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EXHIBIT 2.1
DISTRIBUTION AGREEMENT
BY AND BETWEEN
XXXXXXXXXXX INTERNATIONAL, INC.
AND
GRANT PRIDECO, INC.
APRIL __, 2000
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TABLE OF CONTENTS
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ARTICLE 1.........................................................................................................1
CERTAIN DEFINITIONS......................................................................................1
1.1 "Additional Shares"...................................................................1
1.2 "Affiliate"...........................................................................1
1.3 "Agreement"...........................................................................2
1.4 "Assets"..............................................................................2
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"...........................................................3
1.18 "Excluded Assets".....................................................................3
1.19 "Grant"...............................................................................3
1.20 "Grant Common Stock"..................................................................3
1.21 "Grant Company".......................................................................3
1.22 "Grant Employee"......................................................................3
1.23 "Grant Employee Benefit Plans"........................................................3
1.24 "Grant Entity"........................................................................3
1.25 "Grant 401(k) Plan"...................................................................4
1.26 "Grant Liabilities"...................................................................4
1.27 "Grant Option"........................................................................5
1.28 "Grant Taxes".........................................................................5
1.29 "Liability"...........................................................................5
1.30 "1998 Director Options and Warrants"..................................................5
1.31 "1998 Weatherford Employee Option Plan"...............................................5
1.32 "Note"................................................................................5
1.33 "NYSE"................................................................................5
1.34 "Old Weatherford Director Plans"......................................................5
1.35 "Old Weatherford Employee Option Plans"...............................................5
1.36 "Person"..............................................................................6
1.37 "Preferred Supplier Agreement"........................................................6
1.38 "Properties"..........................................................................6
1.39 "Record Date".........................................................................6
1.40 "Restated Certificate of Incorporation"...............................................6
1.41 "SEC".................................................................................6
1.42 "Service of Process"..................................................................6
1.43 "Stock Split".........................................................................6
1.44 "Tax Allocation Agreement"............................................................6
1.45 "Taxes"...............................................................................6
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1.46 "Transfer Agent"......................................................................6
1.47 "Transfers"...........................................................................6
1.48 "Transition Services Agreement".......................................................6
1.49 "Trust"...............................................................................6
1.50 "Waste Materials".....................................................................6
1.51 "Weatherford".........................................................................7
1.52 "Weatherford Common Stock"............................................................7
1.53 "Xxxxxxxxxxx Company".................................................................7
1.54 "Weatherford Employee"................................................................7
1.55 "Weatherford 401(k) Plan".............................................................7
1.56 "Weatherford Indemnified Parties".....................................................7
1.57 "Weatherford Option"..................................................................7
ARTICLE 2.........................................................................................................7
CONTRIBUTION.............................................................................................7
2.1 Contribution..........................................................................7
2.2 Grant Liabilities.....................................................................8
2.3 Consideration.........................................................................8
2.4 Limitation of Assignments.............................................................8
2.5 Delivery of Records...................................................................8
2.6 Guarantees and Financial Assurances...................................................9
2.7 Grant Acknowledgments.................................................................9
ARTICLE 3.........................................................................................................9
RECAPITALIZATION OF GRANT; MECHANICS OF DISTRIBUTION.....................................................9
3.1 Grant Capitalization..................................................................9
3.2 Recapitalization of Grant.............................................................9
3.3 Mechanics of Distribution.............................................................9
3.4 Timing of Distribution................................................................9
ARTICLE 4.........................................................................................................9
EMPLOYEE BENEFIT PLANS...................................................................................9
4.1 Employee Benefits are Grant Liabilities...............................................9
4.2 401(k) Plans..........................................................................9
4.3 Employee Health, Life and Disability Insurance Plans.................................10
4.4 Credited Employment..................................................................10
4.5 No Termination of Employment for Benefit Entitlement Purposes........................10
ARTICLE 5........................................................................................................10
STOCK PLANS.............................................................................................10
ARTICLE 6........................................................................................................14
INDEMNIFICATION.........................................................................................14
6.1 Indemnification Matters..............................................................14
6.2 Notice of Circumstance...............................................................16
6.3 Payment..............................................................................16
6.4 Insurance............................................................................16
6.5 Scope of Indemnification.............................................................17
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6.6 Indemnity for Certain Environmental Liabilities......................................17
ARTICLE 7........................................................................................................17
CONDITIONS TO OBLIGATIONS OF WEATHERFORD................................................................17
ARTICLE 8........................................................................................................18
MISCELLANEOUS...........................................................................................18
8.1 Grant Covenants......................................................................18
8.2 Governing Law........................................................................18
8.3 Arbitration..........................................................................18
8.4 Notices..............................................................................19
8.5 Expenses.............................................................................20
8.6 Entire Agreement.....................................................................20
8.7 Waiver...............................................................................20
8.8 Binding Effect; Assignment; No Third Party Benefit...................................20
8.9 Counterparts.........................................................................20
8.10 References...........................................................................20
8.11 Terminology..........................................................................21
8.12 Severability.........................................................................21
8.13 Further Assurances...................................................................21
LIST OF ANNEXES
Annex A - Amended Bylaws of Grant
Annex B - Excluded Assets
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
Annex K - Employee Benefits Agreement
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DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Agreement") is dated as of April
__, 2000, 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 effect the
Stock Split and 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 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, which Additional Shares will be
issued to Weatherford as a result of the Stock Split.
1.2 "Affiliate" shall mean, with respect to Weatherford or Xxxxx
Prideco, any Person, that directly or indirectly, is in control of, is
controlled by, controls or is under common control of Weatherford or Grant
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 Xxxxx Prideco, as the case may be. For purposes of clarity, neither
Weatherford nor Grant Prideco shall be considered to be an Affiliate of the
other, nor shall National Oilwell, Grey Wolf Inc. or any other company in which
a director or officer of Weatherford is also a director, officer or shareholder
be considered an Affiliate of Weatherford unless Weatherford itself controls
such company.
1.3 "Agreement" shall have the meaning specified in the preamble.
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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 the Excluded Assets.
1.5 "Amended Bylaws" shall mean the Amended Bylaws of Grant, in
substantially the form of Annex A 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 intercompany
indebtedness owed by a Grant Company to a Xxxxxxxxxxx Company in excess of the
sum of (i) the amount of the Note owed by Grant to Weatherford immediately
prior to the Contribution, (ii) the Drill Stem Credits (as defined in the
Preferred Supplier Agreement), (iii) indebtedness owed by Grant to Weatherford
pursuant to the Tax Allocation Agreement and (iv) indebtedness owed by Grant in
connection with any employee benefit plans, arrangements or policies for the
benefit of employees and former employees (and their beneficiaries) of any
Grant Company.
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),
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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, 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 "Excluded Assets" shall mean the assets listed on Annex B hereto.
1.19 "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 substantially all of the assets or otherwise, and any and all
predecessors or successors to such entities.
1.20 "Grant Common Stock" shall mean shares of common stock, $.01 par
value per share, of Grant.
1.21 "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 company in which the business of a Grant Entity is or was conducted (or
any predecessor to the business or assets of Grant) 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); provided, however, Xxxxxxxxxxx International, Inc., Weatherford
Canada Ltd. and EVI de Venezuela, S.A. shall not be considered Grant Companies
to the extent the business conducted by them does not relate to the drill pipe,
tubular or related businesses that are being transferred to a subsidiary of
Grant.
1.22 "Grant Employee" shall mean an individual whose principal
occupation on the Distribution Date is as an employee of any Grant Company.
1.23 "Grant Employee Benefit Plans" shall have the meaning specified
in Section 4.3 hereof.
1.24 "Grant Entity" shall mean any entity or division of an entity in
which the drill pipe, tubular or related or associated business of
Xxxxxxxxxxx'x Xxxxx Prideco division is now conducted or previously was
conducted, including when those businesses were conducted as a division of
Energy Ventures, Inc. or EVI, Inc.; provided, however, a Grant Entity shall not
include any Xxxxxxxxxxx Company other than to the extent such Xxxxxxxxxxx
Company's business is related to or associated with the drill pipe or other
business historically conducted by the Grant Prideco division.
1.25 "Grant 401(k) Plan" shall have the meaning specified in Section
4.2 hereof.
1.26 "Grant Liabilities" shall mean any and all Liabilities and
Environmental Liabilities (other than Liabilities or Environmental Liabilities
resulting from, arising out of or relating to the Excluded Assets) to which
Weatherford or any of its Affiliates may now or at any time in the future
become subject (whether
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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 (other than Liabilities or Environmental Liabilities
resulting from, arising out of or relating to the Excluded Assets):
(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 or employees (to the extent such officer, director or
employee is acting in his or her capacity as an officer, director or
employee of a Grant Company), independent contractors or agents (in
their capacity as such), (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;
(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
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(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.
1.27 "Grant Option" shall mean an option to purchase Grant Common
Stock.
1.28 "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).
1.29 "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.
1.30 "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.
1.31 "1998 Weatherford Employee Option Plan" shall mean the
Xxxxxxxxxxx International, Inc. 1998 Employee Stock Option Plan.
1.32 "Note" shall mean the promissory note to be executed by Grant in
favor of Weatherford, in substantially the form of Annex C hereto.
1.33 "NYSE" shall mean The New York Stock Exchange, Inc.
1.34 "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.
1.35 "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.
1.36 "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.
1.37 "Preferred Supplier Agreement" shall mean the agreement to be
entered into between Weatherford and Grant, in substantially the form of Annex
D hereto.
1.38 "Properties" shall mean the properties currently or previously
owned or operated by any Grant Company or Grant Entity, but excluding the
Excluded Assets.
1.39 "Record Date" shall have the meaning specified in Section 3.3
hereof.
1.40 "Restated Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation of Grant, in substantially the form of Annex E
hereto.
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1.41 "SEC" shall mean the United States Securities and Exchange
Commission.
1.42 "Service of Process" shall have the meaning specified in Section
6.1 hereof.
1.43 "Stock Split" shall mean the split pursuant to the Restated
Certificate of Incorporation of the outstanding shares of Grant Common Stock
into an aggregate number of shares equal to the number of shares of Weatherford
Common Stock on the Record Date, resulting in the issuance of the Additional
Shares.
1.44 "Tax Allocation Agreement" shall mean the agreement to be entered
into between Weatherford and Grant, substantially in the form of Annex F
hereto.
1.45 "Taxes" shall mean all federal, state, local, foreign and other
taxes, 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 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.
1.46 "Transfer Agent" shall mean American Stock Transfer & Trust
Company.
1.47 "Transfers" shall mean the transactions described on Annex G
hereto.
1.48 "Transition Services Agreement" shall mean the agreement to be
entered into between Weatherford and Xxxxx, in substantially the form of Annex
H hereto.
1.49 "Trust" shall mean the Energy Ventures, Inc. Executive Deferred
Compensation Stock Ownership Trust.
1.50 "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.
1.51 "Weatherford" shall mean Xxxxxxxxxxx International, Inc., a
Delaware corporation.
1.52 "Weatherford Common Stock" shall mean shares of common stock,
$1.00 par value per share, of Weatherford.
1.53 "Xxxxxxxxxxx Company" shall mean any corporation, joint venture,
partnership, limited liability company, association, investment or other entity
(other than Grant, a Grant Company or any entity transferred to Grant or a
Grant Company as a result of the Transfers), including Weatherford, and any
predecessor of the foregoing, in which Xxxxxxxxxxx or any Xxxxxxxxxxx Company
(or any predecessor to the business or assets of Xxxxxxxxxxx or any Xxxxxxxxxxx
Company) now or at any time in the past owned, 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).
1.54 "Weatherford Employee" shall mean an individual whose principal
occupation on the Distribution Date is as an employee of any Xxxxxxxxxxx
Company.
1.55 "Weatherford 401(k) Plan" shall mean the Xxxxxxxxxxx
International, Inc. 401(k) Plan.
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1.56 "Weatherford Indemnified Parties" shall have the meaning set
forth in Section 6.1(a) hereof.
1.57 "Weatherford Option" shall mean an option or warrant, as
applicable, to purchase Weatherford Common Stock.
ARTICLE 2
CONTRIBUTION
2.1 Contribution.
(a) Effective before the Distribution Date: (i) Weatherford
and Grant shall cause the Transfers to be made or occur, or shall have
entered into agreements to effect the Transfers; (ii) Grant will
transfer, or cause to be transferred, the Excluded Assets to the
Xxxxxxxxxxx Company or Weatherford Companies designated by
Weatherford; (iii) Grant will execute and deliver the Note; (iv)
Weatherford will contribute the Contributed Indebtedness to Grant; (v)
Grant will effect the Stock Split and issue the Additional Shares to
Weatherford; and (vi) 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 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, EXCEPT TO THE
EXTENT SUCH LIABILITY RELATES TO THE OWNERSHIP OR OPERATION OF AN EXCLUDED
ASSET AFTER THE DISTRIBUTION DATE.
2.3 Consideration. The aggregate consideration for the Transfers shall
consist of (a) the contribution by Weatherford to Xxxxx of the Contributed
Indebtedness and (b) all other agreements, arrangements and understandings
contemplated by this Agreement.
2.4 Limitation of Assignments. Notwithstanding any other provision
hereof, this Agreement shall not constitute nor require an assignment to any
Grant Company or, in the case of Excluded Assets, any Xxxxxxxxxxx Company of
any contract, permit, license or other right if an attempted assignment of the
same
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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 a Grant Company or, in the case of
Excluded Assets, a Xxxxxxxxxxx Company without such consent (a "Consent
Required Contract"), each transferor agrees that it will use its best efforts
to obtain all consents of third parties and governmental entities as are
necessary for the assignment of any Consent Required Contract. To the extent
that any Consent Required Contract cannot be transferred by law or without the
consent of any governmental entity or third party, such Consent Required
Contract shall be held by the transferor in trust for its transferee and shall
be performed by such transferee in the name of the transferor and all benefits
and obligations derived thereunder shall be for the account of such transferee;
provided, however, that where entitlement of a transferee to such Consent
Required Contract is not recognized by any third party or governmental entity,
its transferor shall, at the request of such transferee, enforce in a
reasonable manner, at the cost of and for the account of such transferee, any
and all rights of such transferor against such third party or governmental
entity.
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 effecting the
Stock Split, and the Board of Directors of Grant shall have adopted the Amended
Bylaws.
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 share of
Weatherford Common Stock held by such holder. No
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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 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. 2000 Employee Stock Option and Restricted Stock Plan, in
substantially the form of Annex I hereto (the "Grant Employee Stock Plan"), and
the Grant Prideco, Inc. 2000 Non-Employee Director Stock Option Plan, in
substantially the form of Annex J attached hereto (the "Grant Director Plan").
In consideration of Xxxxxxxxxxx'x contribution of the Contributed Indebtedness
to Grant, on or before the Distribution Date, Grant will enter into the
Employee Benefits Agreement in substantially the form of Annex K hereto. 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 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 share 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 (G/W)
Where E = The original exercise price of the applicable Weatherford Option;
G = The market value per share of Grant Common Stock (a) initially based on
the average of the high and low trading prices on the NYSE on the first full
trading date after "when-distributed" trading begins, and (b) following 30
consecutive trading days after "when-distributed" trading begins, for
options remaining outstanding on such date, the average of the last sales
price per share of Grant Common Stock on the NYSE 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 (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 (G/W)
The number of shares of Grant Common Stock subject to the
Grant Option will equal NE/Pg
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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 = The market value per share of Grant Common Stock (a) initially based on
the average of the high and low trading prices on the NYSE on the first full
trading date after "when-distributed" trading begins, and (b) following 30
consecutive trading days after "when-distributed" trading begins, for
options remaining outstanding on such date, the average of the last sales
price per share of Grant Common Stock on the NYSE for each of the 30
consecutive trading days beginning on the date "when-distributed" trading
begins;
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 = The market value per share of Grant Common Stock (a) initially based on
the average of the high and low trading prices on the NYSE on the first full
trading date after "when-distributed" trading begins, and (b) following 30
consecutive trading days after "when-distributed" trading begins, for
options remaining outstanding on such date, the average of the last sales
price per share of Grant Common Stock on the NYSE for each of the 30
consecutive trading days beginning on the date "when-distributed" trading
begins;
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).
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(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 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 without any
reference to employment with Grant.
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
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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;
(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 to any Grant
Company 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;
(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; and
(xviii) any Liability relating to any Excluded Asset with
respect to any period prior to the Distribution Date.
(b) Absolute Indemnity. NONE OF THE XXXXXXXXXXX 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
XXXXXXXXXXX INDEMNIFIED PARTIES (WHETHER
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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 ANY OF THE XXXXXXXXXXX
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.
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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.
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) Weatherford 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 Weatherford Common
Stock or (iii) filed with the SEC a Form 25 to strike either the Grant Common
Stock or the Weatherford 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) Weatherford 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
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amount will be included in the income of, the Weatherford 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.
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
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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.
(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: President
If to Weatherford: Xxxxxxxxxxx International, Inc.
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax number: (000) 000-0000
Attention: General Counsel
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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,
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 Weatherford 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
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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.
[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
Executive Vice President, Chief Financial
Officer, General Counsel and Secretary
GRANT PRIDECO, INC.
By:
----------------------------------------
Xxxx X. Xxxxx
President
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