wages of the Former M-I Foreign Employees
representing contributions for employee benefit plans. Xxxxx, as
agent, shall furnish the Foreign Venture Entities with all necessary
information regarding wages paid to the Former M-I Foreign Employees,
and the amounts withheld from such wages, by Xxxxx, as agent, on or
after the Effective Time.
(o) Former M-I Domestic and Foreign Employees Payroll
Processing by USNewco and M-I Canada. For payroll periods commencing
on and after the Effective Time, USNewco shall be directly responsible
for the payroll for all employees of USNewco who were active employees
of the M-I Domestic Business on the day before the Effective Time (the
"Former M-I Domestic Employees") and M-I Canada shall be directly
responsible for the payroll for all Former M-I Foreign Employees who
were employees of M-I Canada on the day before the Effective Time.
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(p) Payroll Processing Services Costs of Schlumberger and
Xxxxx. Until notified otherwise in writing by the appropriate Foreign
Venture Entities, Schlumberger and Xxxxx, as payroll agents, shall be
entitled to assume that there has been no change in any employee's
salary, wages, withholding status, retirement plan, profit-sharing
plan and welfare benefit elections or any other factor affecting
payroll calculations. Except as specifically provided to the contrary
herein, the Foreign Venture Entities shall bear the costs of all
salaries, wages, employment taxes, or other amounts due with respect
to services performed by the employees of the Foreign Venture Entities
at and after the Effective Time, and shall promptly on demand
reimburse Schlumberger and Xxxxx for all amounts expended, and all
expenses incurred, by Schlumberger and Xxxxx in providing the payroll
processing services described above, and shall indemnify Schlumberger
and Xxxxx for any claim, loss, damage or penalty suffered by
Schlumberger and Xxxxx in connection with providing properly such
services in accordance with the terms of this Agreement or the written
instructions of a Foreign Venture Entity with respect to its
employees.
(q) Assumption of Payroll Responsibility by Foreign Venture
Entities. For payroll periods commencing on or after the 91st day
after the Effective Time or such later time as agreed to by
Schlumberger and the appropriate Foreign Venture Entities or Xxxxx and
the appropriate Foreign Venture Entities, or such earlier time as a
Foreign Venture Entity desires, the appropriate Foreign Venture
Entities shall assume direct responsibility for the payroll of the
Former Schlumberger Employees and Former M-I Foreign Employees and
Schlumberger and Xxxxx agree to take such actions and furnish such
information as may be necessary to enable the Foreign Venture Entities
to assume such responsibilities.
EMPLOYEES IN FOREIGN OPERATIONS IN GENERAL.
(r) Expatriates. Employees of the M-I Foreign Business and
the Schlumberger Foreign Business who are actively working and
residing in a country other than their country of permanent residence
or country of original employment as of the Effective Time shall be
referred to as "Expatriates" hereinafter. With respect to Expatriates
who are terminated or receive written notification of termination
within the first 90 days following the Effective Time or who become
entitled to accrued benefits under local law as a result of the
transactions contemplated by this Agreement, the terminating Foreign
Venture Entities shall be responsible for all costs of repatriation
and severance pay, if applicable, provided to such terminated
Expatriates determined under the terms and conditions of the severance
policy of the applicable party previously employing such Expatriates
in effect or authorized as of the day prior to the Effective Time, and
the terminating Foreign Venture Entities shall be reimbursed by the
applicable previously employing party of such terminated employees for
such severance amounts paid, and any other reasonable costs, expenses
or liabilities incurred, that result from such terminations. Subject
to any reimbursement under Section 4.7(a), the terminating
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Foreign Venture Entity shall be fully responsible for, and shall
indemnify Schlumberger, Schlumberger MI, Xxxxx, SIAC, MIPC, M-I and
Xxxxx Canada against, any costs or expenses for terminations occurring
on or after the 91st day following the Effective Time except with
respect to any portion of such costs or expenses that are attributable
to the actions or inactions of Schlumberger, Schlumberger MI, Xxxxx,
SIAC, MIPC, M-I or Xxxxx Canada taken or failed to be taken prior to
the Effective Time.
(s) International Commuters. Employees of the Schlumberger
Foreign Business who are permanent residents of a country and, as of
the Effective Time, are actively working on rotation in a different
country, and are not on the payroll of their country of residence
shall be referred to as "ICs" hereinafter. With respect to ICs who are
terminated or receive written notification of termination within the
first 90 days following the Effective Time or who become entitled to
accrued benefits under local law as a result of the transactions
contemplated by this Agreement, the terminating Foreign Venture
Entities shall be responsible for all costs of repatriation and
severance pay, if applicable, provided to such terminated ICs
determined under terms and conditions of the applicable severance
policy of Schlumberger in effect or authorized as of the day prior to
the Effective Time, and the terminating Foreign Venture Entities shall
be reimbursed by Schlumberger for such severance amounts paid, and any
other reasonable costs, expenses or liabilities incurred, that result
from such terminations. Subject to any reimbursement under Section
4.7(a), the terminating Foreign Venture Entity shall be fully
responsible for, and shall indemnify Schlumberger, Schlumberger MI,
Xxxxx, SIAC, MIPC, M-I and Xxxxx Canada against, any costs or expenses
for terminations occurring on or after the 91st day following the
Effective Time except with respect to any portion of such costs or
expenses that are attributable to the actions or inactions of
Schlumberger, Schlumberger MI, Xxxxx, SIAC, MIPC, M-I or Xxxxx Canada
taken or failed to be taken prior to the Effective Time.
(t) Foreign Employees. Employees of the M-I Foreign Business
and the Schlumberger Foreign Business as of the Effective Time and who
are actively employed in a non-U.S. country which is either the
country of their permanent residence or the country of their original
employment shall be referred to as "Foreign Employees" hereinafter.
With respect to Foreign Employees who are terminated or receive
written notification of termination within the first 90 days following
the Effective Time or who become entitled to accrued benefits under
local law as a result of the transactions contemplated by this
Agreement, the terminating Foreign Venture Entities shall be
responsible for all costs of severance pay, if applicable, provided to
such terminated Foreign Employees determined under the terms and
conditions of the severance policy of the applicable party previously
employing such Foreign Employees in effect as of the day prior to the
Effective Time, and the terminating Foreign Venture Entities shall be
reimbursed by the applicable previously employing party of such
terminated employees for such severance amounts paid, and any other
reasonable costs, expenses or liabilities incurred, that result from
such terminations. Subject to any reimbursement provided under Section
4.7(a), the terminating Foreign Venture Entity shall be fully
responsible for, and shall indemnify Schlumberger, Schlumberger MI,
Xxxxx, SIAC, MIPC, M-I and
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Xxxxx Canada against, any costs or expenses for terminations occurring
on or after the 91st day following the Effective Time except with
respect to any portion of such costs or expenses that are attributable
to the actions or inactions of Schlumberger, Schlumberger MI, Xxxxx,
SIAC, MIPC, M-I and Xxxxx Canada taken or failed to be taken prior to
the Effective Time.
(u) Foreign Pension Plans. Expatriates, ICs and Foreign
Employees who are employees of the Foreign Venture Entities as of the
Effective Time shall participate in the appropriate Foreign Venture
Entities pension and profit sharing plans as provided in Section 4.7.
Subject to any restrictions under applicable law, such plans shall
provide that the service of Expatriates, ICs and Foreign Employees
with the previously employing party or its subsidiary or affiliate
shall be credited for vesting and eligibility purposes. As provided in
Section 4.7, the parties agree that the M-I non-U.S. pension and
profit-sharing plans in effect as of the day prior to the Effective
Time, and the accrued pension and profit-sharing benefits of the
Former M-I Foreign Employees under such plans, shall be assumed by the
appropriate Foreign Venture Entities. The parties further agree that
accrued pension and profit sharing benefits of employees of the
Schlumberger Drilling Fluids Business who are participants in non-U.S.
pension and profit-sharing plans of Schlumberger as of the Effective
Time are not to be assumed by, or transferred to, any of the Foreign
Venture Entities ("Unassumed Foreign Plans") and that the assets
applicable to such accrued pension and profit sharing benefits as of
such date will be retained in the applicable Unassumed Foreign Plan
for the benefit of such employees; provided, however, that, subject to
any restrictions under applicable law, each such employee shall be
credited with service for eligibility and vesting purposes under the
appropriate retirement and profit-sharing plans maintained by the
Foreign Venture Entities equal to such employee's eligibility and
vesting service recognized for purposes of the Unassumed Foreign Plans
as of the Effective Time under the applicable Unassumed Foreign Plan.
If after the Effective Time Schlumberger updates the benefits under an
Unassumed Foreign Plan, then the Former Schlumberger Employee's
benefit under such plan will be increased by Schlumberger in the same
manner as a similarly-situated, active employee participating in such
plan, provided such employee is employed with a Foreign Venture Entity
or an affiliate as of the effective date of the change. Further,
benefits payable, if any, under the applicable Unassumed Foreign Plan
shall be determined in accordance with the provisions of such plan as
in effect on the Effective Time, except that the participants of such
plans shall be credited under the applicable Unassumed Foreign Plan
with their period of employment with a Foreign Venture Entity for
purposes of vesting and for determining the date such employee may
first commence payment of benefits under such Unassumed Foreign Plan.
The transfer of a Former Schlumberger Employee from a Foreign Venture
Entity to Xxxxx or any of Xxxxx'x divisions, subsidiaries or
affiliates shall be deemed to be a termination of employment for
purposes of the Unassumed Foreign Plans. The Foreign Venture Entities
agree to notify Schlumberger of the severance or of such transfer of
employment of any Former Schlumberger Employee. In cases where local
laws, statutes or regulations will not permit the actions described in
this Section 4.3(c), the parties will agree upon the basis of
transferring the applicable profit-sharing and/or pension benefit
obligations to the appropriate Foreign Venture
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Entity; provided, however, that the Foreign Venture Entities will not
be responsible for any costs or expenses of such transfer, or for any
benefit liabilities in excess of the amount transferred to it, or for
any liabilities related to such plans attributable to pre-transfer
matters. In such case, each party represents and warrants, with
respect to the plans and any related trusts sponsored or contributed
to by it from which profit-sharing or pension obligations are
transferred in accordance with this Section 4.3(c), that each such
plan and trust meet in all substantial respects the applicable
requirements of local laws, statutes or regulations.
PROVISIONS REGARDING USNEWCO EMPLOYEES.
(v) Non-Union Employees. USNewco shall accept the transfer of
employment as of the Effective Time of all salaried and hourly
employees of M-I, and its subsidiaries and affiliates, employed in the
United States whose employment is not covered by a collective
bargaining agreement and who are employed by the M-I Domestic Business
immediately prior to the Effective Time (collectively, "U.S.
Employees"). U.S. Employees accepting such employment shall be
referred to as "USNewco Employees" hereinafter. With respect to any
U.S. Employee on approved leave of absence as of the Effective Time,
USNewco's only obligation shall be to offer employment to such U.S.
Employee at the end of such leave of absence if, and only if, USNewco
has an available employment position for such employee at the time
such leave terminates or as otherwise provided by applicable law.
Unless otherwise expressly provided herein, or as provided in the
USNewco Charter Documents or as the parties otherwise may agree, the
terms and conditions of employment of USNewco Employees shall be
determined by USNewco. USNewco Employees shall receive credit under
the USNewco vacation policy for their accrued and unused vacation days
that they had earned during 1999 under the vacation policy of M-I as
of the Effective Time. Any such vacation days not used by December 31,
1999 shall be forfeited as of January 1, 2000. M-I agrees that, except
with the prior written consent of Schlumberger, prior to the Effective
Time M-I will use its best efforts to keep available the services of
the present officers and key employees of the M-I Domestic Business.
(w) Bargaining Unit Employees. As of the Effective Time, M-I
will transfer to USNewco, as successor employer, the U.S. collective
bargaining agreements identified in Exhibit 4.4(b) ("Collective
Agreements"). "Bargaining Unit Employees" shall mean those employees
whose terms and conditions of employment are covered by a Collective
Agreement and who are actively employed in the United States as of the
Effective Time or whose seniority under the applicable Collective
Agreement has not terminated as of such date.
(x) Certain Obligations of the Parties. Xxxxx shall be solely
responsible for payment of commissions, bonuses, incentive or deferred
compensation for the employees of the M-I Domestic Business
attributable to service rendered prior to the Effective Time. Xxxxx
shall be solely responsible for welfare benefits, pension benefits and
any other benefits under plans, programs, arrangements and/or
personnel policies for the U.S.
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Employees (and their eligible dependents and beneficiaries) of the M-I
Domestic Business who do not become USNewco Employees or Bargaining
Unit Employees of USNewco, and for such benefits accrued, if any, by
USNewco Employees prior to the Effective Time. Xxxxx shall remain
responsible for providing the following benefits to its U.S. Employees
and Bargaining Unit Employees who become USNewco Employees or USNewco
Bargaining Unit Employees:
(i) weekly and long-term disability benefits, including
maintenance care for disabilities that commenced before the
Effective Time for the period that the Bargaining Unit
Employee, USNewco Employee or the covered dependent of either
remains eligible for such benefits;
(ii) hospital and nursing home benefits for confinements
that commenced before the Effective Time, including any
doctor's visits during such confinements;
(iii) benefits for medical and dental services or
materials received before the Effective Time;
(iv) life and survivor income benefits for covered
dependent deaths which occur prior to the Effective Time; and
(v) educational assistance program benefits which were
approved prior to the Effective Time.
(y) Certain Employee Claims and Charges. For those
employment-related claims which are not M-I Assumed Liabilities being
assumed by USNewco, if any affirmative action (such as promotion,
transfer and/or reinstatement) is required by reason of judicial
determination, USNewco shall take such affirmative action, provided
that Xxxxx shall be liable for, and indemnify USNewco from and
against, any liability, penalty, cost or expense, including, but not
limited to, reasonable attorney fees, incurred by or imposed on
USNewco as a result of such an action involving an employee or a
former employee of the M-I Domestic Business. If, as part of a
proposed settlement of any such claims, the affirmative action of
USNewco is required, then USNewco shall take such affirmative action
except for good cause, provided that Xxxxx shall be liable for, and
indemnify USNewco from and against, any liability, penalty, cost or
expense, including, but not limited to, reasonable attorney fees,
incurred by or imposed on USNewco as a result of such an action
involving an employee or a former employee of the M-I Domestic
Business. In addition to those claims or potential claims assumed by
USNewco under any other provision of this Agreement, USNewco shall be
liable for, and indemnify Schlumberger, Smith, SIAC and MIPC from and
against, any liability, penalty, cost or expense, including, but not
limited to, reasonable attorney fees, incurred by or imposed on a
party as a result of claims by employees or former employees of the
M-I Domestic Business of alleged violation of any statute, regulation,
code, law or common law relating to the failure of USNewco to offer
employment or the terms of the offer of employment, except with
respect to any such liability, penalty, cost or expense relating to
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or arising from an action or inaction taken or failed to be taken by
any party intended to be indemnified under this Section 4.4(d).
Notwithstanding any other provision of this Agreement, neither the
offer of employment to any employee or former employee of the M-I
Domestic Business, nor the indemnification provisions contained in
this Agreement, shall create any third-party beneficiary rights with
respect to any party.
(z) No Right to Employment. Nothing in this Agreement,
express or implied, shall confer upon any employee, legal
representative thereof or any collective bargaining agent any rights
or remedies, including, without limitation, any right to employment,
or continued employment for any specified period or the benefits,
terms and conditions thereof, of any nature or kind whatsoever under
or by reason of this Agreement.
PROVISIONS REGARDING FOREIGN VENTURE ENTITIES' EMPLOYEES.
(aa) Non-U.S. Employees. The appropriate Foreign Venture
Entities shall accept the transfer of employment from the Schlumberger
Foreign Business and the M-I Foreign Business as of the Effective Time
of all Expatriates, ICs and Foreign Employees (collectively, "Non-U.S.
Employees"). Non-U.S. Employees accepting such employment shall be
referred to as "Foreign Venture Entities' Employees" hereinafter. With
respect to any Non-U.S. Employee on approved leave of absence as of
the Effective Time, the only obligation of the appropriate Foreign
Venture Entity shall be to offer employment to such Non-U.S. Employee
at the end of such leave of absence if, and only if, such Foreign
Venture Entity has an available employment position for such employee
at the time such leave terminates, except as otherwise provided under
local laws, statutes or regulations. Unless otherwise expressly
provided herein, or as provided in the applicable Foreign Venture
Entity Charter Documents or as the parties otherwise may agree, the
terms and conditions of employment of the Foreign Venture Entities'
Employees shall be determined by the appropriate Foreign Venture
Entity that employs the Foreign Venture Entities' Employees. Foreign
Venture Entities' Employees who are former employees of the
Schlumberger Foreign Business shall receive payments from Schlumberger
for their accrued and unused vacation days that they had earned under
the vacation policies of the Schlumberger Foreign Business as of
December 31, 1998, including any accrued and unused vacation days
carried over from prior years; provided, however, that if any such
payments are not permitted under applicable law, Schlumberger shall or
shall cause the appropriate entity to transfer the related accrual and
an equivalent amount of cash to the appropriate Foreign Venture
Entity. Foreign Venture Entities' Employees shall receive credit under
the appropriate Foreign Venture Entity vacation policy for their
accrued and unused vacation days they had earned during 1999 under the
vacation policy of the Schlumberger Foreign Business or the M-I
Foreign Business, as appropriate, as of the Effective Time. Except as
otherwise provided by local laws, statutes or regulations, any such
vacation days not used by December 31, 1999 shall be forfeited as of
January 1, 2000. M-I and Schlumberger agree that, except with the
prior written consent of the other party, prior to the Effective Time
each will use its best efforts to keep available the services of the
present officers and key employees of the M-I Foreign Business and the
Schlumberger Foreign Business, respectively.
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(bb) Certain Obligations of the Parties. Xxxxx and
Schlumberger shall be solely responsible for payment of commissions,
bonuses, pension benefits, welfare benefits, incentive or deferred
compensation for the employees of the M-I Foreign Business and the
Schlumberger Foreign Business, respectively, attributable to service
rendered prior to the Effective Time. Xxxxx and Schlumberger shall be
solely responsible for welfare benefits, pension benefits and any
other benefits under plans, programs, arrangements and/or personnel
policies for the Non-U.S. Employees (and their eligible dependents and
beneficiaries) of the M-I Foreign Business and the Schlumberger
Foreign Business, respectively, who do not become Foreign Venture
Entities' Employees. Xxxxx and Schlumberger, respectively, shall
remain responsible for providing certain benefits to each of its
Non-U.S. Employees who become Foreign Venture Entities' Employees, as
follows:
(i) weekly and long-term disability benefits, including
maintenance care for disabilities that commenced before the
Effective Time for the period that the Foreign Venture
Entities' Employee or the covered dependent of the Foreign
Venture Entities Employee remains eligible for such benefits;
(ii) hospital and nursing home benefits for confinements
that commenced before the Effective Time, including any
doctor's visits during such confinements;
(iii) benefits for medical and dental services or
materials received before the Effective Time;
(iv) life and survivor income benefits for covered
dependent deaths which occur prior to the Effective Time; and
(v) educational assistance program benefits which were
approved prior to the Effective Time.
(cc) Certain Employee Claims and Charges. For those
employment-related claims which are not M-I Assumed Liabilities or
Schlumberger Assumed Liabilities, if any affirmative action (such as
promotion, transfer and/or reinstatement) is required by reason of
judicial determination, the appropriate Foreign Venture Entity shall
take such affirmative action, provided that Schlumberger, with respect
to an action involving an employee or a former employee of the
Schlumberger Foreign Business, and Xxxxx, with respect to an action
involving an employee or a former
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employee of the M-I Foreign Business, shall be liable for, and
indemnify such Foreign Venture Entity from and against, any liability,
penalty, cost or expense, including, but not limited to, reasonable
attorney fees, incurred by or imposed on such Foreign Venture Entity
as a result of such action. If, as part of a proposed settlement of
any such claims, the affirmative action of a Foreign Venture Entity is
required, then such Foreign Venture Entity shall take such affirmative
action except for good cause, provided that Schlumberger, with respect
to an action involving an employee or a former employee of the
Schlumberger Foreign Business, and Xxxxx, with respect to an action
involving an employee or a former employee of the M-I Foreign
Business, shall be liable for, and indemnify such Foreign Venture
Entity from and against, any liability, penalty, cost or expense,
including, but not limited to, reasonable attorney fees, incurred by
or imposed on such Foreign Venture Entity as a result of such action.
In addition to those claims or potential claims assumed by a Foreign
Venture Entity under any other provision of this Agreement, M-I shall
be liable for, and indemnify Schlumberger, Schlumberger MI, Xxxxx,
SIAC, MIPC and Xxxxx Canada from and against, any liability, penalty,
cost or expense, including, but not limited to, reasonable attorney
fees, incurred by or imposed on a party as a result of claims by
employees or former employees of the M-I Foreign Business and the
Schlumberger Foreign Business of alleged violation of any statute,
regulation, code, law or common law relating to the failure of a
Foreign Venture Entity to offer employment or the terms of the offer
of employment, except with respect to any such liability, penalty,
cost or expense relating to or arising from an action or inaction
taken or failed to be taken by any party intended to be indemnified
under this Section 4.5(c). Notwithstanding any other provision of this
Agreement, neither the offer of employment to any employee or former
employee of the Schlumberger Foreign Business or the M-I Foreign
Business, nor the indemnification provisions contained in this
Agreement, shall create any third-party beneficiary rights with
respect to any party.
(dd) No Right to Employment. Nothing in this Agreement,
express or implied, shall confer upon any employee, legal
representative thereof, or any collective bargaining agent any rights
or remedies, including, without limitation, any right to employment,
or continued employment for any specified period or the benefits,
terms and conditions thereof, of any nature or kind whatsoever under
or by reason of this Agreement.
USNEWCO EMPLOYEE BENEFIT PROGRAMS.
(ee) Termination Benefits.
(i) USNewco shall be responsible for severance pay, if
any, for any USNewco Employee it terminates. A USNewco
Employee who is involuntarily terminated after the first 90
days following the Effective Time shall receive a severance
benefit from USNewco determined under a severance plan having
terms and conditions no less favorable than the terms and
conditions of the M-I severance plan for similarly situated
Former M-I Domestic Employees as of the day prior to the
Effective Time ("USNewco Severance Plan"). The parties agree
that USNewco may amend or modify the USNewco Severance Plan
after the Effective Time at such times and in such manner as
it deems appropriate to provide reasonable severance benefits
to its employees.
(ii) The foregoing notwithstanding, a USNewco Employee
who is involuntarily terminated during the first 90 days
following the Effective Time shall receive a severance
benefit from USNewco determined under the terms and
conditions of the M-I Severance Plan applicable to such
USNewco Employee in effect or authorized as of the day prior
to the Effective Time, as described by M-I
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in writing to USNewco, and that USNewco shall be reimbursed
by M-I for such severance amount and any other reasonable
costs, expenses or liabilities incurred by USNewco as a
result of paying such severance amount.
(ff) Employee Benefit Plans. Listed on Exhibit 4.6(b)-1 are
all of the incentive, welfare, pension and retirement plans and
arrangements in effect or authorized as of the Effective Time in
respect of the employees of the M-I Domestic Business.
(gg) Welfare Plans.
(i) M-I agrees to cause USNewco to assume the
sponsorship of, and continue, on and after the Effective
Time, the M-I welfare plan program for similarly situated
Former M-I Domestic Employees in effect as of the day prior
to the Effective Time, consisting of medical, dental,
hospital, life and such other insurance benefits, for all of
the USNewco Employees. USNewco will take all such steps
necessary to facilitate, cause and accept such transfer of
plan sponsorship and continuation of the M-I domestic welfare
plan program as the USNewco welfare plan program.
Furthermore, M-I and USNewco shall timely comply with any
applicable requirements in connection with the transfer,
assumption and continuation of the M-I domestic welfare
benefit plans by USNewco under the Code, ERISA and any other
laws. M-I represents that the M-I domestic welfare plan
program complies in all material respect with the applicable
provisions of the Code and ERISA. Xxxxx and SIAC shall be
responsible for, and agree to indemnify Schlumberger and
USNewco from and against, any liability, penalty, cost or
expense, including, but not limited to, reasonable attorney
fees, incurred by or imposed on Schlumberger and USNewco
related to the M-I domestic welfare plan program prior to the
program assumption date by USNewco. A summary of the terms of
the USNewco welfare plan program is attached hereto as
Exhibit 4.6(c)-1. Eligibility for, and the benefits of, the
USNewco welfare plan program will be determined by USNewco,
in accordance with the foregoing, except that the USNewco
welfare plan program, where applicable, will:
(1) waive application of its preexisting conditions
provision to any USNewco Employee or dependent thereof
for any medical condition such USNewco Employee or
dependent thereof has as of the Effective Time;
(2) recognize and apply to any deductibles under
USNewco's medical and dental plans, any medical and
dental expenses incurred by Former M-I Domestic
Employees that are applied toward their 1999 deductibles
under the applicable M-I medical and dental plans; and
(ii) To the extent reasonably possible, if the USNewco
Employees are not covered under the USNewco welfare plan
program as of the Effective Time, then effective as of the
Effective Time and until the date the USNewco
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Employees are covered under the USNewco welfare plan program,
but not later than 90 days after the Effective Time, the
welfare benefit plans listed in Exhibit 4.6(c)-2 for the
benefit of USNewco Employees who are Former M-I Domestic
Employees will be provided for such employees. The welfare
benefit plans listed on such Exhibit are hereinafter called
"Prior Domestic Welfare Plans." For the period commencing on
the Effective Time and for so long as USNewco maintains the
Prior Domestic Welfare Plans, but not longer than the earlier
of the date the USNewco Employees are covered under the
USNewco welfare plan program or 90 days following the
Effective Time (the "Domestic Plans Extension Period"), Xxxxx
shall provide to USNewco all administrative services in
connection with the Prior Domestic Welfare Plans. USNewco
shall reimburse Xxxxx for all costs and expenses incurred by
Xxxxx for the period from the Effective Date to the Effective
Time and during the Domestic Plans Extension Period and
associated with providing benefits, including claims paid,
under the Prior Domestic Welfare Plans. M-I represents with
respect to its Prior Domestic Welfare Plans that, to the
extent applicable, such plans comply in all material respects
with all applicable provisions of the Code and ERISA.
(iii) M-I and Schlumberger agree that USNewco, as
sponsor of its welfare plans, may amend or modify such plans
following the Domestic Plans Extension Period at such times
and in such manner as it deems appropriate to provide
reasonable benefits to its employees. M-I represents with
respect to its Prior Domestic Welfare Plans that such plans
and the benefits provided hereunder may be modified or
terminated at any time and that USNewco is not required to
continue any benefit available under a Prior Domestic Welfare
Plan.
(iv) Notwithstanding any other provision of this
Agreement, the parties agree that USNewco shall not provide
any postretirement medical ("Retiree Medical") benefits to
its employees, except as may be required to comply with
sections 601 through 609 of ERISA.
(hh) Pension and Retirement Plans.
(i) The USNewco Employees shall participate in the
tax-qualified M-I retirement plan for the benefit of
similarly situated employees of the M-I Domestic Business in
effect as of the day prior to the Effective Time, known as
the M-I Profit Sharing and Savings Plan ("M-I Profit-Sharing
Plan"), on and after the Effective Time (the "USNewco
Profit-Sharing Plan"). M-I shall cause USNewco to assume the
sponsorship of the M-I Profit-Sharing Plan, effective as of
the Effective Time, and USNewco will take all such steps
necessary to facilitate, cause and accept such transfer of
plan sponsorship. After the transfer of plan sponsorship,
USNewco shall timely take all actions necessary to ensure the
plan's continued qualification under the Code, and continued
compliance with ERISA and any other applicable laws. Each
USNewco Employee, for purposes of vesting and eligibility
under the USNewco Profit-Sharing Plan, will be credited
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with service equal to the eligibility and vesting service
such employee had earned as of the Effective Time under the
M-I Profit-Sharing Plan.
(ii) M-I and Schlumberger agree that USNewco, as plan
sponsor, may amend or modify the USNewco Profit-Sharing Plan
following the Effective Time at such times and in such manner
as it deems appropriate to provide reasonable benefits to its
employees and to maintain the tax-qualified status of the
plan and for the plan to remain in compliance with ERISA.
(iii) M-I, Xxxxx, SIAC and MIPC, with respect to the M-I
Profit-Sharing Plan, represent and warrant that the plan, and
its related trust, meet, in all material respects, the
applicable requirements for qualification under Sections
401(a) and (k) and 501(a) of the Code and comply in all
material respects with ERISA. M-I, Xxxxx, SIAC and MIPC agree
to indemnify Schlumberger and Schlumberger MI from and
against any liability, penalty, cost or expense, including,
but not limited to, reasonable attorney fees, incurred by or
imposed on Schlumberger related to the M-I Profit-Sharing
Plan prior to the Effective Time.
(ii) Vacation, Compensation, and Other Employee Benefits.
(i) In addition to any vacation days provided under
Section 4.4(a), the parties agree that USNewco Employees
shall be entitled to vacation benefits under the USNewco
vacation policy, on and after the Effective Time, which are
the same, to the extent reasonably possible, as provided
under the M-I vacation policy in effect or authorized as of
the day immediately prior to the Effective Time. Accordingly,
under such policy, based on seniority, USNewco Employees will
be entitled to vacation benefits of no less than: (1) 10
working days, for 1 to 4 years of service; (2) 15 working
days, for 5 to 9 years of service; (3) 20 working days, for
10 to 19 years of service; and (4) 25 working days, for 20 or
more years of service.
(ii) The parties agree that USNewco shall adopt for the
USNewco Employees the salary, performance incentive plan, and
job bonus structures and policies of M-I in effect or
authorized as of the day immediately prior to the Effective
Time.
(iii) Except as otherwise provided, for purposes of the
benefits provided under this Section 4.6, a USNewco
Employee's seniority shall include his or her employment with
M-I prior to the Effective Time.
FOREIGN VENTURE ENTITIES' EMPLOYEE BENEFIT PROGRAMS.
(jj) Termination Benefits. Except as provided in Section 4.3
and below with respect to M-I Canada, the appropriate Foreign Venture
Entity shall be responsible for severance pay, if any, for Foreign
Venture Entities' Employees whose employment is terminated by such
Foreign Venture Entity. A Foreign Venture Entities Employee's
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severance benefit shall be determined under the appropriate Foreign
Venture Entity severance plan having terms and conditions no less
favorable than the terms and conditions under the applicable M-I
severance plan for similarly situated Former M-I Foreign Employees as
of the day prior to the Effective Time. The foregoing notwithstanding,
if a Foreign Venture Entities Employee who is a Former Schlumberger
Employee entitled to a benefit under Schlumberger's Cash Separation
Indemnity program ("CSI") as of the Effective Time is terminated,
voluntarily or involuntarily, after the 90th day following the
Effective Time, then the Former Schlumberger Employee shall receive a
benefit under the CSI, determined under the terms and conditions of
the CSI, provided such employee is eligible for a CSI benefit based on
his or her years of service with Schlumberger and the Foreign Venture
Entities as of the termination date. In such a case, the parties agree
that (1) if the Former Schlumberger Employee's CSI benefit exceeds the
severance benefit such employee would receive under the applicable
Foreign Venture Entity severance plan, then such employee shall not
receive a severance benefit under the applicable Foreign Venture
Entity severance plan and (2) if the Former Schlumberger Employee's
CSI benefit is less than the severance benefit such employee would
receive under the applicable Foreign Venture Entity severance plan,
then such employee shall receive a severance under the applicable
Foreign Venture Entity severance plan that is reduced by the amount of
such employee's CSI benefit. To the extent the actions described in
the preceding sentence otherwise violate local law, the parties agree
to take such actions as necessary to accomplish the intent of the
preceding sentence. The above notwithstanding, in the case of
employees of M-I Canada who are eligible for benefits under Canadian
law ("Canadian Employees"), such employees' severance pay and other
benefits shall be as provided under applicable Canadian provincial
laws.
(kk) Employee Benefit Plans. Listed on Exhibit 4.7(b)-1, in
the case of M-I, and Exhibit 4.7(b)-2, in the case of Schlumberger,
are all of the incentive, welfare, pension and retirement plans and
arrangements in effect or authorized as of the Effective Time in
respect of the employees of the M-I Foreign Business and the
Schlumberger Foreign Business.
(ll) Welfare Plans.
(i) Employees of M-I Canada on and after the Effective
Time shall be provided the benefits provided under the M-I
Canada welfare plan program as in effect as of the day prior
to the Effective Time; provided, however, that M-I Canada may
amend or modify such program at such times and in such manner
as it deems appropriate to provide reasonable benefits to its
employees, to the extent possible by law, after the Effective
Time. With respect to non-M-I Canada employees, M-I shall
cause the appropriate Foreign Venture Entities to assume the
sponsorship of, and continue, on and after the Effective
Date, the M-I welfare plan program for similarly situated
Former M-I Foreign Employees in effect as of the day prior to
the Effective Time, consisting of medical, hospital, life and
such other insurance benefits, for all of the Foreign Venture
Entities' Employees. The Foreign Venture Entities shall take
all such steps necessary to facilitate, cause and
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accept such transfer of plan sponsorship and continuation of
the M-I foreign welfare plan program as the Foreign Venture
Entities welfare plan program. Furthermore, M-I and the
Foreign Venture Entities shall timely comply with any
applicable requirements in connection with the transfer,
assumption and continuation of the M-I foreign welfare plan
program under the applicable laws. M-I represents that the
M-I foreign welfare plan program complies in all material
respect with the applicable laws. Xxxxx and SIAC shall be
responsible for, and agree to indemnify Schlumberger and the
Foreign Venture Entities from and against, any liability,
penalty, cost or expense, including, but not limited to,
reasonable attorney fees, incurred by or imposed on
Schlumberger and the Foreign Venture Entities related to the
M-I foreign welfare plan program prior to the program
assumption date by the Foreign Venture Entities. A summary of
the terms of the Foreign Venture Entities welfare plan
program, including such benefits for employees of M-I Canada
and the Foreign Venture Entities' Employees who are eligible
for benefits in the U.K., is attached hereto as Exhibit
4.7(c)-1. Eligibility for, and the benefits of, the Foreign
Venture Entities welfare plan program will be determined by
the Foreign Venture Entities, in accordance with the
foregoing, except that the Foreign Venture Entities welfare
plan program, where applicable and in accordance with
applicable law, will:
(1) waive application of its preexisting conditions
provision to any Foreign Venture Entities' Employee or
his or her dependent for any medical condition such
Foreign Venture Entities Employee or dependent has as of
the Effective Time; and
(2) recognize and apply to any deductibles under
the Foreign Venture Entities medical and dental plans,
any medical and dental expenses incurred by Former
Schlumberger Employees and Former M-I Foreign Employees
that are applied toward their 1999 deductibles under the
applicable Schlumberger and M-I medical and dental
plans.
(ii) To the extent reasonably possible, if the Foreign
Venture Entities' Employees are not covered under the Foreign
Venture Entities' welfare plan program as of the Effective
Time, then effective as of the Effective Time and until the
date the Foreign Venture Entities' Employees are covered
under the Foreign Venture Entities welfare plan program, but
not later than 90 days after the Effective Time, the welfare
benefit plans listed in Exhibit 4.7(c)-2 for the benefit of
the Foreign Venture Entities' Employees who are Former
Schlumberger Employees and the welfare benefit plans listed
in Exhibit 4.7(c)-3 for the benefit of the Foreign Ventures
Entities' Employees who are Former M-I Foreign Employees will
be provided for such employees, as applicable. The welfare
benefit plans listed on such Exhibits are hereinafter called
"Prior Foreign Welfare Plans." For the period commencing as
of the Effective Time and for so long as the Foreign Venture
Entities maintain the Prior Foreign Welfare Plans, but not
longer than the earlier of the date the Foreign Venture
Entities' Employees are
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covered under the Foreign Venture Entities welfare plan
program or 90 days following the Effective Time (the "Foreign
Plans Extension Period"), Xxxxx and Schlumberger shall
provide to the Foreign Venture Entities all administrative
services in connection with its Prior Foreign Welfare Plans.
The Foreign Venture Entities shall reimburse Xxxxx and
Schlumberger for all costs and expenses incurred for the
period as of Effective Time to the Effective Time and during
the Foreign Plans Extension Period and associated with
providing benefits, including claims paid, under the Prior
Foreign Welfare Plans. M-I and Schlumberger represent with
respect to each such party's Prior Foreign Welfare Plans that
to the extent applicable, such plans comply in all material
respects with all applicable laws.
(iii) M-I and Schlumberger agree that the Foreign
Venture Entities, as sponsors of the appropriate welfare
plans, may amend or modify such plans following the Foreign
Plans Extension Period at such times and such manners as each
deems appropriate to provide reasonable welfare benefits to
its employees. M-I and Schlumberger represent with respect to
each such party's Prior Foreign Welfare Plans that such plans
and the benefits provided thereunder may be modified or
terminated at any time and that the Foreign Venture Entities
are not required to continue any benefit available under a
Prior Foreign Welfare Plan.
(iv) Notwithstanding any other provision of this
Agreement, the parties agree that the Foreign Venture
Entities shall not provide any Retiree Medical benefits to
its employees. Former Schlumberger Employees who are entitled
to participate under Schlumberger's deferred medical plan
("DMP") and are age 50 or older as of the Effective Time
shall continue to be eligible to participate under the DMP,
subject to the terms and conditions of such plan; Former
Schlumberger Employees who are entitled to participate under
the DMP and are under age 50 as of the Effective Time shall
no longer be eligible to participate under the DMP on and
after the Effective Time and such employees' DMP
contributions shall be returned to them as provided under the
terms and conditions of the DMP as if their employment had
been terminated; and Canadian Employees who are over age 55
with 20 years of service with Schlumberger as of the
Effective Time, and subsequently retire directly from a
Foreign Venture Entity, shall continue to be eligible to
participate under the Schlumberger retiree medical benefits
plan for such employees, subject to and under the terms and
conditions of such plan, in each case, solely at
Schlumberger's cost. Schlumberger agrees to indemnify the
Foreign Venture Entities from and against any liability,
penalty, cost or expense, including, but not limited to,
reasonable attorney fees, incurred by or imposed on any
Foreign Venture Entity related to Retiree Medical benefits
provided by Schlumberger.
(mm) Pension and Retirement Plans. Subject to the provisions
of the relevant pension and retirement plan documents and applicable
law:
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(i) The Foreign Venture Entities' Employees shall
participate in the appropriate M-I foreign pension and
profit-sharing plans for the benefit of similarly situated
employees of the M-I Foreign Business in effect as of the day
prior to the Effective Time ("M-I Foreign Plans"), on and
after the Effective Time ("Foreign Venture Entities' Foreign
Plans"). Subject to the requirements of applicable local
laws, statutes and regulations, M-I shall cause the
appropriate Foreign Venture Entities to assume the
sponsorship of the M-I Foreign Plans, effective as of the
Effective Time, and the Foreign Venture Entities will take
all steps necessary to facilitate, cause and accept such
transfer of plan sponsorship. As soon as practicable after
the transfer of plan sponsorship, the appropriate Foreign
Venture Entities shall timely comply with any reporting and
qualification requirements in connection with such transfer
and assumption that may be required under applicable laws.
Each Foreign Venture Entities Employee, for purposes of
vesting and eligibility under the Foreign Venture Entities'
Foreign Plans, will be credited with service equal to the
eligibility and vesting service such employee had earned as
of the Effective Time under (1) the applicable Schlumberger
foreign retirement and profit sharing plans ("Schlumberger
Foreign Plans") and (2) M-I Foreign Plans, whichever is
applicable.
(ii) As provided in Section 4.3(d), the parties agree
that the accrued pension benefits and account balances of the
Former Schlumberger Employees under the Schlumberger Foreign
Plans shall not be transferred to the Foreign Venture
Entities' Foreign Plans. Benefits payable, if any, to Former
Schlumberger Employees under any of the Schlumberger Foreign
Plans shall be determined in accordance with the provisions
of such plans in effect as of the Effective Time. If after
the Effective Time Schlumberger updates the benefits under an
applicable Schlumberger Foreign Plan, then a Former
Schlumberger Employee's benefit under such plan shall be
increased by Schlumberger solely at its cost in the same
manner as a similarly-situated, active employee participating
in such plan, provided such employee is employed with a
Foreign Venture Entity as of the effective date of the
change. Further, each Former Schlumberger Employee shall be
credited under the applicable Schlumberger Foreign Plan with
such employee's period of employment with a Foreign Venture
Entity following the Effective Time for purposes of
determining the date such employee may first commence payment
of benefits under the applicable plan, including early
retirement. The subsequent transfer of employment of a Former
Schlumberger Employee from a Foreign Venture Entity to Xxxxx
or any of Xxxxx'x divisions, subsidiaries or affiliates shall
be deemed to be termination of employment for purposes of the
applicable Schlumberger Foreign Plans. The Foreign Venture
Entities agree to notify Schlumberger of the severance or
transfer of employment of any Former Schlumberger Employee.
(iii) M-I, Xxxxx, SIAC and MIPC, with respect to the M-I
Foreign Plans, represent and warrant that such plans, and
their related trusts, are in compliance with and meet in all
substantial respects all applicable laws, statutes,
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rules and regulations governing such plans and that, to the
knowledge of M-I, Xxxxx, SIAC and MIPC, no M-I Foreign Plan
is subject to an ongoing audit, investigation or other
administrative proceeding of any local governmental entity or
is scheduled to be subject to an audit, investigation or
proceeding. M-I, Xxxxx, SIAC and MIPC additionally represent
and warrant that, with respect to the M-I Foreign Plans, and
their related trusts, to the knowledge of M-I, Xxxxx, SIAC
and MIPC, there exists no condition or set of circumstances
that could subject M-I, Xxxxx, SIAC or MIPC, or any of their
subsidiaries or affiliates, to any liability arising under
any applicable laws (including under any indemnity agreement
to which M-I, Xxxxx, SIAC or MIPC, or any of their
subsidiaries or affiliates, is a party). No claim, action or
litigation has been made, commenced or threatened by or
against M-I, Xxxxx, SIAC or MIPC, or any of their
subsidiaries or affiliates, with respect to any M-I Foreign
Plan. M-I, Xxxxx, SIAC and MIPC agree to indemnify
Schlumberger from and against any liability, penalty, cost or
expense, including, but not limited to, reasonable attorney
fees, incurred or imposed on Schlumberger related to the M-I
Foreign Plans prior to the Effective Time.
(nn) Vacation, Compensation and Other Employee Benefits.
(i) In addition to any vacation days provided under
Section 4.5(a), the parties agree that the Foreign Venture
Entities' Employees shall be entitled to vacation benefits
under the Foreign Venture Entities' vacation policies, on and
after the Effective Time, which are the same, to the extent
reasonably possible, as provided under the M-I vacation
policy in effect or authorized as of the day immediately
prior to the Effective Time.
(ii) The parties agree that salary, performance
incentive plan, job bonus, tax equalization and housing
allowance structures and policies of M-I in effect or
authorized as of the day immediately prior to the Effective
Time shall apply to all Foreign Venture Entities' Employees.
(iii) Except as otherwise provided, for purposes of the
benefits provided under Section 4.7, Foreign Venture
Entities' Employees' seniority shall include employment with
Schlumberger or M-I, as applicable, prior to the Effective
Time.
INSURANCE AND WARRANTY SERVICE.
(oo) Each Venture Entity shall procure and maintain adequate
insurance covering its operations and assets. In the event
satisfactory separate coverage cannot be obtained, coverage may be
provided under master policies of either Xxxxx or Schlumberger with
the express approval of the board of directors, management committee
or other governing body of that Venture Entity and both Xxxxx and
Schlumberger. It will be the joint responsibility of the insurance
departments of both Xxxxx and Schlumberger to use their reasonable
best efforts to arrange for such insurance coverage to the extent such
coverage is available.
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(pp) Each Venture Entity shall be responsible for all
Warranty and Warranty Service on all products, installations and
services relating to the Schlumberger Acquired Assets currently
covered by a Schlumberger Warranty whether said products or services
were sold, delivered or rendered prior to or subsequent to the
Effective Time. The Schlumberger Warranties are attached hereto as
Exhibit 4.8(b). Except for the Warranty and Warranty Services to be
provided under this Section 4.8, all claims seeking recovery for
property damage, consequential damage, lost revenue or income or
personal injuries shall be for the account of Schlumberger or Xxxxx,
as the case may be, to the same extent as is provided with respect to
indemnity in Article 6.
BULK SALES ACTS. The parties agree that no special notification shall be given
to their respective creditors under the bulk sales laws and any other similar
laws in any applicable jurisdiction in connection with the transactions
contemplated by this Agreement. Each party agrees promptly and diligently to pay
and discharge when due or to contest and litigate all claims of its respective
creditors that are asserted against any party or any of the Venture Entities by
reason of any asserted noncompliance with any such bulk sales laws, and to
indemnify and hold the other parties and the Venture Entities harmless
therefrom, except such claims as arise out of any Schlumberger Assumed
Liabilities or any M-I Assumed Liabilities.
ACCOUNTS RECEIVABLE.
(qq) The parties acknowledge that Schlumberger is not
transferring to any of the Venture Entities any receivables
attributable to the Schlumberger Drilling Fluids Business for the
period prior to the Accounting Date. Accordingly, Schlumberger retains
responsibility for collection of customer accounts, whether an open
account, note account or combination of both, for the period prior to
the Accounting Date, and Schlumberger will be responsible for its own
collection efforts and applicable expenses related to such
receivables. Further, to the extent a Venture Entity collects any
amounts attributable to such receivables, then that Venture Entity
shall promptly remit such amounts to Schlumberger or Schlumberger's
designee.
(rr) The parties agree to review any accounts receivable
included in the M-I Acquired Assets as of the Accounting Date which
have not been collected in full or written off as uncollectible by the
Venture Entities by in each case the later of the first anniversary of
the Accounting Date or the date that is six months after the due date
to determine whether any such accounts receivable should be written
off as uncollectible. Any such amounts written off in excess of the
amount of any accruals therefor as reflected in the M-I Balance Sheet,
as supplemented, at the Accounting Date shall be included in the
indemnification provisions of Section 6.2 and the calculation of the
$5,000,000 amount in Section 6.6.
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FURTHER ACTIONS. The parties acknowledge that merger or transfer of the
Schlumberger Drilling Fluids Business and the M-I Drilling Fluids Business may
not occur prior to or on the Closing Date. Nevertheless, the parties shall
endeavor in good faith to work toward implementation of an international
reorganization plan for the Schlumberger Drilling Fluids Business and the M-I
Drilling Fluids Business as set forth in the International Reorganization
Protocol (the "Protocol"), a copy of which is attached hereto as Exhibit 4.11,
after the Closing Date for whatever period of time is required to complete said
international reorganization plan consistent with Article 2 and Article 3. Each
of the parties shall be given prior notice of any changes or proposed changes in
the transactions described in the Protocol. Furthermore, until such
international reorganization plan is implemented in a specific foreign location,
the parties shall use their reasonable best efforts to conduct the operations of
the Schlumberger Drilling Fluids Business and the M-I Drilling Fluids Business
in said specific foreign location for the benefit of the applicable Venture
Entity, whether such operations be through a separate foreign subsidiary,
affiliate or branch comprised totally of the Schlumberger Drilling Fluids
Business or the M-I Drilling Fluids Business at that location or merely as a
part of a party or a party's foreign subsidiary, affiliate or branch operations
in said location. Each of the parties agrees to use its reasonable best efforts
to take, or cause to be taken, and the parties agree to use their reasonable
best efforts to cause each Venture Entity to take, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement and the Protocol,
whether prior to or on or after the Closing Date, including using its reasonable
best efforts: (a) to obtain prior to or promptly following the Closing Date all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with such party as
are necessary for the consummation of such transaction; (b) to effect all
necessary registrations and filings; (c) to defend any lawsuits or other legal
proceedings, whether judicial or administrative, calling into question this
Agreement or the consummation of the transactions contemplated hereby; (d) to
furnish to the other parties such documentation, information and assistance as
reasonably may be requested in connection with the foregoing; and (e) if any
required consent of any third party under any contract, lease or agreement shall
not be obtained or if any attempted assignment thereof would be ineffective or
would impair a Venture Entity's rights thereunder so that such Venture Entity
would not in effect acquire the benefit of all of the rights of Schlumberger or
M-I, as applicable, to act, to the extent permitted by applicable law, as such
Venture Entity's agent in order for that Venture Entity to obtain or
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assume the benefits or obligations thereunder, and to cooperate, to the extent
permitted by applicable law, within any other reasonable arrangement designated
to obtain or assume such benefits or obligations for that Venture Entity. The
parties agree from time to time to (a) execute, deliver and, when appropriate,
record any such documents of transfer, conveyance and assignment in mutually
agreeable form in addition to those referenced in Section 3.3 and (b) take such
other actions as the parties shall agree are necessary or appropriate to
accomplish the transactions contemplated hereby, including the grants of
licenses described in Section 3.4(a) and Section 3.4(b).
USE OF CERTAIN FACILITIES. With respect to non-U.S. properties or facilities of
Schlumberger not being transferred to a Foreign Venture Entity, but which were
used or jointly used by the Schlumberger Drilling Fluids Business prior to the
Effective Time, such properties or facilities may be made reasonably available
to the appropriate Foreign Venture Entity pursuant to written leases or other
documents upon terms and conditions as may be agreed by the parties. Except as
otherwise agreed to in such written leases or other documents, Schlumberger may
terminate, without liability, any such arrangement on 180 days' prior written
notice to the appropriate Foreign Venture Entity.
EXPENSES.
(ss) Except as otherwise specifically provided in this
Agreement and whether or not the Closing occurs, Xxxxx, SIAC, MIPC and
Xxxxx Canada shall pay (i) all expenses incurred by or on behalf of
Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I and each Venture Entity or any of
their affiliates in connection with the preparation, authorization and
execution of this Agreement, the formation of the Venture Entities,
the conveyance, transfer, assignment and delivery of the M-I Drilling
Fluids Business, including all fees and expenses of agents,
representatives, counsel and accountants, (ii) all federal, state,
local and foreign taxes arising out of the formation of the Venture
Entities and the conveyance, transfer, assignment and delivery of the
M-I Drilling Fluids Business and (iii) all amounts payable with
respect to any claim for brokerage or finders' fees or other
commissions with respect to the transactions contemplated by this
Agreement based in any way on any agreement, arrangement or
understanding made by Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I Canada, M-I
or any of their affiliates; provided, however, that Schlumberger shall
reimburse Xxxxx or Xxxxx'x subsidiaries for (i) up to $600,000 of the
fees and expenses of agents, representatives, counsel and accountants
incurred in connection with the formation of and contribution of
assets to BVINewco and Dutchco, (ii) the first $1,000,000 of any
foreign taxes referred to above and (iii) one half of the foreign
taxes referred to above between $1,000,000 and $3,000,000. Xxxxx shall
pay all
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amounts Schlumberger is not required to reimburse pursuant to clauses
(i), (ii) or (iii); and provided further, that the amount of foreign
taxes required to be reimbursed by Schlumberger pursuant to clauses
(ii) and (iii) shall be reduced by any credit against U.S. tax or
other tax benefit obtained by Xxxxx or its subsidiaries as a direct
result of the payment of such foreign taxes.
(tt) Except as otherwise specifically provided in this
Agreement and whether or not the Closing occurs, Schlumberger shall
pay (i) all expenses incurred by or on behalf of Schlumberger or any
of its affiliates in connection with the preparation, authorization,
and execution of this Agreement, and the conveyance, transfer,
assignment and delivery of the Schlumberger Drilling Fluids Business
to the Foreign Venture Entities, including all fees and expenses of
agents, representatives, counsel and accountants, (ii) all federal,
state, local and foreign taxes arising out of the conveyance,
transfer, assignment and delivery of the Schlumberger Drilling Fluids
Business to the Foreign Venture Entities, including any foreign taxes
incurred by Dutchco in connection with transfers by Schlumberger of
cash or assets to Dutchco, and (iii) all amounts payable with respect
to any claim for brokerage or finders' fees or other commissions with
respect to the transactions contemplated by this Agreement based in
any way on any agreement, arrangement or understanding made by
Schlumberger or any of its affiliates.
BOOKS OF ACCOUNT AND SPECIAL RIGHTS.
(uu) As indicated above, the assets transferred to the
Foreign Venture Entities by Schlumberger include Schlumberger's
rights, if any, to the trade names, trademarks and trade secrets used
in the businesses of the Schlumberger Drilling Fluids Business that
are listed in the Exhibits to Section 2.4. Except as provided below,
no Foreign Venture Entity shall receive or utilize any rights or
interest in the names of Schlumberger Limited or its affiliates or any
other name, logo, abbreviation, word or combination thereof of similar
import. It is hereby agreed that the Foreign Venture Entities may
utilize, at their sole option, the following items:
(i) Without limitation of time, the Foreign Venture
Entities may use manuals, technical specifications,
descriptive literature and catalogs in existence at the
Effective Time and bearing Schlumberger's name or marks,
provided that the name and marks are stamped or overprinted
with that Foreign Venture Entity's own name or marks;
(ii) The Foreign Venture Entities shall have a period of
180 days after the Effective Time within which to change the
names or marks of Schlumberger on the exterior of any
buildings or leaseholds transferred to the Foreign Venture
Entities and to change any names or marks of Schlumberger on
the motor vehicles transferred hereby;
(iii) The Foreign Venture Entities shall have the right
to sell any of the inventories or products that are in bags
or other containers bearing any of the
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names or marks of Schlumberger, so long as the inventories or
products produced after 180 days following the Effective Time
are not packaged in bags or other containers that bear such
names or marks; and
(iv) Notwithstanding anything to the contrary herein,
Schlumberger hereby agrees to allow the Venture Entities to
utilize in their respective businesses, both within the
United States and in foreign jurisdictions, the phrase "A
[insert entity type] owned by Xxxxx International, Inc. and
Schlumberger Limited" or a phrase(s) of substantially similar
content. It is agreed that the Venture Entities may use said
phrase in any advertising material, letterhead, packaging or
on any other necessary or desirable signs, notices or printed
material; provided, however, that it is agreed that the
rights to use said phrase as herein granted to the Venture
Entities shall cease within 180 days following the date on
which Xxxxx'x indirect interest or Schlumberger's indirect
interest in the applicable Venture Entity falls below 30%,
respectively.
(vv) Except as set forth in this Article 4, Schlumberger will
transfer to the appropriate Foreign Venture Entity all of its books
and records (for both financial reporting and tax purposes) relating
exclusively to the Schlumberger Drilling Fluids Business. Xxxxx, SIAC,
Xxxxx Canada, M-I and M-I Canada agree that they will and will cause
the applicable Foreign Venture Entities to make such books and records
available to Schlumberger for inspection during the regular business
hours for a period of six years following the Effective Time, and that
Schlumberger may, at its own expense, make such copies of such books
and records as it may deem necessary. No Foreign Venture Entity shall
destroy any of such books and records without the prior written
consent of Schlumberger. Schlumberger further agrees to cooperate with
the other parties and with the Foreign Venture Entities to make
available from time to time to each other all other books and records
relating to the Schlumberger Drilling Fluids Business for any valid
purpose relating to the Schlumberger Drilling Fluids Business;
provided, however, that Schlumberger may, in its discretion, require
any such party to execute a confidentiality agreement relating to the
information contained in such books and records. Notwithstanding the
agreements contained in this Article 4, Schlumberger will retain all
the accounting books and records (for both financial reporting and tax
accounting purposes) (the "Retained Records") as such books and
records relate to divisions whereby the transactions contemplated by
this Agreement and the Protocol will be accomplished by means of a
transfer of assets to a Venture Entity. Schlumberger will provide the
other parties and the Foreign Venture Entities access to the Retained
Records during the same term and subject to the same conditions as
described in this Article 4 with respect to books and records
transferred to the Foreign Venture Entities.
FIREWALLS.
(ww) Schlumberger shall not exchange, disclose, discuss or
otherwise make available to Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I or
any of the Venture Entities, any
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Non-Public Information of Schlumberger relating to any Non-Acquired
Schlumberger Businesses or any Non-Acquired Schlumberger Assets.
(xx) Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I Canada and M-I
shall not, and Xxxxx, SIAC and Xxxxx Canada shall cause each Venture
Entity not to, exchange, disclose, discuss or otherwise make available
to Schlumberger any Non-Public Information of Xxxxx relating to any
Non-M-I Xxxxx Business.
TECHNICAL AND ENVIRONMENTAL COMMITTEES.
(yy) Promptly after execution of this Agreement, the Venture
Entities and Schlumberger shall jointly establish a technical
committee (the "Technical Committee") for the purpose of evaluating
what assets, facilities, software, intellectual property and
engineering developments of Schlumberger and its affiliates that are
not used or owned exclusively by the Schlumberger Drilling Fluids
Business and therefore not included in the Exhibits to Section 2.4,
but which are used to some degree by the Schlumberger Drilling Fluids
Business or which Schlumberger or the Foreign Venture Entities believe
may have useful applications to the business and operations of the
Foreign Venture Entities and that the Foreign Venture Entities may
want access to by way of a transfer, lease or license of such assets.
If a Foreign Venture Entity desires access to a particular asset, the
Technical Committee shall work in good faith to establish mutually
agreeable terms upon which that Foreign Venture Entity may be provided
access to such asset. Any such agreement for such access shall be
subject to the approval of the board of directors, management
committee or other governing body of the applicable Foreign Venture
Entity and the approval of Schlumberger. The applicable Foreign
Venture Entity shall execute a confidentiality agreement in
substantially the form of Exhibit 4.16 before being granted access to
any confidential information of Schlumberger or any of its affiliates
in connection herewith.
(zz) Promptly after execution of this Agreement, Xxxxx and
Schlumberger shall jointly establish an environmental committee (the
"Environmental Committee"). The Environmental Committee shall work in
good faith to monitor the environmental, health and safety matters
described in Section 6.2(b), Section 6.3(b) and the disclosure letters
thereto and the indemnities related thereto and to recommend to Xxxxx
and Schlumberger the appropriate allocation of liability or
responsibility related thereto. The Environmental Committee shall meet
at mutually agreed upon times and places to perform its obligations
under this Section 4.16(b).
POST-CLOSING TECHNICAL SUPPORT.
(aaa) After the Closing, to the extent that a Venture Entity
needs or desires technical support in the area of research and
development, that Venture Entity shall first inquire as to whether
Schlumberger has the technical knowledge and capability to lend such
technical support before approaching any third party. If Schlumberger
is willing and able to provide such technical support on terms and
conditions that are not materially less
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favorable than are obtainable from a similarly qualified third party,
then that Venture Entity shall contract with Schlumberger for such
technical support. Attached hereto as Exhibit 4.17 is a form of
agreement relating to the provision of research and development
support by Schlumberger and a list of typical costs for such support.
The parties shall execute an agreement in substantially such form
prior to the support being furnished. Unless otherwise agreed to in a
specific research and development agreement, any intellectual property
developed pursuant to this Section 4.17 shall belong to and be owned
by the appropriate Venture Entity; provided, however, that
Schlumberger shall have the right to an exclusive, royalty-free
license with respect to such intellectual property.
(bbb) After the Closing, to the extent that a Venture Entity
needs or desires support in such areas as financial, administrative or
legal operations or the use of additional facilities, that Venture
Entity shall first inquire as to whether Schlumberger has the
capability to provide such support or facilities before approaching
any third party. If Schlumberger is willing and able to provide such
support or facilities on terms and conditions that are at least as
favorable as are obtainable from a similarly qualified third party,
and, with respect to facilities, facilities that are at least as
suitable to that Venture Entity's needs, then that Venture Entity
shall contract with Schlumberger for such support or facilities.
VENTURE ENTITY AUDITS. There shall be an annual audit of the aggregate
operations and businesses of the Venture Entities, taken as a whole, conducted
by an independent accounting firm. The parties agree to, and agree to cause each
of the Venture Entities to, cooperate with such accounting firm with respect to
such audits and to make the results thereof available to Xxxxx and Schlumberger.
TRANSFER RESTRICTIONS AND PROCEDURES. Except as otherwise provided in Section
9.3 or Section 4.21, each of Xxxxx and Schlumberger agrees that it will not and
will cause its respective subsidiaries not to, directly or indirectly, sell,
transfer, pledge, hypothecate or otherwise dispose of all or any part of its
direct or indirect ownership interest in any of the Venture Entities, except to
the other in accordance with the following procedures:
(ccc) If either of Xxxxx or Schlumberger (the "Initiating
Party") wishes to dispose of not less than all of its direct and/or
indirect ownership interests in each of the Venture Entities (an
"Ownership Interest"), the Initiating Party shall give written notice
thereof (the "Transfer Notice") to the other (the "Other Party") by
certified mail, return receipt requested, and otherwise in accordance
with the procedures set forth in Section
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9.5, specifying the cash purchase price (stated in terms of price per
percentage point of Percentage Interest) at which it is willing to
effect such disposition.
(ddd) Not later than 90 days following receipt of the
Transfer Notice, the Other Party shall notify the Initiating Party in
writing (the "Response Notice") of its election to either (i) purchase
the Initiating Party's entire Ownership Interest at the cash purchase
price (stated in terms of price per percentage point of Percentage
Interest) specified in the Transfer Notice or (ii) sell to the
Initiating Party the Other Party's entire Ownership Interest at the
cash purchase price equal to the same price per percentage point of
Percentage Interest as set forth in the Transfer Notice. A failure by
the Other Party to deliver a Response Notice shall be deemed to be a
Response Notice to purchase the Initiating Party's entire Ownership
Interest at the cash purchase price specified in the Transfer Notice,
given on the 90th day following receipt of the Transfer Notice. The
Response Notice shall be irrevocable and shall be binding upon the
Initiating Party and the Other Party.
(eee) The closing of the purchase of any Ownership Interest
in accordance with the Response Notice shall take place within 90 days
after receipt (or deemed receipt) of such Response Notice. The time
and date of such closing shall be specified in the Response Notice
furnished pursuant to Section 4.19(b). If a Response Notice is deemed
to have been given pursuant to such Section 4.19(b), the closing shall
take place at 10:00 a.m., Central time, on the 120th day following
receipt of the Transfer Notice. At the closing, the party that is
purchasing the Ownership Interest shall pay the purchase price
therefor by delivering to the party that is selling the Ownership
Interest cash in immediately available funds to the order of such
selling party. Concurrently with the delivery of such purchase price,
the party that is selling the Ownership Interest shall execute or
cause to be executed such instruments of transfer as shall be
sufficient to fully vest such Ownership Interest in the other party.
The closing shall take place at such place as may be unanimously
agreed upon by Xxxxx and Schlumberger or their respective
subsidiaries.
(fff) Notwithstanding anything to the contrary set forth in
this Section 4.19, Xxxxx and Schlumberger agree that neither of them,
nor any of their respective subsidiaries, shall exercise its rights
under this Section 4.19 until after the fifth anniversary of the
Closing Date; provided, however, that such limitation shall not apply
to the application of this Section 4.19 in accordance with the
provisions of Section 4.21(e).
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SPECIAL OPTION. If at any time Xxxxx, Schlumberger or any of their respective
subsidiaries holding an Ownership Interest experiences a Change of Control
Event, (a) within 30 days following such Change of Control Event, the party that
has experienced such Change of Control Event shall deliver to the other party
written notice of a cash purchase price at which it is prepared to sell its
entire Ownership Interest to the other party, (b) such notice shall, for all
purposes of this Agreement, be deemed to be a Transfer Notice as defined in
Section 4.19 and (c) each of the provisions of Section 4.19 shall apply to such
Transfer Notice; provided that any failure to deliver a Response Notice by the
party that has not experienced such Change of Control Event shall not be
construed as an election to either purchase or sell any Ownership Interest and
the party that has experienced such Change of Control Event shall have no right
to cause any Ownership Interest to be purchased or sold pursuant to this Section
4.20. Any failure to deliver a notice in accordance with clause (a) of the
immediately preceding sentence shall be construed as a Transfer Notice
specifying a cash purchase price equal to the net book value of the applicable
Ownership Interest as of the end of the calendar month preceding the event
giving rise to the obligation to deliver such notice. For purposes hereof,
"Change of Control Event" (a) with respect to either of Xxxxx and Schlumberger
shall mean that any one of the following events has occurred: (i) a change is
proposed by a majority of its stockholders as to the number of members, or
incumbent membership, of its Board of Directors such that the incumbent members
of said Board of Directors immediately prior to such change would no longer
constitute at least two-thirds of the Board of Directors after such change and
such proposal is enacted; (ii) any determination is made by its Board of
Directors that there has been a change in the control of Xxxxx or Schlumberger,
as the case may be, because a "person" (as such term is used in Section 13(d) of
the Exchange Act), together with its affiliates (as such term is defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act), has become,
at any date hereafter, the beneficial owner (as such term is defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act), directly or
indirectly, of 20% or more of the voting power of its then-outstanding voting
securities; (iii) any "person" (as defined in clause (ii)) (other than any
employee stock ownership trust or similar entity created by Xxxxx or
Schlumberger, as the case may be, for the benefit of its employees), together
with its affiliates, has become, at any date hereafter, the beneficial owner,
directly or indirectly, of 20% or more of the voting power of its
then-outstanding securities entitled generally to vote for the election of its
directors; or (iv) the approval by its stockholders of the merger or
consolidation of Xxxxx or Schlumberger, as the case may be, with, or the sale of
all or
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substantially all of its assets to, any other "person" (as defined in clause
(ii)), unless the incumbent members of its Board of Directors as constituted
immediately prior to such merger or consolidation or sale shall constitute at
least a majority of the directors of the surviving corporation of such merger
or consolidation or the transferee in such sale, immediately following the
consummation of any such transaction, or any parent (as such term is defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act) of such
surviving corporation or transferee, and (b) with respect to any wholly owned
subsidiary of Xxxxx or Schlumberger directly or indirectly holding an Ownership
Interest, a change in ultimate ownership of that entity such that Xxxxx or
Schlumberger no longer holds directly or indirectly an ownership interest of at
least 50.1% of that entity.
RIGHT OF FIRST REFUSAL.
(ggg) Procedure. If, at any time after the second anniversary
of the Closing Date, Xxxxx, Schlumberger or any of their respective
subsidiaries desires to transfer (a "Disposition") all or any part of
its Ownership Interest to a third party (other than a transfer allowed
by Section 9.3 hereof), then that party (the "Disposing Party") shall
promptly give notice thereof (the "Disposition Notice") to the other
party (the "Recipient Party"). The Disposition Notice shall set forth
all relevant information with respect to the proposed Disposition,
including the name and address of the prospective acquirer, the
purchase price (and any related information that is required by
Section 4.21(b)), a description of the Ownership Interest or portion
thereof that is the subject of the proposed Disposition and any other
terms and conditions of the proposed Disposition. The Recipient Party
shall have the preferential right to acquire such Ownership Interest
for the same purchase price, and on the same terms and conditions, as
set forth in the Disposition Notice, except as provided otherwise in
this Section 4.21. The Recipient Party shall have 30 days following
its receipt of the Disposition Notice in which to notify the Disposing
Party whether it elects to exercise its preferential right; provided,
however, that if either party elects to require appraisal pursuant to
Section 4.21(b), then the applicable deadline for the Recipient Party
to deliver such notice shall be 15 days following delivery of the
decision of the Appraiser. A notice in which the Recipient Party
exercises such right is referred to herein as an "Exercise Notice."
(hhh) Non-Cash Consideration. If any portion of the purchase
price, as disclosed in the Disposition Notice, is to be paid in a form
other than cash (including through delivery of a promissory note or
other asset) ("Non-Monetary Consideration"), the Disposition Notice
shall set forth the Disposing Party's best estimate of the fair market
value of the Non-Monetary Consideration. If the Recipient Party
disagrees with such estimate and so notifies the Disposing Party
within 10 days following delivery of the Disposition Notice, and if
such disagreement is not resolved within 20 days following delivery of
the Disposition Notice, either the Disposing Party or the Recipient
Party, by notice to the other (the "Appraisal Notice"), may require
the determination of the Fair
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Market Value of the Non-Monetary Consideration to be made by an
appraiser, investment banker or other Person (the "Appraiser") having
expertise in the valuation of assets of the type represented by the
Non-Monetary Consideration. As used herein, the term "Fair Market
Value" shall mean the fair market value of such Non-Monetary
Consideration taking into account all relevant factors, including (i)
any tax benefits to be derived by the Disposing Party from such
Non-Monetary Consideration (such as the benefits of effecting a
tax-free transaction) and (ii) in the case of a promissory note or
similar Non-Monetary Consideration, the creditworthiness of the
proposed purchaser (or other maker of the note). The Appraiser shall
be selected by mutual agreement of the Disposing Party and the
Recipient Party; provided, however, that if the Disposing Party and
the Recipient Party are unable to reach such agreement within 20 days
following delivery of the Appraisal Notice, either such Party may
petition the United States District Judge for the Southern District of
Texas (Houston Division) then senior in service to designate the
Appraiser. If the Appraiser so chosen shall die, resign or otherwise
fail or become unable to serve, a replacement Appraiser shall be
chosen in accordance with the provisions of the immediately preceding
sentence. The decision of the Appraiser shall be final and binding on
the Disposing Party and the Recipient Party, and the fees and expenses
of the Appraiser shall be paid equally by the Disposing Party and the
Recipient Party. Subject to the remaining provisions of this Section
4.21(b), the Recipient Party shall pay in cash the Fair Market Value
of the Non-Monetary Consideration, as so determined by agreement or by
the Appraiser. If the Recipient Party so elects in its Exercise
Notice, the Recipient Party may pay such portion of the purchase price
by delivering to the Disposing Party non-monetary consideration (the
"Alternative Non-Monetary Consideration") that (y) is in a form
substantially equivalent to the Non-Monetary Consideration and (z) has
a Fair Market Value equal to the Fair Market Value of the Non-Monetary
Consideration; provided, however, that, as a condition to the
Recipient Party's right to pay such portion of the purchase price by
delivering the Alternative Non-Monetary Consideration, the Recipient
Party and the Disposing Party shall have first agreed upon the Fair
Market Value of such Alternative Non-Monetary Consideration, or such
Fair Market Value shall have been determined by the Appraiser in
accordance with the provisions of this Section 4.21(b).
(iii) Closing. If the preferential right is exercised in
accordance with Section 4.21(a), the closing of such purchase shall
occur at the principal place of business in Texas of the Disposing
Party on the first business day that is 30 days after the expiration
of the preferential right period (or, if later, the fifth business day
after the receipt of all applicable regulatory and governmental
approvals to the purchase), unless the Disposing Party and the
Recipient Party agree upon a different place or date. At the closing,
(i) the Disposing Party shall execute and deliver to the Recipient
Party (x) an assignment of the Ownership Interest described in the
Disposition Notice, in form and substance reasonably acceptable to the
Recipient Party, containing a general warranty of title as to such
Ownership Interest (including that such Ownership Interest is free and
clear of any Liens), (y) in the case of a Disposition of voting
securities, the stock certificates representing such voting securities
with stock powers attached and endorsed in blank, and (z) any other
instruments reasonably requested by the Recipient Party to give effect
to
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the purchase; and (ii) the Recipient Party shall deliver to the
Disposing Party the purchase price specified in the Disposition Notice
in immediately available funds, subject to any modifications thereof
required by Section 4.21(b).
(jjj) Waiver of Preferential Right. If the Recipient Party
does not deliver an Exercise Notice during the applicable period
specified in Section 4.21(a), it shall be deemed to have waived its
preferential right, and the Disposing Party shall have the right to
dispose of the Ownership Interest described in the Disposition Notice
to the proposed purchaser strictly in accordance with the terms of the
Disposition Notice for a period of 90 days after the expiration of the
preferential right period. If, however, the Disposing Party fails so
to dispose of the Ownership Interest within such 90-day period, the
proposed Disposition shall again become subject to the preferential
right set forth in this Section 4.21.
(kkk) Relationship to Section 4.19. Subject to the other
provisions of this Section 4.21, nothing in this Section 4.21 shall
prevent Xxxxx, Schlumberger or any of their respective subsidiaries
from exercising its rights under Section 4.19. If (i) a Disposition
Notice is delivered under this Section 4.21, (ii) the Recipient Party
does not deliver an Exercise Notice under this Section 4.21 and (iii)
prior to the Disposition of the applicable interest to the proposed
purchaser, the Recipient Party delivers a Transfer Notice under
Section 4.19, then the provisions of this Section 4.21 and Section
4.19 shall be deemed amended (y) to permit the proposed purchaser, by
agreement with the Disposing Party, to deliver the Response Notice and
(z) to require the closing of the Disposition of such Ownership
Interest, and the closing described in Section 4.19(c), to occur at
concurrent closings; it being the intent of the parties that the
purchaser of the Ownership Interest, if the closing of the Disposition
of the Ownership Interest occurs, shall have the right to cause the
Disposing Party to exercise the rights under Section 4.19.
NO DISPOSITIONS. The parties agree not to make any Disposition of all or any
part of their respective Ownership Interests to a third party prior to the
second anniversary of the Closing Date.
REPRESENTATIONS AND WARRANTIES
Xxxxx (with respect to the statements in Section 5.1), SIAC, MIPC and
Xxxxx Canada (with respect to the statements in Section 5.2), M-I and M-I Canada
(with respect to the statements in Section 5.3) and Schlumberger (with respect
to the statements in Section 5.4) and Schlumberger MI (with respect to the
statements in Section 5.5) each agrees that, to the extent that it is aware of
any facts which could reasonably be expected (a) to breach or make inaccurate
any of the statements set forth in its applicable section and (b) to have a
Material Adverse Effect with respect to such entity and its subsidiaries, taken
as a whole, such entity will disclose these facts in a disclosure letter to be
delivered to the other parties on the Closing Date. Such disclosure letter shall
briefly set forth a description of the applicable facts and shall
cross-reference the applicable section where the breach or inaccurate statement
is made. Each of the
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parties agrees that setting forth any such facts in such disclosure letters is
for informational purposes only and shall not affect the allocation of
liabilities set forth in this Agreement.
XXXXX. Xxxxx represents and warrants to Schlumberger, as of the date of this
Agreement and as of the Effective Time, as follows:
(lll) Organization and Standing. Xxxxx is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to conduct or cause to be conducted its business as
currently conducted and to enter into and perform its obligations
under this Agreement. The execution and delivery of this Agreement by
the undersigned officer on behalf of Xxxxx, and the performance of
this Agreement by Xxxxx and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate proceedings on its part. This Agreement constitutes the
legal, valid and binding obligation of Xxxxx enforceable against Xxxxx
in accordance with its terms except to the extent that (i)
enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement
of creditors' rights generally and (ii) courts may award money damages
rather than specific enforcement of contractual provisions involving
matters other than or in addition to the payment of money.
(mmm) Consents; Compliance with Other Instruments. The
execution, delivery and performance by Xxxxx of this Agreement and the
consummation by it of the transactions contemplated hereby: (i) will
not violate (with or without the giving of notice or lapse of time or
both) any provision of law, rule, regulation, order, judgment or
decree applicable to Xxxxx; (ii) will not require any registration
with, consent or approval of, or filing or notice to, any U.S. court,
tribunal, or governmental or regulatory authority under any provision
of law applicable to Xxxxx except for (A) the requirements of the
Exchange Act and (B) an Investment Canada Notification filing to be
made by Xxxxx after Closing and any other similar requirements in
other foreign jurisdictions; (iii) will not result in the creation of
a Lien upon any of the properties, assets or business of M-I or any of
the Venture Entities; (iv) will not violate any provision of the
amended and restated certificate of incorporation or bylaws of Xxxxx;
and (v) will not require any consent, approval or notice under, and
will not conflict with, or result in the breach or termination of any
provision of, or constitute a default under, or result in the
acceleration of (or give anyone the right to accelerate) the
performance of, any obligation of Xxxxx under any indenture, mortgage,
deed of trust, lease, license, franchise, contract, agreement or other
instrument material to Xxxxx to which Xxxxx is a party or by which it
or any of its assets or properties is bound or encumbered. To the
knowledge of Xxxxx, neither it nor any third party to any indenture,
mortgage, deed of trust, agreement or other instrument to which Xxxxx
is a party or by which it is bound or to which it is subject is in
breach, or upon execution and delivery of this Agreement would be in
breach, of any of the terms, covenants, conditions or provisions
thereof, which breach could adversely affect the M-I Acquired Assets.
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(nnn) Title to SIAC, MIPC and Xxxxx Canada Stock. Xxxxx owns
all of the issued and outstanding capital stock of SIAC, MIPC and
Xxxxx Canada free and clear of any Liens, options, warrants, purchase
rights, contracts, commitments, claims or demands.
SIAC, MIPC AND XXXXX CANADA. SIAC, MIPC and Xxxxx Canada represent and warrant
to Schlumberger, as of the date of this Agreement and as of the Effective Time,
as follows:
(ooo) Organization and Standing. Each of SIAC, MIPC and Xxxxx
Canada is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware (with respect to
SIAC and MIPC) or the Province of Alberta (with respect to Xxxxx
Canada) and has all requisite corporate power and authority to conduct
or cause to be conducted its businesses as currently conducted and to
enter into and perform its obligations under this Agreement and, with
respect to SIAC and Xxxxx Canada, the applicable Charter Documents of
the Venture Entities. The execution and delivery of this Agreement by
the undersigned officers on behalf of SIAC, MIPC and Xxxxx Canada, and
the performance of this Agreement and, with respect to SIAC and Xxxxx
Canada, the applicable Charter Documents of the Venture Entities, and
the consummation by each of them of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary
corporate proceedings on their part. This Agreement constitutes, and
upon SIAC's and Xxxxx Canada's execution and delivery, the applicable
Charter Documents of the Venture Entities will constitute, the legal,
valid and binding obligations of each of SIAC, MIPC and Xxxxx Canada,
as applicable, enforceable against that entity in accordance with
their terms except to the extent that (i) enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights
generally and (ii) courts may award money damages rather than specific
enforcement of contractual provisions involving matters other than or
in addition to the payment of money.
(ppp) Consents; Compliance with Other Instruments. The
execution, delivery and performance by each of SIAC, MIPC and Xxxxx
Canada of this Agreement and, with respect to SIAC and Xxxxx Canada,
the applicable Charter Documents of the Venture Entities, and the
consummation by each of them of the transactions contemplated hereby
and thereby: (i) will not violate (with or without the giving of
notice or lapse of time, or both) any provision of law, rule,
regulation, order, judgment or decree applicable to SIAC, MIPC or
Xxxxx Canada; (ii) will not require any registration with, consent or
approval of, or filing or notice to, any U.S. court, tribunal or
governmental or regulatory authority under any provision of law
applicable to SIAC, MIPC or Xxxxx Canada except for (A) the
requirements of the Exchange Act and (B) an Investment Canada
Notification filing to be made by Xxxxx after Closing and any other
similar requirements in other foreign jurisdictions; (iii) will not
result in the creation of a Lien upon any of the properties, assets or
business of SIAC, MIPC, Xxxxx Canada, M-I or any of the Venture
Entities; (iv) will not violate any provision of the certificate of
incorporation or bylaws of
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SIAC, MIPC or Xxxxx Canada; and (v) will not require any consent,
approval or notice under, and will not conflict with, or result in the
breach or termination of any provision of, or constitute a default
under, or result in the acceleration of (or give anyone the right to
accelerate) the performance of, any obligation of SIAC, MIPC or Xxxxx
Canada under any indenture, mortgage, deed of trust, lease, license,
franchise, contract, agreement or other instrument to which SIAC, MIPC
or Xxxxx Canada is a party or by which any of them or any of their
assets or properties is bound or encumbered. To the knowledge of SIAC,
MIPC and Xxxxx Canada, neither it nor any third party to any
indenture, mortgage, deed of trust, agreement or other instrument to
which it is a party or by which it is bound or to which it is subject
is in breach, or upon execution and delivery of this Agreement would
be in breach, of any of the terms, covenants, conditions or provisions
thereof, which breach could adversely affect the M-I Acquired Assets.
(qqq) Title to M-I and M-I Canada Ownership Interests.
Immediately prior to the Effective Time, (i) SIAC and MIPC will own
all of the membership interests in each of the Venture Entities (other
than M-I Canada), and (ii) Xxxxx Canada and MIPC will own all of the
capital stock in M-I Canada, in each case, free and clear of any
Liens, options, warrants, purchase rights, contracts, commitments,
claims or demands, except as otherwise set forth in the applicable
Charter Documents of the Venture Entities. As of the date of this
Agreement, SIAC and MIPC owns all of the membership interests in M-I,
free and clear of any Liens, options, warrants, purchase rights,
contracts, commitments, claims or demands. None of SIAC, MIPC or Xxxxx
Canada is a party to any voting trust, proxy or other agreement or
understanding with respect to the ownership interests in M-I or any of
the Venture Entities.
M-I AND M-I CANADA. M-I and M-I Canada represent and warrant to Schlumberger, as
of the date of this Agreement and as of the Effective Time, as follows:
(rrr) Organization and Standing. Each of M-I and M-I Canada
has been duly formed and is validly existing and in good standing
under the laws of its jurisdiction of formation and has all requisite
company power and authority to conduct or cause to be conducted its
business as currently conducted and to enter into and perform its
obligations under this Agreement. Each subsidiary of M-I and M-I
Canada is (i) a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
(ii) a limited liability company duly formed, validly existing and in
good standing under the laws of its jurisdiction of formation. The
execution and delivery of this Agreement by the undersigned officers
on behalf of M-I and M-I Canada and the performance of this Agreement
by M-I and M-I Canada, and the consummation by each of them of the
transactions contemplated hereby, have been duly authorized by all
necessary company proceedings on each of their parts. This Agreement
constitutes the legal, valid and binding obligations of each of M-I
and M-I Canada enforceable against that entity in accordance with its
terms except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws
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relating to or affecting the enforcement of creditors' rights
generally and (ii) courts may award money damages rather than specific
enforcement of contractual provisions involving matters other than or
in addition to the payment of money.
(sss) Consents; Compliance with Other Instruments. The
execution, delivery and performance by M-I and M-I Canada of this
Agreement and the consummation by each of them of the transactions
contemplated hereby: (i) will not violate (with or without the giving
of notice or lapse of time or both) any provision of law, rule,
regulation, order, judgment or decree applicable to M-I or M-I Canada;
(ii) will not require any registration with, consent or approval of,
or filing or notice to, any U.S. court, tribunal or governmental or
regulatory authority under any provision of law applicable to M-I or
M-I Canada except for (A) the requirements of the Exchange Act and (B)
an Investment Canada Notification filing to be made by Xxxxx after
Closing and any other similar requirements in other foreign
jurisdictions; (iii) will not result in the creation of any Lien upon
any of the properties, assets or business of M-I or M-I Canada; (iv)
will not violate any provision of the limited liability company
agreement of M-I or the charter, bylaws or other organizational
documents of M-I Canada or any of the existing subsidiaries of M-I or
M-I Canada; and (v) will not require any consent, approval or notice
under, and will not conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or
result in the acceleration of (or give anyone the right to accelerate)
the performance of, any obligation of M-I, M-I Canada or any of the
subsidiaries of M-I or M-I Canada under any indenture, mortgage, deed
of trust, lease, license, franchise, contract, agreement or other
instrument to which M-I, M-I Canada or any subsidiary of M-I or M-I
Canada is a party or by which any of these entities or any of their
respective assets or properties is bound or encumbered. To the
knowledge of M-I and M-I Canada, none of M-I, M-I Canada, their
respective subsidiaries or any third-party to any indenture, mortgage,
deed of trust, agreement or other instrument to which M-I, M-I Canada
or any of their respective subsidiaries is a party or by which any of
those entities is bound or to which any of those entities is subject,
is in breach, or upon execution and delivery of this Agreement would
be in breach, of any of the terms, covenants, conditions or provisions
thereof, which breach could adversely affect the M-I Acquired Assets.
(ttt) Title to M-I Acquired Assets. M-I, M-I Canada or one of
their respective subsidiaries has good and indefeasible title to all
of the real properties included in the M-I Acquired Assets purported
to be owned in fee, and good and merchantable title to all of the
other properties (provided that no title warranty is made with respect
to permits, rights-of-way, easements, mining claims or mining leases)
to be owned by the Venture Entities immediately prior to the Effective
Time. Except as to properties upon which no warranties are given,
immediately after the Effective Time, the Venture Entities (or
subsidiaries thereof) will hold good and indefeasible or marketable
title, as the case may be, thereto free and clear of all Liens, other
than the M-I Assumed Liabilities and any encumbrances identified in
the Transfer Documents. All of the M-I Acquired Assets are in good
working order and condition, are maintained in accordance with
reasonable commercial operating practices and are adequate for the
purposes for which they currently are being used or held for use,
ordinary wear and tear excepted.
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(uuu) Financial Statements and Information. The M-I Balance
Sheet sets forth as of December 31, 1998 the net book value of all (i)
the assets, properties and rights to be included in the M-I Acquired
Assets as of such date, and (ii) the liabilities and obligations to be
included in the M-I Assumed Liabilities accrued as of such date, all
as determined in accordance with GAAP except to the extent that
certain assets, properties, rights, liabilities and obligations have
been disposed of or discharged in accordance with the terms of this
Agreement prior to the Accounting Date.
(vvv) Exhibits. The information set forth in the Exhibits to
this Agreement furnished by M-I and M-I Canada are complete and
correct in all respects and all information required to be disclosed
in order to make the Exhibits not misleading has been disclosed.
(www) Contracts. Except for contracts, agreements or
commitments specifically described in Exhibit 2.1-4, none of M-I, M-I
Canada or any of their respective subsidiaries (insofar as any of the
following may affect the M-I Drilling Fluids Business, or any officer
or employee of the M-I Drilling Fluids Business who M-I or M-I Canada
believes is not intending to resign upon consummation of the
transactions contemplated hereby) is a party to or bound by any:
(i) employment agreement (other than salesmen's
commission agreements terminable at will or within one year)
or "golden parachute" arrangements within the meaning of
Section 280G of the Code;
(ii) collective bargaining or union agreement;
(iii) bonus, stock option, incentive compensation plan,
non-qualified stock purchase plan or other welfare benefit
plan or program;
(iv) consulting agreement;
(v) lease with respect to real property, mining lease
(including mining claims), facilities or equipment lease
having a remaining term in excess of one year or involving
annual lease payments greater than $25,000;
(vi) lease with respect to data processing hardware or
software;
(vii) option, contract or commitment to purchase any
fixed assets at a price in excess of $50,000;
(viii) distribution or warehousing agreements;
(ix) sales representation, consigned stock or
sponsorship agreements;
(x) ore purchasing, processing or sales agreements or
mining contractor agreements;
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(xi) agreement with a third party for money borrowed or
loaned in excess of $100,000;
(xii) bonds, guarantees or letters of credit involving a
third party obligating the M-I Drilling Fluids Business in
excess of $25,000;
(xiii) license agreements, whether a member of the M-I
Drilling Fluids Business is a licensor or a licensee;
(xiv) master service agreements or blanket purchase
orders covering or related to the M-I Drilling Fluids
Business;
(xv) other purchase orders or vendor commitments having
a value in excess of $100,000 or relating to purchases to be
fulfilled over a period of more than one year;
(xvi) other customer orders or sales contracts for
products and services having a value in excess of $100,000 or
relating to sales to be fulfilled over a period of more than
one year;
(xvii) non-competition agreement for the benefit of or
obligating a member of the M-I Drilling Fluids Business; or
(xviii) contract or commitment, other than the
foregoing, having a term of more than one year or a value in
excess of $50,000 (including barter or counter-trade
arrangements).
Except as set forth in Exhibit 2.1-4, all such agreements, contracts
and commitments are valid and in full force and effect as to M-I, M-I Canada or
a subsidiary thereof, as the case may be; and M-I, M-I Canada or a subsidiary
thereof, as the case may be, have performed all material obligations required to
be performed by them to date and are not in default in any material respect
thereunder.
(xxx) Absence of Certain Changes or Events. Since December
31, 1998, M-I and M-I Canada (and, to the extent applicable, each of
their respective subsidiaries) operated their respective businesses in
the usual, regular and ordinary manner and have not:
(i) incurred any obligation or liability (contingent or
otherwise), except normal trade or business obligations
incurred in the ordinary course of business;
(ii) mortgaged, pledged or subjected to any Lien any of
their properties or assets (whether tangible or intangible);
(iii) sold, assigned, transferred, conveyed, leased or
otherwise disposed of or agreed to sell, assign, transfer,
convey, lease or otherwise dispose of any of
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their assets or properties, except for a fair consideration
in the ordinary course of business;
(iv) acquired or leased (other than by a renewal of an
existing lease in the ordinary course of business) any assets
or property otherwise than in the ordinary course of
business;
(v) waived or released any rights otherwise than in the
ordinary course of business;
(vi) transferred or granted any proprietary rights under
any concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names, brandmarks, brand names
or copyrights, or with respect to any know-how;
(vii) made any material change or amendment to any
contractual obligation or made or granted any general wage or
salary increase or entered into any employment contract with
any officer or employee that they employ involving an annual
base rate of compensation in excess of $100,000 or a period
of employment of more than 30 days;
(viii) made any material change or amendment to any
contractual obligation or entered into any transaction,
contract or commitment (other than this Agreement) other than
in the ordinary course of business;
(ix) made capital expenditures or entered into any
commitment therefor that, in the aggregate, exceeds
$5,000,000;
(x) suffered any adverse change in their operations,
revenues, earnings, assets, liabilities, properties, business
or condition, financial or otherwise; provided, however, that
losses from operations in the ordinary course of business in
amounts similar to prior months shall not be considered an
adverse change;
(xi) lost any supplier or suppliers;
(xii) introduced any material change with respect to the
operation of the M-I Drilling Fluids Business or permitted
the M-I Acquired Assets to be maintained other than in
accordance with customary standards; or
(xiii) been charged with or advised of any violation of
the Foreign Corrupt Practices Act or any relevant
Anti-Boycott provision of U.S. law.
(yyy) Litigation. There are no actions, suits or proceedings
pending or, to M-I's or M-I Canada's knowledge, threatened against
M-I, M-I Canada, any of their respective subsidiaries or the M-I
Drilling Fluids Business at law or in equity, or before or by any
federal, state, municipal or other governmental or non-governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
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(zzz) Labor Controversies. There are no controversies,
unresolved labor union grievances, unfair labor practice proceedings
or labor arbitration proceedings, pending or, to M-I's or M-I Canada's
knowledge, threatened, between M-I or M-I Canada and any of the
employees of the M-I Drilling Fluids Business.
(aaaa) Patents; Trademarks. To M-I's or M-I Canada's
knowledge, no patents, inventions, trademarks, trade names,
brandmarks, brand names, copyrights, registrations, applications,
trade secrets or confidential or proprietary information are necessary
for the conduct of the M-I Drilling Fluids Business as now conducted,
other than those listed in Exhibit 2.1-4. Except as described in
Exhibit 2.1-4, M-I owns, subject to any outstanding licenses to third
parties or other agreements shown in Exhibit 2.1-4, all such patents,
inventions, trademarks, trade names, brandmarks, brand names,
copyrights, registrations, trade secrets or confidential or
proprietary information. M-I or M-I Canada is not a licensor in
respect of any such patents, inventions, trademarks, trade names,
brandmarks, brand names, copyrights, registrations, applications,
trade secrets or confidential or proprietary information therefor,
except as disclosed in Exhibit 2.1-4. No warranty or representation is
made or implied with respect to the validity of any such patents,
inventions, marks, copyrights, secrets, information or names or with
respect to the infringement of M-I or M-I Canada of any unlicensed
third-party patent; however, neither M-I nor M-I Canada has received
notice of any infringement of or conflict with the asserted rights of
others with respect to the use of any such rights. The royalties or
other remuneration payable by M-I or M-I Canada with respect to its
uses of patents and similar rights owned by others do not exceed the
rates shown on Exhibit 2.1-4. M-I or M-I Canada owns or has the right
and license to use all such rights necessary to carry on the full
scope of the M-I Drilling Fluids Business, and all such rights and
licenses are listed on the applicable Exhibits. Except as set forth in
the foregoing Exhibits, neither M-I nor M-I Canada, in the conduct of
the businesses of the M-I Drilling Fluids Business, has received
written notice of any violation, or reasonably believes that it is in
violation of any patent, patent license, trade name, trademark,
brandmarks, brand names or copyrights of others. No employee of the
M-I Drilling Fluids Business owns, directly or indirectly, in whole or
in part, any patents, inventions, trademarks, trade names, brandmarks,
brand names, copyrights, registrations, applications, trade secrets or
confidential or proprietary information therefor or interest therein
that the M-I Drilling Fluids Business have used, are currently using
or the use of which is necessary for its business as now conducted.
(bbbb) Licenses; Permits; Authorizations. M-I, M-I Canada or
their respective subsidiaries have all material approvals,
authorizations, consents, licenses, orders and other permits of all
governmental agencies, whether federal, state, local or foreign,
required to permit the operations of the M-I Drilling Fluids Business
to be conducted substantially as currently conducted.
(cccc) Compliance with Applicable Law. To the knowledge of
M-I, M-I Canada, Xxxxx Canada, SIAC, MIPC and Xxxxx, the conduct of
the M-I Drilling Fluids Business does not violate or infringe any
domestic or foreign laws (to the extent that compliance
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therewith will not cause a violation of U.S. law), statutes,
ordinances, rules, regulations, codes, orders, licenses, concessions
or permits relating to any of the property thereof or applicable to
the operations thereof including labor, zoning, civil rights and
antitrust laws, and Environmental, Health and Safety Requirements. To
the knowledge of M-I, M-I Canada, Xxxxx Canada, SIAC, MIPC and Xxxxx,
the M-I Drilling Fluids Business has obtained, and is in compliance
with, all permits, licenses and other authorizations that are required
under federal, state, local and foreign laws relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, products,
chemicals, or toxic or hazardous substances or wastes into the
environment (including ambient air, surface water, groundwater or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of pollutants or toxic or hazardous substances or wastes; the M-I
Drilling Fluids Business is in compliance with all terms and
conditions of the required permits, licenses and authorizations, and
is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those Environmental, Health and
Safety Requirements or contained in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder; neither M-I nor M-I Canada is
aware of, and neither of them nor any of their respective subsidiaries
has received notice of, any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions
or plans that may interfere with or prevent compliance or continued
compliance with those Environmental, Health and Safety Requirements or
any regulation, code, letter issued, entered, promulgated or approved
thereunder, or that may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release
or threatened release into the environment of any pollutant, product,
chemical, or industrial, toxic or hazardous substance or waste; to the
best of M-I's and M-I Canada's knowledge there is no friable asbestos
nor materials containing polychlorinated biphenyls at any of the M-I
Drilling Fluids Business facilities; and there is no civil, criminal
or administrative action, suit, demand, claim, hearing, notice or
demand letter, notice of violation, investigation or proceeding
pending or threatened against the M-I Drilling Fluids Business
relating in any way to those Environmental, Health and Safety
Requirements or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
(dddd) Taxes.
(i) Each of M-I, M-I Canada and their respective
subsidiaries has (A) timely (taking into account any
extensions) filed in correct form all federal, state, local
and non-U.S. returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be
filed by or with respect to it in respect of any Taxes, (B)
timely paid all Taxes that are due and payable, (C)
established reserves which are included in its current
balance sheet that are adequate for the
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payment of all Taxes not yet due and payable with respect to
the results of operations through the date of such current
balance sheet, and (D) complied in all respects with all
applicable laws, rules and regulations relating to the
payment and withholding of Taxes and has in all respects
timely withheld from employee wages and paid over.
(ii) No Tax audits or other administrative proceedings
or court proceedings are pending with regard to any Taxes for
which M-I, M-I Canada or any of their respective subsidiaries
would be liable or for which an owner of M-I, M-I Canada or
any of their respective subsidiaries would be liable as a
result of such ownership and no deficiency for any such Taxes
has been proposed, asserted or assessed pursuant to any such
examination against M-I, M-I Canada or any of their
respective subsidiaries or any owner of M-I, M-I Canada or
any of their respective subsidiaries by any federal, state,
local or non-U.S. taxing authority with respect to any
period.
(iii) None of M-I, M-I Canada or any of their respective
subsidiaries or any owner thereof has entered into (or prior
to the close of business on the Closing Date will execute or
enter into) with the IRS or any other taxing authority (A)
any agreement or other document extending or having the
effect of extending the period for assessments or collection
of any Taxes for which M-I, M-I Canada or any of their
respective subsidiaries would be liable or for which any
owner thereof would be liable as a result of such ownership
or (B) a closing agreement pursuant to Section 7121 of the
Code, or any predecessor provision thereof or any similar
provision of state, local or non-U.S. Tax law, that relates
to the assets or operations of M-I, M-I Canada or any of
their respective subsidiaries.
(iv) There are no liens or security interests on any of
the assets of M-I, M-I Canada or any of their respective
subsidiaries that arose in connection with any failure or
alleged failure to pay any Tax other than for taxes which are
not yet delinquent.
(v) None of M-I, M-I Canada or any of their respective
subsidiaries is a party to an agreement that provides for the
payment of any amount that would constitute a "parachute
payment" within the meaning of Section 280G of the Code.
(vi) None of M-I, M-I Canada or any of their respective
subsidiaries is a party to, is bound by or has any obligation
under any tax sharing agreement, tax indemnity agreement or
similar agreement or arrangement.
(vii) None of M-I's subsidiaries has been a United
States real property holding corporation within the meaning
of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
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(viii) No Stock of United States Corporation. As of
immediately prior to the Effective Time, none of the M-I
Acquired Assets will consist of the stock of a corporation
which is created or organized in the United States or under
the laws of any state or of any other entity which is treated
as such a corporation for federal tax purposes.
SCHLUMBERGER. Schlumberger represents and warrants to Xxxxx, SIAC, MIPC, Xxxxx
Canada, M-I Canada and M-I, as of the date of this Agreement and as of the
Effective Time, as follows:
(eeee) Organization and Standing. Schlumberger is a
corporation duly incorporated, validly existing and in good standing
under the laws of the Netherlands Antilles and has all requisite
corporate power and authority to conduct or cause to be conducted its
business (including its Drilling Fluids Business outside of the United
States) as currently conducted and to enter into and perform its
obligations under this Agreement and the applicable Charter Documents
of the Venture Entities. Each subsidiary of Schlumberger that is being
transferred to the Venture Entities as a part of the Schlumberger
Drilling Fluids Business has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
organization. The execution, delivery and performance of this
Agreement and the applicable Charter Documents of the Venture Entities
by Schlumberger and the consummation by it of the transactions
contemplated hereby, and thereby, have been duly authorized by all
necessary corporate proceedings on its part. This Agreement
constitutes, and upon their execution and delivery, the applicable
Charter Documents of the Venture Entities will constitute, the legal,
valid and binding obligations of Schlumberger or its subsidiaries
enforceable against that entity in accordance with its terms except to
the extent that (i) enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and (ii) courts may award
money damages rather than specific enforcement of contractual
provisions involving matters other than or in addition to the payment
of money.
(ffff) Consents; Compliance with Other Instruments. The
execution, delivery and performance by Schlumberger of this Agreement
and the applicable Charter Documents of the Venture Entities and the
consummation by it of the transactions contemplated hereby and
thereby: (i) will not violate (with or without the giving of notice or
lapse of time or both) any provision of law, rule, regulation, order,
judgment or decree applicable to Schlumberger; (ii) will not require
any registration with, consent or approval of, or filing or notice to,
any U.S. court, tribunal, or governmental or regulatory authority
under any provision of law applicable to Schlumberger except for (A)
the requirements of the Exchange Act and (B) an Investment Canada
Notification filing to be made by Xxxxx after Closing and any other
similar requirements in other foreign jurisdictions; (iii) will not
result in the creation of any Lien upon any of the properties, assets
or business of Schlumberger; (iv) will not violate any provision of
the deed of incorporation or bylaws of Schlumberger; and (v) will not
require any consent, approval
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or notice under, and will not conflict with, or result in the breach
or termination of any provision of, or constitute a default under, or
result in the acceleration of (or give anyone the right to accelerate)
the performance of, any obligation of Schlumberger under any
indenture, mortgage, deed of trust, lease, license, franchise,
contract, agreement or other instrument to which Schlumberger is a
party or by which it or any of its assets or properties is bound or
encumbered. To the knowledge of Schlumberger, neither it nor any third
party to any indenture, mortgage, deed of trust, agreement or other
instrument to which Schlumberger is a party or by which it is bound or
to which it is subject is in breach, or upon execution and delivery of
this Agreement would be in breach, of any of the terms, covenants,
conditions or provisions thereof.
(gggg) Title to Schlumberger Assets. Schlumberger or one of
its subsidiaries has good and indefeasible title to all of the real
properties included in the Schlumberger Acquired Assets purported to
be owned in fee, and good and merchantable title to all of its other
properties (provided that no title warranty is made with respect to
permits, rights-of-way, easements, mining claims or mining leases) to
be transferred to the Venture Entities. Except as to properties upon
which no warranties are given, upon the transfer of the Schlumberger
Acquired Assets to the Venture Entities (or to one or more
subsidiaries of the Venture Entities) pursuant to this Agreement, the
Venture Entities (or such subsidiary) will obtain good and
indefeasible or marketable title, as the case may be, thereto, free
and clear of all Liens, other than the Schlumberger Assumed
Liabilities and any encumbrances identified in the Transfer Documents.
All of the Schlumberger Acquired Assets are in good working order and
condition, are maintained in accordance with reasonable commercial
operating practices and are adequate for the purposes for which they
currently are being used or held for use, ordinary wear and tear
excepted.
(hhhh) Financial Statements and Information. The net book
value of all (i) the assets, properties and rights to be included in
the Schlumberger Acquired Assets is set forth in Exhibit 2.4-1 (as may
be supplemented as provided herein) as of the dates set forth therein,
and (ii) the liabilities and obligations included in the Schlumberger
Assumed Liabilities is set forth in Exhibit 2.4-2 (as may be
supplemented as provided herein) accrued as of the dates set forth
therein, except to the extent that certain assets, properties, rights,
liabilities and obligations may be disposed of or discharged in
accordance with the terms of this Agreement prior to the Accounting
Date.
(iiii) Exhibits. The information set forth in the Exhibits to
this Agreement furnished by Schlumberger are complete and correct in
all respects and all information required to be disclosed in order to
make the Exhibits not misleading has been disclosed.
(jjjj) Contracts. Except for contracts, agreements or
commitments specifically described in Exhibit 2.4-1, neither
Schlumberger nor any of its subsidiaries (insofar as any of the
following may affect the Schlumberger Drilling Fluids Business, or any
officer or employee of the Schlumberger Drilling Fluids Business who
Schlumberger believes is not intending to resign upon consummation of
the transactions contemplated hereby) is a party to or bound by any:
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(i) employment agreement (other than salesmen's
commission agreements terminable at will or within one year)
or "golden parachute" arrangements within the meaning of
Section 280G of the Code;
(ii) collective bargaining or union agreement;
(iii) bonus, stock option, incentive compensation plan,
non-qualified stock purchase plan or other welfare benefit
plan or program;
(iv) consulting agreement;
(v) lease with respect to real property, mining lease
(including mining claims), facilities or equipment lease
having a remaining term in excess of one year or involving
annual lease payments greater than $25,000;
(vi) lease with respect to data processing hardware or
software;
(vii) option, contract or commitment to purchase any
fixed assets at a price in excess of $50,000;
(viii) distribution or warehousing agreements;
(ix) sales representation, consigned stock or
sponsorship agreements;
(x) ore purchasing, processing or sales agreements or
mining contractor agreements;
(xi) agreement with a third party for money borrowed or
loaned in excess of $100,000;
(xii) bonds, guarantees or letters of credit involving a
third party obligating the Schlumberger Drilling Fluids
Business in excess of $25,000;
(xiii) license agreements, whether the Schlumberger
Drilling Fluids Business is a licensor or a licensee;
(xiv) master service agreements or blanket purchase
orders covering or related to the Schlumberger Drilling
Fluids Business;
(xv) other purchase orders or vendor commitments having
a value in excess of $100,000 or relating to purchases to be
fulfilled over a period of more than one year;
(xvi) other customer orders or sales contracts for
products and services having a value in excess of $100,000 or
relating to sales to be fulfilled over a period of more than
one year;
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(xvii) non-competition agreement for the benefit of or
obligating the Schlumberger Drilling Fluids Business; or
(xviii) contract or commitment, other than the
foregoing, having a term of more than one year or a value in
excess of $50,000 (including barter or counter-trade
arrangements).
Except as set forth in Exhibit 2.4-1, all such agreements, contracts
and commitments are valid and in full force and effect as to Schlumberger or the
Schlumberger Drilling Fluids Business, as the case may be; and Schlumberger and
the Schlumberger Drilling Fluids Business, as the case may be, have performed
all material obligations required to be performed by them to date and are not in
default in any material respect thereunder.
(kkkk) Absence of Certain Changes or Events. Since December
31, 1998, Schlumberger (and to the extent applicable, each of its
subsidiaries to be transferred hereunder) operated the Schlumberger
Drilling Fluids Business in the usual, regular and ordinary manner and
has not:
(i) incurred any obligation or liability (contingent or
otherwise) relating to the Schlumberger Drilling Fluids
Business except normal trade or business obligations incurred
in the ordinary course of business;
(ii) mortgaged, pledged or subjected to any Lien any of
the properties or assets (whether tangible or intangible)
relating to the Schlumberger Drilling Fluids Business;
(iii) sold, assigned, transferred, conveyed, leased or
otherwise disposed of or agreed to sell, assign, transfer,
convey, lease or otherwise dispose of any of the assets or
properties of the Schlumberger Drilling Fluids Business,
except for a fair consideration in the ordinary course of
business;
(iv) acquired or leased (other than by a renewal of an
existing lease in the ordinary course of business) any assets
or property relating to the Schlumberger Drilling Fluids
Business otherwise than in the ordinary course of business;
(v) waived or released any rights relating to the
Schlumberger Drilling Fluids Business otherwise than in the
ordinary course of business;
(vi) transferred or granted any proprietary rights
relating to the Schlumberger Drilling Fluids Business under
any concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names, brandmarks, brand names
or copyrights, or with respect to any know-how;
(vii) made any material change or amendment to any
contractual obligation or made or granted any general wage or
salary increase or entered into
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any employment contract with any officer or employee that it
employs in the Schlumberger Drilling Fluids Business
involving an annual base rate of compensation in excess of
$100,000 or a period of employment of more than 30 days;
(viii) made any material change or amendment to any
contractual obligation or entered into any transaction,
contract or commitment (other than this Agreement) relating
to the Schlumberger Drilling Fluids Business, other than in
the ordinary course of business;
(ix) made capital expenditures relating to the
Schlumberger Drilling Fluids Business or entered into any
commitment therefor that, in the aggregate, exceed
$5,000,000;
(x) suffered any adverse change in the operations,
revenues, earnings, assets, liabilities, properties, business
or condition, financial or otherwise, of the Schlumberger
Drilling Fluids Business; provided, however, that losses from
operations in the ordinary course of business of the
Schlumberger Drilling Fluids Business in amounts similar to
prior months shall not be considered an adverse change;
(xi) lost any supplier or suppliers;
(xii) introduced any material change with respect to the
operation of the Schlumberger Drilling Fluids Business or
permitted the Schlumberger Acquired Assets to be maintained
other than in accordance with customary standards; or
(xiii) been charged with or advised of any violation of
the Foreign Corrupt Practices Act or any relevant
Anti-Boycott provision of U.S. law.
(llll) Litigation. There are no actions, suits or proceedings
pending or, to Schlumberger's knowledge, threatened against the
Schlumberger Drilling Fluids Business at law or in equity, or before
or by any federal, state, municipal or other governmental or
nongovernmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
(mmmm) Labor Controversies. There are no controversies,
unresolved labor union grievances, unfair labor practice proceedings
or labor arbitration proceedings, pending or, to Schlumberger's
knowledge, threatened, between Schlumberger and any of the employees
of the Schlumberger Drilling Fluids Business.
(nnnn) Patents; Trademarks. To Schlumberger's knowledge, no
patents, inventions, trademarks, trade names, brandmarks, brand names,
copyrights, registrations, applications, trade secrets or confidential
or proprietary information are necessary for the conduct of the
Schlumberger Drilling Fluids Business as now conducted, other than
those listed in Exhibit 2.4-1. Except as described in Exhibit 2.4-1,
Schlumberger owns, subject
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to any outstanding licenses to third parties or other agreements shown
on Exhibit 2.4-1, all such patents, inventions, trademarks, trade
names, brandmarks, brand names, copyrights, registrations, trade
secrets or confidential or proprietary information. Schlumberger is
not a licensor in respect of any such patents, inventions, trademarks,
trade names, brandmarks, brand names, copyrights, registrations,
applications, trade secrets or confidential or proprietary information
therefor except as disclosed in Exhibit 2.4-1. No warranty or
representation is made or implied with respect to the validity of any
such patents, inventions, marks, copyrights, secret information, or
names or with respect to the infringement of Schlumberger of any
unlicensed third party patent; however, Schlumberger has not received
notice of any infringement of or conflict with the asserted rights of
others with respect to the use of any such rights. The royalties or
other remuneration payable by Schlumberger with respect to its uses of
patents and similar rights owned by others do not exceed the rates
shown on Exhibit 2.4-1. Schlumberger owns or has the right and license
to use all such rights necessary to carry on the full scope of the
Schlumberger Drilling Fluids Business, and all such rights and
licenses are listed on the applicable Exhibits. Except as set forth in
the foregoing Exhibits, Schlumberger, in the conduct of the businesses
of the Schlumberger Drilling Fluids Business, has not received written
notice of any violation, and does not reasonably believe that it is in
violation of any patent, patent license, trade name, trademark,
brandmarks, brand names or copyrights of others. No employee of the
Schlumberger Drilling Fluids Business owns, directly or indirectly, in
whole or in part, any patents, inventions, trademarks, trade names,
brandmarks, brand names, copyrights, registrations, or applications,
trade secrets or confidential or proprietary information therefor or
interest therein that the Schlumberger Drilling Fluids Business have
used, are currently using or the use of which is necessary for its
business as now conducted.
(oooo) Licenses; Permits; Authorizations. Schlumberger has
all approvals, authorizations, consents, licenses, orders and other
permits of all governmental agencies, whether federal, state, local or
foreign, required to permit the operations of the Schlumberger
Drilling Fluids Business to be conducted.
(pppp) Compliance with Applicable Law. To the knowledge of
Schlumberger, the conduct of the Schlumberger Drilling Fluids Business
does not violate or infringe any domestic or foreign laws (to the
extent that compliance therewith will not cause a violation of U.S.
law), statutes, ordinances, rules, regulations, codes, orders,
licenses, concessions or permits relating to any of the property
thereof or applicable to the operations thereof including labor,
zoning, civil rights and antitrust laws, and Environmental, Health and
Safety Requirements. To the knowledge of Schlumberger, the
Schlumberger Drilling Fluids Business has obtained, and is in
compliance with, all permits, licenses and other authorizations that
are required under federal, state, local and foreign laws relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
products, chemicals, or toxic or hazardous substances or wastes into
the environment (including ambient air, surface water, groundwater, or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
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handling of pollutants or toxic or hazardous substances or wastes; the
Schlumberger Drilling Fluids Business is in compliance with all terms
and conditions of the required permits, licenses and authorizations,
and is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those Environmental, Health and
Safety Requirements or contained in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder; Schlumberger is not aware of, nor
has it or any of its subsidiaries received notice of, any past,
present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans that may interfere with or
prevent compliance or continued compliance with those Environmental,
Health and Safety Requirements or any regulation, code, letter issued,
entered, promulgated or approved thereunder, or that may give rise to
any common law or legal liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release
into the environment of any pollutant, product, chemical, or
industrial, toxic or hazardous substance or waste; to the best of
Schlumberger's knowledge, there is no friable asbestos nor materials
containing polychlorinated biphenyls at any of the facilities of the
Schlumberger Drilling Fluids Business; and there is no civil, criminal
or administrative action, suit, demand, claim, hearing, notice or
demand letter, notice of violation, investigation, or proceeding
pending or threatened against the Schlumberger Drilling Fluids
Business relating in any way to those Environmental, Health and Safety
Requirements or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
(qqqq) Title to Schlumberger MI. Schlumberger indirectly owns
all of the issued and outstanding capital stock of Schlumberger MI
free and clear of any Liens, options, warrants, purchase rights,
contracts, commitments, claims or demands.
(rrrr) No Stock of United States Corporation. As of
immediately prior to the Effective Time, none of the Schlumberger
Acquired Assets will consist of the stock of a corporation which is
created or organized in the United States or under the laws of any
state or of any other entity which is treated as such a corporation
for federal tax purposes.
SCHLUMBERGER MI. Schlumberger MI represents and warrants to Xxxxx, SIAC, MIPC,
Xxxxx Canada, M-I Canada and M-I, as of the date of this Agreement and as of the
Effective Time, as follows:
(ssss) Organization and Standing. Schlumberger MI is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has all requisite
corporate power and authority to conduct or cause to be conducted its
businesses as currently conducted and to enter into and perform its
obligations under this Agreement and the Charter Documents of USNewco.
The
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execution and delivery of this Agreement by the undersigned officers
on behalf of Schlumberger MI, and the performance of this Agreement,
the Charter Documents of USNewco, and the consummation of the
transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate proceedings on Schlumberger MI's
part. This Agreement constitutes, and upon Schlumberger MI's execution
and delivery, the Charter Documents of USNewco will constitute, the
legal, valid and binding obligations of Schlumberger MI, enforceable
against Schlumberger MI in accordance with their terms except to the
extent that (i) enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and (ii) courts may award
money damages rather than specific enforcement of contractual
provisions involving matters other than or in addition to the payment
of money.
(tttt) Consents; Compliance with Other Instruments. The
execution, delivery and performance by Schlumberger MI of this
Agreement and the Charter Documents of USNewco, and the consummation
by Schlumberger MI of the transactions contemplated hereby and
thereby: (i) will not violate (with or without the giving of notice or
lapse of time or both) any provision of law, rule, regulation, order,
judgment or decree applicable to Schlumberger MI; (ii) will not
require any registration with, consent or approval of, or filing or
notice to, any U.S. court, tribunal, or governmental or regulatory
authority under any provision of law applicable to Schlumberger MI
except for (A) the requirements of the Exchange Act and (B) an
Investment Canada Notification filing to be made by Xxxxx after
Closing and any other similar requirements in other foreign
jurisdictions; (iii) will not result in the creation of a Lien upon
any of the properties, assets or business of Schlumberger MI or any of
the Venture Entities; (iv) will not violate any provision of the
certificate of incorporation or bylaws of Schlumberger MI; and (v)
will not require any consent, approval or notice under, and will not
conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or result in the acceleration of
(or give anyone the right to accelerate) the performance of, any
obligation of Schlumberger MI under any indenture, mortgage, deed of
trust, lease, license, franchise, contract, agreement or other
instrument to which Schlumberger MI is a party or by which
Schlumberger MI or any of its assets or properties is bound or
encumbered. To the knowledge of Schlumberger MI, neither it nor any
third party to any indenture, mortgage, deed of trust, agreement or
other instrument to which it is a party or by which it is bound or to
which it is subject is in breach, or upon execution and delivery of
this Agreement would be in breach, of any of the terms, covenants,
conditions or provisions thereof, which breach could adversely affect
the Schlumberger Acquired Assets.
(uuuu) No Stock of United States Corporation. As of
immediately prior to the Effective Time, none of the Schlumberger
Acquired Assets will consist of the stock of a corporation which is
created or organized in the United States or under the laws of any
state or of any other entity which is treated as such a corporation
for federal tax purposes.
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LIABILITIES AND INDEMNIFICATION.
Xxxxx, SIAC, MIPC, M-I and Schlumberger agree as follows:
VENTURE ENTITY INDEMNIFICATION. Except as provided in Sections 6.2 and 6.3, each
Venture Entity shall, and Xxxxx and Schlumberger hereby agree to cause each
Venture Entity to, indemnify, defend and hold harmless each of Xxxxx, SIAC,
MIPC, Xxxxx Canada and M-I Canada on the one hand, and Schlumberger and its
subsidiaries, on the other, against and in respect of any Damages with respect
to any actions, suits, proceedings, demands, assessments, claims and judgments
arising out of any breach or default in performance by the Venture Entities of
any of the obligations that are to be performed or assumed by them under this
Agreement or pursuant to their Charter Documents and any and all claims for
injury (including death), property or other damage, direct, indirect or
consequential, resulting from or connected with (a) occurrences or exposure
after the Accounting Date in regard to products or services, (b) any failure by
a Venture Entity to duly pay, perform or discharge the Schlumberger Assumed
Liabilities or the M-I Assumed Liabilities or (c) any other aspect of the
Venture Entities' ownership, use or operation of their respective assets and
businesses. Xxxxx or Schlumberger, as the case may be, shall give written notice
to the applicable Venture Entity within 30 days of discovery by either of them
of any matters that may give rise to a claim for indemnification from a Venture
Entity under this Agreement, and Xxxxx and Schlumberger shall cooperate with
that Venture Entity in any investigation by that Venture Entity of such matters.
This indemnification is in addition to the other indemnifications provided for
in this Agreement or the Charter Documents of the Venture Entities.
XXXXX INDEMNIFICATION.
(vvvv) Xxxxx shall be liable for, and hereby agrees to
indemnify and hold each Venture Entity and Schlumberger, as the case
may be, harmless against, any Damages with respect to any actions,
suits, proceedings, demands, assessments, claims and judgments arising
out of:
(i) any breach of or inaccuracy in any of the
representations or warranties made in this Agreement by
Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I Canada, or M-I as of the
date of this Agreement or as of the Effective Time;
(ii) any breach or default in performance of any of the
obligations that are to be performed by Xxxxx, SIAC, MIPC,
Xxxxx Canada, M-I Canada or M-I
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under this Agreement or by any Venture Entity under this
Agreement prior to the Effective Time;
(iii) any claims against a Venture Entity, as the
successor to the M-I Acquired Assets, relating to any period
prior to the Accounting Date, the liability or obligation for
which is not expressly assumed by that Venture Entity
pursuant to this Agreement;
(iv) any liability in excess of the amount, if any,
accrued at the Accounting Date on the Closing Statement of
M-I;
(v) failure to collect the full amount of any of the
accounts receivable set forth in Exhibit 6.2(a)(v) to the
disclosure letter of Xxxxx by the date set forth on such
Exhibit;
(vi) or relating to any of the actions, suits or
proceedings described in Exhibit 6.2(a)(vi) to the disclosure
letter of Xxxxx in excess of any accruals therefor on the
Closing Statement of M-I; or
(vii) any of the matters disclosed in Exhibit
6.2(a)(vii) to the disclosure letter of Xxxxx.
(wwww) In addition to those items specifically identified in
a disclosure letter to be provided on the Closing Date, which items
Xxxxx shall be liable for, Xxxxx hereby agrees to indemnify and hold
each of the Venture Entities, M-I, Schlumberger and each of their
respective subsidiaries, as the case may be, harmless against, any
Damages with respect to any obligations, violations, actions, suits,
proceedings, demands, assessments, cleanups, claims and judgments
relating thereto. Xxxxx shall also be liable for, and hereby agrees to
indemnify and hold each Venture Entity and Schlumberger and each of
their respective subsidiaries, as the case may be, harmless against,
any Damages with respect to any obligations, violations, actions,
suits, proceedings, demands, assessments, cleanups, claims and
judgments, pursuant to or in connection with the application of any
Environmental, Health and Safety Requirements (excluding those
relating solely to health and safety, such as OSHA and any other U.S.
or non-U.S., national, federal, state or local laws, ordinances,
rules, regulations or publications relating to health and safety, the
indemnification obligation for which is described in and limited by
Section 6.2(a)(i)) or to the condition of M-I or any Venture Entity in
case of acts or omissions occurring at, or relating back to, any time
prior to the Accounting Date, specifically including acts or omissions
with respect to the on-site or off-site handling or disposal of any
products, chemicals, wastes and waste waters, or threatened damage to
the environment (including without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) at any on-site
or off-site location, occurring or alleged to have been caused, in
whole or in part, by the transportation, treatment, storage, or
disposal of any pollutant or toxic or hazardous substance or waste
handled, generated or produced in connection with the business of M-I
or any Venture Entity (collectively referred to as the "M-I/Venture
Entity Environmental Liabilities"). This indemnification
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obligation shall apply irrespective of whether the Environmental
Liabilities subject to this provision are known or unknown as of the
Accounting Date.
(xxxx) Schlumberger or the applicable Venture Entity, as the
case may be, shall give written notice to Xxxxx within 60 days of
discovery by any of them of any matters that may give rise to a claim
for indemnification from Xxxxx under this Agreement, and Schlumberger,
M-I and the Venture Entities shall cooperate with Xxxxx in any
investigation by Xxxxx of such matters.
(yyyy) This indemnification is in addition to the other
indemnifications provided for in this Agreement or the Charter
Documents of the Venture Entities.
SCHLUMBERGER INDEMNIFICATION.
(zzzz) Schlumberger shall be liable for, and hereby agrees to
indemnify and hold each Venture Entity and Xxxxx, SIAC, MIPC, M-I
Canada, Xxxxx Canada, as the case may be, harmless against, any
Damages with respect to any actions, suits, proceedings, demands,
assessments, claim and judgments arising out of:
(i) any breach of or inaccuracy in any of the
representations or warranties made by Schlumberger or
Schlumberger MI in this Agreement as of the date of this
Agreement or as of the Effective Time;
(ii) any breach or default in performance by
Schlumberger of any of the obligations that are to be
performed by Schlumberger under this Agreement;
(iii) any claims against a Venture Entity, as the
successor to the Schlumberger Drilling Fluids Business,
relating to any period prior to the Accounting Date, the
liability or obligation for which is not expressly assumed by
that Venture Entity pursuant to this Agreement;
(iv) with respect to any subsidiary or affiliate of
Schlumberger, the stock or other equity interest of which is
to be transferred to a Venture Entity, which subsidiaries and
affiliates are specified on the Exhibits to Section 2.4 (the
"Schlumberger Transferred Subsidiaries"), any liability in
excess of the amount, if any, accrued at the Accounting Date
balance sheet of such Schlumberger Transferred Subsidiary
utilized in the preparation of the Closing Statements;
provided, however, that the foregoing indemnification shall
not apply to any liability for Warranty and Warranty Service;
or
(v) any of the matters disclosed in Exhibit 6.3(a)(v) of
the disclosure letter of Schlumberger.
(aaaaa) In addition to those items specifically identified in
a disclosure letter to be provided on the Closing Date, which items
Schlumberger shall be liable for, Schlumberger hereby agrees to
indemnify and hold each of the Venture Entities and
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Xxxxx, and each of their respective subsidiaries, as the case may be,
harmless against, any Damages with respect to any obligations,
violations, actions, suits, proceedings, demands, assessments,
cleanups, claims and judgments relating thereto. Schlumberger shall
also be liable for, and hereby agrees to indemnify and hold each
Venture Entity and Xxxxx, and each of their respective subsidiaries,
as the case may be, harmless against, any Damages with respect to any
obligations, violations, actions, suits, proceedings, demands,
assessments, cleanups, claims and judgments, pursuant to or in
connection with the application of any Environmental, Health and
Safety Requirements (excluding those relating solely to health and
safety, such as OSHA and any other U.S. or non-U.S., national,
federal, state or local laws, ordinances, rules, regulations or
publications relating to health and safety, the indemnification
obligation for which is described in and limited by Section 6.3(a)(i))
or to the condition of the Schlumberger Drilling Fluids Business in
case of acts or omissions occurring at, or relating back to, any time
prior to the Accounting Date, specifically including acts or omissions
with respect to the on-site or off-site handling or disposal of any
products, chemicals, wastes and waste waters, or threatened damage to
the environment (including ambient air, surface water, groundwater,
land surface or subsurface strata) at any on-site or off-site
location, occurring or alleged to have been caused, in whole or in
part, by the transportation, treatment, storage, or disposal of any
pollutant or toxic, or hazardous substance or waste handled, generated
or produced in connection with the business of the Schlumberger
Drilling Fluids Business (collectively referred to as the
"Schlumberger Environmental Liabilities"). This indemnification
obligation shall apply irrespective of whether the Environmental
Liabilities subject to this provision are known or unknown as of the
Accounting Date.
(bbbbb) Xxxxx or the applicable Venture Entity, as the case
may be, shall give written notice to Schlumberger within 60 days of
discovery by any of them of any matters that may give rise to a claim
for indemnification from Schlumberger under this Agreement, and Xxxxx,
M-I and the applicable Venture Entity shall cooperate with
Schlumberger in any investigation by Schlumberger of such matters.
(ccccc) This indemnification is in addition to the other
indemnifications provided for in this Agreement or the Charter
Documents of the Venture Entities.
PRODUCT LIABILITIES.
(ddddd) Schlumberger shall remain liable (so far as Xxxxx,
SIAC, MIPC, Xxxxx Canada, M-I and the Venture Entities are concerned)
for any Damages that arise out of or are based upon strict liability,
negligence, or any express or implied representation, or agreement
made by Schlumberger or a Schlumberger affiliated entity or claimed to
have been made by Schlumberger or a Schlumberger affiliated entity or
imposed or asserted to be imposed by operation of law, in connection
with any occurrence or exposure prior to the Accounting Date relating
to a Schlumberger product (the foregoing being referred to herein as a
"Schlumberger Product Liability Claim"), and Schlumberger shall
indemnify and hold harmless Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I
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and each of the Venture Entities from and against any Damages
resulting from any Schlumberger Product Liability Claim.
(eeeee) Xxxxx shall remain liable (so far as Schlumberger,
M-I and the Venture Entities are concerned) for any Damages that arise
out of or are based upon strict liability, negligence, or any express
or implied representation, or agreement made by Xxxxx or a Xxxxx
affiliated entity, or claimed to have been made by Xxxxx or a Xxxxx
affiliated entity or imposed or asserted to be imposed by operation of
law, in connection with any occurrence or exposure prior to the
Accounting Date relating to a M-I or Venture Entity product (the
foregoing being referred to herein as a "M-I/Venture Entity Product
Liability Claim"), and Xxxxx shall indemnify and hold harmless the
other parties and each of the Venture Entities from and against any
Damages resulting from any M-I/Venture Entity Product Liability Claim.
PARTNER CROSS-INDEMNITIES.
(fffff) Except as provided in the Charter Documents of the
Venture Entities, or as otherwise expressly provided herein, Xxxxx
shall and hereby agrees to indemnify and hold harmless Schlumberger
and its subsidiaries from and against any and all Damages arising out
of an action, suit, proceeding, demand, assessment, claim, judgment,
or other liability or obligation of any Venture Entity to the extent
that the Damages suffered by Schlumberger and its subsidiaries are in
excess of Schlumberger's Percentage Interest.
(ggggg) Except as provided in the Charter Documents of the
Venture Entities, or as otherwise expressly provided herein,
Schlumberger shall and hereby agrees to indemnify and hold harmless
Xxxxx and its subsidiaries from and against any and all Damages
arising out of an action, suit, proceeding, demand, assessment, claim,
judgment, or other liability or obligation of any Venture Entity to
the extent that the Damages suffered by Xxxxx and its subsidiaries are
in excess of Xxxxx'x Percentage Interest.
SETTLEMENT OF INDEMNITIES.
(hhhhh) Except for the obligations of the parties hereto
under Sections 6.2(a)(v), 6.2(a)(vi), 6.2(a)(vii), 6.3(a)(v), 6.2(b),
6.3(b), 6.4 and 6.5, the obligation of each of Xxxxx and Schlumberger
to indemnify the other, and the Venture Entities hereunder shall not
become effective unless and until the Damages covered hereby and due
to that other party aggregate $5,000,000, in which event such
obligations shall only apply to amounts in excess of that initial
$5,000,000; provided, however, that Damages incurred that do not
exceed $5,000, whether incurred as a result of a single incident or a
series of related incidents, shall not be included in the calculation
of Damages for purposes of determining whether an indemnification
obligation exists. The limitation contained in this Section 6.6 shall
be applicable to health and safety matters which are subject to the
indemnification obligations and limitations set forth in Sections
6.2(a)(i) and 6.3(a)(i). In addition, the limitation contained in this
Section 6.6 shall not be
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applicable to the payment obligations contained in Section 3.10 or any
assumption of the Assumed Liabilities.
(iiiii) If any party or any Venture Entity (the "Indemnified
Party") discovers any fact upon which the Indemnified Party intends to
base a claim for indemnification hereunder, the Indemnified Party
shall give written notice of the claim to the party (or the Venture
Entity) from which indemnification is sought (the "Indemnifying
Party") and if the claim is not resolved to the Indemnified Party's
satisfaction, the Indemnified Party may commence a claim in accordance
with the dispute resolution procedures set forth in Section 9.9.
(jjjjj) If any claim or assertion of liability is made or
asserted by a third party against the Indemnified Party based on any
liability or assertion of a right that, if established, would
constitute a breach of any of the representations, warranties,
covenants or agreements of any other party or any Venture Entity, in
respect of which indemnification has been provided for hereunder, the
Indemnified Party shall, with reasonable promptness, but in no case
more than 60 days, give to the Indemnifying Party written notice of
such claim or assertion of liability and request the Indemnifying
Party to defend same. Failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of any liability which the
Indemnifying Party might have to the Indemnified Party, except to the
extent that such failure materially prejudices the Indemnifying
Party's position. The Indemnifying Party shall have the right to
defend against such liability or assertion, in which event the
Indemnifying Party shall give written notice to the Indemnified Party
of acceptance of the defense of such claim and the identity of counsel
selected by the Indemnifying Party. Except as set forth below, such
notice to the Indemnified Party shall give the Indemnifying Party full
authority to defend, adjust, compromise or settle, without expense to
the Indemnified Party, such action, suit, proceeding or demand of
which such notice shall have been given in the name of the Indemnified
Party or otherwise as the Indemnifying Party shall elect. The
Indemnifying Party shall consult with the Indemnified Party prior to
any such compromise or settlement, and the Indemnified Party shall
have the right to refuse such compromise or settlement and, at its
cost, to take over such defense; provided, however, in such event, the
Indemnifying Party shall not be responsible for, nor shall it be
obligated to indemnify the Indemnified Party against, any cost and
liability in excess of such compromise or settlement. With respect to
any defense accepted by the Indemnifying Party, the Indemnified Party
shall be entitled to participate with the Indemnifying Party in such
defense and also shall be entitled to employ separate counsel for such
defense at its expense. In the event the Indemnifying Party does not
accept the defense of any indemnified claim as provided above, the
Indemnified Party shall have the right to employ counsel for such
defense at the expense of the Indemnifying Party, and to, in good
faith with due regard to the interests of the Indemnifying Party,
control all decisions regarding the handling of the defense without
the consent of the Indemnifying Party, but shall not have the right to
compromise or settle any such action or consent to the entry of any
judgment with respect to such action without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld,
unless such settlement, compromise or
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consent includes an unconditional release of the Indemnifying Party
from all liability and obligations arising out of such action. Each of
Xxxxx, SIAC, MIPC, Xxxxx Canada, M-I and Schlumberger agrees to
cooperate, and agrees to cause each Venture Entity to cooperate, with
Smith, Schlumberger, SIAC, MIPC, Xxxxx Canada, M-I or a Venture
Entity, as the case may be, in the defense of any actions brought by
third parties and the relevant records of each party shall be
available to the other parties with respect to any such defense. None
of Smith, Schlumberger, SIAC, MIPC, Xxxxx Canada, M-I or any Venture
Entity will provide assistance to the party asserting the claim unless
such assistance is required by law.
(kkkkk) Each of the parties and each Venture Entity shall
have a duty to take reasonable steps to mitigate its damages to the
fullest extent possible, including diligently pursuing any possible
(i) insurance coverage that the parties or a Venture Entity may have
relating to the cause or effect of the damages and (ii)
indemnification, counterclaim or other action against third parties
under any contract or other obligation relating to the cause or effect
of the damages, including the indemnification or other obligations of
Halliburton under that certain Organization Agreement between
Halliburton and Dresser dated December 1, 1986, that certain
Partnership Agreement between Halliburton and Dresser dated December
1, 1986, as amended, that certain Owners Agreement among Halliburton,
MIHC, Inc., Xxxxx, SIAC and the predecessor limited partnership to M-I
dated February 28, 1994, that certain limited liability company
agreement of M-I dated March 10, 1994, as amended, and that certain
Purchase and Sale Agreement dated August 20, 1998 among Halliburton,
MIHC, Inc., Xxxxx, SIAC, MIPC and M-I. To the extent total damages are
reduced due to the receipt of an offsetting payment from a third party
under an indemnification obligation, a counterclaim against that third
party or otherwise, the parties shall share that payment pro rata
based on their Percentage Interests. For example, if damages of
$100,000 are incurred that would otherwise be the liability of Xxxxx
($60,000) and Schlumberger ($40,000) and Xxxxx receives the entire
$100,000 from Halliburton based on a previous indemnity, Xxxxx would
be obligated to apply $40,000 of that payment to Schlumberger's
portion of the damages.
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LIMITATION ON LIABILITY. No party or Venture Entity shall be required to
indemnify or pay damages to any other party or Venture Entity in connection with
this Agreement arising from indirect, consequential, special, exemplary or
punitive damages except for indirect, consequential, special, exemplary or
punitive damages actually paid to any third party by the Indemnified Party
seeking indemnification hereunder.
CONDITIONS PRECEDENT TO CLOSING
CONDITIONS TO EACH PARTY'S CLOSING OBLIGATION. Intentionally omitted.
CONDITIONS TO THE CLOSING OBLIGATION OF SCHLUMBERGER. Intentionally omitted.
CONDITIONS TO THE CLOSING OBLIGATION OF XXXXX. Intentionally omitted.
TERMINATION, AMENDMENT, WAIVER AND MODIFICATION.
TERMINATION. Intentionally omitted.
EFFECT OF TERMINATION. Intentionally omitted.
AMENDMENT. This Agreement may not be amended except by an instrument in writing
signed by or on behalf of Xxxxx, Schlumberger and each of the other parties
affected thereby other than STC.
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EXTENSION/WAIVER. At any time, a party solely with respect to itself, may: (a)
with respect to obligations owed to it or the performance of other acts for its
benefit, extend the time for the performance of such obligations or such other
acts to be performed hereunder by another party; (b) waive any inaccuracies in
the representations and warranties of another party contained herein or in any
document delivered pursuant hereto; and (c) waive compliance with any of the
conditions to the obligations of a party contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. No such waiver shall
be operative as a waiver of any other or subsequent requirement of this
Agreement.
GENERAL PROVISIONS.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN INDEMNIFICATION
OBLIGATIONS.
(lllll) Each of the representations and warranties contained
in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing Date for a period of three years
following the Effective Time; provided, however, that the foregoing
three-year survival period shall not apply to or serve to limit (i)
warranties of title, which shall extend according to their terms; (ii)
claims of which a party has given another party against which it is
seeking reimbursement for such claims specific written notice within
said three-year period; (iii) any claim resulting from the assessment
of taxes for any period prior to or including the Accounting Date, the
indemnification for which shall extend for the period of the statute
of limitations applicable to such tax claims; or (iv) any claims for
Schlumberger Environmental Liabilities or M-I/Venture Entity
Environmental Liabilities including those based upon the application
or alleged violation of any Environmental, Health and Safety
Requirements (excluding those related solely to health and safety,
such as OSHA and any other U.S. or non-U.S., national, federal, state
or local laws, ordinances, rules, regulations or publications relating
to health and safety, which claims shall expire at the end of the
three-year period described above), the generation, transportation,
handling, storage, or disposal of any hazardous, toxic or harmful
material, product, chemical, substance or waste, or violation of any
local, state, or federal, national, U.S. or non-U.S. law, statute, or
ordinance relating to the generation, transportation, handling,
storage, or disposal of said materials or substances, and based upon
any activities, action, or inaction of a party either on or off
property owned, leased or occupied by such party and occurring prior
to the Accounting Date, which shall extend for the period of ten years
following the Accounting Date; provided, however, that bona fide, good
faith claims of which a party has given specific written notice within
such ten-year period seeking (x) reimbursement or indemnification for
such claims or (y) action to clean up, remediate any specific items
identified in writing in the notice or otherwise respond to issues
raised by any applicable regulatory agency or third party (other than
a
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party hereto or employees of a party hereto) relating to matters
described in this clause (iv), shall survive until such claim is
settled or such clean up, remediation or other matters of concern are
concluded to the mutual reasonable satisfaction of the affected
parties.
(mmmmm) The indemnification obligations described in Section
6.2(b) and Section 6.3(b) shall survive for a period of ten years;
provided, however, that claims of which a party has given a bona fide,
good faith, specific written notice within such ten-year period
seeking (i) reimbursement or indemnification for such claims or (ii)
action to clean up, remediate any specific items identified in writing
in the notice or otherwise respond to issues raised by any applicable
regulatory agency or third party (other than a party hereto or
employees of a party hereto) relating to matters described in Section
6.2(b) or Section 6.3(b), as applicable, shall survive until such
claim is settled or such clean up, remediation or other matters of
concern are concluded to the mutual reasonable satisfaction of the
affected parties.
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GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas applicable to contracts made and to be
performed therein.
ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, and it is not intended to confer upon any other Person any rights or
remedies hereunder, except that each of the Venture Entities shall be considered
to be a third-party beneficiary of the provisions of this Agreement set forth in
Articles 4 and 5 and Section 9.6. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned, by any of the parties
without the prior written consent of the other parties, except that Xxxxx, SIAC,
Xxxxx Canada or Schlumberger may at any time assign any or all of its rights or
obligations hereunder to one of its wholly owned subsidiaries (but no such
assignment shall relieve Xxxxx, SIAC, Xxxxx Canada or Schlumberger, as the case
may be, of any of its obligations under this Agreement).
COUNTERPARTS. This Agreement may be executed in one or more counterparts each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
NOTICES. All notices, requests, demands and other communications made in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given on the date delivered, if delivered personally, by reputable
overnight delivery service that requires a signature on delivery or sent by
facsimile machine with telephonic confirmation of receipt to the Persons
identified below, or three days after mailing in the U.S. Mail if mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
(nnnnn) if to Xxxxx:
Xxxxx International, Inc.
00000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: 281.233.5996
Attn.: General Counsel
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(ooooo) if to SIAC:
Xxxxx International Acquisition Corp.
00000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: 281.233.5996
Attn.: General Counsel
(ppppp) if to MIPC:
M-I Purchase Corporation
00000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: 281.233.5996
Attn.: General Counsel
(qqqqq) if to M-I:
M-I L.L.C.
0000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: 713.308.9503
Attn.: General Counsel
(rrrrr) if to Xxxxx Canada:
Xxxxx International Canada Ltd.
Lancaster Building
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Facsimile: 000.000.0000
Attn: General Counsel
(sssss) if to M-I Canada:
M-I Drilling Fluids Canada, Inc.
Lancaster Building
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Facsimile: 403.290.5323
Attn: General Counsel
(ttttt) if to Schlumberger:
Schlumberger Limited
c/o Schlumberger Oilfield Services
000 Xxxxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: 281.285.8522
Attn.: General Counsel
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Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 9.5. When the Venture Entities are
formed, M-I shall give the other parties notice of each Venture Entity's address
for notice purposes. Likewise, when the subsidiaries of Schlumberger described
in Exhibit 2.3 are formed, Schlumberger shall give similar notice.
COMPETITION AND CONFIDENTIALITY.
(uuuuu) Each party agrees that so long as it or its affiliate
continues to be a member in any of the Venture Entities and for a
period of one year thereafter, it will not directly or indirectly
engage or invest in any business in the Drilling Fluids Business in
direct competition with the business of any of the Venture Entities as
conducted immediately following the Closing. It is understood and
agreed that (i) a party shall not be deemed to be in default with
respect to the foregoing covenants as a result of any investment it
may make in not more than five percent of the outstanding shares or
other units of any security of any entity subject to the requirements
of Section 13 or 15(d) of the Exchange Act, (ii) the provisions of
this Section 9.6(a) shall not apply to any business activities of any
party, or any of their respective subsidiaries, actually being
conducted as of the date hereof, other than the Schlumberger Drilling
Fluids Business and the M-I Drilling Fluids Business, (iii) this
Section 9.6(a) shall not be construed to prohibit a party, directly or
through any subsidiary, from hereafter acquiring and continuing to own
and operate any entity that has operations in the Drilling Fluids
Business that compete with the business of any of the Venture Entities
as conducted immediately following the Closing if none of the
principal operations of such entity so compete, (iv) the provisions of
this Section 9.6(a) shall not be construed to prohibit any party,
directly or through any subsidiary, from selling inventory or other
assets currently owned by a subsidiary or affiliate, and (v) the
provisions of this Section 9.6(a) shall not apply for a period of six
months after the Closing Date to the ownership and operation by
Schlumberger of its Drilling Fluids Business in the United States
while that business is winding down. For purposes of this Section
9.6(a), "principal operation" shall mean an operation or line of
business of an entity that contributes more than fifteen percent of
such entity's revenues. In the event that either party acquires an
entity that has operations competing directly with any of the Venture
Entities, the parties agree to, and to cause the Venture Entities to,
attempt to negotiate mutually agreeable terms upon which such
operations could be transferred to a Venture Entity.
(vvvvv) In the event that the covenants contained in Section
9.6(a) are more restrictive than permitted by law, the parties agree
that the covenants contained in Section 9.6(a) shall be enforceable
and enforced to the extent permitted by law.
(wwwww) No party shall disclose or use to compete with any
other party any confidential information obtained from such other
party pursuant to this Agreement or any document delivered in
connection herewith or with the transactions contemplated hereby,
except as such use or disclosure may be required in the course of
performance
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hereof and such disclosure as may be required by law. After the
Closing, the parties hereto shall not (except at the request of any of
the Venture Entities) use or disclose to any third party any of the
technical, financial, operational or marketing information of any of
the Venture Entities, the Schlumberger Drilling Fluids Business or the
M-I Drilling Fluids Business except after and to the extent such
information is or becomes generally available to the public through no
fault of the parties or as may be necessary in connection with the
remaining or future business(es) of the parties (subject to the
provisions of Section 9.6(a)) or as may be required by law. The
parties shall take all reasonable efforts to cause their respective
directors, officers, employees and agents to observe the provisions of
this Section 9.6.
(xxxxx) Each party acknowledges and agrees that the remedy at
law for any breach of the requirements of this Section 9.6 would be
inadequate, and agrees and consents that, without intending to limit
any additional remedies that may be available, temporary and permanent
injunctive and other equitable relief may be granted without proof of
actual damage or inadequacy of legal remedy in any proceeding that may
be brought to enforce any of the provisions of this Section 9.6.
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LITIGATION AND CLAIM SUPPORT. If so requested by a party, whether in connection
with the matters set forth in Article 6 or otherwise, each of the Venture
Entities shall cooperate, and shall cause their respective employees to
cooperate, with such party and its affiliates and their counsel in defending or
prosecuting any litigation or claim brought by such party against any third
party or by any third party against such party and relating to the business or
properties of any of the Venture Entities. Cooperation shall include causing the
employees of the Venture Entities to furnish documents, testify as witnesses,
appear for depositions and take other similar actions as a party or affiliate
thereof may reasonably request.
ENFORCEMENT. Each of the parties agrees that it shall take no action to prevent
any of the Venture Entities from seeking to enforce any of the obligations of
any of the other parties, as the case may be, under this Agreement or to obtain
damages as a result of any breach thereof. Each of the parties agrees that it
shall not withhold its consent, and shall cause its representatives on the board
of directors, management committee or other governing body of any of the Venture
Entities, not to withhold their consent, to any of the Venture Entities taking
any such action against it.
MEDIATION-ARBITRATION. If a dispute arises from or relates to this Agreement or
the breach thereof and if the dispute cannot be settled through direct
discussions, the parties agree to endeavor first to settle the dispute in an
amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising from or
relating to this Agreement or breach thereof shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Notwithstanding any other provision of this Agreement or this Section 9.9 to the
contrary, no party shall be precluded from seeking injunctive relief or a
temporary restraining order prior to implementing procedures for mediation or
arbitration hereunder provided that such party determines in the good further
exercise of its best judgment that it will suffer irreparable harm or injury by
any delay caused by mediation or arbitration proceedings.
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ENTIRE AGREEMENT. This Agreement, together with each of the Exhibits and
disclosure letters hereto, constitutes the entire agreement among the parties
hereto with respect to the matters covered hereby and thereby and supersedes all
prior agreements and understandings among the parties.
CONSENTS AND APPROVAL. In the case of any consent or approval required or
contemplated hereby, no party hereto shall unreasonably withhold consent or
approval.
OBLIGATIONS OF SCHLUMBERGER. Whenever this Agreement requires Schlumberger to
take any action, such requirement shall be deemed to be a requirement of the
applicable subsidiary or subsidiaries of Schlumberger listed in Section 2.3
which hold the interests in the Venture Entity or Venture Entities in the
country in which the action is required to be taken and a guarantee of such
performance by Schlumberger.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first above written.
XXXXX INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
Senior Vice President-Administration
XXXXX INTERNATIONAL ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
Vice President
M-I PURCHASE CORPORATION
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
Vice President
M-I L.L.C.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
XXXXX INTERNATIONAL CANADA LTD.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
Assistant Secretary
86
M-I DRILLING FLUIDS CANADA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Vice President
SCHLUMBERGER LIMITED
By: /s/ Xxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx
Executive Vice President
SCHLUMBERGER TECHNOLOGY CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx
Director
SCHLUMBERGER MI, INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
President
