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EXHIBIT 10.2
FORM OF
TAX ALLOCATION AGREEMENT
BY AND BETWEEN
XXXXXXXXXXX INTERNATIONAL, INC.
AND
GRANT PRIDECO, INC.
____________________________, 1999
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TABLE OF CONTENTS
1. Grant Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
2. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
3. Obligation for Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
4. No Weatherford Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
5. Grant Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
6. Tax Credits; Deferred Intercompany Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
7. Grant Tax Carryovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
8. Tax Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
9. Proposed Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
10. Notice of Settlement or Compromise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
11. Grant's Right to Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
12. Subsequent Adjustments or Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
13. Grant Spin-Off Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
14. Future Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
15. Combined, Consolidated or Unitary Basis Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
16. Earnings and Profits Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
17. Retention of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
18. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
19. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
"After-Tax Basis" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
"Agreed Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -00-
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"Xxxxxxxxxxxx Xxxxxxxxx" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
"Grant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
"Grant Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Interim Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Returns" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Ruling" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Short Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Spin-Off" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Spin-Off Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Spin-Off Tax" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Tax Authority" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Taxes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
"Transfer Tax" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
"Weatherford" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
"Weatherford Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
"WEI" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
21. Binding Effect; Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
22. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
23. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
24. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
25. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
EXHIBIT A - MEMBERS OF THE GRANT GROUP
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TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT, made and entered into as of the ____
day of ____________, ____, by and between XXXXXXXXXXX INTERNATIONAL, INC., a
Delaware corporation ("Weatherford"), and GRANT PRIDECO, INC., a Delaware
corporation ("Grant").
W I T N E S S E T H:
WHEREAS, Weatherford is the common parent of an affiliated group of
corporations (hereinafter referred to as the "Weatherford Group") within the
meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), which affiliated group includes (x) corporations owned by
Weatherford (then known as EVI, Inc.) and (y) corporations owned by Weatherford
Enterra, Inc., a Delaware corporation ("WEI"), on May 27, 1998, the date on
which WEI merged with and into Weatherford, and (z) corporations acquired by
Weatherford or other members of the Weatherford Group subsequent to May 27,
1998, and the members of the Weatherford Group have heretofore joined in filing
consolidated Federal income Tax Returns;
WHEREAS, prior to May 27, 1998, Weatherford and its eligible
subsidiaries joined in filing consolidated Federal income Tax Returns as an
affiliated group and WEI and its eligible subsidiaries joined in filing
consolidated Federal income Tax Returns as an affiliated group;
WHEREAS, Grant and its subsidiaries have been members of the
Weatherford Group;
WHEREAS, on or about ____________ __, ____, certain assets associated
with the drilling products business conducted by the Weatherford Group,
including the stock of certain subsidiaries included in the Weatherford Group
and engaged in the drilling products business, will be contributed to the
capital of Grant or otherwise acquired by Grant or one or more of its
subsidiaries;
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WHEREAS, Weatherford, on or about ____________ __, ____ (the "Spin-Off
Date"), will distribute to its stockholders all of the outstanding stock of
Grant (the "Spin-Off"), and thereafter Grant and its subsidiaries will no
longer be members of the Weatherford Group for Federal income Tax purposes; and
WHEREAS, the parties desire to provide for the sharing of the Federal,
state, local and foreign income Tax liabilities and benefits accrued prior to
the Spin-Off between Weatherford and its subsidiaries and Grant and its
subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant Group. For purposes of this Agreement, the "Grant
Group" shall mean (i) Grant, (ii) Grant's subsidiaries, and (iii) those
corporations and other entities whose stock or ownership interests will be
transferred to Grant prior to or on the Spin-Off Date, all of such subsidiaries
of Grant and such corporations and other entities being listed on Exhibit A
attached hereto. Unless otherwise specified, whenever items of income, gain,
loss, deduction, credit, or other Tax attributes of Grant are referred to in
this Agreement, the reference shall be to the collective amounts of such items
for the Grant Group as defined herein.
2. Tax Returns. Weatherford shall prepare and file or cause to
be prepared and filed timely all appropriate Returns in respect of Grant and
the other members of the Grant Group that (i) are required to be filed on or
before the Spin-Off Date; or (ii) are required to be filed after the Spin-Off
Date that (A) are required to include, on a consolidated, combined or unitary
basis, the operations of Grant or any other member of the Grant Group for any
Tax period ending on or before the Spin-Off Date; or (B) are required to be
filed by Grant or any other member of the Grant Group on a separate return
basis for any Tax period ending on or before the Spin-Off Date.
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Grant shall participate in the filing of and shall, to the extent requested by
Weatherford, file any required Returns with respect to any Tax period that ends
on or before the Spin-Off Date. Grant shall prepare or cause to be prepared the
schedules in respect of Grant and other members of the Grant Group containing
the information necessary for Weatherford to prepare any consolidated, combined
or unitary Returns. If Weatherford, after consulting with Grant, files any such
consolidated, combined or unitary Return using information with respect to Grant
and the other members of the Grant Group that is different from the information
prepared and furnished by Grant and Weatherford and Xxxxx thereafter are unable
to resolve such difference, such difference shall constitute a claim for
purposes of Paragraph 25 of this Agreement. Grant shall also prepare or cause
to be prepared and shall file or cause to be filed all other Returns required of
Grant or any other members of the Grant Group, or in respect of its or any of
their activities, for any Tax period ending after the Spin-Off Date that
includes the operations of Grant or any other member of the Grant Group prior to
the Spin-Off Date. The parties hereto will, to the extent permitted by
applicable law, elect with the relevant Tax Authority to treat for all purposes
the Spin-Off Date as the last day of a Tax period of Grant and the other members
of the Grant Group, and such period shall be treated as a "Short Period" for
purposes of this Agreement. In any case where applicable law does not permit
Grant to treat the Spin-Off Date as the last day of a Short Period, then for
purposes of this Agreement, the portion of such Taxes that is attributable to
the operations of Grant and the other members of the Grant Group for such
Interim Period (as defined below) shall be (i) in the case of Taxes that are not
based in whole or in part on income or gross receipts, the total amount of such
Taxes for the period in question multiplied by a fraction, the numerator of
which is the number of days in the Interim Period, and the denominator of which
is the total number of days in the entire period in question, and (ii) in the
case of Taxes that
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are based in whole or in part on income or gross receipts, the Taxes that would
be due with respect to the Interim Period, if such Interim Period were a Short
Period. "Interim Period" means with respect to any Taxes imposed on Grant or
any other members of the Grant Group on a periodic basis for which the Spin-Off
Date is not the last day of a Short Period, the period of time beginning on the
first day of the actual Tax period that includes (but does not end on) the
Spin-Off Date and ending on and including the Spin-Off Date. Any franchise Tax
shall be allocated to the Tax period or portion thereof during which the right
to do business obtained by the payment of such franchise Tax relates,
regardless of whether such franchise Tax is measured by income, operations,
assets or capital relating to another Tax period.
3. Obligation for Payment of Taxes. Weatherford shall be
entitled to receive from Grant amounts calculated in accordance with Paragraphs
5 and 12 hereof. The amounts, if any, that Grant shall be obligated to pay
Weatherford pursuant to Paragraph 5, with respect to Tax periods of the
Weatherford Group ending on or prior to the Spin-Off Date, shall be paid within
45 days after the filing of the applicable Return. This initial settlement
shall be based on the Returns as they have been filed and shall include any
amendments of or adjustments to such Returns that have been finally settled.
Any amounts that Grant shall be obligated to pay Weatherford pursuant to
Paragraph 5 with respect to Tax periods of the Weatherford Group ending after
the Spin-Off Date shall be paid within 45 days after filing of the Returns for
such Tax periods. In the event of an adjustment to the amount of payment for any
Tax period as determined under Paragraph 12, Weatherford shall be entitled to
receive from Grant such payment within 45 days after payment of a deficiency to
or receipt of a refund from the Tax Authority. In the event of an adjustment
under Paragraph 12 resulting in no
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additional payment to or receipt of a refund from the Tax Authority, settlement
shall be made within 45 days after filing of the amended Return or final
settlement of the adjustment.
4. No Weatherford Tax Payments. Except as otherwise provided in
Paragraph 12 hereof, Weatherford shall not be obligated to pay Grant for any
Tax credits of the Grant Group or any losses or deductions of the Grant Group
used by the Weatherford Group to reduce its Federal income Tax liability or
Federal taxable income for any Tax period ending on or before the Spin-Off
Date. For purposes of these computations, the allocation of Tax attributes to
the Grant Group and absorption thereof by the Weatherford Group for each Tax
period shall be determined in accordance with the Treasury Regulations under
Section 1502 of the Code, applied in a manner consistent with practices and
methods followed in reporting the Federal income Tax liability of the
Weatherford Group for such Tax periods. In any instance where a Tax attribute
must be characterized, the characterization prescribed by the aforementioned
Treasury Regulations will control.
5. Grant Tax Payments. For each Tax period of the Weatherford
Group which includes income of the Grant Group, Grant shall be obligated to pay
Weatherford an amount equal to the product of (i) the net taxable income of the
Grant Group included in the consolidated Federal income Tax Return of the
Weatherford Group for such period, multiplied by (ii) the highest marginal
statutory Federal corporate income Tax rate applicable to such income for such
period; provided, however, that no payment shall be required pursuant to this
Paragraph 5 to the extent such payments have previously been made by the Grant
Group to members of the Weatherford Group other than the Grant Group under any
Tax sharing agreement or arrangement (whether written or oral) or any other
similar system of payments with respect to Federal income Taxes of the
Weatherford Group in existence prior to the Spin-Off Date. For purposes of
these computations, the allocation of Tax
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attributes to the Weatherford Group and absorption thereof by the Grant Group
for each Tax period shall be determined in accordance with the Treasury
Regulations under Section 1502 of the Code, applied in a manner consistent with
practices and methods followed in reporting the Federal income Tax liability of
the Weatherford Group for such Tax periods. In any instance where a Tax
attribute must be characterized, the characterization prescribed by the
aforementioned Treasury Regulations will control. To the extent, if any, that
the amount of Taxes that Weatherford is required to pay with respect to the net
taxable income of the Grant Group for a Tax period is less than the amount
calculated as owed by Grant to Weatherford under this Paragraph 5, the amount
owed by Grant to Weatherford shall be reduced by the amount of Tax benefits of
the Weatherford Group used which resulted in such lesser amount of Taxes that
would have otherwise expired unused but for the fact that the Grant Group had
net taxable income for such Tax period.
6. Tax Credits; Deferred Intercompany Gains. For purpose of the
calculations under this Agreement, any loss of Tax credits resulting from or
attributable to the transfer of assets to Grant or any other member of the
Grant Group in connection with the Spin-Off shall be ignored and all
calculations shall be made as though all such tax credits were available for
use by the Weatherford Group. In the event any deferred intercompany gain
attributable to assets transferred to Grant or any other members of the Grant
Group by other members of the Weatherford Group is recognized by the
Weatherford Group by reason of the Spin-Off, such deferred intercompany gain,
if any, shall be deemed to be gain of the Grant Group for its taxable year
ending on the Spin-Off Date for purposes of all calculations under this
Agreement.
7. Grant Tax Carryovers. Notwithstanding anything in this
Agreement to the contrary, no payment shall be made by Grant to Weatherford
with respect to items of loss or other Tax benefits
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apportioned to and carried over by the Grant Group, under the Treasury
Regulations governing Federal consolidated income Tax Returns, after the
Spin-Off, regardless of whether such Tax benefits are used by the Grant Group
to reduce its Federal income Tax liability after the Spin-Off. Weatherford
agrees to cooperate with Grant in determining the amount of such items of loss
or other Tax benefits apportioned to and carried over by the Grant Group after
the Spin-Off.
8. Tax Audits. In the event of an audit by any Tax Authority of
a Return filed by Weatherford for any Tax period ending prior to or on the
Spin-Off Date (or any Tax period thereafter in which a carryforward of the
Grant Group's Tax benefits is used), Weatherford shall give Grant timely and
reasonable notice of such audit proceedings and Grant will provide all
necessary information and other assistance reasonably requested by Weatherford
with respect to issues concerning the activities of the Grant Group. All
communications with any such Tax Authority and its employees concerning any
such audit will be made by Weatherford unless otherwise agreed between the
parties hereto.
9. Proposed Adjustments. Weatherford shall give prompt notice to
Grant of any adjustment or adjustments proposed by any Tax Authority relating
to the activities of the Grant Group for any Tax period ending prior to or on
the Spin-Off Date. After consulting with Grant, Weatherford shall determine in
its sole discretion the nature of all action to be taken to contest such
proposed adjustment, including whether any such action shall initially be
contested by way of judicial or administrative proceedings, or both, whether
any such proposed adjustment shall be contested by resisting payment thereof or
by paying the same and seeking a refund thereof, and if Weatherford shall
undertake to contest such proposed adjustment, the court or other judicial body
before which such action will be commenced. Weatherford shall have full
control over any contest
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or administrative proceeding pursuant to this Paragraph, but Grant, at its
expense, may participate in any proceedings contesting any proposed adjustment
relating to the activities of the Grant Group.
10. Notice of Settlement or Compromise. Weatherford shall give
prompt notice to Grant of any proposal made to it at the time of an audit or
otherwise, to settle or compromise issues relating to the Tax liabilities of
the Grant Group for any Tax period ending prior to or on the Spin-Off Date.
Weatherford will not accept or offer any settlement or compromise of such
issues without the consent of Grant, and such consent shall not be unreasonably
withheld. If, in Xxxxxxxxxxx'x opinion, Grant unreasonably withholds such
consent, Weatherford shall have the right to settle or compromise such issues
on the basis contained in the notice to Grant. If Grant thereafter desires to
dispute such settlement or compromise, Grant's claim with respect thereto shall
constitute a claim for purposes of Paragraph 25 of this Agreement.
11. Grant's Right to Contest. Should Weatherford decline or cease
to contest any proposed adjustment relating to the activities of the Grant
Group for any Tax period ending prior to or on the Spin-Off Date, Weatherford
shall so notify Grant. Grant may, at its expense and only with Xxxxxxxxxxx'x
prior consent, contest such proposed adjustments; but in no event shall Grant
be permitted to accept or offer any settlement or compromise that would require
the settlement or compromise of issues relating to the Tax liabilities of
members of the Weatherford Group other than the Grant Group.
12. Subsequent Adjustments or Refunds. With respect to any Tax
period of the Weatherford Group for which Weatherford received from Grant a
payment pursuant to Paragraph 5 or this Paragraph 12, if the filing of an
amended income Tax Return, final determination of any
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adjustment made by any Tax Authority or the receipt of a refund by Weatherford
occurs with respect to such period and such event would cause a difference in
the amount of payment required for such period as previously calculated
pursuant to Paragraph 5 or this Paragraph 12, Weatherford shall give Grant
prompt notice of such difference and Weatherford shall be obligated to pay or
entitled to receive from Grant the amount of such difference. The amount shall
include interest at the applicable deficiency interest rate imposed by the Tax
Authority if the adjustment results in the payment of Tax to or receipt of Tax
from the Tax Authority.
13. Grant Spin-Off Tax Indemnity. Notwithstanding any other
provision of this Agreement to the contrary, Grant shall be liable for, shall
pay and shall indemnify and hold Weatherford and the other members of the
Weatherford Group harmless, on an After-Tax Basis, against (A) any Transfer
Taxes and other Taxes which may be imposed or assessed as a result of the
contribution by Weatherford to the capital of Grant or the acquisition (by sale
or purchase or otherwise) by Grant or one or more of the other members of the
Grant Group of assets associated with the drilling products business conducted
by the Weatherford Group, including the stock of certain subsidiaries included
in the Weatherford Group and engaged in the drilling products business, and (B)
any Spin-Off Tax.
14. Future Actions. The parties agree not to take any action
inconsistent with any information, covenant or representation provided to the
Internal Revenue Service in connection with obtaining the Ruling. In addition,
Grant agrees that, during the three-year period following the Spin-Off, it will
not engage in any transaction that could adversely affect the tax treatment of
the Spin-Off, unless Grant delivers to Weatherford a supplemental ruling from
the Internal Revenue Service or a
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tax opinion acceptable to Weatherford of nationally recognized tax counsel to
the effect that the proposed transaction would not adversely affect the tax
treatment of the Spin-Off.
15. Combined, Consolidated or Unitary Basis Returns. The parties
acknowledge that certain state, local or foreign Tax Authorities may require,
or one of the parties may desire, to file amended or original state, local or
foreign income Tax Returns on a combined, consolidated or unitary basis. Such
filing may result in an aggregate decrease in the state, local or foreign
income Tax of both parties; however, one party may suffer a Tax increase
compared to its state, local or foreign income Tax liability calculated on a
separate company basis, while the other party enjoys a Tax decrease. In any
such event, the parties intend that the required calculations for determining
which party owes Taxes to the other with respect thereto be made by utilizing
the principles set forth in Paragraphs 3, 4, 5 and 12 hereof.
16. Earnings and Profits Information. The parties agree to share
such information as is necessary to properly allocate the earnings and profits
of the Grant Group in accordance with the Code and Treasury Regulations for Tax
periods prior to or ending on the Spin-Off Date. After the Spin-Off,
Weatherford agrees to provide Grant and Grant's independent auditors with such
information as is necessary to verify amounts received or receivable by Grant
under this Agreement. Grant agrees to make available to Weatherford, upon
request, all Federal, state, local and foreign Tax Returns, work papers and
other documents pertaining to the activities of the Grant Group prior to the
Spin- Off.
17. Retention of Records. Each party hereto agrees, to the extent
potentially relevant to the other party, to (1) retain records, documents,
accounting and other information (including computer data) necessary for the
preparation and filing of all Returns or the audit of such Returns,
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and (2) give to the other party reasonable access to such records, documents,
accounting data, Returns and related books and records and other information
(including computer data) and to its personnel (insuring their cooperation) and
premises, for purposes of the review or audit of such Returns to the extent
relevant to an obligation or liability of a party under this Agreement.
18. Expenses. Each party will bear its own expenses in complying
with this Agreement, including but not limited to the cost of employee work
hours. The sharing of fees and expenses of nonemployees and independent
contractors mutually engaged by the parties shall be agreed upon before such
persons are engaged.
19. Definitions.
(a) "After-Tax Basis" means, with respect to any payment,
an amount calculated by taking into account the Tax consequences of the receipt
of such payment, as well as any Tax benefit associated with the liability
giving rise to the payment, in each case calculated on a present value basis
using the Agreed Rate.
(b) "Agreed Rate" means the annual rate of interest
quoted, from time to time, by ______________________, N.A. in Houston, Texas as
its prime rate of interest for the purpose of determining the interest rates
charged by it for United States dollar commercial loans made in the United
States.
(c) "Code" has the meaning set forth in the first recital
hereof.
(d) "Distribution Agreement" means that certain
Distribution Agreement dated as of _______________, 1999, by and between
Weatherford and Xxxxx, as the same may be amended or otherwise modified from
time to time pursuant to the terms thereof.
(e) "Grant" has the meaning set forth in the preamble
hereto.
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(f) "Grant Group" has the meaning set forth in Section 1
hereof.
(g) "Interim Period" has the meaning set forth in Section
2 hereof.
(h) "Returns" means all returns, declarations, reports,
statements and other documents required to be filed in respect of Taxes, and
the term "Return" means any one of the foregoing Returns.
(i) "Ruling" means the private letter ruling to be issued
by the Internal Revenue Service with respect to the Spin-Off and relating to
the tax consequences associated with the distribution of all outstanding shares
of Grant common stock.
(j) "Short Period" has the meaning set forth in Section 2
hereof.
(k) "Spin-Off" has the meaning set forth in the fifth
recital hereof.
(l) "Spin-Off Date" has the meaning set forth in the
fifth recital hereof.
(m) "Spin-Off Tax" means any Tax to which Weatherford or
any member of the Weatherford Group is subject as a result of the application
of any provision of the Code to the Spin-Off, including without limitation,
Section 311(b), Section 355(c)(2), Section 355(e) or Section 361(c)(2) of the
Code (or any corresponding or similar provision of state, local or foreign
law), other than any such Tax which results solely from the fact that one or
more persons acquire directly or indirectly stock representing a 50-percent or
greater interest in Weatherford after the Spin-Off and such acquisition is
subject to Section 355(e) of the Code.
(n) "Tax Authority" means the United States Internal
Revenue Service or any other comparable state, local or foreign governmental
authority.
(o) "Taxes" means all federal, state, local, foreign and
other taxes, charges, fees, duties, levies, imposts, customs or other
assessments, including, without limitation, all net income,
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gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, profit share, license, value added, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, premium, property, windfall
profits, or other taxes, fees, assessments, customs, duties, levies, imposts,
or charges of any kind whatsoever, together with any interest, penalties,
additions to tax, fines or other additional amounts imposed thereon or related
thereto, and the term "Tax" means any one of the foregoing Taxes.
(p) "Transfer Tax" means any excise, sales, use,
transfer, documentary, filing, recordation or other similar tax or fee,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
(q) "Weatherford" has the meaning set forth in the
preamble hereto.
(r) "Weatherford Group" has the meaning set forth in the
first recital hereto.
(s) "WEI" has the meaning set forth in the first recital
hereto.
20. Notices. All notices and other communications to be given or
made hereunder shall be in writing and shall be (a) personally delivered with
signed receipt obtained acknowledging delivery; (b) transmitted by postage
prepaid registered mail, return receipt requested (air mail if international);
or (c) transmitted by facsimile; to a party at the address set out below (or at
such other address as it may have provided notification for the purposes hereof
to the other party hereto in accordance with this Section).
If to Grant: Grant Prideco, Inc.
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax number: (000) 000-0000
Attention: General Counsel
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If to Weatherford: Xxxxxxxxxxx International, Inc.
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax number: (000) 000-0000
Attention: General Counsel
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Fax number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
00. Binding Effect; Successors. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
any successor, by merger, acquisition of assets or otherwise, to either of the
parties hereto (including but not limited to any successor of Weatherford or
Grant succeeding to the Tax attributes of Weatherford or Xxxxx under Section
381 of the Code), to the same extent as if such successor had been an original
party to this Agreement. In addition, in the event of any acquisition of the
assets of Grant in which gain or loss is not recognized, in whole or in part,
for Federal income Tax purposes, Grant shall ensure that any purchaser of such
assets shall assume the obligations set forth in this Agreement.
22. Severability. Any provision of this Agreement that is
determined by arbitration as provided herein or a court of competent
jurisdiction to be invalid, illegal or unenforceable shall be ineffective to
the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable, so long as the material purposes of this Agreement can
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be determined and effectuated. Should any provision of this Agreement be so
declared invalid, illegal or unenforceable, the parties shall agree on a valid
provision to substitute for it.
23. Entire Agreement. This Agreement, including the exhibit and
other writings referred to herein or delivered pursuant hereto, constitutes the
entire agreement between Weatherford and Xxxxx with respect to the subject
matter hereof and supersedes all other agreements, representations, warranties,
statements, promises and undertakings, whether oral or written, with respect to
the subject matter hereof, including, without limitation, any and all Tax
sharing agreements or arrangements (whether oral or written) between
Weatherford and the other members of the Xxxxxxxxxxx Group (other than the
Grant Group) on the one hand and Grant and the other members of the Grant Group
on the other hand, that require payments or indemnities to be made with respect
to Taxes. This Agreement may not be amended, altered or modified except by a
writing signed by duly authorized officers of Weatherford and Xxxxx.
24. Governing Law. All questions arising out of this Agreement
and the rights and obligations created herein, or its validity, existence,
interpretation, performance or breach, shall be governed by and construed in
accordance with the internal laws of the State of Texas, without regard to or
the application of the rules of conflicts of laws set forth in such laws.
25. Arbitration. The parties agree that any claim arising out of
or related to this Agreement shall be governed by the dispute resolution,
arbitration and choice of forum provisions set forth in Section ___ of the
Distribution Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
XXXXXXXXXXX INTERNATIONAL, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
GRANT PRIDECO INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT A
MEMBERS OF THE GRANT GROUP
Jurisdiction of
Name Incorporation or Formation
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