WEATHERFORD EMPLOYEE BENEFIT AGREEMENT
Exhibit 10.3
WEATHERFORD EMPLOYEE BENEFIT AGREEMENT
THIS AGREEMENT (this “Agreement”) is made by and among Xxxxxxxxxxx International Ltd., a
Bermuda exempted company (“Xxxxxxxxxxx Bermuda”), Xxxxxxxxxxx International, Inc., a Delaware
corporation (“Weatherford Delaware”), on behalf of itself and its subsidiaries, Grant Prideco,
Inc., a Delaware corporation (“GPI”) and National Oilwell Varco, Inc., a Delaware corporation
(“NOV”).
W I T N E S S E T H
WHEREAS, Weatherford Delaware, certain subsidiaries of Weatherford Delaware and GPI previously
entered into those certain agreements entitled “Distribution Agreement” by and between Xxxxxxxxxxx
International, Inc. and Grant Prideco, Inc. dated March 22, 2000 (the “Distribution Agreement”)
(attached hereto) and “Employee Benefits Agreement” dated April 10, 2000 (the “Employee Benefits
Agreement”) (attached hereto);
WHEREAS, pursuant to the Distribution Agreement, Weatherford Delaware distributed to its
stockholders all of the outstanding shares of the common stock of GPI, $.01 par value (the
“Distribution”);
WHEREAS, Weatherford Delaware and certain of its affiliates maintain (i) the Xxxxxxxxxxx
International, Inc. Executive Deferred Compensation Stock Ownership Plan (the “Weatherford Deferred
Compensation Plan”), (ii) the Xxxxxxxxxxx International, Inc. Foreign Executive Deferred
Compensation Plan (the “Weatherford Foreign Deferred Compensation Plan”) and (iii) the Xxxxxxxxxxx
International, Inc. Executive Deferred Compensation Plan for Non-Employee Directors (the
“Weatherford Directors’ Deferred Compensation Plan”) (collectively, the “Weatherford Plans”);
WHEREAS, a multiple grantor trust entitled “Energy Ventures, Inc. Executive Deferred
Compensation Stock Ownership Trust” (the “Trust”) was previously established to assist employers in
meeting their obligations under the Weatherford Deferred Compensation Plan;
WHEREAS, as of the record date for the Distribution the Trust held shares of Weatherford
Delaware common stock for the Weatherford Deferred Compensation Plan and Weatherford Delaware held
shares of Weatherford Delaware common stock for the Weatherford Foreign Deferred Compensation Plan
and the Weatherford Directors’ Deferred Compensation Plan;
WHEREAS, both Weatherford Delaware and the trustee of the Trust waived their rights to receive
a distribution of GPI common stock in connection with the Distribution;
WHEREAS, in accordance with the Employee Benefits Agreement, upon the Distribution, the
account of each participant in each of the Weatherford Plans was deemed to be credited with one
unit equal to one share of GPI common stock for every unit equal to one share of Weatherford
Delaware common stock that was credited to such participant’s Weatherford Plan account as of the
record date for the Distribution;
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WHEREAS, pursuant to the Distribution Agreement by and between Weatherford Delaware and GPI,
GPI granted Weatherford Delaware employees and directors options to purchase shares of GPI common
stock, $.01 par value, and a warrant to purchase shares of GPI common stock;
WHEREAS, in the Distribution Agreement, GPI agreed to issue shares of its common stock upon
the exercise of any option or warrant granted by GPI pursuant to the Distribution Agreement;
WHEREAS, in the Employee Benefits Agreement, GPI agreed to issue shares of its common stock
directly to participants in the Weatherford Plans as distributions became due under such plans with
respect to units equal to shares of GPI common stock credited to participants’ accounts under such
plans in accordance with the Employee Benefits Agreement;
WHEREAS, pursuant to that certain instrument entitled “Assumption and General Amendment of
Directors’ Stock Option and Benefit Programs and General Amendment of Employee Stock Option and
Benefit Programs of Xxxxxxxxxxx International, Inc.” dated June 26, 2002, by and between
Weatherford Bermuda and Weatherford Delaware, Weatherford Bermuda assumed certain obligations of
Weatherford Delaware with respect to the Weatherford Plans and certain Weatherford Delaware stock
option plans;
WHEREAS, NOV, NOV Sub, Inc. and GPI have entered into an Agreement and Plan of Merger by and
among National Oilwell Varco, Inc., NOV Sub, Inc. and Grant Prideco, Inc. dated as of December 16,
2007 (the “Merger Agreement”);
WHEREAS, as of the Effective Time, pursuant to this Agreement the account of each Weatherford
Plan participant that is credited with units representing shares of GPI common stock shall be
deemed to be credited with a certain number of units representing NOV common stock calculated as
specified herein; and
WHEREAS, the parties hereto desire to clarify the manner in which GPI’s obligation under the
Employee Benefits Agreement to issue shares of GPI common stock to participants in the Weatherford
Plans as distributions become due under such plans with respect to units equal to shares of GPI
common stock credited to participants’ accounts under such plans will be implemented following the
conversion of GPI common stock into NOV common stock in accordance with the Merger Agreement;
NOW, THEREFORE, in consideration of the promises contained herein, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by the parties,
effective as of the Effective Time, Weatherford Bermuda, Weatherford Delaware, on behalf of itself
and its subsidiaries, GPI and NOV agree as follows:
(1) NOV hereby assumes GPI’s obligation under the Employee Benefits Agreement to issue shares
of GPI common stock (which after the Effective Time will be converted into shares of NOV common
stock, as adjusted herein) to participants in the Weatherford Plans as distributions become due
under such plans. At the Effective Time, the units representing GPI common stock deemed credited
under the Weatherford Plans determined in accordance with the Employee Benefits Agreement shall be
converted into a certain number of units representing
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NOV common stock. The number of such units representing GPI common stock credited to a
Weatherford Plan participant’s account shall be converted into such number of units representing
NOV common stock as is equal to the number of units representing GPI common stock credited to the
participant’s account multiplied by the Conversion Ratio. For purposes of this Agreement, the term
“Conversion Ratio,” which it is agreed shall be calculated to four decimal places, means the sum of
(A) the Exchange Ratio and (B) the quotient of (i) the Cash Consideration per share of GPI common
stock divided by (ii) the average of the last reported sales price of NOV common stock, as reported
on the NYSE Composite Transactions Tape (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source mutually selected by Weatherford Delaware and
NOV), on each of the ten consecutive trading days immediately preceding the date of the Effective
Time. Notwithstanding the foregoing, there shall be no fractional unit representing NOV common
stock credited to a Weatherford Plan participant’s account. If necessary to prevent the crediting
of a fractional unit, the number of units representing NOV common stock credited to a Weatherford
Plan participant’s account shall be rounded down to the nearest number of whole units.
(2) Prior to the Effective Time, Weatherford Delaware shall furnish to NOV a statement that
indicates the number of units representing shares of GPI common stock credited to the Weatherford
Plans accounts for all participants and former participants. Promptly after the Effective Time,
NOV shall furnish to Weatherford Delaware a statement that calculates the Conversion Ratio and the
applicable number of units representing shares of NOV common stock deemed credited to each of the
participants’ accounts under the Weatherford Plans and, within 10 business days of receipt of such
statement, Weatherford Delaware will certify in writing to NOV either its concurrence with such
calculations or the basis for any disagreement with such calculations (or it shall be deemed to
concur if it fails to respond within this 10-day period).
(3) Weatherford Delaware or Weatherford Bermuda shall notify NOV in writing when the benefits
of the participants and former participants who were employed by Weatherford Bermuda, Weatherford
Delaware or any subsidiary of Weatherford Bermuda or Weatherford Delaware become distributable
under the Weatherford Plans.
(4) As soon as practicable after a notification has been delivered to NOV pursuant to
paragraph (3) above, NOV shall cause to be issued directly to the participant or former participant
such number of shares of NOV common stock as is equal to the number of units representing NOV
common stock that are deemed credited to such participant’s account under the applicable plan in
accordance with this Agreement.
(5) The parties agree that none of NOV, GPI or any of their subsidiaries is entitled to deduct
any amounts paid under or with respect to the Weatherford Deferred Compensation Plan. None of NOV,
GPI or any of their subsidiaries shall attempt to claim federal income taxation deductions with
respect to shares of NOV common stock issued by NOV to Weatherford Deferred Compensation Plan
participants pursuant to this Agreement. The parties agree that pursuant to section 83(h) of the
Internal Revenue Code of 1986, as amended, Weatherford Delaware, or its subsidiary, as appropriate,
shall be entitled to claim a federal income taxation deduction with respect to shares of NOV common
stock issued by NOV to participants of Weatherford Plans pursuant to this Agreement.
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(6) Promptly after each issuance of shares of NOV common stock pursuant to this Agreement, NOV
shall furnish Weatherford Bermuda or Weatherford Delaware a written notice that lists the date of
the issuance, the recipient and the number of shares of NOV common stock issued to each recipient.
(7) NOV shall issue shares of its common stock upon the exercise of any option or warrant
granted by GPI pursuant to the Distribution Agreement.
(8) The parties agree that none of NOV, GPI or any of their subsidiaries is entitled to deduct
any amounts with respect to the options or warrants granted pursuant to the Distribution Agreement.
The parties agree that pursuant to section 83(h) of the Internal Revenue Code of 1986, as amended,
Weatherford Delaware, or its subsidiary, as appropriate, shall be entitled to claim a federal
income taxation deduction with respect to the exercise of the GPI option or warrant.
(9) After the Effective Time, all units representing shares of NOV common stock credited to
the accounts of participants under the Weatherford Plans shall be adjusted from time to time as
appropriate to reflect any and all changes to NOV common stock, including, without limitation,
dividends, stock splits or recapitalizations, in the same manner as adjustments are made for
holders of NOV common stock.
(10) Any notice provided pursuant to this Agreement shall be in writing, addressed to the
General Counsel of the recipient party and delivered to the principal business office of the
recipient party.
(11) Weatherford Delaware shall indemnify and hold NOV (and its subsidiaries) harmless from
any adverse determination, by any governmental instrumentality or agency, that NOV was subject to
any tax withholding obligations with respect to its issuance of shares of NOV common stock pursuant
to this Agreement.
(12) For purpose of this Agreement, the terms “Exchange Ratio”, “Cash Consideration”, and
“Effective Time” shall have the meanings ascribed to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed effective as
of the 21st day of April, 2008.
| XXXXXXXXXXX INTERNATIONAL LTD. | ||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||
| Title: | Senior Vice President | |||||
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| XXXXXXXXXXX INTERNATIONAL, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||
| Title: | Senior Vice President | |||||
| GRANT PRIDECO, INC. | ||||||
| By: | /s/Xxxxxxx XxXxxxx | |||||
| Title: | Chairman President and Chief Executive Officer | |||||
| NATIONAL OILWELL VARCO, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxxxx | |||||
| Title: | Senior Vice President and Chief Financial Officer | |||||
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