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EXHIBIT 2.1
DISTRIBUTION AGREEMENT
BY AND BETWEEN
XXXXXXXXXXX INTERNATIONAL, INC.
AND
GRANT PRIDECO, INC.
__________________, 1999
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TABLE OF CONTENTS
Page
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ARTICLE 1................................................................... 1
CERTAIN DEFINITIONS...................................................... 1
1.1 "Additional Shares".............................................. 1
1.2 "Affiliate"...................................................... 1
1.3 "Agreement"...................................................... 1
1.4 "Assets"......................................................... 1
1.5 "Amended Bylaws"................................................. 2
1.6 "Business Day"................................................... 2
1.7 "CERCLA"......................................................... 2
1.8 "Circumstance"................................................... 2
1.9 "Code"........................................................... 2
1.10 "Consent Required Contract"...................................... 2
1.11 "Contributed Indebtedness"....................................... 2
1.12 "Contribution"................................................... 2
1.13 "Distribution"................................................... 2
1.14 "Distribution Date".............................................. 2
1.15 "Environmental Conditions"....................................... 2
1.16 "Environmental Law" or "Environmental Laws"...................... 2
1.17 "Environmental Liabilities"...................................... 2
1.18 "Grant".......................................................... 3
1.19 "Grant Common Stock"............................................. 3
1.20 "Grant Company".................................................. 3
1.21 "Grant Employee"................................................. 3
1.22 "Grant Employee Benefit Plans"................................... 3
1.23 "Grant 401(k) Plan".............................................. 3
1.24 "Grant Liabilities".............................................. 3
1.25 "Grant Option"................................................... 4
1.26 "Grant Taxes".................................................... 4
1.27 "Liability"...................................................... 4
1.28 "1998 Director Options and Warrants"............................. 4
1.29 "1998 Weatherford Employee Option Plan".......................... 4
1.30 "Note"........................................................... 4
1.31 "NYSE"........................................................... 5
1.32 "Old Weatherford Director Plans"................................. 5
1.33 "Old Weatherford Employee Option Plans".......................... 5
1.34 "Person"......................................................... 5
1.35 "Preferred Supplier Agreement"................................... 5
1.36 "Properties"..................................................... 5
1.37 "Record Date".................................................... 5
1.38 "Restated Certificate of Incorporation".......................... 5
1.39 "SEC"............................................................ 5
1.40 "Service of Process"............................................. 5
1.41 "Tax Allocation Agreement"....................................... 5
1.42 "Taxes".......................................................... 5
1.43 "Transfer Agent"................................................. 5
1.44 "Transfers"...................................................... 5
1.45 "Transition Services Agreement".................................. 5
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1.46 "Trust".......................................................... 5
1.47 "Waste Materials"................................................ 6
1.48 "Weatherford".................................................... 6
1.49 "Weatherford Common Stock"....................................... 6
1.50 "Weatherford Employee"........................................... 6
1.51 "Weatherford 401(k) Plan"........................................ 6
1.52 "Weatherford Indemnified Parties"................................ 6
1.53 "Weatherford Option"............................................. 6
ARTICLE 2................................................................... 6
CONTRIBUTION............................................................. 6
2.1 Contribution..................................................... 6
2.2 Grant Liabilities................................................ 6
2.3 Consideration.................................................... 7
2.4 Limitation of Assignments........................................ 7
2.5 Delivery of Records.............................................. 7
2.6 Guarantees and Financial Assurances.............................. 7
2.7 Grant Acknowledgments............................................ 7
ARTICLE 3................................................................... 7
RECAPITALIZATION OF GRANT; MECHANICS OF DISTRIBUTION..................... 7
3.1 Grant Capitalization............................................. 7
3.2 Recapitalization of Grant........................................ 7
3.3 Mechanics of Distribution........................................ 8
3.4 Timing of Distribution........................................... 8
ARTICLE 4................................................................... 8
EMPLOYEE BENEFIT PLANS................................................... 8
4.1 Employee Benefits are Grant Liabilities.......................... 8
4.2 401(k) Plans..................................................... 8
4.3 Employee Health, Life and Disability Insurance Plans............. 8
4.4 Credited Employment.............................................. 9
4.5 No Termination of Employment for Benefit Entitlement Purposes.... 9
ARTICLE 5................................................................... 9
STOCK PLANS.............................................................. 9
ARTICLE 6................................................................... 12
INDEMNIFICATION.......................................................... 12
6.1 Indemnification Matters.......................................... 12
6.2 Notice of Circumstance........................................... 14
6.3 Payment.......................................................... 14
6.4 Insurance........................................................ 14
6.5 Scope of Indemnification......................................... 14
6.6 Indemnity for Certain Environmental Liabilities.................. 14
ARTICLE 7................................................................... 15
CONDITIONS TO OBLIGATIONS OF WEATHERFORD................................. 15
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ARTICLE 8................................................................... 16
MISCELLANEOUS............................................................ 16
8.1 Grant Covenants.................................................. 16
8.2 Governing Law.................................................... 16
8.3 Arbitration...................................................... 16
8.4 Notices.......................................................... 17
8.5 Expenses......................................................... 17
8.6 Entire Agreement................................................. 17
8.7 Waiver........................................................... 18
8.8 Binding Effect; Assignment; No Third Party Benefit............... 18
8.9 Counterparts..................................................... 18
8.10 References....................................................... 18
8.11 Terminology...................................................... 18
8.12 Severability..................................................... 18
8.13 Further Assurances............................................... 18
LIST OF ANNEXES
Annex A - Excluded Assets
Annex B - Amended Bylaws of Grant
Annex C - Note
Annex D - Preferred Supplier Agreement
Annex E - Restated Certificate of Incorporation of Grant
Annex F - Tax Allocation Agreement
Annex G - Transfers
Annex H - Transition Services Agreement
Annex I - Grant Employee Stock Plan
Annex J - Grant Director Plan
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DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Agreement") is dated as of
__________, 1999, by and among XXXXXXXXXXX INTERNATIONAL, INC., a Delaware
corporation ("Weatherford"), and GRANT PRIDECO, INC. ("Grant"), a Delaware
corporation.
W I T N E S S E T H:
WHEREAS, Grant is a wholly owned subsidiary of Weatherford;
WHEREAS, pursuant to this Agreement Weatherford and Grant will cause
the Transfers to be made or occur, Grant will execute the Note, Weatherford will
contribute the Contributed Indebtedness to Grant and Grant will issue the
Additional Shares to Weatherford (the transactions described in this paragraph
are referred to collectively herein as the "Contribution");
WHEREAS, after the Contribution, Weatherford will distribute to its
stockholders all of the outstanding stock of Grant as further described in
Article 3 hereof; and
WHEREAS, for federal income tax purposes, it is intended that the
Contribution and Distribution will qualify as transactions pursuant to Sections
368(a)(1)(D) and 355 and related sections of the Code;
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the following
respective meanings:
1.1 "Additional Shares" shall mean that number of shares of Grant
Common Stock as shall be equal to one-half of the number of shares of
Weatherford Common Stock outstanding on the Record Date, less the number of
shares of Grant Common Stock owned by Weatherford on the Record Date.
1.2 "Affiliate" shall mean, with respect to Weatherford or Grant
Prideco, any Person, that directly or indirectly, is in control of, is
controlled by, controls or is under common control of Weatherford or Xxxxx
Prideco, as the case may be. For purposes of this definition, control shall
include the ownership of 50% or more of the legal or beneficial interest in any
Person or the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. A Person who is an Affiliate shall only be considered an
Affiliate for so long as that Person meets the definition of an Affiliate. An
officer, director, general partner, managing member or trustee of a Person or
Affiliate of such Person shall not be considered to be an Affiliate unless such
Person is under the direct or indirect control or common control of Weatherford
or Grant Prideco, as the case may be.
1.3 "Agreement" shall have the meaning specified in the preamble.
1.4 "Assets" shall mean, collectively, all the property, assets and
rights, tangible and intangible, owned or operated by the Grant Companies on,
before or after the Distribution Date, excluding those listed on Annex A
attached hereto.
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1.5 "Amended Bylaws" shall mean the Amended Bylaws of Grant, in
substantially the form of Annex B hereto.
1.6 "Business Day" shall mean a day on which national banks are
generally open for the transaction of business in Houston, Texas.
1.7 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.
1.8 "Circumstance" shall have the meaning specified in Section 6.2
hereof.
1.9 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.10 "Consent Required Contract" shall have the meaning specified in
Section 2.4 hereof.
1.11 "Contributed Indebtedness" shall mean all indebtedness in excess
of the sum of (i) the amount of the Note owed by Grant to Weatherford
immediately prior to the Contribution and (ii) the Drill Stem Credits (as
defined in the Preferred Supplier Agreement).
1.12 "Contribution" shall have the meaning specified in the second
"WHEREAS" clause hereof.
1.13 "Distribution" shall mean the distribution by Weatherford to its
stockholders (other than the Trust) of all of the outstanding shares of Grant.
1.14 "Distribution Date" shall mean the time and date as of which the
Distribution is effective.
1.15 "Environmental Conditions" shall mean (i) any pollution,
contamination, degradation, damage or injury caused by, related to, arising from
or in connection with the generation, handling, use, treatment, storage,
transportation, disposal, discharge, release or emission of any Waste Materials
and (ii) any course of conduct or operating practice with respect to matters
governed by or regulated under Environmental Laws.
1.16 "Environmental Law" or "Environmental Laws" shall mean all laws,
rules, regulations, statutes, ordinances, decrees or orders of any governmental
entity now or at any time in the future in effect relating to (i) the prevention
or control of any potential pollutant or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal, discharge, release or transportation and (iii) exposure to hazardous,
toxic or other substances alleged to be harmful. The term "Environmental Law" or
"Environmental Laws" includes, without limitation, (1) the terms and conditions
of any license, permit, approval or other authorization by any governmental
entity and (2) judicial, administrative or other regulatory decrees, judgments
and orders of any governmental entity. The term "Environmental Law" or
"Environmental Laws" includes, but is not limited to, the following statutes and
the regulations promulgated thereunder: the Clean Air Act, 42 U.S.C. Section
7401 et seq., the Resource Conservation Recovery Act, 42 U.S.C. Section 6901 et
seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 11011
et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Federal Water Pollution Control Act (Clean Water Act), 33 U.S.C. Section 1251,
et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq., CERCLA and
any state, county or local laws or regulations similar thereto.
1.17 "Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remediation, removal,
response, abatement, clean-up, investigative or monitoring costs and any other
related costs and expenses), other causes of action recognized now or at any
later time, damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorney fees and
other legal fees imposed or incurred (i) pursuant to any agreement, order,
notice, requirement,
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responsibility or directive (including directives embodied in Environmental
Laws), injunction, judgment or similar documents (including settlements) arising
out of or in connection with any Environmental Laws, (ii) pursuant to any claim
by a governmental entity or other person or entity pursuant to common law or
statute for personal injury, property damage, damage to natural resources,
remediation, payment or reimbursement of response costs or similar costs or
expenses or (iii) as a result of Environmental Conditions.
1.18 "Grant" for purposes of the assumption and indemnification
provisions of this Agreement, shall include Grant Prideco, Inc. and any and all
predecessors or successors thereto, whether by merger, purchase or other
acquisition of assets or otherwise, and any and all predecessors or successors
to such entities.
1.19 "Grant Common Stock" shall mean shares of common stock, $.01 par
value per share, of Grant.
1.20 "Grant Company" shall mean any corporation, joint venture,
partnership, limited liability company, association, investment or other entity,
including Grant, and any predecessor of the foregoing, in which Grant or any
Grant Company (or any predecessor to the business or assets of Grant or any
Grant Company) now or at any time in the past owned, or as a result of Transfers
will own, directly or indirectly, an ownership interest (whether or not such
ownership interest constitutes control of the entity and whether or not such
interest represents a passive or active investment).
1.21 "Grant Employee" shall have the meaning specified in Section 4.2
hereof.
1.22 "Grant Employee Benefit Plans" shall have the meaning specified in
Section 4.3 hereof.
1.23 "Grant 401(k) Plan" shall have the meaning specified in Section
4.2 hereof.
1.24 "Grant Liabilities" shall mean any and all Liabilities and
Environmental Liabilities to which Weatherford or any of its Affiliates may now
or at any time in the future become subject (whether directly or indirectly,
including by reason of any Grant Company owning, controlling or operating any
business or assets), resulting from, arising out of or relating to (i) any Grant
Company, (ii) any Grant Taxes (except as provided otherwise in the Tax
Allocation Agreement), (iii) any obligation, matter, fact, circumstance or
action or omission by any Person in any way relating to or arising from the
business, operations or assets of any Grant Company on, before or after the
Distribution Date, (iv) any product or service manufactured, sold or otherwise
provided by any Grant Company on, before or after the Distribution Date, (v)
except as provided herein, the Contribution, the Distribution or any of the
other transactions contemplated hereby or (vi) the Assets. The term "Grant
Liabilities" shall also include, without limitation, the following:
(a) Any and all Liabilities and Environmental Liabilities
resulting from, arising out of or relating to (i) the current, former
or future assets, activities, operations, facilities, actions or
omissions of any Grant Company or any of their respective officers,
directors, employees, independent contractors or agents, (ii) any
product liability claim, recall, replacement, returns or customer
allowances of or relating to any Grant Company or (iii) any contract or
permit of any Grant Company, regardless of whether the contract or
permit is assigned, conveyed or leased hereunder or under any other
agreement contemplated hereby;
(b) Any and all accounts and notes payable of any Grant
Company;
(c) Any and all Liabilities relating to the Grant 401(k) Plan
and the Grant Employee Benefit Plans;
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(d) Any and all Liabilities and Environmental Liabilities to,
on behalf of, or which arise from or relate to active or inactive
employees (retired or otherwise) of any Grant Company for claims
occurring on, before or after the Distribution Date, including, without
limitation, (i) liability for any salaries, wages, tax equalization
payments, vacation pay, sick leave, personal leave, severance pay,
wrongful dismissal or discrimination claims; (ii) liability for or
under any employee benefit plan, policy or arrangement, including,
without limitation, retirement, pension, medical, dental, profit
sharing, unemployment, supplemental unemployment or disability plan
policy or arrangement; (iii) liability for any payroll taxes, social
security or similar taxes or withholding; (iv) liability arising from
claims or litigation and (v) liability arising from any injury, death,
loss, disability, occupational disease or claims under any workers'
compensation laws;
(e) Any and all Liabilities and Environmental Liabilities
resulting from, arising out of, relating to or occurring on the
Properties, the operations on any of the Properties or with regard to
any of the Assets, and any off-site Environmental Liabilities related
to any of the foregoing or to any Grant Company, including, without
limitation, those under any indemnification agreement or obligation of
any Grant Company, Weatherford or any Affiliate of Weatherford and any
documents related thereto;
(f) Any and all Liabilities of any Grant Company with respect
to any projects or transactions performed or engaged in by it on,
before or after the Distribution Date;
(g) Any and all litigation and claims against any Grant
Company existing as of the Distribution Date;
(h) Except as provided otherwise in the Tax Allocation
Agreement, any and all Liabilities for Grant Taxes; and
(i) Any and all legal, accounting, consulting and expert fees
and expenses incurred in investigating, preparing, defending, settling
or discharging any claim or action arising under, out of or in
connection with any of the Grant Liabilities or Assets.
1.25 "Grant Option" shall mean an option to purchase Grant Common
Stock.
1.26 "Grant Taxes" shall mean any and all Taxes (i) to which any Grant
Company may be obligated pursuant to the Tax Allocation Agreement or (ii)
relating to or arising from the Contribution or the Distribution (including,
without limitation, any transfer taxes or value added taxes).
1.27 "Liability" shall mean any and all claims, demands, liabilities,
responsibilities, disputes, causes of action, losses, damages, assessments,
costs and expenses (including interest, awards, judgments, penalties,
settlements, fines, costs of remediation, diminutions in value, costs and
expenses incurred in connection with investigating and defending any claims or
causes of action (including, without limitation, attorneys' fees and expenses
and all fees and expenses of consultants and other professionals)) and
obligations of every nature whatsoever, liquidated or unliquidated, known or
unknown, matured or unmatured, or fixed or contingent.
1.28 "1998 Director Options and Warrants" shall mean the nonqualified
stock options and warrants granted by Weatherford to non-employee directors on
or after August 31, 1998.
1.29 "1998 Weatherford Employee Option Plan" shall mean the Xxxxxxxxxxx
International, Inc. 1998 Employee Stock Option Plan.
1.30 "Note" shall mean the promissory note to be executed by Grant in
favor of Weatherford, in substantially the form of Annex C hereto.
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1.31 "NYSE" shall mean The New York Stock Exchange, Inc.
1.32 "Old Weatherford Director Plans" shall mean the Energy Ventures,
Inc. 1991 Non-Employee Director Stock Option Plan and the Energy Ventures, Inc.
Amended and Restated Non-Employee Director Stock Option Plan.
1.33 "Old Weatherford Employee Option Plans" shall mean the Xxxxxxxxxxx
International Incorporated 1987 Stock Option Plan, the Xxxxxxxxxxx Enterra, Inc.
1991 Stock Option Plan, the Energy Ventures, Inc. Employees' Stock Option Plan,
the Energy Ventures, Inc. 1992 Employee Stock Option Plan, the Taro Industries
Limited Stock Option Plan and the D. Xxxx Xxxx Stock Option Agreement.
1.34 "Person" shall mean an individual, partnership, corporation,
business trust, limited liability company, limited liability partnership, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
1.35 "Preferred Supplier Agreement" shall mean the agreement to be
entered into between Weatherford and Xxxxx, in substantially the form of Annex D
hereto.
1.36 "Properties" shall mean the properties currently or previously
owned or operated by any Grant Company.
1.37 "Record Date" shall have the meaning specified in Section 3.3
hereof.
1.38 "Restated Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation of Grant, in substantially the form of Annex E
hereto.
1.39 "SEC" shall mean the United States Securities and Exchange
Commission.
1.40 "Service of Process" shall have the meaning specified in Section
6.1 hereof.
1.41 "Tax Allocation Agreement" shall mean the agreement to be entered
into between Weatherford and Xxxxx, substantially in the form of Annex F hereto.
1.42 "Taxes" shall mean all federal, state, local, foreign and other
taxes, charges, fees, duties, levies, imposts, customs or other assessments,
including, without limitation, all net income, 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.
1.43 "Transfer Agent" shall mean American Stock Transfer & Trust
Company.
1.44 "Transfers" shall mean the transactions described on Annex G
hereto.
1.45 "Transition Services Agreement" shall mean the agreement to be
entered into between Weatherford and Xxxxx, in substantially the form of Annex H
hereto.
1.46 "Trust" shall mean the Energy Ventures, Inc. Executive Deferred
Compensation Stock Ownership Trust.
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1.47 "Waste Materials" shall mean any (i) toxic or hazardous materials
or substances; (ii) solid wastes, including asbestos, polychlorinated biphenyls,
mercury, buried contaminants, chemicals, flammable or explosive materials; (iii)
radioactive materials; (iv) petroleum wastes and spills or releases of petroleum
products; and (v) any other chemical, pollutant, contaminant, substance or waste
that is regulated by any governmental entity under any Environmental Law.
1.48 "Weatherford" shall mean Xxxxxxxxxxx International, Inc., a
Delaware corporation.
1.49 "Weatherford Common Stock" shall mean shares of common stock,
$1.00 par value per share, of Weatherford.
1.50 "Weatherford Employee" shall have the meaning specified in Section
4.4 hereof.
1.51 "Weatherford 401(k) Plan" shall mean the Xxxxxxxxxxx
International, Inc. 401(k) Plan.
1.52 "Weatherford Indemnified Parties" shall have the meaning set forth
in Section 6.1(a) hereof.
1.53 "Weatherford Option" shall mean an option or warrant, as
applicable, to purchase Weatherford Common Stock.
ARTICLE 2
CONTRIBUTION
2.1 Contribution.
(a) Effective immediately before the Distribution Date: (i)
Weatherford and Grant shall cause the Transfers to be made or occur;
(ii) Grant will execute and deliver the Note; (iii) Weatherford will
contribute the Contributed Indebtedness to Grant; (iv) Grant will issue
the Additional Shares to Weatherford; and (v) Grant will issue the
Drill Stem Credits (as defined in the Preferred Supplier Agreement) to
Weatherford.
(b) THE TRANSFERS SHALL BE MADE WITHOUT ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS (CURRENT,
FIXED, PERSONAL, REAL, TANGIBLE OR INTANGIBLE), INCLUDING, BUT NOT
LIMITED TO, CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, CAPACITY, SUITABILITY,
UTILITY, SALABILITY, AVAILABILITY, COLLECTIBILITY, OPERATIONS,
CONDITIONS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IT
BEING THE EXPRESS AGREEMENT OF WEATHERFORD AND GRANT THAT, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, GRANT WILL OBTAIN THE ASSETS IN
THEIR PRESENT CONDITION AND STATE OF REPAIR, ON AN "AS IS AND WHERE IS,
WITH ALL FAULTS" BASIS.
2.2 Grant Liabilities. Effective as of the Distribution Date, Grant
hereby unconditionally assumes and undertakes to pay, satisfy and discharge the
Grant Liabilities. IT IS THE INTENT OF THE PARTIES THAT THE GRANT LIABILITIES
AND ENVIRONMENTAL LIABILITIES SHALL BE WITHOUT REGARD TO THE CAUSE THEREOF OR
THE NEGLIGENCE OF ANY PERSON, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, ACTIVE OR PASSIVE, AND WHETHER SUCH GRANT LIABILITY OR ENVIRONMENTAL
LIABILITY IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY OR ARISING AS AN
OBLIGATION OF CONTRIBUTION. GRANT HEREBY WAIVES AND RELEASES FOR ITSELF AND ON
BEHALF OF GRANT'S AFFILIATES ANY CLAIMS, DEFENSES OR CLAIMS FOR CONTRIBUTION,
INCLUDING CLAIMS FOR CONTRIBUTION
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OR REIMBURSEMENT PROVIDED UNDER ENVIRONMENTAL LAWS, THAT IT HAS OR MAY HAVE
AGAINST WEATHERFORD OR ANY OF ITS AFFILIATES WITH RESPECT TO THE GRANT
LIABILITIES AND ENVIRONMENTAL LIABILITIES. AFTER THE DISTRIBUTION, NEITHER
WEATHERFORD NOR ANY OF ITS AFFILIATES SHALL IN ANY WAY BE LIABLE OR RESPONSIBLE
FOR ANY GRANT LIABILITIES.
2.3 Consideration. The aggregate consideration for the Transfers shall
consist of (a) the issuance by Grant to Weatherford of the Additional Shares and
(b) the contribution by Weatherford to Grant of the Contributed Indebtedness.
2.4 Limitation of Assignments. Notwithstanding any other provision
hereof, this Agreement shall not constitute nor require an assignment to any
Grant Company of any contract, permit, license or other right if an attempted
assignment of the same without the consent of any party would constitute a
breach thereof or a violation of any law or any judgment, decree, order, writ,
injunction, rule or regulation of any governmental entity unless and until such
consent shall have been obtained. In the case of any such contract, permit,
license or other right that cannot be effectively transferred to Grant without
such consent (a "Consent Required Contract"), Weatherford agrees that it will
attempt to enter into a reasonable arrangement designed to provide Grant with
the benefit of Xxxxxxxxxxx'x rights under such Consent Required Contract,
including enforcement of any and all rights of Weatherford against any other
party as Grant may reasonably request, all such actions to be at Grant's sole
cost and expense.
2.5 Delivery of Records. Grant shall be entitled to all books, records,
papers and instruments of Weatherford of whatever nature that relate to the
Assets, including, without limitation, all financial and accounting records, on
the Distribution Date, and all books and records relating to employees, the
purchase of materials, supplies and services, research and development,
engineering drawings, designs, schematics, blueprints, instruction manuals,
flowsheets, models, maintenance schedules and similar technical records, and
dealings with customers, vendors and suppliers relating to the Assets, and
including computerized books and records and other computerized storage media
and the software (including documentation and object and source codes) used in
connection therewith; provided that Weatherford shall be entitled to retain all
originals of its corporate, financial, accounting, legal, tax and auditing
records, and Weatherford shall be entitled to retain copies at its expense of
any such other books and records that are necessary for its tax, accounting or
legal purposes.
2.6 Guarantees and Financial Assurances. Grant agrees to use reasonable
efforts to obtain the release of any guarantees or other financial assurances
provided by Weatherford or any of its Affiliates on behalf of any Grant Company.
2.7 Grant Acknowledgments. Grant acknowledges that this Agreement is a
valid, binding and enforceable contract that has been approved by its sole
stockholder. Grant further acknowledges that this Agreement and the transactions
contemplated hereby are in the best interests of Grant.
ARTICLE 3
RECAPITALIZATION OF GRANT; MECHANICS OF DISTRIBUTION
3.1 Grant Capitalization. The current equity capitalization of Grant
consists of 1,000 issued and outstanding shares of Grant Common Stock, all of
which is outstanding and owned beneficially and of record by Weatherford.
3.2 Recapitalization of Grant. Effective before the Distribution Date,
Grant shall have filed the Restated Certificate of Incorporation, and the Board
of Directors of Grant shall have adopted the Amended Bylaws.
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3.3 Mechanics of Distribution. The Distribution shall be effected by
the distribution to each holder of record of Weatherford Common Stock (other
than the Trust), as of the record date designated for the Distribution by or
pursuant to the authorization of the Board of Directors of Weatherford (the
"Record Date"), of one share of Grant Common Stock for each two shares of
Weatherford Common Stock held by such holder. No fraction of a share of Grant
Common Stock shall be issued, but in lieu thereof each holder of shares of
Weatherford Common Stock who otherwise would be entitled to a fraction of a
share of Grant Common Stock shall receive a whole share of Grant Common Stock
for such fraction of a share. All shares of Weatherford Common Stock held by a
record holder other than nominee holders shall be aggregated for purposes of
computing the number of shares of Grant Common Stock to be issued pursuant to
this Section 3.3.
3.4 Timing of Distribution. The Board of Directors of the Weatherford
shall formally declare the Distribution and shall authorize Weatherford to pay
it upon the satisfaction or waiver of the conditions set forth in Article 7, by
delivery of certificates for Grant Common Stock to the Transfer Agent for
delivery to the holders entitled thereto. The Distribution shall be deemed to be
effective upon notification by Weatherford to the Transfer Agent that the
Distribution has been declared and that the Transfer Agent is authorized to
proceed with the distribution of Grant Common Stock.
ARTICLE 4
EMPLOYEE BENEFIT PLANS
4.1 Employee Benefits are Grant Liabilities. All obligations of Grant
Companies with respect to employee benefit plans, arrangements or policies for
the benefit of employees and former employees (and their beneficiaries) of Grant
Companies in place at the time of the Distribution shall be treated and deemed
to be as Grant Liabilities under this Agreement.
4.2 401(k) Plans. Before the Distribution Date, Grant shall establish a
defined contribution plan (the "Grant 401(k) Plan") that shall be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended, and
effective as of the Distribution Date. On or before the Distribution Date, and
in accordance with the terms of the Weatherford 401(k) Plan, Weatherford shall
cause the account balance attributable to each individual who will cease to be
an employee of Weatherford and its Affiliates following the Distribution Date to
be transferred to the Grant 401(k) Plan to the extent that such transfer is
permitted by law. Each individual who continues to be an employee of any Grant
Company on the Distribution Date (a "Grant Employee") shall, for eligibility and
vesting purposes under the Grant 401(k) Plan, be credited with the same service
with which he or she is credited for such purposes under the Weatherford 401(k)
Plan immediately prior to the Distribution Date.
4.3 Employee Health, Life and Disability Insurance Plans. On or before
the Distribution Date, Grant shall establish such employee health, life and
disability insurance plans and other employee welfare or fringe benefit
arrangements (collectively, the "Grant Employee Benefit Plans") that are
comparable in the aggregate to the health, life and disability insurance plans
and other employee welfare or fringe benefit arrangements that had been
maintained by Weatherford for its employees and the employees of its
subsidiaries prior to the Distribution Date (collectively, the "Weatherford
Employee Benefit Plans"). Service by any employee with Weatherford or its
subsidiaries prior to the Distribution Date shall be counted for purposes of
determining any period of eligibility to participate in, or to vest in benefits
(including vacation rights) provided under the Grant Employee Benefit Plans, and
any amounts previously expended by any such employees of Weatherford or its
subsidiaries prior to the Distribution Date for purposes of satisfying such plan
year's deductible, co-payment limitations, maximum out-of-pocket provisions and
applicable annual and/or life-time maximum benefit limitations shall be credited
for purposes of satisfying such plan year's deductible, co-payment limitations
under the Grant Employee Benefit Plans and any coverage waiting period for
pre-existing conditions for such employees shall be waived under the Grant
Employee Benefit Plans.
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4.4 Credited Employment.
(a) During the five-year period following the Distribution, if
any employee of Weatherford or any of its Affiliates shall become an employee of
Grant or any of its Affiliates, Grant shall, and shall cause its Affiliates to,
credit such employee, for purposes of eligibility and vesting under the Grant
Employee Benefit Plans (including Grant's vacation policy) and the Grant 401(k)
Plan, with the period of time such employee was employed by Weatherford or any
of its Affiliates.
(b) During the five-year period following the Distribution, if
any employee of Grant or any of its Affiliates shall become an employee of
Weatherford or any of its Affiliates, Weatherford shall, and shall cause its
Affiliates to, credit such employee, for purposes of eligibility and vesting
under Weatherford Employee Benefit Plans (including Xxxxxxxxxxx'x vacation
policy), with the period of time such employee was employed by Grant or any of
its Affiliates.
4.5 No Termination of Employment for Benefit Entitlement Purposes. For
purposes of determining a person's entitlement to benefits under any of the
Weatherford Employee Benefit Plans, the Distribution shall not constitute a
termination of employment for persons who will continue to be employees of Grant
or any of its Affiliates or Weatherford or any of its Affiliates after the
Distribution.
ARTICLE 5
STOCK PLANS
On or before the Distribution Date, Grant will adopt the Grant Prideco,
Inc. 1999 Employee Stock Option and Restricted Stock Plan, in substantially the
form attached hereto as Annex I (the "Grant Employee Stock Plan"), and the Grant
Prideco, Inc. 1999 Non-Employee Director Stock Option Plan, in substantially the
form attached hereto as Annex J (the "Grant Director Plan"). On or before the
Distribution Date, Weatherford and Xxxxx will take such actions as are necessary
to cause the following treatment of outstanding Weatherford Options to be
effected as of the Distribution Date.
(a) Treatment of Old Weatherford Options and Old Director Options.
(i) Grant will issue Grant Options under the Grant Employee
Stock Plan to each holder of an outstanding Weatherford Option that has
been granted under an Old Weatherford Employee Option Plan ("Old
Weatherford Options").
(ii) Grant will issue Grant Options under the Grant Director
Plan to each holder of an outstanding Weatherford Option that has been
granted under an Old Weatherford Director Plan ("Old Director
Options").
(iii) Grant Options issued pursuant to the preceding two
clauses will be exercisable for Grant Common Stock on the basis of one
share of Grant Common Stock for each two shares of Weatherford Common
Stock subject to the terms of the applicable outstanding Old
Weatherford Option or Old Director Option.
(iv) Each Grant Option will have the same vesting schedule and
other terms (including the exercise date and expiration date) as the
vesting schedules and other terms of the related Old Weatherford Option
or Old Director Option, as applicable; provided that employment with
either Grant or Weatherford will satisfy any condition to continuing
employment where discontinued employment would cause the options to
terminate.
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(v) The per-share exercise price of each adjusted Old
Weatherford Option or Old Director Option and the related Grant Option
will be a function of (A) the per share exercise price of the Old
Weatherford Option or Old Director Option immediately before the
Distribution, (B) the market value per share of Weatherford Common
Stock immediately before giving effect to the Distribution and (C) the
market value per share of Grant Common Stock after giving effect to the
Distribution, all as provided in the following formula:
The adjusted exercise price per share for an Old
Weatherford Option or an Old Director Option will equal: E (W-G)/W
The exercise price per share for the related Grant Option will equal: E (2G/W)
Where E = The original exercise price of the applicable
Weatherford Option;
G = One half of the market value of a share of
Grant Prideco common stock based on (a) the
average of the high and low trading prices on
the NYSE on the first full trading date after
"when-distributed" trading begins, or if lower,
for options remaining outstanding at the date of
adjustment, (b) the average of the last sales
price per share the NYSE on for each of the 30
consecutive trading days beginning on the date
"when-distributed" trading begins; and
W = The market value per share of Weatherford
Common Stock as of the close of market on
the last trading day before "when-issued"
trading begins as reported by the NYSE.
(vi) As a condition of exercise of a Grant Option issued to a
current or former Weatherford employee, Grant shall require the
optionee to pay at the time of exercise the exercise price and the
amount necessary to cover Xxxxxxxxxxx'x obligation to withhold all
federal, state, local and other taxes. Grant will then transfer Grant
Common Stock to the optionee in accordance with the terms of the Grant
Option. Grant also shall immediately notify Weatherford of the exercise
and remit to Weatherford the sum necessary to cover Xxxxxxxxxxx'x
obligation to withhold all federal, state, local and other taxes with
respect to such exercise. To the extent that compensation income
recognized by a holder of a Grant Option is attributable to services
rendered to Weatherford or any of its subsidiaries (other than Grant or
any of its subsidiaries), Weatherford (or its subsidiary) and not Grant
shall be entitled to a compensation expense deduction for federal
income tax purposes, and Grant (or any of its subsidiaries) shall not
attempt to claim a deduction for such expense.
(b) Substitution of 1998 Weatherford Options.
(i) Each Weatherford Option granted under the 1998 Weatherford
Employee Option Plan and 1998 Director Options and Warrants
(collectively, "1998 Weatherford Options") held by a Grant Employee
will be substituted with Grant Options. The number of shares of Grant
Common Stock subject to such Grant Options and the exercise price of
such Grant Options will be determined as provided in the following
formula:
The exercise price for the Grant Option will equal: E (2G/W)
The number of shares of Grant Common Stock subject to the
Grant Option will equal NE/Pg
Where E = The original exercise price of the 1998
Weatherford Option;
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N = The original number of shares of Weatherford
Common Stock subject to the 1998 Weatherford
Option;
G = One half of the market value of a share of
Grant Prideco common stock based on (a) the
average of the high and low trading prices
on the NYSE on the first full trading date
after "when-distributed" trading begins, or if
lower, for options remaining outstanding at the
date of adjustment, (b) the average of the last
sales price per share the NYSE on for each of
the 30 consecutive trading days beginning on
the date "when-distributed" trading begins; and
W = The market value per share of Weatherford
Common Stock as of the close of market on
the last trading day before "when-distributed"
trading begins as reported by the NYSE; and
Pg = The exercise price of the Grant Option
determined in accordance with the first
formula of this subsection (i).
(ii) Each 1998 Weatherford Option held by a Weatherford
Employee and each of the 1998 Director Options and Warrants will be
adjusted. The number of shares of Weatherford Common Stock for which
those adjusted options will be exercisable and the adjusted exercise
price of those options will be determined as provided in the following
formula:
The adjusted exercise price for the Weatherford Option will equal E (W-G)/W
The number of shares of Weatherford Common Stock subject to the
adjusted option will equal NE/Pw
Where E = The original exercise price of the 1998
Weatherford Option;
N = The original number of shares of Weatherford
Common Stock subject to the 1998 Weatherford
Option;
G = One half of the market value of a share of
Grant Prideco common stock based on (a) the
average of the high and low trading prices
on the NYSE on the first full trading date
after "when-distributed" trading begins, or if
lower, for options remaining outstanding at the
date of adjustment, (b) the average of the last
sales price per share the NYSE on for each of
the 30 consecutive trading days beginning on
the date "when-distributed" trading begins; and
W = The market value per share of Weatherford
Common Stock as of the close of market on the
last trading day before "when-distributed"
trading begins as reported by the NYSE; and
Pw = The adjusted exercise price of the 1998
Weatherford Option determined in accordance
with the first formula in this subsection (ii).
(iii) The adjusted Weatherford Options will be administered
under the Weatherford Stock Option Plan or Weatherford Director Plan
under which they were issued. The substitute Grant Options will be
issued and administered under the Grant Employee Stock Plan.
(c) Treatment of Outstanding Restricted Stock. Holders of restricted
Weatherford Common Stock granted under the Xxxxxxxxxxx Enterra, Inc. Restricted
Stock Incentive Plan, the Xxxxxxxxxxx Enterra, Inc. 1997 Non-Employee Directors
Restricted Stock Plan or under an individual agreement in the case of the
restricted stock award granted to Xxxxxx X. Xxxx, will receive one share of
restricted Grant Common Stock for
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each share of restricted Weatherford Common Stock they hold. The restricted
Grant Common Stock will be subject to the same restrictions as the applicable
restricted Weatherford Common Stock.
ARTICLE 6
INDEMNIFICATION
6.1 Indemnification Matters.
(a) Grant hereby agrees to indemnify, defend and hold
Weatherford and its Affiliates and each of their respective officers, directors,
employees, agents and assigns (collectively, the "Weatherford Indemnified
Parties") harmless from and against any and all Liabilities or Environmental
Liabilities (including, without limitation, reasonable fees and expenses of
attorneys, accountants, consultants and experts) that the Weatherford
Indemnified Parties incur, suffer or realize, are subject to a claim for or are
subject to, that are based upon, arising out of, relating to or otherwise in
respect of:
(i) any breach of any covenant or agreement of any
Grant Company contained in this Agreement or any other
agreement contemplated hereby, including the Tax Allocation
Agreement;
(ii) the acts or omissions of any Grant Company or
any Affiliate of any Grant Company (other than Weatherford and
its Affiliates that are not Grant Companies after the
Distribution) or the conduct of any business by them or any
predecessor thereto before, on or after the Distribution Date;
(iii) the Grant Liabilities;
(iv) the Assets;
(v) the conveyance, assignment, sale, lease or making
available of the Assets;
(vi) any Grant Tax (except as provided otherwise in
the Tax Allocation Agreement);
(vii) any and all amounts for which Weatherford may
be liable on account of any claims, administrative charges,
self-insured retentions, deductibles, retrospective premiums
or fronting provisions in insurance policies, including as the
result of any uninsured period, insolvent insurance carriers
or exhausted policies, arising from claims by any Grant
Company or any Affiliate of any Grant Company, or the
employees of any of the foregoing, or claims by insurance
carriers of any Grant Company for indemnity arising from or
out of claims by or against any Grant Company for acts or
omissions of any Grant Company, or related to any current or
past business of any Grant Company or any product or service
provided by any Grant Company;
(viii) any COBRA Liability with respect to any
employees of Weatherford who become employees of any Grant
Company after the Distribution;
(ix) any settlements or judgments in any litigation
commenced by one or more insurance carriers against
Weatherford on account of claims by any Grant Company or
employees of any Grant Company;
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(x) any and all Liabilities incurred by Weatherford
pursuant to its obligations hereunder in seeking to obtain or
obtaining any consent or approval to assign, transfer or lease
any interest in any asset or instrument, contract, lease,
permit or benefit arising thereunder or resulting therefrom;
(xi) any Liability relating to the failure to comply
with any bulk sales or transfer laws in connection herewith or
with any of the other agreements contemplated hereby;
(xii) the on-site or off-site handling, storage,
treatment or disposal of any Waste Materials generated by any
Grant Company;
(xiii) any and all Environmental Conditions, known or
unknown, existing on, at or underlying any of the Properties
or related to the operations on any of the Properties or with
regard to any of the Assets;
(xiv) any acts or omissions of any Grant Company
relating to the ownership or operation of the business of any
Grant Company or the Properties;
(xv) any and all Liabilities incurred by Weatherford
or any of its Affiliates relating to any guarantee or other
financial assurance provided by Weatherford or any of its
Affiliates on behalf of any Grant Company;
(xvi) any Liability relating to any claim or demand
by any stockholder of Weatherford, any stockholder of Grant
following the Distribution or any other Person with respect to
the Transfers (or any of them), the Contribution, the
Distribution or the transactions relating thereto; and
(xvii) any Liability relating to the Grant 401(k)
Plan, any Grant Employee Benefit Plan and the other employee
benefit or welfare plans of any Grant Company.
(b) Absolute Indemnity. NONE OF THE WEATHERFORD INDEMNIFIED
PARTIES WILL BE OBLIGATED TO INSTITUTE ANY LEGAL PROCEEDINGS IN
CONNECTION WITH THE COLLECTION OR PURSUIT OF ANY INSURANCE IN ORDER TO
EXERCISE AN INDEMNIFICATION REMEDY UNDER THIS ARTICLE 6. UNLESS
OTHERWISE SPECIFICALLY EXPRESSED, THIS INDEMNITY OBLIGATION SHALL APPLY
WITHOUT REGARD TO WHETHER THE LIABILITY OR ENVIRONMENTAL LIABILITY WAS
CAUSED BY THE ORDINARY OR GROSS NEGLIGENCE OF ANY OF THE WEATHERFORD
INDEMNIFIED PARTIES (WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT OR ACTIVE OR PASSIVE), OR WHETHER THE LIABILITY OR
ENVIRONMENTAL LIABILITY IS BASED ON STRICT LIABILITY, ABSOLUTE
LIABILITY OR ARISES AS AN OBLIGATION OF CONTRIBUTION OR INDEMNITY.
GRANT ACKNOWLEDGES THAT IT IS AWARE OF VARIOUS THEORIES KNOWN AS THE
"EXPRESS NEGLIGENCE" DOCTRINE AND OTHER SIMILAR DOCTRINES AND THEORIES
THAT MAY LIMIT INDEMNIFICATION AND AGREES AND STIPULATES THAT THE
PROVISIONS OF THIS AGREEMENT REFLECT THE EXPRESS INTENT OF THE PARTIES
THAT THE INDEMNIFICATION TO BE PROVIDED BY GRANT APPLY NOTWITHSTANDING
THE FACT THAT THE LIABILITY OR ENVIRONMENTAL LIABILITY (I) MAY NOT
CURRENTLY BE KNOWN BY IT OR MANIFEST ITSELF IN ANY REGARD, (II) MAY
ARISE UNDER A STATUTE OR THEORY THAT MAY NOT CURRENTLY EXIST OR BE
KNOWN TO GRANT, (III) MAY ARISE AS A RESULT OF ANY ACT OR OMISSION BY
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ANY OF THE WEATHERFORD INDEMNIFIED PARTIES (WHETHER SUCH CONDUCT BE
SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR (IV) MAY CONSTITUTE
A VIOLATION OF ANY APPLICABLE CIVIL OR CRIMINAL LAW OR REGULATION.
6.2 Notice of Circumstance. After receipt by Weatherford of notice, or
Xxxxxxxxxxx'x actual discovery, of any action, proceeding, claim, demand or
potential claim that could give rise to a right to indemnification pursuant to
any provision of this Agreement (any of which is individually referred to as a
"Circumstance"), Weatherford shall give Grant written notice describing the
Circumstance in reasonable detail; provided, however, that no delay by
Weatherford in notifying Grant shall relieve Grant from any Liability or
Environmental Liability hereunder. If Grant notifies Weatherford within 15 days
after such notice that Grant is assuming the defense thereof, except as
otherwise provided in the Tax Allocation Agreement, (i) Grant will defend the
Weatherford Indemnified Parties against the Circumstance with counsel of its
choice, provided such counsel is reasonably satisfactory to Weatherford, (ii)
the Weatherford Indemnified Parties may retain separate co-counsel at its or
their sole cost and expense (except that Grant will be responsible for the fees
and expenses for the separate co-counsel to the extent Weatherford concludes
reasonably that the counsel Grant has selected has a conflict of interest),
(iii) the Weatherford Indemnified Parties will not consent to the entry of any
judgment or enter into any settlement with respect to the Circumstance without
the written consent of Grant and (iv) Grant will not consent to the entry of any
judgment with respect to the Circumstance, or enter into any settlement that (x)
requires any payments by or continuing obligations of an Weatherford Indemnified
Party, (y) requires an Weatherford Indemnified Party to admit any facts or
liability that could reasonably be expected to adversely affect an Weatherford
Indemnified Party in any other matter or (z) does not include a provision
whereby the plaintiff or claimant in the matter releases the Weatherford
Indemnified Parties from all Liability with respect thereto, without the written
consent of Weatherford. In the event Grant does not notify Weatherford within 15
days after Weatherford has given notice of the Circumstance that Grant is
assuming the defense thereof, the Weatherford Indemnified Parties may defend
against, or enter into any settlement with respect to, the Circumstance in any
manner the Weatherford Indemnified Parties reasonably may deem appropriate, at
Grant's sole cost.
6.3 Payment. Payment of any amounts due pursuant to this Article 6
shall be made in United States dollars in immediately available funds, by wire
transfer to a bank account or accounts to be designated by the Weatherford
Indemnified Party, within ten Business Days after notice is sent by the
Weatherford Indemnified Party. If and to the extent the Weatherford Indemnified
Party shall make written demand upon Grant for indemnification pursuant to this
Article 6 and Grant shall refuse or fail to pay in full, within ten Business
Days of such written demand, the amounts demanded pursuant hereto and in
accordance herewith, then the Weatherford Indemnified Party may utilize any
legal or equitable remedy to collect from Grant the amount demanded.
6.4 Insurance. Grant shall not be obligated to indemnify the
Weatherford Indemnified Parties for amounts that shall have been covered and
paid by insurance of the Weatherford Indemnified Parties; provided, however,
insurance shall not include deductibles or self-insured retentions.
6.5 Scope of Indemnification. INDEMNIFICATION UNDER THIS ARTICLE 6
SHALL BE IN ADDITION TO ANY REMEDIES WEATHERFORD OR ANY WEATHERFORD INDEMNIFIED
PARTY MAY HAVE AT LAW OR EQUITY. THERE SHALL BE NO TIME LIMIT AS TO GRANT'S
INDEMNIFICATION OBLIGATIONS HEREUNDER.
6.6 Indemnity for Certain Environmental Liabilities. It is the
intention of the parties that the indemnity provided herein with respect to
Environmental Liabilities under CERCLA and corresponding provisions of state law
is an agreement expressly not barred by 42 U.S.C. Section 9607(e)(i) or
corresponding provisions of any state law.
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ARTICLE 7
CONDITIONS TO OBLIGATIONS OF WEATHERFORD
The obligations of the Weatherford to consummate the Distribution
hereunder shall be subject to the fulfillment of each of the following
conditions:
(a) The Board of Directors of Weatherford shall be satisfied that,
after giving effect to the Contribution, (i) Weatherford will not be insolvent
and will not have unreasonably small capital with which to engage in its
businesses and (ii) the Weatherford surplus will be sufficient to permit,
without violation of Delaware law, the Distribution.
(b) The Transfers shall have been made or occurred.
(c) Weatherford and Grant shall have executed the Preferred Supplier
Agreement.
(d) Weatherford and Xxxxx shall have executed the Tax Allocation
Agreement.
(e) Xxxxxxxxxxx and Grant shall have executed the Transition Services
Agreement.
(f) Grant shall have filed the Restated Certificate of Incorporation,
effecting the recapitalization described in Section 3.2.
(g) The Board of Directors of Grant shall have adopted the Amended
Bylaws.
(h) The Grant Common Stock shall have been approved for listing by the
NYSE, and the NYSE shall not have (i) withdrawn its certification filed with the
SEC that the Grant Common Stock has been approved for listing, (ii) suspended
trading in either the Grant Common Stock or the Xxxxxxxxxxx Common Stock or
(iii) filed with the SEC a Form 25 to strike either the Grant Common Stock or
the Xxxxxxxxxxx Common Stock from listing and registration thereof.
(i) Grant's Registration Statement on Form 10 shall have become
effective pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and the SEC shall not have commenced any action to prohibit or restrict
the Distribution in any way.
(j) Xxxxxxxxxxx shall have received a ruling from the United States
Internal Revenue Service to the effect that, for United States federal income
tax purposes, no gain or loss will be recognized by, and no amount will be
included in the income of, the Xxxxxxxxxxx stockholders upon their receipt of
shares of Grant Common Stock in the Distribution and that no gain or loss will
be recognized by Weatherford as a result of the Distribution.
(k) Grant shall have executed the Note and delivered the Note to
Weatherford.
(l) The Board of Directors of Weatherford shall not have determined, in
its sole discretion, to abandon, defer or modify the Transfers, the Contribution
and the Distribution or the terms thereof.
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ARTICLE 8
MISCELLANEOUS
8.1 Grant Covenants. To assure the performance of the obligations of
Grant under this Agreement, Grant hereby covenants and agrees that it will not,
and will cause the Grant Companies not to, merge, convert into another entity,
engage in a share exchange for a majority of its shares, liquidate or transfer,
assign or otherwise convey or allocate, directly or indirectly, in one or more
transactions, whether or not related, a majority of Grant's assets (determined
in good faith by a board resolution prior to the transaction on a fair value and
consolidated basis) to any Person unless the acquiring Person (i) expressly
assumes the obligations of Grant hereunder, (ii) executes and delivers to
Weatherford an agreement, in form and substance satisfactory to Weatherford,
agreeing to be bound by each and every provision of this Agreement as if it were
Grant and (iii) has a net worth on a pro forma basis after giving effect to the
acquisition or business combination equal to or greater than that of Grant (on a
consolidated basis) and Grant complies with the provisions of the Tax Allocation
Agreement. Any such assumption of liability by the acquiring Person shall not
release Grant from its obligations under this Agreement.
8.2 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 internals laws of the State of Texas, without regard to or
the application of the rules of conflicts of laws set forth in such laws.
8.3 Arbitration.
(a) In the event there shall exist any dispute or controversy
with respect to this Agreement or any matter relating hereto or the transactions
contemplated hereby, the parties hereto agree to seek to resolve such dispute or
controversy by mutual agreement. If the parties hereto are unable to resolve
such dispute or controversy by agreement within 90 days following notice by any
party hereto of the nature of such dispute or controversy setting forth in
reasonable detail the circumstances and basis of such dispute or controversy,
the parties agree that such dispute or controversy be resolved by binding
arbitration pursuant to the provisions of this Section 8.3 and in accordance
with the then current Commercial Arbitration Rules of the American Arbitration
Association. If a party elects to submit such matter to arbitration, such party
shall provide notice to the other party of its election to do so, which notice
shall name one arbitrator. Within 10 Business Days after the receipt of such
notice, the other party shall provide written notice to the electing party
naming a second arbitrator. The two arbitrators so appointed shall name a third
arbitrator, or failing to do so, a third arbitrator shall be appointed pursuant
to the Commercial Arbitration Rules of the American Arbitration Association.
(b) All arbitration proceedings shall be held in Houston,
Texas.
(c) Each arbitrator selected to act hereunder shall be
qualified by education and experience to pass on the particular question in
dispute and shall be independent and not affiliated with any of the parties
hereto or an Affiliate thereof. A person associated or affiliated with the legal
counsel for either of the parties or their Affiliates will not be considered
independent.
(d) The arbitrators shall resolve all disputes in controversy
in accordance with the Texas substantive law. All statutes of limitations that
would otherwise be applicable shall apply to any arbitration proceeding. The
arbitrators shall not be authorized to order any equitable remedies and shall
only be empowered to make monetary awards and determinations with respect to
compliance by a party and its Affiliates with the terms hereof.
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(e) The arbitrators appointed pursuant to this Section 8.3
shall promptly hear and determine (after due notice and hearing and giving the
parties reasonable opportunity to be heard) the questions submitted, and shall
endeavor to render their decision within 60 days after appointment of the third
arbitrator or as soon as practical thereafter. If within such period a decision
is not rendered by the board or a majority thereof, new arbitrators may be named
and shall act hereunder at the election of either party in like manner as if
none had previously been named.
(f) The decision of the arbitrators, or a majority thereof,
made in writing, shall absent manifest error be final and binding upon the
parties hereto as to the questions submitted, and each party shall abide by such
decision.
(g) The cost of the arbitration shall be borne by the parties
thereto as unanimously determined by the arbitrators.
(h) Notwithstanding the agreement by the parties to
arbitration, either party may seek from a court of competent jurisdiction
injunctive and other equitable relief in aid of arbitration. Each party hereto
on its own behalf and on behalf of its Affiliates irrevocably agrees that any
such relief shall first be sought in Federal or State court in Xxxxxx County,
Texas.
8.4 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
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
8.5 Expenses. Except as otherwise set forth herein or in any agreement
executed in connection herewith, all costs and expenses related to the
Distribution and the transactions contemplated hereby shall be borne by
Weatherford.
8.6 Entire Agreement. This Agreement, including the Schedules, Annexes
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,
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statements, promises and understandings, whether oral or written, with respect
to the subject matter hereof. This Agreement may not be amended, altered or
modified except by a writing signed by duly authorized officers of Weatherford
and Grant.
8.7 Waiver. No consent or waiver, express or implied, by a party hereto
to or of any breach or default by the other party hereto in the performance by
such other party of its obligations hereunder will be deemed or construed to be
a consent or waiver to or of any other breach or default in the performance by
such other party of the same or any other obligations of such other party
hereunder. Failure on the part of a party to complain of any act or failure to
act of the other party or to declare the other party in default, irrespective of
how long such failure continues, will not constitute a waiver by such party of
its rights hereunder. The giving of consent by a party in any one instance will
not limit or waive the necessity to obtain such party's consent in any future
instance.
8.8 Binding Effect; Assignment; No Third Party Benefit.
(a) This Agreement will be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. Neither party to this Agreement may assign its
rights under this Agreement without the prior written consent of the other
party; provided, however, Weatherford may assign any of its rights and
obligations under this Agreement to any Weatherford Affiliate, of which
Weatherford beneficially owns or controls at least 50% of the equity or other
interests of such Affiliate, without the consent of Grant.
(b) Nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than Grant, Xxxxxxxxxxx and the
Xxxxxxxxxxx Indemnified Parties any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
8.9 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
8.10 References. All references in this Agreement to Articles, Sections
and other subdivisions refer to the Articles, Sections and other subdivisions of
this Agreement unless expressly provided otherwise. The words "this Agreement",
"herein", "hereof", "hereby", "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly
so limited.
8.11 Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, will include all other
genders; and the singular will include the plural and vice versa. The headings
of the Articles and Sections of this Agreement are included for convenience only
and will not be deemed to constitute part of this Agreement or to affect the
construction hereof or thereof.
8.12 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 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.
8.13 Further Assurances. Each party hereto agrees to do all acts and
things and to make, execute and deliver such written instruments, as will from
time to time be reasonably required to carry out the terms and provisions of
this Agreement.
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23
[signatures of the following page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth in the introduction to this Agreement.
XXXXXXXXXXX INTERNATIONAL, INC.
By:
--------------------------------
Xxxxxx X. Xxxx
Senior Vice President,
General Counsel and Secretary
GRANT PRIDECO, INC.
By:
--------------------------------
Xxxx X. Xxxxx
President
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ANNEX A
EXCLUDED ASSETS
The real estate, facility and improvements located at 0000 X. Xxxxxxxx Xxxxxxx,
Xxxxxxx, Xxxxx 00000, being two tracts of land aggregating 13.4897 acres, more
or less.
United States Patent No. 5,263,683 (issued November 23, 1993) and United States
Patent Application Nos. TA-0024-US and TA-0018-US and all related technology and
rights thereto.
A-1
