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EXHIBIT 10.13
OPERATING AGREEMENT
by and among
Grant Prideco, Inc.
a Delaware Corporation
and
VOEST-ALPINE SCHIENEN GmbH & Co KG
an Austrian limited partnership
relating to
VOEST-ALPINE STAHLROHR KINDBERG GmbH
VOEST-ALPINE STAHLROHR KINDBERG GmbH & Co KG
dated as of July 23, 1999
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OPERATING AGREEMENT
This Operating Agreement dated as of July 23, 1999, ("Operating Agreement"), by
and among (i) GRANT PRIDECO, Inc., a Delaware corporation with its principal
place of business in The Woodlands, Texas and business address at 0000 Xxxx
Xxxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxx 00000, ("GRANT"), on the one hand and (ii)
VOEST-ALPINE SCHIENEN GmbH & Co KG, an Austrian limited partnership, with its
principal place of business in Leoben-Donawitz and business address at
Xxxxxxxxxxxxxx 000, 0000 Xxxxxx-Xxxxxxxx, Xxxxxxx, registered in the
commercial register of the Higher Court of Leoben under the registration number
165399 i ("VA SCHIENE"), on the other hand.
RECITALS
WHEREAS, VA SCHIENE is the sole limited partner of VOEST-ALPINE STAHLROHR
KINDBERG GmbH & Co KG, a limited partnership, duly organized, validly existing
and in good standing under the laws of Austria, with its principal place of
business in Kindberg and business address at Xxxxxx Xxxxxxx 00, X-0000
Xxxxxxxx, Xxxxxxx, registered in the commercial register of the Higher Court of
Leoben under the registration number 165400 k ("VASK GmbH & Co KG"), whose
registered liability amount is ATS 247,500,000 (in words: Austrian Shillings two
hundred forty-seven million five hundred thousand);
WHEREAS, VA SCHIENE is the sole shareholder of VOEST-ALPINE STAHLROHR KINDBERG
GmbH, an Austrian limited liability company, duly organized, validly existing
and in good standing under the laws of Austria, with its principal place of
business in Linz and business address at Xxxxx-Xxxxxx Xxxxxxx 0, 0000 Xxxx,
Xxxxxxx, registered in the commercial register of the Higher Court of Linz under
the registration number 106933 f ("VASK GmbH"), having a nominal capital of ATS
500,000 (in words: Austrian Shillings five hundred thousand) which is fully
paid-up, being the general partner and therefore the management company of VASK
GmbH & Co KG;
WHEREAS, GRANT has concluded with VA SCHIENE an investment agreement, dated as
of April 29, 1999 ("Investment Agreement"), regarding the acquisition and
assignment of (i) 50.01 % of VA SCHIENE's limited partnership interest in VASK
GmbH & Co KG, corresponding to a limited partnership interest of ATS 123,774,750
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(in words: Austrian Shillings one hundred twenty-three million seven hundred
seventy-four thousand seven hundred fifty) and (ii) 50% of VA SCHIENE's
interest in VASK GmbH, corresponding to a fully paid-up nominal capital of ATS
250,000 (in words: Austrian Shillings two hundred fifty thousand);
WHEREAS, GRANT and VA SCHIENE have concluded a supply agreement, dated as of
July 23, 1999 ("Supply Agreement"), regarding the delivery of green pipes on a
long-term basis;
WHEREAS, GRANT and VA SCHIENE desire to establish a framework for a long-term
relationship in which a combined company could benefit both from GRANT'S
expertise in the areas of drill pipe, premium tubulars and premium connections
and VASK GmbH & Co. KG's and VASK GmbH's expertise and experience in the
manufacture of green pipes and the marketing of oil country tubular products in
the Eastern Hemisphere;
WHEREAS, GRANT and VA SCHIENE wish to conclude an agreement defining their
general rights and obligations in VASK GmbH & Co KG and VASK GmbH;
NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
GRANT and VA SCHIENE (each a "Party" and together the "Parties) hereby agree as
follows:
1. DEFINITIONS
1.1 All capitalized or other defined terms used in this Operating
Agreement shall be as defined in the Investment Agreement unless the
context otherwise requires. For the purpose of this Operating
Agreement:
"Adjusted EBITDA" shall have the meaning assigned to the term in
Section 5.2.19 of this Operating Agreement;
"Adjusted Gross Margin" shall have the meaning assigned to the term
in Section 5.2.19 of this Operating Agreement;
"Auditors" shall have the meaning assigned to such term in Section
6.3 of this Operating Agreement;
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"Available Cash" shall mean on any date of determination, the cash
and cash equivalents (i.e., investments with a maturity of one year
or less) of the Companies on hand on such date (other than capital
contributions of a partner or shareholder) less such amounts as VASK
GmbH or the management board thereof, as the case may be, shall, in
good faith, determine to be necessary to be set aside for (i) the
payment of liabilities and obligations of the Companies, contingent
or otherwise, (ii) working capital purposes and (iii) Capital Budget
Expenditures, as approved from time to time by the Parties;
"Capital Budget Expenditures" shall mean, for any period of
determination, the aggregate amount expended or to be expended by the
Companies (in any case as provided for in the Companies' annual
business plans) during such period for purchasing new or used
equipment for sale or lease during such period, including capitalized
repairs and modifications and facility repairs and modifications;
"Change of Control" shall mean the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer, in
one transaction or a series of related transactions of all or any
portion of shares of or interest in the Parties exceeding 25% to a
Competitor or Steel Competitor or any Affiliates thereof; or (ii) if
a Competitor or Steel Competitor or any Affiliates thereof shall
become the owner, directly or indirectly, beneficially or of record,
of any shares of or interest in the Parties representing more than
25% of the aggregate voting rights;
"Companies" shall mean, collectively, VASK GmbH and VASK GmbH & Co KG
or, individually, anyone thereof, as interpretation may require;
"Competitor" shall mean any Person that is directly or indirectly
engaged in the manufacture of seamless tubular goods;
"Defaulting Party" shall have the meaning assigned to such term in
Section 10.1 of this Operating Agreement;
"Directors" shall mean, collectively, the managing directors of VASK
GmbH and "Director" any one of them;
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"Entire Interest" shall have the meaning assigned to such term in
Section 9.1 of this Operating Agreement;
"Event of Default" shall have the meaning assigned to such term in
Section 10.1 of this Operating Agreement;
"Event of Withdrawal" shall have the meaning assigned to such term in
Section 10.2 of this Operating Agreement;
"Expert" shall have the meaning assigned to such term in Section
9.2.4 of this Operating Agreement;
"Gross Margin" shall mean net sales less all direct and variable
costs of production;
"IAS" shall mean International Accounting Standards according to the
International Accounting Standards Committee;
"Interest Purchase Price" shall have the meaning assigned to such
term in Section 9.2.4 of this Operating Agreement;
"Management Board" shall have the meaning assigned to such term in
Section 3.2 of this Operating Agreement;
"Market Value of the Companies" shall mean, with respect to 100% of
equity of the Companies, the price which could reasonably be expected
to be negotiated in an arm's length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither
of whom is under undue pressure or compulsion to complete the
transaction. The Market Value of the Companies shall be determined by
the Parties in good faith and in a reasonable manner. In the event
the Parties fail to reach an agreement on the Market Value of the
Companies, an Expert shall determine the Market Value of the
Companies as of the relevant time. In determining the Market Value of
the Companies, consideration shall be given to a range of analytical
methodologies, potentially including, but not limited to, the
following: net asset value, third party offers and expressions of
interests to purchase the
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Companies or the Sale Interest, comparable trading analysis,
comparable transaction analysis and discounted cash flow analysis. In
the determination of the Market Value of the Companies, the Companies
shall be valued as a going concern on a stand-alone basis without
regard to synergies that might be achieved by a particular purchaser
and without any liquidity discount. In determining the Market Value
of the Companies, no consideration should be given to the values that
are initially assigned to assets of the Companies for purchase
accounting or tax accounting purposes;
"Offer" shall have the meaning assigned to such term in Section 9.2.1
of this Operating Agreement;
"Sale Interest" shall have the meaning assigned to such term in
Section 9.2 of this Operating Agreement;
"Seller" shall have the meaning assigned to such term in Section 9.2
of this Operating Agreement;
"Supervisory Board" shall mean the supervisory board of VASK GmbH;
"Steel Competitor" shall mean any company producing steel billets or
steel, excluding, however, companies that are engaged in the
fabrication of steel products;
"Transfer" shall mean with respect to all or any part of any limited
partnership interest in VASK GmbH & Co KG or any shares in VASK GmbH,
the sale, transfer, assignment, pledge, hypothecation or other
disposition thereof; provided, however, for the purpose of clarity
that any change of control of either of the Parties or their ultimate
parent entities shall not be deemed to be a Transfer nor shall any
merger, consolidation, amalgamation, share exchange or similar
business combination unless after giving effect to such transaction
the Party is controlled by a Competitor; provided, further, however,
a distribution of the shares of GRANT by Xxxxxxxxxxx International,
Inc. ("WFT") to WFT's stockholders shall not be deemed to be a
Transfer; and
"VASK-Group" shall have the meaning assigned to this term in Section
3.3 of this Operating Agreement.
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1.2 Unless there is something inconsistent in the subject or the context,
words denoting the singular number only include the plural and vice
versa; wording denoting individuals include corporations and vice
versa.
1.3 Unless the context otherwise requires, a reference to a Section is to
a Section of this Operating Agreement.
1.4 The provisions of the Investment Agreement shall take precedence over
any conflicting provision of this Operating Agreement.
2. BUSINESS OF THE COMPANIES
2.1 VASK GmbH & Co KG's business shall continue to be:
(i) the manufacturing of tubes of all kind other than finished
drill pipe, in particular seamless steel tubes, and the
processing of tubes in Kindberg;
(ii) the research and development in the field of tube
technology and in the field of products referred to in
Section 2.1.(i);
(iii) the distribution of and the trade with the products
referred to in Section 2.1.(i) and carrying on of the
business of a commercial agent for the products referred to
in Section 2.1.(i); and
(iv) the carrying on of other commercial activities of all
kinds, in a subordinate extent with the entire business
activities of the limited partnership.
VASK GmbH & Co KG shall furthermore continue to be entitled to carry
on all activities and measures which are necessary or expedient to
achieve the above-listed activities and business of VASK GmbH & Co
KG.
2.2 VASK GmbH's business shall be:
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(i) the manufacturing of tubes of all kinds other than finished
drill pipe, in particular seamless steel tubes, and the
processing of tubes, in Kindberg;
(ii) research and development in the field of tube technology
and in the field of the products referred to in Section
2.2.(i);
(iii) the distribution of and the trade with the products
referred to in Section 2.2.(i) and carrying on of the
business of a commercial agent for the products referred to
in Section 2.2.(i);
(iv) the carrying on of other commercial activities of all
kinds, in a subordinate extent with the entire business
activities of the company;
(v) the participation in other companies, in particular the
participation as a general partner in VASK GmbH & Co KG;
and
(vi) the assumption of the function of a managing partner in
VASK GmbH & Co KG.
VASK GmbH shall furthermore continue to be entitled to carry on all
activities and measures which are necessary and expedient to achieve
the above-listed company activities and business.
2.3 The nature of the business and operations of the Companies shall not
be changed without the prior consent of both Parties.
3. MANAGEMENT BOARD
3.1 VASK GmbH is the sole general partner of VASK GmbH & Co KG. VASK GmbH
and its Directors are therefore also responsible for the management
and the representation of VASK GmbH & Co KG. The admittance of any
third Person as general partner of VASK GmbH & Co KG requires the
consent of both Parties.
3.2 VASK GmbH shall have two Directors (collectively also referred to as
the "Management Board"), who are from time to time to be proposed by
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VA SCHIENE. GRANT undertakes to vote in VASK GmbH's shareholders'
meeting according to VA SCHIENE's proposal(s), except for good cause
as determined by both Parties regarding the ability of the nominated
Directors. Upon request of GRANT, the Directors shall also be removed
for good cause in accordance with applicable laws (including the
Austrian Limited Liability Company Act ("GmbHG")). It is explicitly
agreed among the Parties that a Director shall be removed if the
Director does not comply with the provisions of this Operating
Agreement. Notwithstanding the forgoing provisions, GRANT's right
pursuant to Section 16 paragraph 2 of the "GmbHG" remains unaffected.
3.3 The Directors shall conduct and manage the business and affairs of
the Companies and their subsidiaries (hereinafter also referred to as
"VASK-Group") in accordance with (i) applicable laws, (ii) VASK
GmbH's articles of association, (iii) VASK GmbH & Co KG's partnership
agreement, (iv) the by-laws, (v) the resolutions of the shareholders,
partners and Supervisory Board and (vi) the provisions set forth in
the employment contracts, if any.
3.4 VASK GmbH and VASK GmbH & Co KG shall be represented by two Directors
jointly and severally or by one Director together with an agent with
special authority ("Prokurist"). VASK GmbH and VASK GmbH & Co KG
shall also be represented by two agents with special authority, to
the extent permitted by law.
3.5 The Supervisory Board of VASK GmbH shall resolve by-laws for the
Directors in a form as attached hereto as Schedule 3.5 determining,
in particular, transactions requiring the prior consent of the
shareholders' meeting and/or the Supervisory Board.
3.6 Meetings of the Directors shall be held on a regular basis, but not
less frequently than every month. Resolutions shall be adopted by
unanimous vote. In case of a tie, the issue shall be brought before
the Supervisory Board which shall resolve the issue in a final
manner.
3.7 Each Party to this Operating Agreement agrees and undertakes with the
other to procure that:
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3.7.1 VASK GmbH's Directors shall exercise VASK GmbH's voting right in VASK
GmbH & Co KG in accordance with shareholders' meetings instructions;
3.7.2 Within two months after the end of each business year the Companies'
annual financial statements for that year shall be prepared and
audited, if required by law, in accordance with IAS;
3.7.3 The Companies and the Directors shall keep the Parties informed of
the business of the VASK-Group and furnish them with such information
relating to the business, financial position and affairs of the
VASK-Group on a regular basis and as they may from time to time
reasonably require;
3.7.4 All confidential, non-public information provided by the VASK-Group
for the purpose of the foregoing provisions
(i) shall remain the absolute property of the VASK-Group;
(ii) may be used by the Parties and their Affiliates and
advisors for the sole purpose of monitoring and making
decisions relating to their investment in the Companies
provided that such Affiliates and advisors are subject to
the confidentiality obligations as provided in this Section
3.7.4;
(iii) shall be kept confidential; and
(iv) may not be disclosed by any Party except
(A) as may be required by law or regulation or by order of
a court of competent jurisdiction;
(B) financial information regarding the Companies may be
disclosed in the financial statements and public
reports of the Parties and their Affiliates;
(C) in connection with any legal proceedings arising out
of or relating to the Transaction Documents; and
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(D) that each of the shareholders and partners may include
reasonable summaries of its investment in the Companies
and the financial position of the Companies in any
report and accounts or documents issued to Affiliates
of the shareholders and partners,
and each of the Parties shall procure that its directors,
officers and employees shall comply with all the provisions
of this sub-clause.
3.8 Each Party to this Operating Agreement agrees with the other to cause
the Directors to exercise their rights to ensure that the business of
the Companies is conducted in accordance with this Operating
Agreement, sound business practice and, as between the Parties to
this Operating Agreement, in good faith.
4. SUPERVISORY BOARD
4.1 The Supervisory Board shall consist of four members not including the
representatives delegated by the Companies' works council pursuant to
Sec. 110 ArbVG (the "Labour Relations Act"). The members are
appointed by the shareholder's meeting. Each Party shall each have
the right to delegate two members to the Supervisory Board. The right
to delegate includes the right to revoke and substitute the delegated
members to the Supervisory Board. The right to separate election
pursuant to Section 30b GmbHG is thereby exercised by the Parties.
Each Party undertakes to procure the appointment of the members to
the Supervisory Board delegated by the other Party. Any committee set
up by the Supervisory Board shall contain an equal number of members
delegated by each of the Parties.
4.2 The members of the Supervisory Board shall be delegated for a term
ending at the close of the shareholder's meeting that resolves on
their release from responsibility for the third business year after
their delegation, not taking into account the business year of the
delegation. Re-delegation is permissible only by the Party who
initially delegated such delegate.
4.3 For its term the Supervisory Board shall elect the Chairman and the
Deputy Chairman from among its Members. The Supervisory Board shall
elect as Chairman and Deputy Chairman the members delegated by VA
SCHIENE.
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Unless otherwise provided in the by-laws, the articles of association
or under applicable law, resolutions shall be adopted by a simple
majority of the votes cast. The members of the Supervisory Board
delegated by GRANT and VA SCHIENE shall meet prior to the meeting of
the Supervisory Board in order to discuss each item of the agenda and
shall be bound for purposes of the Supervisory Board meeting by any
agreement reached in such pre-meeting. If those members cannot reach
an agreement in such prior meeting, they shall resolve each item of
the agenda by a simple majority of the votes cast. In case of a tie,
the vote of the Chairman (during his absence the vote of the Deputy
Chairman) shall prevail if the Companies will suffer material damage
in case no resolution would be passed. In the matters referred to in
Section 5.2, the Chairman or the Deputy Chairman shall have no tie
breaking vote. The required quorum for the pre-meeting is one member
delegated by each Party.
4.4 Members of the Supervisory Board may authorize a proxy in writing to
represent him/her at a particular meeting of the Supervisory Board or
one of its committees, who shall have the rights provided in the
GmbHG. The proxy may also be entrusted with the representation of
more than one member of the Supervisory Board and shall have the
right to present votes for each of the members of the Supervisory
Board.
4.5 The Parties shall have the right to delegate advisors from time to
time to any meeting of the Supervisory Board, provided that the other
Party is notified with sufficient time in advance of such delegation
along with a brief description of the qualifications of the advisor
delegated, in order to enable the other Party to determine in its
sole discretion whether to also delegate an advisor with similar
qualifications. The advisors shall have no voting right.
4.6 Each Party to this Operating Agreement agrees with the other to cause
the members of the Supervisory Board to exercise their rights to
ensure that the business of the Companies is conducted in accordance
with sound business practice and, as between the parties to this
Operating Agreement, in good faith.
4.7 The Parties undertake to cause that at any meeting of the Supervisory
Board or a committee at least one of its delegated members - or a
proxy - will be present. If a Party fails to comply with this
obligation, a second meeting shall be called
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with the same agenda. Such meeting may adopt resolutions regardless
of the representation of either Party.
4.8 The Supervisory Board first appointed by the shareholders' meeting
shall adopt the Supervisory Board by-laws attached hereto as Schedule
4.8.
5. CONDUCT OF THE COMPANIES
5.1 The Parties shall at all times ensure, by the exercise of their
voting rights and powers of control in relation to the Companies,
full compliance with the provisions of this Operating Agreement so as
to give full effect to its terms.
5.2 The taking of any fundamental or material action will require the
approval of the Supervisory Board or, to the extent required by the
applicable law, the shareholders' meeting. Subject to Section 4.7
herein, both Parties must be represented at any meeting of the
shareholders or of the partners at which the following fundamental or
material actions are to be considered:
5.2.1 mergers, consolidations, amalgamations, changes to the organizational
or constituent documents of the VASK-Group;
5.2.2 sales of any capital assets having a book or market value in excess
of ATS 10 million;
5.2.3 the making of any material tax election;
5.2.4 the changing of any accounting policy or method;
5.2.5 the entering into of any contract with GRANT or VA-SCHIENE or any
Affiliate of GRANT or VA-SCHIENE (other than purchases of raw
materials in the ordinary course of business pursuant to pricing and
other arrangements previously authorized and except for those
contracts concluded in the normal course of business);
5.2.6 the incurrence of any indebtedness, other than in the normal course
of business;
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5.2.7 the increase and/or reduction of the Companies' registered capital or
partnership contributions or the issuance of any additional equity or
rights to acquire equity in the Companies;
5.2.8 the creation of any subsidiaries or partnerships;
5.2.9 any fundamental change in the business of the Companies as described
in Sections 2.1 and 2.2 herein;
5.2.10 the purchase of any capital assets for an amount in excess of ATS 10
million that was not approved as part of the budget by both GRANT and
VA-SCHIENE;
5.2.11 any amendment to any contract or agreement with VA-SCHIENE or GRANT
other than amendments to contracts or agreements in the ordinary
course of business pursuant to pricing and other arrangements
previously authorized; provided, however, that the termination of the
Supply Agreement shall be a matter for the Management Board to decide
and shall not be subject to this section 5.2;
5.2.12 the approval of the Companies' annual financial statements and the
allocation and distribution of the Companies' profits, provided that
if the Parties fail to reach an agreement within the period of eight
(8) months after the end of the business year, the Companies' annual
financial statements and the allocation and distribution of the
Companies' profits shall be adopted as has been suggested by the
Management Board in accordance with the terms of this Agreement;
5.2.13 the calling of additional payments by GRANT and VA-SCHIENE;
5.2.14 the issuance of instructions for VASK GmbH's Management Board;
5.2.15 the determination of Available Cash;
5.2.16 an increase or decrease in the size of the Supervisory Board;
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5.2.17 the declaration of dividends or other distributions to any of the
shareholders or partners other than is provided herein;
5.2.18 the issuance of any additional shares or other interests in either of
the Companies;
5.2.19 a decision to provide indemnification under Section 12 of the Supply
Agreement or a request for a stay or continuation of the Supply
Agreement under Section 12 of the Supply Agreement if, in each case,
(A) the earnings before interest, taxes, depreciation and
amortization of the business of VASK GmbH & Co. KG for the
immediately preceding three calendar months, excluding revenues and
income from sales under the Supply Agreement (the "Adjusted EBITDA")
is negative or (B) the average Gross Margin per metric ton of Green
Pipe to be sold under the Supply Agreement after giving effect to the
payment or potential payment by VASK GmbH & Co. KG of the U.S.
Antidumping or Countervailing Duties imposed on the Green Pipe or
preliminarily determined to be imposed on the Green Pipe ("Adjusted
Gross Margin") is less than ATS 300;
5.2.20 any amendment or modification to the articles of association or
partnership agreement, as the case may be, of the Companies;
5.2.21 the appointment or removal of the Special Sales Advisor as defined in
the Supply Agreement; or
5.2.22 the opening and closing of any representative or sales office.
5.3 Any action taken in violation of Section 5.2 shall be null and void
between the Parties, to the extent permitted by applicable law.
5.4 Each Party shall have 50% of the outstanding votes in VASK GmbH and
such portion of the outstanding votes in VASK GmbH & Co KG
corresponding to such Party's portion of the entire limited
partnership interest. Resolutions to be adopted:
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(i) by VASK GmbH's shareholders' meeting require a simple
majority of the votes cast, unless otherwise stipulated by
law or by this Operating Agreement, the by-laws or the
articles of association; and
(ii) by VASK GmbH & Co KG's partners' meeting require an
unanimous vote.
5.5 If the Parties fail to reach an agreement with respect to fundamental
or material actions listed in Section 5.2 in the shareholders'
meeting or in the partners' meeting, the action in dispute will not
occur and the respective Company shall continue to operate in the
ordinary course.
5.6 If indemnification is provided by VASK GmbH & Co. KG pursuant to
Section 12 of the Supply Agreement, the decision to provide
indemnification in lieu of a stay or termination under the Supply
Agreement will be subject to review by the Parties every three
calendar months based on the actual Adjusted EBITDA and Adjusted
Gross Margin realized during the six month period then ended. If as a
result of such review, the Adjusted EBITDA for such period is
negative or if the Adjusted Gross Margin is less than ATS 300, GRANT
may request the Supervisory Board to cancel the indemnification and
to stay. In such case, VA SCHIENE shall cause its representatives to
vote in favor of such cancellation.
6. ACCOUNTING AND FISCAL AFFAIRS; INSPECTIONS
6.1 The Companies shall keep or cause to be kept full, complete, proper
and accurate records and books of account for the Companies. Such
records and books of account shall be:
(i) prepared and presented in accordance with IAS, consistently
applied;
(ii) maintained on the basis of accrual accounting;
(iii) adequate to provide each Party with all financial information
that may be needed by such Party or any of its Affiliates for
purposes of satisfying the financial or tax reporting
obligations of such Party or Affiliate;
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(iv) kept at the principal office of the Companies; and
(v) open for the inspection, examination and copying by any Party
or that Party's authorized representative as often as may
reasonably be desired.
6.2 The Companies shall establish IAS accounting policies and a system of
internal controls and procedures designed to ensure that the
Companies and any of its subsidiaries keep and maintain records and
books that, in sufficient and reasonable detail, accurately and
fairly reflect all transactions of the VASK-Group.
6.3 The Companies shall continue to engage as independent auditors
("Auditors") for the Companies, if an audit is mandatorily required
by law, the firm of Xxxxx-Xxxxxxxx-Xxxxxxx & Xxxxxxx or such other
firm of internationally recognized, independent certified public
accountants as the Parties shall mutually agree. The Auditors shall
at the end of each fiscal year
(i) audit the records and accounts of the Companies, if required
by law, and
(ii) render their opinion on the statements of financial condition
of the Companies as of the end of each fiscal year and related
statements of income and changes in financial condition for
each fiscal year.
6.4 The Companies shall furnish to each of the Parties annually, within
sixty (60) days following the end of each business year, a complete
copy of the Companies' annual financial statements audited by the
Auditors in accordance with IAS, containing statements of profit and
loss and the balance sheet for the Companies. Such statements shall
set forth the financial condition and income and expenses for the
Companies for the immediately preceding fiscal year, including
without limitation, statements of annual net operating income. In
addition, the Companies shall furnish to each of the Parties, on or
before twenty (20) days after the end of each fiscal quarter, a
quarterly report in a form reasonably acceptable to the Parties,
certified by the Companies, containing the Companies' quarterly and
year-to-date unaudited financials, prepared in accordance with IAS.
The Companies shall furnish to the Parties on a monthly basis
financial information with respect to the Companies.
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6.5 The Companies shall furnish to each of the Parties, promptly but
within fourteen (14) days after request (or if more than fourteen
(14) days is reasonably necessary, as soon thereafter as may be
reasonably possible), such further detailed information with respect
to the Companies' financial condition, results of operations and
affairs as may be reasonably requested by any Party and that is
directly related to the properties, business or operations of the
Companies.
6.6 The Companies shall cause all tax returns and reports required to be
filed by the Companies to be prepared and timely filed with the
appropriate authorities and shall furnish to the Parties copies of
such tax returns and reports promptly after the filing of the same
upon request. The Companies shall retain all such tax returns and
reports.
6.7 In addition to the financial statements of the Companies, all other
statements and financial information provided under this Operating
Agreement shall be prepared in accordance with IAS.
6.8 Each Party shall have the right to conduct financial and operational
audits of the VASK-Group, at its own expense, and the VASK-Group, the
respective management board and the Auditors shall cooperate fully
with the auditors and representatives of the Parties in connection
therewith, including without limitation responding to any comments
and suggestions made thereby. Copies of all internal audits conducted
by a Party pursuant to this Section 6.8, and all responses of
VASK-Group and the respective management board thereto, shall be
furnished to the Parties. If in the course of any audit (or other
review) of the VASK-Group, problems are noted and the response or
action of VASK-Group made with regard thereto is deemed by a Party
not to be adequate, the Parties shall attempt to agree upon a
satisfactory resolution. If the Parties cannot agree, the dispute
shall be submitted to the Auditors, who shall attempt to propose a
satisfactory resolution.
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7. CERTAIN RESTRICTIONS
7.1 The Parties agree and acknowledge that it is their intention to
maintain their interest in the Companies on a long term basis and
this Operating Agreement defines the general terms and obligations of
the Parties in the Companies for such long term basis. Other than
provided in Section 12 of this Operating Agreement, any termination
of this Operating Agreement shall be excluded to the extent permitted
by the applicable law. The Parties further agree not to effect a
Transfer of their interest in the Companies for a period of eight (8)
years except as provided in Sections 10 and 15 and any Transfer of a
Party's interest in the Companies before such time shall entitle the
other Party, in addition to its right of first refusal pursuant to
Section 9 of this Operating Agreement, to all damages suffered by
such Party and its Affiliates as a result of such Transfer.
7.2 No Party shall have the right to dissolve, terminate or liquidate, or
to petition a court for the dissolution, termination or liquidation
of, the Companies. No Party at any time shall have the right to
petition or to take any action to subject the Companies' assets or
any part thereof to the authority of any court or other governmental
body in connection with any bankruptcy, insolvency, receivership or
similar proceeding unless otherwise required by law.
8. DISTRIBUTION OF PROFITS
8.1 The balance-sheet profit of the Companies remaining after write-offs,
depreciation, value adjustments, formation of reserves and
provisions, including the endowment of the statutory reserve, shall
be entirely distributed to the shareholders and partners of the
Companies, as the case may be, unless otherwise provided by the
shareholders' meeting or partners' meeting. The shares in profit due
to the shareholders and partners, as the case may be, as dividends or
distributions shall be divided among them in proportion to their
contributions. It is, however, agreed among the Parties that
dividends and distributions shall be paid by the Companies only to
the extent Available Cash is available. No dividends or distributions
shall be made if the Companies are then insolvent or would thereby be
made insolvent or rendered unable to carry on their business
purposes, or if the fair value of the Companies' assets after such
distribution would be insufficient to meet its liabilities.
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8.2 Any dividends or distributions shall be due within 14 days after the
annual financial statements of the respective business year have been
approved. No Party shall be entitled to receive any other dividends
or distributions during the business year unless otherwise agreed by
both Parties.
8.3 Any annual dividends and distributions attributable to GRANT's
interests in VASK GmbH & Co KG and VASK GmbH within the first five
business years, commencing with the business year 1999/2000, up to or
equal to Installment III due pursuant to the Investment Agreement
shall be transferred together with the dividends and distributions
attributable to VA SCHIENE to a bank account nominated by VA SCHIENE.
Any portion of the dividends or distributions attributable to GRANT
exceeding Installment III shall be transferred to a bank account
nominated by GRANT. Dividends and distributions shall be payable
within 14 (fourteen) days after the respective annual financial
statements have been approved.
9. RIGHT OF FIRST REFUSAL
9.1 GRANT and VA-SCHIENE agree that they will not at any time effect a
Transfer of the ownership of their shares in VASK GmbH and/or their
limited partnership interest in VASK GmbH & Co KG ("Entire
Interest"), otherwise than in accordance with the following
provisions of this section.
9.2 If, at any time after the 8 years term or such date when the Purchase
Price is paid in full, whichever is later, either Party ("Seller")
wishes to Transfer to a third Person its Entire Interest ("Sale
Interest"), such Transfer shall be made pursuant to following
procedures:
9.2.1 Seller shall first make an offer ("Offer") in writing to sell and
transfer the Sale Interest to the other Party, provided that such an
offer shall not be validly made unless it shall specify the name of
the third Person to whom Seller wishes to sell the Sale Interest, the
price in cash bona fide offered to be paid by the third Person for
the Sale Interest and all other terms and conditions Seller as agreed
on with the third Person. The Offer shall contain a copy of the
binding written offer from the third Person wishing to acquire the
Sale Interest, including a
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commitment that the third Person shall agree to be bound by the terms
of this Operating Agreement.
9.2.2 The Offer shall remain open for a period of 30 (thirty) days from the
date when it is served on the other Party and the other Party shall
be entitled to state its willingness to purchase all but not part of
the Sale Interest.
9.2.3 If the other Party has accepted in writing within the period pursuant
to Section 9.2.2 the Offer, Seller shall sell and transfer and the
other Party shall purchase the Sale Interest free from all Liens for
the Interest Purchase Price and on substantially the same terms and
conditions as offered by the third Person, with the exceptions of
price, parties, notices and other matters relating specifically to
the fact that the purchaser is different than the purchaser in the
Offer. Adequate security shall be agreed upon to guarantee the
payment of the Interest Purchase Price. The Parties agree to draw up
an assignment agreement for the transfer of Seller's interest in VASK
GmbH & Co KG and a notarial transfer deed for the transfer of
Seller's interest in VASK GmbH and any additional required documents
within one month from the day of receipt of the written acceptance of
the Offer on substantially the terms set forth in the Offer with the
exceptions of price, parties, notices and other matters relating
specifically to the fact that the purchaser is different than the
purchaser in the Offer. Any costs related to the consummation of this
sale shall be borne by the purchasing Party, except as may be
required by the terms of the Offer. Parties shall work together to
timely obtain all approvals, if any, required for the transfer of the
Sale Interest. The Parties shall execute the agreement(s) related to
the transfer of the Sale Interest outside of Austria.
9.2.4 The purchase price for the Sale Interest ("Interest Purchase Price")
shall be the Market Value of the Companies allocated to the Sale
Interest (based upon the percentage ownership of the Companies which
the Sale Interest represents). The Parties shall first attempt to
agree upon the Market Value of the Companies for a period of 30 days
following the date on which the Offer was communicated to the other
Party. After the expiration of such 30-day period the Market Value of
the Companies shall be determined by an internationally recognized
investment banking firm ("Expert"). The other Party shall notify
Seller forthwith after the expiration of the 30-day period of the
name of the Expert nominated by the other Party for determining the
Market Value of the
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Companies. Seller may notify the other Party within seven (7)
business days after receipt of the name of the Expert that Seller
objects to the Expert, stating reasons for such objection. If no such
objections are timely notified, the Expert nominated by the other
Party shall be deemed to be mutually agreed upon by the Parties. If
the other Party shall have failed to nominate an Expert the Seller is
entitled to do so within 14 days. Seller shall notify the other Party
forthwith after the expiration of the 14 day period of the name of
the Expert nominated by the Seller for determining the Market Value
of the Companies. The other Party may notify Seller within seven (7)
days after receipt of the name of the Expert that the other Party
objects to the Expert, stating the reasons for the objection. In the
case of timely objections or if neither Party shall have nominated an
Expert the Parties shall undertake their best efforts to agree on an
Expert within further 14 days after (i) the other Party has been
notified of Seller's objections or (ii) in the event the other Party
failed to nominate an Expert and the Seller has made such nomination,
the Seller has been notified of the other Party's objections, as the
case may be. In the case that the Parties do not reach an agreement
on the Expert within such period, each of the Parties may request the
President of the Chamber of Public Certified Accountants in Vienna to
nominate an Expert within 2 weeks. The Expert shall determine the
Market Value of the Companies in a final and binding manner within
four (4) weeks and shall:
(i) prepare a report which
(A) sets forth such Expert's determination of the Market
Value of the Companies (which shall be a single
amount as opposed to a range); and
(B) includes work papers which indicate the basis for
and calculation of the Market Value of the
Companies; and
(ii) deliver to GRANT and VA SCHIENE a written opinion as to the
Market Value of the Companies.
The Parties shall give the Expert full access to all documents,
records and books for that purpose. The costs of the Expert shall be
borne equally by the Seller (half) and the other Party (half).
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9.2.6 Each Party may appoint a designee which shall be an Affiliate of the
Party to exercise its right pursuant to Section 9.2 provided that the
respective Party and its designee shall be jointly and severally
liable for the performance of obligations resulting therefrom.
9.2.7 If the other Party shall have failed to accept the Offer made to it
within the period stated in Section 9.2.2, Seller is entitled to sell
the Sale Interest to the third Person stated in the Offer, provided
that such third Person shall agree to be bound by the terms of this
Operating Agreement, at a price not less than the price stated in the
Offer and on the terms and conditions substantially similar to those
stated in the Offer within 180 days after the Offer was not accepted
by the other Party or the expiration of the period pursuant to
Section 9.2.2 whichever is earlier. After the expiration of this
180-day period, the Sale Interest shall be reoffered to the other
Party pursuant to this Section 9.2.
9.3 The restrictions set forth in Section 9.2 shall not apply to any
Transfer of any part of the Entire Interest by any Party among its
Affiliates, provided that the provisions of the Operating Agreement
will continue to be applicable to the respective Affiliate after the
transfer and the transferring Party agrees to be jointly and
severally liable for all obligations provided for herein and the
respective Affiliate shall agree in writing to be bound by the
provisions of this Operating Agreement.
10. MANDATORY SELL OBLIGATION
10.1 The occurrence of any of the following events shall constitute an
"Event of Default" hereunder on the part of the Party with respect to
whom such event occurs (the "Defaulting Party"), if such default
continues without being cured for ninety (90) days after written
notice thereof by the Party not in default:
(i) a breach of GRANT's payment obligations pursuant to the
Investment Agreement;
(ii) a material breach of VA SCHIENE's indemnity obligations
pursuant to the Investment Agreement;
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(iii) a material default in the performance of or failure to comply
with any other material obligations or undertakings of a Party
contained in this Operating Agreement or the Investment
Agreement;
10.2 The occurrence of any of the following events shall constitute an
"Event of Withdrawal" hereunder on the part of the Party with respect
to whom such event occurs (also the "Defaulting Party") immediately
upon such occurrence without any requirement of notice from the other
Party or passage of time except as specifically set forth below:
(i) A Change of Control;
(ii) institution by a Party of proceedings of any nature under any
laws of Austria, the United States or of any state, whether
now existing or subsequently enacted or amended, for the
relief of debtors wherein such Party is seeking relief as
debtor;
(iii) a general assignment by a Party for the benefit of its
creditors;
(iv) the institution by a Party of a case or other proceeding under
the Austrian or United States Bankruptcy Law, as now existing
or hereafter amended or becoming effective;
(v) the institution against a Party of a case or other proceeding
with respect to it under the Austrian or United States
Bankruptcy Law, as now existing or hereafter amended or
becoming effective, which proceeding is not dismissed, stayed
or discharged within a period of 60 days after the filing
thereof or if stayed, which stay is thereafter lifted without
a contemporaneous discharge or dismissal of such proceeding;
(vi) the appointment of a receiver, custodian, trustee or like
officer, to take possession of assets having a value in excess
of US$ 25,000,000 of a Party if the pendency of said
receivership would reasonably tend to have a Material Adverse
Effect upon the performance by said Party of its obligations
under the Transactions Documents, which receivership
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remains undischarged or unstayed for a period of 60 days from
the date of its imposition;
(vii) admission by a Party in writing of its inability to pay its
debts as they mature;
(viii) attachment, execution or other judicial seizure of all or any
substantial part of a Party's assets or of a Party's Entire
Interest, or any part thereof, such attachment, execution or
seizure being with respect to an amount not less than US
$25,000,000 and remaining undismissed, unstayed or
undischarged for a period of 60 days after the levy thereof,
if the occurrence of such attachment, execution or other
judicial seizure would reasonably tend to have a Material
Adverse Effect upon the performance by said Party of its
obligations under the Transaction Documents; provided,
however, that said attachment, execution or seizure shall not
constitute an Event of Withdrawal hereunder if said Party
posts a bond sufficient to fully satisfy the amount of such
claim or judgment within 15 days after the levy thereof and
the Party's assets are thereby released from the lien of such
attachment; or
(ix) the resignation or withdrawal of the Party from Vask GmbH & Co
KG.
10.3 Upon the occurrence of an Event of Default or an Event of Withdrawal
by any Party, the other Party may purchase the Defaulting Party's
Entire Interest at an Interest Purchase Price as defined pursuant to
Section 9.2.4; provided, however, that if the Event of Default is a
result of the breach of GRANT's payment obligations pursuant to the
Investment Agreement, the Interest Purchase Price payable by VA
SCHIENE shall not exceed ATS 400 million (provided that VA SCHIENE
may off-set any unpaid Purchase Price amounts owed by GRANT against
the Interest Purchase Price).
10.4 (a) VA SCHIENE shall be entitled to purchase GRANT's Entire Interest
from GRANT for an Interest Purchase Price determined pursuant to
Section 9.2.4 if the Supply Agreement is terminated by VASK GmbH
& Co. KG under Section 3.2 of the Supply Agreement due to a
material default by GRANT as defined in Section 3.3 of the Supply
Agreement;
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(b) GRANT shall be entitled, at GRANT's election, to either purchase
VA SCHIENE's Entire Interest or sell to VA SCHIENE GRANT's Entire
Interest at the Interest Purchase Price determined pursuant to
Section 9.2.4 if the Supply Agreement is terminated by GRANT
under Section 3.2 of the Supply Agreement due to a continued
intentional failure by VASK GmbH & Co. KG to materially meet the
quality and specifications requirements or the delivery
requirements under the Supply Agreement.
11. CONFIDENTIALITY
Each Party to this Operating Agreement undertakes to keep
confidential and secret all confidential business and trade secrets
and/or information of which it may learn or become informed, provided
however, such obligation shall not apply to any information that (i)
is or becomes part of the public domain, (ii) is already in the
possession of the Parties or (iii) is lawfully disclosed to either of
the Parties by a third Person. This obligation shall survive the
effective termination of the Operating Agreement for a period of five
(5) years.
12. TERM OF AGREEMENT
This Operating Agreement is concluded for an indefinite term. It
shall be deemed to be terminated if and when a Party validly acquires
the Entire Interest of the other Party pursuant to Section 9 or 10.
13. NOTICES
13.1 Any notice, request or other communication to be given or made under
this Operating Agreement shall be in writing. Such notice, request or
other communication shall be deemed to have been duly given or made
when it shall be delivered by hand, air-mail, telex or telefax to the
Party to which it is required or permitted to be given or made at
such Party's address specified below or at such other address as such
Party shall have designated by notice to the party giving or making
such notice, request or other communication.
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For GRANT:
GRANT Prideco, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
XXX
attn: Xxxx Xxxxx and Xxxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 and
(000) 000-0000
With a copy to
BRUCKHAUS XXXXXXXX XXXXXX XXXXX
Xxxxxxxxxxx 00
0000 XXXXXX
XXXXXXX
att.: Xxxxx W.T. Power
Telephone (++431) 000 00-000 or 310
Telecopy (++431) 512 6394
If to VA SCHIENE to
VA Xxxxxxx XxxX
XxxxxxxXxxxxxx 000
0000 Xxxxxx
XXXXXXX
att.:Xxxxxxxxx Xxxxxxx
Telephone: (++43) 3842/000 0000
Telecopy: (++43) 3842/202 2444
With a copy to
VOEST-ALPINE XXXXX XX
Xxxxx-Xxxxxx-Xxxxxxx 0
0000 Xxxx
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AUSTRIA
att: Xxxxxx Xxxxxxxxx
Telephone: (++43/70/0000-0000)
Telecopy: (++43/70/6980-5581)
14. RIGHTS, REMEDIES AND WAIVERS
14.1 No course of dealing and no delay in exercising, or omission to
exercise, any right, power or remedy accruing to any Party upon any
default under the Transaction Documents shall impair any such right,
power or remedy or be construed to be a waiver thereof or an
acquiescence therein; nor shall the action of any Party therein
affect or impair any right, power or remedy of the other Party in
respect of any other default.
14.2 No single or partial exercise of any right, power or remedy occurring
to any Party upon in default under the Transaction Documents shall
preclude any other or further exercise thereof or the exercise of any
other legal right.
14.3 No waiver of any right, power or remedy accruing to any Party upon
any default under the Transaction Documents shall be effective unless
given in writing by that party.
14.4 The rights or remedies provided for herein are cumulative and are not
exclusive of any other rights, powers or remedies provided by law.
14.5 The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion of any other
appropriate right or remedy.
15. SUCCESSOR AND ASSIGNMENT
Unless expressly provided in this Operating Agreement, no Party shall
transfer or assign its rights and obligations hereunder. The Parties
may transfer or assign all of the limited partnership interest in
VASK GmbH & Co KG and all of the shares of VASK GmbH to any Affiliate
provided that such Party informs
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the other Party of the intended transfer reasonably in advance and
agrees to remain jointly and severally liable with the acquiring
Affiliate for all its obligations under this Operating Agreement. If
the transfer is made to more than one Affiliate, the Parties shall
amend this Operating Agreement to appropriately reflect the division
of that Party's interest.
16. GOVERNING LAW
This agreement shall be governed by and construed in accordance with
the substantive laws of Austria without regard to the conflict of law
rules thereof.
17. DISPUTE RESOLUTION
All disputes arising out of this Investment Agreement or related to
its violation, termination or nullity shall be finally settled under
the Rules of Arbitration and Conciliation of the International
Arbitral Centre of the Austrian Federal Economic Chamber in Vienna
(Vienna Rules) by one or more arbitrators appointed in accordance
with these rules. The number of arbitrators shall be three; the
substantive law of Austria shall be applicable; the language to be
used in the arbitral proceedings shall be English. The place of
arbitration shall be Vienna, Austria.
18. AMENDMENTS AND WAIVERS
18.1 The provisions of this Operating Agreement shall override any
provisions to the contrary in the articles of association of VASK
GmbH and the partnership agreement of VASK GmbH & Co KG from time to
time in force and in the event of any such conflict the Parties
shall, unless otherwise agreed, procure the amendment of the articles
of association or the partnership agreement to conform with this
Operating Agreement accordingly.
18.2 This Operating Agreement may only be amended or varied in writing
signed by or on behalf of each of the Parties.
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19. HEADINGS
The headings in this Operating Agreement are inserted for convenience
only and do not affect its interpretation.
20. COUNTERPART
This Operating Agreement shall be executed in three originals with
each Party, and VASK GmbH receiving one.
Vienna, July 23, 1999
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
------------------- ----------------------------------
GRANT PRIDECO, Inc. VOEST-ALPINE SCHIENEN GmbH & Co XX
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XXXXX-XXXXXX XXXXXXXXX XXXXXXXX GmbH acknowledges the content of this Operating
Agreement and agrees to comply with the provisions contained therein relating to
itself.
Vienna, July 23, 1999
/s/ [ILLEGIBLE]
------------------------------------
VOEST-ALPINE STAHLROHR XXXXXXXX GmbH
