SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (date of earliest event reported)
APRIL 10, 2001
Halliburton Company
(Exact name of registrant as specified in its charter)
State or other Commission IRS Employer
jurisdiction File Number Identification
of incorporation Number
Delaware 1-3492 No. 75-2677995
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
(Address of principal executive offices)
Registrant's telephone number,
including area code - 214/978-2600
1
The Exhibit Index Appears on Page 4
INFORMATION TO BE INCLUDED IN REPORT
Item 5. Other Events
The registrant may, at its option, report under this item any events, with
respect to which information is not otherwise called for by this form, that the
registrant deems of importance to security holders.
On April 10, 2001 registrant issued a press release entitled "Halliburton
Completes Sale of Dresser Equipment Group" pertaining, among other things, to an
announcement that registrant has completed the sale of Dresser Equipment Group
(DEG), now called Dresser, Inc., to an investor group consisting primarily of
First Reserve Corporation and Odyssey Investment Partners, LLC. The value of the
sale is $1.55 billion in cash and assumed liabilities. For registrant, the
transaction results in a $500 million pre-tax gain and a $300 million after-tax
gain, or $0.69 per share. A subsidiary of registrant will retain ownership of
5.1 percent of DEG. After adjustments for assumed liabilities and changes in net
assets since the date of the purchase agreement, registrant received
approximately $1.3 billion in net cash proceeds. After payment of taxes and sale
expenses, registrant will net approximately $1.0 billion in cash. All above
amounts are subject to adjustments based upon the DEG balance sheet at closing.
Item 7. Financial Statements and Exhibits
List below the financial statements, pro forma financial information and
exhibits, if any, filed as part of this report.
(c) Exhibits.
Exhibit 99 - Amended and Restated Agreement and Plan of Recapitalization
Among Halliburton Company, Dresser B.V. and DEG
Acquisitions, LLC dated as of April 10, 2001
2
The Exhibit Index Appears on Page 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HALLIBURTON COMPANY
Date: May 9, 2001 By: /s/ Susan S. Keith
------------------------------------
Susan S. Keith
Vice President and Secretary
3
The Exhibit Index Appears on Page 4
EXHIBIT INDEX
Exhibit Description
99 Amended and Restated Agreement and Plan
of Recapitalization Among Halliburton Company,
Dresser B.V. and DEG Acquisitions, LLC dated
as of April 10, 2001
4
Exhibit 99.1
Execution Copy
AMENDED AND RESTATED
AGREEMENT AND PLAN
OF RECAPITALIZATION
dated as of April 10, 2001
Among
HALLIBURTON COMPANY,
THE SELLER NAMED HEREIN,
AND
DEG ACQUISITIONS, LLC
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.................................................2
Section 1.02. Rules of Construction.......................................2
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities.............................2
Section 2.02. Sale and Purchase of BV Companies...........................4
Section 2.03. Cash Consideration..........................................4
Section 2.04. The Closings................................................4
Section 2.05. Pre-Closing Transactions....................................5
Section 2.06. Transactions at the First Closing...........................5
Section 2.07. Transactions at the Second Closing..........................7
Section 2.08. Adjustment of the Preliminary Purchase Price................8
Section 2.09. Procedures for Calculating the Purchase Price Adjustment....9
Section 2.10. Adjustments to Net Equity...................................11
Section 2.11. Allocation of Purchase Price Adjustment.....................13
Section 2.12. Amendments to Effect Recapitalization.......................13
Section 2.13. Delayed Purchases...........................................13
Section 2.14. Joint Ventures..............................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES
Section 3.01. Organization and Qualification..............................15
Section 3.02. Authorization of Agreement..................................15
Section 3.03. Approvals...................................................16
Section 3.04. No Violation................................................16
Section 3.05. No Brokers..................................................16
Section 3.06. Title to Securities.........................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Section 4.01. Organization................................................17
Section 4.02. Authorization of Agreement..................................17
Section 4.03. Approvals...................................................18
Section 4.04. No Violation................................................18
Section 4.05. Title to Securities.........................................18
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
i
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS OF THE COMPANY GROUPS
Section 5.01. Organization; Subsidiaries..................................19
Section 5.02. Organizational Documents; Authorization; No Violation.......20
Section 5.03. Capitalization..............................................20
Section 5.04. Title to Properties.........................................21
Section 5.05. Financial Statements........................................22
Section 5.06. Authorizations..............................................23
Section 5.07. Compliance With Laws; Regulation of Businesses..............23
Section 5.08. Taxes.......................................................24
Section 5.09. Principal Contracts.........................................25
Section 5.10. Employees...................................................26
Section 5.11. Environmental Matters.......................................30
Section 5.12. Litigation..................................................31
Section 5.13. Material Adverse Changes....................................31
Section 5.14. Customers and Suppliers.....................................31
Section 5.15. Adequacy of Assets..........................................32
Section 5.16. Full Disclosure.............................................32
Section 5.17. Disclaimers.................................................32
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Section 6.01. Organization and Qualification..............................33
Section 6.02. Authorization of Agreement..................................33
Section 6.03. Approvals...................................................33
Section 6.04. No Violation................................................34
Section 6.05. Commitment Letters..........................................34
Section 6.06. No Brokers..................................................34
Section 6.07. Transitory Merger Sub.......................................34
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Section 7.01. Organization................................................34
Section 7.02. Authorization of Agreement..................................35
Section 7.03. Approvals...................................................35
Section 7.04. No Violation................................................35
Section 7.05. Investment in Securities....................................35
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ii
ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding Operation of the
Businesses..................................................36
Section 8.02. Negative Covenants Regarding the Operation of the
Businesses..................................................37
Section 8.03. Access to Information.......................................40
Section 8.04. Insurance Benefits..........................................41
Section 8.05. Compliance with Competition Laws Applicable to Designated
Regulatory Assets...........................................41
Section 8.06. Covenant Not to Compete.....................................43
Section 8.07. Nonsolicitation.............................................44
Section 8.08. Accountants' Opinion and Consents...........................45
Section 8.09. Financing...................................................45
Section 8.10. Financial Statements........................................47
Section 8.11. Assignments.................................................47
Section 8.12. Release of Liens............................................47
Section 8.13. Environmental Schedules.....................................47
Section 8.14. Use of Dresser Name.........................................47
ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement...................................48
Section 9.02. Corporate Name..............................................48
Section 9.03. Surety Arrangements.........................................48
Section 9.04. Dresser Valve Division Contracts............................48
ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation................................................49
Section 10.02. Ancillary Agreements.......................................51
Section 10.03. Public Announcements.......................................51
Section 10.04. Transfer Taxes.............................................52
Section 10.05. Expenses...................................................52
Section 10.06. Tax Matters................................................52
Section 10.07. Offers to Employees........................................55
Section 10.08. Related Party Contracts....................................56
Section 10.09. Litigation Support.........................................56
Section 10.10. Post-Closing Matters.......................................57
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of Each Party Under This
Agreement..................................................58
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
iii
Section 11.02. Additional Conditions to the Parent's Obligations..........58
Section 11.03. Additional Conditions to the Acquiror's Obligations........59
ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties, Covenants and
Agreements.................................................62
Section 12.02. General Indemnification by the Parent......................63
Section 12.03. General Indemnification by the Acquiror....................66
Section 12.04. Procedures.................................................68
Section 12.05. Special Environmental Indemnification Provisions...........70
Section 12.06. Punitive Damages...........................................73
Section 12.07. Failure of Acquiror to Close...............................73
Section 12.08. No Right of Contribution...................................74
Section 12.09. Specific Performance.......................................74
Section 12.10. Sole Remedy................................................74
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination................................................74
Section 13.02. Effect of Termination......................................75
Section 13.03. Amendment..................................................75
Section 13.04. Waiver.....................................................75
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices....................................................76
Section 14.02. Headings...................................................77
Section 14.03. Severability...............................................77
Section 14.04. Entire Agreement...........................................78
Section 14.05. Assignment.................................................78
Section 14.06. Successors; Parties in Interest............................78
Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative......78
Section 14.08. Disclosure Letters.........................................78
Section 14.09. Governing Law..............................................78
Section 14.10. Arbitration................................................79
Section 14.11. Confidentiality Agreements.................................79
Section 14.12. Counterparts...............................................79
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
iv
ANNEXES
Annex A -- Definitions.
Annex B -- Reorganization (Components and Procedure).
Annex C -- List of the Seller, Buyers and BV Companies and BV
Allocable Purchase Price.
Annex D -- Allocation Procedures for Purchase Price Adjustment.
APPENDICES
Appendix I -- Form of Merger Agreement.
Appendix II -- Forms of Releases of Intercompany Indebtedness.
Appendix III -- Forms of Releases of Claims.
Appendix IV -- Form of Assignment of Name.
Appendix V -- Form of Highway 6 Lease Agreement.
Appendix VI -- Form of Employee Benefits Agreement.
Appendix VII -- Form of Transition Services Agreement.
Appendix VIII -- Form of Stockholders' Agreement.
Appendix IX -- Form of Category 2A Purchase and Sale Agreement.
Appendix X -- Form of Opinion of Acquiror's Counsel.
Appendix XI -- Form of Opinion of Parent's Counsel.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
v
AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION
This AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION (this
"Agreement") dated as of April 10, 2001, is by and among Halliburton Company, a
Delaware corporation (the "Parent"), Dresser B.V., a Netherlands company and a
wholly owned indirect Subsidiary of the Parent (the "Seller") and DEG
Acquisitions, LLC, a Delaware limited liability company (the "Acquiror"). This
Agreement amends and restates in its entirety that certain Agreement and Plan of
Recapitalization dated as of January 30, 2001 by and among the Parent, the
Seller and the Acquiror, as amended by Amendatory Agreement No. 1 thereto, dated
March 2001, and Amendatory Agreement No. 2 thereto, dated March 2001. References
in this Agreement to the "date of this Agreement," or "the date hereof" shall
refer to January 30, 2001.
R E C I T A L S:
The Parent has determined to redeploy a significant portion of its assets.
Accordingly, the Parent desires to sell, and the Acquiror has determined to
purchase, certain interests in the Parent's businesses relating to, among other
things, the design, manufacturing and marketing of engineered measurement, flow
control and power systems for customers primarily in the energy industry.
In order to accomplish this transaction, the Parent will, in consultation
with the Acquiror and in the manner set forth herein, prior to the First Closing
effect the Reorganization described in Annex B of the various legal entities
that comprise the Dresser Equipment Group.
After giving effect to the Reorganization, (a) the Parent desires to cause
Dresser Industries and DEGI to engage, and the Acquiror desires to engage, and
to cause Transitory Merger Sub to engage, in the transactions contemplated by
Article II herein at the First Closing and (b) immediately following the First
Closing, the Parent desires to cause the Seller to engage, and the Acquiror
desires to cause the Buyers to engage, in the transactions contemplated by
Article II herein at the Second Closing.
On March 28, 2001, DEGI changed its legal name from "Dresser Equipment
Group, Inc." to "Dresser, Inc." References in this Agreement (including the
exhibits, annexes and schedules hereto) to "Dresser Equipment Group, Inc." shall
mean Dresser, Inc.
NOW, THEREFORE, the parties hereto, in consideration of the premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, agree as follows:
ARTICLE I
DEFINITIONS
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
Section 1.01. Definitions. Capitalized and other terms used in this
Agreement are defined in Annex A attached hereto and are used herein with the
meanings ascribed to them therein.
Section 1.02. Rules of Construction.
(a) Unless the context otherwise requires, as used in this Agreement:
(i) a term defined in Annex A has the meaning ascribed to it in
Annex A; (ii) an accounting term not defined herein has the meaning
ascribed to it in accordance with U.S. GAAP; (iii) "or" is not
exclusive; (iv) "including" means "including without limitation;"
(v) words in the singular include the plural and vice versa; (vi)
words applicable to one gender shall be construed to apply to each
gender; (vii) the terms "hereof," "herein," "hereby," "hereto" and
derivative or similar words refer to this entire Agreement,
including the Annexes and Appendices hereto; (viii) the terms
"Article," "Section," "Annex" and "Appendix" shall refer to the
specified Article, Section, Annex or Appendix of or to this
Agreement; (ix) the term "Schedule" shall refer to the appropriate
Schedule to the Parent's Disclosure Letter or the Acquiror's
Disclosure Letter; and (x) the phrases "pursuant to," "as described
in" and "subject to the terms of," when used with reference to a
particular Section of this Agreement, or words of similar import,
shall refer to such Section and to any Schedule of the Parent's
Disclosure Letter or the Acquiror's Disclosure Letter referenced
therein.
(b) A reference to any Person includes such Person's successors and
permitted assigns.
(c) Any reference to "days" shall mean calendar days unless "Business
Days" (as defined in Annex A) are expressly specified.
(d) Each Annex and Appendix identified in this Agreement is incorporated
herein by reference and made a part hereof for all purposes.
(e) The Parent and the Acquiror, each represented by legal counsel, have
each participated in the negotiation and drafting of this Agreement.
If an ambiguity or question of intent or interpretation should
arise, this Agreement shall be construed as if drafted jointly by
such parties and no presumption or burden of proof shall arise
favoring or burdening any party hereto by virtue of the authorship
of any of the provisions of this Agreement.
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities. On the terms and subject to
the conditions contained in this Agreement, the Parent agrees to cause DEGI and
Dresser Industries to engage at the First Closing in the following transactions,
and the Acquiror agrees to engage and to cause the Transitory Merger Sub to
engage at the First Closing in the following transactions:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
2
(a) The Acquiror shall purchase from Transitory Merger Sub, upon
original issue, common stock of Transitory Merger Sub for cash in an
amount in U.S. Dollars (which the Acquiror estimates will be
approximately $400,000,000) equal to at least the Purchase Price,
plus fees and expenses incurred by the Acquiror in connection with
the transactions contemplated hereby (other than fees or discounts
related to the Loan) less the Loan (the "Investment");
(b) DEGI shall borrow an amount in cash in U.S. Dollars equal to at
least $970,000,000 (nine hundred seventy million dollars) (the net
proceeds to DEGI pursuant to this clause (b), being the "Loan"),
comprised of (i) borrowings from a syndicate of Lenders on Terms
contemplated by the Commitment Letter Term Sheet attached to the
Bank Commitment Letter and (ii) the proceeds from the issuance of
senior subordinated notes in a private placement of such notes or
borrowings from a syndicate of Lenders on the Terms contemplated by
the Commitment Letter Term Sheet attached to the Bridge Commitment
Letter; and
(c) The Acquiror and the Parent shall cause the merger (the "Merger") of
Transitory Merger Sub with and into DEGI, which shall be the
corporation surviving the Merger, to be effected through execution
and delivery of the Merger Agreement and the filing thereof with the
Secretary of State of Delaware, pursuant to which:
(i) All the issued and outstanding capital stock of Transitory
Merger Sub shall be converted into an aggregate number of
shares of common stock of DEGI ("DEGI Common Stock") equal to
(i) the total number of shares of DEGI Common Stock
outstanding immediately prior to the Merger multiplied by (ii)
0.949;
(ii) subject to the provisions of clause (iii) of this subsection
(c), the number of shares of DEGI Common Stock owned by
Dresser Industries equal to (i) the total number of shares of
DEGI Common Stock outstanding immediately prior to the Merger
multiplied by (ii) 0.949 shall be converted into the right to
receive cash in an aggregate amount equal to (A) the DEGI
Group Preliminary Purchase Price Percentage times the
Preliminary Purchase Price as adjusted by (B) a portion of the
Purchase Price Adjustment determined in accordance with the
Allocation Procedures (the "Merger Consideration") (with the
balance of the shares of DEGI Common Stock owned by Dresser
Industries to remain outstanding); and
(iii) if any Management Shares are outstanding at the effective date
of the Merger, then (A) the number of shares of DEGI Common
Stock converted into the right to receive cash pursuant to
clause (ii) of this subsection (c) shall be increased by a
number equal to the number of Management Shares and (B) the
consideration payable to Dresser
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
3
Industries in connection with the Merger shall be increased by
the amount of the cash consideration received by DEGI against
the issuance of such Management Shares.
(d) Any Management Shares issued by DEGI prior to the First Closing
shall be sold to management employees at a price per share not less
than an amount equal to the Merger Consideration plus the BV
Consideration divided by the number of shares of DEGI Common Stock
to be converted by Dresser Industries in the Merger as determined
pursuant to clause (ii) of subsection 2.01(c) before giving effect
to clause (iii) of subsection 2.01(c).
Section 2.02. Sale and Purchase of BV Companies. On the terms and subject
to the conditions contained in this Agreement, the Parent agrees to cause the
Seller to engage at the Second Closing in the following transactions, and the
Acquiror agrees to cause each of the Buyers to engage at the Second Closing in
the following transactions: The Seller shall assign to the appropriate Buyer as
indicated on Annex C hereto, and such Buyer shall accept, the Equity Securities
of the BV Company whose name is set forth next to the name of such Buyer on
Annex C hereto. In consideration for such assignments, the Buyers shall pay to
the Seller cash in U.S. Dollars in an aggregate amount equal to (a) the BV
Preliminary Purchase Price Percentage times the Preliminary Purchase Price as
adjusted by (b) a portion of the Purchase Price Adjustment determined in
accordance with the Allocation Procedures (the "BV Consideration").
Section 2.03. Cash Consideration.
(a) The aggregate cash consideration to be paid to Dresser Industries
and the Seller for engaging in the transactions contemplated by
Sections 2.01 and 2.02 herein shall consist of the Purchase Price.
The "Purchase Price" shall be equal to the Preliminary Purchase
Price as adjusted by the Purchase Price Adjustment in accordance
with Sections 2.08 and 2.09.
(b) The parties hereto have agreed that the "Preliminary Purchase Price"
shall be equal to (i) U.S. $1,309,111,797 (one billion three hundred
nine million one hundred eleven thousand seven hundred ninety-seven
dollars) less (ii) the amount which, when taken together with the
aggregate consideration paid to acquire the Management Shares,
equals 5.1% of the Equity of DEGI.
Section 2.04. The Closings.
(a) The transactions contemplated by Section 2.01 shall be consummated
(the "First Closing") on the date and at the time and place
determined pursuant to this subsection (a). The First Closing shall
be held at the offices of Latham & Watkins, 885 Third Avenue, New
York, New York 10022 on the Closing Date. The "Closing Date" shall
be the fifteenth (15th) Business Day following the date on which the
Closing Conditions (other than conditions that can be satisfied only
by delivery of certificates or other documents at the Closings and
where such delivery is in the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
4
control of a party hereto) have been fulfilled or waived. If such
date is not a Business Day, then the Closing Date shall be the next
succeeding Business Day.
(b) Upon fulfillment or waiver of the Closing Conditions to which
reference is made in subsection (a) of this Section, either the
Parent or the Acquiror may give the other notice thereof (the
"Closing Notice") and the date of receipt of such Closing Notice
determined in accordance with Section 14.01 shall be the first
Business Day of the time periods therein referenced.
(c) Immediately following the First Closing, the transactions
contemplated by Section 2.02 shall be consummated (the "Second
Closing"). The Second Closing shall be held at the same location as
the First Closing. The consummation of the Second Closing shall be a
condition subsequent to the consummation of the First Closing, such
that if the Second Closing shall not occur immediately following the
First Closing either the Parent or the Acquiror shall be entitled to
cause the rescission of the transactions consummated at the First
Closing.
Section 2.05. Pre-Closing Transactions.
(a) Prior to the First Closing, the Parent shall effect the
Reorganization described in Annex B. The Parent and the Acquiror
shall cooperate with each other with respect to the implementation
of the Reorganization described in Annex B, including actions
involving filings with Governmental Authorities, the execution of
agreements, transfer documents and similar instruments and the
issuance of securities. If the Parent and the Acquiror consent in
writing to any action that is inconsistent with the transactions
described on Annex B hereto, then Annex B shall, automatically and
without further action by the parties hereto, be deemed to have been
amended to the extent necessary to permit such action.
(b) The Parent shall prior to the First Closing cause the outstanding
DEGI Common Stock to be subdivided pursuant to a stock split on a
basis that is mutually satisfactory to the Acquiror and the Parent.
(c) In any case in which the Reorganization, as the Reorganization may
be amended as provided in subsection (a) of this Section 2.05 prior
to the First Closing, requires that a member of a Company Group be
"formed" or otherwise implies that it must be organized de novo, the
parties hereto acknowledge that counsel to, or other representatives
of, the Parent or the Acquiror may, in lieu of a legal entity
organized de novo, use a previously formed legal entity "off the
shelf" for such purpose ( herein called a "Shelf Entity").
Section 2.06. Transactions at the First Closing. Subject to the terms and
conditions of this Agreement, the Parent shall at the First Closing cause DEGI
to do and perform the following actions and to deliver the following documents,
and the Acquiror shall do and perform the following actions
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
5
and deliver the following documents. At the First Closing, the following events
shall occur, each event being (i) conditioned on the occurrence or waiver of
each other event and (ii) deemed to occur simultaneously with each other event:
(a) Financial Transactions:
(i) The Acquiror shall purchase from the Transitory Merger Sub
upon original issue shares of common stock for cash in the
amount of the Investment;
(ii) DEGI shall execute and deliver the Loan Documents against the
funding of the full amount of the Loan to DEGI by wire
transfer of immediately available funds to the wire transfer
address of DEGI provided in written instructions to the
Acquiror not less than three (3) Business Days prior to the
Closing Date; and
(iii) the Parent and the Acquiror shall cause the Merger to be
effected in accordance with subsection (c) of Section 2.01;
provided, however, that the amount of cash to be paid to
Dresser Industries pursuant to the Merger at the time of the
First Closing (subject to adjustment pursuant to Sections 2.08
and 2.09) shall be an aggregate amount equal to the DEGI Group
Preliminary Purchase Price Percentage times the Estimated
Purchase Price. The consideration to be received by Dresser
Industries pursuant to the Merger shall be paid to Dresser
Industries by wire transfer of immediately available funds to
the wire transfer address of Dresser Industries provided in
written instructions by the Acquiror not less than three (3)
Business Days prior to the Closing Date.
(b) Ancillary Agreements. The parties to each Ancillary Agreement shall
execute and deliver such Ancillary Agreement.
(c) Intercompany Indebtedness. Any Intercompany Indebtedness owed at the
Closing Date by any member of the Parent Group to any member of the
DEGI Group or by any member of the DEGI Group to any member of the
Parent Group shall be discharged, whether, at the election of the
Parent (provided, that the Parent shall cooperate with the Acquiror
to structure such discharge in the manner that is most tax-efficient
to all the parties), by payment by the obligor or by release and
forgiveness by the obligee pursuant to a written release, in form
and substance substantially similar to the form thereof attached
hereto as Appendix II, executed and delivered at the First Closing.
The Intercompany Indebtedness has not been reflected in the Initial
Balance Sheet, and will not be reflected in the Estimated or Closing
Balance Sheet, as an asset or liability and, consequently, shall
have no effect on the calculation of the Purchase Price Adjustment
hereunder.
(d) The Parent shall at the First Closing execute, where appropriate,
and deliver to the Acquiror the following documents:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
6
(i) A release, in form and substance substantially similar to the
form thereof attached hereto as Appendix III, by the Parent on
behalf of itself and the Parent Group of all claims that they
may have against any member of the DEGI Group with respect to
the operation or conduct of the Businesses prior to the
Closing Date;
(ii) A certificate in the form required by Treasury Regulation
Section 1.1445-2; and
(iii) such other documents and instruments as shall evidence
fulfillment or waiver of the Closing Conditions.
(e) The Acquiror shall at the First Closing execute, where appropriate,
and deliver to the Parent such documents and instruments as shall
evidence fulfillment or waiver of the Closing Conditions.
Section 2.07. Transactions at the Second Closing. Subject to the terms of
this Agreement and to the condition that the First Closing shall have been
effected, the Parent shall cause the Seller at the Second Closing to do and
perform the following actions and to deliver the following documents, and the
Acquiror shall do and perform the following actions and cause the Buyers at the
Second Closing to do and perform the following actions and to deliver the
following documents. At the Second Closing, the following events shall occur,
each event being (i) conditioned on the occurrence or waiver of each other event
and (ii) deemed, except as otherwise provided in subsection (b) of this Section,
to occur simultaneously with each other event:
(a) The Parent shall cause the Seller to deliver, in the sequence
provided on Annex C, to the appropriate Buyer the certificate or
certificates evidencing the Equity Securities of the BV Companies to
be sold by it at the Second Closing in accordance with Annex C,
which certificates shall be duly endorsed for transfer or
accompanied by duly executed stock transfer powers or other
appropriate instruments of assignment and transfer in favor of the
Buyer;
(b) The Acquiror shall cause the Buyers to deliver or cause to be
delivered to the Seller cash in the amount of the BV Preliminary
Purchase Price Percentage times the Estimated Purchase Price. Such
amount shall be paid in United States Dollars by wire transfer of
immediately available funds to the wire transfer address of the
Seller provided in written instructions by the Seller not less than
three (3) Business Days prior to the Closing Date.
(c) Any Intercompany Indebtedness owed at the Closing Date by any member
of the Parent Group to any member of the BV Group or by any member
of the BV Group to any member of the Parent Group shall be
discharged, whether, at the election of the Parent (provided, that
the Parent shall cooperate with the Acquiror to structure such
discharge in the manner that is most tax-efficient to all the
parties), by payment
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
7
by the obligor or by release and forgiveness by the obligee pursuant
to a written release, in form and substance substantially similar to
the form thereof attached hereto as Appendix II, executed and
delivered at the Second Closing. The Intercompany Indebtedness has
not been reflected in the Initial Balance Sheet, and will not be
reflected in the Estimated or Closing Balance Sheet, as an asset or
liability and, consequently, shall have no effect on the calculation
of the Purchase Price Adjustment hereunder.
(d) The Parent shall at the Second Closing execute, where appropriate,
and deliver to the Acquiror, a release, in form and substance
substantially similar to the form thereof attached hereto as
Appendix III, by the Parent on behalf of itself and the Parent Group
of all claims that they may have against any member of the BV Group
with respect to the operation or conduct of the Businesses prior to
the Closing Date.
Section 2.08. Adjustment of the Preliminary Purchase Price.
(a) By no later than five (5) Business Days after the delivery of a
Closing Notice, the Parent shall deliver to the Acquiror on a
consolidated basis, (i) the balance sheet of the Businesses as of
December 31, 2000 and the related statement of results of operations
for the twelve months then ended (the "Year-End Financial
Statements") and (ii) the balance sheet (the "Estimated Balance
Sheet") as of the close of business on the last day of the most
recently completed calendar month for which internal management
financial statements are available (the "Estimated Balance Sheet
Date") and the related statement of results of operations of the
Businesses for the period beginning on January 1, 2001 and ending on
the Estimated Balance Sheet Date (together with the Estimated
Balance Sheet, the "Estimated Financial Statements"). The Year End
Financial Statements and the Estimated Financial Statements shall be
prepared in accordance with U.S. GAAP applied consistently with the
Initial Financial Statements. The Year End Financial Statements
shall present fairly the financial position and the results of
operations of the Businesses as of the date and for the period then
ended and the Estimated Financial Statements shall, to the extent
reasonably practicable in light of the purpose for which they were
prepared and the time parameter provided in this subsection, present
fairly the financial position and results of operations of the
Businesses as of the date and for the period then ended.
(b) The "Estimated Purchase Price" shall mean the Preliminary Purchase
Price adjusted by the Estimated Purchase Price Adjustment. The
Preliminary Purchase Price shall be increased by a positive
Estimated Purchase Price Adjustment and decreased by a negative
Estimated Purchase Price Adjustment.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
8
(c) The "Estimated Purchase Price Adjustment" shall be an amount equal
to the increase (positive) or decrease (negative) in the Net Equity
as of the Initial Balance Sheet Date to the Estimated Balance Sheet
Date, determined, in accordance with Section 2.10, by comparing the
amount of Net Equity as of the Initial Balance Sheet Date with the
amount of Net Equity as of the Estimated Balance Sheet Date;
provided, however, that, if the amount of such Estimated Purchase
Price Adjustment is less than U.S. $10,000,000 (ten million
dollars), whether positive or negative, the Estimated Purchase Price
Adjustment shall be deemed to be $0.
(d) For purposes of the determination of the Estimated Purchase Price
Adjustment and the Purchase Price Adjustment, Intercompany
Indebtedness shall be classified and reflected in each of the
Initial Balance Sheet, the Estimated Balance Sheet and the Closing
Balance Sheet neither as an asset nor a liability.
Section 2.09. Procedures for Calculating the Purchase Price Adjustment.
(a) Following the end of the calendar month in which the First Closing
shall occur, the Acquiror shall cause to be prepared and delivered
to the Parent, no later than ninety (90) days following the end of
such month, on a consolidated basis, the Closing Financial
Statements, prepared in accordance with U.S. GAAP applied
consistently with the Initial Financial Statements which shall be
certified by Arthur Andersen LLP as presenting fairly the financial
position of the Businesses as of the Closing Date. Thereafter, the
Acquiror shall promptly provide to the Parent such supporting work
papers or other supporting information as may be reasonably
requested by the Parent, including access to the work papers of
Arthur Andersen LLP prepared in connection with the audit of the
Initial Financial Statements and the audit of the Closing Financial
Statements. To the extent that the judgment of management of the
Businesses is relied upon for any estimate used to prepare the
Closing Balance Sheet as required or permitted by U.S. GAAP, such
judgment shall not differ in any material respect from the judgment
relied upon for the same or any similar estimate used to prepare the
Initial Financial Statements unless there has been a material change
since the date of the Initial Financial Statements in the facts upon
which such judgment is based.
(b) If the Parent shall have any objections to the Closing Balance
Sheet, the Parent shall within twenty (20) Business Days following
receipt of the Closing Balance Sheet so notify the Acquiror, stating
in reasonable detail the basis for any such objections; provided,
however, that the only bases for objection shall be (i)
non-compliance with the standards set forth in subsection (a) of
this Section for the preparation of the Closing Balance Sheet and
(ii) computational errors. If the Parent fails to notify the
Acquiror of any such objections in writing within such twenty (20)
Business Day period, the Parent shall be deemed to have concurred
with the Closing Balance Sheet. Otherwise, following any such
notification, the Acquiror and the Parent shall endeavor in good
faith for a period not to exceed twenty (20) Business Days to
resolve their differences (the "Differences"). If the parties are
unable to resolve all
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
9
their Differences and have not agreed in writing to extend the
resolution period, either the Parent or the Acquiror shall, if the
aggregate amount of the unresolved Differences does not exceed U.S.
$10 million, be entitled for a period of twenty (20) additional
Business Days to request the Accounting Firm to resolve the
unresolved Differences or, if the aggregate amount of the unresolved
Differences exceeds $10 million, to apply for arbitration pursuant
to the provisions of Section 14.10. If the parties are unable to
resolve all their Differences but neither party shall apply to the
Accounting Firm or for arbitration for resolution of the remaining
Differences, the determinations set forth in the Closing Balance
Sheet, as adjusted for those Differences that the parties were able
to resolve, shall be deemed to be dispositive.
(c) If either party shall request the Accounting Firm to resolve the
unresolved Differences, both parties shall cooperate with the
Accounting Firm and its representatives by providing access to all
relevant Books and Records and access at reasonable times to
personnel having relevant information. The Accounting Firm shall be
requested to use all reasonable efforts to resolve such Differences
in favor of the Parent in their entirety or in favor of the Acquiror
in their entirety within twenty (20) Business Days after the matter
is referred to it on the basis of the standards set forth in
subsection (a) of this Section or as soon thereafter as possible.
Upon completion of its task, the Accounting Firm shall notify each
party of its determination of the matters subject to the
Differences, which determination shall be conclusive. The fees and
expenses of the Accounting Firm shall be borne 50% by the Parent and
50% by the Acquiror.
(d) If either party shall apply for arbitration to resolve the
unresolved Differences, or if the Accounting Firm is unable to
resolve the Differences, both parties shall cooperate with the
arbitration tribunal and its representatives by providing access to
all relevant Books and Records and access at reasonable times to
personnel having relevant information. The arbitration tribunal
shall be requested to use all reasonable efforts to resolve such
Differences in favor of the Parent in their entirety or in favor of
the Acquiror in their entirety within twenty (20) Business Days
after the matter is referred to it on the basis of the standards set
forth in subsection (a) of this Section or as soon thereafter as
possible. The determination of the arbitration tribunal with respect
to the Differences shall be conclusive. Unless differently awarded
by the arbitration tribunal, the fees and expenses of arbitration
shall be borne 50% by the Parent and 50% by the Acquiror.
(e) The "Purchase Price Adjustment" shall mean an amount equal to the
increase (positive) or decrease (negative) in the Net Equity of the
Businesses from the Initial Balance Sheet Date to the Closing Date
in accordance with Section 2.10, determined by comparing the amount
of Net Equity as of the Initial Balance Sheet Date with the amount
of Net Equity as of the Closing Date (based on the Closing Balance
Sheet as finally determined pursuant to subsections (a) through (d)
of this Section).
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
10
(f) The result obtained by subtracting the Estimated Purchase Price
Adjustment from the Purchase Price Adjustment is referred to as the
"Post-Closing Payment Amount." The Post-Closing Payment Amount shall
be paid by the Acquiror to the Parent if it is positive or by the
Parent to the Acquiror if it is negative, in cash in United States
Dollars, by wire transfer of immediately available funds to the wire
transfer address of the Acquiror provided in written instructions to
the Parent or to the wire transfer address of the Parent provided in
written instructions to the Acquiror, as appropriate, on the third
(3rd) Business Day following the date on which the procedures in
this Section 2.09 have been completed. The Post-Closing Payment
Amount shall bear simple interest at the lowest interest rate
applicable under the revolving credit agreement referred to in the
Commitment Letter Term Sheets from the Closing Date to the date of
such payment, inclusive.
(g) If, notwithstanding the representations and warranties set forth in
subsection (a) of Section 5.05 herein, it shall be determined that
the Initial Financial Statements were not in fact prepared in
accordance with U.S. GAAP, the Closing Financial Statements prepared
pursuant to subsection (a) of Section 2.09 need not be prepared
consistently with the Initial Financial Statements to the extent and
only to the extent that such Initial Financial Statements were not
prepared in accordance with U.S. GAAP. If the Closing Financial
Statements are not prepared consistently with the Initial Financial
Statements pursuant to this subsection (g) of Section 2.09 and such
inconsistency results in a decrease in the amount of the Purchase
Price Adjustment, any indemnification to be paid by the Parent to
the Acquiror with respect to any such breach of the representations
and warranties in Section 5.05 that caused the Purchase Price
Adjustment shall be reduced by the amount of such decrease.
Section 2.10. Adjustments to Net Equity. In determining the Estimated
Purchase Price Adjustment and the Purchase Price Adjustment pursuant to Sections
2.08 and 2.09, the Net Equity reflected in the Initial Balance Sheet, the
Estimated Balance Sheet and the Closing Balance Sheet shall be adjusted as
follows:
(a) Solely for the purpose of determining Net Equity in calculating the
Estimated Purchase Price Adjustment and the Purchase Price
Adjustment, the Net Equity reflected in each of such Balance Sheets
shall be adjusted to exclude the following assets and liabilities in
order that these assets and liabilities shall have no effect on the
Estimated Purchase Price Adjustment or the Purchase Price
Adjustment: (i) The Highway 6 Real Property; (ii) the accumulated
projected benefit obligation for the postretirement medical and life
benefits; (iii) assets transferred in excess of liabilities assumed
of the DICON defined benefit retirement plan (Plan No. 164); (iv)
reserves for uninsured litigation; and (v) the self-insurance
reserves for workers' compensation, general liability, product
liability and automobile liability. For the purpose of clarity of
identification of the foregoing items, the amounts reflected on, or
missing from, the Initial Balance Sheet for each of the above listed
items is as follows: (A) Real Property subject to the Highway 6
Deed: $12.4 million, (B) the accumulated projected benefit
obligation for the post-retirement medical and life
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
11
benefits: $128.3 million, (C) assets transferred in excess of
liabilities assumed of the DICON defined benefit retirement plan
(Plan No. 164): $9.0 million, (D) reserves for uninsured litigation:
$10 million, and (E) the self-insurance reserves, including case
reserves and IBNR, for workers' compensation, general liability,
product liability and automobile liability: $21.7 million.
(b) The Initial Balance Sheet includes an asset in the amount of
$14,708,000 (fourteen million seven hundred and eight thousand
dollars) representing the assets in excess of liabilities of the
Dresser Canada Retirement Income Plan. This $14,708,000 asset is not
an asset of a member of a Company Group and should not have been
included in the Initial Financial Statements. In computing Net
Equity at the Initial Balance Sheet Date, the Net Equity shall be
reduced by $14,708,000, but this reduction shall not be made to the
Net Equity to be determined as of either the Estimated Balance Sheet
Date or the Closing Balance Sheet Date. The Parent shall not be
entitled to make further adjustments to Net Equity reflected in the
Initial Balance Sheet (other than those adjustments identified in
this Agreement) after the date hereof. If it is determined by the
Acquiror during the period from the date hereof to the date on which
the Closing Balance Sheet is delivered to the Parent that any
liabilities reflected in the Initial Balance Sheet are not
liabilities of a member of a Company Group or that any assets of a
member of a Company Group are not reflected in the Initial Balance
Sheet, then the Net Equity determined by reference to the Initial
Balance Sheet shall be increased to exclude such liabilities or to
include such assets up to $14,780,000 in order that they shall have
no effect on the Estimated Purchase Price Adjustment or the Purchase
Price Adjustment.
(c) No adjustments will be recorded in the Estimated Balance Sheet or
the Closing Balance Sheet related to the allocation of the purchase
price in connection with the acquisition of NIMCO.
(d) Solelyfor the purpose of determining Net Equity in calculating the
Estimated Purchase Price Adjustment and the Purchase Price
Adjustment, cash and cash equivalents (net of the aggregate amount
of (i) outstanding checks and overdrafts drawn on bank accounts of
all members of the Company Groups and (ii) any notes payable by any
member of either Company Group) ("Net Cash") shall be deemed to be
$11.5 million on the Initial Balance Sheet notwithstanding the $23
million in Net Cash actually reflected in the Initial Balance Sheet.
No adjustment shall be made to the actual Net Cash on the Estimated
Balance Sheet or Closing Balance Sheet.
(e) To the extent that Net Cash reflected in the Estimated Balance Sheet
or Closing Balance Sheet exceeds $11.5 million in compliance with
Section 11.03 (f), such excess will contribute positively to any
Purchase Price Adjustment calculation to the benefit of the Parent.
No other adjustments will be made to the Net Equity reflected in each of
the Initial Balance Sheet, the Estimated Balance Sheet or the Closing Balance
Sheet for the purpose of computing the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
12
Estimated Purchase Price Adjustments or the Purchase Price Adjustment.
Accordingly, any changes in the amounts of other assets or liabilities reflected
in the Estimated Balance Sheet or the Closing Balance Sheet as compared with the
Initial Balance Sheet will have an effect on the Estimated Purchase Price
Adjustment or the Purchase Price Adjustment or both.
Section 2.11. Allocation of Purchase Price Adjustment. The Purchase Price
Adjustment shall be allocated among Dresser Industries and the Seller in
accordance with the Allocation Procedures of Annex D. Dresser Industries and the
Seller shall be deemed to hold that portion of the Purchase Price Adjustment
that it has theretofore received in constructive trust pending allocation of the
entire Purchase Price Adjustment in accordance with such Allocation Procedures.
Upon completion of the allocation, Dresser Industries and the Seller shall make
such payments of cash in U.S. Dollars as shall be necessary to give effect to
the allocation and the Parent shall, promptly after completion of the
allocation, provide to the Acquiror a copy of the allocation, together with
evidence, reasonably satisfactory to the Acquiror, of such payments.
Section 2.12. Amendments to Effect Recapitalization. The parties
acknowledge that certain amendments to the structure of the transactions
contemplated hereby may be necessary in order to record such transactions as a
Recapitalization for financial reporting purposes, as well as amendments to
provide for the adjustment of the Purchase Price to account for the retention of
equity by the Parent and the rollover of management equity, and the parties
shall cooperate in good faith to effect such amendments.
Section 2.13. Delayed Purchases. Notwithstanding any provisions to the
contrary herein,
(a) If at the time of the First Closing any of the Category 2A
Requirements applicable to the First Closing shall not have been
satisfied, the Acquiror may elect, in its sole discretion, to delay
the purchase of the Equity Securities of the DEGI Group member
located in such jurisdiction in which such Category 2A Requirements
shall not have been satisfied until such time as such requirements
have been satisfied; provided that the Acquiror shall have given
written notice to the Parent of such election no later than ten (10)
Business Days prior to the Closing Date. In such event, (i) prior to
the First Closing, the Parent shall (A), if the assets subject to
delayed purchase have not theretofore been transferred to the DEGI
Group, cause a Retained Subsidiary to retain such assets or, if the
assets subject to delayed purchase have theretofore been transferred
to the DEGI Group, cause the appropriate member of the DEGI Group to
transfer such Equity Securities to a member of the Parent Group;
(ii) the Preliminary Purchase Price and the Merger Consideration
shall be reduced by the dollar amount allocated to such Equity
Securities on Schedule 2.13 to the Parent's Disclosure Letter; (iii)
for any determination of Net Equity, the transfer of such Equity
Securities pursuant to this subsection (a) shall be disregarded; and
(iv) at the First Closing, the Acquiror shall execute and deliver to
the Parent a Purchase and Sale Agreement, in form and substance
substantially similar to the form thereof attached hereto as
Appendix IX.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
13
(b) If at the time of the Second Closing any of the Category 2A
Requirements applicable to the Second Closing shall not have been
satisfied, the Acquiror may elect, in its sole discretion, to delay
the purchase of the Equity Securities of the BV Group member located
in such jurisdiction in which such Category 2A Requirements shall
not have been satisfied until such time as such requirements have
been satisfied; provided that the Acquiror shall have given written
notice to the Parent of such election no later than ten (10)
Business Days prior to the Closing Date. In such event, (i) prior to
the Second Closing, the Parent shall (A), if the assets subject to
delayed purchase have not theretofore been transferred to the BV
Group, cause a Retained Subsidiary to retain such assets or, if the
assets subject to delayed purchase have theretofore been transferred
to the BV Group, cause the appropriate member of the BV Group to
transfer such Equity Securities to a member of the Parent Group;
(ii) the Preliminary Purchase Price and the BV Consideration shall
be reduced by the dollar amount allocated to such Equity Securities
on Schedule 2.13 to the Parent's Disclosure Letter; (iii) for any
determination of Net Equity, the transfer of such Equity Securities
pursuant to this subsection (b) shall be disregarded; and (iv) at
the Second Closing, the Acquiror shall execute and deliver to the
Parent a Purchase and Sale Agreement, in form and substance
substantially similar to the form thereof attached hereto as
Appendix IX.
(c) If the Equity Securities of any member of the DEGI Group or the BV
Group are subject to delayed purchase pursuant to subsection (a) or
(b) of this Section 2.13 and the operations of such member are
conducted in more than one jurisdiction, the Parent and the Acquiror
shall cooperate in amending Annex B to preserve the assets of such
member that are located in any jurisdiction other than the Category
2A Jurisdiction resulting in the delayed purchase.
Section 2.14. Joint Ventures.
(a) If prior to the First Closing, a third Person has, with respect to
its rights under any Contractual Transfer Restrictions relating to
any DEGI Joint Venture, (i) (A) exercised a right to acquire the
Equity Securities of the DEGI Joint Venture owned indirectly by DEGI
(giving effect to the Reorganization), (B) failed to waive any such
rights or (C) failed to provide a required consent and (ii)
consummation of the transactions contemplated hereby would violate
the terms of such Contractual Transfer Restriction, then (x) such
DEGI Joint Venture shall be deemed not to be a member of the DEGI
Group; (y) the Preliminary Purchase Price and the Merger
Consideration shall be reduced by the dollar amount allocated to
such DEGI Joint Venture on Schedule 2.14 to the Parent's Disclosure
Letter; and (z) for any determination of Net Equity, such DEGI Joint
Venture shall be disregarded.
(b) If prior to the Second Closing, a third Person has, with respect to
its rights under any Contractual Transfer Restrictions relating to
any BV Joint Venture, (i) (A) exercised a right to acquire the
Equity Securities of the BV Joint Venture owned indirectly by a BV
Company (giving effect to the Reorganization), (B) failed to waive
any such rights or (C) failed to provide a required consent and (ii)
consummation of the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
14
transactions contemplated hereby would violate the terms of such
Contractual Transfer Restriction, then (x) such BV Joint Venture
shall be deemed not to be a member of the BV Group; (ii) the
Preliminary Purchase Price and the BV Consideration shall be reduced
by the dollar amount allocated to such BV Joint Venture on Schedule
2.14 to the Parent's Disclosure Letter; and (iii) for any
determination of Net Equity, such BV Joint Venture shall be
disregarded.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES
Except as set forth in the Parent's Disclosure Letter and subject to the
limitations set forth in Section 12.01, the Parent represents and warrants to
the Acquiror that:
Section 3.01. Organization and Qualification. The Parent is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. The Parent is duly qualified to do business as a foreign corporation
and is in good standing (in those jurisdictions in which the concept of good
standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to affect materially and adversely the
Parent's ability to perform its obligations under this Agreement or any
Ancillary Agreement. Dresser Industries is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted and is duly qualified
to do business as a foreign corporation and is in good standing (in those
jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing could not reasonably be expected
to affect materially and adversely the Parent's ability to cause Dresser
Industries to consummate the transactions contemplated under this Agreement or
any Ancillary Agreement.
Section 3.02. Authorization of Agreement. The Parent has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by the Parent of this Agreement and each
of the Ancillary Agreements to which it will be a party and the performance by
the Parent of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Parent.
No vote of, or consent by, the holders of any class or series of capital stock
or voting debt issued by the Parent is necessary to authorize the execution and
delivery by the Parent of this Agreement or any Ancillary Agreement to which it
will be a party or the performance by the Parent of its obligations hereunder or
thereunder. This Agreement has been, and each Ancillary Agreement to which the
Parent will be a party will at the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
15
First Closing have been, duly executed and delivered by the Parent and (assuming
due authorization, execution and delivery hereof by the Acquiror and thereof by
each other party thereto) constitutes or, in the case of each such Ancillary
Agreement, will at the First Closing constitute the legal, valid and binding
obligation of the Parent, enforceable against the Parent in accordance with its
terms, except as enforcement hereof or thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity or at law or
under applicable legal codes).
Section 3.03. Approvals. Except for (a) such filings and approvals as may
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Parent from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Parent or
any of its Affiliates (excluding the Seller and the members of the Company
Groups) to permit the Parent to execute, deliver or perform this Agreement or
any Ancillary Agreement to which it will be a party or to permit the Parent to
consummate the transactions contemplated hereby or thereby.
Section 3.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 3.03, neither the execution
and delivery by the Parent of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Parent of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to rights under any Contractual Transfer Restrictions under
(i) any Legal Requirement applicable to the Parent or Dresser Industries, (ii)
the Organizational Documents of the Parent or Dresser Industries, or (iii) any
contract or agreement to which the Parent or Dresser Industries is a party or by
which the Parent or Dresser Industries or any of their properties or assets is
bound (including any provision thereof requiring any Third Person Consents) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in clauses (a)(i) and (a)(iii) of this
Section that could not reasonably be expected, individually or in the aggregate,
to prevent the Parent from performing this Agreement or any Ancillary Agreement
to which it will be a party in all material respects or to have a Material
Adverse Effect on the Businesses.
Section 3.05. No Brokers. No broker, finder or investment banker (other
than Morgan Stanley Dean Witter Incorporated) is entitled to any brokerage,
finder's or investment banking fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Parent or its Affiliates. All fees and expenses of the Parent
and its Affiliates incurred pursuant to the engagement of Morgan Stanley Dean
Witter Incorporated will be discharged by the Parent.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
16
Section 3.06. Title to Securities. Dresser Industries has, or after giving
effect to the Reorganization will have, directly or indirectly, good title to
the Equity Securities of each member of the DEGI Group indicated as owned,
directly or indirectly, by DEGI on Schedule 5.03(a) to the Parent's Disclosure
Letter, free and clear of any Liens, and there are no contracts, agreements,
commitments or arrangements of the Parent or any of its Subsidiaries obligating
Dresser Industries (other than pursuant to this Agreement and the
Reorganization) to sell or to offer to sell any Equity Securities of any such
member of the DEGI Group or to purchase or acquire, or to offer to purchase or
acquire, any outstanding Equity Securities of any such member of the DEGI Group.
Upon consummation of the transactions contemplated hereby, the Acquiror will
acquire good title to such Equity Securities to be acquired by Acquiror
hereunder directly or indirectly, free and clear of any such Liens (other than
any created by the Acquiror).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Except as set forth in the Parent's Disclosure Letter and subject to the
limitations set forth in Section 12.01, the Parent and the Seller, jointly and
severally, represent and warrant to the Acquiror that:
Section 4.01. Organization. The Seller is a legal entity duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation or organization and has all requisite organizational power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. The Seller is duly qualified to do business as a
foreign corporation and is in good standing (in those jurisdictions in which the
concept of good standing is applicable) in each jurisdiction in which the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary in order for the Seller to perform this
Agreement and any Ancillary Agreement to which it is a party in all material
respects.
Section 4.02. Authorization of Agreement. The Seller has all requisite
organizational power and authority to execute and deliver this Agreement and
each Ancillary Agreement to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
The execution and delivery by the Seller of this Agreement and each Ancillary
Agreement to which it will be a party and the performance by the Seller of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite organizational action on the part of the Seller and, to the extent
required by Law, Regulation or the Seller's Organizational Documents, by the
holder of the Seller's Equity Securities. This Agreement has been, and any
Ancillary Agreement to which it will be a party will at the Second Closing have
been, duly executed and delivered by the Seller and (assuming due authorization,
execution and delivery hereof by the Acquiror and of any Ancillary Agreement by
each Buyer) constitutes or, in the case of any such Ancillary Agreement, will at
the Second Closing constitute the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except as
enforcement hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
17
creditors' rights generally and legal principles of general applicability
governing the availability of equitable remedies (whether considered in a
proceeding in equity or at law or under applicable legal codes).
Section 4.03. Approvals. Except for (a) such filings and approvals as may
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Seller from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Seller to
permit the Seller to execute, deliver or perform this Agreement or any Ancillary
Agreement to which it will be a party or to consummate the transactions
contemplated hereby.
Section 4.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 4.03, neither the execution
and delivery by the Seller of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Seller of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to any rights under (i) any Legal Requirement applicable to
the Seller, or (ii) the Organizational Documents of the Seller, or (iii) any
contract or agreement to which such Seller is a party or by which it or any of
its properties or assets is bound (including any provisions thereof requiring
any Third Person Consents) or (b), with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in clauses (a)(i) and (a)(iii) of this Section that could not
reasonably be expected, individually or in the aggregate, to prevent the Seller
from performing this Agreement or any Ancillary Agreement to which it will be a
party in all material respects or to have a Material Adverse Effect on the
Businesses.
Section 4.05. Title to Securities. The Seller has, or after giving effect
to the Reorganization will have, good title to the Equity Securities of each BV
Company to be sold by the Seller hereunder as provided on Annex C, free and
clear of any Liens, and there are no contracts, agreements, commitments or
arrangements of any Person obligating the Seller (other than pursuant to this
Agreement and the Reorganization) to sell or to offer to sell any Equity
Securities of any such BV Company or to purchase or acquire, or to offer to
purchase or acquire, any outstanding Equity Securities of any such BV Company.
Upon consummation of the transactions contemplated hereby, each Buyer will
acquire good title to the Securities to be purchased by such Buyer hereunder as
provided on Annex B, free and clear of any such Liens (other than any created by
the Acquiror or such Buyer).
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
18
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING
MEMBERS OF THE COMPANY GROUPS
Except for the representations and warranties set forth in Sections 5.01,
5.02, and 5.03, to the extent that any of the representations and warranties set
forth in this Article V is made with respect to any member of a Company Group
that is a Non-Controlled Entity, the representation and warranty is qualified as
being given only to the Knowledge of the Parent. Each of the representations and
warranties contained in this Article V, other than those made in subsection (b)
of Section 5.02 but including those that are made only as of the date hereof,
gives effect to the Reorganization as if the Reorganization had been effected on
the date of this Agreement. Subject to the preceding provisions of this Article
V, to the matters set forth in the Parent's Disclosure Letter and to the
limitations set forth in Section 12.01, the Parent and the Seller, jointly and
severally, represent and warrant to the Acquiror that:
Section 5.01. Organization; Subsidiaries.
(a) Each member of each Company Group is a legal entity duly organized,
validly existing and in good standing (in those jurisdictions in
which the concept of good standing is applicable) under the Laws of
its jurisdiction of incorporation or organization and has all
requisite organizational power and authority to own, lease and
operate its properties and to carry on its business as it is now
being conducted, other than any matters that could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on the Businesses. Each member of each Company Group
is duly qualified to do business as a foreign corporation or entity
and is in good standing (in those jurisdictions in which the concept
of good standing is applicable) in each jurisdiction in which the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except where any such
failure to be so qualified or in good standing, could not reasonably
be expected, individually or in the aggregate, to result in a
Material Adverse Effect on the Businesses. Schedule 5.01 of the
Parent's Disclosure Letter sets forth a true and complete list, as
of the date of this Agreement, of the members of each Company Group,
together with (a) a specification of the nature of the legal
organization of each such entity, (b) the jurisdiction of
incorporation or other organization of each such entity, (c) the
magnitude (expressed as a percentage of the aggregate ordinary
voting power of all outstanding Equity Securities of such legal
entity) of the direct or indirect equity investment of the Parent
(and, if different, the economic interest) in each such entity and
(d) the identity of the Business to be conducted by each member of
each Company Group after giving effect to the Reorganization.
(b) To the extent that any member of a Company Group constitutes a
"Shelf Entity" in accordance with subsection (c) of Section 2.05,
such Shelf Entity, immediately prior to the time it became a member
of a Company Group (i) was not a party to, and had no liability or
obligation under, any executory contract or agreement, whether
written
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
19
or oral, and (ii) had no assets or other liabilities or obligations
(whether accrued, absolute or otherwise).
Section 5.02. Organizational Documents; Authorization; No Violation.
(a) The Parent has heretofore made available to the Acquiror complete
and correct copies of the Organizational Documents, in each case as
amended or restated to the date hereof, of each member of each
Company Group. None of the members of either Company Group is in
violation of any of the provisions of its Organizational Documents,
except for any such violations that could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on the Businesses.
(b) At the time of the Reorganization, each member of each Company Group
will, to the extent required, have all requisite organizational
power and authority to consummate the Reorganization and the other
transactions contemplated to be consummated by it by this Agreement,
and the consummation of the Reorganization and such other
transactions will have been, to the extent required, duly and
validly authorized by all requisite company action on the part of
each such entity.
(c) The consummation of the Reorganization and the other transactions
contemplated by this Agreement will not (i) violate or breach the
terms of or cause a default or give rise to rights under any
Contractual Transfer Restrictions under (A) any Legal Requirement
applicable to any member of either Company Group, (B) the
Organizational Documents of any member of either Company Group or
(C) any contract or agreement to which any member of either Company
Group is a party or by which it or its properties or assets are
bound (including any provision thereof requiring any Third Person
Consent) or (ii), with the passage of time, the giving of notice or
the taking of any action by a third Person, have any of the effects
set forth in clause (i) of this subsection (c), except for any
matters described in clauses (A) and (C) of clause (i) of this
subsection (c) that could not reasonably be expected, individually
or in the aggregate, to prevent any member of either Company Group
from consummating the Reorganization or the other transactions
contemplated by this Agreement in all material respects or to have a
Material Adverse Effect on the Businesses.
Section 5.03. Capitalization.
(a) The authorized Equity Securities of each member of each Company
Group, the total outstanding Equity Securities of each such Company
Group member and the name of the record holders of all the
outstanding Equity Securities of each such Company Group member, in
each case as of the date of this Agreement, are as set forth in
Schedule 5.03(a) of the Parent's Disclosure Letter.
(b) No Equity Securities of any member of either Company Group are
reserved for issuance, and there are no outstanding options,
warrants, calls, pre-emptive rights,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
20
subscriptions or other rights, contracts, agreements, commitments or
arrangements obligating any such Company Group member to offer,
sell, issue or grant any of its Equity Securities or to redeem,
purchase or acquire, or offer to purchase or acquire, any of its
outstanding Equity Securities.
(c) Except as required by this Agreement and the Reorganization, there
are no options, warrants, calls, pre-emptive rights, subscriptions
or other rights, contracts, agreements, commitments or arrangements
obligating any such Company Group member (A) to offer, sell, issue,
grant, pledge, dispose of or encumber any Equity Securities of any
other Company Group member or (B) to purchase or acquire, or offer
to purchase or acquire, any outstanding Equity Securities of any
other Company Group member or (C) to grant any Lien on any
outstanding Equity Securities of any other Company Group member.
(d) All the issued and outstanding Equity Securities of each member of
each Company Group that are owned directly or indirectly by the
Parent have been duly authorized and are validly issued and, with
respect to capital stock, are fully paid and nonassessable. All such
issued and outstanding Equity Securities that are owned directly or
indirectly by the Parent are owned free and clear of all Liens.
(e) Except for matters contemplated by this Agreement or the Ancillary
Agreements and for revocable proxies, if any, granted by any member
of either Company Group with respect to the capital stock of another
Company Group member, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which
any member of either Company Group is a party or by which it is
bound with respect to the voting of any Equity Securities of any
Company Group member.
Section 5.04. Title to Properties.
(a) Schedule 5.04(a)(i) sets forth all of the Real Property owned by any
member of either Company Group and Schedule 5.04(a)(ii) sets forth
all of the Real Property leased by any member of either Company
Group other than any such leased Real Property that is not
individually or in the aggregate Material to the Businesses. The
appropriate member of each Company Group has (i) good and marketable
title to all of the Real Property marked as "designated" (the
"Designated Real Property") on Schedule 5.04(a)(i) to the Parent's
Disclosure Letter and (ii) good and defensible title to the other
properties reflected in the Initial Financial Statements (other
than, in the case of this clause (ii), (A) any properties sold or
otherwise disposed of in the ordinary course of business since the
Initial Balance Sheet Date, and (B) any properties that are not
material to the Businesses) free and clear of Liens, other than (X)
Liens securing debt, the existence of which is reflected in the
Initial Financial Statements, (Y) Permitted Encumbrances and (Z)
Liens that are not, individually or in the aggregate, Material to
the Businesses. The appropriate member of each Company Group holds
under valid lease agreements (i) all Material Real Property
reflected in Schedule 5.04(a)(ii) to the Parent's Disclosure Letter
and (ii) all other
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
21
properties reflected in the Initial Financial Statements as being
held under capitalized leases or operating leases and enjoys
peaceful and undisturbed possession of such properties under such
leases, other than, in the case of clause (ii), (A) any properties
as to which such leases have terminated in the ordinary course of
business since the Initial Balance Sheet Date without any liability
of such Company Group member party thereto that is Material to the
Businesses and (B) any properties that are not, individually or in
the aggregate, Material to the Businesses. Each such lease is valid
and enforceable against the Company Group member party thereto and,
to the Knowledge of the Parent, each other party thereto, in
accordance with its terms and there is not under any such lease any
existing default by the Company Group member party thereto or, to
the Knowledge of the Parent, any other party thereto, or any
condition, event or act which, with notice or lapse of time or
action of a third Person, would constitute such a default, except in
each case for matters that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect
on the Businesses. Neither the Parent, the Seller nor any Company
Group member has received any written notification of any adverse
claim to the title to any properties owned by such Company Group
member or with respect to any lease under which any properties are
held by it, other than any claims that could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on the Businesses.
(b) Schedule 5.04(b) to the Parent's Disclosure Letter sets forth, as of
the date hereof, to the extent material to a Business, all
Intellectual Property owned by or registered in the name of any
member of either Company Group or in which any such entity has any
rights including the name of the Company Group member in whose name
such Intellectual Property is registered or which has such rights
and the Business to which such Intellectual Property relates. Except
as could not reasonably be expected to have a Material Adverse
Effect on the Businesses, as of the date hereof the members of the
Company Groups own, or have the valid right to use, all of the
Intellectual Property. Except as could not reasonably be expected to
have a Material Adverse Effect on the Businesses, after giving
effect to the Reorganization, the members of the Company Groups
which conduct each Business will own, or have the valid right to
use, all of the Intellectual Property used in such Business.
Section 5.05. Financial Statements.
(a) The Initial Financial Statements (i) are attached as Schedule 5.05
to the Parent's Disclosure Letter, (ii) have been prepared in
accordance with U.S. GAAP consistently applied, (iii) fairly present
the combined financial position of the Businesses as of the
respective dates thereof and the combined results of operations of
the Businesses for the periods indicated and (iv) reflect all
material "loss contingencies" as determined under Statement of
Financial Accounting Standards No. 5 other than those for which, at
the time of preparation of the Initial Financial Statements, the
members of the Parent Group were expected to be responsible after
giving effect to the transactions contemplated hereby.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
22
(b) There exist no liabilities, obligations or commitments, whether
direct or indirect, absolute or contingent, of the members of either
Company Group that are Material to the Businesses and that would be
required to be reflected or reserved for under U.S. GAAP in an
historical combined balance sheet of the members of the Company
Groups, other than (i) liabilities or obligations that are reflected
or reserved for in the Initial Financial Statements, (ii)
liabilities or obligations excluded from the Initial Financial
Statements as described in note 2 to such Initial Financial
Statements, (iii) liabilities or obligations incurred in the
ordinary course of business of the Businesses since the Initial
Balance Sheet Date and (iv) liabilities or obligations incurred
since the Initial Balance Sheet Date of the nature of liabilities
that may be incurred after the date of this Agreement pursuant to
subsection (b) of Section 8.02. None of the liabilities described in
clauses (iii) and (iv) of the preceding sentence has or could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Businesses.
(c) The books, records and accounts of the members of the Company
Groups, in reasonable detail, accurately and fairly reflect in the
aggregate the transactions and dispositions of the assets of the
Businesses. No member of either Company Group has engaged in any
Material transaction, maintained any Material bank account or used
any Material corporate funds except for transactions, bank accounts
and funds that have been and are reflected in the normally
maintained Books and Records of such member of either Company Group.
(d) The notes to the Initial Financial Statements fairly reflect in all
material respects all transactions between or among any member of
either Company Group and any Affiliate thereof (other than
transactions solely between or among the members of the Company
Groups).
Section 5.06. Authorizations. Each member of each Company Group has
obtained all Authorizations that are necessary to carry on the Business related
thereto as currently conducted, except for any such Authorizations that its
failure to possess, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Businesses. Each such
Authorization (i) is in full force and effect, (ii) has not been violated in any
respect and (iii) is not subject to any suspension, revocation or cancellation,
other than for matters, in any such case, that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Businesses. There is no action, proceeding or investigation pending or, to the
Knowledge of the Parent, threatened regarding suspension, revocation or
cancellation of any of such Authorizations, except in any circumstances in which
the suspension, revocation or cancellation of such Authorizations could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Businesses.
Section 5.07. Compliance With Laws; Regulation of Businesses. Each member
of each Company Group is and, to the extent that any noncompliance could
reasonably be expected to have current consequences, has been in compliance with
all applicable Laws and Regulations and any
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
23
Orders applicable to any such entity, other than Environmental Laws and, to the
extent applicable to the execution, delivery and performance of this Agreement,
foreign competition Laws and except such events of noncompliance or defaults
that, individually or, with respect to multiple events of noncompliance or
defaults arising out of the same facts or circumstances, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the Businesses.
To the Knowledge of the Parent, each member of each Company Group has at all
times been in compliance with, and continues to comply with, the Foreign Corrupt
Practices Act of 1977, as amended.
Section 5.08. Taxes. Except for any matter that could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Businesses:
(a) (i) all Tax Returns that were required to be filed by or with
respect to any member of a Company Group, or any member of the
Parent Group insofar as it affects any member of a Company Group,
have been duly and timely filed, (ii) all items of income, gain,
loss, deduction and credit or other items ("Tax Items") required to
be included in each such Tax Return have been so included and all
such Tax Items and any other information provided in each such Tax
Return are true, correct and complete insofar as such items are
related to or affect a member of a Company Group, (iii) all Taxes
shown as due on each such Tax Return have been timely paid in full
insofar as such Taxes are related to or affect a member of a Company
Group, (iv) insofar as such items are related to or affect a member
of a Company Group, no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or
late payment of any such Tax and (v) all Tax withholding and deposit
requirements imposed on or with respect to any member of a Company
Group, or any member of the Parent Group insofar as it affects any
member of a Company Group, have been satisfied in full in all
respects;
(b) no member of a Company Group (or the Parent Group insofar as it
affects any member of a Company Group) has in force any waiver of
any statute of limitations in respect of Taxes or any extension of
time with respect to a Tax assessment or deficiency;
(c) there are no pending Tax audits or examinations and no proposed
deficiencies or other claims for unpaid Taxes of any member of a
Company Group for which written notice has been received;
(d) Schedule 5.08(d) to the Parent's Disclosure Letter contains a list
as of the date hereof of (i) all tax allocation or sharing
agreements to which any member of either Company Group is a party
and (ii) each member of a Company Group that has any liability for
the Taxes of any other Person (other than members of its respective
Company Group) under United States Treasury Regulation section
1.1502-6 (or any similar provision of state, local or foreign law);
(e) the aggregate unpaid Taxes of all members of the Company Groups
(computed with respect to each such member on the basis of the
income, operations and activities of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
24
such member through the Closing Date as if the applicable taxable
year of such member ended on the Closing Date) did not, as of the
date of the Closing, exceed the amounts reserved for Tax liability
(as distinguished from any reserve for deferred taxes established to
reflect timing differences between book and tax income) in the
reserve for Taxes set forth on the face of (rather than in any notes
to) the Closing Financial Statements;
(f) none of the assets of any member of any Company Group is property
required to be treated as being owned by any other Person pursuant
to the "safe harbor lease" provisions of former Section 168(f)(8) of
the Code;
(g) none of the assets of any member of any Company Group directly or
indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code;
(h) none of the assets of any member of any Company Group is "tax-exempt
use property" within the meaning of Section 168(h) of the Code;
(i) each member of each Company Group that is not a corporation is
properly classified for United States federal income tax purposes as
a partnership or a disregarded entity, and not as an association or
publicly traded partnership taxable as a corporation. No member of a
Company Group is a party to any joint venture, partnership, limited
liability company agreement, or other arrangement or contract that
could be treated as a partnership for federal income tax purposes;
(j) the Parent is the common parent of the affiliated group within the
meaning of Section 1504(a) of the Code that includes Dresser
Industries and each member of the DEGI Group that is a domestic
corporation;
(k) the Parent is eligible to make an election under Section 338(h)(10)
of the Code (and any comparable election under state, local or
foreign tax law) with respect to each member of each Company Group
that is a domestic corporation; and
(l) no claim has been made by a jurisdiction where any member of any
Company Group does not file Tax Returns or otherwise comply with
local taxation requirements (e.g., through a withholding tax regime)
that such member is or may be subject to taxation in that
jurisdiction.
Section 5.09. Principal Contracts.
(a) Schedule 5.09(a) to the Parent's Disclosure Letter contains a list
as of the date hereof of all Principal Contracts, other than Related
Party Contracts and Surety Arrangements, including the name of the
Company Group member that is a party thereto and the Business to
which each such Principal Contract relates. Each such Principal
Contract is in full force and effect, and neither the member or
members of either Company Group party
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
25
thereto nor, to the Knowledge of Parent, any other party thereto,
has failed to perform its obligations thereunder to date, other than
any failure of a Principal Contract to be in full force and effect
or of any nonperformance thereof that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect on the Businesses. To the Knowledge of the Parent, no party
to any such Principal Contract has given or received any notice of
cancellation or termination of such Principal Contract.
(b) Schedule 5.09(b) to the Parent's Disclosure Letter contains a list
as of the date hereof of all Principal Contracts that are Related
Party Contracts, including the name of each Company Group member
that is a party thereto and the Business to which each such Related
Party Contract relates, and identifies each Retained Subsidiary of
the Parent that is the party to each such Related Party Contract.
Each Related Party Contract is in full force and effect and each
party thereto has performed its obligations thereunder to date.
(c) Schedule 5.09(c) to the Parent's Disclosure Letter contains a list
as of the date hereof of all Surety Arrangements, including the name
of each Company Group member that is a beneficiary thereof and the
Business to which the Surety Arrangement relates, and identifies
each surety in such arrangement, whether that be the Parent or a
Retained Subsidiary. To the Knowledge of the Parent, all such Surety
Arrangements are in full force and effect, no Parent or Retained
Subsidiary is in default thereunder and no party to any Surety
Arrangement has given or received any notice of cancellation or
termination of any Surety Arrangement.
Section 5.10. Employees.
(a) Except for matters that could not reasonably be expected to have a
Material Adverse Effect on the Businesses, (i) no collective
bargaining or similar agreement is being negotiated by any member of
either Company Group, (ii) there is no pending or, to the Knowledge
of the Parent, threatened labor dispute, strike, slowdown, lockout
or work stoppage against any member of either Company Group, (iii)
none of the members of the Company Groups is a party to or bound by
any collective bargaining or similar agreement with any union or
work rules or practices agreed to with any labor organization or
employee association applicable to employees of any member of either
Company Group, (iv) none of the employees of any member of either
Company Group is represented by any labor organization and, to the
Knowledge of the Parent, there are no current union organizing
activities among the employees of any member of either Company Group
and (v), to the Knowledge of the Parent, no member of either Company
Group is engaged in any unfair labor practice in connection with the
operation of the related Business, which unfair labor practice is
actionable under applicable Laws and Regulations. Except for matters
that could not reasonably be expected to have a Material Adverse
Effect on the Businesses, since January 1, 1998, none of the members
of either Company Group has (A), without fully complying with the
notice and other requirements of the WARN Act, effectuated (i) a
"plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any
site of employment or facility of any such Company Group member
covered by the WARN Act or (ii) a "mass layoff" (as defined in the
WARN Act) affecting any site of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
26
employment or facility of any such Company Group member covered by
the WARN Act; or (B) engaged in layoffs or employment terminations
sufficient to imply application of any foreign, state or local Laws
or Regulations relating to plant closing or mass layoffs and
requiring notice to employees in the event thereof without complying
with such Laws and Regulations.
(b) Schedule 5.10(b) to the Parent's Disclosure Letter sets forth as of
the date hereof a true and complete list of the Significant Benefit
Plans. Schedule 5.10(b) to the Parent's Disclosure Letter also
identifies which of the Significant Benefit Plans constitute Parent
Benefit Plans. The Parent has made available to the Acquiror copies
of all Significant Benefit Plans and, for each such Significant
Benefit Plan, copies of (i) the most recent annual report (if any)
required to be filed with an applicable Governmental Authority, (ii)
a copy of the most recent actuarial report and valuation of the
assets and liabilities subject thereto to the extent that any such
report or valuation is required to be prepared by applicable Laws
and Regulations, (iii) a copy of the organizational documents
relating to any funding vehicle established thereunder and a copy of
the summary plan description (if any) therefor, (iv) where
applicable, the most recent determination letter issued by the
Internal Revenue Service, (v) a complete description of any
unwritten Significant Benefit Plans, and (vi) summary plan
descriptions, summaries of material modifications, and any other
material communications distributed to participants. Except for the
Parent Benefit Plans, no Person that is not a member of a Company
Group is a participating employer or sponsor of any Significant
Benefit Plan. The Parent has made available to the Acquiror copies
of any retention agreements with any management employees of any
member of either Company Group that were executed in contemplation
of the transactions that are the subject of this Agreement.
(c) Except for matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the
Businesses:
(i) no Benefit Plan is subject to section 412 of the Code, section
302 of ERISA or Title IV of ERISA, and each Benefit Plan
intended to be qualified under section 401(a) of the Code (A)
satisfies in form the requirements of such section except to
the extent amendments are not required by law to be made until
a date after the Closing Date and (B) has received a favorable
determination letter from the Internal Revenue Service
regarding such qualified status;
(ii) each Benefit Plan has been operated and administered in
compliance with its governing documents and all applicable
Legal Requirements;
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
27
(iii) each member of each Company Group has performed all
obligations, whether arising by Legal Requirement or by
contract, required to be performed by it in connection with
the Benefit Plans;
(iv) there are no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the
Parent, threatened against, or with respect to, any of the
Benefit Plans or their assets;
(v) all contributions required to be made to the Benefit Plans
pursuant to their terms and the provisions of all applicable
Legal Requirements have been timely made;
(vi) other than routine applications, filings and amendments and
modifications, there is no matter pending with respect to any
of the Benefit Plans before any Governmental Authority;
(vii) each member of each Company Group is in substantial compliance
with all applicable Legal Requirements mandating benefits for
their employees;
(viii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not
(except as otherwise provided in this Agreement or pursuant to
the terms of a Benefit Plan as in effect on the date of this
Agreement) (A) require any member of either Company Group to
make a larger contribution to, or pay greater benefits or
accelerate vesting or other rights or provide other rights
under, any Benefit Plan than it otherwise would, whether or
not some other subsequent action or event would be required to
cause such payment or provision to be triggered or (B) create
or give rise to any additional vested rights or service
credits or accruals under any such Benefit Plan;
(ix) in connection with the consummation of the transactions
contemplated by this Agreement, no payment of money or other
property, acceleration of benefits or provision of other
rights has been or could be made under this Agreement, any
Ancillary Agreement, any Benefit Plan or otherwise that would
be reasonably likely to be nondeductible for United States
federal income tax purposes by any member of either Company
Group that is a United States person (within the meaning of
section 7701(a)(30) of the Code) solely by virtue of section
162(m) or section 280G of the Code or that would be reasonably
likely to be an "excess parachute payment" pursuant to Section
280G of the Code or that would be an "excess parachute
payment," but for the application of Section 280G(b)(5) of the
Code;
(x) to the Knowledge of the Parent neither any member of either
Company Group nor any fiduciary of any Benefit Plan has
engaged in any transaction in violation of Sections 404 or 406
of ERISA or any non-exempt "prohibited transaction" as defined
in Section 4975(c)(i) of the Code, or has otherwise
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
28
violated the provisions of Part 4 of Title I, Subtitle B of
ERISA, and, to the Knowledge of the Parent, no member of
either Company Group has knowingly participated in a violation
of Part 4 of Title I, Subtitle B of ERISA by any fiduciary of
a Benefit Plan (or other employee benefit plan subject to
ERISA) and, to the Knowledge of the Parent, no member of
either Company Group has been assessed any civil penalty under
Section 502(a) of ERISA of a material amount which has not
been paid in full or accrued as a liability in the financial
statements;
(xi) except pursuant to one or more of those Significant Benefit
Plans set forth on Schedule 5.10(b) to the Parent's Disclosure
Letter, none of the Parent, either Company Group, or any
Benefit Plan has any present or future obligation to provide
any benefits to or make any payment with respect to any
current or former employee, director, officer, consultant or
agent of any Company Group pursuant to any Significant Benefit
Plan that is a retiree medical benefit plan or other retiree
welfare plan and no condition exists that would prevent the
Parent or either Company Group from amending or terminating
any such plan;
(xii) to the Knowledge of the Parent, each Benefit Plan that is a
"group health plan" has been operated in all Material respects
in compliance with the provisions of Part 6 of Title I,
Subtitle B;
(xiii) to the Knowledge of the Parent, neither the Parent nor any
member of either Company Group nor any ERISA Affiliate has
announced, proposed, or agreed to any changes to any Benefit
Plan that would cause an increase in benefits (or the creation
of new benefits) under any such Benefit Plan or that would
cause a material increase in the cost of maintaining such
Benefit Plan with respect to a Company Group; and
(xiv) to the Knowledge of the Parent, each Benefit Plan that covers
current or former employees, directors, officers or
consultants and that is not subject to ERISA and the Code has
been maintained in material compliance with its terms and with
the requirements prescribed by any and all applicable
statutes, orders, rules and regulations (including any special
provisions relating to the tax status of contributions to,
earnings of or distributions from such Benefit Plans where
each such Benefit Plan was intended to have tax status) and
has been maintained in good standing with applicable statutes,
orders, rules and regulations (including any special
provisions relating to the tax status of contributions to,
earnings of or distributions from such Benefit Plans where
each such Benefit Plan was intended to have tax status) and
has been maintained in good standing with applicable
regulatory authorities.
(d) There does not now exist, nor do any circumstances exist that could
result in, any Controlled Group Liability of the Parent or any of
its ERISA Affiliates that could reasonably be expected to become a
liability of any member of either Company
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
29
Group following the First Closing. No liability under Title IV of
ERISA (including liabilities pursuant to Sections 4064, 4069 or 4204
of ERISA) has been incurred by any member of either Company Group
since the effective date of ERISA that has not been satisfied in
full and no such liability is reasonably expected to arise with
respect to any member of either Company Group. To the extent that
the representation in the preceding sentence applies to any section
of ERISA pursuant to which either Controlled Group could have
liability with respect to an ERISA Affiliate, it is made not only
with respect to the Benefit Plans but also with respect to any
employee benefit plan subject to Title IV of ERISA to which any
member of either Company Group or any ERISA Affiliate made, or was
required to make, contributions during the six-year period preceding
the date of this Agreement. The Pension Benefit Guaranty Corporation
has not instituted proceedings pursuant to section 4042 of ERISA to
terminate any of the Benefit Plans subject to Title IV of ERISA or,
to the Knowledge of the Parent, any plan maintained by any other
entity that would be considered a single employer with any member of
either Company Group pursuant to section 4001(b)(1) of ERISA. As to
any Benefit Plan subject to Title IV of ERISA, there has been no
"reportable event" (as defined in Section 4043(c) of ERISA and the
regulations under such section and for which the disclosure
requirements of Regulation section 4043.1 et. seq., promulgated by
the Pension Benefit Guaranty Corporation, have not been waived) and
no member of the Company Groups nor Parent nor any ERISA Affiliate
is subject to Section 4043(b) of ERISA and no analogous event has
occurred under applicable foreign law. Within the past six years,
neither any Benefit Plan nor any other plan maintained by any entity
that would be considered a single employer with any member of either
Company Group pursuant to section 4001(b)(1) of ERISA is or was a
"multiemployer plan" (as such term is defined in section 3(37) of
ERISA).
Section 5.11. Environmental Matters. Notwithstanding anything to the
contrary in this Article V or in any other section of this Agreement, the
representations and warranties set forth in this Section 5.11 are the only
representations and warranties thereof of the Parent in any way relating to
environmental matters, including the Environmental Laws, Authorizations under
any Environmental Laws and Hazardous Materials, and the remaining
representations and warranties in this Agreement shall be construed not to apply
to such matters. Employee health and safety matters are covered by Section 5.07.
Except for matters that could not reasonably be expected to have a Material
Adverse Effect on the Businesses, Schedule 5.11 to the Parent's Disclosure
Letter sets forth:
(a) to the Knowledge of the Parent, all Hazardous Materials
Contamination on, about or under the Real Property as of the date of
this Agreement;
(b) to the Knowledge of the Parent, all Environmental Compliance Matters
related to the Businesses as of the date of this Agreement;
(c) all existing, pending or, to the Knowledge of the Parent, threatened
actions, suits, investigations, CERCLA potentially responsible party
notices, inquiries and proceedings by or before any Court or
Governmental Authority under any applicable
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
30
Environmental Laws as of the date of this Agreement against any
member of either Company Group; and
(d) Schedule 5.11 to the Parent's Disclosure Letter includes a listing
of all the environmental site assessment reports prepared in
connection with the transactions contemplated hereby, all of which
have heretofore been delivered to the Acquiror.
Section 5.12. Litigation. There are no actions, suits, arbitrations,
proceedings or investigations pending or, to the Knowledge of the Parent,
threatened against the Parent, the Seller or any member of either Company Group,
including any involving a claim for indemnification pursuant to any statute,
Organizational Document or contract relating to any other action, suit,
arbitration, proceeding or investigation, in or before any Court or before or by
any Governmental Authority, except actions, suits, proceedings or investigations
as disclosed in the Parent's Disclosure Letter pursuant to Section 5.07, 5.10 or
5.11 or that, individually or, with respect to multiple actions, suits or
proceedings that allege similar theories of recovery based on the same or
substantially the same facts or occurrences, in the aggregate, could not
reasonably be expected, in the case of any member of either Company Group, to
have a Material Adverse Effect on the Businesses or, in the case of any of the
Parent or the Seller, to prevent, enjoin or delay materially the performance of
this Agreement, and the Parent has no Knowledge of any facts which could give
rise to any such action, suit, arbitration, proceeding or investigation. Neither
the Parent nor the Seller nor any member of either Company Group is subject to
any judgment, injunction, order, ruling or decree that could reasonably be
expected, individually or in the aggregate, in the case of any member of either
Company Group, to have a Material Adverse Effect on the Businesses or, in the
case of the Parent or the Seller, to prevent or enjoin or delay materially the
performance of this Agreement.
Section 5.13. Material Adverse Changes.
(a) Since the Initial Balance Sheet Date, no event, condition or
circumstance has occurred resulting in any change in or effect on
any Business (except for (i) such changes or effects resulting from
changes in general economic, regulatory or political conditions
(including foreign exchange rate movements or devaluations), (ii)
such changes or effects affecting generally the industry in which
such Business participates and (iii) any such changes or effects
disclosed in the Parent's Disclosure Letter pursuant to any other
representation or warranty contained in this Article V) that has had
or could reasonably be expected to constitute or have a Material
Adverse Effect on the Businesses.
(b) During the period from the Initial Balance Sheet Date to the date of
this Agreement, no member of either Company Group has engaged in any
conduct that is proscribed during the period from the date of this
Agreement to the Closing Date by clauses (i) through (xvi) of
subsection (b) of Section 8.02.
Section 5.14. Customers and Suppliers. Schedule 5.14 to the Parent's
Disclosure Letter sets forth a true and correct list of (a) the 20 largest
customers of each Business, in terms of sales during each of the fiscal years
ended December 31, 1999 and 2000, setting forth the total sales to each such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
31
customer during such period and (b) the 10 largest suppliers of each Business,
in terms of purchases during each of the fiscal years ended December 31, 1999
and 2000, setting forth for each such supplier the total purchases from each
such supplier during such period. Since the Initial Balance Sheet Date, to the
Knowledge of the Parent, there has not been any change in the business
relationship of the relevant members of either Company Group with any customer
or supplier named in Schedule 5.14 to the Parent's Disclosure Letter that could
reasonably be expected to have a Material Adverse Effect on the Businesses.
Section 5.15. Adequacy of Assets. The assets and properties of the members
of the Company Groups constitute all of the assets, rights and properties that
are necessary for the conduct of the Businesses as now conducted.
Section 5.16. Full Disclosure. The Acquiror shall be entitled to rely
upon, and shall not be deemed to have knowledge of facts other than those set
forth in, the representations and warranties of the Parent and the Seller made
in this Agreement (including the Schedules to the Parent's Disclosure Letter
related hereto) and in the certificates delivered by or on behalf of the Parent
and the Seller confirming the accuracy of such representations and warranties
and pursuant to any disclosures in writing made to the Acquiror pursuant to
Section 12.02(c).
Section 5.17. Disclaimers. THE ACQUIROR ACKNOWLEDGES THAT EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT THE PARENT HAS NOT MADE, AND THE PARENT
HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND THE ACQUIROR HEREBY EXPRESSLY
WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE OR OTHERWISE RELATING TO, AND THE ACQUIROR HEREBY EXPRESSLY WAIVES AND
RELINQUISHES ANY AND ALL RIGHTS, CLAIMS AND CAUSES OF ACTION AGAINST THE PARENT
AND ITS REPRESENTATIVES IN CONNECTION WITH, THE ACCURACY, COMPLETENESS OR
MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL),
HERETOFORE FURNISHED TO THE ACQUIROR AND ITS REPRESENTATIVES BY OR ON BEHALF OF
THE PARENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARENT EXPRESSLY
DISCLAIMS AND NEGATES, AND THE ACQUIROR HEREBY WAIVES, AS TO PERSONAL PROPERTY,
EQUIPMENT AND FIXTURES CONSTITUTING A PART OF THE ASSETS OWNED OR OPERATED BY
THE BUSINESSES, (I) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (II) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (III) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
(IV) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE LEGAL REQUIREMENTS TO CLAIM
DIMINUTION OF CONSIDERATION, (V) ANY CLAIMS BY ACQUIROR FOR DAMAGES BECAUSE OF
ANY LATENT OR PATENT DEFECTS OR OTHER DEFECTS, WHETHER KNOWN OR UNKNOWN AND (VI)
ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LEGAL REQUIREMENTS; IT
BEING THE EXPRESS INTENTION OF THE PARENT AND THE ACQUIROR THAT, EXCEPT AS
EXPRESSLY PROVIDED ELSEWHERE IN THIS AGREEMENT, THE TANGIBLE PROPERTY, INCLUDING
REAL PROPERTY, IMMOVABLES, PERSONAL PROPERTY, MOVABLES, EQUIPMENT AND FIXTURES
OWNED BY OR IN THE POSSESSION OF THE SELLER OR ANY MEMBER OF EITHER COMPANY
GROUP ARE TO BE CONVEYED IN THEIR THEN PRESENT CONDITION AND STATE OF REPAIR,
"AS IS" AND "WHERE IS" WITH ALL FAULTS. THE PARENT AND THE ACQUIROR AGREE THAT,
TO THE EXTENT REQUIRED BY APPLICABLE LEGAL REQUIREMENTS TO
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
32
BE EFFECTIVE, THE DISCLAIMERS OF THE WARRANTIES CONTAINED IN THIS SECTION ARE
"CONSPICUOUS."
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Subject to the matters set forth in the Acquiror's Disclosure Letter and
to the limitations set forth in Section 12.01, the Acquiror represents and
warrants to the Parent that:
Section 6.01. Organization and Qualification. The Acquiror is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Acquiror is duly qualified to do business as a foreign
company and is in good standing (in those jurisdictions in which the concept of
good standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to prevent the Acquiror from
performing this Agreement and each Ancillary Agreement in all material respects.
Section 6.02. Authorization of Agreement. The Acquiror has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by the Acquiror of this Agreement and each of the
Ancillary Agreements and the performance by the Acquiror of its obligations
hereunder and thereunder have been duly and validly authorized by all requisite
company action on the part of the Acquiror. This Agreement has been, and each
Ancillary Agreement will at the First Closing have been, duly executed and
delivered by the Acquiror and (assuming due authorization, execution and
delivery hereof by the Parent and thereof by each other party thereto)
constitutes or, in the case of the Ancillary Agreements, will at the First
Closing constitute the legal, valid and binding obligation of the Acquiror,
enforceable against the Acquiror in accordance with its terms, except as
enforcement hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).
Section 6.03. Approvals. Except for (a) such filings and approvals as may
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Acquiror from performing this Agreement or the
Ancillary Agreements in all material respects, no filing or registration with,
no waiting period imposed by, and no Authorization of, any Governmental
Authority is required under any Legal Requirement applicable to the Acquiror to
permit the Acquiror to execute, deliver or perform this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
33
Section 6.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, each Court and Governmental
Authority indicated as required pursuant to Section 6.03, neither the execution
and delivery by the Acquiror of this Agreement or any Ancillary Agreement nor
the performance by the Acquiror of its obligations hereunder or thereunder will
(a) violate or breach the terms of or cause a default under (i) any Legal
Requirement applicable to the Acquiror, (ii) the Organizational Documents of the
Acquiror or (iii) any contract or agreement to which the Acquiror or any of its
Subsidiaries is a party or by which it or any of its properties or assets is
bound (including any provision thereof requiring any Third Person Consent) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in this Section that could not
reasonably be expected to prevent the Acquiror from performing this Agreement
and the Ancillary Agreements in all material respects.
Section 6.05. Commitment Letters. The Acquiror has delivered to the Parent
true and complete copies of the Commitment Letters. The Commitment Letters have
not been amended or modified and are in full force and effect.
Section 6.06. No Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or investment banking fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Acquiror.
Section 6.07. Transitory Merger Sub. Transitory Merger Sub is not and has
never been a party to any material agreements and has not conducted any
activities other than in connection with its organization, the negotiation and
execution of the Merger Agreement, the Loan, the Investment and the consummation
of the transactions contemplated hereby. Transitory Merger Sub has no
Subsidiaries.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Each of the representations and warranties contained in this Article VII
gives effect to the Reorganization as if the Reorganization had been effected on
the date of this Agreement. Subject to the limitations set forth in Section
12.01, each of the Parent and the Acquiror represents and warrants to the other
as of the Second Closing that:
Section 7.01. Organization. Each Buyer is a legal entity duly organized,
validly existing and in good standing (if the concept of good standing is
applicable in that jurisdiction) under the Laws of its jurisdiction of
incorporation or organization, and has all requisite organizational power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
34
Section 7.02. Authorization of Agreement. Each Buyer has all requisite
organizational power and authority to execute and deliver the Ancillary
Agreements, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by each Buyer of
each Ancillary Agreement to which it is a party and the performance by such
Buyer of its obligations thereunder have been duly and validly authorized by all
requisite organizational action on the part of such Buyer and, to the extent
required by Law, Regulation or such Buyer's Organizational Documents, by the
holder or holders of such Buyer's Equity Securities. Each Ancillary Agreement to
which it is a party will at the Second Closing have been duly executed and
delivered by each Buyer and (assuming due authorization, execution and delivery
thereof by each other party thereto) at the Second Closing each Ancillary
Agreement to which it is a party will constitute the legal, valid and binding
obligation of such Buyer, enforceable against such Buyer in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).
Section 7.03. Approvals. Except for (a) such filings and approvals as may
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent any Buyer from performing any Ancillary Agreement to which
it is a party in all material respects, no filing or registration with, no
waiting period imposed by and no Authorization of, any Governmental Authority or
Court is required under any Legal Requirement applicable to such Buyer to permit
such Buyer to execute, deliver or perform each Ancillary Agreement to which it
is a party or to consummate the transactions contemplated thereby.
Section 7.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 7.03, neither the execution
and delivery by any Buyer of any Ancillary Agreement to which it is a party nor
the performance by the Buyer of its obligations thereunder will (a) violate or
breach the terms of or cause a default under (i) any Legal Requirement
applicable to such Buyer, (ii) the Organizational Documents of such Buyer or
(iii) any contract or agreement to which such Buyer is a party or by which it or
any of its properties or assets is bound or (b), with the passage of time, the
giving of notice or the taking of any action by a third Person, have any of the
effects set forth in clause (a) of this Section 7.04, except in any such case
for any matters described in this Section 7.04 that could not reasonably be
expected to prevent such Buyer from performing each Ancillary Agreement to which
it is a party in all material respects.
Section 7.05. Investment in Securities. Each Buyer is acquiring the
Securities to be purchased by it for its own account and not with a view to a
distribution thereof within the meaning of that term as used in the U.S.
Securities Act of 1933 (the "Securities Act").
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
35
ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding Operation of the Businesses.
(a) The Parent and the Seller, jointly and severally, hereby covenant
and agree that, from the date hereof to the Closing Date, except as
set forth in Schedule 8.01(a) to the Parent's Disclosure Letter, as
otherwise contemplated by this Agreement or as approved in writing
by the Acquiror, they will cause each member of each Company Group
(other than any Non-Controlled Entity):
(i) to operate in the usual and ordinary course consistent with
past practices;
(ii) to use all commercially reasonable efforts to preserve
substantially intact its business organization and goodwill,
to maintain its rights, privileges and immunities, to retain
the services of its key employees (subject to work force
requirements and compliance with the Parent's normal employee
policies), to perform in all material respects the Principal
Contracts to which it is a party and to maintain its
relationships with its customers, regulators, and suppliers;
(iii) to use all commercially reasonable efforts consistent with
past practice to maintain and to keep its properties and
assets in as good repair and condition as at present, ordinary
wear and tear excepted, and to maintain supplies and
inventories in quantities consistent with past practice;
(iv) to use all commercially reasonable efforts to maintain in full
force and effect insurance, performance bonds, bank guarantees
and letters of credit to the extent consistent with the
ordinary course of business consistent with past practice;
(v) to use all commercially reasonable efforts to maintain in full
force and effect all existing Authorizations pursuant to which
they operate and to obtain timely any additional
Authorizations or renewals thereof to the extent Material to
its ongoing operations; and
(vi) to comply in all Material respects with all applicable Legal
Requirements;
except for any matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the
Businesses.
(b) The Parent and the Seller, jointly and severally, agree that, from
the date hereof to the Closing Date, except as otherwise
contemplated by this Agreement or as approved in writing by the
Acquiror, they will use all commercially reasonable
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
36
efforts to cause each Non-Controlled Entity to conduct its business
affairs in accordance with the provisions of clauses (i) through
(vi), inclusive, of subsection (a) of this Section, except for any
matters that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on the Businesses. In
this regard, the Acquiror acknowledges that none of the
Non-Controlled Entities is under the direct or indirect control of
the Parent.
Section 8.02. Negative Covenants Regarding the Operation of the
Businesses.
(a) The Parent and the Seller, jointly and severally, covenant and agree
that, except as set forth in Schedule 8.02(a) to the Parent's
Disclosure Letter, as otherwise contemplated by this Agreement
(including the Reorganization), or as approved in writing by the
Acquiror, from the date of this Agreement until the Closing Date,
they will not directly or indirectly through any of their Affiliates
offer, issue, sell, transfer or otherwise dispose of, or grant any
Lien with respect to, any Equity Securities of any member of either
Company Group or authorize any of the foregoing.
(b) The Parent and the Seller, jointly and severally, covenant and agree
that, except as set forth in Schedule 8.02(b) to the Parent's
Disclosure Letter, as otherwise contemplated by this Agreement
(including the Reorganization), or as approved in writing by the
Acquiror, from the date of this Agreement until the Closing Date,
they will not permit any member of a Company Group (other than any
Non-Controlled Entity) to do any of the following:
(i) (A) increase Significantly the compensation payable to or to
become payable to any director or officer named in Schedule
8.02(b)(i) to the Parent's Disclosure Letter, (B) except as
otherwise provided in clause (ii) of this subsection (b),
grant any severance or termination pay, (C) amend or take any
other actions to increase Significantly the amount of, or
accelerate the payment or vesting of, any benefit under any
Benefit Plan or (D) contribute, transfer or otherwise provide
any Significant amount of cash, securities or other property
to any grantee, trust, escrow or other arrangement that has
the effect of providing or setting aside assets for benefits
payable pursuant to any termination, severance or other change
in control agreement; except (x) pursuant to the terms of any
Principal Contract of any member of a Company Group or any
Benefit Plan, contract, agreement or other legal obligation
existing at the Initial Balance Sheet Date or (y) in the case
of severance or termination payments, pursuant to the
severance policy of any member of a Company Group existing at
the Initial Balance Sheet Date the terms of which are usual
and customary for similarly situated entities or any Benefit
Plan, contract, agreement or other legal obligation existing
at the Initial Balance Sheet Date;
(ii) (A) enter into any employment or severance agreement with any
director or executive officer of any member of either Company
Group, either
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
37
individually or as part of a class of similarly situated
persons, or (B) establish, adopt or enter into any new Benefit
Plan; except employment and severance agreements and Benefit
Plans for the benefit of any newly employed or promoted
officers or employees, in which case the terms of such
agreements and Benefit Plans shall be reasonably consistent
with those existing at the Initial Balance Sheet Date, and
except Benefit Plans relating to health and life insurance
benefits established or adopted in the ordinary course of
business consistent with past practice;
(iii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any of its outstanding Equity Securities or those of
any other member of a Company Group, (B) effect any
reorganization, liquidation, dissolution, merger,
consolidation, restructuring or recapitalization, (C) split,
combine or reclassify any of its capital stock or other Equity
Securities or (D) declare, set aside or pay any dividend on or
make any other distribution in respect of its capital stock or
other Equity Securities, except (X) dividends or distribution
of cash by DEGI to Dresser Industries in excess of the cash
requirements set forth in subsection (f) of Section 11.03 and
(Y) dividends by any direct or indirect wholly owned
Subsidiary of DEGI or any BV Company to DEGI or such BV
Company or to any other direct or indirect wholly owned
Subsidiary of DEGI or such BV Company;
(iv) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any of its capital stock or other Equity
Securities;
(v) acquire on behalf of any member of either Company Group,
whether by purchasing an equity interest or otherwise, any
business or any corporation, partnership, association or other
business organization or division thereof other than any such
acquisition transaction that is not Material to the
Businesses;
(vi) acquire or construct for its account or that of any other
member of either Company Group any assets or properties other
than (A) any assets and properties that are not Material to
the Businesses, (B) assets and properties acquired or
constructed by making capital expenditures approved prior to
the date hereof and (C) the acquisition of assets from
suppliers or vendors in the ordinary course of business and
consistent with past practice;
(vii) make any significant loan, advance or capital contribution to,
or any significant investment in, any Person other than a
direct or indirect wholly owned Subsidiary of DEGI or any BV
Company;
(viii) sell, lease, license, exchange or otherwise dispose of
(including any disposition through any permitted lapse of any
Intellectual Property rights), or grant any Lien with respect
to, any of its assets, except for dispositions of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
38
assets and inventories in the ordinary course of business
consistent with past practice and purchase money Liens
incurred in connection with the original acquisition of assets
secured by such assets;
(ix) adopt any amendments to its Organizational Documents;
(x) (A) make any change in any of its methods of accounting in
effect at the Initial Balance Sheet Date, except as may be
required to comply with U.S. GAAP, or seek any regulations or
rulings from any Governmental Authority regarding the same,
(B) make or rescind any election relating to any Taxes (other
than any election that must be made periodically and that is
made consistent with past practice) or change any of its
methods of reporting income or deductions for income tax
purposes from such methods adopted and currently in effect
prior to the date of this Agreement, except as may be required
by Law, or (C) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, except, in each case, as may be
required by Law or for matters that could not reasonably be
expected to be adverse and Significant;
(xi) incur any obligations for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument, except Intercompany
Indebtedness, purchase money indebtedness as to which Liens
may be granted pursuant to clause (viii) of this subsection
(b), drawings under credit lines existing at the date of this
Agreement and borrowings evidenced by obligations having a
term of up to five years issued in the ordinary course of
business consistent with past practice, or assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingent, or otherwise) for any Significant
obligations of any Person (other than a direct or indirect
wholly owned Subsidiary of DEGI or any BV Company);
(xii) (A) except in connection with the elimination or satisfaction
of a Contractual Transfer Restriction required in order to
consummate the Reorganization, pay, repay, discharge,
purchase, repurchase or satisfy any other obligation for a
Significant amount of indebtedness for borrowed money owed by
it or any other member of either Company Group except in
accordance with its scheduled maturities; or (B) modify the
terms of any obligation for a Significant amount of
indebtedness for borrowed money owed by it or any member of
either Company Group, other than modifications of short term
debt that are not, in the aggregate, Material;
(xiii) exclusive of those subject to clause (xii) of this subsection
and other than with respect to Intercompany Indebtedness, pay,
prepay, discharge, or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) that are Material to the Businesses,
other
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
39
than in the ordinary course of business consistent with past
practice (including the payment of final and unappealable
judgments);
(xiv) enter into any new Related Party Contract or any Principal
Contract with any third Person, other than any distributorship
or sales representation agreement entered into in the ordinary
course of business, that provides that third Person with an
exclusive arrangement relating to a particular line of
business or geographic area;
(xv) initiate any proceeding before any federal, national, state,
regional or local regulatory agency in any country (other than
with respect to any Regulatory Transfer Restriction required
by any applicable Law, Regulation or Order), which proceeding
could reasonably be expected to have a Material Adverse Effect
on the Businesses except for proceedings related to Taxes
undertaken in the ordinary course of business with respect to
submitting or perfecting a claim for refund or defending or
preserving rights with respect to an assessed deficiency; or
(xvi) agree to do any of the foregoing.
(c) The Parent and the Seller, jointly and severally, hereby covenant
and agree that, prior to the Closing Date, except as otherwise
expressly contemplated by this Agreement or as approved in writing
by the Acquiror, they will use all commercially reasonable efforts
consistent with their fiduciary obligations, if any, to prevent each
Non-Controlled Entity from taking any of the actions contemplated by
clauses (i) through (xvi) of subsection (b) of this Section. In this
regard, the Acquiror acknowledges that none of the Non-Controlled
Entities is under the direct or indirect control of the Parent.
Section 8.03. Access to Information.
(a) Subject to any limitations on disclosures to which the Parent and
the Acquiror agreed in the Confidentiality Agreement, the Parent
shall, prior to the Closing Date, cause each member of each Company
Group (or, in the case of any Company Group member that is a
Non-Controlled Entity, use commercially reasonable efforts to cause
such Non-Controlled Entity) (i) to afford to the Acquiror and its
Representatives access, at reasonable times upon reasonable prior
notice, to the officers, employees, agents, properties, offices and
other facilities of the Company Group member and to its Books and
Records and (ii) to furnish promptly to the Acquiror and its
Representatives such information concerning the properties,
contracts, records and personnel (including financial, operating and
other data and information) related to the Businesses as may be
reasonably requested, from time to time, by or on behalf of the
Acquiror; provided, that Acquiror's Representatives (i) comply with
the provisions of the Confidentiality Agreement, (ii) comply with
all applicable safety and other rules of conduct of such offices and
facilities and (iii) do
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
40
not unreasonably interfere with the operation of such offices or
facilities or the personnel involved. In this regard, the Acquiror
acknowledges that none of the Non-Controlled Entities is under the
direct or indirect control of the Parent.
(b) Subject to any limitations on disclosures to which the Parent and
the Acquiror agreed in the Confidentiality Agreement, the Parent
shall, at any time following the issuance of a press release or
similar disclosure announcing the execution of this Agreement and
prior to the Closing Date, cause each member of each Company Group
to afford to the Acquiror and its Representatives access, at
reasonable times and upon reasonable prior notice, to the customers
and suppliers of such Company Group member.
(c) All information provided to the Acquiror and the Acquiror's
Representatives pursuant to the Parent's Disclosure Letter and
otherwise pursuant to subsection (a) of this Section shall be deemed
to be "Evaluation Material" as that term is defined in the
Confidentiality Agreement but subject to the exclusions and
exceptions described therein.
Section 8.04. Insurance Benefits. If, with respect to any of the Assumed
Obligations or, to the extent that the Acquiror is not then entitled to
indemnification therefor pursuant to Article XII, any of the Excluded
Liabilities, the Parent has prior to the Closing Date carried one or more
policies of insurance for the benefit of a member of a Company Group that may
provide coverage for such Assumed Obligation, then after the Closing Date the
Parent shall assist the Acquiror and its relevant Subsidiary in making a claim
for the benefits of such insurance; provided, however, that the Parent shall
have no liability with respect to the success or failure of such claim. Neither
the Acquiror nor, following the Closing Date, any Subsidiary of the Acquiror
shall have any rights as provided in this Section 8.04 with regard to any
insurance policies of the Parent that are in effect self insurance, such as
retrospectively rated, deductible or captive reinsured policies.
Section 8.05. Compliance with Competition Laws Applicable to Designated
Regulatory Assets.
(a) Subject to the Acquiror's compliance with subsection (a) of Section
10.01 and the satisfaction of the conditions contained in subsection
(b) of this Section, at any time after the Closing Date and prior to
the second anniversary of the Closing Date, the Acquiror may elect
to require, by giving notice to the Parent of such election, the
Parent or, if the Parent so desires, an Affiliate of the Parent to
repurchase any Designated Regulatory Assets for cash consideration
equal to the value allocated to such Designated Regulatory Assets in
the column entitled "Allocated Dollar Amount" in Schedule 2.13 to
the Parent's Disclosure Letter within 90 days after the receipt of
such notice by the Parent, and the Parent or, at the election of the
Parent, an Affiliate of the Parent shall purchase such Designated
Regulatory Assets for such cash consideration within such period. To
the extent that an amount set forth in Schedule 2.13 to the Parent's
Disclosure Letter becomes the purchase price for any such entity as
a Designated Regulatory Asset, such amount shall be reduced by the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
41
amount of any payment by the Parent to the Acquiror under Article
XII directly related to such entity.
(b) It shall be a condition to the Acquiror's right to exercise the
option with respect to any Designated Regulatory Assets as provided
in subsection (a) of this Section that:
(i) such assets became Designated Regulatory Assets no more than
90 days prior to the exercise of such option;
(ii) such Designated Regulatory Assets shall be transferred to the
Parent or an Affiliate of the Parent, as applicable, free and
clear of all Liens (other than Liens in existence immediately
prior to the Closing) and shall not be subject to an aggregate
amount of liabilities materially in excess of the aggregate
liabilities to which such Designated Regulatory Assets were
subject immediately prior to the Closing;
(iii) the Acquiror shall agree, for a period of five years from the
date of the transfer of such Designated Regulatory Assets to
the Parent or an Affiliate of the Parent, to provide or cause
to be provided to or to purchase or cause to be purchased
from, as the case may be, the Parent or an Affiliate of the
Parent, as applicable, such quantity and quality of products,
components, spare parts and services as the other operations
of the Businesses have historically provided to, or purchased
from, as the case may be, such Designated Regulatory Assets at
the applicable Adjusted Price for such product, component,
spare part or service and
(iv) at the dates of exercise of the option and at the date of
transfer of such Designated Regulatory Assets, the Acquiror
shall represent and warrant to the Parent or an Affiliate of
the Parent, as applicable, that the matters set forth in
clauses (i) and (ii) of this subsection (b) are true and
correct and that since the Closing Date, the Acquiror or any
other Person owning, operating or managing such Designated
Regulatory Assets has, in all Material respects:
(A) operated such Designated Regulatory Assets in the usual
and ordinary course consistent with past practices;
(B) used all commercially reasonable efforts to preserve
substantially intact the business organization and
goodwill, if any, associated with such Designated
Regulatory Assets, to maintain the rights, privileges
and immunities, if any, of such Designated Regulatory
Assets, to retain the services of any key employees of
such Designated Regulatory Assets, to perform in all
material respects the material contracts and agreements
relating to such Designated Regulatory Assets and to
maintain the relationships with customers, regulators
and suppliers of such Designated Regulatory Assets;
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
42
(C) used all commercially reasonable efforts consistent with
past practice to maintain and to keep such Designated
Regulatory Assets in as good repair and condition as at
the Closing Date, ordinary wear and tear excepted, and
to maintain supplies and inventories of such Designated
Regulatory Assets in quantities consistent with past
practice;
(D) used all commercially reasonable efforts to maintain in
full force and effect insurance, performance bonds, bank
guarantees and letters of credit on behalf of or with
respect to such Designated Regulatory Assets to the
extent consistent with the ordinary course of business
consistent with past practice;
(E) used all commercially reasonable efforts to maintain in
full force and effect all existing Authorizations
pursuant to which such Designated Regulatory Assets
operate and to obtain timely any additional
Authorizations or renewals thereof to the extent
material to the ongoing operations of such Designated
Regulatory Assets; and
(F) complied with all Legal Requirements applicable to such
Designated Regulatory Assets.
(c) The Acquiror shall have 60 days from and after the repurchase by a
member of the Parent Group of Designated Regulatory Assets under
subsection (a) of this Section 8.05 to present the Parent with a
reasonably viable plan pursuant to which (i) one or more members of
a Company Group would again purchase all or a portion of such
Designated Regulatory Assets or (ii) such member or members of a
Company Group would enter into a contractual relationship with one
or more Subsidiaries of the Parent that would provide to the Parent
and the Acquiror approximately the same economic benefits and
obligations as such a purchase of all or a portion of the Designated
Regulatory Assets which plan (x) is reasonably likely to be
acceptable to all Governmental Authorities having jurisdiction over
such Designated Regulatory Assets and (y) may be accomplished in no
more than 24 months from the date of repurchase by the member of the
Parent Group. The Parent and the Acquiror agree to negotiate in good
faith and pursue such plan on commercially reasonable terms so long
as it is practicable to do so but in any event no longer than 90
days.
Section 8.06. Covenant Not to Compete. For a period commencing on the
Closing Date and ending on the third anniversary of the Closing Date, the
Parent, the Seller and their respective Subsidiaries (whether now existing or
hereafter acquired or created and for so long as the Seller and such
Subsidiaries remain as Subsidiaries of the Parent) shall not directly or
indirectly engage in any geographical area in any business of the same type as
that conducted by any of the Businesses as of the Closing Date in that
geographical area (a "Competing Business"); provided, however, that the
foregoing shall not prohibit (a) the ownership by the Parent, the Seller or any
of their respective Subsidiaries (whether now existing or hereafter acquired or
created) of less than 5% of the outstanding stock of any publicly-traded
corporation engaged in a Competing Business, (b) activities
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
43
by the Parent, the Seller or their respective Affiliates that were existing
activities of the Parent, the Seller or their respective Affiliates as of the
Closing Date other than activities of the Businesses, (c) providing services
similar to the services provided by the Businesses to only the Parent, the
Seller and their Affiliates, provided, that the Parent and the Seller hereby
represent that the Parent, the Seller or any Affiliate thereof does not, as of
the date hereof or as of the Closing Date, have any current intention of
providing any such services, (d) the acquisition of the Parent, the Seller or
any of their Affiliates by a third party whose operations involve a Competing
Business, (e) the acquisition by the Parent, the Seller or any of their
Affiliates of a third party which engages in a Competing Business, provided that
the primary purpose of any such acquisition referred to in this clause (e) is
not the acquisition of such Competing Businesses, and provided further that such
Competing Business referred to in this clause (e) either (i), together with the
revenues for any prior acquisition exempted from the provisions of this Section
8.06 by this clause (e)(i), accounts for less than U.S. $50,000,000 in revenues
for the last fiscal year of such third party for which financial statements are
available or (ii) is divested by the Acquiror within 270 days from the date it
is acquired or (f) the Parent or any of its Affiliates acquiring any Designated
Regulatory Assets pursuant to subsection (a) of Section 8.05; provided, however,
that if significant progress has been made and is continuing with respect to
such divestiture by the end of such period, the period shall be extended at the
request of the Parent for an additional ninety (90) days. If the final judgment
of a Court of competent jurisdiction declares that any term or provision of this
Section 8.06 is invalid or unenforceable, the parties agree that the Court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid and unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. The Parent and
the Seller acknowledge that the provisions of this Section 8.06 are reasonable
in time and scope and necessary to protect the legitimate interests of the
Acquiror and each Buyer and that any violation of this Section 8.06 will result
in irreparable injury to the Acquiror, each Buyer and to the Businesses, the
exact amount of which will be difficult to ascertain, and that the remedies at
law for any such violation would not be reasonable or adequate compensation to
the Acquiror, the Buyers and the Businesses. Accordingly, the Parent and the
Seller agree that, if any of them or any of their Subsidiaries (whether now
existing or hereafter acquired or created) violates this Section 8.06, the
Acquiror, any of the Buyers and the members of each Company Group (following
consummation of the transactions contemplated hereby) shall be entitled, in
addition to any other remedy that may be available at law or in equity, to
specific performance and injunctive relief, without posting bond or other
security and without the necessity of proving actual damages.
Section 8.07. Nonsolicitation. The Parent hereby covenants and agrees
that, prior to the Closing Date, the Parent shall not and shall not permit the
Seller or any member of either Company Group, (whether directly or indirectly
through its officers, directors, advisors, agents or other intermediaries) to
(i) solicit, initiate or take any action to facilitate the submission of
inquiries, proposals or offers from any Person or group relating to (A) any
acquisition or purchase of any portion of any Business or any Securities, (B)
any merger, consolidation, recapitalization, sale of all or substantially all of
the assets, liquidation, dissolution or similar transaction involving any member
of either Company Group other than in connection with the Reorganization or
transactions
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
44
contemplated by this Agreement or (C) any other transaction that, if agreed to
by the Parent or any of its Subsidiaries, would contractually prohibit the
Parent or the Seller from consummating all or any part of the transactions
contemplated by this Agreement (each such transaction described in clauses (A),
(B) and (C) being referred to herein as an "Acquisition Proposal"), or agree to
or endorse any Acquisition Proposal, (ii) enter into or participate in any
discussions or negotiations regarding any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person (other than any Buyer) to do or seek
any of the foregoing. The Parent shall, and shall cause the Seller and each
member of both Company Groups immediately (i) to cease and cause its officers,
directors, advisors, agents and other intermediaries to cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and (ii) to provide written
notification to the Acquiror of any submissions, proposals, offers or inquiries
relating to an Acquisition Proposal made prior to the Closing Date but shall not
be required to disclose the contents of such proposal or the identity of the
bidder. The Parent and the Seller hereby represent that they are not now engaged
in discussions or negotiations with any party other than Acquiror with respect
to any Acquisition Proposal. After the Closing Date, the Parent shall provide
the Acquiror with copies of all written submissions, proposals, offers and
inquiries relating to Acquisition Proposals except to the extent that the
provisions of such information would violate any contractual obligation of the
Parent or its Retained Subsidiaries.
Section 8.08 Accountants' Opinion and Consents. The Parent shall use all
commercially reasonable efforts to cause Arthur Andersen LLP to provide the
Acquiror, at the Acquiror's expense, with all opinions and consents (including
audit reports) with respect to the consolidated financial statements of the
Businesses necessary for inclusion in any offering memoranda prepared in
connection with any offering of securities pursuant to Rule 144A promulgated
under the Securities Act, or for the completion of filings with the SEC under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), until such time as such financial statements,
opinions and consents are no longer required to be included in such filings by
the Securities Act, the Securities Exchange Act or the rules and regulations
promulgated thereunder.
Section 8.09. Financing.
(a) Subject to subsection (b) of this Section 8.09, prior to the Closing
Date, the Parent agrees to use all commercially reasonable efforts
to provide, and to cause the Seller and each member of each Company
Group, their advisers and the personnel of each member of each
Company Group to provide, all necessary cooperation in connection
with the arrangement of any financing that is to be consummated
contemporaneously with the First Closing or within twelve months
after the Closing Date in respect of the transactions contemplated
by this Agreement, including participation in meetings, due
diligence sessions, road shows, the preparation of offering
memoranda, private placement memoranda, prospectuses and similar
documents ("Offering Documents"), completion of a 2000 year-end
audit, the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge and security documents,
other definitive financing documents, or other requested
certificates or documents, including a certificate of the chief
financial officer of each member of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
45
each Company Group with respect to solvency matters, comfort letters
of accountants and legal opinions as may be reasonably requested by
the Acquiror, provided, however, that the advisors and personnel of
the Parent shall not be required to participate in meetings, due
diligence sessions, or road shows after the six month anniversary of
the Closing Date.
(b) The Acquiror agrees that it will provide the Parent with a
reasonable opportunity to review each Offering Document and that it
will not, and will cause its Affiliates and its and their agents,
advisors, underwriters and placement agents to not, distribute such
Offering Document to any investor or potential investor in any of
the securities offered or to be offered pursuant to such Offering
Document without obtaining the prior written approval of the Parent
(which approval shall not be unreasonably withheld) of all
information contained in such Offering Document that relates in any
way to the Businesses.
(c) The Parent shall cooperate and shall cause the Seller and each
member of each Company Group to cooperate with any reasonable
requests of the Acquiror or the SEC related to the recording of the
transaction contemplated hereby as a Recapitalization for financial
reporting purposes, including assisting the Acquiror and its
Affiliates with any presentation to the SEC with regard to such
recording. Unless otherwise required by Law or by any pronouncement
of the SEC or by any authoritative accounting association after the
Closing Date, the Parent agrees that it will not report the
transaction contemplated hereby for financial accounting or other
public disclosure purposes in a manner inconsistent with such
recording.
(d) The Acquiror agrees to reimburse the Parent promptly for all
reasonable costs and expenses incurred by the Parent or any of its
Affiliates in connection with the Parent's obligations under this
Section 8.09.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
46
Section 8.10. Financial Statements.
(a) From the date hereof to the Closing Date, the Parent shall provide
the Acquiror with (i) monthly management reports on the Businesses,
(ii) an unaudited consolidated balance sheet of the Businesses and
the related consolidated statements of operations of the Businesses
for each calendar month within 20 days after the end of such
calendar month and (iii) any other financial reports prepared
routinely by management of the Company Groups.
(b) The Parent shall use all commercially reasonable efforts to provide
to the Acquiror, on or before February 28, 2001, consolidated
statements of assets contemplated for sale and liabilities expected
to be transferred of the Dresser Equipment Group as of December 31,
2000 and December 31, 1999 and the related consolidated statements
of revenues and expenses and cash flows for the years ended December
31, 2000, 1999 and 1998, each prepared in accordance with U.S. GAAP
(including the related notes thereto) and audited by Arthur
Andersen, LLP.
Section 8.11. Assignments. To the extent that any assets listed in the
Parent's Disclosure Letter or that are otherwise Material to the Businesses are
not held by a member of any Company Group, the Parent shall, prior to the
Closing, effect the assignment of such assets to a member of a Company Group
designated by the Acquiror. To the extent that time does not permit proper
recordation of such assignments, as for example in the case of certain
assignments of Intellectual Property, the Parent shall cause the assignment of
beneficial title to be effected prior to the Closings and, subsequent to the
Closings, will provide such assistance and cooperation as necessary to effect
recordable assignments of such assets.
Section 8.12. Release of Liens. To the extent that any Liens exist with
respect to any assets and properties of any member of the Company Groups
securing debt of any member of the Parent Group, the Parent agrees to use all
commercially reasonable efforts to cause such Liens, to the extent they attach
to such assets and/or properties, to be released as soon as practicable.
Section 8.13. Environmental Schedules. The Parent agrees that the Parent
will prepare and deliver to the Acquiror at the First Closing a revised Schedule
5.11 to the Parent's Disclosure Letter to set forth all matters described in
clause (a), (c) and (e) of the definition of Indemnifiable Environmental Matters
as of the Closing Date, which Schedule 5.11 shall (a) constitute a
representation and warranty, which shall survive until the fifth anniversary of
the Closing Date, as to such matters as of the Closing Date subject to the
provisions of clause (i) of subsection (a) of Section 12.02 and (ii) govern the
matters subject to indemnification pursuant to the provisions of Article XII as
that Article applies to such Indemnifiable Environmental Matters.
Section 8.14. Use of Dresser Name. Prior the Closing, the Parent agrees
that it will not directly or indirectly organize any new Subsidiary, or rename
any existing Subsidiary, using the name Dresser or any variation thereof.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
47
ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement. The parties hereto hereby
incorporate by reference the provisions of paragraphs 1 to 3, inclusive, and 8
to 11, inclusive of the Confidentiality Agreement (including any addenda
thereto).
Section 9.02. Corporate Name. Neither the Acquiror nor any Buyer shall
acquire, and no member of either Company Group shall acquire or retain, any
rights to the name "Halliburton" (or any variation thereof) or any trademarks,
trade names or symbols related thereto. The Acquiror shall, as soon as
reasonably practicable after the Closing Date (and in any event, within 60 days
thereafter), cause each member of each Company Group to amend its Organizational
Documents to the extent necessary to remove the "Halliburton" name (and any
variations thereof) from the name of such company and to remove all trademarks,
trade names, logos and symbols related to such name from the properties and
assets (including all signs) of the members of the Company Groups.
Section 9.03. Surety Arrangements. The Acquiror acknowledges the list of
Surety Arrangements set forth on Schedule 5.09(c) to the Parent's Disclosure
Letter. The Acquiror agrees to use all commercially reasonable efforts prior to
the Closing Date to substitute the credit of the Acquiror or a Subsidiary of the
Acquiror for that of the Parent or the Retained Subsidiary of the Parent in each
such Surety Arrangement, such substitution to take effect at the First Closing.
The Acquiror agrees that it will, from and after the Closing Date, indemnify and
hold the Parent and each Retained Subsidiary harmless from and against any and
all losses, claims and damages arising from any Surety Arrangement extant at the
First Closing and, to the extent that the Acquiror is not able to effect such a
substitution prior to the Closing Date, the Acquiror also agrees (a) to continue
to use, and to cause each Buyer to use, its commercially reasonable efforts
thereafter to effect such a substitution with respect to each Surety Arrangement
and (b) to provide to the Parent at the First Closing a letter of credit issued
by a responsible commercial bank reasonably acceptable to the Parent against
which the Parent and the Retained Subsidiaries may draw to the extent of any
loss or damage they may incur or suffer as a result of being required to perform
any obligations under any Surety Arrangements from and after the Closing Date.
Section 9.04. Dresser Valve Division Contracts. From and after the Closing
Date, the Acquiror shall cause its Subsidiaries engaged in the Dresser Valve
Division Business to use their commercially reasonable efforts to amend the
executory alliance contracts, master purchase agreements and purchase orders of
the Dresser Valve Division Business that do not contain any provision expressly
prohibiting awards of consequential damages as a partial remedy for breach of
such contract to include such a provision prior to the first renewal or
extension thereof.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
48
ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation. The covenants in this Section 10.01 shall
apply to the parties hereto from and after the date of this Agreement:
(a) Each of the Parent and the Acquiror shall use, and shall cause each
of its respective Affiliates to use, all commercially reasonable
efforts (i) to take, or to cause to be taken, all actions, and to
do, or to cause to be done, all things that, in either case, are
necessary, proper or advisable under applicable Legal Requirements
(other than foreign competition Laws except those of the Category 1,
2A and 2B Jurisdictions) or otherwise to consummate and make
effective the transactions contemplated by this Agreement, (ii)
subject to the provisions of clause (iii) of this subsection (a), to
obtain from any Governmental Authorities and Courts any
Authorizations or Orders required to be obtained by the Parent or
the Acquiror or any of their Affiliates in connection with the
authorization, execution, delivery and performance of this Agreement
and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and (iii) to make all necessary
filings as expeditiously as reasonably practicable, and thereafter
to make promptly any other required submissions, with respect to
this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby required under the HSR Act, any
foreign competition Laws of a Category 1 Jurisdiction, a Category 2A
Jurisdiction or a Category 2B Jurisdiction that are applicable to
the transactions contemplated by this Agreement and any other
applicable Legal Requirements (other than foreign competition Laws).
With respect to the Laws of the Covered Jurisdictions, the Parent
and the Acquiror shall furnish or cause to be furnished all
information required for any application or other filing to be made
pursuant to any such Laws or any applicable Regulations in
connection with the transactions contemplated by this Agreement.
(b) Each of the Parent and the Acquiror shall timely give or cause to be
given any notices to third Persons, and use, and cause its
respective Affiliates to use, commercially reasonable efforts to
obtain any Third Person Consents (i) necessary, proper or advisable
for Parent or the Acquiror, as the case may be, to consummate the
transactions contemplated by this Agreement or to satisfy any of the
Closing Conditions, (ii) in the case of the Parent and its
Affiliates, otherwise required under any Principal Contracts in
connection with the consummation of the transactions contemplated
hereby or (iii) in the case of the Parent and its Affiliates,
required in order to prevent a Material Adverse Effect on the
Businesses from occurring prior to or after the Closing Date;
provided, however, that, with respect to Third Person Consents set
forth on Schedule 5.02(c), the Parent shall use, and cause its
Affiliates to use, efforts that are deemed customary and usual in
the jurisdiction in which any such Third Person Consent is required
to obtain any such Third Person Consent; provided, further, that the
Parent shall not be required to expend an amount of money
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
49
that would be unreasonable in light of local custom and practice in
order to obtain any such Third Person Consent. The Parent and
Acquiror shall cooperate with each other in connection with the
giving of all such notices and the preparation of all consent or
waiver requests or agreement amendments. The Parent and the Acquiror
shall cooperate with each other in providing copies of all such
documents to the other party and its advisors, and, if requested,
shall accept all reasonable additions, deletions or changes
suggested in connection therewith. The Parent and Acquiror shall
furnish or cause to be furnished all information requested by the
other party in connection with this subsection (b).
(c) Each of the Parent and the Acquiror shall give, and shall cause its
Affiliates to give, prompt notice to the other of (i) any notice or
other communication from any Person alleging that the consent of
such Person is or may be required in connection with the
transactions contemplated hereby, (ii) any notice or other
communication from any Governmental Authority in connection with the
transactions contemplated hereby, (iii) any actions, suits, claims,
investigations or proceedings commenced or threatened in writing
against, relating to or involving or otherwise affecting the Parent,
the Acquiror or any member of a Company Group that relate to the
consummation of the transactions contemplated hereby and (iv) the
occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be reasonably likely (A) to cause any
Closing Condition relating to the obligations of the other party not
to be satisfied, (B) to cause a breach of the covenants of such
party under this Agreement or (C) to delay or impede the ability of
either the Parent or the Acquiror to consummate the transactions
contemplated by this Agreement or to fulfill their respective
obligations set forth herein. No delivery of any notice pursuant to
clause (iv) of this subsection (c) shall cure any breach of any
representation or warranty of the party giving such notice contained
in this Agreement or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
(d) Each of the Parent and the Acquiror agree to cooperate and to use,
and to cause their Affiliates to cooperate and to use, all
commercially reasonable efforts, vigorously to contest and to resist
any action, including legislative, administrative or judicial
action, and to have vacated, lifted, reversed or overturned any
Order (whether temporary, preliminary or permanent) of any Court or
Governmental Authority that is in effect and that restricts,
prevents or prohibits the consummation of the transactions
contemplated by this Agreement, including the vigorous pursuit of
all available avenues of administrative and judicial appeal and all
available legislative action. Each of the Parent and the Acquiror
also agree to use all commercially reasonable efforts to take, or to
cause to be taken, any and all actions, including the disposition
(by the Acquiror) or retention (by the Parent) of assets or the
withdrawal from doing business in particular jurisdictions, required
by any Court or Governmental Authority as a condition to the
granting of any Authorization or Order necessary for the
consummation of the transactions contemplated hereby or as may be
required to avoid, lift, vacate or reverse any legislative,
administrative or judicial
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
50
action to the extent that such action would otherwise cause any
condition to the First Closing not to be satisfied or would
restrict, prevent or prohibit the consummation of the transactions
contemplated hereby; provided, however, that in no event shall the
Parent be required to take, or cause to be taken, any action that
could reasonably be expected to have a Material Adverse Effect on
the Parent or on the Businesses or shall the Acquiror be required to
take, or cause to be taken, any action that could reasonably be
expected to have a Material Adverse Effect on the Acquiror or on the
Businesses.
(e) The Parent shall use its commercially reasonable efforts consistent
with its fiduciary obligations to cause any Non-Controlled Entity in
which it has a direct or indirect ownership interest to take action
consistent with its other obligations under this Section 10.01
including (i), where appropriate, voting, directly or indirectly,
the Equity Securities owned by it directly or indirectly in such
Non-Controlled Entity in a manner consistent with such obligations
and (ii) instructing each director or similar official of such
Non-Controlled Entity appointed, directly or indirectly, by it to
act in a manner consistent with such obligations so long as any such
action does not violate such director's or official's fiduciary
duties. In this regard, the Acquiror acknowledges that none of the
Non-Controlled Entities in which the Parent has a direct or indirect
ownership interest is under the direct or indirect control of the
Parent.
(f) Nothing in this Section 10.01 shall be deemed to require divestiture
of any securities or other assets owned prior to the Closing Date by
the Acquiror, any direct or indirect holder of Equity Securities in
the Acquiror or any Affiliate of the foregoing Persons.
Section 10.02. Ancillary Agreements. The Parent and the Acquiror agree to
execute and deliver at the First Closing:
(i) the Merger Agreement;
(ii) the Assignment of Name;
(iii) the Highway 6 Lease Agreement;
(iv) the Employee Benefits Agreement;
(v) the Transition Services Agreement; and
(vi) the Stockholders' Agreement.
Section 10.03. Public Announcements. Promptly following the execution and
delivery of this Agreement, the Parent and the Acquiror shall issue concurrent
press releases with respect to the subject matter of this Agreement. Pending the
Closing Date, the Acquiror and the Parent shall consult with, and obtain the
prior approval of, the other, which shall not be unreasonably withheld,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
51
before issuing any other press release or otherwise making any public statements
with respect to the transactions contemplated hereby. Neither the Parent nor the
Acquiror shall permit any of its Affiliates to make any press release or public
statement with respect to the transactions contemplated hereby. Notwithstanding
the foregoing, this Section shall not preclude any party from issuing such press
releases, making such other public statements or making such filings with or
applications to Governmental Authorities, including a filing of a Current Report
on Form 8-K by the Parent with the SEC with respect to the transactions
contemplated hereby, as such party in good faith believes to be required under
applicable Legal Requirements.
Section 10.04. Transfer Taxes. The Parent and the Acquiror shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer, sales,
use, and stamp taxes, any transfer, recording, registration and other fees and
any similar taxes that become payable as a direct result of the transactions
contemplated hereby ("Transfer Taxes"). The Transfer Taxes that become payable
as a result of the transfers included in the Reorganization and as a result of
the sale of the Securities shall be paid 50% by the Acquiror and 50% by the
Parent.
Section 10.05. Expenses. Except as otherwise expressly provided herein,
all costs and expenses incurred by the Parent in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Parent, and all
costs and expenses incurred by the Acquiror in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Acquiror.
Notwithstanding the foregoing, the Acquiror shall be responsible for and shall
pay or reimburse the Parent for (i) all expenses incurred in connection with
steps I-7, I-8, I-9, I-10, I-12, I-13, II-1, II-10, III-1, IV-1, IV-3, V-1,
V-2A, V-4, V-6, V-11, V-16, V-19, V-27 and V29 in the Reorganization described
in Annex B and any actions taken at the direction of the Acquiror or any
individual that the Acquiror has identified in written notice to the Parent and
(ii) any Taxes that would not have been incurred but for such actions and steps.
For the avoidance of doubt all costs incurred in the formation of DI France
S.A.S. are the responsibility of the Acquiror and all costs incurred in the
formation of DI Singapore Pte Ltd. are the responsibility of Parent.
Notwithstanding the foregoing, the Parent shall be responsible for, and shall
pay or reimburse the Acquiror for, the expenses incurred as a result of
recording assignments of Intellectual Property and Real Property pursuant to
Section 8.11, whether prior to or after the Closings.
Section 10.06. Tax Matters.
(a) Within 240 days after the Closing Date, the Acquiror in its sole
discretion may cause to be made a timely and effective election
under section 338(g) of the Code (a "Section 338 Election") with
respect to a qualified stock purchase (within the meaning of Section
338 of the Code) of any member of a Company Group that is a foreign
corporation.
(b) The Acquiror shall indemnify and hold harmless the Parent and each
member of the affiliated group of which the Parent is the common
parent (within the meaning of section 1504 of the Code) from and
against any United States federal or state income or franchise Tax
Consequence arising solely by reason of any Section 338 Election
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
52
made. A "Tax Consequence" shall include (by way of example and not
limitation) a reduction in or change in characterization of
available foreign taxes under sections 901 or 902 of the Code.
(c) The Parent and the Acquiror shall make a joint election under
section 338(h)(10) of the Code and any similar election under the
applicable income tax law of any state or political subdivision of
the United States (collectively, the "Section 338(h)(10) Elections")
with respect to the Acquiror's purchase of the Securities of DEGI
and any deemed purchase of the Securities of any Subsidiary of DEGI
that is a domestic corporation within the meaning of Section 7701 of
the Code. The Acquiror shall prepare and submit to the Parent a
proposed allocation of the aggregate deemed sales price (as defined
in Treasury Regulation Section 1.338-4T) for each member of the DEGI
Group among the assets of each such member as soon as practicable
but not later than 240 days after the Closing Date. The Parent shall
approve and agree to the proposed allocation unless the Parent
reasonably determines that the proposed allocation is improper.
Neither the Acquiror nor the Parent shall take any action
inconsistent with, or fail to take any action necessary for, the
validity of the Section 338(h)(10) Elections, and, if an allocation
schedule is agreed to by the Acquiror and the Parent, the Acquiror
and the Parent shall adopt and utilize the asset values as
determined on the allocation schedule for the purpose of all Tax
Returns filed by them unless otherwise required by applicable law.
Not later than 240 days after the Closing Date, the Acquiror shall
prepare and deliver to the Parent an Internal Revenue Service Form
8023 and any similar form under applicable state income tax law (the
"Forms") with respect to the Section 338(h)(10) Elections, together
with any completed schedules required to be attached thereto, which
Forms shall have been duly executed by an authorized person for the
Acquiror. The Parent shall cause the Forms to be duly executed by an
authorized person for the Parent and shall provide an executed copy
of the Forms to the Acquiror, whereupon each shall duly and timely
file the Forms as prescribed by Treasury Regulation 1.338(h)(10)-1T
or the corresponding provisions of the applicable income tax law of
any state or political subdivision of the United States. Each such
executed Form provided to the Parent shall be accompanied by a
certificate of the secretary of the Acquiror that documents the
authority of the signatory to make the Section 338(h)(10) Election.
(d) The Parent shall cause to be included in the consolidated U.S.
federal income Tax Returns (and the U.S. state income Tax Returns of
any U.S. state that permits consolidated, combined or unitary income
Tax Returns, if any) of the affiliated group of corporations of
which the Parent is the common parent corporation for all periods
ending on or before the Closing Date, all Tax Items of each member
of each Company Group that are required to be included therein,
shall cause such Tax Returns to be timely filed with the appropriate
taxing authorities, and shall be responsible for the timely payment
(and entitled to any refund) of all Taxes due with respect to the
periods covered by such Tax Returns. To the extent permitted by law
or administrative practice, (A) the taxable year of DEGI and each of
its Subsidiaries (after reflecting the Reorganization) that is a
domestic corporation that includes the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
53
Closing Date shall be treated as closing on (and including) the
Closing Date and (B) all transactions occurring on the Closing Date
but after the Closings shall have occurred shall be reported on the
Acquiror's consolidated United States federal income tax return to
the extent permitted by Treasury Regulation Section
1.1502-76(b)(1)(ii)(B) and shall be similarly reported on other Tax
Returns of the Acquiror or its Affiliates.
(e) With respect to all Tax Returns required to be filed after the
Closing Date by or with respect to any member of a Company Group
other than those Tax Returns described in subsection (d) of this
Section, the Acquiror shall cause each such Tax Return to be
prepared, shall cause to be included in each such Tax Return all Tax
Items required to be included therein, shall cause each such Tax
Return to be timely filed with the appropriate taxing authorities,
and shall be responsible for the timely payment (and entitled to any
refund or credit) of all Taxes due with respect to the period
covered by each such Tax Return. Any Tax Return to be prepared
pursuant to the provisions of this subsection (e) with respect to a
taxable year that includes any period on or before the Closing Date
shall be prepared in a manner consistent with practices followed in
prior years with respect to similar Tax Returns, except for changes
required by changes in law or fact.
(f) With respect to all Tax Returns filed by or with respect to any
member of a Company Group on or prior to the Closing Date, the
Parent shall be responsible for the payment of all Taxes and shall
be entitled to all refunds or credits of any Taxes attributable to
the periods covered by such Tax Returns and shall have the right, at
its sole cost and expense, to control the defense, prosecution,
settlement or compromise of any proceeding involving any such Tax
Return or the period covered thereby, and the Acquiror shall take
such action in connection with any such proceeding as the Parent
shall request from time to time, including the selection of counsel
and experts and the execution of powers of attorney; provided,
however, that if Acquiror or any member of a Company Group would
bear any liability for Taxes at issue in such proceeding for which
Acquiror would not be indemnified pursuant to Article XII, or if
Acquiror or any member of a Company Group would be bound by the
results of such proceeding for Tax periods (or portions thereof)
beginning after the Closing Date, then (i) the Acquiror may also
participate in such proceeding at its own expense and (ii) neither
party may settle any such proceeding without the written consent of
the other party (which consent shall not be unreasonably withheld).
The Parent shall give written notice to the Acquiror of, and the
Acquiror shall, and shall cause each member of a Company Group to,
give written notice to the Parent, of its receipt of any notice of
any audit, examination, claim or assessment for any Tax which could
result in any such proceeding, within 20 Business Days after the
receipt of such notice. Failure of the Acquiror or any BV Company or
Subsidiary to give the Parent written notice of any such audit,
examination, or assessment within such 20 Business Day period shall
cause the provisions of Article XII to be inapplicable to any Losses
realized with respect to such Tax but only to the extent Parent was
actually prejudiced by such failure.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
54
(g) The Acquiror and the Parent shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section 10.06 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are
reasonably relevant to any such proceeding and making employees
(including employees of any member of a Company Group) available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Acquiror and the
Parent agree (i) to retain all Books and Records with respect to Tax
matters pertinent to the any member of a Company Group relating to
any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent
notified by the Acquiror or the Parent, any extensions thereof) of
the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give
the other party reasonable written notice prior to transferring,
destroying or discarding any such Books and Records and, if the
other party so requests, the Acquiror or the Parent, as the case may
be, shall allow the other party to take possession of such Books and
Records. The Acquiror and the Parent further agree, upon request, to
use their best efforts to obtain any certificate or other document
from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby). The Acquiror and the Parent
further agree, upon request, to provide the other party with all
information that either party may be required to report pursuant to
Section 6043 of the Code and the Treasury Regulations promulgated
thereunder.
Section 10.07. Offers to Employees.
(a) The Parent has listed in Schedule 10.07(a) to the Parent's
Disclosure Letter the names and positions of certain of those
employees of the Parent or one of the Retained Subsidiaries that
have been seconded to members of the Company Groups. The Acquiror
agrees that, pending the Closing Date and for a period of six (6)
months thereafter, neither the Acquiror nor any of its Subsidiaries,
including the Buyers and (after the Closing Date) their
Subsidiaries, will make any offer of employment or solicit any
request for employment to or from any of the employees so listed,
except (i) for any such employees included in an agreed list
contained in a letter of even date herewith from the Parent to the
Acquiror or (ii) with the prior written consent of the Parent. For
purposes of the preceding sentence, the term "employment" shall
include an employee/employer relationship and/or a consulting
relationship.
(b) The Parent and the Acquiror shall, and shall cause their respective
Subsidiaries to, use reasonable efforts to cause each individual
listed on Schedule 10.07(b) to enter into an employment agreement
with a member of a Company Group on terms reasonably satisfactory to
the Acquiror. In this regard, the Acquiror agrees to offer
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
55
terms of employment to such individuals that are as good or better
than their existing terms of employment taken in the aggregate for
each employee.
Section 10.08. Related Party Contracts. Schedule 5.09(b) to the Parent's
Disclosure Letter provides a complete and accurate list of the Related Party
Contracts. To the extent that the Parent controls the parties to such Related
Party Contracts, the Parent agrees to cause such parties to terminate each such
Related Party Contract specified in Schedule 5.09(b) to the Parent's Disclosure
Letter prior to the Closing, such Related Party Contracts to be replaced by the
Transition Services Agreement and the Highway 6 Deed and the Highway 6 Lease.
Any contract that is between any member of the Parent Group and any member of
the Company Group but does not constitute a Principal Contract shall terminate
at the Closing.
Section 10.09 Litigation Support.
(a) If and for so long as the Acquiror, any Buyer or any member of
either Company Group is actively contesting or defending against any
charge, complaint, claim or demand (a "Claim") or any action, suit,
proceeding, investigation or hearing (an "Action") based thereon in
connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction on or prior to the Closing
Date involving any member of either Company Group, the Parent and
the Seller shall, if neither the Parent nor any of its Subsidiaries
is a party to or involved in such Claim or Action, reasonably
cooperate with the contesting or defending party and its counsel in
the contest or defense, make reasonably available their personnel
and provide such testimony and reasonable access to their Books and
Records as shall be necessary in connection with the contest or
defense, the out-of-pocket expense of which shall be for the account
of the contesting or defending party. The covenant contained in this
subsection (a) shall not apply to any matter that is subject to the
indemnification obligations of the parties under Article XII, other
than a Proceeding as to which an Indemnifying Party has assumed the
legal defense in accordance with subsection (d) of Section 12.04 or
under Section 12.05.
(b) If and for so long as the Parent, the Seller or any of their
respective Affiliates is actively contesting or defending against
any Claim or Action based thereon in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act or
transaction involving any of the Businesses, the Acquiror, each
Buyer and each member of each Company Group shall, if neither the
Acquiror nor any of its Subsidiaries is a party to or involved in
such Claim or Action, reasonably cooperate with the contesting or
defending party and its counsel in the contest or defense, make
reasonably available their personnel and provide such testimony and
reasonable access to their Books and Records as shall be necessary
in connection with the contest or defense, the out-of-pocket expense
of which shall be for the account of the contesting or defending
party. The covenant contained in this subsection (b) shall not apply
to any matter that is subject to the indemnification
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
56
obligations of the parties under Article XII, other than a
Proceeding as to which an Indemnifying Party has assumed the legal
defense in accordance with subsection (d) of Section 12.04 or under
Section 12.05.
Section 10.10. Post-Closing Matters.
(a) From and after the Closing Date, each party hereto agrees to execute
such further instruments or documents as any other party may from
time to time reasonably request in order to confirm or carry out the
transactions contemplated by this Agreement; provided, however, that
no such instrument or document shall increase a party's liability
beyond that contemplated hereby.
(b) From and after the Closing Date, the Acquiror and each Buyer shall
cause each member of each Company Group (other than any
Non-Controlled Entity), and shall use all commercially reasonable
efforts to cause each Non-Controlled Entity, to maintain copies of
all Books and Records in the possession of such members of the
Company Groups and the Non-Controlled Entities at the Closing Date
and shall prevent such members of the Company Groups, and shall use
all commercially reasonable efforts to prevent each Non-Controlled
Entity, from destroying any of such Books and Records for a period
of six years following the Closing Date or, to the extent
applicable, the period specified in clause (i) of subsection
10.06(g). During the period of retention of such Books and Records,
the Acquiror and the Buyers shall cause such members of each Company
Group, and shall use all commercially reasonable efforts to cause
each Non-Controlled Entity, (i) to grant to the Parent or the
appropriate Seller and its Representatives reasonable cooperation,
access and staff assistance at all reasonable times and upon
reasonable notice to all of such Books and Records of such entities
relating to the period prior to the Closing Date (including
workpapers and correspondence with taxing authorities) that are not
otherwise protected by legal privilege, (ii) to afford the Parent or
the appropriate Seller and its Representatives the right, at the
Parent's expense, to take extracts therefrom and to make copies
thereof and (iii) to have access to the employees of the members of
the Company Groups, all to the extent reasonably necessary or
appropriate for general business purposes, including the preparation
of tax returns and the handling of tax audits, disputes and
litigation; provided, however, that such requested cooperation,
access and assistance shall not unreasonably interfere with the
normal operations of the Businesses. In this regard, the Parent
acknowledges that the Non-Controlled Entities will not be under the
direct or indirect control of the Acquiror.
(c) To the extent that the Acquiror shall, directly or indirectly, sell
or otherwise transfer its interests in any member of either Company
Group subsequent to the Closing Date, the Acquiror agrees to use all
reasonable efforts to obtain from the transferee of such interests
an obligation to comply with the provisions of subsection (b) of
this Section, which obligation shall be enforceable by the Parent as
a third party beneficiary.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
57
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of the Parent and the Acquiror to
consummate the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the First Closing of the following conditions, any
or all of which may be waived by the parties hereto, in whole or in part, to the
extent permitted by applicable Law:
(a) No Governmental Authority or Court shall, following the date of this
Agreement, have enacted, issued, promulgated, enforced or entered
any Legal Requirement (other than any Legal Requirement constituting
or under foreign competition Laws) (whether temporary, preliminary
or permanent) that is in effect and prohibits or renders illegal the
transactions contemplated hereby in a manner that is Material and
adverse to the Parent, the Acquiror or the Businesses.
(b) The waiting period under the HSR Act shall have expired or been
terminated and all Category 1 Requirements shall have been
satisfied.
(c) The parties hereto shall have obtained each Authorization required
under any applicable Regulatory Transfer Restriction (other than any
foreign competition Laws) required for consummation of all or any
part of the transactions contemplated hereby.
(d) The Reorganization shall have been effected.
(e) The Parent shall have obtained each Third Person Consent listed on
Schedules 3.03 and 4.03 of the Parent's Disclosure Letter, and the
Acquiror shall have obtained each Third Party Consent listed on
Schedule 6.03 to the Acquiror's Disclosure Letter.
(f) The Releases of Intercompany Indebtedness shall have been executed
and delivered as required by subsection (c) of Section 2.06.
Section 11.02. Additional Conditions to the Parent's Obligations. The
obligations of the Parent to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Parent, in whole or in
part, to the extent permitted by applicable Law:
(a) Each of the representations and warranties of the Acquiror contained
in this Agreement that is qualified as to Materiality shall be true
and correct in all respects, and each of such representations and
warranties that is not so qualified shall be true and correct in all
Material respects, as of the date of this Agreement and as of the
Closing Date as though made again on and as of the Closing Date
(except to the extent that any such representations or warranties
were made as of a specified date,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
58
in which event such representations and warranties shall continue on
the Closing Date to have been true and correct at and as of such
specified date). The Parent shall have received a certificate of the
Chief Executive Officer or the President and the Chief Financial
Officer of the Acquiror, dated the Closing Date, to such effect.
(b) The Acquiror shall have performed or complied in all Material
respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to
Closing Date. The Parent shall have received a certificate of the
Chief Executive Officer or the President and the Chief Financial
Officer of the Acquiror, dated the Closing Date, to such effect.
(c) The Acquiror, the Transitory Merger Sub or another Subsidiary of the
Acquiror, as appropriate, shall have executed and delivered the
Ancillary Agreements.
(d) No action, suit, arbitration or investigation (other than any
action, suit, arbitration or investigation disclosed in the Parent's
Disclosure Letter) shall be pending or threatened in writing against
any member of the Parent Group that is based on or arises out of the
transactions contemplated by this Agreement by:
(i) any Governmental Authority that could reasonably be expected
to have a Material Adverse Effect on the Parent Group and the
success of which on the merits is at least "reasonably
possible" as that term is used in Financial Accounting
Standards Board's Statement of Accounting Standards No. 5
("FAS No. 5"); or
(ii) any third Person who claims damages that are Material and the
success of which on the merits is at least "reasonably
possible" as that term is used in FAS No. 5.
(e) The Parent shall have received an opinion from outside counsel
(which may consist of opinions from more than one outside counsel)
to the Acquiror, dated the Closing Date and in form and substance
substantially similar to the form thereof attached hereto as
Appendix X.
Section 11.03. Additional Conditions to the Acquiror's Obligations. The
obligations of the Acquiror to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Acquiror, in whole or in
part, to the extent permitted by applicable Law:
(a) (i) Each of the representations and warranties of the Parent
and the Seller contained in this Agreement that is qualified
as to Materiality shall be true and correct in all respects,
and each of such representations and warranties that is not so
qualified shall be true and correct in all Material respects,
as of the date of this Agreement and as of the Closing Date as
though made again on and as of the Closing Date (except to the
extent that any such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
59
representations or warranties were made as of a specified
date, in which event such representations and warranties shall
continue on the Closing Date to have been true and correct at
and as of such specified date). The Acquiror shall have
received a certificate of the Chief Executive Officer and the
Chief Financial Officer of the Parent, dated the Closing Date,
to such effect.
(ii) All of the representations and warranties of the Parent and
the Seller contained in this Agreement shall be true and
correct at and as of the Closing Date as though made again on
and as of the Closing Date (except to the extent that any such
representations or warranties were made as of a specified
date, in which event such representations and warranties shall
continue on the Closing Date to have been true and correct as
of such specified date), except where any untruth and
incorrectness of such representations and warranties could
not, singly or in the aggregate, be reasonably expected to
have an adverse effect measured in monetary terms of U.S.
$50,000,000 or more. Solely for purposes of determining the
monetary effect to which reference is made in the next
preceding sentence of this clause (ii) of this subsection (a),
the representations and warranties of the Parent and the
Seller contained in this Agreement shall be deemed to have
been made without any qualification as to materiality and,
accordingly, all references in such representations and
warranties to "Material," "Materially, "Material Adverse
Effect," and similar terms and phrases (including references
to the dollar thresholds therein) shall be deemed to be
deleted therefrom.
(b) The Parent and the Seller shall have performed or complied in all
Material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to
Closing Date. The Acquiror shall have received a certificate of the
Chief Executive Officer and the Chief Financial Officer of each of
the Parent and the Seller, dated the Closing Date, to such effect.
(c) None of the Authorizations required in order to consummate the
transactions contemplated by this Agreement are subject to any
conditions that, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect on the
Acquiror or the Businesses.
(d) The Parent or a Retained Subsidiary, as appropriate, shall have
executed and delivered each of the Ancillary Agreements.
(e) No action, suit, arbitration or investigation (other than any
action, suit, arbitration or investigation disclosed in the Parent's
Disclosure Letter) shall be pending or threatened in writing against
any member of either Company Group by:
(i) any Governmental Authority that could reasonably be expected
to have a Material Adverse Effect on the Businesses and the
success of which on its merits is at least "reasonably
possible" as that term is used in FAS No. 5; or
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
60
(ii) any third Person who claims damages that are Material and the
success of which on the merits is at least "reasonably
possible" as that term is used in FAS No. 5.
(f) After giving effect to the forgiveness of Intercompany Indebtedness
contemplated by subsection (c) of Section 2.06 and subsection (c) of
Section 2.07, the members of the Company Groups at the First Closing
shall in the aggregate have not less than U.S. $30,000,000 (thirty
million dollars) in cash and cash equivalents (net of the aggregate
amount of (i) outstanding checks and overdrafts drawn on bank
accounts of all members of the Company Groups and (ii) any notes
payable by any member of either Company Group) and the Acquiror
shall have received a certificate from the Chief Financial Officer
of the Parent to such effect.
(g) The Acquiror shall have obtained an aggregate of U.S. $970 million
of debt financing from the lenders referred to in the Commitment
Letters on the terms and structure contemplated by the Commitment
Letter Term Sheets attached to the Commitment Letters.
(h) A member of a Company Group shall have entered into an employment
agreement with at least 23 out of the 35 people listed on Schedule
10.07(b) to the Parent's Disclosure Letter on terms reasonably
satisfactory to the Acquiror, and such employment agreements shall
remain in full force and effect on the Closing Date and shall not
have been amended, modified or restated without the consent of the
Acquiror.
(i) No authoritative pronouncement shall have been issued subsequent to
the date of this Agreement by the SEC or by a self regulatory board
of the U.S. accounting profession that would prohibit the Acquiror
from (A) recording the transactions contemplated by this Agreement
as a Recapitalization for financial reporting purposes or (B)
restructuring such transactions in a manner that would preserve the
economic effects of recording such transactions as a
Recapitalization for financial reporting purposes.
(j) The Parent shall have executed and delivered to the Acquiror the
Release contemplated by clause (i) of subsection 2.06(d) and the
Parent shall have prepared, executed and delivered to the Acquiror
the tax certificate referenced in clause (ii) of subsection 2.06(d).
(k) The Parent shall have executed and delivered to the Acquiror the
Highway 6 Deed.
(l) The Acquiror shall have received an opinion from outside counsel
(which may consist of opinions from more than one outside counsel)
to the Parent, dated the Closing Date and in form and substance
substantially similar to the form thereof attached hereto as
Appendix XI.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
61
(m) The Acquiror shall have received the financial statements referred
to in Section 8.10(b) prior to the First Closing.
ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties, Covenants and
Agreements.
(a) Except as set forth in subsection (b) of this Section, the
representations, warranties, covenants and agreements of each party
hereto shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any other
party hereto, any Person controlling any such party or any of their
officers, directors, representatives or agents whether prior to or
after the execution of this Agreement.
(b) (i) The representations and warranties of the Parent contained in
Articles III and IV and in Sections 5.01, 5.02 and 5.03 and
those of the Acquiror contained in Article VI shall survive
the Closings and any investigation by the parties with respect
thereto without contractual restriction, but the
representations and warranties of the Parent and the Acquiror
contained in Article VII shall terminate at the Closing and be
of no further force or effect.
(ii) The representations and warranties of the Parent contained in
Article V (other than those in Sections 5.01, 5.02, 5.03,
5.08, 5.10, 5.11 and 5.12) shall survive the Closings and any
investigation by the parties with respect thereto, but shall
terminate and be of no further force or effect on the date
that is 90 days following the completion of an audit of the
Businesses or portions thereof for the calendar year in which
the Closing Date shall occur (but in any event no later than
June 30, 2002).
(iii) The representations and warranties of the Parent contained in
Section 5.10 and Section 5.08 shall survive the Closings and
any investigation by the parties with respect thereto until
the expiration of the applicable statute of limitations
(including extensions thereof) plus 90 days.
(iv) The representations and warranties of the Parent contained in
Section 5.11 shall survive the Closings and any investigation
by the parties with respect thereto, but shall terminate and
be of no further force or effect on the fifth anniversary of
the Closing Date.
(v) The representations and warranties of the Parent contained in
Section 5.12 shall survive the Closings and any investigation
by the parties with respect thereto, but shall terminate and
be of no further force or effect on the third anniversary of
the Closing Date.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
62
(vi) Notwithstanding any of the foregoing clauses of this
subsection (b), any such representation or warranty as to
which a bona fide claim relating thereto is asserted in
writing (which states with specificity the basis therefor) in
accordance with Section 12.04 or Section 12.05 during such
applicable survival period shall, with respect only to such
claim, continue in force and effect beyond such applicable
survival period pending resolution of the claim. The covenants
and agreements in this Article XII shall survive the Closings
and shall remain in full force and effect for such period as
is necessary to resolve any bona fide claim made with respect
to any representation or warranty contained in this Agreement
during the survival period thereof. The remaining covenants
and agreements of the parties hereto contained in this
Agreement shall survive the Closings without any contractual
limitation on the period of survival.
Section 12.02. General Indemnification by the Parent.
(a) If the transactions contemplated hereby to occur at the Closings are
effected and subject to the provisions of subsection (b) of Section
12.01, the Parent and the Seller, jointly and severally, hereby
agree (each, in such capacity, an "Indemnifying Party"), from and
after the Closing Date, to indemnify and hold harmless the Acquiror,
the Buyers, their Affiliates and the directors, officers and
employees of such Persons (each, in such capacity, an "Indemnified
Party") against any losses, claims, demands, damages, judgments,
settlements, liabilities, charges and deficiencies, in each case
whether arising out of third party claims or otherwise, and any
reasonable legal or other expenses incurred in connection with
investigating or defending against the foregoing (collectively,
"Losses") that such Indemnified Party shall actually incur, to the
extent that such Losses (or actions, suits or proceedings in respect
thereof and any appeals therefrom ("Proceedings")):
(i) arise out of or result from the untruth or breach of any
representation or warranty made in Article III, IV or V for
the benefit of the Acquiror; or
(ii) arise out of or result from the nonperformance in accordance
with its terms of any covenant or agreement made herein for
the benefit of the Indemnified Party by the Indemnifying
Party; or
(iii) arise out of or result from the nonpayment or nonperformance
of any Excluded Liability; or
(iv) arise out of any Taxes payable as a result of the transactions
contemplated by the Reorganization other than in connection
with the steps listed in, and actions contemplated by, Section
10.05; provided, however, that the Parent shall be entitled to
any net refunds of any such Taxes (including interest
thereon);
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
63
(v) arise out of or result from any Indemnifiable Environmental
Matter to the extent that the Acquiror has given notice to the
Parent of any claim for indemnification pursuant to Section
12.04(a) prior to the fifth anniversary of the Closing Date;
provided, however, that the Indemnifying Parties shall not be
obligated to indemnify any Indemnified Party for that portion
of any Losses described in clause (a), (c) or (e) of the
definition of "Indemnifiable Environmental Matters" that are
incurred by an Indemnified Party as a result of its own
negligence; or
(vi) arise out of the failure to obtain any Third Person Consent
that continues at the Closing Date to be required under any
Agreement identified on Schedule 5.02(c) to the Parent's
Disclosure Letter.
Notwithstanding the foregoing, the Indemnifying Party shall be
liable to the Indemnified Party under this Section 12.02 only if and
to the extent that the amount of Losses incurred by the Indemnified
Party exceeds U.S. $15,000,000 (fifteen million dollars) in the
aggregate (the "Deductible Amount"); provided, however, that:
(A) no Loss subject to indemnification pursuant to clause
(a), (c) or (e) of the definition of Indemnifiable
Environmental Matters, no Loss subject to
indemnification for breach of Section 5.11 pursuant to
Section 12.02(a)(i), and no Loss subject to
indemnification as an Excluded Liability shall be
subject to nor counted toward the Deductible Amount;
(B) no Loss or aggregation of similar Losses based on the
same or substantially similar facts and circumstances
shall be subject to indemnification pursuant to clause
(i) of subsection (a) of Section 12.02 unless it
involves more than (1) U.S. $500,000 (five hundred
thousand dollars), in the case of any such Loss or
Losses based on facts and circumstances of which
officers of the Parent listed on Schedule 12.02(a)(B) to
the Parent's Disclosure Letter had no actual knowledge
on the date of this Agreement or (2) U.S. $100,000 (one
hundred thousand dollars) in the case of any such Loss
or Losses based on facts and circumstances of which
officers of the Parent listed on Schedule 12.02(a)(B) to
the Parent's Disclosure Letter had actual knowledge on
the date of this Agreement;
(C) the amount of such Losses that are subject to
indemnification hereunder shall not exceed
U.S.$950,000,000; and
(D) the Losses incurred by an Indemnified Party shall, for
purposes of determining the maximum amount or threshold
level thereof in accordance with this sentence and
otherwise with respect to the obligations of the
Indemnifying Parties hereunder, be offset by (i) the
proceeds of any insurance received directly or
indirectly by the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
64
Indemnified Party with respect thereto and (ii) the
amount of any income tax benefit actually realized by
the Indemnified Party with respect thereto.
For purposes of clause (i) of this subsection (a), the
representations and warranties of the Parent contained in this
Agreement shall, except for each instance in which a representation
and warranty regarding the completeness or accuracy of a list or
Schedule to the Parent's Disclosure Letter is qualified as to
materiality, be deemed to have been made without any qualification
as to materiality and, accordingly, all references in such
representations and warranties to "Material", "Materially,"
"Material Adverse Effect" and similar terms and phrases (including
references to dollar thresholds therein) shall be deemed to be
deleted therefrom.
(b) Notwithstanding anything to the contrary in this Agreement, the
liability of the Parent as an Indemnifying Party under this
Agreement shall also be limited as follows:
(i) The amount payable by the Parent in respect of any Losses
incurred by an entity partially owned, directly or indirectly,
by an Indemnified Party shall be determined by multiplying the
total amount that would otherwise be payable in respect of
such Losses by a percentage equal to the percentage of the
Equity Securities of such entity transferred to the Acquiror,
directly or indirectly, pursuant to this Agreement.
(ii) The Parent shall not be liable for any Losses resulting from a
breach of any of the representations and warranties set forth
in Articles III, IV or V of this Agreement to the extent that:
(A) the liability for such breach occurs or is increased as
a result of the adoption or imposition of any Law,
Regulation or Order not in force at the date of this
Agreement or as a result of any increase in rates of
taxation after the date of this Agreement; or
(B) the Losses would not have arisen but for a change in
accounting policy or practice of the Acquiror or any
member of the Company Groups after the Closing Date
(other than changes required for any such accounting
policy or practice to comply with U.S. GAAP as in effect
on the Closing Date).
(iii) The Parent shall be liable for any Loss resulting from a
breach of any of the representations and warranties set forth
in Section 5.08 only if and to the extent that such Loss is
not offset by a deferred Tax asset that would properly be
reflected in the Closing Financial Statements. Notwithstanding
the foregoing, if the amount of such Loss exceeds $20.0
million, the amount of such Loss shall only be offset by the
present value of any such deferred Tax asset, which present
value shall be determined (A) using a discount rate equal to
DEGI's average cost of capital at the date of the Loss and (B)
on the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
65
assumption that the corresponding Tax benefit is utilized as
soon as possible and at the maximum rate of Tax under
applicable Laws, without regard to any limitations arising
from any Tax attributes of the taxpayer.
(iv) The Parent shall not be liable for any Loss incurred by the
Acquiror, the Buyers or any member of either Company Group
that arises out of or results from the implementation of the
steps of the Reorganization referred to in the last sentence
of Section 10.05 or from any action taken at the direction of
the Acquiror or any individual that the Acquiror had
identified in written notice to the Parent.
(c) Notwithstanding anything herein to the contrary, to the extent that
the Acquiror waives satisfaction of one or more conditions set forth
in subsection (a) or (b) of Section 11.03, which conditions were not
satisfied due to one or more events, conditions or circumstances
that occurred after the date of this Agreement and that were
specifically disclosed in writing to the Acquiror prior to the
Closing Date, the Parent shall not have any liability hereunder for
such matter or matters to the extent so disclosed.
(d) The procedures set forth in Section 12.04 shall govern the
disposition of claims for indemnification brought pursuant to this
Section 12.02 except that any claim for indemnification regarding an
Indemnifiable Environmental Matter shall, in addition, be subject
the provisions of Section 12.05. In the event of a conflict between
the provisions of Section 12.04 and Section 12.05, the provisions of
the latter shall govern.
Section 12.03. General Indemnification by the Acquiror.
(a) If the transactions contemplated hereby to occur at the Closings are
effected and subject to the provisions of subsection (b) of Section
12.01, the Acquiror hereby agrees (in such capacity, an
"Indemnifying Party"), from and after the Closing Date, to indemnify
and hold harmless the Parent and the Seller, their Affiliates,
directors, officers and employees (in such capacity, an "Indemnified
Party") against any Losses that such Indemnified Party shall
actually incur, to the extent that such Losses (or Proceedings):
(i) arise out of or result from the untruth or breach of any
representation or warranty made in Article VI for the benefit
of the Parent; or
(ii) arise out of or result from the nonperformance in accordance
with its terms of any covenant or agreement made herein for
the benefit of the Indemnified Party by the Indemnifying
Party; or
(iii) arise out of or result from any acts or omissions to act after
the Closing Date by any Buyer or any member of either Company
Group hereunder; or
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
66
(iv) arise out of or result from the nonpayment or nonperformance
of any of the Assumed Obligations; or
(v) arise out of or result from the implementation of the steps of
the Reorganization referred to in the last sentence of Section
10.05 or from any actions taken at the direction of the
Acquiror or any individual that the Acquiror has identified in
written notice to the Parent; or
(vi) arise out of or result from any matter set forth in clause (i)
through (vii), inclusive, of subsection (d) of Section 12.05
arising after the Closing Date.
Notwithstanding the foregoing, the Indemnifying Party shall be
liable to the Indemnified Party under this Section 12.03 only in the
event and to the extent that the amount of Losses incurred by the
Indemnified Party exceeds the Deductible Amount; provided, however,
that:
(A) no Loss subject to indemnification pursuant to clause
(iii) or (iv) of this Section shall be subject to or
counted toward the Deductible Amount;
(B) the amount of such Losses that are subject to
indemnification hereunder shall not exceed $950,000,000
(nine hundred fifty million dollars); and
(C) the Losses incurred by an Indemnified Party shall, for
purposes of determining the maximum amount or threshold
level thereof in accordance with this sentence and
otherwise with respect to the obligations of the
Indemnifying Parties hereunder, be offset by (i) the
proceeds of any insurance received directly or
indirectly by the Indemnified Party with respect thereto
and (ii) the amount of any income tax benefit actually
realized by the Indemnified Party with respect thereto.
For purposes of clause (i) of this subsection (a), the
representations and warranties of the Acquiror contained in this
Agreement shall, except for each instance in which a representation
and warranty regarding the completeness or accuracy of a list or
Schedule to the Acquiror's Disclosure Letter is qualified as to
materiality, be deemed to have been made without any qualification
as to materiality and, accordingly, all references in such
representations and warranties to "Material", "Materially,"
"Material Adverse Effect" and similar terms and phrases (including
references to dollar thresholds therein) shall be deemed to be
deleted therefrom.
(b) Notwithstanding anything to the contrary in this Agreement, the
Acquiror shall not be liable for any Losses resulting from a breach
of any of the representations and warranties set forth in Article VI
of this Agreement to the extent that the liability for
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
67
such breach occurs or is increased as a result of the adoption or
imposition of any Law, Regulation or Order not in force at the date
of this Agreement or as a result of any increase in rates of
taxation after the date of this Agreement.
(c) Notwithstanding anything herein to the contrary, to the extent that
the Parent waives satisfaction of one or more conditions set forth
in subsection (a) or (b) of Section 11.02, which conditions were not
satisfied due to one or more events, conditions or circumstances
that occurred after the date of this Agreement and that were
specifically disclosed in writing to the Parent prior to the Closing
Date, the Acquiror shall not have any liability hereunder for such
matter or matters to the extent so disclosed.
(d) The procedures set forth in Section 12.04 shall govern the
disposition of claims for indemnification brought pursuant to this
Section 12.03.
Section 12.04. Procedures.
(a) Promptly after (i) discovery by an Indemnified Party hereunder of a
Loss or (ii) receipt by the Indemnified Party of notice of the
commencement of any Proceeding, in each case, against which it
believes it is indemnified under this Article, the Indemnified Party
shall, if a claim in respect thereto is to be made against the
Indemnifying Party under this Article, notify the Indemnifying Party
in writing of the discovery or commencement thereof (the
"Indemnification Notice"); provided, however, that the omission so
to notify the Indemnifying Party shall not relieve it from any
liability that it may have to the Indemnified Party to the extent
that the Indemnifying Party is not prejudiced by such omission; and
provided, further, that with respect to any Loss or Proceeding in
existence on the Closing Date with respect to an Excluded Liability
or with respect to any Indemnifiable Environmental Matter to which
reference is made in clause (a), (c) or (e) of the definitions of
that term, the Acquiror shall be deemed to have given notice thereof
to the Parent pursuant to this subsection (a) and the Parent shall
be deemed to have responded to such notice in accordance with clause
(ii) of subsection (b) of this Section, all effective as of the
Closing Date.
(b) The Indemnifying Party shall, within thirty (30) days after receipt
of an Indemnification Notice, either (i) in writing acknowledge
liability, as between the Indemnifying Party and the Indemnified
Party, for such Loss or the amount in controversy in such Proceeding
and pay the Indemnified Party the amount of such Loss or the amount
in controversy in such Proceeding in cash in immediately available
funds (or establish by agreement with the Indemnified Party an
alternative payment arrangement), (ii) in writing acknowledge
liability, as between the Indemnifying Party and the Indemnified
Party, for such Loss or the amount in controversy in such Proceeding
but disavow the validity of the Loss or Proceeding or the amount
thereof and, in the case of a Proceeding to the extent that it shall
so desire in accordance with subsection (d) of this Section, assume
the legal defense
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
68
thereof or (iii) in writing object (or reserve the right to object
until additional information is obtained) to the claim for
indemnification or the amount thereof and set forth the grounds
therefor in reasonable detail. If the Indemnifying Party does not
respond to the Indemnified Party as provided in this subsection
within such thirty (30) day period, the Indemnifying Party shall be
deemed to have acknowledged its liability for such indemnification
claim in accordance with clause (i) of this subsection and the
Indemnified Party may exercise any and all of its rights under
applicable Law to collect such amount.
(c) An Indemnifying Party shall not, without the prior written consent
of the Indemnified Party (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened Proceeding in
respect of which indemnification or contribution is sought
hereunder. If the Indemnifying Party has responded to the
Indemnified Party pursuant to clause (i) of subsection (b) of this
Section, the Indemnified Party may settle or compromise or consent
to the entry of any judgment with respect to the Proceeding that was
the subject of notice to the Indemnifying Party pursuant to
subsection (b) of this Section without the consent of the
Indemnifying Party (but no such settlement, compromise or consent
shall increase the indemnification obligation of the Indemnifying
Party to which it has consented pursuant to clause (i) of subsection
(b) of this Section). Except as otherwise provided in the
immediately preceding sentence and in subsection (d) of this
Section, an Indemnified Party shall not, without the prior written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened
Proceeding, but, if such Proceeding is settled or compromised or if
there is entered any judgment with respect to any such Proceeding,
in either case with the consent of the Indemnifying Party, or if
there be a final judgment for the plaintiff in any such Proceeding,
the Indemnifying Party shall indemnify and hold harmless any
Indemnified Party from and against any Loss by reason of such
settlement, compromise or judgment in accordance with the other
provisions of this Article XII.
(d) If a Proceeding shall be brought against an Indemnified Party and it
shall notify the Indemnifying Party thereof in accordance with
subsection (a) of this Section, the Indemnifying Party shall, if it
shall have responded to such notice in accordance with clause (ii)
of subsection (b) of this Section, be entitled to assume the legal
defense thereof at the expense of the Indemnifying Party with
counsel reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the
Indemnified Party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the Indemnifying
Party or (ii) the Indemnifying Party shall have failed to assume the
defense of such action or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party, and the Indemnified
Party shall have been advised by such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
69
counsel that there is one or more legal defenses available to it
that are different from or additional to those available to the
Indemnifying Party. In any such case, the Indemnifying Party shall
not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the Indemnified Party. Except as
aforesaid, after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such
claim or such action, the Indemnifying Party shall not be liable to
the Indemnified Party under this Section for any attorney's fees or
other expenses (except reasonable costs of investigation)
subsequently incurred by the Indemnified Party in connection with
the defense thereof. If the Indemnifying Party does not assume the
defense of a Proceeding as to which it has acknowledged liability,
as between itself and the Indemnified Party, pursuant to clause (ii)
of subsection (b) of this Section, the Indemnified Party may require
the Indemnifying Party to reimburse it on a current basis for its
reasonable expenses of investigation, reasonable attorney's fees and
expenses and reasonable out-of-pocket expenses incurred in the
defense thereof and the Indemnifying Party shall be bound by the
result obtained with respect thereto by the Indemnified Party.
(e) In the case of a Loss as to which the Indemnifying Party shall have
responded pursuant to clause (iii) of subsection (b) above, the
parties shall attempt in good faith to resolve their differences for
a period of sixty (60) days following receipt by the Indemnified
Party of the response of the Indemnifying Party pursuant to
subsection (b) above and, if the parties are unable to resolve their
differences within such period, the Indemnified Party may submit the
matter to arbitration in accordance with the provisions of Section
14.10.
Section 12.05. Special Environmental Indemnification Provisions.
(a) The Parent shall have the sole and exclusive right to control the
defense, response, proceedings, settlement and resolution of any
Indemnifiable Environmental Matters, including any investigations,
removals, remediations, response actions, enforcement actions or
administrative proceedings; provided that the Parent shall not agree
to any response, settlement or resolution that unreasonably
interferes with any operations of the Business. The Acquiror shall
cooperate in all reasonable ways with the Parent in the defense,
contest, settlement of or prosecution of any Indemnifiable
Environmental Matters.
(b) With respect to any Indemnifiable Environmental Matters that require
corrective actions, the Parent's indemnification obligations under
clause (v) of subsection (a) of Section 12.02 shall be applicable to
any investigation, removal, remediation or other response action
("Environmental Activities") only if and to the extent the
conditions giving rise to such matter require reporting to a
Governmental Authority and require corrective action under
applicable Environmental Laws or, if such conditions were known to a
Governmental Authority having jurisdiction over the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
70
matter, the Governmental Authority would be entitled to bring an
enforcement action to require the Environmental Activities, but then
only to the extent necessary to bring the appropriate member of a
Company Group into compliance with the requirements of applicable
Environmental Laws in effect as of the Closing Date. (The Acquiror
shall be responsible for any additional Environmental Activities
which may be required by Environmental Laws enacted or adopted after
the Closing Date.) The Parent, in its sole discretion, shall
determine the applicable cleanup standard for Covered Known
Hazardous Materials Contamination and Unknown Hazardous Materials
Contamination that are Indemnifiable Environmental Matters, in
consultation with the Agency. Neither the Acquiror, any Buyer nor
any member of a Company Group may use the properties of any member
of any Company Group for any residential, health care, childcare or
school purposes. The Acquiror acknowledges and agrees that any title
transfer documents relating to the Real Property delivered to the
Acquiror may contain restrictions on the use of the Real Properties.
The Acquiror further agrees and binds itself to execute and file any
and all documents restricting the use of the properties of the
members of the Company Groups as may be required in connection with
the Environmental Activities. Notwithstanding anything in this
Section 12.05 to the contrary, no cleanup standards, use
restrictions or institutional controls shall be required that
unreasonably interfere with any operations of the Business. The
Acquiror shall not encourage or invite any Agency to require any
Environmental Activities or enforcement action; provided, however,
that the Acquiror may cause the Buyers and the members of the
Company Groups to comply with all applicable Environmental Laws in
the use, ownership or occupation of the Real Property or the
operations of the Businesses.
(c) The Acquiror acknowledges that, prior to the Closing Date, the
Parent may have initiated Environmental Activities as a result of
the Parent's obligation to applicable Agencies, and that such
Environmental Activities may continue after the Closing Date. The
Acquiror further acknowledges that any Environmental Activities
conducted after the Closing Date in accordance with this Section
12.05 or continued from Environmental Activities prior to the
Closing Date may involve the filing of land use and deed
restrictions, institutional and engineering controls, groundwater
use restrictions, soil management requirements, access and easement
rights, and restrictive covenants (including a prohibition against
installation of water wells on the properties of the members of the
Company Groups). The Acquiror shall at all times cooperate with the
Parent in obtaining and maintaining any necessary documents, permits
or conditions, and the Acquiror shall not take any action in
contravention of such land use or deed restrictions or other
requirements. The Acquiror further acknowledges that the Parent's
environmental obligations hereunder may include sampling and
excavating soil, the sampling, operation and maintenance of
groundwater monitoring and recovery wells, associated piping,
groundwater pumping and treatment equipment and other facilities or
equipment. The Acquiror shall, without further compensation, costs
or fees to the Parent, grant and provide, after reasonable advance
notice, all necessary access to the Parent, the Parent's employees,
agents, contractors, subcontractors, representatives and Agency
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
71
representatives to enter onto the properties of the members of the
Company Groups after the Closing Date to undertake any Environmental
Activities. The Parent's rights of access to use the properties of
the members of the Company Groups are non-exclusive and shall endure
as long as is necessary to complete the Environmental Activities.
The Parent shall, to the extent practicable and consistent with
sound investigation and remediation practices, undertake the
Environmental Activities in a manner that will not unreasonably
interfere with the use of the properties of the members of either of
the Company Groups and shall indemnify and hold harmless the
Acquiror against any Losses arising out of such rights of access
except for any such Losses that arise out of or result from the
negligence of the Acquiror or any Persons acting on its behalf. The
Acquiror shall cause the Buyers and the members of the Company
Groups to take all necessary precautions to avoid any damage to or
loss of any equipment or facilities placed on the properties of the
members of the Company Groups by the Parent as part of the
Environmental Activities, and shall pay for all damages to or loss
of such equipment or facilities resulting from any negligent acts or
omissions of the Buyers or members of the Company Groups, or their
ownership, use or occupancy of their properties.
(d) The Parent's indemnity obligations with respect to Indemnifiable
Environmental Matters under clause (v) of subsection (a) of Section
12.02 shall not apply to any Losses: (i) caused by the Acquiror's
inspection of the properties of the members of the Company Groups;
(ii) arising from the use or occupancy of the properties of the
members of the Company Groups by the Acquiror or any of its
Affiliates prior to the Closing Date; (iii) with respect to any
Indemnified Environmental Matter known to Acquiror, arising from,
caused by, or exacerbated by the use, occupancy or ownership of the
Real Property or the operation of the Businesses or omissions of the
Acquiror after the first anniversary of Acquiror gaining such
knowledge, (iv) arising after the expiration of any applicable
indemnity period, (v) based on Hazardous Materials Contamination,
Environmental Compliance Matters or other conditions that did not
exist as of the Closing Date; (vi) that constitute Known Hazardous
Materials Contamination that is not Covered Known Hazardous
Materials Contamination; (vii) incurred in connection with the
management, removal or abatement of asbestos-containing material
from any structure or equipment during any demolition or renovation
of any facility or structure after the Closing Date; or (viii)
arising from the migration of Hazardous Materials or Hazardous
Materials Contamination onto the Real Property of any members of any
of the Company Groups from an offsite source. The Parent, may at its
own cost and option, participate in the defense of any such claim.
(e) Except as set forth in this Article XII, the Acquiror
unconditionally releases the Parent from any and all Losses arising
out of or resulting from any Hazardous Materials or Hazardous
Materials Contamination, Environmental Compliance Matters or related
environmental conditions (including Known Hazardous Materials
Contamination, Unknown Hazardous Materials Contamination Known
Environmental Compliance Matters, Unknown Environmental Compliance
Matters
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
72
and Indemnifiable Environmental Matters, regardless of how or when
discovered). Provided that the Parent is in material compliance with
its obligations under this Article XII, the Acquiror hereby
covenants and agrees that neither the Acquiror nor any Affiliate
under its control will file suit or name the Parent or any of its
Affiliates in any lawsuit arising from any of the foregoing. The
Acquiror understands and expressly agrees that releases set forth in
this Section:
(i) shall constitute releases of liability under all applicable
Environmental Laws, including the United States Comprehensive
Environmental Response, Compensation and Liability Act, as
currently in effect, the United States Resource Conservation
Recovery Act, as currently in effect, and any similar or
equivalent laws in the jurisdiction of any Governmental
Authority in which any properties of any member of a Company
Group are located;
(ii) shall constitute an assumption of future liabilities;
(iii) are made with the knowledge of the prior commercial or
industrial use of the properties of the members of the Company
Groups and the possible presence of Hazardous Materials on
such properties; and
(iv) are supported by separate consideration, the receipt and
sufficiency of which are expressly acknowledged and confessed
by the Acquiror.
Section 12.06. Punitive Damages. Neither party to this Agreement nor any
of its Affiliates or Representatives shall be liable to any other party hereto
or any of its Affiliates or Representatives for claims for punitive, special,
exemplary or incidental damages, regardless of whether a claim is based on
contract, tort (including negligence), strict liability, violation of any
applicable deceptive trade practices act or similar Law or any other legal or
equitable principle. No party shall be entitled to rescission of this Agreement
as a result of breach of any other party's representations, warranties,
covenants or agreements, or for any other matter.
Section 12.07. Failure of Acquiror to Close. The Parent and the Acquiror
have agreed that if the Acquiror shall fail to consummate the transactions
contemplated hereby for any reason under its control that does not confer upon
the Acquiror a right to terminate this Agreement under Section 13.01, the
Acquiror shall pay to the Parent, on or before the fifth (5th) Business Day
following the date on which the Acquiror failed to consummate such transactions
in violation of the terms of this Agreement or, if such date is not
determinable, the Termination Date, an amount in cash in U.S. Dollars equal to
$20 million less professional fees and expenses incurred on behalf of the
Acquiror prior to, on or after the date hereof by wire transfer of immediately
available funds to the wire transfer address of Parent provided in written
instructions to the Acquiror. Such amount shall be deemed to be liquidated
damages and, in that regard, it is expressly stipulated by the parties that the
actual amount of any damages resulting from the Acquiror's failure to complete
the transactions contemplated by this Agreement would be difficult if not
impossible to determine accurately because of the unique nature of this
Agreement, the unique nature of the Securities, the uncertainties of the
relevant markets in which the Businesses operate and differences of opinion with
respect to such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
73
matters, and that the liquidated damages provided for herein are a reasonable
estimate by the parties of such damages.
Section 12.08. No Right of Contribution. After the Closing Date, no member
of either Company Group shall be obligated to indemnify either the Acquiror, any
Buyer, the Parent or the Seller on account of the breach of any representation
or warranty or the nonfulfillment of any covenant or agreement of the Parent or
the Seller; and neither Parent nor the Seller shall have any right of
contribution against any member of either Company Group for any such breach or
nonfulfillment.
Section 12.09. Specific Performance. The Parent hereby agrees that
irreparable damage would occur to the Acquiror if the Parent failed to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement, and, accordingly, the Parent and the Acquiror agree that the
Acquiror shall be entitled to enforce specifically the performance of the
transactions contemplated hereby in the United States federal court for the
Southern District of New York or in any other court having jurisdiction without
posting bond or other security, this being in addition to any other remedy to
which it is entitled at law or in equity.
Section 12.10. Sole Remedy. From and after the Closing Date, the
provisions of this Article XII shall, except as provided in subsection 2.09(g),
be the sole and exclusive remedy of each party hereto for (i) any breach of the
other party's representations or warranties contained in this Agreement or (ii)
any breach of the other party's covenants or agreements contained in this
Agreement (other than any covenant or agreement to be performed after the
Closing Date).
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual written consent of the Parent and the Acquiror;
(b) by the Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Acquiror set forth in this
Agreement or if any representation or warranty of the Acquiror shall
have become untrue, in either case, such that the conditions set
forth in subsection (a) or (b) of Section 11.02 would not be
satisfied (a "Terminating Acquiror Breach"); provided, however,
that, if such Terminating Acquiror Breach is curable by the Acquiror
through the exercise of its reasonable efforts and for so long as
the Acquiror continues to exercise such reasonable efforts, the
Parent may not terminate this Agreement under this subsection (b)
until September 30, 2001;
(c) by the Acquiror, upon a breach of any representation, warranty,
covenant or agreement on the part of the Parent set forth in this
Agreement or if any
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
74
representation or warranty of the Parent shall have become untrue,
in either case, such that the conditions set forth in subsection (a)
or (b) of Section 11.03 would not be satisfied (a "Terminating
Parent Breach"); provided, however, that, if such Terminating Parent
Breach is curable by the Parent through the exercise of its
reasonable efforts and for so long as the Parent continues to
exercise such reasonable efforts, the Acquiror may not terminate
this Agreement under this subsection (c) until September 30, 2001;
(d) by either the Parent or the Acquiror, if the Closing Date
contemplated hereby shall not have occurred on or before June 30,
2001 (the "Termination Date"); provided, however, that the right to
terminate this Agreement under this subsection (d) shall not be
available to either Party whose failure to fulfill any obligation
under this Agreement has been, directly or indirectly, the cause of,
or resulted in, the failure of the Closing Date to occur on or
before such date; provided, further, that, if on the Termination
Date the conditions to the First Closing set forth in subsection (b)
or (c) of Section 11.01 shall not have been fulfilled but all other
conditions to the First Closing have been fulfilled or are capable
of being fulfilled, then the Termination Date shall be extended to
September 30, 2001.
The right of any party hereto to terminate this Agreement pursuant to this
Section 13.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their Representatives, whether prior to or
after the execution of this Agreement.
Section 13.02. Effect of Termination. If terminated pursuant to Section
13.01, this Agreement shall, except for Sections 9.01, 10.05, 10.07(a), 12.06,
12.07 and 12.09 of this Agreement, forthwith become void and (i) there shall be
no liability on the part of the Parent, the Seller, the Acquiror or any of their
respective officers or directors to any other party and (ii) all rights and
obligations of any party hereto shall cease; provided, however, that nothing
herein shall relieve the Parent, the Seller or the Acquiror from liability for
any misrepresentation of any representation and warranty or breach of any
covenant or agreement under this Agreement occurring prior to the date of such
termination.
Section 13.03. Amendment. This Agreement may not be amended except by an
instrument in writing authorized by the Parent, the Seller and the Acquiror and
signed by the Parent, the Seller and the Acquiror.
Section 13.04. Waiver. Either the Parent or the Acquiror hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other parties with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
75
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
If to the Parent, to:
Halliburton Company
4100 Clinton Drive
Houston, Texas 77020
Attention: Gary V. Morris
Executive Vice President
and Chief Financial Officer
Telephone: 713/676-4189
Telecopier: 713/676-7799
Copy to:
Lester L. Coleman
Executive Vice President
and General Counsel
Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201-3391
Telephone: 214/978-2634
Telecopier: 214/978-2658
If to the Acquiror, to:
c/o First Reserve Corporation
411 West Putnam Avenue
Greenwich, CT 06830
Attention: William Macaulay
Telephone: (203) 625-2500
Telecopier: (203) 661-6729
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
76
Copy to:
Tom Denison
First Reserve Corporation
1801 California Street, #4110
Denver, CO 80202
Telephone: (303) 382-1271
Telecopier: (303) 382-1275
and to:
Odyssey Investment Partners, LLC
280 Park Avenue
West Tower, 38th Floor
New York, NY 10017
Attention: Paul Barnett
Telephone: (212) 351-7900
Telecopier: (212) 351-7925
Copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Attention: Robert Kennedy
Telephone: (212) 906-1200
Telecopier: (212) 751-4864
or to such other address or telecopier number as the Parent or the Acquiror may,
from time to time, designate in a written notice given in a like manner. Notice
given by telecopier shall be deemed delivered on the day the sender receives
telecopier confirmation that such notice was received at the telecopier number
of the addressee. Notice given by mail as set out above shall be deemed to be
delivered on the fifth Business Day following deposit in the U.S. mail.
Section 14.02. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
77
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
Section 14.04. Entire Agreement. This Agreement (together with the
Ancillary Agreements, the Annexes and Appendices hereto, the Parent's Disclosure
Letter and the Acquiror's Disclosure Letter) constitutes the entire agreement of
the parties, and supersedes all prior agreements, deliveries, disclosures and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
Section 14.05. Assignment. Without the prior written consent of the other
party hereto, the rights and obligations of a party hereto under this Agreement
may not be assigned except by operation of Law; provided, however, that the
Acquiror may (i) assign its rights and obligations hereunder without the consent
of any other party hereto to any wholly owned Subsidiary of the Acquiror, in
which event the Acquiror shall remain liable for all of its obligations under
this Agreement, and the assignee shall, together with the Acquiror, be jointly
and severally liable for such obligations and (ii) assign as collateral its
rights and obligations hereunder without the consent of any other party hereto
to the Lenders referred to in the Commitment Letters or a collateral agent
acting on their behalf.
Section 14.06. Successors; Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. Except as set
forth in Section 12.10, all rights and remedies existing under this Agreement
are cumulative with, and not exclusive of, any rights or remedies otherwise
available.
Section 14.08. Disclosure Letters. Each of the Parent's Disclosure Letter
and the Acquiror's Disclosure Letter have been arranged in paragraphs or
schedules corresponding to the relevant Sections of this Agreement. Any matter
disclosed by the Parent in the Parent's Disclosure Letter or by the Acquiror in
the Acquiror's Disclosure Letter pursuant to any Section of this Agreement shall
be deemed to have been disclosed by such party for purposes of each other
Section of this Agreement to which such disclosure would reasonably relate.
Section 14.09. Governing Law. This Agreement shall be construed (both as
to validity and performance) and enforced in accordance with, and governed by,
the laws of the State of New York applicable to agreements made and to be
performed wholly within such jurisdiction. Any judicial proceeding brought
against any of the parties hereto with respect to this Agreement shall be
brought in the United States District Court for the Southern District of New
York sitting in New York County and any appellate court of that District Court
irrespective of where such party may be located
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
78
at the time of such proceeding, and by execution and delivery of this Agreement,
each of the parties hereto hereby consents to the exclusive jurisdiction of such
court and waives any defense or opposition to such jurisdiction.
Section 14.10. Arbitration. Any dispute referenced in subsection (b) of
Section 2.09 or in subsection (e) of Section 12.04 shall be resolved by binding
arbitration under the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"). This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration Act,
9 U.S.C. Sections 1 -14. The parties hereto agree that, pursuant to Section 9 of
the Federal Arbitration Act, a judgment of a United States District Court of
competent jurisdiction shall be entered upon the award made pursuant to the
arbitration. Three arbitrators, who shall have the authority to allocate the
costs of any arbitration initiated under this paragraph, shall be selected in
accordance with the following sentence within ten (10) days of the submission to
the AAA of the response to the statement of claim or the date on which any such
response is due, whichever is earlier. The selection shall be made as follows:
one by the Parent, one by the Acquiror and one by the two so selected, provided,
however, that only the third arbitrator shall be required to be neutral. The
arbitrators shall conduct the arbitration in accordance with the Federal Rules
of Evidence. The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to enter
any award of monetary or injunctive relief (including the power to issue
permanent injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court in response
to a request therefor by either of the parties), including the power to render
an award as provided in Rule 43 of the AAA Rules; provided, however, that the
arbitrators shall not have the power to award punitive or consequential damages
under any circumstances (whether styled as punitive, exemplary, or treble
damages, or any penalty or punitive type of damages) regardless of whether such
damages may be available under applicable Law, the parties hereby waiving their
rights, if any, to recover any such damages, whether in arbitration or
litigation. Unless differently awarded by the arbitration tribunal, the fees and
expenses of the arbitrators shall be paid 50% by the Acquiror and 50% by the
Parent. The arbitration award may be enforced in any court having jurisdiction
over the parties and the subject matter of the arbitration. The arbitration
shall be held in New York, New York.
Section 14.11. Confidentiality Agreements. The Parent agrees that, until
the second anniversary of the Closing Date, it will not terminate, or waive any
provision of, any confidentiality agreement relating to information regarding
any of the Businesses entered into at any time during the period of two years
immediately preceding the date of this Agreement.
Section 14.12. Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
79
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
PARENT
HALLIBURTON COMPANY
By: _____________________________________
Name: ___________________________________
Title: __________________________________
ACQUIROR
DEG ACQUISITIONS, LLC
By: _____________________________________
Name: ___________________________________
Title: __________________________________
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SELLER
DRESSER B.V.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
80
ANNEX A
DEFINITIONS
"AAA" shall have the meaning ascribed to such term in Section 14.10.
"AAA Rules" shall have the meaning ascribed to such term in Section 14.10.
"Accounting Firm" shall mean Ernst & Young LLP, independent public
accountants, Houston office.
"Acquiror" shall have the meaning ascribed to such term in the
introductory paragraph to this Agreement.
"Acquiror's Disclosure Letter" shall mean that letter, together with the
associated schedules, of even date herewith from the Acquiror to the Parent
setting forth, as required hereby, the information called for herein and the
discrepancies from the representations, warranties and covenants of the Acquiror
contained herein.
"Action" shall have the meaning ascribed to such term in subsection (a) of
Section 10.09.
"Adjusted Price" with respect to a particular product, component, spare
part or service supplied or rendered by the Businesses to any Designated
Regulatory Assets transferred to Parent pursuant to Section 8.05 shall mean the
price of such product, component, spare part or service on the date of such
transfer subject to such "cost of living" adjustments as are fair and reasonable
under the circumstances.
"Affiliate" shall mean a Person controlling, controlled by or under common
control with another Person. For this purpose, control shall mean the ability to
direct the management and affairs of a Person, whether through ownership of
securities, by contract or otherwise.
"Agency" shall mean any Governmental Authority entitled and empowered to
administer and enforce Environmental Laws.
"Agreement" shall have the meaning ascribed to such term in the
introductory paragraph of this instrument.
"Allocation Procedures" shall mean the procedures for allocation of the
Purchase Price Adjustment set forth on Annex D.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A
"Ancillary Agreements" shall mean the Merger Agreement, the Assignment of
Name, the Highway 6 Lease Agreement, the Employee Benefits Agreement, the
Transition Services Agreement and the Stockholders' Agreement.
"Acquisition Proposal" shall have the meaning ascribed to such term in
Section 8.07.
"Asbestos Liability Claim" shall mean any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
giving rise to any liability or obligation (whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due), whether
based on strict liability or negligence, in respect of the exposure of any
Person of any of the Businesses to asbestos or in respect of any product
containing asbestos manufactured and sold or distributed by the Businesses.
Asbestos Liability Claim shall not include any Indemnifiable Environmental
Matter.
"Assignment of Name" shall mean an Assignment of Name between the Parent
and the Acquiror dated the Closing Date with respect to the use of the Dresser
name in form and substance substantially similar to the form thereof attached
hereto as Appendix IV.
"Assumed Contracts" shall mean all agreements and contracts, including all
indentures, mortgages, deeds of trust, chattel mortgages, conditional sales
agreements, supply contracts, sales contracts, purchase orders, real property
leases, equipment and vehicle leases, distribution agreements, joint venture
agreements, collective bargaining agreements and employment agreements, all as
the same may exist from time to time, to which any member of a Company Group is
a party or by which it is bound. The Assumed Contracts shall include (A) the
Principal Contracts, and (B) any Principal Contracts to which any member of a
Company Group shall become a party subsequent to the date hereof to the extent
such Principal Contracts are entered into in accordance with this Agreement and
are in effect as of the Closing Date.
"Assumed Obligations" shall mean all debts, liabilities, taxes and
obligations, contractual and otherwise, whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due, of any
member of a Company Group, except Excluded Liabilities and any other such debts,
liabilities, taxes and obligations with respect to which the Acquiror, the
Buyers, their Affiliates and the directors, officers and employees of such
Persons are entitled to indemnification pursuant to Article XII. Subject to the
foregoing, the Assumed Obligations shall include those of each member of each
Company Group (i) that were reflected in the Initial Financial Statements
(except to the extent such liabilities are excluded from the determination of
Net Equity pursuant to subsection (a) of Section 2.10), (ii) that were accrued
in the ordinary course of business of the Businesses conducted in accordance
with past practice during the period from the Initial Balance Sheet Date to the
Closing Date, (iii) that constitute contingent liabilities that arise out of or
are based on events occurring on or before the Closing Date, (iv) that
constitute the obligations of any member of a Company Group under Assumed
Contracts or (v) that constitute obligations assumed by DEGI pursuant to the
General Indenture between DEGI and Dresser Industries, a copy of which is
provided in Schedule A-1 to the Parent's Disclosure Letter. Notwithstanding the
foregoing, the Assumed Obligations shall not include (x) any such obligations
and liabilities that
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-2
constitute federal, state, local and foreign income, sales, use, property and
other taxes, the disposition of which is governed by the provisions of Section
10.06 herein, and (y) any such obligations and liabilities other than those
included in clauses (i) and (ii) above that relate to the Benefit Plans, the
disposition of which is governed by the Employee Benefit Agreement.
"Authorization" shall mean any franchise, permit, license, authorization,
order, certificate, registration or other consent or approval granted or
required by any Court or Governmental Authority.
"Bank Commitment Letter" shall mean the Senior Bank Commitment Letter
dated January 30, 2001 to DEG Acquisitions, LLC from Morgan Stanley Senior
Funding Inc. and Credit Suisse First Boston.
"Benefit Plan" shall mean any pension, profit sharing, retirement, life,
health, unemployment, accident, disability, stock bonus, stock ownership, stock
option, stock purchase, stock appreciation rights, phantom stock, other
stock-based, severance, employment, change-in-control, deferred compensation,
bonus or incentive compensation plan, agreement, program or policy (whether
written or oral) sponsored, maintained or contributed to by any member of either
Company Group for the benefit of or pursuant to which any Company Group member
could have liability with respect to any of their present or former directors,
officers, employees, agents, consultants or other similar representatives;
provided, however, that such term shall not include (a) routine employment
policies and procedures developed and applied in the ordinary course of business
and consistent with past practice and local custom, including wage, vacation,
holiday and sick or other leave policies, (b) programs mandated by applicable
Law and (c) directors' and officers' liability insurance.
"Books and Records" shall mean all books and records of a Person relating
to that Person's business, operations and activities, including all general and
other ledgers, records of corporate or organizational proceedings, tax records,
financial statements, documents of title to real/immovable and personal/movable
property, personnel records, salary and wage records, production records,
inventory records, sales documentation, correspondence, customer lists,
employment records and contracts and agreements to which such Person is a party
or by which it is bound, as well as related computer programs and files.
"Bridge Commitment Letter" shall mean the Bridge Commitment Letter dated
January 30, 2001 to DEG Acquisitions, LLC from Morgan Stanley Senior Funding,
Inc. and Credit Suisse First Boston.
"Business" shall mean any of (i) the Dresser Valve Business, (ii) the
Dresser Wayne Business, (iii) the Dresser Waukesha Business and (iv) the Dresser
Instrument - DMD - Roots Business; provided, however, the term "Business" shall
not include any Discontinued Product or Service Line. The term "Businesses"
shall mean all the Businesses, taken as a whole.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-3
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday unless such day shall be a day when financial institutions in the City of
New York, New York are authorized by Law to close.
"Buyers" shall mean the companies identified as such in Annex C.
"BV Allocable Purchase Price" shall mean the portion of the Preliminary
Purchase Price allocated to the BV Companies as set forth on Annex C.
"BV Companies" shall mean the companies identified as such in Annex C.
"BV Group" shall mean, after giving effect to the Reorganization, each of
the BV Companies and their respective Subsidiaries and Non-Controlled Entities,
each of which is a "member" of the BV Group.
"BV Joint Venture" shall mean each of the following entities:
Penaga Grove Sdn. Bhd.
Dresser Tankanlagen GmbH & Co. Service KG
"BV Preliminary Purchase Price Percentage" shall mean the BV Allocable
Purchase Price divided by the Preliminary Purchase Price.
"Category 1 Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 2A Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 2B Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 3 Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 1 Requirements" shall mean the expiration or termination of any
waiting period required under, any authorization required by or any other Legal
Requirement of the competition Laws of each Category 1 Jurisdiction with respect
to the transactions contemplated hereby.
"Category 2A Requirements" shall mean the expiration or termination of any
waiting period required under, any authorization required by or any other Legal
Requirement of the competition Laws of each Category 2A Jurisdiction with
respect to the transactions contemplated hereby.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-4
"Category 2B Requirements" shall mean the expiration or termination of any
waiting period required under, any authorization required by or any other Legal
Requirement of the competition Laws of each Category 2B Jurisdiction with
respect to the transactions contemplated hereby.
"Claim" shall have the meaning ascribed to such term in subsection (a) of
Section 10.09.
"Closing Balance Sheet" shall mean the audited consolidated balance sheets
of the Businesses included in the Closing Financial Statements.
"Closing Conditions" shall mean those conditions to the First Closing of
the transactions contemplated hereby contained in Article XI.
"Closing Date" shall have the meaning ascribed to such term in subsection
(a) of Section 2.04.
"Closing Financial Statements" shall mean the consolidated balance sheet
of the Businesses as of the Closing Date and the consolidated statements of
results of their operations for the interim period then ended, together with the
notes thereto, all prepared by the Acquiror in accordance with U.S. GAAP
consistently applied with the principles used in connection with the Initial
Financial Statements and audited by Arthur Andersen LLP as set forth in their
report with respect thereto.
"Closing Notice" shall have the meaning ascribed to such term in
subsection (b) of Section 2.04.
"Closings" shall mean both the First Closing and the Second Closing.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Commitment Letters" shall mean the Bank Commitment Letter and the Bridge
Commitment Letter.
"Commitment Letter Term Sheets" means those certain term sheets attached
as Exhibits to the Commitment Letter(s).
"Company Group" shall mean the DEGI Group or the BV Group.
"Competing Business" shall have the meaning ascribed to such term in
Section 8.06.
"Confidentiality Agreement" shall mean the Confidentiality Agreement dated
September 14, 2000 between Dresser Industries and First Reserve Corporation, as
amended or supplemented from time to time.
"Contractual Transfer Restriction" shall mean obligations imposed by
Organizational Documents of a Person or by contract limiting or prohibiting the
alienation by a Person of any of the Securities or the Equity Securities of any
other member of a Company Group or creating a default,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-5
obligation, right (with or without due notice, the passage of time, or action of
any third Person) or a right to acceleration of a payment obligation under any
agreement or instrument to which such Person is a party or by which any of them
or their respective properties or assets is bound.
"Controlled Group Liability" shall mean any and all liabilities (i) under
Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under sections 412 and
4971 of the Code, (iv) as a result of the failure to comply with the
continuation of coverage requirements of section 601 et. seq. of ERISA and
section 4980B of the Code, and (v) under corresponding or similar provisions of
foreign Laws and Regulations.
"Court" shall mean (i) any court established and functioning under the
Laws of any nation or state, including the United States of America, or any
political subdivision thereof, including any state of the United States of
America or (ii) any arbitration tribunal established and functioning under the
rules of any nationally or internationally recognized arbitration association or
forum.
"Covered Jurisdictions" shall mean Category 1 Jurisdictions, Category 2A
Jurisdictions, Category 2B Jurisdictions and Category 3 Jurisdictions.
"Deductible Amount" shall have the meaning ascribed to such term in
subsection (a) of Section 12.02.
"DEGI" shall mean Dresser, Inc., a Delaware corporation.
"DEGI Common Stock" shall have the meaning ascribed to such term in
subsection (c) of Section 2.01.
"DEGI Group" shall mean each of DEGI and, after giving effect to the
Reorganization, its Subsidiaries and Non-Controlled Entities, each of which is a
"member" of the DEGI Group.
"DEGI Group Preliminary Purchase Price Percentage" shall mean the
percentage determined by subtracting the BV Preliminary Purchase Price
Percentage from 100%.
"DEGI Joint Venture" shall mean each of the following entities:
Dresser Al-Rushaid Valve and Instrument Company, Ltd.
Dresser-Nagano, Inc.
Manufacturas Petrolanos Venezolanos, S.A.
DS Controls
Saber Technologies, L.L.C.
GazDMD Avtomatika
"Designated Real Property" shall have the meaning ascribed to such term in
subsection (a) of Section 5.04.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-6
"Designated Regulatory Assets" shall mean any assets located in a Category
2B Jurisdiction that were acquired directly or indirectly (by the acquisition of
Securities) by the Acquiror or any of its Affiliates pursuant to this Agreement
that a Governmental Authority or Court of competent jurisdiction has ordered
(which order is final and not subject to appeal) the Acquiror or any of its
Affiliates to dispose of (either directly or indirectly through the sale of
securities) in order to satisfy any Category 2B Requirements of such Category 2B
Jurisdiction.
"Differences" shall have the meaning ascribed to such term in subsection
(b) of Section 2.09.
"Discontinued Product or Service Line" shall mean any product line or
services line formerly produced or provided by any member of a Company Group or
any predecessor of any of them that constituted a part of the Businesses but was
discontinued in its entirety prior to the date of this Agreement and was not
replaced with a product or service line designed for essentially the same use or
purpose as the discontinued product or service line.
"Dresser Industries" shall mean Dresser Industries, Inc., a Delaware
corporation and a wholly owned subsidiary of the Parent.
"Dresser Instrument - DMD - Roots Business" shall mean the business of the
manufacture, sale and distribution of pressure and temperature instruments,
rotary gas meters, specialty piping products, regulators and commercial blowers,
as conducted by the members of the Company Groups.
"Dresser Valve Business" shall mean the business of the manufacture, sale
and distribution of control valves, on/off valves, safety and safety relief
valves, actuators and control solutions, as conducted by the members of the
Company Groups.
"Dresser Waukesha Business" shall mean the business of the manufacturing
of gaseous-fueled industrial engines, as conducted by the members of the Company
Groups.
"Dresser Wayne Business" shall mean the business of providing retail
fueling solutions, integrating fuel dispensers, pumps and peripherals, providing
point-of-sale systems and software, site services and maintenance for the retail
fueling segment of the energy value chain, as conducted by the members of the
Company Groups.
"Employee Benefits Agreement" shall mean an Employee Benefits Agreement
entered into as of the Closing Date between the Parent and the Acquiror, in form
and substance substantially similar to the form thereof attached hereto as
Appendix VI.
"Environmental Activities" shall have the meaning ascribed to such term in
subsection (b) of Section 12.05.
"Environmental Compliance Matter" shall mean any failure to be in
compliance with applicable Environmental Laws.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-7
"Environmental Laws" shall mean any Laws or any Regulations of any
applicable Governmental Authority with legal jurisdiction of the Businesses and
the properties of the members of the Company Groups where such Laws and
Regulations pertain to pollution or protection of the environment or the impact
of environmental quality on human health and are applicable to a specified
Person or any of its Subsidiaries.
"Equity of DEGI" shall mean the aggregate of (i) the Investment by the
Acquiror, (ii) the aggregate consideration paid for Management Shares and (iii)
after the Merger, the investment in DEGI retained by Dresser Industries pursuant
to the provisions of subsection (b) of Section 2.03.
"Equity Securities" shall mean (i) the shares of capital stock of a
corporation, (ii) the general or limited partnership interests in any
partnership, (iii) the membership or other ownership interest in any limited
liability company, (iv) the equity securities of or other ownership interests or
rights in any other legal entity; or (v) any option, warrant or other right to
convert into or otherwise receive any of the foregoing; in any such case,
whether owned or held beneficially or legally.
"ERISA" shall mean the United States Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" shall mean, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in section 414(b), (c), (m) or (o) of the Code or section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to section 4001(a)(14) of ERISA.
"Estimated Balance Sheet" shall have the meaning ascribed to such term in
subsection (a) of Section 2.08.
"Estimated Balance Sheet Date" shall have the meaning ascribed to such
term in subsection (a) of Section 2.08.
"Estimated Financial Statements" shall have the meaning ascribed to such
term in subsection (a) of Section 2.08.
"Estimated Purchase Price" shall have the meaning ascribed to such term in
subsection (b) of Section 2.08.
"Estimated Purchase Price Adjustment" shall have the meaning ascribed to
such term in subsection (c) of Section 2.08.
"Evaluation Material" shall have the meaning ascribed to such term in
subsection (c) of Section 8.03.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-8
"Excluded Liability" shall mean all debts, liabilities, taxes and
obligations, contractual and otherwise, whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due, of the
Parent or any of its Subsidiaries that do not arise as a result of the operation
of the Businesses and are not accounted for as part of, the Businesses,
including any Product Liability Claim or Product Warranty Claim against any
member of a Company Group based on, or arising out of, any product, component or
other item manufactured, sold, designed or produced by, or service rendered by
or on behalf of, a member of a Company Group or any predecessor thereof pursuant
to any Discontinued Product or Service Line. The Excluded Liabilities shall, in
addition, include: (i) any other Product Liability Claim made on or prior to the
Closing Date, (ii) any Asbestos Liability Claim against any member of a Company
Group based on or arising out of events or occurrences with respect to the
Businesses prior to the First Closing, (iii) any loss, liability, damage or
expense resulting from any action, suit or proceeding against any member of
either Company Group initiated prior to the Closing Date, (iv) any loss,
liability, damage or expense resulting from claims against any member of either
Company Group relating to insured risks, to wit: workmen's compensation, general
liability and automobile liability risks, arising out of or based on events or
occurrences prior to the Closing Date as to which the Acquiror has notified the
Parent prior to the third anniversary of the Closing Date, and (v) any loss,
liability, damage or expense of the Dresser Valve Business based on or arising
out of the absence in any alliance contract, any master purchase agreement or
any purchase order of any provision that expressly prohibits awards of
consequential damages as a partial remedy for breach of such contract; provided,
however, that no such loss, liability, damage or expense based on or arising out
of the absence of such an express prohibition in any such contract after the
first renewal or extension thereof following the Closing Date shall be an
Excluded Liability (and, whether or not actually renewed, all such contracts
shall for this purpose be deemed renewed on the second anniversary of the
Closing Date).
"Expenses" shall have the meaning ascribed to such term in Section 10.05.
"FAS No. 5" shall have the meaning ascribed to such term in subsection (d)
of Section 11.02.
"First Closing" shall have the meaning ascribed to such term in subsection
(a) of Section 2.04.
"Forms" shall have the meaning ascribed to such term in subsection (c) of
Section 10.06.
"Governmental Authority" shall mean any national, federal, regional,
state, local or other governmental agency, authority, administrative agency,
regulatory body, commission or instrumentality (other than a Court), including
any multinational authority having governmental or quasi-governmental powers.
"Hazardous Materials" shall mean any (A) petroleum or petroleum products
or petroleum wastes (including crude oil or any fraction thereof), radioactive
materials emitting radiation in excess of local background conditions, friable
asbestos or friable asbestos-containing material, urea formaldehyde foam
insulation, and polychlorinated biphenyls, or (B) chemicals, materials or
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-9
substances which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "dangerous
substances," "dangerous wastes," "pollutants" or "toxic pollutants," or words of
similar import, under any Environmental Law or Regulation.
"Hazardous Materials Contamination" shall mean the existence of Hazardous
Materials on, about or under a property at or in excess of levels that could
reasonably be expected to require investigation, remediation or monitoring under
applicable Environmental Laws in the jurisdiction in which the property is
located.
"Highway 6 Deed" shall mean a general warranty deed from an affiliate of
the Parent to the Acquiror or a Subsidiary of the Acquiror dated the Closing
Date with respect to the real property described in the Highway 6 Lease.
"Highway 6 Lease" shall mean a lease agreement between the Acquiror or a
Subsidiary of the Acquiror, as lessor, and the Parent or a Retained Subsidiary,
as lessee, and an access agreement between the same parties relating to a
certain transite test well, each in form and substance substantially similar to
the forms thereof attached hereto as Appendix V and relating to the real
property therein described.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnifiable Environmental Matters" shall mean:
(a) Hazardous Materials Contamination existing on any current Real
Property that is (i) identified in environmental site assessment
reports and studies listed in Schedule 5.11 to the Parent's
Disclosure Letter ("Known Hazardous Materials Contamination") and
(ii) requires Environmental Activities (under the standards set
forth in subsection (b) of Section 12.05) as of the Closing Date
under applicable Environmental Laws existing as of the Closing Date
(together, "Covered Known Hazardous Materials Contamination");
(b) Hazardous Materials Contamination existing on any current or former
Real Property of any member of any Company Group or generated by any
member of any Company Group, other than Known Environmental
Conditions, that requires Environmental Activities (under the
standards set forth in subsection (b) of Section 12.05) as of the
Closing Date under applicable Environmental Laws existing as of the
Closing Date ("Unknown Hazardous Materials Contamination");
(c) Environmental Compliance Matters that are identified in Schedule
5.11 to the Parent Disclosure Letter ("Known Environmental
Compliance Matters");
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-10
(d) Environmental Compliance Matters as of the Closing Date related to
the Businesses and any member of either Company Group, other than
any Known Environmental Compliance Matters ("Unknown Environmental
Compliance Matters"); and
(e) any matter set forth in the Parent's Disclosure Letter as an
exception to subsection (c) of Section 5.11.
"Indemnification Notice" shall have the meaning ascribed to such term in
subsection (a) of Section 12.04.
"Indemnified Party" shall mean the Person or Persons entitled to
indemnification under Section 12.02 or 12.03.
"Indemnifying Party" shall mean the Person or Persons obligated to
indemnify the Indemnified Parties under Section 12.02 or 12.03.
"Initial Balance Sheet" shall mean the audited combined balance sheet as
of September 30, 2000 included in the Initial Financial Statements.
"Initial Balance Sheet Date" shall mean September 30, 2000.
"Initial Financial Statements" shall mean the consolidating statements of
assets contemplated for sale and liabilities expected to be transferred of the
Dresser Equipment Group as of September 30, 2000 and December 31, 1999 and the
related consolidating statements of revenues and expenses excluding certain
items for the nine month period ended September 30, 2000 and for the year ended
December 31, 1999 and 1998, pursuant to the Halliburton Company Information
Memorandum and the draft purchase and sale agreement, together with the notes
thereto, all as audited by Arthur Andersen LLP as set forth in their report
dated December 11, 2000 with respect thereto and for which the basis of
presentation is set forth in note (2) thereto.
"Intellectual Property" shall mean all domestic or foreign patents, patent
applications, inventions, disclosures, trademarks, service marks and
registrations therefor, trade names, copyrights, copyright registrations, trade
secrets, knowhow, processes, logos, proprietary computer software, proprietary
technology, slogans, research and development projects and all other proprietary
rights of any kind or character, wherever located, that are used or being
developed in connection with the Businesses and the confidential information
owned by or licensed to and used in connection with such knowhow or processes or
in the conduct of the Businesses ("Intellectual Property"), but which in no
event shall include the name "Halliburton" (or any version or variation thereof)
or any trademarks, trade names or symbols related thereto, together with such
additions, deletions and changes to the Intellectual Property as may be
permitted by this Agreement prior to the Closing Date.
"Intercompany Account" shall mean all the accounts maintained by the
Parent and its Subsidiaries in their Books and Records to reflect indebtedness
owed by the Parent and its
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-11
Subsidiaries to other Subsidiaries and by Subsidiaries of the Parent to other
Subsidiaries or to the Parent.
"Intercompany Indebtedness" shall mean indebtedness reflected in the
Intercompany Account, including any obligation to contribute to the consolidated
federal income tax liability, whether or not evidenced by a promissory note or
other security and whether payable on demand or having a scheduled maturity,
owing either (A) from any member of either Company Group to any member of the
Parent Group or (B) from any member of the Parent Group to any member of either
Company Group.
"Investment" shall have the meaning ascribed to such term in Section 2.01.
"Knowledge" shall mean, with respect to the Parent, the actual knowledge
of any of the individuals listed on Schedule A-2 to the Parent's Disclosure
Letter.
"Laws" shall mean all laws, statutes and ordinances of any nation or
state, including the United States of America, and any political subdivision
thereof, including any state of the United States of America, including all
decisions of Courts having the effect of law in any such jurisdiction.
"Legal Requirements" shall mean the obligations applicable to a specific
Person imposed by Laws, Regulations and Orders.
"Lenders" shall mean the lenders under the Bank Commitment Letter and the
Bridge Commitment Letter.
"Lien" shall mean any mortgage, pledge, security interest, adverse claim,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature thereof or the filing of or agreement to give any financing
statement under the Laws of any jurisdiction; provided, however, that the term
Lien shall not include a Permitted Encumbrance.
"Loan" shall have the meaning ascribed to such term in Section 2.01.
"Loan Documents" shall mean the documents relating to the Loan to be made
to DEGI pursuant to the Commitment Letters.
"Losses" shall have the meaning ascribed to such term in subsection (a) of
Section 12.02.
"Management Shares" shall mean the aggregate number of shares of DEGI
Common Stock purchased prior to the First Closing by those individuals who will
constitute members of management of the Acquiror and (after the Closings) its
Subsidiaries to the extent that such shares of DEGI Common Stock qualify as
retained equity for purposes of the Recapitalization of DEGI.
"Material" shall mean:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-12
(a) when used in any representation, warranty, covenant or condition of
the Acquiror, material to the business, assets, results of
operations, condition (financial and otherwise) or prospects of the
Acquiror and its Subsidiaries, taken as a whole; or
(b) when used in the context of any representation, warranty, covenant
or condition of the Parent or the Seller to be confirmed as required
by any Closing Condition, material to the business, assets, results
of operations, condition (financial and otherwise) or prospects of
the Businesses or, in the case of any matter susceptible of monetary
quantification, any condition, circumstance, event, change or effect
that could reasonably be expected to have an adverse effect measured
in monetary terms equal to U.S. $15,000,000 or more; provided,
however, that, when used with reference to the Parent, the term
shall apply to the Parent and its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean:
(a) when used in any representation, warranty, covenant or condition of
the Acquiror, any condition, circumstance, event, change or effect
that could reasonably be expected to have a material and adverse
effect on the business, assets, results of operations, condition
(financial and otherwise) or prospects of the Acquiror and its
Subsidiaries, taken as a whole; or
(b) when used (i) in the context of any representation, warranty,
covenant or condition of the Parent or the Seller to be confirmed as
required by any Closing Condition, any condition, circumstance,
event, change or effect that could reasonably be expected to have a
material and adverse effect on the business, assets, results of
operations, condition (financial and otherwise) or prospects of the
Businesses, or, in the case of any matter susceptible of monetary
quantification, any condition, circumstance, event, change or effect
that could reasonably be expected to have an adverse effect measured
in monetary terms of U.S. $15,000,000 or more; provided, however,
that, when used with reference to the Parent, the term shall apply
to any condition, circumstance, event, change or effect that could
reasonably be expected to have a material and adverse effect on the
business, assets, results of operations, condition (financial and
otherwise) or prospects of the Parent and its Subsidiaries, taken as
a whole.
"Merger" shall have the meaning ascribed to such term in subsection (c) of
Section 2.01.
"Merger Agreement" shall mean a Merger Agreement dated the Closing Date
among Dresser Industries, DEGI and Transitory Merger Sub in form and substance
substantially similar to the form thereof attached hereto as Appendix I and
pursuant to which the Transitory Merger Sub shall merge with and into DEGI.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-13
"Merger Consideration" shall have the meaning ascribed to such term in
subsection (c) of Section 2.01.
"Net Equity" shall mean the difference between the consolidated total
assets and the consolidated total liabilities of the Businesses as determined as
of the Initial Balance Sheet Date, the Estimated Balance Sheet Date or the
Closing Date and presented in the Initial Balance Sheet, the Estimated Balance
Sheet or the Closing Balance Sheet, respectively.
"Non-Controlled Entity" shall mean each of the following entities:
Dresser Al-Rushaid Valve and Instrument Company, Ltd.
Manufacturas Petrolanos Venezolanos, S.A.
Penaga Grove Sdn. Bhd.
DS Controls
Dresser Tankanlagen GmbH & Co. Service KG
GazDMD Avtomatika
"Offering Documents" shall have the meaning ascribed to such term in
subsection (a) of Section 8.09.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority of competent jurisdiction.
"Organizational Documents" shall mean, with respect to any entity, the
certificate of incorporation, by-laws, articles of organization, limited
liability company agreement, partnership agreement, formation agreement, joint
venture agreement or other similar organizational documents of such entity.
"Parent" shall have the meaning ascribed to such term in the introductory
paragraph to this Agreement.
"Parent Benefit Plans" shall mean, collectively, (i) the Benefit Plans
that are also sponsored, maintained or contributed to by one or more members of
the Parent Group for the benefit of any of their present or former directors,
officers, employees, agents, consultants or other similar representatives and
(ii) any other Material pension, profit sharing, retirement, life, health,
unemployment, accident, disability, stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock, other stock-based,
severance, employment, change-in-control, deferred compensation, bonus or
incentive compensation plan, agreement, program or policy, whether written or
oral, sponsored, maintained, or contributed to by the Parent or the Seller
pursuant to which the Parent or the Seller could have any Material liability
with respect to, any of the present or former directors, officers, employees,
agents, consultants or other similar representatives of the Company Groups but
solely with respect to any such individual's capacity as a present or former
director, officer, employee, agent, consultant or similar representative of a
Company Group.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-14
"Parent Group" shall mean the Parent and each of the Subsidiaries of the
Parent other than any member of either Company Group.
"Parent's Disclosure Letter" shall mean that letter, together with the
associated schedules, of even date herewith, from the Parent to the Acquiror
setting forth, as required hereby, the information called for herein and the
discrepancies from the representations, warranties and covenants of the Parent
contained herein.
"Permitted Encumbrances" shall mean the following:
(a) liens for taxes, assessments and other governmental charges not
delinquent or which are currently being contested in good faith by
appropriate proceedings; provided that, in the latter case, the
specified Person or one of its Subsidiaries shall have set aside on
its books adequate reserves with respect thereto in accordance with
U.S. GAAP;
(b) mechanics' and materialmen's liens not filed of record and similar
charges not delinquent or which are filed of record but are being
contested in good faith by appropriate proceedings; provided that,
in the latter case, the specified Person or one of its Subsidiaries
shall have set aside on its books adequate reserves with respect
thereto in accordance with U.S. GAAP;
(c) liens in respect of judgments or awards with respect to which the
specified Person or one of its Subsidiaries shall in good faith
currently be prosecuting an appeal or other proceeding for review
and with respect to which such Person or such Subsidiary shall have
secured a stay of execution pending such appeal or such proceeding
for review; provided that, such Person or such Subsidiary shall have
set aside on its books adequate reserves with respect thereto;
(d) easements, leases, reservations or other rights of others in, or
minor defects and irregularities in title to, property or assets of
a specified Person or any of its Subsidiaries; provided that, such
easements, leases, reservations, rights, defects or irregularities
do not materially impair the use of such property or assets for the
purposes for which they are held; and
(e) any lien or privilege vested in any lessor, licensor or permittor
for rent or other obligations of a specified Person or any of its
Subsidiaries thereunder so long as the payment of such rent or the
performance of such obligations is not delinquent.
"Person" shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but shall not include a Court or Governmental Authority.
"Post-Closing Payment Amount" shall have the meaning ascribed to such term
in subsection (f) of Section 2.09.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-15
"Preliminary Purchase Price" shall have the meaning ascribed to such term
in subsection (b) of Section 2.03.
"Principal Contract" shall mean any contract, written or oral, to which
any member of either Company Group is a party (in the latter case, that relates
to one or more of the Businesses) that is not terminable without substantial
penalty at the option of such member of a Company Group on sixty days' notice or
less and under which the monetary value to the Businesses of the executory
portion of the contract exceeds U.S. $1 million or the monetary cost to the
Businesses of the executory portion of the contract exceeds U.S. $1 million;
provided, however, that no purchase order relating to products or services of
the Businesses entered into in the ordinary course of business shall constitute
a Principal Contract.
"Proceedings" shall have the meaning ascribed to such term in subsection
(a) of Section 12.02.
"Product Liability Claim" shall mean any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand giving rise to any liability
or obligation (whether known or unknown, accrued, absolute, contingent or
otherwise, and whether due or to become due), whether based on strict liability
or negligence, in respect of any product, component or other item manufactured,
sold, designed or produced at any time by, or service rendered at any time by or
on behalf of, a specified Person in connection with any of the Businesses.
"Product Warranty Claim" shall mean any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand giving rise to any liability
or obligation (whether known or unknown, accrued, absolute, contingent or
otherwise, and whether due or to become due) under any guaranty, warranty,
indemnity or other contract, express or implied, with respect to any product,
component or other item manufactured, sold, designed or produced at any time by,
or service rendered at any time by or on behalf of, a specified Person in
connection with any of the Businesses.
"Purchase Price" shall have the meaning ascribed to such term in
subsection (a) of Section 2.03.
"Purchase Price Adjustment" shall have the meaning ascribed to such term
in subsection (e) of Section 2.09.
"Real Property" shall mean all real property used in the Businesses,
whether owned or leased by any member of the Company Groups.
"Recapitalization" shall mean a transaction in which the Acquiror acquires
the majority but not substantially all of DEGI (as distinct from the BV
Companies) under circumstances in which "push-down" accounting is not required
with respect to the books of DEGI by the application of the SEC's Staff
Accounting Bulletin No. 54.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-16
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any
self-regulatory organization, such as a national securities exchange in the
United States of America.
"Regulatory Transfer Restriction" shall mean any Legal Requirement that
imposes an obligation on the Parent or any of its Affiliates or on the Acquiror
or any of its Affiliates to obtain the consent or approval of any Court or
Governmental Authority in connection with the transfer of the Securities to the
Acquiror or any Buyer.
"Related Party Contract" shall mean a Principal Contract between a member
of a Company Group and a member of the Parent Group (but which does not include
any Surety Arrangement); provided, however, that any contract to which a Person
that is not an Affiliate of the Parent is a party shall not be a Related Party
Contract; and provided, further, that no purchase order or contract or agreement
for the purchase or sale of supplies or services in the ordinary course of
business shall be deemed to be a Related Party Contract.
"Release" shall have the meaning specified in the United States
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA"), as currently in effect; provided however, that, to the extent the
Environmental Laws of the state or locality in which the properties of any
member of either Company Group are located establish a meaning for "Release"
that is broader than that specified in CERCLA such broader meaning shall apply.
"Reorganization" shall mean the aggregate of the corporate and other
organizational transfers, combinations and separations to which reference is
made in Annex B and that are necessary to result in the overall corporate
structure necessary to permit the transactions contemplated by this Agreement.
"Representatives" shall mean, with respect to the Parent or the Acquiror,
its officers, directors, employees, accountants, consultants, legal counsel,
agents and other representatives.
"Retained Subsidiary" shall mean any Subsidiary of the Parent other than
any member of either Company Group.
"SEC" shall mean the Securities and Exchange Commission.
"Second Closing" shall have the meaning ascribed to such term in
subsection (c) of Section 2.04.
"Section 338 Election" shall have the meaning ascribed to such term in
subsection (a) of Section 10.06.
"Section 338(h)(10) Elections" shall have the meaning ascribed to such
term in subsection (c) of Section 10.06.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-17
"Securities" shall mean those shares of DEGI Common Stock owned by Dresser
Industries that are to be converted into cash pursuant to the Merger Agreement,
the shares of DEGI Common Stock to be issued to the Acquiror in the Merger and
the issued and outstanding Equity Securities of each BV Company that are to be
sold pursuant to this Agreement.
"Securities Act" shall have the meaning ascribed to such term in Section
7.05.
"Securities Exchange Act" shall have the meaning ascribed to such term in
Section 8.08.
"Seller" shall have the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"Significant" and any variation thereof shall mean, when used to modify an
obligation, an obligation or increase in an obligation having a monetary value
of (i) U.S. $50,000 or more in case of any such value for an individual or (ii)
U.S. $250,000 or more in case of any such value for a Person other than an
individual.
"Significant Benefit Plan" shall mean (a) a Benefit Plan with aggregate
benefit liabilities or assets as of the date of this Agreement of U.S. $500,000
or more, (b) a Benefit Plan that is reasonably expected to cost the Company
Groups in the aggregate U.S. $500,000 or more per annum to maintain or (c) any
Parent Benefit Plan of the type described in clause (ii) of the definition of
"Parent Benefit Plan" that is reasonably expected to cost the Company Groups in
the aggregate U.S. $500,000.
"Stockholders' Agreement" shall mean a Stockholders' Agreement to be
entered into as of the Closing Date between the Parent and the Acquiror, in form
and substance substantially similar to the form thereof attached hereto as
Appendix VIII .
"Subsidiary" shall mean, with respect to a specified Person, any
corporation, partnership, limited liability company, joint venture or other
legal entity of which the specified Person (either alone or through or together
with any other Subsidiary) owns, directly or indirectly, more than fifty percent
(50%) of the Equity Securities the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
"Surety Arrangements" shall mean a contract or agreement under which the
Parent or any Retained Subsidiary shall have agreed to act as guarantor or
surety with respect to any obligation of any member of a Company Group, whether
by guaranty, suretyship contract, letter of credit (including as the
reimbursement party in connection with any letter of credit), indemnity
agreement, performance bond or otherwise.
"Tax" or "Taxes" means any and all federal, state, local or foreign taxes,
levies, imposts or withholdings of any nature whatsoever imposed by or on behalf
of any Governmental Authority (including income (gross and net), franchise,
gross receipt, capital stock, production, business and occupation, disability,
employment, payroll, license, estimated, ad valorem, sales, rental, use,
turnover, value added, property (tangible and intangible), windfall profit,
goods and services, excise
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-18
and stamp taxes), together with any and all assessments, penalties, fines,
additions and interest relating thereto.
"Tax Consequence" shall have the meaning ascribed to such term in
subsection (b) of Section 10.06.
"Tax Items" shall have the meaning ascribed to such term in subsection (a)
of Section 5.08.
"Tax Returns" shall mean any report, return, declaration, claim for refund
or statement of other information with respect to Taxes, including any schedule,
attachment or amendment thereto.
"Terminating Acquiror Breach" shall have the meaning ascribed to such term
in subsection (b) of Section 13.01.
"Terminating Parent Breach" shall have the meaning ascribed to such term
in subsection (c) of Section 13.01.
"Termination Date" shall have the meaning ascribed to such term in
subsection (d) of Section 13.01.
"Third Person Consents" shall mean any approval, consent, amendment or
waiver of a Person, other than a wholly owned Subsidiary of the Parent, that is
required under any Organizational Document relating to the Parent, the Seller or
any member of either Company Group or the Acquiror or any Buyer or under any
contract to which any of the foregoing is a party or by which any of them or any
of their properties or assets is bound in order to effect the transactions
contemplated hereby or any part thereof, including waivers and consents by
lenders and waivers of Transfer Restrictions.
"Transfer Restrictions" shall mean Regulatory Transfer Restrictions and
Contractual Transfer Restrictions.
"Transfer Taxes" shall have the meaning ascribed to such term in Section
10.04.
"Transition Services Agreement" shall mean a Transition Services Agreement
entered into as of the Closing Date between the Parent and the Acquiror, in form
and substance substantially similar to the form attached hereto as Appendix VII
.
"Transitory Merger Sub" shall mean DEG Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of the Acquiror.
"United States Dollars" (including "Dollars," "U.S. Dollars" and "U.S. $")
shall mean the lawful currency of the United States of America.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-19
"U.S. GAAP" shall mean accounting principles generally accepted in the
United States of America, including generally accepted accounting principles as
interpreted by the SEC. For the avoidance of doubt, the term, "U.S. GAAP," when
used herein, shall mean the accounting principles generally accepted by the SEC
as reflected in Regulation S-X promulgated under the Securities Exchange Act as
in effect from time to time.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended.
"Year End Financial Statements" shall have the meaning ascribed to such
term in subsection (a) of Section 2.08.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX A-20
ANNEX B
REORGANIZATION
The Parent shall cause the following steps to be completed on or prior to the
Closing Date.
I. Europe
1. Dresser Europe G.m.b.H. distributes the DM 28.3 million note received on
December 29, 2000 for shares of Baroid G.m.b.H. and DB Stratabit G.m.b.H.
to Dresser Europe S.P.R.L.
2. Dresser Europe S.P.R.L. sells the assets of its non-DEG operations to
Dresser B.V. in exchange for a note.
3. [Intentionally Omitted]
4. Dresser Produits Industriels S.A.S. distributes the shares of Dresser
Congo S.A.R.L. and Kellogg France S.A. to Dresser B.V.
5. [Intentionally Omitted]
6. [Intentionally Omitted]
7. Dresser Equipment Group, Inc. forms Dresser International, Inc., a
Delaware corporation.
8. Masoneilan International, L.L.C. sells its shares of Dresser Valves Europe
G.m.b.H. to Dresser Europe G.m.b.H. for a note in the amount of $11.1
million.
8A. Masoneilan International, L.L.C. distributes the note received in step 8,
above, to Dresser Industries, Inc.
9. Dresser Industries, Inc. contributes the $11.1 million note received in
step 8A, above, to Dresser Equipment Group, Inc.
10. Dresser Netherlands B.V. sells the shares of Dresser Wayne AB to Dresser
B.V. for $10.
11. Dresser Equipment Group, Inc. purchases the Lira note receivable held by
Dresser Ireland Finance Company.
12. Dresser International, Inc. creates the following new entities:
a. Italy Newco S.R.L.
b. [Intentionally Omitted]
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX B
c. Belgium Newco S.P.R.L.
d. Netherlands Newco B.V.
e. Sweden Newco AB
f. Dresser Finance (Luxembourg) S.A.R.L.
g. DEG Italia S.p.A.
13. First Reserve Fund VIII, LP creates DI France S.A.S.
14. Masoneilan International L.L.C. sells its 74.79% of the shares of
Masoneilan S.A. to Dresser International, Inc.
II. Latin America
1. Dresser International, Inc. forms Ven Newco S.R.L., a Venezuelan sociedad
de responsibilidad limitada.
2. [Intentionally Omitted]
3. Halliburton de Mexico S.A. de C.V. sells the shares of Dresser Valve de
Mexico S.A. de C.V. and Dresser Instruments S.A. de C.V. to Dresser
International, Inc. for a note.
4. Dresser Industries, Inc. loans an amount equal to the note described in
step 3 above to Dresser Equipment Group, Inc.
5. Dresser Equipment Group, Inc. loans funds from step 4 above to Dresser
International, Inc.
6. Dresser International, Inc. pays the note to Halliburton de Mexico S.A. de
C.V. described in step 3 above.
7. [Intentionally omitted.]
8. Dresser Industries, Inc. sells its 99.99% of the shares of Dresser
Industria e Commercio Ltda. to Dresser International, Inc..
9. Dresser Industries, Inc. contributes its 44.75% of the shares of
Manufacturas Petroleros Venezolanos S.A. to Dresser Equipment Group, Inc.
10. Dresser Equipment Group, Inc. contributes the 44.75% of the shares of
Manufacturas Petroleros Venezolanos S.A. received in step 9 above to
Dresser International, Inc.
III. United Kingdom
1. Dresser International, Inc. forms a new U.K. limited company, DEG U.K.
Ltd.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX B-2
2. Dresser UK Limited sells the assets of its Valve, Wayne and IDR divisions
to DEG U.K. Ltd.
3. Grove T.K. Valve Ltd. sells the assets of its Valve division to DEG U.K.
Ltd.
4. [Intentionally omitted]
5. [Intentionally omitted]
IV. Canada
1. Dresser International, Inc. forms a new Canadian corporation, DEG (Canada)
Inc.
2. Halliburton Group Canada, Inc. sells its DEG tangible assets to DEG
(Canada) Inc.
3. Halliburton Group Canada, Inc. sells its DEG intangible assets to Dresser
International, Inc.
V. Miscellaneous Jurisdictions
1. Dresser International, Inc. creates Japan Newco Ltd.
2. Dresser Industries, Inc. sells the shares of Niigata Masoneilan Co. Ltd.
to Japan Newco Ltd.
2A. Niigata Masoneilan Valve Service Co. Ltd. and Niigata Masoneilan Co. Ltd.
merge into Japan Newco Ltd. Each of the Parent and the Acquiror shall use
its reasonable best efforts to effect as much of this step V.2A as
possible on or prior to March 31, 2001. Notwithstanding any provisions to
the contrary in this Agreement, this step V.2A shall not be a condition to
the First Closing.
3. Dresser Industries, Inc. contributes the shares of Dresser Russia, Inc. to
Dresser Equipment Group, Inc.
4. Dresser Equipment Group, Inc. contributes the shares of Dresser Russia,
Inc. received in step 3 above to Dresser International, Inc.
5. Dresser Industries, Inc. contributes the shares of Dresser Korea Inc. to
Dresser Equipment Group, Inc.
6. Dresser Equipment Group, Inc. contributes the shares of Dresser Korea Inc.
received in step 5 above to Dresser International, Inc.
7. Dresser Industries, Inc. contributes its 51% interest in Saber
Technologies, L.L.C. to Dresser Equipment Group, Inc.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX B-3
8. Dresser Industries, Inc. contributes its 71.4% of the shares of
Dresser-Nagano Inc. to Dresser Equipment Group, Inc.
9. Masoneilan International, L.L.C. distributes the shares of Dresser Latvia
Ltd. to Dresser Industries, Inc.
10. Dresser Industries, Inc. contributes the shares of Dresser Latvia Ltd.
received in step 9 above to Dresser Equipment Group, Inc.
11. Dresser Equipment Group, Inc. contributes the shares of Dresser Latvia
Ltd. to Dresser International, Inc.
11A. Dresser International, Inc. contributes the shares of Dresser Latvia Ltd.
received in step 11 above to Netherlands Newco B.V.
12. [Intentionally omitted]
13. Masoneilan International L.L.C. sells the shares of Dresser Singapore Pte.
Ltd. to Dresser International, Inc.
14. Masoneilan International, L.L.C. distributes the shares of Dresser Valve
India Pte. Ltd. to Dresser Industries, Inc.
15. Dresser Industries, Inc. contributes the shares of Dresser Valve India
Pte. Ltd. received in step 14 above to Dresser Equipment Group, Inc.
16. Dresser Equipment Group, Inc. contributes the shares of Dresser Valve
India Pte. Ltd. received in step 15 above to Dresser International, Inc.
16A. Dresser International, Inc. contributes the shares of Dresser Valve India
Pte. Ltd. received in step 16 above to Netherlands Newco B.V.
17. Masoneilan International, LLC distributes the assets of its Dubai Branch
(UAE) to Dresser Industries, Inc.
18. Dresser Industries, Inc. contributes the Dubai Branch (UAE) assets
received in step 17 above to Dresser Equipment Group, Inc.
19. Dresser Equipment Group, Inc. contributes the Dubai Branch (UAE) assets
received in step 18 above to Dresser International, Inc.
20. Dresser AG sells its 49% interest in Dresser Al-Rushaid Valve & Instrument
Company, Ltd. (Saudi Arabia) to Dresser International, Inc.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX B-4
21. Dresser Equipment Group, Inc. distributes the shares of Dresser Holding,
Inc., to Dresser Industries, Inc.
22. [Intentionally Omitted]
23. Dresser Industries, Inc. transfers the activities of its China Rep. Office
to Dresser International, Inc.
24. Dresser AG sells the DEG assets of its South African Branch to Dresser
International, Inc.
25. Dresser International, Inc. (90%) and Dresser, Inc. (10%) form Nigerian
Limited Company.
26. Dresser Industries, Inc. contributes its 31% of the stock of GAZDMD
Avtomatika, a Russian closed joint stock company, to Dresser Equipment
Group, Inc.
27. Dresser Equipment Group, Inc. transfers the 31% of the stock of GAZDMD
Avtomatika received in step 26 above to Dresser International, Inc.
28. DIL, Inc. merges into Dresser Equipment Group, Inc.
29. Dresser Equipment Group, Inc. forms Dresser RE, Inc., a Delaware
Corporation.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX B-5
ANNEX C
LIST OF THE SELLER, BUYERS AND BV COMPANIES,
AND BV ALLOCABLE PURCHASE PRICE
Allocation of BV
Allocable Purchase
Seller Buyer BV Company Price(1)
------ ----- ---------- ------------------
1. Dresser B.V. Italy Newco S.R.L. Dresser Italia S.R.L. (millions)
$113.9
2. Dresser B.V. France Newco S.A.S. Dresser Produits Industriels
S.A.S. 67.6
3. Dresser B.V. Japan Newco Dresser Japan Ltd.
1.6
4. Dresser B.V. Sweden Newco Dresser Wayne AB
29.2
5. Dresser B.V. Dresser International, Inc. Dresser Europe S.P.R.L.
23.3
6. Dresser B.V. (32.46%) Netherlands Newco B.V. Dresser Industrial Products B.V.
5.0
7. Dresser B.V. Dresser International, Inc. Dresser Netherlands B.V.
1.7
8. Dresser B.V. Dresser International, Inc. Dresser Polska Sp. Zo.o
5.0
9. Dresser B.V. Dresser International, Inc. Dresser Finland Oy
.2
10. Dresser B.V. (67.54%) Dresser International, Inc. Dresser Industrial Products B.V.
10.4
------
BV Allocable Purchase Price $257.9
======
(1) The allocation of the BV Allocable Purchase Price among the BV Companies, as
set forth above, has been agreed among the Parent, the Acquiror and the Seller
on the basis of available financial data. Upon further analysis, the Parent, the
Seller and the Acquiror may agree in writing to amend the allocation of the BV
Allocable Purchase Price as among the BV Companies set forth above.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX C
ANNEX D
ALLOCATION PROCEDURES FOR PURCHASE PRICE ADJUSTMENT
The Purchase Price Adjustment, if any, shall be allocated as follows:
To the extent that the Net Equity of any BV Company set forth on Annex C
hereto increases or decreases from the Initial Balance Sheet Date to the Closing
Date, the Purchase Price allocated to that BV Company shall be increased or
decreased accordingly. The balance of any Purchase Price Adjustment shall be
allocated to DEGI.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ANNEX D
Appendix I
FORM OF
AGREEMENT AND PLAN OF MERGER
By and Between
Dresser, Inc.
and
DEG Acquisition Corporation
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 10, 2001 (this
"Merger Agreement"), is by and between Dresser, Inc., a Delaware corporation and
a wholly owned subsidiary of Dresser Industries, Inc., a Delaware corporation
("Dresser Industries") and DEG Acquisition Corporation, a Delaware corporation
("Transitory Merger Sub") and a wholly owned subsidiary of DEG Acquisitions,
LLC, a Delaware limited liability company (the "Acquiror").
RECITALS:
Halliburton Company, a Delaware corporation ("Halliburton") and the owner
of all the outstanding capital stock of Dresser Industries, the Acquiror and the
Seller named therein have executed and delivered an Agreement and Plan of
Recapitalization ("the Recapitalization Agreement") dated January 30, 2001, as
amended and restated, relating to certain transactions pursuant to which, when
consummated, Dresser Industries will effectively have transferred to the
Acquiror 94.9% of its capital stock interest in Dresser, Inc. and, following the
Reorganization, the Subsidiaries of Dresser, Inc. and the Non-Controlled
Entities.
One of the transactions contemplated by the Recapitalization Agreement is
the Merger provided for herein.
The Boards of Directors of Halliburton, the Acquiror and the Seller have
approved the Recapitalization Agreement and desire to consummate the
transactions contemplated thereby.
The Boards of Directors of Dresser, Inc. and Transitory Merger Sub have
approved and adopted this Merger Agreement and Dresser Industries, as the owner
of all the issued and outstanding capital stock of Dresser, Inc., has approved
this Merger Agreement and the Merger.
Before entering into this Merger Agreement, the 1,000 shares of common
stock of Dresser, Inc. issued and outstanding were, pursuant to the
authorization of the Board of Directors of Dresser, Inc. and Dresser Industries,
as the sole stockholder of Dresser, Inc., divided, on the basis of 1,000 shares
of Class A common stock of Dresser, Inc. ("Dresser, Inc. Class A Common Stock")
for each outstanding share of common stock of Dresser, Inc., into 1,000,000
shares of Dresser, Inc. Class A Common Stock, all of which is owned of record
and beneficially by Dresser Industries immediately prior to the Merger
contemplated hereby.
Upon the terms of this Merger Agreement and in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"),
Transitory Merger Sub will merge with and into Dresser, Inc. (the "Merger") and
Dresser, Inc. will be the surviving corporation.
The executed Merger Agreement is on file at the office of Dresser, Inc. at
2601 Beltline Road, Carrollton, Texas 75006. A copy of the Merger Agreement will
be furnished by Dresser, Inc., on request and without cost, to any stockholder
of any constituent corporation.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-2
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Certain capitalized and other terms used in this
Merger Agreement are defined in Annex A to the Recapitalization Agreement and
are used herein with the meanings ascribed to them therein.
SECTION 1.02 Rules of Construction. Unless the context otherwise requires,
as used in this Merger Agreement: (a) a term has the meaning ascribed to it; (b)
an accounting term not otherwise defined has the meaning ascribed to it in
accordance with U.S. GAAP; (c) "or" is not exclusive; (d) "including" means
"including, without limitation;" (e) words in the singular include the plural;
(f) words in the plural include the singular; (g) words applicable to one gender
shall be construed to apply to each gender; (h) the terms "hereof," "herein,"
"hereby," "hereto" and derivative or similar words refer to this entire Merger
Agreement; and (i) the terms "Article" or "Section" shall refer to the specified
Article or Section of this Merger Agreement.
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger. Subject to the terms contained herein,
Transitory Merger Sub shall merge with and into Dresser, Inc. at the effective
time (the "Effective Time"). The terms and conditions of the Merger and the mode
of carrying the same into effect shall be as set forth in this Merger Agreement.
As a result of the Merger, the separate corporate existence of each of the
constituent corporations shall cease and Dresser, Inc. shall continue as the
surviving corporation.
SECTION 2.02 Effective Time. Promptly after execution and delivery of this
Merger Agreement (the timing of which is governed by the Recapitalization
Agreement), the parties hereto shall cause the Merger to be consummated by
filing a certified copy of this Merger Agreement with the Secretary of State of
the State of Delaware.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of the Transitory Merger Sub and Dresser, Inc.
shall vest in the surviving corporation, and all debts, liabilities and duties
of the Transitory Merger Sub and Dresser, Inc. shall become the debts,
liabilities and duties of the surviving corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. At the Effective Time,
the certificate of incorporation and the bylaws of Dresser, Inc., as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the surviving corporation.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-3
SECTION 2.05 Directors and Officers. The directors of the Transitory
Merger Sub immediately prior to the Effective Time shall be the directors of the
surviving corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the surviving corporation, and the officers of
Transitory Merger Sub immediately prior to the Effective Time shall be the
officers of the surviving corporation, in each case until their respective
successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of Dresser Industries, Dresser, Inc. or the holders of any of
the following securities:
(a) Subject to the other provisions of this Article III, each of an
aggregate of 200 shares of common stock of the Transitory Merger Sub
("Transitory Merger Sub Common Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into 48,500 shares of
Dresser, Inc. Class A Common Stock and 1,500 shares of Class B common
stock of Dresser, Inc. ("Dresser, Inc. Class B Common Stock").
Notwithstanding the foregoing, if between the date of this Merger
Agreement and the Effective Time the outstanding shares of the Transitory
Merger Sub Common Stock or Dresser, Inc. Class A Common Stock or Dresser,
Inc. Class B Common Stock shall have been changed into a different number
of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the exchange ratio specified in this subsection (a)
shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) An aggregate of 462,592 shares of Dresser, Inc. Class A Common
Stock issued and outstanding and held by Dresser Industries immediately
prior to the Effective Time shall be converted into the right to receive
U.S. $1,009,338,486 in cash, and each of the 537,408 then remaining shares
of Dresser, Inc. Class A Common Stock held by Dresser Industries shall
continue to be issued and outstanding and held by Dresser Industries.
SECTION 3.02 Exchange of Certificates.
(a) Certificates. Promptly following the Effective Time, Dresser
Industries shall deliver to Dresser, Inc. a certificate or certificates
evidencing the number of shares of Dresser, Inc. Class A Common Stock that
were converted into the right to receive cash as provided in subsection
(b) of Section 3.01 herein and Dresser, Inc. shall pay or cause to be paid
to Dresser Industries an amount in cash equal to the dollar amount set
forth in subsection (b) of Section 3.01. If, and to the extent, the
aggregate number of shares of Dresser, Inc. Class A Common Stock evidenced
by the certificates so delivered exceed the number of shares specified in
subsection (b) of Section 3.01, Dresser, Inc. shall cancel or
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-4
cause to be cancelled all such certificates and shall issue or cause to be
issued one or more additional certificates evidencing those shares of
Dresser, Inc. Class A Common Stock not so converted pursuant to subsection
(b) of Section 3.01.
(b) Promptly following the Effective Time, Acquiror shall deliver to
Dresser, Inc. a certificate or certificates formerly representing all of
the issued and outstanding shares of Transitory Merger Sub Common Stock
and Dresser, Inc. shall issue or cause to be issued one or more additional
certificates evidencing 9,700,000 shares of Dresser, Inc. Class A Common
Stock and 300,000 shares of Dresser, Inc. Class B Common Stock to Acquiror
in exchange therefor.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01 Termination. This Merger Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of Transitory Merger Sub and Dresser, Inc.;
(b) by either Transitory Merger Sub or Dresser, Inc., if the Merger
shall not have been consummated before June 30, 2001;
(c) upon a termination of the Recapitalization Agreement.
SECTION 4.02 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to Dresser Industries or Dresser, Inc., to:
Dresser Industries, Inc.
c/o Halliburton Company
4100 Clinton Drive
Houston, TX 77020
Attention: David Reamer, Senior Vice President
Telecopier No.: (713) 676-3112
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-5
with a copy to:
Vinson & Elkins L.L.P.
First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: William E. Joor III
Telecopier No.: (713) 615-5201
(b) If to Transitory Merger Sub, to:
c/o First Reserve Corporation
411 West Putnam Avenue
Greenwich, CT 06830
Attention: William Macaulay
Telecopier No.: (713) 224-0771
with a copy to:
Tom Denison
1801 California Street, #4110
Denver, CO 80202
Telecopier No.: (303) 382-1275
and
c/o Odyssey Investment Partners, LLC
280 Park Avenue
West Tower, 38th Floor
New York, NY 10017
Attention: Paul Barnett
Telecopier No.: (212) 351-7925
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attention: Robert F. Kennedy
Telecopier No.: (212) 751-4864
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-6
number of the addressee. Notice given by mail as set out above shall be deemed
delivered three days after the date the same is postmarked.
SECTION 4.03 Headings. The headings contained in this Merger Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Merger Agreement.
SECTION 4.04 Severability. If any term or other provision of this Merger
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Merger Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Merger Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 4.05 Entire Agreement. This Merger Agreement constitutes the
entire agreement of the parties, and supersedes all prior agreements and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
SECTION 4.06 Assignment. This Merger Agreement shall not be assigned by
operation of Law or otherwise.
SECTION 4.07 Governing Law. This Merger Agreement shall be governed by,
and construed in accordance with, the Laws of the State of Delaware, and any
matter involving the internal corporate affairs of any party hereto shall be
governed by the provisions of the DGCL.
SECTION 4.08 Counterparts. This Merger Agreement may be executed in
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-7
IN WITNESS WHEREOF, each of the parties hereto has caused this Merger
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DRESSER, INC.
By: _________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-8
DEG ACQUISITION CORPORATION
By: _________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX I-9
Appendix II-A
AGREEMENT AND RELEASE OF INTERCOMPANY INDEBTEDNESS
AT THE FIRST CLOSING
This Agreement and Release of Intercompany Indebtedness ("Agreement and
Release") dated as of April 10, 2001 is by and between Halliburton Company, a
Delaware corporation (the "Parent"), for itself and on behalf of each of the
other members of the Parent Group, as such term is defined in the Agreement, as
defined below, and Dresser, Inc., a Delaware corporation ("DEGI"), for itself
and on behalf of each of the other members of the DEGI Group, as such term is
defined in the Agreement.
RECITALS:
On April 10, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Amended and Restated Agreement
and Plan of Recapitalization dated as of that date (the "Agreement") relating to
the sale of certain of the Parent's businesses relating to, among other things,
the design, manufacturing and marketing of engineered measurement, flow control
and power systems for customers primarily in the energy industry.
Section 2.06(c) of the Agreement provides in part that
'Any Intercompany Indebtedness owed at the Closing Date by any
member of the Parent Group to any member of the DEGI Group or by any
member of the DEGI Group to any member of the Parent Group shall be
discharged, whether, at the election of the Parent (provided, that the
Parent shall cooperate with the Acquiror to structure such discharge in
the manner that is most tax-efficient to all the parties), by payment by
the obligor or by release and forgiveness by the obligee pursuant to a
written release...'
The Parent and the Acquiror have determined that they need additional time
to record the transactions whereby the discharge of the Intercompany
Indebtedness is effected, but they wish to release and forgive, effective as of
the date hereof any and all Intercompany Indebtedness between the Parent Group
and the DEGI Group.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged:
Section 1. Capitalized terms used but not defined herein are defined in
the Agreement and are used herein with the same meanings as ascribed to them
therein.
Section 2. The Parent and the Acquiror hereby agree to cooperate and to
cause their
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX II-A
controlled affiliates to cooperate with each other in recording the transactions
whereby the discharge of Intercompany Indebtedness between the Parent Group and
the DEGI Group is effected, including payments, capital contributions,
distributions, assumptions and other transactions with respect to Intercompany
Indebtedness in the most tax efficient manner.
Section 3. For purposes of this Agreement and Release, to the maximum
extent practicable (as determined by the Parent and the Acquiror and after
giving effect to such payments, capital contributions, distributions,
assumptions and other transactions with respect to Intercompany Indebtedness as
the Parent and the Acquiror determine to undertake pursuant to Section 2 of this
Agreement and Release), Parent Group Intercompany Indebtedness (as defined in
Section 5 below) and DEGI Group Intercompany Indebtedness (as defined in Section
4 below) shall be netted.
Section 4. The Parent, for itself and on behalf of each of the other
members of the Parent Group, does hereby release, effective as of the date
hereof, DEGI and each of the other members of the DEGI Group from any and all
liabilities, obligations, duties and debts arising with respect to any and all
Intercompany Indebtedness owed by DEGI or any other member of the DEGI Group to
any member of the Parent Group ("DEGI Group Intercompany Indebtedness") after
taking into account the effect of the netting of Intercompany Indebtedness
contemplated by Section 3 above and any actions taken pursuant to Section 2
above. The Parent, for itself and on behalf of each of the other members of the
Parent Group, acknowledges and agrees that, from and after the date hereof, none
of DEGI or any other member of the DEGI Group shall have any liability,
obligation, duty or debt whatsoever to any member of the Parent Group with
respect to DEGI Group Intercompany Indebtedness.
Section 5. DEGI, for itself and on behalf of each of the other members of
the DEGI Group, does hereby release, effective as of the date hereof, Parent and
each of the other members of the Parent Group from any and all liabilities,
obligations, duties and debts arising with respect to any and all Intercompany
Indebtedness owed by the Parent or any other member of the Parent Group to any
member of the DEGI Group ("Parent Group Intercompany Indebtedness") after taking
into account the effect of the netting of Intercompany Indebtedness contemplated
by Section 3 above and any actions taken pursuant to Section 2 above. DEGI, for
itself and on behalf of each of the other members of the DEGI Group,
acknowledges and agrees that, from and after the date hereof, none of the Parent
or any other member of the Parent Group shall have any liability, obligation,
duty or debt whatsoever to any member of the DEGI Group with respect to Parent
Group Intercompany Indebtedness.
This Agreement and Release may be executed in any number of counterparts,
each of which shall be deemed an original and all of which, taken together,
shall constitute but a single instrument.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX II-A-2
IN WITNESS WHEREOF, the Parent, acting through the officer thereof named
below, thereunto duly authorized, and DEGI, acting through the officer thereof
named below, thereunto duly authorized, have executed this Agreement and Release
as of the 10th day of April, 2001.
HALLIBURTON COMPANY,
for itself and on behalf of each of the other
members of the Parent Group
By: _________________________________________
Name:
Title:
DEG ACQUISITIONS, LLC
By: _________________________________________
Name:
Title:
DRESSER, INC.,
for itself and on behalf of each of the other
members of the DEGI Group
By: _________________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX II-A-3
Appendix II-B
AGREEMENT AND RELEASE OF INTERCOMPANY INDEBTEDNESS
AT THE SECOND CLOSING
This Agreement and Release of Intercompany Indebtedness ("Agreement and
Release") dated as of April 10, 2001 is by and between Halliburton Company, a
Delaware corporation (the "Parent"), for itself and on behalf of each of the
other members of the Parent Group, as such term is defined in the Agreement, as
defined below, and Dresser, Inc., a Delaware corporation ("DEGI"), on behalf of
each of the members of the BV Group, as such term is defined in the Agreement.
RECITALS:
On April 10, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Amended and Restated Agreement
and Plan of Recapitalization dated as of that date (the "Agreement") relating to
the sale of certain of the Parent's businesses relating to, among other things,
the design, manufacturing and marketing of engineered measurement, flow control
and power systems for customers primarily in the energy industry.
Section 2.07(c) of the Agreement provides in part that
'Any Intercompany Indebtedness owed at the Closing Date by any
member of the Parent Group to any member of the BV Group or by any member
of the BV Group to any member of the Parent Group shall be discharged,
whether, at the election of the Parent (provided, that the Parent shall
cooperate with the Acquiror to structure such discharge in the manner that
is most tax-efficient to all the parties), by payment by the obligor or by
release and forgiveness by the obligee pursuant to a written release...'
The Parent and the Acquiror have determined that they need additional time
to record the transactions whereby the discharge of the Intercompany
Indebtedness is effected, but they wish to release and forgive, effective as of
the date hereof any and all Intercompany Indebtedness between the Parent Group
and the BV Group.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged:
Section 1. Capitalized terms used but not defined herein are defined in
the Agreement and are used herein with the same meanings as ascribed to them
therein.
Section 2. The Parent and the Acquiror hereby agree to cooperate and to
cause their
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX II-B
controlled affiliates to cooperate with each other in recording the transactions
whereby the discharge of Intercompany Indebtedness between the Parent Group and
the BV Group is effected, including payments, capital contributions,
distributions, assumptions and other transactions with respect to Intercompany
Indebtedness in the most tax efficient manner.
Section 3. For purposes of this Agreement and Release, to the maximum
extent practicable (as determined by the Parent and the Acquiror and after
giving effect to such payments, capital contributions, distributions,
assumptions and other transactions with respect to Intercompany Indebtedness as
the Parent and the Acquiror determine to undertake pursuant to Section 2 of this
Agreement and Release), Parent Group Intercompany Indebtedness (as defined in
Section 5 below) and BV Group Intercompany Indebtedness (as defined in Section 4
below) shall be netted.
Section 4. The Parent, for itself and on behalf of each of the other
members of the Parent Group, does hereby release, effective as of the date
hereof, each member of the BV Group from any and all liabilities, obligations,
duties and debts arising with respect to any and all Intercompany Indebtedness
owed by any member of the BV Group to any member of the Parent Group ("BV Group
Intercompany Indebtedness") after taking into account the effect of the netting
of Intercompany Indebtedness contemplated by Section 3 above and any actions
taken pursuant to Section 2 above. The Parent, for itself and on behalf of each
of the other members of the Parent Group, acknowledges and agrees that, from and
after the date hereof, no member of the BV Group shall have any liability,
obligation, duty or debt whatsoever to any member of the Parent Group with
respect to BV Group Intercompany Indebtedness.
Section 5. DEGI, on behalf of each member of the BV Group, does hereby
release, effective as of the date hereof, Parent and each of the other members
of the Parent Group from any and all liabilities, obligations, duties and debts
arising with respect to any and all Intercompany Indebtedness owed by the Parent
or any other member of the Parent Group to any member of the BV Group ("Parent
Group Intercompany Indebtedness") after taking into account the effect of the
netting of Intercompany Indebtedness contemplated by Section 3 above and any
actions taken pursuant to Section 2 above. DEGI, on behalf of each of the
members of the BV Group, acknowledges and agrees that, from and after the date
hereof, none of the Parent or any other member of the Parent Group shall have
any liability, obligation, duty or debt whatsoever to any member of the BV Group
with respect to Parent Group Intercompany Indebtedness.
This Agreement and Release may be executed in any number of counterparts,
each of which shall be deemed an original and all of which, taken together,
shall constitute but a single instrument.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX II-B-2
IN WITNESS WHEREOF, the Parent, acting through the officer thereof named
below, thereunto duly authorized, the Acquiror, acting through the officer
thereof named below, thereunto duly authorized, and DEGI, acting through the
officer thereof named below, thereunto duly authorized, have executed this
Agreement and Release as of the 10th day of April, 2001.
HALLIBURTON COMPANY,
for itself and on behalf of each of the other
members of the Parent Group
By:__________________________________________
Name:
Title:
DEG ACQUISITIONS, LLC
By:__________________________________________
Name:
Title:
DRESSER, INC.
on behalf of each of the members of the BV
Group
By:__________________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX II-B-3
Appendix III-A
RELEASE OF CLAIMS
BY PARENT AT THE FIRST CLOSING
This Release of Claims ("Release") dated as of April 10, 2001 is granted
by Halliburton Company, a Delaware corporation (the "Parent"), for itself and on
behalf of each other member of the Parent Group, as such term is defined in the
Agreement, as defined below, and is accepted by Dresser, Inc., a Delaware
corporation ("DEGI") for itself and on behalf of each other member of the DEGI
Group, as such term is defined in the Agreement.
RECITALS:
On April 10, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Amended and Restated Agreement
and Plan of Recapitalization dated as of that date (the "Agreement") relating to
the sale of certain of the Parent's businesses relating to, among other things,
the design, manufacturing and marketing of engineered measurement, flow control
and power systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, the Parent
Group shall release all claims that it may have against any member of the DEGI
Group with respect to the Businesses prior to the Closing Date.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent, for itself and for its affiliates, successors, assigns
and the stockholders of each of them, hereby fully releases, discharges,
disclaims, waives and renounces any and all claims, controversies, demands,
rights, disputes and causes of action of whatever kind or nature, whether known
or unknown, contingent or absolute, at common law, statutory or otherwise that
the Parent or any other member of the Parent Group has had, may now have or may
ever have against DEGI or any other member of the DEGI Group or against any
officer, director, employee, consultant or attorney, past or present, of the
companies so released, arising out of or in any way resulting from or related to
any act or omission by any of such Persons in the operation and conduct of the
Businesses at any time prior to the date hereof; provided, however, that there
shall be excluded from the scope and reach of this Release any claims,
controversies, demands, rights, disputes or causes of action that (i) relate to
any Related Party Contract that is continued in effect after the date hereof in
accordance with the terms of the Agreement or (ii) are based upon or arise out
of any provision of the Agreement. The Parent agrees and covenants never to sue
or otherwise look to DEGI or any other member of the DEGI Group or any officer,
director, employee, consultant or attorney, past or present, of the companies so
released,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX III-A
for payment or satisfaction of such released claims, controversies, demands,
rights, disputes or causes of action. The Parent hereby covenants and agrees
that it has not heretofore assigned any claims or causes of action released
hereby.
IN WITNESS WHEREOF, the Parent, acting herein through the officer thereof
named below, thereunto duly authorized, have executed this Release as of April
10, 2001.
HALLIBURTON COMPANY,
for itself and on behalf of each other
member of the Parent Group
By:___________________________________
Name:
Title:
Accepted as of the day written above,
for itself and on behalf of each other
member of the DEGI Group
DRESSER, INC.
By:___________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX III-A-2
Appendix III-B
RELEASE OF CLAIMS
BY PARENT AT THE SECOND CLOSING
This Release of Claims ("Release") dated as of April 10, 2001 is granted
by Halliburton Company, a Delaware corporation (the "Parent"), and the Seller,
for themselves and on behalf of each other member of the Parent Group, as such
term is defined in the Agreement, as defined below, for the benefit of each of
the BV Companies, as such term is defined in the Agreement, and each other
member of the BV Group, as such term is defined in the Agreement.
RECITALS:
On April 10, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Amended and Restated Agreement
and Plan of Recapitalization dated as of that date (the "Agreement") relating to
the sale of certain of the Parent's businesses relating to, among other things,
the design, manufacturing and marketing of engineered measurement, flow control
and power systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, the Parent
Group shall release all claims that it may have against any member of the BV
Group with respect to the Businesses prior to the Closing Date.
Pursuant to the Agreement, the Securities of the BV Companies are being
sold and purchased at the Second Closing.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent and the Seller, for themselves, for each other member
of the Parent Group, and for the affiliates, successors, assigns and the
stockholders of each of them, hereby fully release, discharge, disclaim, waive
and renounce any and all claims,controversies, demands, rights, disputes and
causes of action of whatever kind or nature, whether known or unknown,
contingent or absolute, at common law, statutory or otherwise that the Parent,
the Seller or any other member of the Parent Group has had, may now have or may
ever have against the BV Companies or any other member of the BV Group or
against any officer, director, employee, consultant or attorney, past or
present, of the companies so released, arising out of or in any way resulting
from or related to any act or omission by any of such Persons in the operation
and conduct of the Businesses at any time prior to the date hereof; provided,
however, that there shall be excluded from the scope and reach of this Release
any claims,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX III-B
controversies, demands, rights, disputes or causes of action that (i) relate to
any Related Party Contract that is continued in effect after the date hereof in
accordance with the terms of the Agreement or (ii) are based upon or arise out
of any provision of the Agreement. The Parent and the Seller agree and covenant
never to sue or otherwise look to the BV Companies or any other member of the BV
Group or any officer, director, employee, consultant or attorney, past or
present, of the companies so released, for payment or satisfaction of such
released claims, controversies, demands, rights, disputes or causes of action.
The Parent and the Seller hereby covenant and agree that they have not
heretofore assigned any claims or causes of action released hereby.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX III-B-2
IN WITNESS WHEREOF, the Parent and the Seller, acting herein through the
officers thereof named below, thereunto duly authorized, have executed this
Release as of April 10, 2001.
HALLIBURTON COMPANY
By:__________________________________
Name:
Title:
DRESSER B.V.
By:__________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX III-B-3
Appendix IV
HALLIBURTON COMPANY
TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT
THIS TRADEMARK ASSIGNMENT AND LICENSE Agreement (this "Agreement"),
effective as of April 10, 2001 (the "Effective Date"), is entered into by and
between Halliburton Company, having a principal place of business at 3600
Lincoln Plaza, 500 N. Akard St., Dallas, Texas 75201-3391, hereinafter referred
to as "ASSIGNOR," and Dresser, Inc. having a principal place of business at 2601
Beltline Road, Carollton, Texas, 75006, hereinafter referred to as "ASSIGNEE."
WHEREAS, ASSIGNOR and its Affiliates have adopted and are using the mark
"DRESSER" and "DRESSER and Design" as trademarks and service marks for a broad
range of goods and services in the United States and elsewhere throughout the
world, and has on file with the trademark offices of various countries pending
trademark and service mark applications and registrations covering the
above-mentioned Marks, a listing of which is attached hereto as Appendix A
(hereinafter collectively referred to as the "Marks");
WHEREAS, ASSIGNEE is acquiring substantially all of the capital stock of
the Dresser, Inc., pursuant to a certain Amended and Restated Agreement and Plan
of Recapitalization among ASSIGNOR, DEG Acquisitions, LLC and the Seller named
therein dated as of April 10, 2001 (the "Recapitalization Agreement"), and as a
condition to the completion of the transactions contemplated by the
Reorganization Agreement ASSIGNOR and ASSIGNEE are entering into this Agreement
pursuant to which ASSIGNEE will acquire any and all right, title and interest in
and to the Marks together with the goodwill of the business symbolized thereby,
subject to the Existing Licenses (as defined below), the General License (as
defined below) and the Exclusive License (as defined below); and
WHEREAS, ASSIGNOR and ASSIGNEE agree that ASSIGNEE shall not use the name
DRESSER INDUSTRIES, that ASSIGNEE shall be limited in its use of the Marks in
the Upstream Oilfield Business (as defined below) for the period of time set
forth herein, and that covenants of ASSIGNEE set forth below are necessary and
reasonable to ensure that the parties' intentions in these regards are fulfilled
during the term hereof;
NOW, THEREFORE, in consideration of the mutual covenants of the parties,
the execution of the Recapitalization Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
both parties, the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the following terms
shall have the meaning ascribed to them in this Article 1, whether plural
or singular.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV
"Affiliate" of a specified entity shall mean an entity that directly, or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, the entity specified. For the purpose
of this definition, "control" means (a) the legal or beneficial ownership
of: (i) 50% or more of the outstanding voting stock of a company; or (ii)
50% or more of the equity of a company, partnership or joint venture; or
(b) the power to direct (whether directly or through one or more
intermediaries) the management or policies of an entity.
"Assignment" shall have the meaning ascribed to such term in Section 2.1.
"Existing Licenses" shall have the meaning ascribed to such term in
Section 8.1.
"Exclusive License" shall have the meaning ascribed to such term in
Section 2.3.
"General License" shall have the meaning ascribed to such term in Section
2.2.
"Investor Group" shall mean any one or more of First Reserve Corporation,
Odyssey Investment Partners, LLC and each of their affiliated investment
partnerships and portfolio investments.
"Subsidiary" shall mean any entity in which Dresser, Inc. holds any direct
or indirect interest.
"Upstream Oilfield Business" shall mean the upstream oilfield business of
the ASSIGNOR as described in Appendix B hereto.
ARTICLE 2 - ASSIGNMENT AND LICENSES
2.1 Assignment. ASSIGNOR hereby assigns to ASSIGNEE all right, title and
interest in and to the Marks, together with the goodwill of the business
symbolized thereby, and all rights to damages and profits, due or accrued,
arising out of past infringements of the Marks, and the right to sue for
and recover the same (the "Assignment"); provided, however, that ASSIGNEE
agrees and acknowledges that the Assignment is subject to and encumbered
by all outstanding license agreements between ASSIGNOR, its Affiliates and
third parties in effect as of the Effective Date, as more fully set forth
in Section 8.1. Subject to the foregoing, ASSIGNOR will execute such
further assurances as may reasonably be required in order to permit
ASSIGNEE to hold and enjoy the Marks. It is the intention of Assignor to
assign hereby to Assignee all of the trademarks and service marks using
the mark "DRESSER" and "DRESSER and Design" in connection with the sale,
promotion, design, manufacture or development of products or services in
the United States and elsewhere throughout the world, that are on file
with the trademark offices of various countries on behalf of ASSIGNOR and
its Affiliates. ASSIGNOR covenants and
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-2
agrees to execute subsequent assignments or amendments to this Assignment
conveying any additional Marks which Assignor may own relating to the
Dresser name or design which ASSIGNOR may discover from time to time
including, but not limited to, the Trademark License Agreement attached
hereto as Appendix C.
2.2 General License to Marks. ASSIGNEE grants to ASSIGNOR and its
Affiliates as of the date hereof a nonexclusive, irrevocable, worldwide,
royalty-free and nontransferable license to use the Marks for a transition
period of up to three years to ASSIGNOR to effect promptly, using
commercially reasonable efforts, the liquidation and/or change the names
of those specific entities which are using the Marks as of the Effective
Date other than Dresser, Inc. and its Subsidiaries. This limited license
is not transferable, perpetual, exclusive, irrevocable, worldwide, and
royalty free. All of the license rights conveyed in this Section 2.2 shall
comprise the "General License."
2.3 Exclusive License to "Dresser Industries" Name. Independent from the
General License granted in Section 2.2, ASSIGNEE grants to ASSIGNOR and
its Affiliates as of the date hereof a perpetual, exclusive, irrevocable,
worldwide, royalty-free and nontransferable license to use the name
"DRESSER INDUSTRIES"; provided, however, that neither ASSIGNOR nor any of
its Affiliates shall use or sublicense the "DRESSER INDUSTRIES" name,
directly or indirectly, in connection with the raising of capital, the
sale, promotion, design, manufacture or development of goods or services
or other activity which would create confusion in the capital markets or
with customers of ASSIGNEE and its Affiliates regarding ASSIGNEE's
ownership of the Marks. In addition, ASSIGNEE grants to ASSIGNOR the
limited license to use the "Dresser Industries, Inc." name for use as a
holding company name and not for use (i) in the sale, promotion, design,
manufacture, development or delivery of any product or service or (ii) in
commerce, fundraising or financing activities. All of the license rights
conveyed in this Section 2.3 shall comprise the "Exclusive License."
ARTICLE 3 - COVENANTS OF ASSIGNEE
3.1 Covenant Not to Use Marks in Upstream Oilfield Business. For a period
of seven years following the Effective Date, ASSIGNEE covenants and agrees
that it and its Affiliates will not use or license the Marks directly in
connection with the sale, promotion, design, manufacture or development of
goods or services in the Upstream Oilfield Business. The foregoing
prohibition against use and licensing the Marks includes, without
limitation, any contract or agreement by the Assignee or any Affiliates
thereof under which the Assignee or such Affiliate purports to transfer to
a third person, or permit a third person to use, any of the Marks;
provided, however, that after the third anniversary of the Effective Date,
ASSIGNEE may identify its Upstream Oilfield Businesses, if any, as being a
"Dresser Company" (assuming that Dresser, Inc. is the ASSIGNEE or parent
entity of the ASSIGNEE).
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-3
3.2 Covenant Not to Use the Marks. For a period of three years following
the Effective Date, no ASSIGNEE or ASSIGNEE Affiliate (for purposes of
clarity, this shall not include affiliates of the Investor Group, other
than Dresser, Inc. and its Subsidiaries) shall, during a period of time
where a direct or indirect parent entity of such Affiliate uses the Marks,
directly or indirectly (whether as owner, partner, contractor or
otherwise), engage in any activity that is competitive with ASSIGNOR or
its Affiliates in the Upstream Oilfield Business anywhere in the world,
whether alone or on behalf of or in conjunction with any other person,
persons, company, partnership or corporation. The parties hereto agree and
acknowledge that this covenant is ancillary to the Recapitalization
Agreement, and is reasonably calculated to enforce covenants in the
Recapitalization Agreement and this Agreement.
3.3 Exceptions. Notwithstanding the foregoing provisions of this Article
3, nothing in this Agreement shall prohibit:
(a) the ownership by the ASSIGNEE or any of its Affiliates (whether now
existing or hereafter acquired or created) of less than 5% of the
outstanding stock of any publicly-traded corporation engaged in an
Upstream Oilfield Business;
(b) the acquisition of the ASSIGNEE or any of its Affiliates by a third
party whose operations involve an Upstream Oilfield Business;
(c) the acquisition by the ASSIGNEE or any of its Affiliates of a third
party which engages in an Upstream Oilfield Business, provided that
the primary purpose of any such acquisition referred to in this
clause (c) is not the acquisition of such Upstream Oilfield
Businesses, and provided further that such Upstream Oilfield
Business referred to in this clause (c) either (i), together with
the revenues for any prior acquisition exempted from the provisions
of this Article 3 by this clause (c)(i), accounts for less than U.S.
$50,000,000 in revenues for the last fiscal year of such third party
for which financial statements are available or (ii) is divested by
the ASSIGNEE or its Affiliate within 270 days from the date it is
acquired;
(d) any action of the Investor Group and investments of and other
entities controlled by the Investor Group, individually or in the
aggregate, other than with respect to Dresser, Inc. and its
Subsidiaries;
(e) any commercial relationship (as distinguished from an equity
relationship) where ASSIGNEE sells services or products which are
currently provided by ASSIGNOR or are logical extensions of such
businesses as provided in the last proviso of Appendix B; or
(f) any joint venture relationship in which (1) the joint venture does
not use any Dresser name, (2) the ASSIGNEE has a minority equity
interest, (3) the services or products provided by the ASSIGNEE to
such joint venture are currently provided, serviced, sold or
manufactured by ASSIGNEE or are logical extensions of such
businesses as provided in the last proviso of Appendix B and (4)
ASSIGNOR has a minority and non-controlling role in the management
of such joint venture.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-4
ARTICLE 4 - INJUNCTIVE RELIEF AND LIQUIDATED DAMAGES
FOR BREACH OF COVENANTS BY ASSIGNEE
4.1 Injunctive Relief for Breach of Covenants and Terms of Licenses.
ASSIGNOR and ASSIGNEE agree and acknowledge that due to the important
nature of the covenants set forth in Article 3 and the licenses granted
pursuant to Article 2 any violation (in the case of Article 2, an
"ASSIGNOR Breach" and, in the case of Article 3, an "ASSIGNEE Breach")
thereof will result in immediate and irreparable harm to the non-breaching
party. ASSIGNOR and ASSIGNEE recognize that the remedies of the
non-breaching party at law may be inadequate, and that the non-breaching
party shall have the right to injunctive relief in addition to any other
remedy available to it. In the case of an Assignor Breach or an Assignee
Breach, the non-breaching party shall have the right to a court-ordered
injunction, as well as any and all other remedies and damages, to compel
the enforcement of the terms stated herein. If court action is taken to
enforce this Agreement, the party prevailing in such action shall be
entitled to reimbursement from the other party for its reasonable
attorneys' fees and court costs.
ARTICLE 5 - QUALITY OF GOODS AND SERVICES
5.1 Quality Control. ASSIGNOR shall use the Marks only as described in
this Agreement, and only in accordance with the guidance and directions
furnished to ASSIGNOR by ASSIGNEE, or its representatives or agents, but
the quality of the goods and services under the General License and the
quality of the documentation shall always be reasonably satisfactory to
ASSIGNEE or as reasonably specified by it. ASSIGNEE agrees and
acknowledges that the manner in which ASSIGNOR is currently using the
Marks fully meets the quality standards of ASSIGNEE.
ARTICLE 6 - INSPECTION
6.1 Inspection. ASSIGNOR shall permit an independent accounting firm
selected by ASSIGNEE to inspect, at the expense of ASSIGNEE, the
ASSIGNOR's use of the Marks during normal business hours and with at least
10 business days notice, for the purpose of ascertaining or determining
compliance with Article 2 hereof. Such inspection shall occur no more than
once annually. It shall be a condition to the exercise by ASSIGNEE of
rights under this Article 6 that the accounting firm selected shall enter
into an agreement with ASSIGNOR reasonably satisfactory to ASSIGNEE
obligating the accounting firm to confidentiality prior to conducting such
inspection. ASSIGNOR shall use its best efforts to cause its Affiliates to
permit inspection by ASSIGNEE of such Affiliates' use of the Marks on the
same terms as apply to inspection of ASSIGNOR.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-5
ARTICLE 7 - USE OF MARKS
7.1 Compliance with Laws. When using the Marks under this Agreement, each
party undertakes to comply substantially with all laws pertaining to
service marks and trademarks in force at any time in the United States and
all foreign jurisdictions in which the Marks are used.
7.2 No Sublicensing. The ASSIGNOR and its Affiliates may not sublicense
the Marks to any party.
ARTICLE 8 - THIRD PARTY LICENSEES
8.1 Assignment Subject to Third Party Licenses. The Assignment, the
General License and the Exclusive License are subject to the rights to the
Marks granted to Dresser-Rand Company and Ingersoll-Dresser Pump Company
arising in connection with the divestiture of the Dresser Rand and
Ingersoll Dresser Pump joint ventures in February 2000 and granted to
Bredero-Shaw.
ARTICLE 9 -DISCLAIMER OF WARRANTIES AND MUTUAL INDEMNITIES
9.1 DISCLAIMER OF WARRANTIES. EXCEPT AS SET FORTH IN THE RECAPITALIZATION
AGREEMENT AND IN SECTION 2.1 HEREOF, ASSIGNOR MAKES NO REPRESENTATION OR
WARRANTY AS TO OWNERSHIP OR TITLE TO THE MARKS, OR AS TO FREEDOM OF THE
MARKS FROM PRE-EXISTING LICENSES, LIENS OR ENCUMBRANCES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE
MARKS. Neither party assumes any liability to THE OTHER OR third parties
in connection with the performance characteristics of the services or
goods rendered by the other party.
ARTICLE 10 - TERMINATION
10.1 Term. Except as otherwise provided herein, this Agreement shall
remain in full force and effect in perpetuity.
10.2 Termination. If ASSIGNOR makes an assignment of assets or business
for the benefit of creditors, or a trustee or receiver is appointed to
conduct its business or affairs or it is adjudged in any legal proceeding
to be either a voluntary or involuntary bankrupt, the General License
shall forthwith cease and terminate without any prior
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-6
written notice or legal action by ASSIGNEE.
10.3 Effect of Termination. Notwithstanding anything to the contrary, the
Assignment is irrevocable and shall survive any termination of this
Agreement. Furthermore, notwithstanding anything to the contrary, the
Exclusive License set forth in Section 2.3 is perpetual and irrevocable,
and shall not be terminated for any reason.
ARTICLE 11 - OWNERSHIP OF MARKS
11.1 ASSIGNEE's Ownership of the Marks. Subject to the Existing Licenses,
ASSIGNOR and all parties to this agreement acknowledge ASSIGNEE's
exclusive right, title in and to the Marks and any registrations that have
issued or may issue thereon, and will not at any time do or cause to be
done any act or thing contesting or in any way impairing or tending to
impair part of such right, title and interest. In connection with its use
of the Marks, ASSIGNOR shall not in any manner represent that it has any
ownership in the Marks or registrations thereof, and both parties
acknowledge that use of the Marks shall inure to the benefit of ASSIGNEE.
Subject to the Exclusive License, which shall survive, upon termination of
the General License in any manner provided herein, ASSIGNOR will cease and
desist from all use of the Marks in any way and will deliver up to
ASSIGNEE or its duly authorized representatives all material and papers
upon which the Marks appear; and; furthermore, ASSIGNOR will not at any
time adopt or use without ASSIGNEE's prior written consent any word or
mark that is likely to be similar to or confused with the Marks.
11.2 Reasonable Assistance. ASSIGNOR shall take all reasonable steps to
advise ASSIGNEE promptly of any infringement or apparent infringement as
soon as it becomes known to ASSIGNOR and to provide information and other
reasonable assistance in defense of such infringement, provide that
ASSIGNEE shall reimburse ASSIGNOR for all out-of-pocket costs and expenses
incurred in connection with such assistance. ASSIGNEE shall have sole
authority to initiate and pursue legal proceedings, as it deems
appropriate, for infringement of the Marks, and ASSIGNOR shall cooperate
fully, at ASSIGNEE'S expense, with ASSIGNEE in respect of any such
proceedings.
ARTICLE 12 - MISCELLANEOUS
12.1 Entire Agreement; Amendments. This Agreement and the Recapitalization
Agreement (including the appendices attached hereto and thereto)
constitutes the entire agreement between the parties concerning the
subject matter hereof, and supersedes prior or contemporaneous
representations, inducements, promises, or agreements, oral or otherwise,
between the parties. No modification or amendment to this Agreement will
be valid or binding unless reduced to writing and duly executed and
delivered by
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-7
the party to be bound thereby. No terms in any written order or
acknowledgment that add to or change the terms of this Agreement shall be
of any force or effect, whether or not the party receiving the same signs
the order or acknowledgment or otherwise indicates its acceptance, unless
such party expressly refers to the specific addition or change in question
as a modification of this Agreement.
12.2 Notices. Any notices required or permitted to be given under this
Agreement shall be deemed sufficiently given if mailed by registered mail,
postage prepaid, addressed to the party to be notified at its address
shown below, or at such other address as may be furnished in writing to
the notifying party.
12.3 Governing Law. This Agreement shall be construed (both as to validity
and performance) and enforced in accordance with, and governed by, the
laws of the State of New York applicable to agreements made and to be
performed wholly within such jurisdiction. Any judicial proceeding brought
against either of the parties hereto with respect to this Agreement shall
be brought in the United States Federal Court for the Southern District of
New York irrespective of where such party may be located at the time of
such proceeding, and by execution and delivery of this Agreement, each of
the parties hereto hereby consents to the exclusive jurisdiction of such
court and waives any defense or opposition to such jurisdiction.
12.4 Intentional Risk Allocation. ASSIGNOR AND ASSIGNEE EACH ACKNOWLEDGES
THAT THE PROVISIONS OF THIS Agreement WERE NEGOTIATED TO REFLECT AN
INFORMED, VOLUNTARY ALLOCATION BETWEEN THEM OF ALL RISKS (BOTH KNOWN AND
UNKNOWN) ASSOCIATED WITH THE SUBJECT MATTER OF THIS AGREEMENT.
12.5 Effect of Partial Invalidity. If any one or more of the provisions of
this Agreement should be ruled wholly or partly invalid or unenforceable
by competent authority, then: (a) the validity and enforceability of all
provisions of this Agreement not ruled to be invalid or unenforceable will
be unaffected; (b) the effect of the ruling will be limited to competent
authority making the ruling; and (c) the provision(s) held wholly or
partly invalid or unenforceable will be deemed amended, and such competent
authority is authorized to reform the provision(s), to the minimum extent
necessary to render them valid and enforceable in conformity with the
parties' intent as manifested herein.
12.6 No Waiver. The failure of either party at any time to require
performance by the other party of any provision of this Agreement shall in
no way affect the right of such party to require performance of that
provision. Any waiver by either party of any breach of any provision of
this Agreement shall not be construed as a waiver of any continuing or
succeeding breach of such provision, a waiver of the provision itself or a
waiver of any right under this Agreement.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-8
12.7 Survival of Covenants. The provisions of Article 1, Sections 2.1 and
2.3, Article 8, Article 9, Section 10.3 and Article 12 shall survive
termination of this Agreement for any reason. Termination of this
Agreement for any reason shall not release either party from any
liabilities or obligations set forth in this Agreement that the parties
have expressly agreed shall survive any such termination, remain to be
performed or by their nature would be intended to be applicable following
any such termination.
12.8 Independent Parties. ASSIGNOR and ASSIGNEE are independent
contractors. No partnership or joint venture is intended to be created by
this Agreement, nor any principal-agent or employer-employee relationship.
Neither party has, and neither party shall attempt to assert, the
authority to make commitments for or to bind the other party to any
obligation.
12.9 Headings. The section headings and the table of contents used herein
are for reference and convenience only, and shall not enter into the
construction of this Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section or other subdivision.
12.10 Breaches by Affiliates. Each party shall be responsible for any
action or omission by the Affiliates of such party which, if taken or made
by such party, would constitute a breach of those provisions of this
Agreement that are expressly binding upon Affiliates of such party.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-9
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
ASSIGNOR ASSIGNEE
Halliburton Company Dresser, Inc.
3600 Lincoln Plaza 2601 Beltline Road
500 N. Akard St. Carollton, TX 75006
Dallas, TX 75201-3391 (972) 417-1400 (Ph)
(214) 978-2600 (Ph) (972) 478-5088 (Fax)
(214) 978-2611 (Fax)
By: ______________________________ By:____________________________
------------------------------ ---------------------------
Typed or Printed Name Typed or Printed Name
Title:______________________________ Title:_________________________
Date:_______________________________ Date:__________________________
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-10
APPENDIX A
TRADEMARKS ASSIGNED TO ASSIGNEE
Country Mark App/Reg No. Classes
- --------------------------------------------------------------------------------
USA DRESSER & Design (Swish Logo) 75/934721 6, 7, 9 & 11
USA DRESSER 1,396,487 7
USA DRESSER (IN OVAL DESIGN) 855814 6, 9, 11
USA DRESSER 556039 17
USA WHEATLEY 140464
Algeria DRESSER 31740 6, 7, 17
Argentina DRESSER (LOGO) 987960 5
Argentina DRESSER 1716239 1
Argentina DRESSER 1745773 37
Argentina DRESSER 1716238 42
Argentina DRESSER (LOGO) 1205793 7
Argentina DRESSER (LOGO) 987961 6
Argentina DRESSER (LOGO) 1633334 9
Argentina DRESSER 1662345 6
Argentina DRESSER 21662346 2
Argentina DRESSER 1662347 9
Argentina DRESSER 1662348 21
Argentina DRESSER (LOGO) 1551864
Argentina DRESSER (LOGO) 1449932
Argentina DRESSER (LOGO) 1009727
Argentina DRESSER (LOGO) 1449933
Australia DRESSER (LOGO) B227171 9
Australia DRESSER (LOGO) B227172 11
Australia DRESSER (LOGO) B227169 6
Australia DRESSER (LOGO) B227170 7
Australia DRESSER (LOGO) B227168
Australia DRESSER 748420 17, 37, 42
Benelux DRESSER 71980 2, 6
Benelux DRESSER 402844 7, 12
Benelux DRESSER (LOGO) 462497
Brazil DRESSER 5027640 17
Brazil DRESSER 3470172 19
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-11
Country Mark App/Reg No. Classes
- --------------------------------------------------------------------------------
Brazil DRESSER (LOGO) 7537697 9
Brazil DRESSER (LOGO) 7537700 19
Brazil DRESSER (LOGO) 7537670 7
Canada DRESSER & Design (Swish Logo) 1056174
Canada DRESSER & DESIGN 496290
Canada DRESSER 337835
Canada DRESSER TMA537417
Canada DRESSER 169/43214
Canada DRESSER (LOGO) 176015
Chile DRESSER 467045 6
Chile DRESSER (LOGO) 379115 7, 9, 12
Chile DRESSER (LOGO) 360558 9
Chile DRESSER (LOGO) 355697 6, 19
China DRESSER 1208841 1
China DRESSER 1103400 6
China DRESSER 1159058 7
China DRESSER 1108419 9
China DRESSER 1097340 11
China DRESSER 1093369 17
China DRESSER 1115803 37
China DRESSER 1115397 42
China DRESSER (Chinese characters) 1099926 1
China DRESSER (Chinese characters) 1103399 6
China DRESSER (Chinese characters) 1113826 7
China DRESSER (Chinese characters) 1131254 9
China DRESSER (Chinese characters) 1091278 11
China DRESSER (Chinese characters) 1093368 17
China DRESSER (Chinese characters) 1115820 37
China DRESSER (Chinese characters) 1115396 42
Columbia DRESSER (LOGO) 167872 9A AND 10A
Columbia DRESSER 37632A 21
Columbia DRESSER (LOGO) 167873 6
Columbia DRESSER (LOGO) 167874 7
Columbia DRESSER 211337 1
Columbia DRESSER 211557 17
Columbia DRESSER 211299 37
Columbia DRESSER 97067530 42
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-12
Denmark DRESSER (LOGO) 910/1970 1, 6-7, 9
Denmark DRESSER 456/1959 6, 17
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-13
Country Mark App/Reg No. Classes
- --------------------------------------------------------------------------------
EU DRESSER (Design) 82024 1, 6, 7, 9, 11,
12, 13, 17,
35, 37, 42
Finland DRESSER 34632 6, 17
France DRESSER 1290898 7, 12
France DRESSER 1656047 6, 7, 17
France DRESSER (LOGO) 1456533 1-42
Great Britain DRESSER (LOGO) 1049983 1
Great Britain DRESSER 1226896 7
Great Britain DRESSER 1232984 12
Great Britain DRESSER (LOGO) 940220 11
Great Britain DRESSER (LOGO) 940225 6
Great Britain DRESSER (LOGO) 940223 9
Great Britain DRESSER (LOGO) 940226 1
Great Britain DRESSER (LOGO) 940224 7
Great Britain DRESSER 789415 17
Great Britain DRESSER 781960 6
Great Britain DRESSER (LOGO) 1436935 9
Great Britain DRESSER (LOGO) 1436936 11
Great Britain DRESSER (LOGO) 1436937 13
Great Britain DRESSER (LOGO) 1436938 17
Germany DRESSER 1101313 6, 7, 9, 12
Germany DRESSER 1083148 7, 12
Germany DRESSER 702484/6 6, 9
Germany DRESSER (LOGO) 910087 1,6-9,11,12,17, 20
Greece DRESSER (LOGO) 41686 6, 7, 9, 11
Greece DRESSER (LOGO) 55209 1
Greece DRESSER 22248 6, 11, 17
Hong Kong DRESSER 229/59 6
India DRESSER 187549 6
India DRESSER 778171 1
India DRESSER 778172 7
India DRESSER 778173 9
India DRESSER 778174 17
India DRESSER 778175 11
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-14
Indonesia DRESSER 286991 6, 7
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-15
Country Mark App/Reg No. Classes
- --------------------------------------------------------------------------------
Israel DRESSER 17192 6
Israel DRESSER 17512 17
Italy DRESSER (LOGO) 555420 1, 6, 7, 8, 9, 11, 19, 42
Italy DRESSER (LOGO) 723804 1
Japan DRESSER (LOGO) 976273 10
Japan DRESSER (LOGO) 1046390 9
Japan DRESSER (LOGO) 1019191 13
Japan DRESSER (LOGO) 1062193 6
Japan DRESSER 552411 6
Japan DRESSER 664656 12
Japan DRESSER 702890 9
Japan DRESSER 827882 7
Japan DRESSER 583487 17
Kuwait DRESSER (LOGO) 25752 6
Kuwait DRESSER (LOGO) 25904 9
Malaysia DRESSER 90/05269 6
Malaysia DRESSER (LOGO) 90/05270 6
Malaysia DRESSER 98/02189 7
Malaysia DRESSER 98/02188 9
Malaysia DRESSER 98/02190 11
Malaysia DRESSER 97/19726 37
Malaysia DRESSER 97/19729 42
Mexico DRESSER (LOGO) 150734 13
Mexico DRESSER (LOGO) 149964 26
Mexico DRESSER (LOGO) 149072 23
Mexico DRESSER (LOGO) 149070 21
Mexico DRESSER 84757 13
Mexico DRESSER 571411 1
Mexico DRESSER 569623 37
Mexico DRESSER 569624 42
New Zealand DRESSER 284592 1
New Zealand DRESSER 284593 7
New Zealand DRESSER 284594 9
New Zealand DRESSER 284595 11
New Zealand DRESSER 284596 37
New Zealand DRESSER 284597 42
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-16
Country Mark App/Reg No. Classes
- --------------------------------------------------------------------------------
Nigeria DRESSER 56251 1, 37, 42
Nigeria DRESSER (LOGO) 20566 6
Nigeria DRESSER (LOGO) 20567 7
Nigeria DRESSER (LOGO) 20568 9
Nigeria DRESSER (LOGO) 50329 17
Nigeria DRESSER (LOGO) 50331 11
Norway DRESSER (LOGO) 99164 1, 19
Norway DRESSER (LOGO) 80188 6, 7, 9, 11
Norway DRESSER 52833 6, 17
Norway DRESSER 190510 37, 42
Peru DRESSER (LOGO) 5217 7
Peru DRESSER (LOGO) 5216 9
Peru DRESSER (LOGO) 5239 11
Peru DRESSER 104020 6
Peru DRESSER 104021 17
Russia DRESSER 98705452 7, 9
Saudi Arabia DRESSER 496/74 1
Saudi Arabia DRESSER 42195 7
Saudi Arabia DRESSER 42196 9
Saudi Arabia DRESSER 500/19 11
Saudi Arabia DRESSER 490/32 37
Saudi Arabia DRESSER 42199 42
South Africa DRESSER (LOGO) 69/0888 6
South Africa DRESSER (LOGO) 69/0886 9
South Africa DRESSER (LOGO) 69/0885 11
South Africa DRESSER (LOGO) 69/0887 7
South Africa DRESSER 59/115 17
South Africa DRESSER 59/114 6
South Korea DRESSER 442913 34
South Korea DRESSER 51081 104
South Korea DRESSER 54973 112
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-17
Country Mark App/Reg No. Classes
- --------------------------------------------------------------------------------
Singapore DRESSER 5618/90 6
Singapore DRESSER (LOGO) 5619/90 6
Singapore DRESSER 14045/97 1
Singapore DRESSER 14046/97 7
Singapore DRESSER T97/14047H 9
Singapore DRESSER 14048/97 11
Singapore DRESSER T97/14049D 17
Singapore DRESSER 14050/97 37
Singapore DRESSER 14051/97 42
Sweden DRESSER (LOGO) 156194 6, 7, 9, 11
Sweden DRESSER (LOGO) 154249 1
Sweden DRESSER 86504 6, 17
Switzerland DRESSER (LOGO) 280417 1, 4, 19
Switzerland DRESSER 451589 7, 9, 11
Thailand DRESSER 87123 1
Thailand DRESSER 379864 6
Venezuela DRESSER (LOGO) 62705 1
Venezuela DRESSER (LOGO) 62715 19
Venezuela DRESSER (LOGO) 62718 26
Venezuela DRESSER (LOGO) 62704 23
Venezuela DRESSER (LOGO) 62702 13
Venezuela DRESSER (LOGO) 62703 21
Venezuela DRESSER 118240 23
Venezuela DRESSER 33110 13
Venezuela DRESSER 22.748/97 42
Venezuela DRESSER 11.522/98 37
Venezuela DRESSER 22.749/97 37
Vietnam DRESSER 10238 17
Vietnam DRESSER N-5319/93
Vietnam DRESSER 31528 7, 9, 37
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-18
APPENDIX B
DEFINITION OF UPSTREAM OILFIELD BUSINESS
ENERGY SERVICES GROUP
Halliburton Energy Services
Well Construction:
Baroid - various drilling fluid systems needed for drilling operations,
brines of all types for completion/workover operations and
filtration equipment for the brines
Security Diamont Boart Stratabit - solutions for drilling and evaluation
needs primarily with rock removal at the cutting element/formation
interface and reservoir sampling
Zonal Isolation - processes used to ensure optimum reservoir access and
fluid zone protection - establishing connection between the
geological formation and the well
Drilling and Reservoir Evaluation:
Logging and Perforating - Open Hole and Cased Hole services including
fluids and formation evaluation, visualization, sampling, rock
mechanics, slim hole and hostile well logging, data acquisition and
evaluation, advanced wireline and drillpipe conveyed logging,
cementing evaluation, reservoir monitoring, production analysis,
perforating, pipe evaluation, pipe recovery, and mechanical services
Sperry-Sun Drilling Services - drilling and formation evaluation services
including directional and horizontal drilling, multilateral drilling
and completion systems, Measurement While Drilling/Logging While
Drilling and drilling optimization services, steam-assisted gravity
drainage, surface data logging, wellbore surveying services,
drillstring design, and well planning and rigsite information
management systems
Well Completions:
Completion Products and Services - systems for any completion and
production operation including subsurface safety valves and flow
control equipment,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-19
surface safety systems, packers and specialty completion equipment,
production automation, well screens, and slickline equipment and
services
Pipeline and Process Services - pipeline testing, commissioning and
cleaning services which include pipeline flooding, gauging,
hydrotesting, dewatering and drying and conditioning
Production Enhancement - optimizing well performance through reservoir
understanding and integrating intelligent stimulation and
completions including carbon dioxide, coiled tubing, frac/acid,
nitrogen, sand control, well control and hydraulic workover
Special Services - provides quality core and support personnel for
Frac/Acid, Zonal Isolation, Sand Control, Coiled Tubing and
Hydraulic Workover jobs globally along with complete Production
Enhancement crews deployed in North America - also technicians to
provide global instrument technical support for job preparations,
data acquisition and remote control personnel and equipment needs
along with telephone answering assistance to Boots & Coots and Well
Control
Tools,Testing & Tubing Conveyed Perforating- obtaining accurate reservoir
information through service and well testing tools, data acquisition
services, production applications, and perforating systems
Solutions Group:
Integrated Technology Products - rapid development and commercialization
of emerging multi-psl technology solutions that maximize the
performance of clients' reservoirs through understanding and
assessing the needs of the reservoir
Reservoir Description - provides innovative and integrated Design
Engineering that may include all aspects of Asset Evaluation,
Development and Management focusing on the integration of reservoir
understanding, well/production technologies and facilities
engineering
Halliburton Subsea - subsea construction expertise of Rockwater, remote
technology expertise of Subsea International and subsea engineering expertise as
a single integrated solutions provider - including standard inspection,
maintenance, operations and repair tasks on pipelines, jackets and subsea
structures along with emergency and major accident prevention plans
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-20
Wellstream - provides top quality flexible pipe products used primarily in the
offshore oil and gas industry for both topside and subsea applications - this
product is very compatible to the latest technology utilized in the development
of subsea wells and is easy to install and retrieve ensuring a more economic
solution for total field development
Granherne Ltd - provides engineering and project management services to
customers who are mainly oil and gas production, gas processing and oil refining
industries
EMC (European Marine Contractors Ltd) - jointly owned by Brown & Root and Saipem
to operate the most comprehensive fleet of pipelay vessels in the world
Bredero-Shaw - strategic pipe coating alliance with Shaw Industries Ltd and
Bredero Price
EPC (Engineering, Procurement & Construction) - direction, coordination and
control of major projects, alliances and joint ventures
For purposes of clarity with respect to non-compete, the following shall not
violate this Agreement: (a) natural extensions of the existing business of the
Dresser Valve Business or the Dresser Instrument - DMD - Roots Business (each as
defined in the Recapitalization Agreement) of the design, manufacture, service
and sale of valves, instruments and related products into additional areas of
surface and subsurface applications will not be considered a conflict with
respect to ASSIGNOR's business listed above, as long as that extension does not
also include the installation, maintenance or service of valves, instruments or
related products in the well bore; (b) any business acquired by the ASSIGNEE or
its Affiliates pursuant to the Recapitalization Agreement; and (c) any business
listed above in which the ASSIGNOR and its Affiliates cease to conduct the
corresponding activities listed above, whether as a result of divestiture or
discontinuation for a period of more than 60 days.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-21
APPENDIX C
HALLIBURTON COMPANY
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT, effective as of April 10, 2001, by and between Halliburton
Company, having a principle place of business at 3600 Lincoln Plaza, 500 N.
Akard St., Dallas, Texas 75201-3391 , hereinafter referred to as "LICENSOR," and
Dresser, Inc., having a principle place of business at 2601 Beltline Road,
Carollton, Texas, 75006, hereinafter referred to as "LICENSEE."
WHEREAS, LICENSOR has adopted and is using the word, "WHEATLEY" and
"WHEATLEY and Design " as trademarks and service marks for a broad range of
goods and services in the United States and elsewhere throughout the world
(hereinafter collectively referred to as the "Marks"), and has on file with the
trademark offices of various countries pending trademark and service mark
applications and registrations covering the above-mentioned Marks, a listing of
which is attached hereto as Appendix A; and
WHEREAS, ASSIGNEE is acquiring the Dresser, Inc. from ASSIGNOR, pursuant
to a certain Agreement and Plan of Recapitalization among ASSIGNOR, ASSIGNEE and
the seller named therein dated January 30, 2001 (the "Recapitalization
Agreement"), and in connection with such acquisition would like to acquire any
and all right, title and interest in and to the Marks together with the goodwill
of the business symbolized thereby, subject to the Existing Licenses (as defined
below), the General License (as defined below) and the Exclusive License (as
defined below); and
NOW, THEREFORE, in consideration of the mutual covenants of the parties in
this Agreement and the Recapitalization Agreement, and the sum of ten dollars
($10.00) herewith paid by LICENSEE to LICENSOR, the receipt and sufficiency of
which is hereby acknowledged by said LICENSOR, the parties hereby agree as
follows:
ARTICLE 1 - LICENSE
LICENSOR grants to LICENSEE the non-transferable right to use the Marks in
the Field of Use and to use the Marks in documentation related to the
Field of Use. This license is exclusive within the Field of Use. The
"Field of Use" includes valves for industrial use. The foregoing
conveyance is referred to herein as the "License."
LICENSEE acknowledges that the License and any subsequent assignment is
subject to license and ownership rights of other parties to the WHEATLEY
marks in International Class 7 for pumps. LICENSEE consents to the use of
the WHEATLEY
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-22
marks by such parties within International Class 7.
ARTICLE 2 - QUALITY OF GOODS AND SERVICES
LICENSEE shall use the Marks only as described in the grant in Article 1,
and only in accordance with the guidance and directions furnished to
LICENSEE by LICENSOR, or its representatives or agents, but always the
quality of the LICENSED GOODS AND SERVICES and the quality of the
documentation shall always be satisfactory to LICENSOR or as specified by
it. LICENSOR shall be the sole judge, in its commercially reasonable
discretion, as to whether or not LICENSEE has met or is meeting the
standards of quality so established.
ARTICLE 3 - INSPECTION
LICENSEE shall permit duly authorized representatives of LICENSOR to
inspect the LICENSED GOODS and the documentation during normal business
hours and with at least 10 days' notice prior to any distribution of same,
for the purpose of ascertaining or determining compliance with Articles 1
and 2 hereof.
ARTICLE 4 - USE OF MARKS
When using the Marks under this agreement, LICENSEE undertakes to comply
substantially with all laws pertaining to service marks and trademarks in
force at any time in the United States and all foreign jurisdictions in
which the marks are used. This provision includes compliance with marking
requirements, showing that the Marks are owned by Halliburton Company.
ARTICLE 5 - EXTENT OF LICENSE
The right granted in paragraph 1 hereof shall be exclusive within the
Field of Use, but subject to any outstanding license agreements which
LICENSOR may currently have in force with other third parties. This
license is not assignable or transferable in any manner whatsoever, nor
does LICENSEE have the right to grant any sub-licenses except to
affiliates, unless LICENSEE has obtained prior written consent of
LICENSOR.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-23
ARTICLE 6
NEW APPLICATIONS AND AMENDMENT OF EXISTING REGISTRATIONS
(a) Prior to the Effective Date, LICENSOR owned title to registrations for
the marks for pumps in International Class 7 and valves in International
Class 9. LICENSOR agrees to use commercially reasonable efforts to file
and prosecute trademark applications in the United States of America and
in the CTM office of the European Community for: "WHEATLEY" and "WHEATLEY"
(Stylized) for valves in International Class 9.
(b) LICENSEE consents to the filing of the above applications recited in
paragraph (a).
(c) LICENSOR agrees that upon registration of the WHEATLEY mark for valves
in International Class 9, it will assign the rights in and to such mark,
along with the related goodwill, to LICENSEE. Following such assignment,
all obligations of LICENSOR to LICENSEE, including the License, shall
terminate.
(d) After termination of this License, LICENSOR consents to the ownership
and filing of future applications by LICENSEE of marks incorporating the
term "WHEATLEY" within the Field of Use only.
(e) LICENSEE agrees that it will not file any applications for
registration of any marks incorporating the term "WHEATLEY" for use on any
goods or services other than within the Field of Use. This clause shall
survive the termination of this License.
ARTICLE 7 -- ASSIGNMENT
As set forth in Article 6, LICENSOR agrees to assign the newly filed
U.S. and CTM Registrations for Class 9 valves to Licensee, contingent upon
issuance of a registration and the filing and acceptance of a Section 8
and 15 Affidavit of Continuous Usage by the U.S. Patent and Trademark
Office for the U.S. applications identified in paragraph 6(a).
ARTICLE 8 - INDEMNITY AND DISCLAIMER OF WARRANTIES
LICENSOR assumes no liability to LICENSEE or to third parties with the
performance characteristics of the services or goods rendered by LICENSEE.
Furthermore, LICENSEE shall indemnify LICENSOR against damages, costs and
losses incurred as a result of claims of third parties against LICENSOR
involving the marketing or sale of LICENSEE's goods or services,
including, but not limited to, liability for any claim
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-24
of third parties relating to trademark, patent, copyright, or trade secret
infringement by LICENSEE or in connection with LICENSEE's goods or
services.
ARTICLE 9 -- TERMINATION
Except as otherwise provided, herein, this agreement shall remain in full
force and effect. If LICENSEE makes any assignments of assets or business
for the benefit of creditors, or a trustee or receiver is appointed to
conduct its business or affairs or it is adjudged in any legal proceeding
to be either a voluntary or involuntary bankruptcy, the rights granted
herein shall forthwith cease and terminate without any prior written
notice or legal action by LICENSOR. If LICENSEE materially breaches this
agreement, such as by using the Marks outside the granted scope of this
license, LICENSOR may cancel the License immediately. Upon assignment of
the WHEATLEY mark in International Class 9 to LICENSEE in accordance with
Articles 6 and 7, this Agreement will terminate.
ARTICLE 10 - OWNERSHIP OF MARKS
LICENSEE and all parties to this agreement acknowledge LICENSOR's
exclusive right, title in and to the Marks and any registrations that have
issued or may issue thereon, and will not at any time due or cause to be
done in the act or thing contesting or in any way impairing or tending to
impair part of such right, title and interest. In connection with its use
of the Marks, neither LICENSEE nor any other party hereto shall in any
manner represent that he or it has any ownership in the Marks or
registrations thereof, and all parties acknowledge that use of the Marks
shall inure to the benefit of LICENSOR. On termination of this agreement
in any manner provided herein, LICENSEE will cease and desist from all use
of the Marks in any way and will deliver up to LICENSOR, or its duly
authorized representatives, all material and papers upon which the Marks
appear; and furthermore, LICENSEE will not at any time adopt or use
without LICENSOR's prior written consent, any word or mark which is likely
to be similar to or confusing with the Marks.
LICENSEE shall take all reasonable steps to promptly advise LICENSOR of
any infringement or apparent infringement as soon as it becomes known to
LICENSEE. LICENSOR shall have sole control to take proceedings, as it
deems appropriate, for infringement of the Marks, and LICENSEE shall
cooperate fully, at LICENSOR'S expense, with LICENSOR in respect of any
such proceedings.
ARTICLE 11 - MISCELLANEOUS
Any notices required or permitted to be given under this agreement shall
be deemed
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-25
sufficiently given if mailed by registered mail, postage prepaid,
addressed to the party to be notified at its address shown below, or at
such other address as may be furnished in writing to the notifying party.
Governing Law. This Agreement shall be construed (both as to validity and
performance) and enforced in accordance with, and governed by, the laws of
the State of Texas applicable to agreements made and to be performed
wholly within such jurisdiction. Any judicial proceeding brought against
either of the parties hereto with respect to this Agreement shall be
brought in the United States federal court for the Southern District of
Texas irrespective of where such party may be located at the time of such
proceeding, and by execution and delivery of this Agreement, each of the
parties hereto hereby consents to the exclusive jurisdiction of such court
and waives any defense or opposition to such jurisdiction.
Arbitration. Any dispute relating to this Agreement shall be resolved by
binding arbitration under the Commercial Arbitration Rules (the "AAA
Rules") of the American Arbitration Association (the "AAA"). This
arbitration provision is expressly made pursuant to and shall be governed
by the Federal Arbitration Act, 9 U.S.C. Sections 1-14. The parties hereto
agree that, pursuant to Section 9 of the Federal Arbitration Act, a
judgment of a United States District Court of competent jurisdiction shall
be entered upon the award made pursuant to the arbitration. Three
arbitrators, who shall have the authority to allocate the costs of any
arbitration initiated under this paragraph, shall be selected in
accordance with the following sentence within ten (10) days of the
submission to the AAA of the response to the statement of claim or the
date on which any such response is due, whichever is earlier. The
selection shall be made as follows: one by the LICENSOR, one by the
LICENSEE and one by the two so selected, provided, however, that only the
third arbitrator shall be required to be neutral. The arbitrators shall
conduct the arbitration in accordance with the Federal Rules of Evidence.
The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to
enter any award of monetary or injunctive relief (including the power to
issue permanent injunctive relief and also the power to reconsider any
prior request for immediate injunctive relief by either of the parties and
any order as to immediate injunctive relief previously granted or denied
by a court in response to a request therefor by either of the parties),
including the power to render an award as provided in Rule 43 of the AAA
Rules; provided, however, that the arbitrators shall not have the power to
award punitive or consequential damages under any circumstances (whether
styled as punitive, exemplary, or treble damages, or any penalty or
punitive type of damages) regardless of whether such damages may be
available under applicable Law, the parties hereby waiving their rights,
if any, to recover any such damages, whether in arbitration or litigation.
The arbitrators shall award the prevailing party its costs and reasonable
attorney's fees, and the losing party shall bear the entire cost of the
arbitration, including the arbitrators' fees. The arbitration award may be
enforced in any court having jurisdiction over the parties
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-26
and the subject matter of the arbitration. The arbitration shall be held
in Houston, Texas.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-27
IN WITNESS WHEREOF the parties have caused this Agreement to be executed
by their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
LICENSOR LICENSEE
Halliburton Company Dresser, Inc.
3600 Lincoln Plaza 2601 Beltline Road
500 N. Akard St. Carollton, TX 75006
Dallas, TX 75201-3391 (972) 417-1400 (Ph)
(214) 978-2600 (Ph) (972) 478-5088 (Fax)
(214) 978-2611 (Fax)
By: ______________________________ By:______________________________
------------------------------ ------------------------------
Typed or Printed Name Typed or Printed Name
Title:____________________________ Title:___________________________
Date:_____________________________ Date:____________________________
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-28
APPENDIX A
TRADEMARKS LICENSED TO LICENSEE
MARK Reg. No. International Class/Goods
- ---- -------- -------------------------
WHEATLEY U.S. Reg. No. 1,388,818 Class 7/ Pumps
Class 9/ Automatic Control Valves
WHEATLEY U.S. Reg. No. 1,388,817 Class 7/ Pumps
(Stylized) Class 9/ Automatic Control Valves
WHEATLEY CTM Reg. No. 81836 Class 7/ Pumps & Valves
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IV-29
Appendix V
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease Agreement"), made and entered into as of
April 10th, 2001 by and between DRESSER, INC., a Delaware corporation, having
its offices at 2601 Beltline Road, Carrollton, Texas, 75006, (hereinafter
referred to as "Landlord") and HALLIBURTON ENERGY SERVICES, INC., a Delaware
corporation, having offices at 4100 Clinton Drive, Houston, Texas, 77020
(hereinafter referred to as "Tenant").
1. LEASED PREMISES. Subject to the terms and provisions hereinafter set forth,
and in consideration of the rent to be paid by Tenant, Landlord does hereby
lease, demise and let unto Tenant, and Tenant does hereby hire and take from
Landlord, for the uses and purposes hereinafter set out, the following portions
of a building (the "Facility") located at 2135 Highway 6 South, Houston, Harris
County, Texas: (a) approximately 40,878 rentable square feet of office space
(the "Primary Space") as shown on Exhibit "A" attached hereto and made a part
hereof for all purposes, together with the right to use, at no cost to Tenant,
up to 130 parking spaces and access to and from same, and (b) an additional
approximately 12,152 rentable square feet of office space and 8,873 rentable
square feet of warehouse/manufacturing/laboratory space ("Month to Month
Space"), as more fully described on Exhibit "B" attached hereto and made a part
hereof for all purposes, together with the right to use, at no cost to Tenant,
three (3) parking spaces per each 1,000 rentable square feet of such Month to
Month Space. The Primary Space and the Month to Month Space together with all
rights and appurtenances; any improvements; and any and all personal property,
fixtures and equipment located upon or in the Primary Space and the Month to
Month Space, at the time Tenant takes possession thereof, being hereinafter
called the "Leased Premises."
2. TERM.
A. Initial Term. The term ("Initial Term") of this Lease Agreement for the
Primary Space shall be a period of twelve (12) months, commencing on April 10,
2001 ("Commencement Date") and ending on April 10, 2002 ("Expiration Date"),
unless terminated earlier as provided in this Lease. Tenant shall lease the
Month to Month Space on a month to month basis at the then current Rent as
provided in this Lease Agreement for such space, as applicable, commencing on
the Commencement Date and terminable by either Landlord or Tenant upon thirty
(30) days' prior written notice to the other party.
B. Renewal. Provided that the Lease Agreement has not been terminated or
that Tenant is not in default of any provision of this Lease beyond applicable
cure periods, the Initial Term for the Primary Space may be extended, at the
option of Tenant, for two (2) additional twelve (12) month periods, (each an
"Extended Term"). Notice of the exercise of (each) such option to extend the
Initial Term or any Extended Term shall be given by Tenant, in writing, to
Landlord not less than sixty (60) days prior to the expiration of the current
term. Any
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V
Extended Term shall be upon the same terms as provided for in the Initial Term
except for rent as determined in Article 3.C. below.
C. Option to Lease Additional Space. For and in consideration of the sum
of TEN AND NO/100 Dollars ($10.00), the receipt and sufficiency of which are
hereby acknowledged by Landlord, Landlord hereby grants to Tenant the option to
lease an additional approximately 35,156 rentable square feet of office space
("Option Space") on the first floor of the Facility, as described on Exhibit "C"
attached hereto and made a part hereof for all purposes, at the then applicable
Rent for office space under this Lease Agreement. In the event Tenant exercises
this option, any portion of the Option Space taken by the Tenant ("Expansion
Space") shall be part of the Leased Premises as defined in this Lease Agreement.
3. RENT.
A. Rent. As used in this Lease Agreement "Rent" shall mean all amounts
provided for in this Lease Agreement to be paid by Tenant, all of which shall
constitute gross Rent in consideration for the leasing of the Leased Premises.
The Rent shall be paid at the times and in the amounts provided for herein in
legal tender of the United States of America. The Rent shall be paid without
notice, demand, abatement, deduction or offset except as may be expressly set
forth in this Lease Agreement.
B. Base Rent. The base rent ("Rent") for the Initial Term shall be (a)
TWELVE AND 00/100 DOLLARS ($12.00) per rentable square foot per year for office
space; and SEVEN AND 20/100 DOLLARS ($7.20) per rentable square foot per year
for warehouse/manufacturing/laboratory space.
C. Extended Term Rent. Rent for any Extended Term shall be the then
current market rental rate for comparable space and conditions. In the event
Landlord and Tenant are unable to agree on what constitutes current market rent,
Landlord and Tenant shall secure the opinion of two (2) real estate brokers
specializing in the leasing of similar space, one chosen by Landlord and the
other chosen by Tenant, and the then current market rental rate shall be
determined to be the average of the market rates suggested by such real estate
brokers. Landlord and Tenant shall be responsible for compensation of the broker
each of them shall have retained. In no event, however, shall the Base Rent be
less than $12.00 per rentable square foot per year for office space or $7.20 per
rentable square foot per year of warehouse/manufacturing/laboratory space for
any Extended Term.
4. PAYMENTS. All Rent payments and other payments to Landlord by Tenant
hereunder shall be paid to Landlord at 2601 Beltline Road, Carrollton, Texas,
75006, Attention: Dale Mikus, or at such other address as Landlord may, from
time to time, specify by written notice to Tenant.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-2
5. OPERATING EXPENSES.
A. Except as provided for in Article 5.B below, Landlord shall be
responsible for all operating expenses to maintain the Leased Premises in
accordance with sound and reasonable practices for facilities of a like kind and
character. Such operating expenses shall include all expenses, costs and
disbursements of every kind and nature which Landlord shall pay or become
obligated to pay because of or in connection with the ownership, operation,
maintenance and security of the Leased Premises, including, but not limited to,
the following:
(i) Wages and salaries of all employees, including employees of
Landlord, engaged in the direct operation, maintenance and security
of the Leased Premises;
(ii) The cost of all supplies, tools, equipment and materials used in the
operation and maintenance of the Leased Premises;
(iii) Except as otherwise specifically provided in this Lease Agreement,
the cost of all utilities for the Leased Premises;
(iv) Cost of all maintenance and service agreements for the Leased
Premises and the equipment therein including, without limitation,
janitorial service, security service, landscape maintenance, pest
control service, trash removal service, alarm service, window
cleaning and elevator maintenance;
(v) Cost of all insurance relating to the Leased Premises, including,
without limitation, physical damage to Landlord's property and third
party liability insurance premiums applicable to the Leased
Premises;
(vi) All taxes and assessments and governmental charges, whether federal,
state, county or municipal attributable to the Leased Premises;
B. Notwithstanding the foregoing, Tenant agrees to pay the following:
(i) Electrical Service used by Tenant at the Leased Premises, for which
Tenant shall pay Landlord the sum of TWO AND NO/100 DOLLARS ($2.00)
per rentable square foot of the Leased Premises per year.
(ii) Any increase in Landlord's insurance costs for the Leased Premises
directly attributable to Tenant's occupancy of the Leased Premises.
(iii) Any increase in Landlord's property taxes for the Leased Premises or
its contents directly attributable to Tenant's occupancy of the
Leased Premises.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-3
6. DELIVERY OF LEASED PREMISES. Landlord shall deliver the Leased Premises to
Tenant, no later than the Commencement Date, in good repair with all electrical,
security and intercom systems in good working order.
7. WAIVER OF ALL WARRANTIES AND ACCEPTANCE OF PREMISES.
A. Acceptance of Premises. Tenant is familiar with said Leased Premises,
its condition, state of repair and everything connected therewith, and except as
is specifically stated herein to the contrary, it is expressly agreed by Tenant
that the Leased Premises are being leased in their strict "AS IS, WHERE IS"
condition, and "WITH ALL FAULTS", and Tenant accepts said Leased Premises in the
condition thereof at the date of this Lease Agreement and agrees that no other
representations of any kind concerning said premises or any part thereof shall
be binding upon Landlord. Tenant has had all right and access and opportunity to
inspect the Leased Premises, and is aware that past use of the Leased Premises
has been, among other things, for industrial purposes. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, LANDLORD HAS MADE NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER TO TENANT AS TO THE LEASED PREMISES, THE CONDITION THEREOF, OR ANY
OTHER MATTERS RELEVANT THERETO, AND TENANT EXPRESSLY WAIVES ANY AND ALL
WARRANTIES, EXPRESS OR IMPLIED, RELEVANT TO THE LEASED PREMISES.
B. Warranty Disclaimer of Landlord. LANDLORD MAKES NO WARRANTY, EXPRESS OR
IMPLIED, REGARDING THE COMMERCIAL SUITABILITY OR ENVIRONMENTAL QUALITY OF THE
LEASED PREMISES FOR TENANT'S INTENDED USE. TENANT ACKNOWLEDGES THAT TENANT'S
KNOWLEDGE OF TENANT'S INTENDED USE OF THE LEASED PREMISES IS EQUAL OR SUPERIOR
TO THAT OF LANDLORD, AND LANDLORD CANNOT OFFER, AND HAS NOT OFFERED, ANY
WARRANTY, EXPRESS OR IMPLIED, WITH REGARD TO TENANT'S INTENDED COMMERCIAL USE.
THIS PARAGRAPH DOES NOT LIMIT LANDLORD'S EXPRESS OBLIGATIONS UNDER THIS LEASE
AGREEMENT.
C. USE OF PREMISES. Tenant's use of the Leased Premises under this Lease
Agreement shall be for laboratory, research and development, limited production,
and office activities in connection with Tenant's usual business. Tenant also
agrees that it will not use, or suffer or permit any person to use the said
Leased Premises or any portion or portions thereof for any use or purpose in
violation of the laws of the United States, or the State of Texas or other
governmental subdivision having jurisdiction, and neither suffer nor permit
nuisances upon said Leased Premises. Tenant shall not use the Leased Premises in
an extra hazardous manner. In the event that, by reasons of acts of Tenant,
there shall be any increase in the rate of insurance on the Leased Premises then
Tenant hereby agrees to pay the amount of such increase upon receipt of written
demand by Landlord. Failure of Tenant to pay such amount on demand shall
constitute a default under this Lease Agreement.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-4
9. ACCESS TO LEASED PREMISES.
A. Landlord and Tenant acknowledge that the Facility was constructed as a
single user facility. Landlord grants to Tenant a non-exclusive easement during
the Initial Term and any extended Term for access purposes over and across
drives, parking areas, parking areas used for storage, sidewalks, loading docks,
restrooms and cafeteria facilities of the Facility (or otherwise serving the
Facility and owned by Landlord) for the purposes of facilitating vehicular and
pedestrian ingress and egress to and from the Leased Premises. This right is for
the benefit of Tenant, its employees, agents, independent contractors, and
business invitees. Use of the Facility for ingress and egress purposes shall be
subject to the reasonable rules and regulations of Landlord. The Landlord shall
maintain the area subject to this right in good repair consistent with the
current condition thereof, reasonable wear and tear excepted.
B. Landlord grants to Tenant a non-exclusive license to use the internal
hallways of the Facility during the normal business hours of the Facility for
the purpose of ingress and egress to and from the Leased Premises. In using this
license, Tenant shall comply with reasonable rules and regulations promulgated
by Landlord from time to time. This license shall be for the benefit of Tenant,
its employees, agents, independent contractors, and business invitees. To the
extent that Tenant desires to operate outside normal business hours, on a
schedule of up to 24 hours a day, seven days a week, the parties shall cooperate
to enable Tenant to obtain access to the Leased Premises during such period at
no incremental cost to Tenant.
C. Landlord retains access to the Leased Premises during the normal
business hours of Tenant for the following purposes:
(i) for provision of services required by this Lease Agreement;
(ii) to inspect the general condition and state of repair of the Leased
Premises;
(iii) to provide maintenance and make repairs required or permitted under
this Lease Agreement; and
(iv) to exercise it's other rights under this Lease Agreement.
D. Except in case of emergency, Landlord's access shall be subject to
prior notice, and right of Tenant to determine the timing and conditions of
access, which shall not be unreasonable. No entry by Landlord shall interfere
with the activities of Tenant.
E. Landlord agrees to restrict information which would provide access to
the Leased Premises (whether by traditional key, card key, key pad or
otherwise,) in order to minimize the number of individuals with the right of
access to the Leased Premises. In the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-5
event of need of emergency access to the Leased Premises, Landlord agrees to, if
practicable, contact Tenant, and notify it of the need of access. If Tenant's
contact individuals (or their successors) cannot be immediately located by
telephone, then access may be gained by Landlord to the Leased Premises by key
or other means. Tenant's contact individuals shall be promptly contacted by
telephone as soon as possible after the emergency access has been gained in
order to advise them of the emergency, the fact that access has been gained and
a description of any activities necessary in the future to be taken by Landlord
or Tenant.
10. BUILDING SERVICES TO BE PROVIDED BY LANDLORD. Landlord agrees to furnish or
cause to be furnished to the Leased Premises, the utilities and services
detailed below, in accordance with the standards which shall not be materially
less than the level of service of similar office buildings located in the
vicinity of the Facility.
(a) Water - Landlord shall furnish only at those points of supply for
lavatory purposes and drinking fountain purposes, hot and cold
potable water in sufficient quantities, and at such other points as
may be agreed to by Landlord and Tenant.
(b) Heat and air conditioning service, maintenance and repair.
(c) Janitorial services and waste removal.
(d) Building security and alarm service.
(e) Elevator service, maintenance and repair.
Landlord's failure to provide any of the services provided in this Section 10
shall not constitute a constructive eviction of Tenant. If Landlord fails to
provide any such services and such failure continues for more than five business
days after written notice from Tenant, then Tenant: (a) may cure such failure
and offset Tenant's reasonable cure costs against Rent; and (b) obtain an
equitable abatement of Rent to the extent that such failure prevents Tenant from
reasonably operating (and accordingly Tenant ceases operating) its business in
any substantial portion of the Leased Premises.
11. SECURITY. Landlord acknowledges that Tenant desires the ability to insure
that the Leased Premises are secure in order to protect its employees, property
and the confidentiality of Tenant's activities at the Leased Premises. Landlord
shall cooperate with Tenant to facilitate its security needs. Landlord shall
allow the installation of additional security systems and the use of additional
security personnel. Tenant may, at Tenant's expense, implement security
procedures regarding access to the Leased Premises. Landlord's security
personnel and Tenant's security personnel shall exercise good faith efforts to
coordinate their activities.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-6
12. MAINTENANCE OF LEASED PREMISES.
A. Landlord Maintenance. Subject to the provisions of Article 5 (Operating
Expenses), Article 20 (Damage and Destruction) and Article 21 (Condemnation) and
except for damage caused by any act or omission of Tenant, Landlord shall keep
the yards and grounds, landscaping, paving, foundation, roof, mechanical
equipment, electrical facilities, plumbing, exterior windows and the structural
portion of exterior walls of the Facility in good order, condition and repair.
Landlord shall not be obligated to make any repairs under this Section until a
reasonable time after receipt of written notice from Tenant of the need of such
repairs under this Section. If any repairs are required to be made by Landlord,
Tenant shall, at Tenant's sole cost and expense, promptly remove Tenant's
fixtures, inventory, equipment and other property, to the extent required to
enable Landlord to make such repairs. Landlord's liability for failure to make
any such repairs or corrections shall be limited to the cost of such repairs or
corrections. Landlord shall make all repairs in a diligent and expeditious
manner, minimizing any interference with Tenant's business.
B. Tenant Maintenance. Except as otherwise provided for herein, Tenant
agrees to maintain and keep the interior of the Leased Premises in good repair
and condition at Tenant's expense. Tenant agrees not to commit or allow any
waste or damage to be committed on any portion of the Leased Premises. Tenant
shall promptly repair any damage to the Leased Premises caused by the neglect,
misuse, negligence or willful misconduct of Tenant, its employees, agents,
licensees or invitees. Tenant shall promptly give Landlord written notice of any
material damage to the Premises. At Tenant's request, Landlord shall, at the
reasonable cost and expense of Tenant, repair or replace any damage or injury to
the Leased Premises not done by, but the responsibility of, Tenant.
C. Landlord Performing Tenant Maintenance. If Tenant fails to maintain and
repair the Leased Premises as required by this Article 12, Landlord may, on five
(5) business days prior written notice, enter the Leased Premises and perform
such maintenance or repair on behalf of Tenant, except that no notice shall be
required in case of emergency, and Tenant shall pay Landlord immediately upon
demand for all such reasonable costs incurred in performing such maintenance or
repair as is required herein.
13. INDEMNITIES.
A. Indemnification by Tenant. Tenant will not in any manner deface, damage
or injure any building or fixture on the Leased Premises. Tenant shall defend,
protect, indemnify and hold harmless Landlord from any and all losses, damages,
demands, claims, costs, penalties, fines, judgments and expenses, including, but
not limited to reasonable attorney fees, engineering, expert or environmental
consultant fees, or causes of action arising out of injury to or death of
persons, damage to or destruction or loss of property, that directly or
indirectly may be caused by or resulting from (a) Tenant's use and operations
on, in or about the Leased Premises, and (b) Tenant's use of public or private
roadways traversing other lands adjacent to or in the vicinity of the Leased
Premises, including the use of such roadways for
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-7
ingress and egress to and from the Leased Premises, and (c) any claims, costs,
penalties, fines, judgments, liabilities and expenses which Landlord may incur
arising out of or in connection with Tenant's non-compliance with applicable
federal, state or local laws or regulations of the presence or release of any
Hazardous Materials (as defined below) caused by Tenant or by persons claiming
through Tenant on, in or under the Leased Premises, on or after the date Tenant
takes possession of the Leased Premises, except to the extent such conditions
arise from the acts or omissions of Landlord or Landlord's agents. Tenant's
obligations hereunder shall survive the expiration or early termination of this
Lease Agreement.
B. Indemnification by Landlord. Landlord shall defend, protect, indemnify
and hold harmless Tenant from any and all losses, damages, demands, claims,
costs, penalties, fines, judgments and expenses, including, but not limited to,
reasonable attorney fees, engineering, expert or environmental consultant fees,
or causes of action arising out of injury to or death of persons, damage to or
destruction or loss of property, that directly or indirectly may be caused by or
result from (a) Landlord's use of and operations on, in and about the Leased
Premises; (b) Landlord's use of public or private roadways and waterways
traversing other lands owned by Landlord adjacent to or in the vicinity of the
Leased Premises, including the use of such roadways and waterways for ingress
and egress to and from the Leased Premises; and (c) any claims, costs,
penalties, fines, judgments, liabilities and expenses which Tenant may incur
arising out of the presence or release of any Hazardous Materials (as defined
below) on, in or under the Leased Premises, except to the extent such conditions
arise from the acts or omissions of Tenant, and except when Tenant fails to
advise Landlord of the matter as is required in this Lease Agreement and such
failure materially prejudices Landlord. Landlord's obligations hereunder shall
survive the expiration or early termination of this Lease Agreement, except in
the event of Tenant's purchase of the property, in which event Landlord shall
cease to have any obligation hereunder to Tenant upon the closing of the sale
unless the parties agree otherwise in writing.
14. RELEASE. Except as otherwise expressly provided for herein, Landlord and
Tenant unconditionally mutually release one another from and against any and all
liability to one another for any environmental damages or requirements or
conditions, or the presence of any Hazardous Materials placed on, under, or
about the Leased Premises while Landlord or Tenant occupied the Leased Premises.
15. COMPLIANCE WITH GOVERNMENT LAWS AND REGULATIONS.
A. General Compliance. Tenant shall comply in all material respects with
all applicable federal, state and local laws, ordinances, rules and regulations
with respect to its occupancy of the Leased Premises.
B. Environmental Compliance. Tenant agrees that any condition(s) arising
after commencement of this Lease Agreement which result directly or indirectly
from Tenant's occupancy and use of said Leased Premises, including, but not
limited to, any release or threatened release of Hazardous Materials, Hazardous
Materials Contamination, installation of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-8
devices or structures, Hazardous Materials generation/storage or any negligent
acts or omissions by Tenant occurring on or about the Leased Premises that are
determined to be in violation of any environmental laws or ordinances of the
United States or the State of Texas, or other Governmental subdivisions having
jurisdiction, but specifically excluding any acts of the Landlord or other third
parties not in Tenant's control, shall be the sole responsibility of Tenant.
Tenant further agrees to indemnify, defend and hold harmless Landlord for any
reasonable costs, loss, damage or liability arising out of such conditions
pursuant to the terms set forth in Article 15. Notwithstanding anything to the
contrary in this Lease Agreement, in no event shall Tenant have any liability to
Landlord for any condition that existed before the commencement of this Lease
Agreement.
C. Definitions. For the purposes hereof and for greater certainty, the
term "Hazardous Materials" shall mean and include:
(i) such "solid waste or hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 et seq.),
as amended from time to time, and the regulations promulgated
thereunder;
(ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss. 9601 et seq.), as amended from time to time, and the
regulations promulgated thereunder;
(iii) asbestos;
(iv) polychlorinated biphenyls, as defined by the Federal Toxic Substance
Control Act (15 U.S.C. ss. 2601 et seq.), as amended from time to
time, and the regulations promulgated thereunder;
(v) any substance the presence of which on the Leased Premises is
prohibited by any laws, regulations, or ordinances (collectively,
the "Laws"), relating to or at the Leased Premises;
(vi) petroleum based materials;
(vii) Naturally Occurring Radioactive Material ("NORM"); and
(vii) any other substance which is defined as hazardous, toxic,
infectious, or radioactive by any Laws relating to the Leased
Premises.
For the purposes hereof, the term "Hazardous Materials Contamination"
shall mean the contamination of the Leased Premises to levels of noncompliance
with applicable laws and regulations as a direct result of Hazardous Materials
released or located upon the Leased Premises due to actions of the Tenant.
D. Remedial Work. In the event any investigation or monitoring of the
Leased Premises or any cleanup, containment, restoration, removal, or other
remedial work of the Leased Premises (collectively referred to as "Remedial
Work"), is required in connection with Tenant's use or its operation at the
Leased Premises, under any applicable federal, state, or local law or
regulation, or by any judicial order, or by any governmental entity, or in order
to comply with any agreements of any governmental authority, Landlord (or at
Tenant's option, Tenant) shall perform or cause to be performed the Remedial
Work in compliance with such law,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-9
regulation, order or governmental authorities at Tenant's cost and expense.
E. Access. Tenant agrees to provide all reasonable and appropriate access
to the Leased Premises to Landlord or any designated representative of Landlord
during the term of this Lease Agreement, if necessary, for purposes of starting,
continuing and/or completing of any Remedial Work on the Leased Premises being
undertaken by Landlord or its designated representative.
F. Americans With Disabilities Act. Tenant specifically agrees to assume
the responsibility for and to comply with the public accommodations and
commercial facilities provisions of the Americans with Disabilities Act ("ADA")
and the regulations promulgated pursuant to the ADA as they apply to the Leased
Premises, but only to the extent that such ADA requirements arise as a result of
the particular nature of Tenant's use of the Leased Premises.
16. GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities" as used herein
shall mean "all statutes, ordinances, rules, orders, regulations and
requirements of the Federal, State, County and Local Government and of any and
all Departments or Bureaus thereof." Tenant covenants and agrees that it will,
at its own cost and expense, hold Landlord, Landlord's affiliates, employees,
directors, officers, agents and servants harmless and will promptly execute and
comply with all Governmental Authorities applicable to the use or occupancy of
said Leased Premises or for the correction, prevention and abatement of
nuisances, violations and other grievances, in, upon or connected with said
Leased Premises during the term of this Lease Agreement and arising out of
Tenant's use and occupancy of the Leased Premises. Tenant shall also promptly
comply with and execute all rules, orders and regulations respecting fire, fire
hazards, sanitation and pollution and relating to Tenant's use and occupancy of
the Leased Premises.
17. ALTERATIONS. Tenant shall not make any alterations or improvements to the
Leased Premises without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed. However, Tenant at
its own cost and expense, without the creation of mechanic's or materialman's
liens, and in a good workmanlike manner, may make such minor alterations as it
may deem advisable. Such minor alterations shall be without altering the basic
character or structure of the building or improvements, and in each case
complying with all applicable governmental laws, ordinances, regulations, and
other requirements. At the termination of this Lease Agreement, Tenant shall, if
Landlord so elects by written notice at least 30 days before such termination
(unless such termination occurred because of Tenant's default), remove all
alterations that are of a nature or scope that would cause the next user or
occupant of the Leased Premises to incur demolition and removal expenses
substantially greater than would be normal and typical for similar space (such
as raised concrete floors, vaults, installed heavy machinery, permanently
installed inventory racks, or other special purpose equipment). Otherwise, such
improvements shall be delivered up to Landlord in their "as is" condition at the
end of the term of this Lease, except for any damage resulting from waste caused
by Tenant or Tenant's failure to perform its obligations under this Lease. All
such removals and restoration shall be accomplished under the same standards as
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-10
is set forth above in this paragraph for any alterations, except that Tenant
shall not be obligated to restore any nonstructural damage caused by Tenant's
removal of any alterations that Tenant is required to remove, provided that such
removal is performed in a reasonable manner and with due care under the
circumstances.
18. SIGNS. Tenant shall not place any signs or other objects upon the roof of
the building, or paint or otherwise deface the exterior walls of the building,
except with the prior written approval of the Landlord. Subject to the prior
written approval of Landlord, not to be unreasonably withheld, Tenant shall have
the right to erect such other signs as it may desire, subject to any applicable
governmental laws, ordinances, regulations, and other requirements. Tenant shall
remove all signs at the termination of this Lease Agreement. Such installation
and removals shall be made in such manner as to avoid injury, defacement or
overloading of the buildings and other improvements. Landlord may place
customary "For Sale" or (during the last year of the Lease) "For Lease" signs on
the property.
19. INSURANCE.
A. Tenant Insurance. During the term and existence of this Lease
Agreement, Tenant shall, at its sole cost and expense, carry insurance on forms
subject to approval of Landlord, with an insurance company or companies
authorized to do business in the State of Texas and which are otherwise
satisfactory to Landlord, or through blanket, self-insurance, or captive
insurance arrangements consistent with Tenant's ordinary insurance practices, as
follows:
1. Commercial General Liability Insurance with limits of not less
than: Bodily Injury/Property Damage $5,000,000 each occurrence (combined single
limit). Said insurance as is provided by this policy must apply to the
contractual liability assumed by Tenant for bodily injury and property damage
under the provisions of this Lease Agreement.
2. Comprehensive Automobile Liability Insurance with limits of not
less than: Bodily Injury/Property Damage $2,000,000 each occurrence (combined
single limit)
3. Statutory Worker's Compensation Coverage Pursuant to State Law.
4. To the extent required by Tenant's ordinary insurance practices,
all risk, fire and extended coverage insurance or similar type of physical
damage to property insurance covering, inter alia, the perils of fire,
lightning, windstorm, tornado, hail, explosion, riot, civil commotion,
vandalism, malicious mischief, theft, smoke, aircraft or land vehicle damage in
an amount not less than the replacement cost of Tenant's vehicles, inventory,
equipment, furniture, fixtures or other such similar property on the Leased
Premises.
5. Landlord will be named as an additional insured on policies
detailed in paragraphs A., B., and D. above but only to the extent of Tenant's
obligations and liabilities under this Lease. Landlord will be provided with a
waiver of subrogation on policies detailed
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-11
in paragraph C. above. Upon request of Landlord from time to time, Tenant shall
provide insurance certificates evidencing such above insurance coverage.
6. The above insurance shall be on an occurrence basis and shall
include a requirement that the Insurer(s) provide Landlord with 30 days' written
notice prior to the effective date of any cancellation or material change of
said insurance. Tenant shall provide Landlord with a Certificate of Insurance
complying with Landlord's reasonable and customary requirements. Any and all
deductible(s), self-insured retention(s) retrospective adjustments and the like
in connection with Tenant's policies are solely for Tenant's account. All
insurance required herein shall be endorsed to provide that Tenant's insurance
shall be primary insurance, as respects the additional insured, irrespective of
any "excess" or "other insurance" clauses contained in policies maintained
solely by Landlord.
B. Landlord's Insurance. During the Term of this Lease Agreement, Landlord
shall keep and maintain: (1) Property Insurance covering the Facility against
damage and destruction by fire, vandalism, and other perils so called "All
Risks" perils; and (2) Commercial General Liability Insurance with limits of not
less than: Bodily Injury/Property Damage $5,000,000 each occurrence (combined
single limit). The "All Risks" perils shall also include the perils of Earth
Movement, Flood, and Boiler and Machinery. The amount of the Property Insurance
shall be equal to the full replacement value of the Building, as the value may
exist from time to time. The Property Insurance shall include a replacement cost
endorsement subject to no co-insurance. The Commercial General Liability
Insurance shall apply to all contractual liability of Landlord for bodily injury
and property damage under the provisions of this Lease Agreement.
20. DAMAGE OR DESTRUCTION.
A. Notice. If the building or other improvements situated on the Leased
Premises should be damaged or destroyed by fire, tornado or other casualty,
Tenant shall immediately give written notice thereof to Landlord.
B. Partial Damage. If the building or other improvements situated on the
Leased Premises are damaged by fire, tornado, or other casualty but not to such
an extent that rebuilding or repairs cannot reasonably be completed within one
hundred and twenty days (120) days from the date Landlord receives written
notification by Tenant of the happening of the damage, this Lease Agreement
shall not terminate, but Landlord shall proceed forthwith and use reasonable
diligence to rebuild or repair such building and other improvements on the
Leased Premises (other than leasehold improvements made by Tenant or any
assignee, subtenant or other occupant of the Leased Premises) to substantially
the same condition in which they existed prior to such damage. Landlord's
obligation under this Section 20.B to use reasonable diligence to rebuild or
repair such building and other improvements on the Leased Premises shall not
exceed the proceeds received by Landlord from any insurance policy maintained by
Landlord or Tenant under this Lease Agreement. If the casualty occurs during the
final eight (8) months of the Lease Term, Landlord may elect not to rebuild or
repair such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-12
damage, provided the Tenant does not immediately elect to exercise its renewal
option, if applicable. This Lease Agreement shall terminate upon Landlord's
election and the Rent shall be abated for the remaining unused portion of this
Lease Agreement, effective from the date of actual receipt by Landlord of the
written notification of the damage. If the building and other improvements are
to be rebuilt or repairs made which cause the Leased Premises to be untenantable
in whole or in part following such damage, the installments of Rent payable
hereunder during the period in which they are untenantable shall be adjusted
equitably.
C. Substantial or Total Destruction. If the Facility is substantially or
totally destroyed by fire, tornado, or other casualty, or so damaged that
rebuilding or repairs cannot reasonably be completed within one hundred twenty
(120) days from the date Landlord receives written notification by Tenant of the
happening of the damage, this Lease Agreement shall terminate at the option of
either Landlord or Tenant and all future monthly installments of Rent shall be
abated for the unexpired portion of this Lease Agreement. If this Lease
Agreement is not terminated, the building and the improvements shall be rebuilt
or repaired at Landlord's expense and the installments of Rent abated to the
extent provided under Article 20.B hereof. Landlord's obligation to rebuild or
repair under this Section 20.C shall not exceed the proceeds received by
Landlord from any insurance policy maintained by Landlord or Tenant under this
Lease Agreement.
21. CONDEMNATION. If there is any taking by eminent domain that materially
affects Tenant's use of the Leased Premises, this Lease Agreement shall
terminate when title vests in the authority exercising the right of eminent
domain. The Rent shall be apportioned as of the day of termination, and any Rent
paid for a period beyond that date shall be repaid to Tenant. Tenant shall not
be entitled to any part of the award to Landlord for the taking but Tenant may
file a claim for an award on Tenant's behalf. If there is a partial taking by
eminent domain that does not materially affect Tenant's use of the Leased
Premises, then there shall be no reduction of Rent payable by Tenant to
Landlord, nor any right of termination by either party.
22. BANKRUPTCY OR INSOLVENCY.
A. Neither this Lease Agreement nor any interest therein nor any estate
thereby created, shall pass to any trustee or receiver in bankruptcy, or to any
receiver or assignee for the benefit of creditors or otherwise by operation of
law.
B. In the event that the Tenant shall become bankrupt or shall make a
voluntary assignment for benefit of creditors, or in the event that a receiver
of the Tenant shall be appointed, then, at the option of the Landlord and upon
fifteen (15) days written notice to the Tenant of the exercise of such option,
this Lease Agreement shall cease and come to an end.
23. DEFAULT.
A. Events of Default. If any Rent payable by Tenant shall be or remain
unpaid for
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-13
more than ten (10) days after written notice from Landlord that same is due and
payable, or if Tenant shall violate or make default in any of the other
covenants, agreements, stipulations or conditions herein, and Tenant does not
commence the correction of such default within twenty (20) days after receipt by
Tenant from Landlord of written notice of such violation or default, stating the
nature of such default, and thereafter continue the correction thereof with
promptness and dispatch until the same is fully rectified, then it shall be
optional for Landlord to terminate this Lease Agreement and receive from Tenant
as damages for Tenant's breach, an amount equal to the discounted value of such
Rents payable under the terms of this Lease Agreement for the residue of the
term hereof, less the discounted value of the Rents to be received from the new
Tenant or terminate Tenant's right of possession and to re-enter said Leased
Premises, with or without process of law, using such force as may be necessary
to remove all persons or chattels therefrom; but notwithstanding such re-entry
by Landlord, the liability of Tenant for the Rent provided for herein shall not
be relinquished or extinguished for the balance of the term of this Lease
Agreement.
B. Retaking. In the event Landlord terminates Tenant's right of possession under
the terms and provisions of the previous paragraph and Landlord retakes the
possession of the Leased Premises under the authority contained herein, all
claims for damage incurred by reason of any such re-entry by Landlord are
expressly waived by Tenant. It is further expressly understood and agreed that
Landlord may resume possession of the Leased Premises and relet the same for the
remainder of the term of this Lease Agreement on commercially reasonable terms
for the account of Tenant, who shall make good any deficiency. Any such
deficiency or part thereof may be recovered by Landlord from time to time from
Tenant as such deficiency or part thereof is determined, or Landlord may elect
to receive from Tenant as damages for Tenant's breach, an amount equal to the
discounted value of such Rents payable under the terms of this Lease Agreement
for the residue of the term hereof, less the discounted fair market rental value
of the Leased Premises for the residue of the term hereof.
The discount rate to be used for purposes of determining the discounted
value of Rents and the discounted fair market rental value as provided in this
Section 23 shall be a per annum rate equal to the "Prime Rate" as published on
the date this Lease is terminated by The Wall Street Journal, Southwest Edition,
in its listing of "Money Rates" minus one percent.
C. Non-waiver. If Landlord should delay in enforcing any obligation of
Tenant hereunder, or should waive the performance of any such obligation, or
should accept payment of rent after the occurrence of any default by Tenant,
then such action or forbearance by Landlord shall not be construed as a waiver
of any default in any other obligation of Tenant hereunder, regardless of
whether such default was then existing or had previously occurred or should
thereafter occur. In the event Landlord employs an attorney to enforce any of
its rights under this Lease Agreement, Tenant agrees to pay any reasonable
attorney fees arising out of the enforcement of such rights.
D. Tenant's Remedies. Landlord shall not be in default hereunder unless
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-14
Landlord fails to perform any of its obligations hereunder within thirty (30)
days after written notice from Tenant specifying such failure (unless such
performance will, when due to the nature of the obligation, require a period of
time in excess of thirty (30) days, then after such period of time as is
reasonably necessary). This shall not limit Tenant's rights to cure Landlord's
default and offset Rent or to obtain an equitable abatement of Rent, all as
otherwise expressly provided for in this Lease. All obligations of Landlord
hereunder shall be construed as covenants, not conditions; and except as may be
otherwise expressly provided in this Lease Agreement, Tenant may not terminate
this Lease Agreement for breach of Landlord's obligations hereunder All
obligations of Landlord under this Lease Agreement will be binding upon Landlord
only during the period of ownership of the Leased Premises by Landlord and not
thereafter. Any liability of Landlord under this Lease Agreement shall be
limited solely to Landlord's interest in the Leased Premises, and in no event
shall any personal liability be asserted against Landlord in connection with
this Lease Agreement nor shall Tenant have any recourse against any other
property or assets of Landlord.
24. TERMINATION AND RENTS. Notwithstanding anything to the contrary herein, the
termination of this Lease Agreement for any reason shall not release Tenant from
any liability to Landlord for Rents previously due and unpaid and shall not
release Tenant from performance of any other obligation accrued prior to the
time of such termination.
25. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease Agreement nor
sublet the Leased Premises, in whole or in part, without the prior written
consent of Landlord. Such consent by Landlord shall not be unreasonably
withheld. Any assignment or subletting, even if consented to by Landlord, shall
nevertheless be expressly subject to all of the terms, provisions and conditions
of this Lease Agreement and shall not in any way release or impair the
liabilities of Tenant hereunder. Notwithstanding the foregoing, Tenant may,
without the prior written consent of Landlord, sublet the Leased Premises or any
part thereof to an Affiliate, or assign this Lease Agreement to an Affiliate or
permit occupancy of any portion of the Premises by an Affiliate. The term
"Affiliate" shall mean (i) any corporation which, directly or indirectly,
controls or is controlled by, or is under common control with Tenant; (ii) any
corporation not less than fifty percent (50%) of whose outstanding stock shall,
at the time be owned directly or indirectly by Tenant or Tenant's parent
corporation; or (iii) any corporation that acquires all or substantially all of
Tenant's assets. For purposes hereof, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities or by contract or otherwise.
26. QUIET ENJOYMENT. Landlord covenants, warrants and represents that it has
full right and power to execute and perform this Lease Agreement, and to grant
the estate demised herein, and that Tenant upon paying the Rent specified herein
and performing the covenants and agreements contained herein, shall and may
peaceably and quietly hold the Leased Premises for the term herein provided.
27. SURRENDER OF LEASED PREMISES AT TERMINATION. At the expiration
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-15
or termination of this Lease Agreement, or any extension or renewal hereof,
Tenant agrees to surrender the Leased Premises to Landlord in as good condition
and state of repair as when received, ordinary and reasonable wear and tear
excepted, except as this Lease otherwise provides. Determination of the
condition of the Premises prior to Tenant's move in and move out will be
performed by visual inspection photographically recorded and agreed to by both
Landlord and Tenant.
28. HOLDING OVER. In the event Tenant remains in possession of the Leased
Premises after the expiration or termination of this Lease Agreement, for any
reason, including to perform and complete any Remedial Work on the Leased
Premises, such holding over shall not serve to renew or extend this Lease
Agreement and Tenant shall be deemed to be occupying the Leased Premises as
Landlord's Tenant from month to month subject to all of the conditions,
provisions and obligations of this Lease Agreement insofar as the same are
applicable to a month to month tenancy. The Rent for such holding over shall be
paid within 10 days after demand, and be at the rate of One Hundred Fifty
Percent (150%) of the prior Rent in effect at the termination of this Lease. If
a hold over continues for less than seven days after the expiration or
termination of this Lease Agreement, then such holdover Rent shall be prorated
daily.
29. NOTICES. All notices or demands required or provided for in this Lease
Agreement shall be in writing and may be given or served personally, or shall be
sent by United States registered or certified mail with postage or charges
prepaid, addressed to the party to whom such notice is to be given at the
address of such party as set forth on Page 1 hereof, or to such other address as
may hereafter be designated by either party by written notice to the other party
hereto. In addition, notice shall also be given as follows:
Tenant: Landlord:
Halliburton Energy Services, Inc. Dresser, Inc.
4100 Clinton Drive, 03-903G 2601 Beltline Road
Houston, Texas 77020 Carrollton, Texas 75006
Attention: Real Estate Services Attention: Dale Mikus
30. SUCCESSORS AND ASSIGNS. Except as may be herein specifically provided to the
contrary, this Lease Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and assigns.
31. GOVERNING LAW. This Lease Agreement shall be governed and construed in
accordance with the laws of the State of Texas.
32. ENTIRE AGREEMENT. This Lease Agreement, together with all exhibits and
addenda thereto, contains all of the agreements of the parties hereto with
respect to any
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-16
matter covered or mentioned in this Lease Agreement, and no prior agreement,
understanding or representation pertaining to any such matter shall be effective
for any purpose. No provision of this Lease Agreement may be amended or added to
except by an agreement in writing signed by the parties hereto or their
respective successors in interest.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-17
IN WITNESS WHEREOF, this instrument is executed in duplicate originals effective
the day and year first set forth above.
"TENANT" "LANDLORD"
HALLIBURTON ENERGY DRESSER, INC.
SERVICES, INC.,
a Delaware corporation a Delaware corporation
By:___________________________ By:___________________________
Name:_________________________ Name: ________________________
Title:________________________ Title:________________________
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-18
ACCESS AGREEMENT
1. THIS ACCESS AGREEMENT, is made and entered into April 10th, 2001, by
and between Dresser, Inc. ("Property Owner"), with offices at 2601 Beltline
Road, Carrollton, Texas, 75006 and Halliburton Energy Services, Inc.
("Halliburton"), with offices at 4100 Clinton Drive, Houston, Texas 77020. The
preceding entities are referred to collectively herein as the "Parties."
2. Property Owner currently owns certain property described as set forth
in Attachment "A" hereto (the "Property"). Halliburton requires access to the
Property for use of the transite test well ("Test Well") situated on the
Property.
3. The Parties desire to enter into this Access Agreement to provide for
Halliburton's use of the Test Well. In consideration of the premises and mutual
covenants set forth herein, the Parties agree to the terms of this Access
Agreement.
4. Property Owner hereby grants, without compensation, costs or fees to
Halliburton, access to Halliburton, its employees, representatives, agents,
contractors, subcontractors, and their subcontractors to enter upon the Property
to permit Halliburton's use of the Test Well on the Property. The rights of
Halliburton's access to the Property to use the Test Well are non-exclusive.
5. The Access Agreement shall be effective as of the date set forth above
and shall continue until the earlier to occur of: (a) twelve (12) months from
the date of this Access Agreement; or (b) Halliburton's need for the Test Well
ends. Halliburton will notify Property Owner when this Access Agreement
terminates.
6. Halliburton shall, to the extent practicable and consistent with sound
business practices, undertake the use of the Test Well in a manner that will not
unreasonably interfere with Property Owner's use of the Property. Property Owner
is aware that Halliburton's use of the Test Well may involve the placement of
other equipment on the Property. Property Owner's acceptance of this Agreement
will serve as Property Owner's acceptance of these conditions and agreement that
these conditions will not constitute unreasonable interference with Property
Owner's use of the Property.
7. Halliburton agrees to release, defend, indemnify and hold harmless
Property Owner from and against all liability, cost and expense ("Claims")
including, loss of or damage to the Property or for injury to or death of any
person directly arising out of the negligent use of the Test Well by
Halliburton, its employees, representatives, agents, contractors or
subcontractors on the Property pursuant to this Access Agreement, but only to
the extent or degree such negligence proximately causes such loss of or damage
to the Property or injury to or death of any person. In addition, Halliburton
shall release, indemnify, defend, and hold harmless Property Owner from any and
all Claims for injuries to or death of its own employees, agents, and
representatives, or damage to their property
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-19
arising our of its activities under this Access Agreement including, without
limitation, the plug and abandonment and any environmental compliance or cleanup
liability related to the test well or its use. In no event shall Halliburton be
liable for any consequential, incidental, special, or exemplary damages,
including without limitation, loss of use, loss of profit, or diminution in
value.
8. No provision of this Access Agreement nor any action under or by reason
of this Access Agreement shall in any action, proceeding or litigation operate
or be construed as an admission by any Party of any violation of law or
regulation, any liability, fault, or past or present wrongdoing, or any breach
of duty at any time.
9. Failure by any Party to enforce or exercise its rights under any term,
condition or covenant of this Access Agreement shall not be construed as a
waiver of such rights or of such term, covenant or condition.
10. Any notices of statements herein requested or required to be given by
any party to other party(ies) shall be in writing. Delivery of such written
notices, demands or statements shall be conclusively taken as sufficient when
delivered in person or deposited in the United States Mail, registered or
certified, postage fully prepaid, addressed to the addresses set forth below.
Any party hereto may by written notice change the address to which such demands,
notices or statements may be sent.
11. The contents of this Access Agreement are the entire agreement among
the Parties regarding access rights and supersede all written or oral
communication between the Parties prior to its execution, all understandings and
negotiations regarding the same having been merged herein, it being their
intention that this be an integrated agreement. This Access Agreement shall not
be modified except by written agreement of the Parties.
12. Nothing in this Access Agreement shall waive or prejudice any right,
claim, cause of action or defense that any Party otherwise may have under the
law.
13. Nothing in this Access Agreement shall confer any rights upon
non-parties hereto, whether owners of other properties in the area of the
Property or any other persons.
14. This Access Agreement may be executed in counterparts which, taken
together, shall constitute one and the same agreement.
15. This Access Agreement shall be governed by the laws of the State of
Texas.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-20
IN WITNESS WHEREOF, the Parties' duly authorized representatives have
signed this Agreement as of the day and year first above written.
PROPERTY OWNER
DRESSER, INC.
Address: 2601 Beltline Road
Carrollton, Texas 75006
By:______________________________
Printed Name:____________________
Title:___________________________
Date:____________________________
HALLIBURTON ENERGY SERVICES, INC.
Address: P. O. Box 3 (03-903)
Houston, Texas 77001-0003
By:______________________________
Printed Name:____________________
Title:___________________________
Date:____________________________
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-21
ATTACHMENT "A"
Being all of Restricted Reserve "A" of Welex Plant Site, a Subdivision of 49.00
acres of land, according to the Map or Plat thereof recorded in Volume 329, Page
52, of the Map Records of Harris County, Texas, being the same tract or parcel
of land conveyed to Halliburton Company by Deed dated June 19, 1973, filed for
record under Harris County Clerk's File No. D902754.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX V-22
Appendix VI
EMPLOYEE BENEFITS AGREEMENT
This Employee Benefits Agreement, dated as of April 10, 2001 (the
"Effective Date"), is by and among Halliburton Company, a Delaware corporation
(the "Parent") and Dresser, Inc., a Delaware corporation ("Dresser").
RECITALS:
The Parent and Dresser desire to enter into this Employee Benefits
Agreement with respect to implementation of matters concerning employees and
employee benefits in connection with the recapitalization set forth in the
Amended and Restated Agreement and Plan of Recapitalization dated April 10, 2001
among Halliburton Company, the Seller Named Therein, and DEG Acquisitions, LLC,
a Delaware limited liability company (the "Acquiror") (the "Recapitalization
Agreement").
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter expressed, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Terms used in this Employee Benefits Agreement with initial capitalization
shall have the same meanings as are ascribed to such terms under the
Recapitalization Agreement, except as otherwise specifically indicated herein.
ARTICLE II
EMPLOYEE MATTERS
Section 2.1 Employment. Dresser agrees that all of the employees of each
member of each Company Group on the Closing Date will be retained in employment
(the "Continued Employees"). Nothing in this Employee Benefits Agreement shall
create any obligation on the part of any member of the Dresser Group (as defined
in Section 2.2) to continue the employment of any Continued Employee for any
definite period of time following the Effective Date.
Section 2.2 Equivalent Compensation. For a period commencing on the
Effective Date and ending on December 31, 2001, Dresser or another member of
either Company Group (all of which shall constitute of the "Dresser Group") or
Non-Controlled Entities (the "Dresser Group") shall provide for Continued
Employees in the aggregate, other than those covered by a collective bargaining
agreement or similar agreement, employee compensation and employee benefit
plans, programs, and policies that are in the aggregate no less favorable than
those in effect with respect to similarly situated employees of the Company
Groups immediately prior to the Effective Date.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI
Section 2.3 Credit for Service. Continued Employees shall be given credit
for all service with the Parent and each ERISA Affiliate thereof under all
employee benefit plans, programs, and fringe benefit arrangements of the Dresser
Group in which they become participants. The service credit given is for
purposes of eligibility, vesting, and service related benefits, but not benefit
accrual, except as otherwise provided in this Employee Benefits Agreement.
Section 2.4 Participation in Parent Benefit Plans. Except as set forth
herein, prior to the Effective Date, the Parent shall cause the members of each
Company Group to withdraw as participating employers or to cease to be
designated as participating employers in the Parent Group's employee benefit
plans effective as of the Effective Date.
Section 2.5 Vacation. Vacation entitlement accrued but not utilized by a
Continued Employee for the year in which the Effective Date occurs under the
vacation policy applicable to such Continued Employee immediately prior to the
Effective Date shall be recognized by the Dresser Group following the Effective
Date.
Section 2.6 Other Liabilities. Except as otherwise provided in Articles
VI, VII and VIII, notwithstanding any other provision in this Employee Benefits
Agreement or the Recapitalization Agreement to the contrary, (a) all liabilities
related to employees of the Businesses arising from events occurring either
before or after the Effective Date shall be the responsibility of Dresser,
including, but not limited to liabilities incurred by reason of the sale of the
Businesses pursuant to the Recapitalization Agreement but excluding (i) any
Losses for which an Indemnified Party is entitled to indemnification pursuant to
Section 12.02(a)(i) of the Recapitalization Agreement, (ii) Parent's obligations
pursuant to Sections 3.1(b) and 3.2(b) of this Employee Benefits Agreement, and
(iii) any loss, liability, damage or expense (net of applicable insurance
proceeds) resulting from claims related to insured risks involving workers
compensation arising out of or based on events or occurrences prior to the
Closing Date as to which Dresser has notified the Parent prior to the third
anniversary of the Closing Date, and (b) Dresser hereby indemnifies and holds
the Parent and its ERISA Affiliates harmless from and against any and all such
liabilities described in the foregoing clause (a) and any damages, claims and
expenses with respect thereto.
ARTICLE III
WELFARE PLANS
Section 3.1 Active Employee Welfare Plans.
(a) Effective as of 12:00 midnight on the day prior to the Effective Date,
the members of each Company Group shall withdraw as participating employers from
each employee welfare benefit plan, as defined in Section 3(1) of ERISA, and
each plan that would be an employee welfare benefit plan if it were subject to
ERISA (such as a plan maintained outside the United States), sponsored by the
Parent or a member of the Parent Group (the "Prior Welfare Plans"), and all
Continued Employees shall cease to participate in such plans as of such date.
Except as otherwise provided in any applicable collective bargaining agreements
or similar agreements, Dresser shall (i) cause the Continued Employees to
commence participation in similar benefit plans of the Dresser
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-2
Group on the Effective Date (the "Replacement Welfare Plans"), (ii) waive, or
cause to be waived, all limitations as to pre-existing condition exclusions and
waiting periods that were in effect with respect to the Continued Employees
under the Replacement Welfare Plans, other than, but only to the extent of,
limitations or waiting periods that were in effect with respect to such
employees under the Prior Welfare Plans and that have not been satisfied as of
the Effective Date, and (iii) provide, or cause to be provided, each Continued
Employee with credit for any co-payments and deductibles paid prior to the
Effective Date in satisfying any deductible or out-of-pocket requirements under
the Replacement Welfare Plans (on a pro-rata basis in the event of a difference
in plan years).
(b) Claims for benefits by Continued Employees arising out of occurrences
on or subsequent to the Effective Date shall be covered by the Replacement
Welfare Plans in accordance with the terms of such plans. Claims for benefits by
Continued Employees arising out of occurrences prior to the Effective Date shall
be covered by the Prior Welfare Plans in accordance with the terms of such
plans, and Parent shall retain any liabilities for premiums, payments, or other
costs with respect to such claims under the Prior Welfare Plans, provided,
however, that any such obligation that is reflected as an accrued liability on
the Closing Financial Statements shall remain as a liability of the Company
Group. For this purpose, (i) claims for medical, dental, prescription drug, and
vision benefits by Continued Employees shall be considered to have occurred on
the date of purchase or the date service or treatment was rendered, as
applicable, (ii) claims for life insurance and accidental death and
dismemberment insurance benefits shall be considered to have occurred on the
date of death or the date the accident occurred, and (iii) claims for disability
benefits shall be considered to have occurred on the date the disability
commenced.
Section 3.2 Retiree Medical and Life Benefits.
(a) Effective as of the Effective Date, all retiree medical and life
benefit liabilities with respect to the Continued Employees, employees who
retired from employment with a member of a Company Group, and any other
employees who retired from employment connected to the Businesses ("Prior
Retirees") and their eligible dependents provided under the Subplans to the
Halliburton Company Welfare Benefits Plan (Plan 526) that are listed on Schedule
A attached hereto shall be assumed by Dresser (the "Assumed Retiree Benefits").
In connection with such assumption, Dresser shall assume sponsorship of the
portion of Plan 526 that constitutes the Assumed Retiree Benefits and shall, (i)
with respect to Subplan 501 of Plan 526, maintain the Assumed Retiree Benefits
under the same terms as in effect on the Effective Date without any reduction in
the amount or form of benefits provided thereunder (except to the extent
required by law and except to the extent that any modifications thereto are
consistent with changes in the medical plans provided by Dresser for similarly
situated active employees) and (ii) with respect to all other subplans listed on
Schedule A, maintain the Assumed Retiree Benefits in accordance with the
collective bargaining agreements governing such subplans as negotiated from time
to time. The Parent Group shall not be responsible for providing the Assumed
Retiree Benefits (a) to any Prior Retiree or to any dependent thereof, nor (b)
to any Continued Employee who retires or terminates employment subsequent to the
Effective Date. Dresser hereby indemnifies and holds the Parent and its ERISA
Affiliates harmless from and against any and all damages, liabilities, claims or
expenses incurred for post-retirement medical and life benefits made by any
Continued Employee or Prior Retiree with respect to the Assumed Retiree
Benefits.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-3
(b) The Acquiror and/or Dresser may request, by written notice to the
Parent no later than March 31, 2001, that the Parent notify, in writing and
prior to the Effective Date, any Continued Employees, employees who retired from
employment with a member of a Company Group, and Prior Retirees, in each case
who received retiree medical and/or retiree life benefits under plans other than
the Subplans to Plan 526 that are listed on Schedule A attached hereto, that
such retiree medical and/or retiree life benefits shall no longer be provided to
such employees and retirees after the Effective Date. The Parent shall permit
Dresser to review and approve any such communication prior to its distribution
to such employees and retirees.
Section 3.3 Flexible Spending Accounts. Effective as of the Effective Date
with respect to Continued Employees participating in health care and/or
dependent care flexible spending account plans sponsored by the Parent, Dresser
shall cause the Dresser Group to have in effect health care and dependent care
flexible spending account plans for the benefit of each such Continued Employee,
the terms of which shall (i) be substantially similar in all material respects
to the flexible spending account plans sponsored by the Parent for such
Continued Employees, (ii) give full effect to, and continue in effect, salary
reduction elections made under such flexible spending account plans sponsored by
the Parent, and (iii) place such Continued Employees in the same status with
respect to account balances and claims paid as such Continued Employees were
under the flexible spending account plans sponsored by the Parent as of the
Effective Date. The net aggregate balances of the health care and dependent care
flexible spending accounts with respect to Continued Employees (reflecting
contributions to and claims paid through the Effective Date) shall be reflected
on the Closing Financial Statements. Any claims made by Continued Employees with
respect to the health care and dependent care flexible spending accounts that
have not been paid as of the Effective Date shall be paid by Dresser or another
member of the Dresser Group subject to and in accordance with the terms of the
health care and/or dependent care flexible spending account plans of the Dresser
Group.
Section 3.4 COBRA. The Parent shall be responsible for providing
continuation coverage as required by Section 4980B of the Code or similar state
law ("COBRA"), under a group health plan maintained by the Parent or an
affiliate of the Parent, to any employee, officer, director, consultant, or
agent of the Company Group, and other qualified beneficiaries under COBRA with
respect to such individuals, who have a COBRA qualifying event (due to
termination of employment with the Parent or otherwise) prior to or on the
Effective Date (the "Continuees"). The Parent shall indemnify and hold all
members of the Dresser Group harmless from any and all damages, liabilities,
claims or expenses incurred by the Dresser Group by reason of the Parent or any
members of its controlled group (as determined for purposes of COBRA) ceasing to
maintain a group health plan.
ARTICLE IV
DOMESTIC RETIREMENT PLANS
Section 4.1 Assumption of Retirement Plans. Effective as of the Effective
Date, Dresser shall assume sponsorship of the following plans in their
entireties:
Dresser Industries, Inc. Pension Plan for the International Association of
Machinists and
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-4
Aerospace Workers, AFL-CIO, Local 2218, Dresser Valve and Controls
Division, Alexandria , LA (Plan No. 002)
Dresser Industries, Inc. Dresser Manufacturing Division (Bradford) Pension
Plan for Local 1644 (Plan No. 006)
Dresser Industries, Inc. Pension Plan for United Automobile, Aerospace and
Agricultural Implement Workers of America, Local 1118 of Roots Blower
Division, Connersville, IN (Plan No. 016)
Dresser Industries, Inc. Pension Plan for Truck Drivers, Chauffeurs,
Warehousemen Helpers, Union Local 707, Dresser Manufacturing Division,
Chicago, Illinois (Frozen) (Plan No. 059)
Dresser Industries, Inc. Pension Plan for Office and Professional
Employees International Union, Local 465, AFL-CIO, Valve and Controls
Division, Alexandria, Louisiana (Plan No. 067)
Dresser Industries, Inc. Pension Plan for the United Paperworkers
International Union, AFL-CIO, Local No. 7399, Instrument Division, Berea,
Kentucky (Plan No. 075)
Dresser Industries, Inc. Pension Plan for Hourly Employees of Instrument
Division, Newtown, Connecticut (Plan No. 078)
Dresser Industries, Inc. Pension Plan for Hourly Employees of Nil-Cor
Operations, Alliance, Ohio (Frozen) (Plan No. 123)
Dresser Industries, Inc. Pension Plan for UAW, Local 470, Dresser Valve
and Controls Division, Avon and Canton, Mass. (Plan No. 158)
Dresser Industries, Inc. Pension Plan for Graphic Communications Union
Local 388, Dresser Valve and Controls Division, Montebello, California
(closed plan) (Plan No. 159)
Dresser Industries, Inc. Retirement Plan for IAM, District 10, Waukesha
Engine Division, Waukesha, Wisconsin (Plan No. 169)
Wayne Division (Salisbury, Maryland) of Dresser Industries, Inc. Pension
Plan for International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, Local 354 (Plan No. 178)
Dresser Industries, Inc. Retirement Plan for Local 145 of International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America,
Hourly Employees and Draftsmen, Instrument Division, Stratford,
Connecticut (Plan No. 180)
Dresser Industries, Inc. Retirement Plan for Local 145 of International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America,
Office Unit, Instrument Division, Stratford, Conn. (Plan No. 183)
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-5
Dresser Industries, Inc. Union Plan (401(k)) (Plan No. 196).
Effective immediately before the Effective Date, the members of the Parent Group
shall withdraw from participation in and sponsorship of the foregoing plans and
shall not be responsible for providing any benefits under such plans. For
purposes of the Closing Balance Sheet, the Projected Benefit Obligation (the
"PBO") calculated in accordance with United States Statement of Financial
Accounting Standards No. 87 ("FAS 87") with respect to the plans listed in this
Section 4.1 shall be determined using the same actuarial assumptions used for
determining such obligation for the Initial Balance Sheet. Dresser hereby
indemnifies and holds the members of the Parent Group and their ERISA Affiliates
harmless from and against any and all damages, claims, liabilities or expenses
arising from such plans.
Section 4.2 Spin-off of Plan 164. Effective as of the Effective Date,
Dresser shall cause to be established a defined benefit pension plan (the
"Dresser Defined Benefit Plan") for the benefit of participants (including
retired and deferred vested participants) in the Dresser Industries, Inc.
Consolidated Salaried Retirement Plan (Plan No. 164) ("DICON") as of the
Effective Date who are Continued Employees or whose employment prior to their
retirement or termination of employment was in connection with the Businesses
("Former Business Employees") (including alternate payees related thereto) (such
participants and alternate payees being hereinafter referred to as the
"Transferred DICON Participants"). The Dresser Defined Benefit Plan shall have
terms substantially similar to DICON as in effect immediately before the
Effective Date, preserving all accrued benefits with respect to the Transferred
DICON Participants. The Continued Employees shall be given credit in the Dresser
Defined Benefit Plan for service with Dresser and its ERISA Affiliates for
purposes of determining Vesting Service under the Dresser Defined Benefit Plan.
In connection with the foregoing, the following actions will be taken:
(i) At the time and in the manner set forth in paragraph (ii) below, the
Parent shall cause to be transferred to the Dresser Defined Benefit
Plan a pro-rata portion of the assets of DICON in an amount equal to
the total assets of DICON as of the Effective Date multiplied by the
accumulated benefit obligations with respect to the Transferred
DICON Participants under DICON as of the Effective Date divided by
the total accumulated benefit obligations with respect to all
participants under DICON as of the Effective Date.
(ii) The accumulated benefit obligations pursuant to paragraph (i) above
shall be determined by Hewitt Associates in accordance with FAS 87
and based on the actuarial assumptions set forth on Schedule B
attached hereto; provided, however, that the transfer pursuant to
paragraph (i) above shall be subject to satisfaction of the
requirements of section 414(l) of the Code and any other applicable
governmental requirements as determined by Hewitt Associates and
subject further to the review of such determinations by Dresser as
set forth in Section 12.1. The transfer of assets will take place as
soon as administratively practicable after the completion of the
calculation and the obtaining of any required governmental approvals
or otherwise complying with applicable governmental requirements.
The amount transferred will be determined as of the Effective Date
and will also include interest at seven percent
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-6
per annum from the Effective Date until the day immediately
preceding the transfer. The assets will be transferred in cash (or
other property reasonably acceptable to Dresser).
(iii) Benefit payments to Transferred DICON Participants in pay status
shall continue to be made from DICON following the Effective Date
and until the date of the asset transfer described in paragraph
(ii). Any such payments, adjusted for applicable interest, shall be
deducted from the amount required to be transferred to the Dresser
Defined Benefit Plan pursuant to paragraph (ii).
(iv) Dresser agrees to apply for a favorable Internal Revenue Service
determination letter as to the qualified status of the Dresser
Defined Benefit Plan as soon as administratively practicable after
the Effective Date. Dresser agrees to make any operational or form
changes with respect to the Dresser Defined Benefit Plan as may be
required by the Internal Revenue Service so that such a favorable
determination letter will be issued.
Following any such transfer of assets, Dresser shall assume all obligations and
liabilities of the Parent Group under DICON with respect to the Transferred
DICON Participants, and the Parent Group shall have no further liability to
Dresser or any Transferred DICON Participant with respect thereto. Dresser
hereby indemnifies and holds the members of the Parent Group and their ERISA
Affiliates harmless from and against any and all damages, claims, liabilities,
and expenses arising from DICON with respect to the Transferred DICON
Participants.
Section 4.3 Administration of Terminated Retirement Plan: Effective as of
the Effective Date, Dresser shall assume all responsibilities for the
administration of the group annuity contracts issued by The Prudential Insurance
Company of America (the "Group Annuity Contracts") in connection with the
termination of the Dresser Industries, Inc. Retirement Income Plan under ERISA,
as constituted on April 1, 1986 ("Plan 19") with respect to those participants
(including retired and deferred vested participants) who are Continued Employees
or Former Business Employees (including alternate payees related thereto) (such
participants being hereafter referred to as the "Transferred Plan 19
Participants"). Effective immediately before the Effective Date, the members of
the Parent Group shall relinquish administration of the Group Annuity Contracts
with respect to Transferred Plan 19 Participants and shall not be responsible
for providing any such administration with respect to such contracts. Dresser
hereby indemnifies and holds the Parent and its ERISA Affiliates harmless from
and against any and all damages, claims, liabilities and expenses associated
with the administration of the Group Annuity Contracts with respect to the
Transferred Plan 19 Participants.
Section 4.4 Spin-off of 401(k) Plan:
(a) Effective as of the Effective Date, Dresser shall have in effect a
tax-qualified defined contribution plan that includes a qualified cash or
deferred arrangement within the meaning of Section 401(k) of the Code ("Dresser
401(k) Plan") and that provides terms that are identical to the Halliburton
Retirement and Savings Plan (Plan No. 001) with respect to the pension equalizer
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-7
contribution formula thereunder as it applies to the Continued Employees who are
entitled to such pension equalizer contribution immediately before the Effective
Date, but taking into account any retirement benefits provided to the Continued
Employees by any plan or program of Dresser after the Effective Date (the
"Pension Equalizer") and shall maintain such terms with respect to the pension
equalizer contribution formula without revision (provided, however, that if
changes in the law require any such terms to be modified, such terms may be
changed to comply with such laws). At such time after the Effective Date that
the Parent is reasonably satisfied that the Dresser 401(k) Plan meets the
requirements for qualification under Section 401(a) of the Code, the Parent
shall cause to be transferred to the Dresser 401(k) Plan in a trust to trust
transfer in cash (or other property reasonably acceptable to Dresser) assets
equal to the value of the accounts (but not including assets reflecting any
matching or other Parent contributions accrued but not yet contributed as of the
Effective Date to the extent such contributions are accrued liabilities on the
Closing Financial Statements) of the participants (including retired and
deferred vested participants) in the Halliburton Retirement and Savings Plan
(Plan No. 001) and the Halliburton Savings Plan (Plan No. 145) who are Continued
Employees or Former Business Employees (including alternate payees related
thereto) (such participants and alternate payees being hereinafter referred to
as the "Transferred 401(k) Participants"); provided that any outstanding loans
to Transferred 401(k) Participants from the Halliburton Retirement and Savings
Plan (Plan No. 001) and the Halliburton Savings Plan (Plan No. 145) shall be
transferred in kind. After the Effective Date and prior to any such transfer,
Dresser and the Parent shall cooperate in the administration of distributions to
and loan repayments from the Transferred 401(k) Participants.
(b) Following any such transfer of assets, Dresser shall assume all
obligations and liabilities of the Parent Group under the Halliburton Retirement
and Savings Plan (Plan No. 001) and Halliburton Savings Plan (Plan No. 145) with
respect to the Transferred 401(k) Participants, and the Parent Group shall have
no further liability to Dresser or any Transferred 401(k) Participant with
respect thereto. Dresser hereby indemnifies and holds the members of the Parent
Group and their ERISA Affiliates harmless from and against any and all damages,
claims, liabilities and expenses arising from the Halliburton Retirement and
Savings Plan (Plan No. 001) and the Halliburton Savings Plan (Plan No. 145) with
respect to the Transferred 401(k) Participants.
ARTICLE V
FOREIGN RETIREMENT PLANS
Section 5.1 Assumption of Foreign Retirement Plans. Effective as of the
Effective Date, Dresser shall cause one or more members of the Dresser Group to
assume sponsorship of the following plans in their entireties:
Belgium
Plan 0104 - Reglement de l'Assurance de Groupe Deces/Retraite de la Societe
Dresser Europe S.A. (DB Plan)
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-8
Brazil
Contrato de Instituicao de Plano Previdenciario de Beneficios nao Definidos (DC
Pension Fund)
France
Plan 2501 Masoneilan Retirement Indemnity
Germany
Plan 2201 - Grundzuge der betrieblichen Altersversorgung fur die Beschaftigten
der firma Dresser Europe S.A. (Einbeck and Bremen Branches) (Pension)
Plan 2202 - Betriebliche Altersversorgung fur Fuhrungskrafte der International
Harvester Company (Management)(Pension)
Plan 2203 - Richtlinien uber die Pensionszusagen der International Harvester
Company (Pension)
Plan 2205 - Pan Geo Atlas (Pension)
Plan 2209 - Betriebsvereinbarung uber den Pensionsplan fur die Mitarbeiter der
Dresser Europe S.A., Niederlassung Baesweiler (Pension)
Dresser Europe S.A., ASS
Plan 2210 - Dresser Europe GmbH (aka Dresser Europe S.A.)
Hong Kong
National Mutual Central Provident Fund
Italy
TFR Plans (Nos. 5641, 5981, and 5983)
Japan
DVD - Nimco Qualified Pension Plan for Retirement
Netherlands
Bedrijfspensioenfonds Voor de Metaal (Industry-wide DB plan)
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-9
Excedent Pension Plan Delta Lloyd (Top Hat DB plan)
Plan 58457 - Excedent Verzeuering (Top Hat Pension Insurance Regulations)
Norway
Plan 16411 - Tjenestepenjonsforsikring (DB Plan)
South Africa
Plan 2601 - Dresser South Africa Staff Pension Scheme (DB Plan)
Metal Industries Provident Fund (Industry-wide DC Plan)
Sweden
Trygg Plan (DC Plan for Managing Director)
STP Plan for Wage Earner (centralized industry-wide pension plan)
ITP Plan for Salaried Employees (centralized industry-wide pension plan)
Book reserve for current retirees and terminated vesteds
Switzerland
Plan 11525 - Kurzbeschrieb Des Personalvorsorgeplanes (DB plan)
Effective immediately before the Effective Date, the members of the Parent Group
shall withdraw from participation in and sponsorship of the foregoing plans and
shall not be responsible for providing any benefits under such plans. For
purposes of the Closing Balance Sheet, the PBO calculated in accordance with FAS
87 with respect to the plans listed in this Section 5.1, where applicable, shall
be determined using the same actuarial assumptions used for determining such
obligation for the Initial Balance Sheet. Dresser hereby indemnifies and holds
the members of the Parent Group harmless from and against any and all damages,
claims, liabilities and expenses arising from such plans.
Section 5.2 Spin-off of Foreign Retirement Plans. Effective as of the
Effective Date, Dresser shall cause to be established defined benefit pension
plans ("Dresser Foreign Defined Benefit Plans") for the benefit of participants
in the Dresser Canada Retirement Income Plan (the "Canadian Plan") and the
Halliburton UK Pension Plan (collectively, the "Foreign Pension Plans") who are
Continued Employees or Former Business Employees or any other individuals whose
benefits are derived therefrom (the "Transferred Foreign Pension Plan
Participants"). The Dresser Foreign Defined Benefit Plans shall have
substantially similar terms as the Foreign Pension Plans
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-10
as in effect immediately before the Effective Date, preserving all accrued
benefits with respect to the Transferred Foreign Pension Plan Participants. The
Continued Employees shall be given credit in the relevant Dresser Foreign
Defined Benefit Plan for service credited under the relevant Foreign Pension
Plan for purposes of determining vesting service (and eligibility for other
service-related ancillary benefits such as early retirement) under the Dresser
Foreign Defined Benefit Plan. In connection with the foregoing, the following
actions will be taken:
(i) At the time, in the amounts, and in the manner set forth in
paragraph (ii) below, the Parent shall cause assets from the Foreign
Pension Plans to be transferred to the relevant Dresser Foreign
Defined Benefit Plan as of the Effective Date.
(ii) The amount of assets to be transferred shall be determined by the
Parent's appointed actuary for each Foreign Pension Plan in
accordance with local country law and practice but subject to the
review of such determinations by Dresser as set forth in Section
12.1 and subject to the following provisions of this subparagraph
5.2(ii).
(A) With respect to the Halliburton UK Pension Plan, to the extent
permitted by local law or practice, the amount of assets to be
transferred will be equal to the PBO calculated in accordance
with FAS 87 using the assumptions described in Schedule C. To
the extent that a payment in excess of such PBO is transferred
pursuant to the requirements of local law or practice, the
amount of such surplus shall be reflected on the Closing
Balance Sheet.
(B) With respect to the Canadian Plan, to the extent permitted by
applicable Law, the amount of assets to be transferred will be
a pro-rata portion of the assets of the Canadian Plan equal to
the total assets of the Canadian Plan as of the Effective Date
multiplied by the PBO with respect to the Transferred Foreign
Pension Plan Participants under the Canadian Plan as of the
Effective Date divided by the PBO with respect to all
participants under the Canadian Plan as of the Effective Date.
The PBO pursuant to the foregoing sentence will be determined
in accordance with FAS 87 and based on the actuarial
assumptions set forth on Schedule C attached hereto. To the
extent that the amount of assets to be transferred pursuant to
this paragraph 5.2(ii)(B) exceeds the PBO with respect to the
Transferred Foreign Pension Plan Participants under the
Canadian Plan calculated in accordance with this paragraph
5.2(ii)(B), the amount of such surplus shall be reflected on
the Closing Balance Sheet.
The transfer of assets will take place as soon as administratively
practicable after the completion of the calculations and the
obtaining of any required governmental approvals or otherwise
complying with applicable governmental or other legal requirements.
The amount transferred will be determined as of the Effective Date
and will also include interest as set out in Schedule C from the
Effective Date until the day immediately preceding the transfer. The
assets will be transferred in cash (or
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-11
other property reasonably acceptable to Dresser). The Parent and
Dresser agree to provide such data and information as necessary to
assist the appointed actuary in the preparation of the calculation
of the transfer amount and the filing of any governmental or other
forms.
(iii) Benefit payments to Transferred Foreign Pension Plan Participants
shall continue to be made from the relevant Foreign Pension Plan
following the Effective Date and until the date of the asset
transfer described in paragraph (ii). Any such payments, adjusted
for applicable interest, shall be deducted from the amount required
to be transferred to the Dresser Foreign Defined Benefit Plans
pursuant to paragraph (ii).
Following any such transfer of assets, Dresser shall cause the Dresser Group to
assume all obligations and liabilities of the Parent Group under the Foreign
Pension Plans with respect to the Transferred Foreign Pension Plan Participants,
and the Parent Group shall have no further liability to the Dresser Group or
former Foreign Pension Plan participant with respect thereto. Dresser hereby
indemnifies and holds the members of the Parent Group harmless from and against
any and all damages, claims, liabilities and expenses arising from such plans
with respect to the Transferred Foreign Pension Plan Participants.
ARTICLE VI
NONQUALIFIED DEFERRED COMPENSATION PLANS
Section 6.1 Assumption of Liabilities. Dresser shall assume the accrued
liabilities as of the Effective Date of the Continued Employees under the
following nonqualified deferred compensation plans sponsored by the Parent or
members of the Parent Group: the Dresser Industries, Inc. Deferred Compensation
Plan, the Halliburton Elective Deferral Plan, the Halliburton Company Senior
Executives' Deferred Compensation Plan, the ERISA Excess Benefit Plan for
Dresser Industries, Inc., and the Supplemental Executive Retirement Plan of
Dresser Industries, Inc. (the "Parent Group Nonqualified Plans").
Section 6.2 Creation of Dresser Plan(s). Dresser shall create one or more
nonqualified deferred compensation plans (the "Dresser Nonqualified Plan(s)") to
reflect such assumed liabilities, to provide for continued earnings credits
thereon, and to provide for payment of the accrued liabilities under the terms
of the Parent Group Nonqualified Plans as in effect immediately prior to the
Effective Date. The Dresser Nonqualified Plan(s) shall not be required to allow
continued deferrals or accrual of benefits (other than earnings) thereunder.
With respect to accrued liabilities assumed from the Dresser Industries, Inc.
Deferred Compensation Plan, the Dresser Nonqualified Plan(s) shall convert
valuations based on stock of the Parent to equivalent valuations based on stock
of Dresser, or at Dresser's election, to a cash equivalent based on the
valuation method set forth in Section VI. 1. of the Dresser Industries, Inc.
Deferred Compensation Plan. The parties hereto agree to cooperate and assist
each other with all matters relating to the deferred compensation arrangements
set forth in this Article VI, including the establishment of successor plans.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-12
ARTICLE VII
EQUITY COMPENSATION
Section 7.1 Stock Options and Restricted Stock. The options to purchase
common stock of the Parent and the outstanding awards of restricted common stock
of the Parent, in each case held on the Effective Date by those Continued
Employees selected by the Acquiror by written notice to the Parent no later than
March 31, 2001, shall be assumed by Dresser and shall be converted into options
to purchase stock of Dresser, or restricted stock of Dresser, as the case may
be. Such conversion shall be made on a fair and equitable basis, reflecting the
relative values of the stock of the Parent and the stock Dresser and, with
respect to options, the applicable option purchase price; provided that in the
case of any option to which section 421 of the Code applies by reason of
qualification under section 422 of the Code, such conversion shall be made in a
manner that complies with section 424(a) of the Code. Subject to obtaining any
required consents of the affected Continued Employees, the Acquiror may elect,
by written notice to Parent no later than March 31, 2001, that the liability for
any cash payments that may otherwise be payable with respect to restricted
common stock of the Parent as of the Effective Date shall be assumed by Dresser
and Dresser shall create one or more deferred compensation plans which shall
reflect such assumed liabilities as book reserves hypothetically invested as
either (a) units of "phantom equity" of Dresser or (b) cash earning interest at
a rate determined by Dresser in its discretion. Dresser agrees to, and hereby
does, indemnify and hold the Parent Group harmless from and against any
liabilities, costs, damages, claims or expenses with respect to (x) any and all
matters and any and all actions taken in connection with any liabilities assumed
pursuant to the foregoing provisions of this Section 7.1, (y) Parent's liability
with respect to any and all restricted stock awards or any and all cash payments
in connection with restricted stock awards that are assumed by Dresser pursuant
to this Section 7.1, and (z) the establishment and operation of any deferred
compensation plan(s) by Dresser in connection with this Section 7.1, including
but not limited to the content and distribution of election forms and summary
descriptions of any such plans and compliance with any and all applicable Laws
and any tax consequences with respect to such plans and deferral elections
thereunder.
Section 7.2 Creation of Equity Plan(s). Dresser shall create one or more
plans to effectuate the assumption and substitution of the restricted stock and
options set forth in Section 7.1. The parties hereto agree to cooperate and
assist each other with all matters relating to the assumption and conversion of
the options and restricted stock set forth in this Article VII, including the
establishment of successor plans.
ARTICLE VIII
RETENTION AGREEMENTS
The payments set forth in each of the retention agreements entered into
between Dresser, Inc., the Parent, and certain Continued Employees, copies of
which have been furnished to Dresser (the "Retention Agreements"), shall be paid
by the Parent to each such Continued Employee in accordance with the terms of
the Retention Agreements, provided that, in lieu of the foregoing, subject to
obtaining any required consents of the affected Continued Employees, the
Acquiror may
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-13
elect, by written notice to the Parent no later than March 31, 2001, that the
liability for the payments under any or all of the Retention Agreements shall be
assumed by Dresser, and Dresser shall create one or more nonqualified deferred
compensation plans which shall reflect such assumed liabilities as book reserves
hypothetically invested as either (a) units of "phantom equity" of Dresser or
(b) cash earning interest at a rate determined by Dresser in its discretion.
Dresser agrees to, and hereby does, indemnify and hold the Parent Group harmless
from and against any liabilities, costs, damages, claims or expenses with
respect to (x) any and all matters and any and all actions taken in connection
with any liabilities assumed pursuant to the foregoing provisions of this
Article VIII, (y) Parent's liability with respect to any and all payments under
the Retention Agreements that are assumed by Dresser hereunder, and (z) the
establishment and operation of any deferred compensation plan(s) by Dresser in
connection with this Article VIII, including but not limited to the content and
distribution of election forms and summary descriptions of any such plans and
compliance with any and all applicable Laws and any tax consequences with
respect to such plans and deferral elections thereunder.
ARTICLE IX
EMPLOYMENT OBLIGATIONS
Except as otherwise provided herein, effective as of the Effective Date,
Dresser shall cause the Dresser Group to assume all liability and responsibility
for all obligations connected with employment of the Continued Employees and
with respect to the Former Business Employees, including, but not limited to,
social security, retirement/termination indemnities, and participation in
mandated employee benefit plans (whether due to Law or collective bargaining or
similar agreement) without regard to when such obligations were incurred.
Dresser hereby indemnifies and holds the members of the Parent Group harmless
from and against any and all claims or liabilities arising from such employment
obligations.
ARTICLE X
APPLICATION TO SUBSEQUENT PURCHASERS
In the event that any other business entity (regardless of its
relationship to the Dresser Group) acquires all or a portion of a member of a
Company Group (whether as a stock purchase or asset purchase), (a) Dresser will
require any such entity (i) to maintain the benefits described in Section 3.2
and to maintain a defined contribution plan which provides the Pension Equalizer
to those Transferred 401(k) Participants who are eligible to participate in the
Pension Equalizer immediately before the Effective Date, (ii) to provide
indemnities identical to those set forth in Sections 3.2 and 4.4 herein in favor
of Dresser, and (iii) to require any and all successor entities to comply with
the foregoing clauses (i) and (ii) in the event any other business entity
subsequently acquires all or a portion of such member of the Company Group.
Notwithstanding the foregoing, the indemnities set forth in Sections 3.2 and 4.4
shall survive without qualification in the event that any other business entity
(regardless of its relationship to the Dresser Group) acquires all or a portion
of a member of the Company Group.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-14
ARTICLE XI
MUTUAL COOPERATION
The Parent shall cause the Parent Group and Dresser shall cause the
Dresser Group each to cooperate with the other to effectuate the provisions of
this Employee Benefits Agreement, including, but not limited to, obtaining any
required consents of Continued Employees to the benefit changes described in
Articles VI, VII, and VIII. Promptly after the Effective Date, in addition to
any other actions required to be taken by the Parent under this Employee
Benefits Agreement, the Parent shall furnish Dresser with any and all data,
reports, compilations, calculations, and working papers not then in the
possession of Dresser that relate to the benefit liabilities that are being
assumed by the Dresser Group hereunder and that are reasonably necessary to
enable the Dresser Group to fulfill any and all obligations they have assumed
under this Employee Benefits Agreement.
ARTICLE XII
DISPUTED CALCULATIONS
Section 12.1 Calculation of DICON and Foreign Pension Plan Spin-Offs. The
calculations contemplated in Sections 4.2 and 5.2 shall first be made by the
Parent's actuary. The Parent shall provide a copy of such calculations to
Dresser's actuary promptly upon completion thereof along with such other
information as such Dresser's actuary may reasonably request, which information
shall be true and correct in all material respects. If Dresser's actuary
concludes that the calculations made by the Parent's actuary are incorrect or
inconsistent with Sections 4.2 or 5.2, as applicable, the parties shall seek to
resolve the difference among themselves or, if they are unable to do so, shall
resolve such matter in accordance with the procedure set forth in Section 12.3.
Section 12.2 Calculations of Assumed Retiree Benefits. In the event an
error in the Census Data (as defined below) with respect to the retiree medical
and retiree life benefits assumed by Dresser pursuant to Section 3.2 is
discovered by the Parent or Dresser (collectively, the "Contracting Parties") or
any affiliate or any agent (including an actuary or actuaries) of any of the
Contracting Parties prior to the six month anniversary of the Effective Date,
such Contracting Party has the obligation to notify the Parent and Dresser of
such error in the Census Data in writing within 30 days of the six month
anniversary of the Effective Date in accordance with the notice provisions of
Section 14.01 of the Recapitalization Agreement. If the actuary or actuaries of
any Contracting Party determine that the Cumulative Effect of all errors in
Census Data discovered prior to the six month anniversary of the Effective Date
nets to $500,000 or more, such Contracting Party shall supply all Contracting
Parties with such determination, along with such other information as any
Contracting Party shall reasonably request, within 60 days following the six
month anniversary of the Effective Date and the Affected Party (as defined
below) shall have 30 days to review such determination. In the event the
Affected Party disputes such determination, any such dispute shall be resolved
between the Parent and Dresser, or if they are unable to do so, such dispute
shall be resolved according to Section 12.3, with the 30 day period referred to
in Section 12.3(a) commencing on the date the Affected Party receives such
determination. In the event the Cumulative Effect (as defined below) of all
errors in Census Data is determined under the foregoing
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-15
provisions to exceed $500,000 (a) if such Cumulative Effect is a net decrease in
liability, Dresser shall pay to Parent the amount of any such net decrease in
liability and (b) if such Cumulative Effect is a net increase in liability, the
Parent shall pay to Dresser the amount of any such net increase in liability.
Any such payment shall be made within 30 days that the amount of such Cumulative
Effect is finally determined pursuant to this Section 12.2 and pursuant to
Section 12.3, if applicable.
For purposes of this Section 12.2 the following terms shall have the following
meanings:
(i) "Affected Party" shall mean the Parent or Dresser, as applicable, to
whom another Contracting Party has provided an actuarial
determination pursuant to this Section 12.2 that would require a
payment from such party pursuant to this Section.
(ii) "Census Data" shall mean the following basic demographic information
with respect to Continued Employees, Prior Retirees and their
eligible dependents (according to the status of such individuals as
eligible dependents as of May 1, 2000) (hereinafter "Assumed
Retirees"): identification of such individuals, date of birth, date
of hire, gender, amount of life insurance coverage in effect on May
1, 2000, the benefit and level of retiree medical coverage elected
on May 1, 2000 (if applicable), and with respect to individuals who
as of May 1, 2000, were not yet eligible for retiree medical or
retiree life insurance benefits, the identification of which
programs and benefits such individuals may become eligible for as of
May 1, 2000. Any change effective after May 1, 2000, in the
following information shall not be considered to be an error in
census data for purposes of this Employee Benefits Agreement: (i)
changes in coverage elections, (ii) eligible dependent status, (iii)
available coverages, and (iv) accrual of service and normal aging
from and after May 1, 2000.
(iii) "Cumulative Effect" shall mean (A) the net aggregate effect of each
error in Census Data on the total liability for retiree medical and
retiree life with respect to Assumed Retirees calculated as of May
1, 2000; provided, however, for these purposes such liability shall
be the Accumulated Post Retirement Benefit Obligation (APBO) as
described in Statement of Financial Accounting Standards No. 106 as
of May 1, 2000, as calculated by Hewitt Associates using the same
actuarial assumptions and methods as used to determine the APBO as
reflected in the Initial Financial Statements, multiplied by (B) a
factor of 1.21.
Section 12.3 Resolution of Disputes With Respect to Calculations.
(a) If the parties do not reach a final resolution within 30 days
following the date the Parent has provided the calculations to
Dresser's actuary under Section 12.1 or within 30 days following the
date an Affected party has received a "determination" from a
Contracting Party under Section 12.2, as applicable, unless the
parties mutually agree to continue their efforts to resolve such
differences, an actuary selected jointly by the Parent's actuary and
Dresser's actuary (or, if such actuaries
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-16
are unable to jointly agree on such an actuary, an arbitrator
selected by the New York, NY office of the American Arbitration
Association (the "Arbitrator")) shall resolve such differences in
the manner provided below. The Parent and Dresser shall each be
entitled to make a presentation to the Arbitrator, pursuant to
procedures agreed to among the Parent, Dresser and the Arbitrator,
advocating the merits of the calculations espoused by such party,
and the Arbitrator shall be required to resolve the differences
between the parties and determine the appropriate calculations
within ten business days thereafter. Such determination shall be
conclusive and binding upon such parties, absent fraud or manifest
error.
(b) Nothing herein shall be construed to authorize or permit the
Arbitrator to determine any questions or matters whatsoever under or in
connection with this Employee Benefits Agreement except for resolution of
difference between the parties regarding the calculations set forth in
this Article XII.
(c) The Parent and Dresser shall share equally the fees and expenses of
the Arbitrator; provided that if the Arbitrator determines that one party
has adopted a position or positions with respect to the calculations
referenced in this Article XII that is frivolous or clearly without merit,
the Arbitrator may, in his or her discretion, assign a greater portion of
any such fees or expenses to such party.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1 Governing Law. EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW,
THIS EMPLOYEE BENEFITS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 13.2 Invalid Provisions. If any provision of this Employee
Benefits Agreement is held to be illegal, invalid, or unenforceable under any
present of future Law, and if the rights or obligations of either party under
this Employee Benefits Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Employee Benefits
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Employee Benefits Agreement will remain in full force and
effect and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom; and (d) in lieu of such illegal,
invalid, or unenforceable provision, there will be added automatically as a part
of this Employee Benefits Agreement a legal, valid, and enforceable provision as
similar in terms to such illegal, invalid, or unenforceable provision as may be
possible.
Section 13.3 Counterparts. This Employee Benefits Agreement may be
executed in counterparts, each of which shall be deemed an original but all of
which taken together shall constitute but one and the same agreement.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-17
Section 13.4 Headings. The article and section headings herein are for
convenience only and shall not affect the construction hereof.
Section 13.5 Entire Agreement. This Employee Benefits Agreement, the
Recapitalization Agreement and the other Ancillary Agreements collectively
constitute the entire agreement and supersede all other prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof; provided, however, that in the event of any
inconsistencies between this Employee Benefits Agreement and the
Recapitalization Agreement, the terms of this Employee Benefits Agreement shall
control.
Section 13.6 Use of Certain Words, Terms, and Phrases. Unless the context
of this Employee Benefits Agreement otherwise requires the Rules of Construction
under the Recapitalization Agreement, including Section 1.01 shall govern
herein; provided however that (a) the terms "hereof," "herein," "hereby,"
"hereto," and derivative or similar words will refer to this entire Employee
Benefits Agreement; and (b) the terms "Article" or "Section" will refer to the
specified article or section of this Employee Benefits Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Employee
Benefits Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-18
PARENT
HALLIBURTON COMPANY
By:
--------------------------------------------
Name:
Title:
DRESSER
DRESSER, INC.
By:
--------------------------------------------
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-19
SCHEDULE A
Assumed Retiree Benefits
The following Subplans of the Halliburton Company Welfare Benefits Plan (Plan
526) are those with respect to which Dresser is assuming the Assumed Retiree
Benefits, as such term is defined in Section 3.2 (the Subplan numbers correspond
to the former Dresser Industries, Inc. welfare benefits plan numbers):
o Subplan 501 for non-union salaried and hourly employees grandfathered for
Dresser retiree medical.
o Subplan 511 for hourly employees of Roots Division, Connersville, Indiana,
represented by the United Automobile, Aerospace and Agricultural Implement
Workers of America, Local No. 1118.
o Subplan 519 for employees of Wayne Salisbury, represented by UAW Local
354.
o Subplan 537 for employees of Waukesha Engine.
o Subplan 540 for employees of Waukesha, Clinton, Iowa.
o Subplans 542 and 543 for Hourly Retirees of the Instrument Division -
Stratford of Dresser, International Brotherhood of Teamsters Local #145
for Retirees Retiring on or after May 15, 1995.
o Subplan 544 for hourly employees of Instrument Division, at Berea,
Kentucky, who are in a job classification represented for collective
bargaining purposes by United Paper Workers International Union AFL-CIO,
Local No. 7399.
o Subplan 545 for employees of DVD, Alexandria, represented by IAM Local
2518.
o Subplan 546 for employees of DVD, Alexandria, represented by OPEIO Local
465.
o Subplan 549 for hourly employees of DMD Division, at Bradford,
Pennsylvania, who are in a job classification represented for collective
bargaining purposes by International Association of Machinists and
Aerospace Workers, AFL-CIO, Local No. 1644.
o Subplan 552 for the hourly employees of DMD, Wellsboro.
o Subplan 693 for employees of Masoneilan, Dresser Valve Division, a
Halliburton Company and the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America (UAW) and its
Local No. 470.
o Subplan 746 for Texsteam Inc. Collectively Bargained Employees.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-20
SCHEDULE B
Actuarial Assumptions for Spin-off of Plan Assets from
Dresser Industries, Inc. Consolidated Salaried Retirement Plan
Interest Rate 7.00% per year.
Salary Scale Not applicable.
Retirement Rates Retirement is assumed to occur based on rates that vary
by age (assumed mid-year decrement).
Sample rates are shown below:
Age Rate Age Rate
--- ---- --- ----
55 4.000% 63 15.517%
56 4.167% 64 12.245%
57 4.348% 65 88.372%
58 4.546% 66 20.000%
59 4.762% 67 25.000%
60 6.250% 68 33.333%
61 6.6667% 69 50.000%
62 17.143% 70 100.000%
Participants eligible for benefits under the Vested
Termination provisions of the Plan are assumed to
commence payment of their benefit at age 65.
Mortality Rates
Active and Inactive Lives 1983 Group Annuitant's Mortality Table.
Withdrawal Rates Table A attached.
Disability Rates None assumed.
Marriage Rates 85% of participants are assumed to be married. Males are
assumed to be three years older than females.
Lump Sum 90% of the participants eligible for a lump sum of
their pre-1986 benefit are assumed to elect a lump sum
upon decrement. The lump sum is calculated using the 83
GATT mortality table and 6.75% interest.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-21
Actuarial Assumptions and Methods
Table A
Probability of Withdrawal in a One-Year Period
Current Age Males Females
- ----------- ----- -------
20 .1392 .1914
21 .1320 .1815
22 .1272 .1749
23 .1224 .1683
24 .1176 .1617
25 .1128 .1551
26 .1080 .1485
27 .1032 .1419
28 .0984 .1353
29 .0936 .1287
30 .0888 .1221
31 .0840 .1155
32 .0792 .1089
33 .0768 .1056
34 .0720 .0990
35 .0672 .0924
36 .0648 .0891
37 .0600 .0825
38 .0576 .0792
39 .0552 .0759
40 .0528 .0726
41 .0504 .0693
42 .0504 .0693
43 .0480 .0660
44 .0456 .0627
45 .0432 .0594
46 .0408 .0561
47 .0384 .0528
48 .0360 .0495
49 .0336 .0462
50 .0312 .0429
51 .0288 .0396
52 .0264 .0363
53 .0240 .0330
54 .0216 .0297
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-22
SCHEDULE C
Actuarial Assumptions for Spin-off of Plan Assets from
Dresser Canada, Inc. Retirement Income Plan
Interest Rate 7.0% per year.
Salary scale 4.5% per year
YMPE increases 3.75% per year
Increase in ITA maximum 3.75% per year starting 2005
Mortality table 1983 GAM
Assumed retirement age 63.5
Withdrawal rates (percent per year) Age Males Females
--- ----- -------
20 11.6% 16%
25 9.4% 12.9%
30 7.4% 10.2%
35 5.6% 7.7%
40 4.4% 6.1%
45 3.6% 5.0%
50 2.6% 3.6%
55 1.6% 2.2%
60 Zero Zero
Disability rates None
Percentage married 85% of participants are assumed to be married at
retirement age. Males are assumed to be 3 years older
than female spouses
Interest rate to be applied from the Actual rate of return of plan assets from the Effective Date
Effective Date until the date until the day immediately preceding the transfer
immediately preceding the
transfer
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-23
Actuarial Assumptions for Spin-off of Plan Assets from
Halliburton UK Pension Plan
Interest Rate 6.5% per year
Salary scale 4.5% per year
Pension increase/price inflation 2.5% per year
Assumed retirement age Normal retirement age (or earliest age at which no
actuarial reduction factor applies to the benefit
tranche in question)
Post retirement mortality table PA(90) rated down by 3 years for both males and females
Pre retirement mortality table A 1967/70 ultimate, unadjusted for males and rated down
by 4 years for females
Withdrawal rates (percent per year) Age Males Females
--- ----- -------
20 26.0% 30.0%
25 23.0% 27.0%
30 13.0% 17.0%
35 8.0% 8.0%
40 5.0% 3.0%
45 2.5% Zero
50 Zero Zero
55 Zero Zero
60 Zero Zero
Disability rates None
Percentage married Age Males Females
--- ----- -------
20 10.7% 30.3%
30 81.0% 88.1%
40 86.9% 88.8%
50 87.5% 83.5%
60 86.0% 69.6%
70 78.0% 44.4%
80 59.0% 21.0%
90 30.0% 5.0%
Interest rate to be applied from the Actual rate of return of plan assets from the Effective Date
Effective Date until the date until the day immediately preceding the transfer
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-24
immediately preceding the
transfer
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VI-25
Appendix VII
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT, dated as of April 10, 2001 (the
"Agreement"), is between Dresser, Inc., a Delaware corporation (the "Company"),
and Halliburton Company, a Delaware corporation ("Halliburton").
Pursuant to the transactions contemplated in that certain Amended
and Restated Agreement and Plan of Recapitalization dated as of April 10, 2001
(the "Recapitalization Agreement") among Halliburton, the Seller named therein
and Dresser Acquisitions, LLC (the "Acquiror"), the Acquiror is acquiring
approximately 94.9% of the capital stock of the Company. This Agreement is being
executed and delivered pursuant to Section 10.02 of the Recapitalization
Agreement. In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Halliburton and the Company have agreed to the following transition
arrangements:
1. Transition Services.
(a) During the period of nine months following the date hereof or such
shorter period as may be specified with respect to any particular Service (as
defined below) in the Service Level Specifications attached as Annex A hereto,
(i) Halliburton agrees to provide, or cause its affiliates to provide, to the
Company and its controlled affiliates those specific services listed in the
Service Level Specifications as being provided by Halliburton (the "Halliburton
Services") and (ii) the Company agrees to provide, or cause its affiliates to
provide, to Halliburton and its controlled affiliates those specific services
listed in the Service Level Specifications as being provided by the Company (the
"Company Services" and, together with the Halliburton Services, the "Services").
The Service Level Specifications set forth how each Service is to be performed,
the length of time such Service is to be provided and the costs that will be
charged for such Service (subject to the costing principles set forth therein).
In its capacity as a provider, whether by itself or any of its controlled
affiliates, of Services hereunder, each of Halliburton and the Company is
referred to herein as a "Service Provider", and, in its capacity as a receiver,
whether for itself or any of its controlled affiliates, of Services hereunder,
each of Halliburton and the Company is referred to herein as a "Service
Receiver."
(b) If either party hereto can identify a third party service provider who
agrees to provide a Service to the Service Receiver at a lower cost than that
specified in the Service Level Specifications for such Service, then the Service
Receiver shall have the right to request the Service Provider to reduce its cost
to an amount equal to the cost offered by the third party. The Service Provider
shall have the right either to accept or reject any such cost reduction request.
If
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII
the Service Provider decides to reject any such request, then the Service
Receiver shall have the rights to terminate the specific Service (subject to the
notice provisions herein) and to obtain such services directly from the third
party service provider.
(c) Halliburton and the Company shall each designate one individual (a
"Representative") who shall oversee and administer this Agreement. These
individuals shall cooperate to resolve any differences between the managers of
the Service Provider and the managers of the Service Receiver. These individuals
shall also establish procedures for billing and paying for the Services.
(d) The Company may terminate one or more Halliburton Services listed in
the Service Level Specifications and Halliburton may terminate one or more
Company Services listed in the Service Level Specification, in each case upon 30
days prior written notice, except that the Service Receiver may terminate any
Service pursuant to subsection (b) of this Section 1 at any time.
Notwithstanding the periods for which the Services are to be provided set forth
in the Service Level Specifications, Halliburton and the Company agree to
cooperate in their efforts to terminate the use of the Services by each such
party as soon as reasonably practicable.
(e) From time to time after the date hereof, the parties may identify
additional services that Halliburton or the Company heretofore provided to the
other. At the request of the other party, Halliburton or the Company, at its
sole option, may decide to provide such services to the other party. In such an
event, the parties shall create an Addendum to the Service Level Specifications
for each additional service setting forth the name of the Service Provider, a
description of the additional service, the time period during which the
additional service will be provided, the charge for the additional service and
any other terms applicable thereto and shall obtain approval thereof from each
party's Representative. In this Agreement, all references to "Services" shall
include any additional services hereunder.
(f) Annex A attached hereto identifies certain services that are currently
provided by third party vendors ("Vendors") pursuant to contracts between
Halliburton or the Company and the Vendor ("Vendor Services"). Each of
Halliburton and the Company shall use its commercially reasonable efforts to
obtain any required consents of the Vendors so that the Vendor Services can be
provided to the other party. If such consents are not obtained, then Halliburton
or the Company, as appropriate, shall use its commercially reasonable efforts to
assist the other party in obtaining these services directly from the Vendor.
2. Billing and Payment. Within fifteen (15) days after the end of each
month, the Service Receiver shall remit to the Service Provider, by wire
transfer to an account specified by the Service Provider, the fees specified in
the Service Level Specifications, other than any fees or expenses required to be
paid directly to third parties pursuant to subsection 8(b). If such payment is
not made within thirty (30) days after the date due, then the Service Provider,
at its option, may immediately terminate the furnishing of all Services
hereunder.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-2
3. Mutual Obligations. Each party hereto and its controlled affiliates
shall cooperate with the other party and its affiliates in all reasonable
respects in the performance of this Agreement by a party providing Services
hereunder and shall respond promptly to requests of the other party for consents
of or other communication from such other party or its controlled affiliates.
4. Transitional Nature of Services. The parties acknowledge the
transitional nature of the Services and that either party hereto may make
changes from time to time in the manner of performing the Services if such party
is making similar changes in performing similar services for itself or its
affiliates. The party making any such change shall provide notice to the other
party of any such change.
5. Representative. Each party may treat an act of the Representative of
the other party as being authorized by such other party without inquiring behind
such act or ascertaining whether such Representative had authority to so act.
The initial Representatives are named on Annex B. Each party shall have the
right at any time and from time to time to replace its Representative by giving
notice in writing to the other party setting forth the name of (i) the
Representative to be replaced and (ii) the replacement, and certifying that the
replacement Representative is authorized to act for the party giving the notice
in all matters relating to this Agreement. Each Representative is hereby
authorized by the party he or she represents to approve modifications to the
Service Level Specifications for Services and the Addenda thereto for additional
services.
6. Certain Limitations.
(a) Service Boundaries. Except as provided in the Service Level
Specifications for a specific Service: (i) the Service Provider shall be
required to provide the Service only to the extent and only at the locations
such Service was being provided by the Service Provider to the Service Receiver
and its controlled affiliates immediately prior to the date hereof; and (ii) the
Services will be available only for purposes of conducting the businesses of the
Service Receiver and its controlled affiliates substantially in the manner in
which they were conducted prior to the date hereof.
(b) Impracticability. Neither party shall be required to provide any
Service to the other to the extent that the provision of such Service becomes
"impracticable" as a result of a cause or causes outside the reasonable control
of such party, including without limitation (i) performance by such party is
technologically not feasible without additional expenditures by such party, (2)
provision of such Service would require such party to violate any applicable
law, rule or regulation; (3) provision of such Service would cause such party to
be in the breach of any software license or any other applicable contract or (4)
provision of such Service would cause such party to lose any material benefit
from any contract or relationship with a third party. At the date of this
Agreement, neither party is aware of any such violations or breaches that would
result from the provision of the Services as contemplated hereunder.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-3
7. Taxes, Costs and Payments to Third Parties.
(a) The Service Receiver shall be responsible for all sales, use and other
similar taxes, levies and charges (other than taxes based on net income or net
profits) imposed by applicable taxing authorities on the provision of Services
to the Service Receiver hereunder. If the Service Provider or any of its
affiliates is required to pay such taxes, levies or charges, the Service
Receiver shall promptly reimburse the Services Provider therefor.
(b) Unless otherwise agreed, all payments to third parties relating to the
Services hereunder shall, upon provision by a Service Provider to a Service
Receiver of an invoice therefore, be paid directly by the Service Receiver to
the third party. If the parties agree that a Service Provider shall make any
payments to third parties for the benefit of the Service Receiver, the Service
Receiver shall promptly reimburse the Service Provider for any such payments.
The provisions of this subsection (b) shall not affect the costs of the Services
as reflected in the Service Level Specifications.
8. Independent Contractor. In providing services hereunder, a Service
Provider and each of its affiliates shall act solely as independent contractors.
Nothing herein shall constitute or be construed to be or create a partnership,
joint venture or principal/agent relationship between the parties hereto.
9. Warranties. IT IS SPECIFICALLY UNDERSTOOD AND AGREED BY THE PARTIES
THAT THERE ARE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE PROVISION OF
SERVICES HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE
SPECIFICALLY DISCLAIMED.
10. Responsibility For Errors; Delays. A Service Provider's sole
responsibility to the Service Receiver:
(a) for errors or omissions in Services caused by the Service Provider or
an affiliate thereof shall be to furnish corrected information or adjustment in
the Services, at no additional cost or expense to the Service Receiver;
provided, however, that the Service Receiver must advise the Service Provider
with reasonable promptness of any such error or omission of which it becomes
aware;
(b) for failure to deliver any Service because of impracticability, shall
be to notify the Service Receiver of the impracticability and to use reasonable
efforts to make the Services available or to resume performing the Services as
promptly as reasonably practicable; and
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-4
(c) for an error or fault in a system (a "System Error") that did not
exist in the system immediately before the date hereof shall be to use
commercially reasonable efforts, taking into account the importance of the
System Error and the affected system to the business operations of the Service
Receiver, to cooperate with the Service Receiver to correct such System Error.
11. Limitation of Liability. Neither the Service Provider nor any of its
officers, directors, affiliates, employees or agents shall have any liability
relating to or in connection with this Agreement or the provision of the
Services other than for acts of gross negligence or willful misconduct. IN NO
EVENT SHALL THE SERVICE PROVIDER BE LIABLE TO THE SERVICE RECEIVER OR ITS
AFFILIATED COMPANIES FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL LOSS
OR DAMAGES OF ANY KIND.
12. Indemnity. (a) The Service Receiver releases, indemnifies and holds
harmless the Service Provider and its officers, directors, affiliates, employees
and agents from and against any and all costs, expenses (including, without
limitation, reasonable attorneys' fees), losses, claims, suits, actions, or
liabilities (collectively, "Losses") in any way arising from or relating to the
provision of Services by the Service Provider, including the negligence of the
Service Provider, excepting only Losses arising out of the gross negligence or
willful misconduct of the Service Provider or its affiliates. This indemnity
shall survive the termination of this Agreement.
(b) Subject to the limitation on liability of the Service Provider as set
forth in Section 12 above, the Service Provider shall indemnify and hold
harmless the other party hereto and its officers, directors, affiliates,
employees and agents from and against any and all Losses arising out of the
gross negligence or willful misconduct of the Service Provider in providing such
Services. This indemnity shall survive the termination of this Agreement.
13. Validity of Documents. The parties hereto shall be entitled to rely
upon the genuineness, validity or truthfulness of any document, instrument or
other writing presented in connection with this Agreement unless such document,
instrument or other writing appears on its face to be fraudulent, false or
forged.
14. Assignment. This Agreement shall not be assignable in whole or in part
by either party hereto without the prior written consent of the other, which
consent shall not be unreasonably withheld. It is understood that consent would
be unreasonably withheld if a failure to agree to an assignment would cause
material damage to the business of the Service Receiver. Notwithstanding the
foregoing, Halliburton may assign this Agreement to Halliburton Energy Services,
Inc., a Delaware corporation and a wholly owned subsidiary of Halliburton.
15. Confidentiality. In relation to the performance of the Services
hereunder, the Service Provider agrees that any confidential or proprietary
information that it obtains from the Service Receiver shall not be disclosed to
third parties (except affiliates of the Service Provider) unless the Service
Provider or an affiliate thereof is legally required, by order of any court or
otherwise, to disclose such information. In such an event, the Service Provider
shall provide the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-5
Service Receiver with written notice of such legal requirement to disclose and
shall use its reasonable efforts to afford the Service Receiver an opportunity
to contest such disclosure. It is expressly understood that no information shall
be deemed to be confidential or proprietary if the Service Provider learned of
such information from a third party, independently had knowledge of such
information other than as a result of the corporate relationship between the
parties hereto prior to the date hereof or such information is available through
the public domain through no fault of the Service Provider or its affiliates. In
any event, the obligations of each party hereto under this Section 15 shall
terminate on the second anniversary of the date hereof.
16. Force Majeure. Any delay or failure by the Service Provider in the
performance of this Agreement shall be excused to the extent that the delays or
failure are due to causes or contingencies beyond the reasonable control of the
Service Provider.
17. Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
19. Good Faith Cooperation; Consents. The parties shall cooperate with
each other in good faith in all matters relating to the provision and receipt of
Services. Such cooperation shall include exchanging information, providing
electronic access to systems used in connection with the Services, and obtaining
all consents, licenses, sublicenses or approvals necessary to permit each party
to perform its obligations hereunder. The parties will cooperate with each other
in making such information available as needed in the event of any and all
internal or external audits, whether in the United States or any other country.
The Representatives of each party shall consult with each other regularly and
the parties hereto shall cooperate with each other in all reasonable respects in
order to effect an efficient transition and to minimize the disruption therefrom
to the business of all parties.
20. Recapitalization Agreement. Nothing contained in this Agreement is
intended or shall be construed to amend or modify in any respect, or constitute
a waiver of, any of the rights and obligations of the parties under the
Recapitalization Agreement.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-6
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first set forth above.
HALLIBURTON COMPANY
By: __________________________________
Name: __________________________________
Title: __________________________________
DRESSER, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-7
ANNEX A
SERVICE LEVEL SPECIFICATIONS
1 - HALLIBURTON's facility located on Beltline Road in Carrollton, Texas will
provide I.T. support for 6 months after the close of the sale. At the end of the
6 months, DRESSER, INC. desires the option to extend the support agreement. This
service agreement will include server, LAN/WAN, E-mail, Internet and Legacy
application support. DRESSER, INC. management in Carollton will continue to use
the HALLIBURTON LAN until they move to their new location. All DRESSER, INC.
servers will be consolidated at the HALLIBURTON Carollton location in order to
facilitate the transfer of the equipment. All DRESSER, INC. related circuits
except for a T1 (owned by DRESSER, INC.) between the HALLIBURTON Carollton
office and ADS will be re-routed from the NBC hub to the ADS hub by 3/31/01.
DRESSER, INC. will pay $5,000 per month for the services provided for a period
not to exceed 6 months. Requires 30 days notice to stop services without
penalty.
11 - Accounting services in support of DRESSER, INC. Management trial balances
on SAP, including recording cash funding transactions, bank reconciliations,
misc JV entries, recording of IC billings, trial balance and financial stmt
review. Training to be provided to DRESSER, INC. Corporate staff once resources
and GL system are in place to assume these duties. Cost for providing such
services will be $9,300 per month. Service period not to exceed 90 days from the
Closing Date.
13 - Processing on SAP of Accounts Payable invoices, wire transfers, document
retrieval and reconciliation services as required from the SAP intercompany
Department in Duncan, Oklahoma will be provided at a cost of $5,000 per month
for a period not to exceed 90 days.
26 - Duncan Payroll will provide tax related data collection/reporting services
using FLS. Duncan Payroll will remit payments and the applicable returns of
DRESSER, INC. Federal/State/Local withholding taxes. This service will also
include the remittance of employer FICA, Medicare, and Unemployment Taxes.
Multiple worksite reporting is included in this service through June 30, 2001.
This service will be provided until such time as DRESSER, INC. has FLS installed
or other such software to handle this task. Federal and State unemployment
returns and payments as well as multiple worksite reports will be prepared by
Duncan Payroll for the 1st Quarter 2001 only. Fee for such services is $3,800
per month. Any such tax related payment made on behalf of DRESSER, INC. will be
reimbursed to HALLIBURTON within 3 banking days via wire transfer. There will be
no penalty for early termination of this service.
28 - The Americans Transaction Tax Department will complete the Sales and Use
Tax statutory
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-8
reporting/filing requirement for the consolidated DRESSER, INC. business
divisions for first quarter (Jan - Mar 2001) activity. This activity is reported
on returns due in April. Americans Transaction Tax will also make any Sales and
Use Tax prepayments to taxing authorities of behalf of DRESSER, INC. due in
April and provide routine tax support to DRESSER, INC. divisions through the
Closing Date. DRESSER, INC. will be invoiced and will reimburse HALLIBURTON for
any payments made on behalf of DRESSER, INC. for liabilities incurred on or
after the Effective Date. These services will be provided after the Closing Date
at a cost of $8,000 per month. If state and local return filing for compliance
only are required after the Closing Date, the fee will be reduced to $6,000 per
month.
33 - International HR will provided services for the Tax Year 2000 to include
1.Expat Tax support - 2. US Immigration Support . Cost will be $1,355 per expat
and $2,500 per visa plus any additional outside provider cost or outside lawyer
fees.
34 - Dispute Resolution Services will be provided to include initial intake and
documentation of employment related dispute calls/contacts from DRESSER, INC.
employees to include coordination of conflict resolution as appropriate with
DRESSER, INC. management. Cost will include any actual cost billed by outside
sources such as lawyers, mediation/arbitration services, travel costs,
settlement etc. This service will be provided for 90 days.
35A - HALLIBURTON GLOBAL BENEFITS will provide transition services in the form
of consulting and assistance to transfer benefit administration to DRESSER, INC.
HEWITT & Co will continue benefits administration and invoice DRESSER, INC.
directly for services provided beginning with the Effective Date. The service
will be provided HALLIBURTON by Global Benefits until July 31, 2001 at a cost of
$50,000 per month. Assistance with short plan audit year for Dresser Industries
Inc Consolidated Salaried Retirement Plan 164 will be provided at a cost of
$6,000. There will be no penalty for early termination of this service
35B - Hewitt & Co will coordinate "re-contracting " with vendors to duplicate
coverage with DRESSER, INC. as plan sponsor effective as of sale date, except
that life insurance services shall be provided by Halliburton's vendor at
Halliburton's internal cost for a period not to exceed 60 days. All costs for
such services will be invoiced directly to DRESSER, INC. There will be no
penalty for early termination of this service
35C - GROUP INSURANCE: The April 20th premium will be paid by HALLIBURTON and
rebilled to DRESSER, INC. by Benefits Acctg. - The allocation of premiums will
be based on the financial statement effectivity date agreed upon by both
parties. The May 20th premium process will be sent directly to DRESSER, INC. by
Hewitt .
35D - DEFINED CONTRIBUTION PLANS: DRESSER, INC. has selected Vanguard as their
recordkeeper. Contributions after sale date flow to Vanguard. Plan to Plan
transfer of balances under HALLIBURTON R&S targeted for June 30, 2001. DEFINED
CONTRIBUTION fees are charged to the trust and will continue until assets are
transferred. DRESSER, INC. agrees to
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-9
continue such trust charges until the transfer of Trust Assets. DRESSER, INC.
agrees to reimburse HALLIBURTON for any applicable fees not charged to the
trust.
35E - DEFINED BENEFIT PLANS: DRESSER, INC. has selected Vanguard as their
recordkeeper. Contributions after sale date flow to Vanguard. Plan to Plan
transfer of balances under HALLIBURTON R&S targeted for June 30, 2001. DEFINED
BENEFIT fees are charged to the trust and will continue until assets are
transferred. DRESSER, INC. agrees to continue such trust charges until the
transfer of Trust Assets. DRESSER, INC. agrees to reimburse HALLIBURTON for any
applicable fees not charged to the trust.
36 - DRESSER, INC. will procure that the UK Subsidiary enters into a deed of
admission to the Halliburton UK Pension Plan ("the HUK Plan") which sets out the
terms upon which the UK Subsidiary will participate in the HUK Plan. Subject to
entering into and continuing to comply with the terms of such deed of admission
and to the approval of the Inland Revenue, the UK Subsidiary will be permitted
to participate in the HUK Plan for a period of 6 months from the Closing Date or
such other period as HALLIBURTON AND DRESSER, INC. agree and does not prejudice
approval by the Inland revenue of the HUK Plan. Employer contributions into the
trust on behalf of these employees will be the responsibility of the UK
Subsidiary (currently at 11.5% of payroll) for the duration of the transition
period. This rate includes a load for the day-to-day administration which will
continue to be provided by the HUK Plan administrators until the end of the
transition period. Other transitional expenses outside this scope will be paid
for directly by the UK Subsidiary.
38B - HALLIBURTON agrees to provide space for the DRESSER, INC. Waukesha staff
currently officed at its North Belt Facility in Houston, Texas on a
month-to-month basis. However, DRESSER, INC. agrees to relocate its staff at the
earliest possible date, but not later than July 31, 2001. DRESSER, INC. must
provide the RES site manager with a 15-day notice. This will include
approximately 2,000 sq. ft for a total monthly rental amount of $4,138.90.
38C - HALLIBURTON agrees to provide 10,593 sq. ft of space for the DRESSER, INC.
staff currently officed at its Carrollton Facility on a month-to-month basis.
DRESSER, INC. agrees to relocate its staff at the earliest possible date, but
not later than September 30, 2001. DRESSER, INC. must provide the RES site
manager with a 15-day notice. DRESSER, INC. assumes ownership of their existing
furniture. This service will be provided at a monthly rental rate of $16,948.80.
38D - DRESSER, INC. will have access to the food catering services provided at
the Carollton Facility. Services utilized will be invoiced to DRESSER, INC. by
the food service vendor
38E - Mail services to include pickup and delivery to facility will be included
in the monthly rental rate for Carollton and North Belt Facilities. Any
additional mail services to include but not limited to 1st Class, FedEx and DHL
will be charged based on actual metered usage.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-10
38G - Full Service Management of the Hwy 6 Facility in Houston Texas. As of the
effective date of closing, buyer assumes all costs for the Hwy 6 facility
associated with depreciation, taxes, utilities, local voice services (to include
PBX maintenance and local telco services), copiers and facsimile equipment, and
renovations/moves. In each case as provided on Annex C, HALLIBURTON will,
through June 30, 2001, provide the facility operations and maintenance services
it has provided during its ownership of the facility at a cost of $130,693 per
month and, through May 31, 2001, provide Security and Mail services it has
provided during its ownership of the facility at a cost of $33,022 per month.
HALLIBURTON will bill DRESSER, INC. for operations and maintenance and for
security for the entire facility; and will bill DRESSER, INC. for mail services
for the space DRESSER, INC. actually occupies.
41A - Travel Services apply to DRESSER, INC. Corporate Card holders in the US,
Canada, and United Kingdom. Fees will be added to the employee's American
Express credit card. In those cases where a DRESSER, INC. employee does not
possess a corporate card, then the fee is assessed and applied to the ticket
cost. Travel reservations (initial, changes, voids & refunds $30, ABA standard
$30, ABA for non card holders $100). Travel rates charged will be comparable to
rates charged to Halliburton and its affiliates.
41B - Passport & Visa Services are coordinated through the HALLIBURTON Travel
Services. Cost charged will be added to employee's credit card. In those cases
where a DRESSER, INC. employee does not possess a corporate card, then the fee
will be billed at cost directly to DRESSER, INC.
41C - Cellular phone services through Verizon and AT & T will remain in effect
through the current HALLIBURTON contract after Closing Date. DRESSER, INC. will
make all efforts to transfer such services to a new contract in the name of
DRESSER, INC. within six months following Closing Date. Cost for such services
will be invoiced direct to individual users during this time period. Should
HALLIBURTON be required to pay any past due invoices for Services after the date
of closing, DRESSER, INC. will indemnify and reimburse all associated costs.
41D - British Standard Institute (BSI) - DRESSER, INC. will continue to be able
to acquire standards via HALLIBURTON agreement until August 2001; after which,
DRESSER, INC. must subscribe on their own. Any services provided by BSI will be
invoiced directly to DRESSER, INC.
41E - HALLIBURTON agrees to provide space for the DRESSER, INC. Waukesha/Wayne
staff currently officed at 79 Anson Road in Singapore through April 30, 2001.
DRESSER, INC. will provide HALLIBURTON with a 15 day notice prior to relocation.
Rate will be based on the assignable square footage at UD $2.95 square foot per
month. DRESSER, INC. will provide a 15 days notice provide to vacating the
property. Monthly lease cost is US$2,994.10 and US$1,690.35 for Wayne and
Waukesha respectively.
42A - Voice/Fax Services currently provided at any HALLIBURTON facilities via
the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-11
HALLIBURTON Software Defined Network (HSDN) including long distance and calling
cards will be provided through current Concert Contract ending 11/2001. When
service is renegotiated or extended with Concert our service to DRESSER, INC.
will be reevaluated at that time. If decision is made to discontinue service to
DRESSER, INC. it will require minimum 180 days for DRESSER, INC. to transfer to
a new carrier. Costs will be billed directly to DRESSER, INC. through HSDN
billing system using the existing rates.
48 - HALLIBURTON will provide payroll services from their Infinium system
located at the North Belt Facility in Houston, Texas. HALLIBURTON will produce
checks for the semi-monthly employees under the DEV group (Texsteam, TK Valve,
Grove, Becker Precision, and Tom Wheatley) as well as hourly checks. The
Infinium Payroll will interface the data collection information to Jerry Lenihan
for further distribution to their Benefit Provider. Cost for this service is
$4,800 per month and will be prorated for any part of a month the service is not
required. There will be no penalty for early cancellation of this service.
Medical and Child Care spending accounts managed by Boone-Chapman & Associates
will be settled by DRESSER, INC. to HALLIBURTON for any deficit between the
amounts that have been reimbursed to DRESSER, INC. employees and the amount that
has been credited to their respective accounts via payroll deduction as of the
Closing Date. If DRESSER, INC. is unable to establish their own funding
arrangements with Boone-Chapman & Associates following the Closing Date,
HALLIBURTON will continue to provide the service for a period not to exceed 90
days. Funds expended on behalf of DRESSER, INC. employees for Spending Account
reimbursement will be paid to HALLIBURTON within 3 banking days. Any direct or
proportional fees charged by Boone-Chapman for such services will be paid by
DRESSER, INC.
HALLIBURTON will provide data acquisition and reporting services of foreign
exchange balance sheet exposure for a period of up to 90 days from the Closing
Date. HALLIBURTON will use the "Dresser EMS" system which has been the standard
system of accumulating this data prior to the divestiture. Dresser EMS depends
on receiving exposure information from each RUI in the form of a template
(DA2D). The data collected will be compiled into the normal reports that were
being generated prior to the divestiture and provided to DRESSER, INC. Treasury
Department. The charge for this service will be USD 4,000.00 per month for which
the reports are generated.
HALLIBURTON will assign Rene Berkel, currently in the Netherlands Tax
Department, full time in support of Treasury Management and other duties as
assigned by DRESSER, INC. for a fee of $11,025 per month. Service period shall
not exceed 6 months and there will be no penalty for early cancellation by
DRESSER, INC.
HALLIBURTON agrees to provide space for the DRESSER, INC. DVD currently officed
at SW 44th Street in Oklahoma City, Oklahoma on a month-to-month basis. Service
period shall not exceed 6 months and there will be no penalty for early
cancellation by DRESSER, INC. DRESSER, INC. must provide the RES site manager
with a 15-day notice. The total monthly
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-12
rental amount will be $400.00
HALLIBURTON agrees to provide space for the DRESSER, INC. EVD currently officed
at 6900 Arctic Blvd, Anchorage, Alaska on a month-to-month basis. Service period
shall not exceed 6 months and there will be no penalty for early cancellation by
DRESSER, INC. DRESSER, INC. must provide the RES site manager with a 15-day
notice. The total monthly rental amount will be $2,650.00.
HALLIBURTON will pay the transfer costs of approximately $40,000 to transfer
BPCS seat licenses of System Software Associates, Inc. from Dresser Industries,
Inc. to DRESSER, INC.. DRESSER, INC. will pay the costs for the support and
maintenance services.
SERVICES TO BE PROVIDED BY DRESSER, INC. TO HALLIBURTON AND/OR ITS
AFFILIATES
51 - KBR GEAC Payroll - Via ADS, DRESSER, INC. will provide to KBR uninterrupted
and continuing operations support for execution of the KBR GEAC Payroll System
(GEAC software licensed to HALLIBURTON). "Support" includes ADS operations
staff, KBR staff use of ADS environment and interface software tools currently
used in the execution of the KBR GEAC Payroll, communications processes between
ADS and KBR Cullen Center IT Operations Center for routing and printing of GEAC
checks and reports, accesses and communications between ADS and
banking/financial institutions for Automated Clearing House (ACH) processing,
generation of electronic output for federal, state and local taxing authorities
and any other support services necessary for continued execution of GEAC Payroll
at the same levels in effect and provided by ADS prior to divestiture of
DRESSER, INC. by HALLIBURTON. HALLIBURTON will continue to be billed at existing
rates based on usage. No additional fees will be charged by DRESSER, INC.
52 - Provide Data Collection services to elements of HES/Houston in support of
HR/Benefits Administration. Data elements include TBA fields, demographics,
Flexible Spending, etc. This will include: TBA Basic file, TBA Pay File TBA
Instruct file to Hewitt & Associates, Unemployment interface to Sheakley
Unviservice, Spending Accounting information to Boon Chapman, Swiss Life
International Savings Plan Process, Quarterly tax collection & Dept of
Labor-Alaska and submission of file to Duncan Transaction Center Payroll
Department for Federal and State Tax Reporting. Services will be provided in the
same time frame and frequency as required to meet filing and reporting
requirements.
57 - DRESSER, INC. agrees to permit the HES Wire Line Technical Services group
access to the transite lined test well at HWY 6 facility effective with the
Closing Date. HES will require the periodic use of the test well for the next
twelve (12) months. HES assumes responsibility for closure and plugging of the
well upon agreement expiration.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-13
59 -DRESSER, INC. will provide uninterrupted lease space to Landmark Graphics at
the DRESSER, INC. Corporate office located in Rijswijk/The Netherlands. Landmark
will be supplied 1,400 sq. ft at $14.29 per sq. ft annum.
DRESSER, INC. agrees to provide best effort to obtain the rights for HALLIBURTON
to use the required licenses to allow the payroll being processed on the
Alliance Mainframe to continue through June 30, 2001.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-14
ANNEX B
REPRESENTATIVES
HALLIBURTON COMPANY - Sam Pace
DRESSER, INC. - James A. Nattier
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-15
ANNEX C
HALLIBURTON REAL ESTATE SERVICES
Facilities Operations Transition Services for Dresser, Inc. 2135 Highway 6
South, Houston, Texas
Operations and Maintenance Services Included in Monthly O&M Rate
o Maintenance of buildings, grounds, roadways, parking lots, and building
systems including heating, ventilation, air conditioning, electrical,
mechanical, plumbing, and fire protection.
o Janitorial services (excluding process clean up).
o Landscaping and maintenance of lawns and planted areas.
o Facility fire detection and alarm systems.
o Food services and vending administration.
o Telephone operator/receptionist.
o Non-hazardous waste removal (office and shop).
o O&M-related administration and procurement.
Mail and Security Services Included in Monthly M&S Rate
o Security services to protect personnel and company assets and to provide
emergency response for fire, accident, medical, and other emergencies.
o Facility security systems, access control systems, and ID badges.
o Mail services including collection and distribution within the site,
interoffice mail between Halliburton Company sites, and
receiving/dispatching U.S. Postal Service mail and overnight courier
shipments (for example, Federal Express).
o U.S. Postal Service postage (except for groups with very large mail
volumes, such as Accounts Payable, which are charged for their USPS
postage).
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-16
Costs and Services Not Included in Monthly Rates
o Ownership and depreciation costs for owned land, buildings, and
improvements.
o Lease payments and lease administration for leased facilities.
o Taxes on real estate, furniture, and fixtures.
o Insurance for real estate assets.
o Federal, state, and local government fees, permits and licenses related to
real estate activities.
o Project management, procurement, and construction management services for
building or remodeling facilities.
o Space planning and office/manufacturing relocation management services.
o Office furniture provision, maintenance, and replacement.
o Utilities including electricity, gas, water, and sewer.
o Energy management services for the facility and energy management
consulting for business unit equipment and processes.
o Telephone equipment provision and maintenance, local telephone service,
and maintenance of voice and data cabling.
o Copier and fax equipment provision and maintenance.
o Document life management / records management.
o Other associated services not specifically listed.
Additional Services Available on Request (Not Included in Monthly Rates)
Halliburton Real Estate Services can offer additional services to
support the manufacturing and work processes at the site. These services are
provided on request and are billed to the requester at cost. Requests should be
approved in advance in accordance
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-17
with company and business unit policies. An estimate of the cost of a service
can be provided in advance of its delivery.
o Cost of overnight courier (for example, Federal Express) and local
messenger.
o Food catering requested from onsite suppliers.
o Personnel or equipment relocations requested by the business unit.
o Requested renovation or construction work.
o Requested contract labor or contract services.
o Requested rental equipment.
o Installation of utilities to support process equipment.
o Requested maintenance to process equipment.
o Repairs to buildings, equipment, furniture, or fixtures due to damage
caused by negligence.
o Work performed on any moving equipment.
o Requested mobile crane lift.
o Providing propane gas or other fuel for site forklift fleet.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VII-18
Appendix VIII
FORM OF STOCKHOLDERS' AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and entered into
effective as of April 10, 2001 by and among Dresser, Inc., a Delaware
corporation (the "Company"), DEG Acquisitions, LLC, a Delaware limited liability
company (the "Control Stockholder"), Dresser Industries, Inc., a Delaware
corporation ("DI") and wholly owned subsidiary of Halliburton Company, a
Delaware corporation ("Halliburton"), and each of the individual employees who
become parties hereto from time to time in accordance with the terms hereof (the
"Employee Stockholders"). The Employee Stockholders, the Control Stockholder, DI
and any other person made party to this Agreement are collectively referred to
herein as the "Stockholders".
R E C I T A L S
A. The Company heretofore entered into an Agreement and Plan of Merger
(the "Merger Agreement") between DEG Acquisition Corp., a Delaware corporation
("Transitory Merger Sub"), and the Company, which Merger Agreement has become
effective.
B. As a result of the transactions contemplated by the Merger Agreement,
the Control Stockholder has acquired from the Company an aggregate of 9,700,000
shares of the Company's Class A Common Stock, par value $0.001 (the "Class A
Common Stock"), and 300,000 shares of the Company's Class B Common Stock, par
value $0.001 per share (the "Class B Common Stock," and collectively with the
Class A Common Stock, the "Common Stock").
C. As a result of the transactions contemplated by the Merger Agreement,
DI has retained an aggregate of 537,408 shares of Class A Common Stock.
D. As contemplated elsewhere herein, the Company may agree to issue, and
issue, additional shares of Common Stock to employees and grant stock options to
employees, in which event such employees shall become parties hereto as Employee
Stockholders.
E. After giving effect to the transactions described in these recitals,
Exhibit A attached to this Agreement sets forth the holders of the issued and
outstanding Common Stock of the Company and the number of shares held by each.
F. A true and correct copy of the Company's Amended and Restated
Certificate of Incorporation and Bylaws are attached as Exhibits B and C,
respectively.
G. The Stockholders desire to set forth certain understandings with
respect to their holdings of Common Stock, as set forth herein.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. CONFLICTS.
1.1 Potential Conflicts. Each Stockholder and the Company acknowledges
that:
(a) The Control Stockholder or one or more subsidiaries (other than
the Company and its subsidiaries) or other affiliates or members of the Control
Stockholder (other than the Company, its subsidiaries and their respective
officers and directors not nominated, directly or indirectly, by the Control
Stockholder) (the Control Stockholder and any such subsidiary or affiliate being
collectively referred to herein as an "Interested Party") may engage in material
business transactions with the Company, subject to the provisions of Section 1.6
herein.
(b) Directors, officers, and employees of an Interested Party may
serve as directors or officers of the Company.
(c) One or more Interested Parties may now or in the future engage
in the same or similar lines of business or other business activities as those
in which the Company may engage.
(d) One or more Interested Parties may exercise a controlling
influence over business, policy and strategic decisions of the Company.
1.2. Scope of Business of the Company and its Controlled Affiliates. The
Company hereby renounces any interest or expectancy in any business opportunity
that does not consist exclusively of a portion or all of the Designated
Business. For this purpose, the Designated Business consists of the businesses
conducted by the Company and its controlled affiliates as described in that
certain Offering Memorandum dated April 4, 2001 prepared and distributed by the
Company.
1.3 Corporate Opportunities. The Company and each Stockholder recognize
that the Interested Parties and individuals who are directors, officers and
employees of one or more Interested Parties and are designated by the Interested
Parties to serve as directors and officers of the Company and its controlled
affiliates ("Designees") (a) participate and will continue to participate,
directly and through affiliates, in businesses that compete with, or are
substantially the same as, the Designated Business, (b) may have interests in,
participate with, and serve as directors, officers or employees of other persons
engaged in businesses that compete with, or are substantially the same as, the
Designated Business and (c) may develop business opportunities for the
Interested Parties. The Company and each Stockholder (i) acknowledge and agree
that neither the Interested Parties nor their Designees shall be restricted or
prohibited by the relationship between the Interested Parties and the Designees,
on the one hand, and the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-2
Company, on the other, or by service of a Designee as a director or officer of
the Company from engaging in any businesses that compete with, or are
substantially the same as, the Designated Business or in any other business,
regardless of whether such business activity is in direct or indirect
competition with the Designated Business of the Company, (ii) acknowledge and
agree that, as long as their activities are conducted in accordance with the
standards set forth in Section 1.4 hereof, neither any Interested Party nor any
Designee shall have any obligation to offer the Company or any of its controlled
affiliates any business opportunity, (iii) renounce any interest or expectancy
in any business opportunity pursued by any Interested Party in accordance with
the standards set forth in Section 1.4 hereof and (iv) waive any claim that any
business opportunity pursued by an Interested Party or any Designee in
accordance with the standards set forth in Section 1.4 hereof constitutes a
corporate opportunity of the Company or any of its controlled affiliates that
should have been presented to the Company.
1.4 Standards for Separate Conduct of Business. The Interested Parties and
their Designees shall be deemed to meet the standards set forth in this Section
1.4 if the business of the Interested Parties is conducted through the use of
their own personnel and assets and not with the substantial involvement of any
personnel (other than the Designees) or material amount of assets of the
Company. Without limiting the foregoing, such standards will be met with respect
to a business opportunity if (a) it is identified by or presented to personnel
of an Interested Party or a Designee and developed and pursued substantially
through the use of the personnel (including any Designee) and assets of one or
more Interested Parties (and not based on confidential information disclosed by
or on behalf of the Company in or during the course of a Designee's relationship
with the Company), and (b) it did not come to the attention of such Designee
solely in, and as a direct result of, his or her capacity as a director or
officer of the Company; provided, however, that (i) if such opportunity is
separately identified by an Interested Party or separately presented to an
Interested Party other than such Designee, the Interested Parties shall be free
to pursue such opportunity even if it also came to the Designee's attention
solely as a result of and in his or her capacity as a director or officer of the
Company and (ii) if such opportunity is presented to or identified by a Designee
other than solely as a result of and in his or her capacity as a director or
officer of the Company, the Interested Parties shall be free to pursue such
opportunity even if it also came to the Designee's attention as a result of and
in his or her capacity as a director or officer of the Company. Nothing in this
Agreement shall be interpreted to allow a Designee to pursue a business
opportunity in the Designated Business solely for his or her personal benefit
(as opposed to the benefit of an Interested Party).
1.5 Competing Activities. Except as otherwise expressly provided in an
agreement between the Company and an Interested Party, any Interested Party and
its officers, directors, agents, shareholders, members, partners, affiliates and
subsidiaries, may engage or invest independently or with others, in any business
activity of any type or description, including without limitation those that
might be the same as or similar to the Designated Business and without limiting
the foregoing, the Stockholders acknowledge that:
(a) (i) First Reserve Corporation, a Delaware corporation ("First
Reserve" or "FRC"), manages each of First Reserve Fund VIII, L.P., a Delaware
limited
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-3
partnership and First Reserve Fund IX, L.P., a Delaware limited partnership,
which are members of the Control Stockholder, and manages other investment
limited partnerships, and
(ii) Odyssey Investment Partners, LLC ("Odyssey") manages
Odyssey Investment Partners Fund, L.P., a Delaware limited partnership, Odyssey
Coinvestors, LLC, a Delaware limited liability company, and DI Coinvestment,
LLC, a Delaware limited liability company, which are members of the Control
Stockholder, and manages other investment limited partnerships,
all of which may from time to time compete, directly or indirectly, with the
Company, and that such Interested Parties may in their sole discretion pursue
such competing businesses without disclosure of such competition to the
Company); and
(b) neither the Company, any subsidiary of the Company, nor any
other stockholder of the Company shall have any right in or to such business
activities or ventures or to receive or share in any income or proceeds derived
therefrom.
1.6 Transactions with Affiliates. Except for the payment of fees and the
reimbursement of expenses in connection with the Control Stockholder's
acquisition of Common Stock on the date hereof, until the consummation of the
Company's Initial Public Offering (as hereinafter defined), the Company and its
subsidiaries will not enter into any transaction or series of similar
transactions with any affiliates of the Company unless: (i) in the case of
transactions in excess of $10 million but less than $50 million, the Company
obtains a resolution of the Board of Directors of the Company approved by a
majority of Disinterested Directors certifying as to the fairness of the
transaction; or (ii) in the case of transactions (A) in excess of $50 million or
(B) pursuant to which fees are paid to such affiliate (other than sales of
products and services in the ordinary course of business), the Company obtains,
in addition to the approval of a majority of Disinterested Directors, a fairness
opinion from a nationally recognized investment banking firm selected by the
Disinterested Directors. In addition to the foregoing, (i) if all of the
transactions entered into after the date hereof among the Company or its
subsidiaries, on the one hand, and with First Reserve and its affiliates (the
"FRC Affiliate Group"), on the other hand, (other than the acquisition by the
Company of Entech Industries, Inc., a Delaware corporation, and LVF Holding
Corporation, a Delaware corporation, both of which are controlled by First
Reserve) in the aggregate exceed $50 million, then the Company will not enter
into any subsequent transactions with the FRC Affiliate Group unless the Company
obtains a resolution of the Board of Directors of the Company approved by a
majority of Disinterested Directors certifying as to the fairness of the
transaction, and (ii) if all of the transactions entered into after the date
hereof among the Company or its subsidiaries, on the one hand, and with Odyssey
and its affiliates (the "Odyssey Affiliate Group"), on the other hand, in the
aggregate exceed $50 million, then the Company will not enter into any
subsequent transactions with the Odyssey Affiliate Group unless the Company
obtains a resolution of the Board of Directors of the Company approved by a
majority of Disinterested Directors (which majority shall include the
affirmative vote of at least one director appointed by FRC) certifying as to the
fairness of the transaction. Without limiting the foregoing, term "Disinterested
Directors" shall mean (a) with respect to any transaction with
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-4
the FRC Affiliate Group, the directors other than those nominated by FRC and (b)
with respect to any transaction with the Odyssey Affiliate Group, the directors
other than those nominated by Odyssey. For purposes of this Section 1.6, the
dollar amount of any transaction shall be determined by reference, in the case
of any transaction to be performed by one or the other party entirely through
the payment of cash, to the amount of cash so required or, in the case of any
other transaction, to the fair value of any property or services conveyed or
rendered by one or the other party, as determined by a majority of the
Disinterested Directors, together with the amount of any cash required to be
paid by such party.
For purposes of this Agreement, the Company's Initial Public Offering
shall mean the first firmly underwritten public offering by the Company of
shares of Common Stock representing at least 5% of the outstanding Common Stock
(on a fully diluted basis after giving effect to such offering) in which the
Company receives proceeds, in the aggregate, of not less than $100,000,000
before deduction of underwriters' commissions and expenses.
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Section 2:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of effectiveness of such
registration statement.
(b) Registrable Securities. The term "Registrable Securities" means
all shares of Common Stock now held or hereinafter acquired by a Stockholder;
provided, however, that the term "Registrable Securities" shall exclude any
Common Stock sold by a person in a transaction in which rights under this
Section 2 are not assigned in accordance with this Agreement or any Common Stock
sold in a public offering, whether sold pursuant to Rule 144 promulgated under
the Securities Act, or in a registered offering, or otherwise.
(c) Registrable Securities Then Outstanding. The number of shares of
"Registrable Securities then outstanding" shall mean the number of shares of
Common Stock of the Company that are Registrable Securities and (l) are then
issued and outstanding or (2) are then issuable pursuant to an exercise or
conversion of securities exercisable or convertible into Common Stock.
(d) Holder. For purposes of this Section 2, the term "Holder" means
any Stockholder owning of record Registrable Securities or any permitted
assignee of record of such Registrable Securities to whom rights under this
Section 2 have been duly assigned in accordance with this Agreement.
(e) SEC. The term "SEC" or "Commission" means the U.S. Securities
and Exchange Commission.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-5
2.2 Demand Registration.
(a) Request by Control Stockholder. At any time after the Initial
Public Offering of the Company's Common Stock, if the Company shall receive a
written request from the Control Stockholder or DI (a "Requesting Stockholder")
that the Company file a registration statement under the Securities Act
(including a "shelf" registration statement on Form S-3 or any successor form
pursuant to Rule 415) covering the registration of Registrable Securities
pursuant to this Section 2.2 (a "Demand Notice"), then the Company shall, within
ten (10) business days of the receipt of such written request, give written
notice of such request ("Request Notice") to all Holders, including the Control
Stockholder or DI, as the case may be, and, in addition to any obligations under
Section 2.3, use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that the
Requesting Stockholder requests to be registered in the Demand Notice, subject
only to the limitations of this Section 2.2 and the rights of other Holders
pursuant to Section 2.3; provided that the Company shall not be obligated to
effect any such registration until 180 days after the effective date of the
registration statement pertaining to the Company's Initial Public Offering; and
provided, further, that the Company shall not be obligated to effect any such
registration if the Company has, within the six (6) month period preceding the
date of the Demand Notice, already effected a registration under the Securities
Act pursuant to (i) this Section 2.2 or (ii) Section 2.3 in which the Requesting
Stockholder participated, other than a registration from which all or a portion
of the Registrable Securities of the Requesting Stockholder were excluded
pursuant to the provisions of Section 2.3(a).
(b) Underwriting. If the Requesting Stockholder intends to
distribute the Registrable Securities covered by its request by means of an
underwritten offering, then it shall so advise the Company as a part of the
Demand Notice, and the Company shall include such information in the Request
Notice. In such event, the right of any Holder to include his Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
the Requesting Stockholder and such Holder) as provided herein. The Company and
all Holders proposing to distribute their securities through such underwriting
shall enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting by the Requesting
Stockholder. All Holders, whether or not they are participating in such
offering, and the Company agree not to effect any sale, transfer, assignment,
pledge or conveyance of (including, without limitation, taking any short
position in) the Common Stock (or any securities of the Company exchangeable or
convertible into Common Stock) during (i) the 90-day period (or such longer
period required by the underwriters of such offering) beginning on the effective
date of a registration statement filed by the Company (except pursuant to the
registration effected thereby), or (ii) any period in which trading in the
Company's securities is restricted pursuant to Company insider trading policies;
provided, however, that none of DI, FRC or Odyssey shall be subject to the
restrictions imposed by clause (ii) of this Section during any period in which
it has not designated any of the directors of the Company and is otherwise not
affiliated with the Company. Notwithstanding any other provision of this Section
2.2 or Section 2.3, if the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-6
managing underwriter(s) determine(s) in good faith that marketing factors
require a limitation of the number of securities to be underwritten, then the
Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the managing
underwriter(s) may exclude shares of the Registrable Securities from the
registration and the underwriting, and the number of shares that will be
included in the registration and the underwriting shall be allocated, first to
the Requesting Stockholder and to each of the Holders requesting inclusion of
their Registrable Securities in such registration statement pursuant to Section
2.3 on a pro rata basis based on the total number of Registrable Securities
requested for inclusion in the registration by the Requesting Stockholder and
each such Holder, and second to the Company. No other shares may be included
(other than by the Company or by the Holders pursuant to Section 2.3) without
the Requesting Stockholder's consent.
(c) Maximum Number of Demand Registrations. The Company shall be
obligated to effect only one (1) such registration pursuant to this Section 2.2
for DI, and the Company shall be obligated to effect only six (6) such
registrations pursuant to this Section 2.2 for the Control Stockholder;
provided, however, that, if the number of Registrable Securities that the
Requesting Stockholder is permitted to offer under this Section 2.2 is reduced
by more than 50% of the amount such Requesting Stockholder requested to be
registered in the Initial Demand Notice as a result of the application of
Section 2.2(b), the initial request shall not reduce the number of requests
permitted by this Section 2.2(c) pursuant to Section 2.2(a). A Registration
shall be effected for purposes of this Section 2.2(c) when and if a registration
statement is declared effective by the Commission and the distribution of
securities thereunder has been completed without the occurrence of any stop
order or proceeding relating thereto suspending the effectiveness of the
Registration.
(d) Deferral. Notwithstanding the foregoing, if the Company shall
furnish to the Requesting Stockholder a certificate signed by the President or
Chief Executive Officer of the Company stating that, in the good faith judgment
of the Board, it would be materially detrimental to the Company and its
stockholders for such registration statement then to be filed, the Company shall
have the right to defer such filings and, by notice to the Requesting
Stockholder, to require the Requesting Stockholder to withdraw its Demand Notice
and to refrain from delivering another Demand Notice for a period of not more
than ninety (90) days after receipt of the request of the initial Demand Notice;
provided, however, that the Company may not utilize this right more than twice
in any twelve (12) month period.
(e) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 2.2, including without limitation all
federal and "blue sky" registration, filing and qualification fees, printer's
and accounting fees, fees and disbursements of counsel for the Company, and fees
and expenses of one counsel to the Holders (selected by the Holder including
Registrable Securities in such registration statement that holds the greatest
number of Registrable Securities) shall be borne by the Company. Each Holder
participating in a registration pursuant to this Section 2.2 shall, in the case
of a firmly underwritten offering, bear such Holder's proportionate share (based
on the total number of shares sold in such registration
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-7
other than for the account of the Company) of all discounts, commissions or
other amounts payable to underwriters in connection with such offering by the
Holders and, in the case of any other offering, bear the entire amount of
discounts, commissions and other amounts payable to underwriters or brokers
attributable to Registrable Securities sold by such Holder pursuant to such
registration. Notwithstanding the foregoing, the Company shall not be required
to pay for any expenses of any registration proceeding begun pursuant to this
Section 2.2 if the registration request is subsequently withdrawn at the request
of the Requesting Stockholder, unless the Requesting Stockholder agrees that
such registration constitutes the use by it of one (1) demand registration
pursuant to this Section 2.2; provided, however, that, if at the time of such
withdrawal, the Requesting Stockholder has learned of a material adverse change
in the condition, business, or prospects of the Company not known to the
Requesting Stockholder at the time of its request for such registration and has
withdrawn its request for registration with reasonable promptness after learning
of such material adverse change, then the Requesting Stockholder shall not be
required to pay any of such expenses and such registration shall not constitute
the use of a demand registration pursuant to this Section 2.2.
2.3 Piggyback Registrations. The Company shall promptly notify all Holders
of Registrable Securities in writing (a "Piggyback Notice") prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company (including, without limitation,
registration statements relating to secondary offerings of securities of the
Company, whether pursuant to Section 2.2 or otherwise, but excluding
registration statements relating to any employee benefit plan, an acquisition or
a corporate reorganization) and will afford each such Holder an opportunity to
include in such registration statement all or any part of the Registrable
Securities then held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by
such Holder shall within ten (10) days after receipt of the Piggyback Notice, so
notify the Company in writing and in such notice shall inform the Company of the
number of Registrable Securities such Holder wishes to include in such
registration statement.
(a) Underwriting. If a registration statement referred to in the
Piggyback Notice is for an underwritten offering, then the Company shall so
advise the Holders of Registrable Securities. In such event, the right of any
such Holder to include Registrable Securities in such a Registration pursuant to
this Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting as provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting. With respect to the Company's
Initial Public Offering or any other offering in which the Company is
registering securities, all Holders, whether or not they are participating in
such offering, hereby agree not to effect any sale, transfer, assignment, pledge
or conveyance of (including, without limitation, taking any short position in)
the Common Stock (or any securities of the Company exchangeable or convertible
into Common Stock) during (i) the 90-day period beginning on the effective date
of a registration statement filed by the Company (except as part of that
Registration), or (ii) any period in which trading in the Company's securities
is restricted
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-8
pursuant to Company insider trading policies; provided, however, that none of
DI, FRC or Odyssey shall be subject to the restrictions imposed by clause (ii)
of this Section during any period in which it has not designated any of the
directors of the Company and is otherwise not affiliated with the Company.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the Company shall so
advise all Holders of Registrable Securities that would otherwise be registered
and underwritten pursuant hereto, and the managing underwriter(s) may exclude
shares of the Registrable Securities from the registration and the underwriting,
and the number of shares that will be included in the registration and the
underwriting shall be allocated as set forth in Section 2.2, or, if the
underwriting is not pursuant to Section 2.2, first to the Company, and second,
to each of the Holders requesting inclusion of their Registrable Securities in
such registration statement on a pro rata basis based on the total number of
Registrable Securities requested for inclusion in the registration by each such
Holder. If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter(s), delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For both (i) any Holder that is a partnership, the Holder and the
partners and retired partners of such Holder, or the estates and family members
of any such partners and retired partners and any trusts for the benefit of any
of the foregoing persons, and (ii) any Holder that is a corporation, the Holder
and all corporations that are affiliates of such Holder, shall be deemed to be a
single "Holder," and any pro rata reduction with respect to such "Holder" shall
be based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "Holder," as defined in this
sentence.
(b) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 2.3 (excluding underwriters' and brokers'
discounts and commissions relating to shares sold by the Holders, which shall be
borne by each Holder of such shares), including without limitation all federal
and "blue sky" registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of one counsel for Holders (selected by
the Holder including Registrable Securities in such registration statement that
holds the greatest number of Registrable Securities), and fees and disbursements
of counsel for the Company, shall be borne by the Company.
(c) Not Demand Registration. Registration pursuant to this Section
2.3 shall not be deemed to be a demand registration as described in Section 2.2,
unless the Requesting Stockholder specifically elects otherwise in writing.
Except as otherwise provided herein, there shall be no limit on the number of
times the Holders may request registration of Registrable Securities under this
Section 2.3.
2.4 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement the Company
shall, as expeditiously as reasonably possible:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-9
(a) Registration Statement. Prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective and to
keep any such registration statement effective for so long as required by the
Securities Act to complete the distribution.
(b) Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Prospectuses. Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Blue Sky. Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) Underwriting. In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement in usual
and customary form (including indemnification provisions), with the managing
underwriter(s) of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.
(f) Notification. Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(g) Opinion and Comfort Letter. Furnish, at the request of any
Holder requesting registration of Registrable Securities or of any underwriter
in connection herewith, on the date or dates requested by such Holder, (i) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities and (ii) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-10
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
(h) Road Shows. To the extent reasonably requested by a Requesting
Stockholder, cause the appropriate members of the management and employees to
participate in meetings, diligence sessions, and road shows.
2.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2.2 or 2.3
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect timely the
Registration of their Registrable Securities.
2.6 Indemnification. If any Registrable Securities are included in a
registration statement under Sections 2.2 or 2.3:
(a) By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in Section 2(11) of the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended, (the "Exchange Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto;
(ii) any omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities
law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any federal or state securities law in
connection with the offering covered by such registration statement;
and the Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 2.6(a) shall not
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-11
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or action to
the extent (and only to the extent) that it arises out of or is based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, underwriter or controlling person of
such Holder.
(b) By Selling Holders. To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, officer, director or controlling
person of such other Holder in connection with investigating or defending any
such loss, claim, damage, liability or action: provided, however, that the
indemnity agreement contained in this subsection 2.6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; and provided, further, that the total
amounts payable in indemnity by a Holder under this Section 2.6(b) in respect of
any Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under
this Section 2.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-12
within a reasonable time of the commencement of any such action shall relieve
such indemnifying party of liability to the indemnified party under this Section
2.6 only to the extent the indemnifying party is prejudiced as a result thereof,
and the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 2.6.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that, insofar
as they relate to any Violation made in a preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was timely furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
(e) Contribution. To provide for just and equitable contribution, if
an indemnified party makes a claim for indemnification pursuant to Section 2.6
(subject to the limitations hereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Stockholders from the
offering of the Registrable Securities or (ii) if the allocation provided in
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and Stockholders in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Stockholders shall be deemed to be in the same proportion as
the total net proceeds from the offering and sale of the Registrable Securities
(before deducting expenses) received by the Company and the Stockholders, bears
to the total price to the public of the Registrable Securities. The relative
fault of the Company and the Stockholders shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or the alleged omission to state a material fact relates to
information supplied by the Company or the Stockholders and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and Stockholders agree that it
would not be just and equitable if contribution pursuant to this Section 2.6(e)
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-13
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 2.6, no Stockholder shall be required to contribute more in the
aggregate than the aggregate net proceeds received by such Stockholder in the
registered offering out of which such contribution obligation arises. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under this
Section 2.6 shall survive until the first anniversary of the expiration of all
applicable statutes of limitation or extensions of such statutes.
2.7 Termination of the Company's Obligations. The Company shall have no
obligations pursuant to Sections 2.2 or 2.3 with respect to any Registrable
Securities proposed to be sold by a Holder in a registration pursuant to Section
2.2 or 2.3 if, in the reasonable opinion of counsel to the Company, addressed to
such Holder, all such Registrable Securities held by such Holder could be sold
in a single transaction in reliance upon Rule 144 promulgated under the
Securities Act.
3. SALES BY STOCKHOLDERS.
3.1 Restrictions on Transfer; Notice of Sales.
(a) Absolute Restriction. Except for Permitted Transfers (as defined
in Section 3.6) and transfers effected in accordance with Section 3.5 (provided
that, in the case of such transfer effected in accordance with Section 3.5, DI
shall have a co-sale right pursuant to Section 3.3), no Stockholder shall sell,
transfer, assign, pledge or otherwise dispose of, directly or indirectly,
through the sale of interests in any holding company or otherwise ("Transfer")
any shares of the capital stock of the Company now held or hereafter acquired by
such Stockholder ("Stock") prior to April 10, 2003.
(b) Sale Only In Accordance With This Section. No Stockholder shall
Transfer any shares of Stock, other than by means of a Permitted Transfer (as
defined in Section 3.5) or a Transfer effected in accordance with Section 3.2,
Section 3.3, Section 3.4, Section 3.5 or Section 4, during the period beginning
on April 10, 2003 and ending on the day prior to the effective date of the
registration statement pertaining to the Company's Initial Public Offering. If
any Stockholder (the "Seller") proposes to Transfer any Stock, then the Seller
shall promptly give written notice (the "Notice") to the Company and the other
Stockholders at least thirty-five (35) business days prior to the closing of
such sale or transfer (or, in the case of a Transfer pursuant to Section 3.2,
forty-five (45) days). In addition to any requirements of Section 3.2, the
Notice shall describe in reasonable detail the proposed sale or transfer
including, without limitation, the number of shares of Stock to be sold or
transferred, the nature of such sale or
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-14
transfer, the consideration to be paid, and, if known, the name and address of
each prospective purchaser or transferee.
3.2 Right of First Refusal.
(a) At least forty-five (45) days prior to DI making any Transfer
(other than a Permitted Transfer), either directly or indirectly, of any shares
of the Company's capital stock (such shares, the "Offer Shares"), DI shall
deliver the Notice to the Company and the other Stockholders.
(b) Upon receipt of the Notice, the Company may elect to purchase
all (or a portion) of the Offer Shares specified in the Notice at the price and
on the terms specified therein by delivering written notice of such election to
DI and the other Stockholders within ten (10) days after the delivery of the
Notice. If the Company has not elected to purchase all of the Offer Shares
within such ten-day period, the other Stockholders may elect to purchase their
pro rata share of the available Offer Shares (which shall be the same as the
number contained in the Notice less any such Offer Shares the Company has
elected to purchase) at the price and on the terms specified therein by
delivering written notice of such election to the Company and DI within twenty
(20) days after delivery of the Notice. Any Offer Shares not elected to be
purchased by the end of such 20-day period shall be reoffered for the ten-day
period prior to the expiration of the Notice by DI on a pro rata basis to the
Stockholders who have elected to purchase their pro rata share. If the Company
or any other Stockholders have elected to purchase all of the Offer Shares from
DI, the transfer of such shares shall be consummated within fifteen (15) days
after the expiration of the initial 30-day period. If the Company and the other
Stockholders have not elected to purchase all of the Offer Shares being offered,
then neither the Company nor the other Stockholders may purchase any of the
Offer Shares and DI may transfer all of the Offer Shares to one or more third
parties at a price not less than the price per share specified in the Notice and
on other terms no more favorable to the transferees than offered to the Company
and the Stockholders in the Notice. The purchase price specified in any Notice
shall be payable solely in cash at the closing of the transaction or in
installments over time, and no capital stock of the Company held by a Holder may
be pledged except on terms and conditions satisfactory to a majority in interest
of the Stockholders.
(c) The right of first refusal established by this Section 3.2 shall
terminate on the effective date of the registration statement pertaining to the
Company's Initial Public Offering.
3.3 Co-Sale Right.
(a) If any Seller holding more than 5% of the outstanding Common
Stock (or equivalent) of the Company desires to Transfer Stock (other than a
Permitted Transfer), then such Seller shall deliver the Notice to all of the
Stockholders. Each Stockholder shall have the pro rata right, based on the total
number of shares of Common Stock held by such Stockholder, exercisable upon
written notice to the Seller within fifteen (15) days after receipt of the
Notice,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-15
to participate in such Transfer of Stock on the same terms and conditions, up to
the total number of shares of Stock included in the Notice. To the extent
Stockholders exercise such right of participation (each a "Co-Sale Stockholder")
the number of shares of Stock that the Seller may sell or otherwise dispose of
in the Transfer shall be correspondingly reduced so that the maximum number of
shares of Stock sold or otherwise disposed of in the Transfer by the Seller or a
Co-Sale Stockholder under this Section 3.3 shall be the number found by
multiplying the total number of shares included in the Notice, as delivered
under this Section 3.3, by a fraction the numerator of which is the total number
of shares owned by the Seller or such Co-Sale Stockholder, as the case may be
(on a fully diluted basis) and the denominator of which is the total number of
shares owned by the Seller and all Co-Sale Stockholders exercising such rights
in the aggregate (on a fully diluted basis). Each Co-Sale Stockholder shall
effect its participation in the Transfer by promptly delivering to Seller for
transfer to the prospective purchaser one or more certificates, properly
endorsed for transfer, that represent the number of shares of Stock which such
Co-Sale Stockholder elects to sell. The Seller will use its best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Co-Sale Stockholders in the contemplated Transfer and will not Transfer any
Stock to the prospective transferee(s) if such transferee(s) refuses to allow
the participation of the Co-Sale Stockholders, or refuses to become a party to
this Agreement as a Stockholder.
(b) The co-sale right established by this Section 3.3 shall
terminate upon the effective date of the registration statement pertaining to
the Company's Initial Public Offering. In addition, notwithstanding anything in
Section 3.3(a) to the contrary, no Employee Stockholder shall have any rights
under Section 3.3 with respect to any sale or transfer by DI.
3.4 Further Sales. To the extent the Company, the Control Stockholder and
the other Stockholders do not exercise their rights under Sections 3.2, or 3.3
with respect to the sale of Stock subject to the Notice, the Seller may, not
later than one hundred twenty (120) days following the first delivery to the
Company and the other Stockholders of the Notice, conclude a Transfer of the
Stock covered by the Notice and (i) in the case of Section 3.2, not elected to
be purchased by the Company or the Stockholders on terms and conditions no less
favorable to the Seller than those described in the Notice or (ii) in the case
of Section 3.3, not excluded from the Transfer by virtue of the participation
therein by Co-Sale Stockholders on the terms and conditions set forth in the
Notice. Any proposed Transfer on terms and conditions less favorable to the
Seller than those described in the Notice (in the case of a Transfer subject to
Section 3.2) or more favorable to the Seller than those described in the Notice
(in the case of a Transfer subject to Section 3.3) or any proposed transfer of
any Stock by the Seller after such one hundred twenty day period, shall again be
subject to the co-sale rights and rights of first refusal of the Stockholders
and shall require compliance by the Seller with the procedures described in this
Section 3. Notwithstanding the foregoing, no Transfer of the Stock shall be
effective unless such transferee agrees to be bound by the terms of this
Agreement as a Stockholder.
3.5 Rights to Compel Transfer.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-16
(a) If a Stockholder or Stockholders or any of their affiliates
holding, individually or collectively, more than 50% of the outstanding Stock
(collectively, the "selling Stockholder"), proposes to make a Transfer to any
person or entity (other than the Control Stockholder) that, (i) upon completion
of such Transfer, would hold, directly or indirectly, more than 50% of the
outstanding Stock on a fully diluted basis and (ii) is not an affiliate of such
Stockholder, then such Stockholder shall have the right, exercisable as set
forth below, to require all of the other Stockholders (the "Remaining
Stockholders") to sell, directly or indirectly, any or all of the Common Stock
(as well as, at the election of the selling Stockholder, any securities
convertible into or exercisable for Common Stock, and any other equity interest
of the Company (the "Stock Rights")) then owned by such Remaining Stockholders
(the "Transfer Stock") to the proposed transferee (the "Acquiror") in the same
pro rata amount (determined based upon the relative direct or indirect ownership
of shares of Common Stock) as is being sold by the selling Stockholder and for
the same consideration per share of Common Stock as is being paid to the selling
Stockholder and on the same terms as are applicable to the selling Stockholder
(the "Compelled Transfer"). The purchase price for each vested Stock Right in
any such Transfer shall equal the "spread" between the exercise price for such
vested Stock Right and the purchase price per share of Stock. The terms and
conditions of the Compelled Transfer shall be as set forth in the applicable
purchase agreement between the selling Stockholder and the Acquiror.
(b) The selling Stockholder shall cause the terms of the Compelled
Transfer to be reduced to writing and shall provide a written notice (the
"Compelled Transfer Notice") of such Compelled Transfer to the Company and the
Company shall provide such Compelled Transfer Notice to the Remaining
Stockholders. The Compelled Transfer Notice shall contain written notice of the
exercise of the selling Stockholder's rights pursuant to Section 3.5(a) hereof,
setting forth the consideration to be paid by the Acquiror for each share of
Stock and each Stock Right and the other terms and conditions of the Compelled
Transfer. Within 20 calendar days following the date of receipt of the Compelled
Transfer Notice, each of the Remaining Stockholders shall deliver to the selling
Stockholder certificates representing the Stock required to be transferred and
instruments representing Stock Rights required to be transferred, duly endorsed,
together with all other documents required to be executed in connection with
such Compelled Transfer or, if such delivery is not permitted by applicable law,
an unconditional agreement to deliver such certificates pursuant to this Section
3.5(b) at the closing for such Compelled Transfer against delivery to such
Remaining Stockholder of the consideration therefore. Such certificates shall be
held by the selling Stockholder in escrow for the benefit of the appropriate
Remaining Stockholder. If a Remaining Stockholder should fail to deliver such
certificates as described herein, the Company shall cause the books and records
of the Company to show that such Stock and Stock Rights are bound by the
provisions of this Section 3.5(b) and that such Stock and Stock Rights shall be
transferred only to the Acquiror upon surrender for Transfer by the Remaining
Stockholder thereof.
(c) If, within 150 calendar days (or such longer period not
exceeding 210 calendar days as may be necessary to comply with any applicable
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or to obtain other required regulatory approval) after the selling
Stockholder gives the Compelled Transfer Notice, they have not
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-17
completed the sale of all the Transfer Stock, the selling Stockholder shall
return to each of the Remaining Stockholders all certificates representing Stock
and instruments representing Stock Rights that such Remaining Stockholders
delivered for sale pursuant hereto, and all the restrictions on sale or other
disposition contained in this Agreement with respect to such Stock and the Stock
owned by the selling Stockholder shall again be in effect.
(d) Upon the consummation of the Compelled Transfer, the selling
Stockholder shall give notice thereof to the Remaining Stockholders, and shall
(or shall cause the Acquiror to) remit promptly to each of the Remaining
Stockholders a net amount with respect to the Stock and Stock Rights of such
Remaining Stockholders sold pursuant thereto, after deducting a pro rata portion
of any related out-of-pocket fees and expenses, and shall furnish such other
evidence of the completion and time of completion of such sale or other
disposition and the terms thereof as may be reasonably requested by such
Remaining Stockholders.
(e) The right to compel Transfers established by this Section 3.5
shall terminate upon the effective date of the registration statement pertaining
to the Company's Initial Public Offering.
3.6 Permitted Transfers. The following shall be considered "Permitted
Transfers," and not subject to the restrictions of this Section 3, provided the
transferee thereof (the "Permitted Transferee") agrees to become a party to and
be bound by the provisions of this Agreement as a Stockholder: (a) Transfers to
the Company approved in advance by the Board, (b) Transfers among the members of
the Control Stockholder and from the Control Stockholder to its members, (c)
Transfers by DI to affiliates of DI, (d) Transfers by an Employee Stockholder to
another Employee Stockholder with the approval of the Board, (e) Transfers or
gifts by Employee Stockholders for bona fide estate planning purposes, (f)
Transfers effected pursuant to an effective registration statement filed
pursuant to the Securities Act, or (g) after the Company's Initial Public
Offering, Transfers of securities registered under the Exchange Act sold in
reliance upon an exemption under the Securities Act.
4. REPURCHASE OF SHARES AND RIGHT TO PUT SHARES TO THE COMPANY.
4.1 Right to Put Shares to the Company Upon Termination of Employment.
Each Employee Stockholder has the right to cause the Company to purchase all or
part of the shares of Stock (but not Stock Rights) of the Company held by such
Employee stockholder (the "Put Shares") at the Repurchase Price (as such term is
defined in Section 4.4) (the "Put Right") pursuant to the terms set forth in the
"Executive Employment Agreement" entered into between each Employee Stockholder
and the Company. If a Terminated Stockholder (as hereinafter defined) elects to
exercise his/her Put Right, the Terminated Stockholder shall deliver written
notice of such intention to the Company (the "Put Notice") on or prior to the
date that is nine months following the date on which the Terminated
Stockholder's employment with the Company was terminated (such nine-month period
shall be the "Put Period"). Upon delivery of the Put Notice, the Terminated
Stockholder shall immediately transfer and deliver to the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-18
Company the number of Put Shares specified in the Put Notice, and the Company
shall, so long as and to the extent permitted by the financing agreements of the
Company, pay the Repurchase Price for such Put Shares in cash in immediately
available funds within ten (10) business days of delivery of the Put Notice. The
purchase of the Put Shares shall be deemed to have occurred upon delivery of the
Repurchase Price, notwithstanding any failure by the Terminated Stockholder to
deliver share certificates representing the Put Shares or any dispute regarding
the Repurchase Price. Notwithstanding anything herein or in an Executive
Employment Agreement to the contrary, the Company shall not be obligated to
purchase any Stock of an Employee Stockholder that has not been held by such
Employee Stockholder for a period of at least six months. Any Stock underlying a
Stock Right shall not be deemed to be "held" until the full purchase price
therefore has been paid to the Company. For purposes of this Section 4, a
"Terminated Stockholder" shall mean any Employee Stockholder upon the
termination of employment or consulting relationship of such Stockholder.
4.2 Optional Repurchase Upon Termination of Employment. Each Employee
Stockholder agrees that the Company shall have the right (but not the
obligation, other than as set forth in Section 4.1 and any Executive Employment
Agreement) to repurchase all or part of the shares of Stock or vested Stock
Rights of the Company held by such Employee Stockholder (the "Repurchase
Shares") at the Repurchase Price upon the termination of employment or
consulting relationship of such Stockholder, after giving effect to the
operation of Section 4.1.
4.3 Procedure for Repurchase. If the Company elects to purchase the
Repurchase Shares, and to the extent such Repurchase Shares have not yet been
repurchased pursuant to Section 4.1, the Company shall deliver written notice of
such intention to the Terminated Stockholder on or prior to the last day of the
first full calendar month following the expiration of the Put Period (without
giving effect to any waiver of the Put Period prior thereto) (the "Notice of
Repurchase"). Upon delivery of the Notice of Repurchase, the Terminated
Stockholder shall immediately transfer and deliver to the Company the number of
Repurchase Shares specified in the Notice of Repurchase, and the Company shall
pay the Repurchase Price for such Repurchase Shares in cash in immediately
available funds within six months of delivery of the Notice of Repurchase. The
purchase of the Repurchase Shares shall be deemed to have occurred upon delivery
of the Repurchase Price, notwithstanding any failure by the Terminated
Stockholder to deliver share certificates representing the Repurchase Shares or
any dispute regarding the Repurchase Price.
4.4 Repurchase Price. The "Repurchase Price" for Repurchase Shares or Put
Shares shall be the fair market value of the Repurchase Shares or the Put
Shares, as the case may be, as determined in the good faith judgment of the
Board, provided, however that the Repurchase Price for Stock Rights shall be the
fair market value of the shares underlying the Stock Rights less any applicable
exercise price. The fair market value shall be determined using the same method
of valuation that First Reserve Fund IX, L.P. uses for purposes of reporting to
its limited partners, with appropriate discount applied to Put or Repurchase
Shares or shares underlying Stock Rights representing a minority ownership
position. The Board shall determine fair market value as of the last day of the
month in which the employment of the Terminated Stockholder is
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-19
terminated. Notwithstanding the foregoing, if the Company's right to repurchase
shares under this Section 4 arises as a result of the termination of employment
of the Terminated Stockholder described in Section 3.4 of the Executive
Employment Agreement of such Terminated Stockholder, then the Repurchase Price
shall be determined without regard to any discount attributable to minority
ownership.
4.5 Disputes as to Repurchase Price. In the event of any dispute regarding
the Repurchase Price, the Terminated Stockholder will irrevocably transfer the
Put and/or Repurchase Shares to the Company as set forth in Sections 4.1 and 4.3
above and the Company shall pay the Repurchase Price for the Put or Repurchase
Shares (as determined by the Board) within ten (10) business days of the Put
Notice or the Notice of Repurchase (as the case may be). In such event, the
Terminated Stockholder may elect to use an investment bank selected by the Board
to determine the Repurchase Price. If the Repurchase Price as finally determined
by such investment bank is less than 115% of the Repurchase Price determined by
the Board, the Terminated Stockholder shall pay the fees of such investment
bank. The Company or the Terminated Stockholder, as the case may be, shall pay
the difference between the value determined by the Board and the value finally
determined by the investment bank.
4.6 Unvested Stock Rights. Any unvested Stock Right shall not be
repurchased pursuant to this Section 4 (except as may be required pursuant to an
Executive Employment Agreement), and shall terminate as set forth in the
respective agreements granting such right.
5. ASSIGNMENT, AMENDMENT AND TERMINATION.
5.1 Assignment.
(a) General. Notwithstanding anything herein to the contrary, the
rights of a Stockholder hereunder may be assigned in connection with any
Transfer in accordance with this Agreement; provided, however, that no party may
be assigned any of the foregoing rights and no Transfer shall be permitted
unless (i) the Company is given written notice by the assigning party at the
time of such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in question are
being assigned and (ii) any such assignee shall have agreed to be subject to all
the terms and conditions of this Agreement, including without limitation the
provisions of this Section 5.
(b) Repurchase Rights. The Company may assign its rights under
Section 4 to the Control Stockholder.
5.2 Amendment of Rights; Termination.
(a) Amendment. Subject to Section 7.10, any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with the written consent of Stockholders holding not less than sixty-six and
two-thirds percent (66 2/3%) of the outstanding shares of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-20
Common Stock subject to this Agreement held by Stockholders (not on a fully
diluted basis). Any amendment or waiver effected in accordance with this Section
5.2 shall be binding upon the Stockholders, each Holder, each permitted
successor or assignee of such Stockholder or Holder and the Company. In
addition, Employee Stockholders holding a majority of shares of Common Stock (on
a fully diluted basis) held by Employee Stockholders may amend or waive any
provision of this Agreement on behalf of all Employee Stockholders ("Employee
Stockholder Approval"). In addition, this Agreement may be amended in any manner
by the Control Stockholder and the Company in connection with a reorganization
or recapitalization in which members of the Control Stockholder become
stockholders of the Company, provided such amendment does not materially and
adversely effect any of the other parties hereto. Notwithstanding the foregoing,
no amendment or waiver shall be effective as to an Employee Stockholder unless
(a) there is Employee Stockholder Approval, or (b) such amendment or waiver does
not disproportionately and adversely affect such Employee Stockholder or the
Employee Stockholders as a group.
(b) Termination. This Agreement may be terminated with the written
consent of the Stockholders holding not less than sixty-six and two-thirds
percent (66 2/3%) of the shares of Common Stock subject to this Agreement;
provided such consent must include the consent of DI at any time prior to the
Initial Public Offering, or so long as they own at least 1% of the outstanding
shares. Notwithstanding the foregoing, this Agreement may not be terminated as
to Employee Stockholders in connection with a transaction that would give
Employee Stockholders rights under Section 3 or 4 of this Agreement without
Employee Stockholder Approval.
6. LEGEND.
Each certificate representing shares of capital stock of the Company now
or hereafter owned by a Stockholder shall be endorsed with the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-21
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
INVESTOR RIGHTS AGREEMENT BY AND AMONG THE STOCKHOLDER, THE CORPORATION
AND CERTAIN HOLDERS OF SHARES OF STOCK OF THE CORPORATION. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION.
7. GENERAL PROVISIONS.
7.1. Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other party; (b) when received when sent by facsimile at
the address and number set forth below; (c) three business days after deposit in
the U.S. mail with first class or certified mail, return receipt requested,
postage prepaid and addressed to the other party as set forth below; or (d) the
next business day after deposit with a national overnight delivery service,
postage prepaid, addressed to the parties as set forth below with
next-business-day delivery guaranteed, provided that the sending party receives
a confirmation of delivery from the delivery service provider.
To the Control Stockholder:
DEG Acquisitions, LLC
c/o First Reserve Corporation
411 W. Putnam Ave, Suite 109
Greenwich, CT 06830
Attn: William E. Macaulay
Fax Number: (203) 661-6729
and
DEG Acquisitions, LLC
c/o Odyssey Investment Partners
Managing Principal
280 Park Ave.
38th Floor
New York, NY 10017
Attn: Paul Barnett
Fax Number: (212) 351-7925
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-22
with a copy to
First Reserve Corporation
600 Travis, No. 6000
Houston, Texas 77002
Attn: Ben A. Guill
Fax Number: (713) 224-0771
and a copy to:
First Reserve Corporation
1801 California St., Suite 4110
Denver, Colorado 80202
Attn: Thomas R. Denison
Fax Number: (303) 382-1275
To the Company:
2601 Beltline Road
Carrollton, Texas 75006
Attn: James A. Nattier
Fax Number: (972) 478-5098
With a copy to the General Counsel at the same address.
To Dresser Industries, Inc.:
Dresser Industries, Inc.
c/o Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201
Attn: General Counsel
To any of the Employee Stockholders:
To the address of record for the Company
Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 7.1 by giving the other party written
notice of the new address in the manner set forth above.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-23
7.2 Entire Agreement; Interpretation; Termination of Prior Agreements.
This Agreement, together with all the Exhibits hereto, constitutes and contains
the entire agreement and understanding of the parties with respect to the
subject matter hereof (other than any restrictions on transfer and repurchase
rights contained in subscription agreements, employment agreements or stock
option agreements between the Company and the Employee Stockholders, and other
than the Sponsor Rights Agreement) and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties respecting the subject matter hereof.
7.3 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of Delaware,
excluding that body of law relating to conflict of laws and choice of law.
7.4 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.
7.5 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
permitted successors and assigns, any rights or remedies under or by reason of
this Agreement.
7.6 Successors and Assigns. Subject to the provisions of Section 5.1, the
provisions of this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto.
7.7 Captions. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
7.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
7.9 Actions to Effectuate Agreement. Each party to this Agreement agrees
to take all actions within its power (including voting shares of capital stock )
to give effect to the terms of this Agreement. In the event of any inconsistency
between this Agreement, on the one hand, and the Certificate of Incorporation or
Bylaws of the Company, on the other hand, the provisions of this Agreement shall
control, and each Stockholder of the Company shall vote his or its capital stock
in such manner as to effectuate any and all amendments to the Certificate of
Incorporation or Bylaws of the Company that may be necessary in order to bring
the Amended and Certificate of Incorporation and Bylaws of the Company into
conformity with the provisions of this Agreement. The vote of any Stockholder of
the Company in violation of the provisions of this Agreement shall be void and
shall be ignored by the Company. In connection therewith, each
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-24
Stockholder hereby grants an irrevocable proxy with full power of substitution
to William E. Macaulay and Thomas R. Denison for purposes of voting all shares
of capital stock subject to this Agreement at any meeting of stockholders or in
any action by written consent of stockholders in any manner necessary to give
effect to the provisions of this Agreement, it being acknowledged that such
proxy is coupled with an interest under this Agreement.
7.10 New Stockholders to Become Parties. Either the Company or the Control
Stockholder may cause each new stockholder of the Company (including those
becoming a Stockholder by virtue of being granted an option to purchase Common
Stock or exercising a stock option granted by the Company, and including any
Permitted Transferee) to become a party to this Agreement as a "Stockholder"
without the consent of any party other than the Control Stockholder. At each
such time as a new party becomes a Stockholder under this Agreement, the Company
or the Control Stockholder shall so notify each other Stockholder, which notice
shall include the name and address of such Stockholder.
7.11 Arbitration. Any controversy, dispute, or claim arising out of, in
connection with, or in relation to, the interpretation, performance or breach of
this Agreement, including, without limitation, the validity, scope, and
enforceability of this section, may at the election of any Stockholder be solely
and finally settled by arbitration conducted in New York, New York, by and in
accordance with the then existing rules for commercial arbitration of the
American Arbitration Association, or any successor organization. Judgment upon
any award rendered by the arbitrator(s) may be entered by the State or Federal
Court having jurisdiction thereof. Any of the parties may demand arbitration by
written notice to the other and to the American Arbitration Association ("Demand
for Arbitration"). The parties intend that this agreement to arbitrate be valid,
enforceable and irrevocable.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
DRESSER, INC.
By: ________________________________
Name:
Title:
DEG AcquIsitions, LLC
By: FIRST RESERVE FUND VIII, L.P.,
a Delaware limited partnership, its manager
By: First Reserve GP VIII, L.P.
a Delaware limited partnership, its general partner
By: First Reserve Corporation,
a Delaware corporation, its general partner
By:_____________________________
Name: Thomas R. Denison
Title: Managing Director
DRESSER INDUSTRIES, INC.
By: ________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-26
Common Stock Ownership
Shares at a par value of $0.001:
CLASS A CLASS B
------- -------
DRESSER INDUSTRIES, INC. 537,408
DEG ACQUISITIONS, LLC 9,700,000 300,000
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-27
Amended and Restated
Certificate of Incorporation
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX VIII-28
Appendix IX
FORM OF
CATEGORY 2A ASSETS PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement") dated as of
___________, 2001 is by and between Halliburton Company, a Delaware corporation
(the "Parent") and DEG Acquisitions, LLC, a Delaware limited liability company
(the "Acquiror").
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror executed and delivered an Agreement and Plan of Recapitalization dated
that date (the "Original Agreement") relating to the sale of certain of the
Parent's businesses relating to, among other things, the design, manufacturing
and marketing of engineered measurement, flow control and power systems for
customers primarily in the energy industry.
Section 2.13 of the Original Agreement provides that, if at the time of
the [First][Second] Closing any of the Category 2A Requirements applicable to
such Closing shall not have been satisfied, the Acquiror may elect, in its sole
discretion, to delay the purchase of the assets located in such jurisdiction in
which such Category 2A Requirements shall not have been satisfied until such
time as such requirements have been satisfied. The Acquiror has made such an
election and, pursuant to Section 2.13 of the Original Agreement, the Acquiror
is executing and delivering this Agreement regarding the purchase of such assets
at such time as such Category 2A Requirements are satisfied.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For ease
of reference, Annex A to the Agreement containing the definitions used therein
is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Acquiror agrees that it will purchase or cause an Affiliate of
the Acquiror to purchase, and the Parent agrees that it will cause a Subsidiary
of the Parent to sell, [description of assets subject to a delayed purchase
under Section 2.13 of the Agreement] (the "Assets") for cash in the amount of
U.S. $_____________ (repeat) payable by wire transfer of immediately available
funds to a wire transfer address of the Parent or such Subsidiary provided by
the Parent to the Acquiror. The closing of such purchase and sale shall be
effected at the principal executive offices of the Parent in Houston, Texas on
the fifteenth (15th) Business Day following receipt of the Authorization
specified below.
It shall be a condition to the Acquiror's obligation to purchase the
Assets pursuant to this Agreement that:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IX
(i) The Acquiror shall have obtained each Authorization under the
applicable foreign competition Laws specified in Category 2A on Schedule 2.13 to
the Parent's Disclosure Letter required in order for such purchase of the Assets
to comply with such foreign competition Laws;
(ii) such Assets shall be transferred to the Acquiror or an Affiliate of
the Acquiror, as applicable, free and clear of all Liens (other than Liens in
existence immediately prior to the First Closing) and shall not be subject to an
aggregate amount of liabilities materially in excess of the aggregate
liabilities to which such Assets were subject immediately prior to the First
Closing;
(iii) at the date of purchase of such Assets, the Parent shall represent
and warrant to the Acquiror or an Affiliate of the Acquiror, as applicable, that
the matters set forth in clause (ii) of this paragraph are true and correct and
that since the First Closing, the Parent or any Affiliate of the Parent that
owned such Assets has, in all Material respects:
(A) operated such Assets in the usual and ordinary course consistent
with past practices;
(B) used all commercially reasonable efforts to preserve
substantially intact the business organization and goodwill, if any,
associated with such Assets, to maintain the rights, privileges and
immunities, if any, of such Assets, to retain the services of any key
employees of such Assets, to perform in all material respects the material
contracts and agreements relating to such Assets and to maintain the
relationships with customers, regulators and suppliers of such Assets;
(C) used all commercially reasonable efforts consistent with past
practice to maintain and to keep such Assets in as good repair and
condition as at the First Closing Date, ordinary wear and tear excepted,
and to maintain supplies and inventories of such Assets in quantities
consistent with past practice;
(D) used all commercially reasonable efforts to maintain in full
force and effect insurance, performance bonds, bank guarantees and letters
of credit on behalf of or with respect to such Assets to the extent
consistent with the ordinary course of business consistent with past
practice;
(E) used all commercially reasonable efforts to maintain in full
force and effect all existing Authorizations pursuant to which such Assets
operate and to obtain timely any additional Authorizations or renewals
thereof to the extent material to the ongoing operations of such Assets;
and
(F) complied with all Legal Requirements applicable to such Assets.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute but a single instrument.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IX-2
IN WITNESS WHEREOF, the Acquiror and the Parent, acting through their
respective officers named below, thereunto duly authorized, have executed this
Agreement as of April 10, 2001.
DEG ACQUISITIONS, LLC
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
HALLIBURTON COMPANY
By: ________________________________
Name:
Title:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX IX-3
Appendix X
FORM OPINION OF COUNSEL TO THE ACQUIROR
Ladies and Gentlemen:
We have acted as counsel to DEG Acquisitions, LLC, a Delaware
limited liability company (the "Acquiror"), and DEG Acquisition Corporation, a
Delaware corporation (the "Merger Sub"), in connection with the recapitalization
of Dresser, Inc., a Delaware corporation ("Dresser"), pursuant to that certain
Amended and Restated Agreement and Plan of Recapitalization, dated April 10,
2001 ("the Agreement") between Halliburton Company (the "Parent"), the Seller
party thereto and the Acquiror (the "Transaction").
This opinion is rendered to you pursuant to Section 11.02(e) of the
Agreement. Capitalized terms used but not defined herein shall have the meanings
given them in the Agreement.
As such counsel, we have made such legal and factual examinations
and inquiries as we have deemed necessary or appropriate for purposes of this
opinion. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies. As to facts material to the opinions, statements and assumptions
expressed herein, we have, with your consent, relied upon oral or written
statements and representations of officers and other representatives of the
Company and others. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.
Whenever a statement herein is qualified by "to the best of our knowledge" or a
similar phrase, it is intended to indicate that those attorneys in this firm who
have rendered legal services in connection with the Transaction do not have
current actual knowledge of the inaccuracy of such statement. However, except as
otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of any such statement. We have examined,
among other things, the following:
(a) the Agreement;
(b) the Investor Rights Agreement, dated as of the date hereof, by and
among Dresser, the Acquiror and Dresser Industries, Inc. (the "Investor Rights
Agreement"); and
(c) the Merger Agreement, dated as of the date hereof, between Dresser,
Inc. and Merger Sub (the "Merger Agreement").
The documents described above are referred to herein collectively as the
"Transaction Documents."
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX X
We are opining herein as to the effect on the subject transaction
only of the federal laws of the United States, the internal laws of the State of
New York, the Delaware General Corporation ("DGCL") and the Delaware Limited
Liability Company Act ("DLLCA") and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws or as to any matters of
municipal law or the laws of any other local agencies within any state. Our
opinions set forth in paragraph 4 below are based upon our consideration of only
those statutes, rules and regulations which, in our experience, are normally
applicable to recapitalization transactions.
Subject to the foregoing and the other matters set forth herein, it
is our opinion that, as of the date hereof:
1. The Acquiror is a limited liability company, duly formed, validly existing
and in good standing under the DLLCA with the requisite power and authority to
enter into each of the Transaction Documents to which it is a party and perform
its obligations thereunder. Merger Sub is a corporation, duly formed, validly
existing and in good standing under the DGCL with corporate power and authority
to enter into the Merger Agreement and perform its obligations thereunder.
2. The execution, delivery and performance of the Transaction Documents to which
it is a party have been duly authorized by all necessary action of each of the
Acquiror and Merger Sub, and each of the Transaction Documents to which it is a
party have been duly executed and delivered by each of the Acquiror and Merger
Sub.
3. The Agreement constitutes a legally valid and binding obligation of the
Acquiror, enforceable against the Acquiror in accordance with its terms.
4. The execution and delivery of the Transaction Documents by the Acquiror and
Merger Sub on the date hereof do not: (i) violate any federal or New York
statute, rule or regulation applicable to the Acquiror or Merger Sub, (ii)
violate the provisions of the Organizational Documents of the Acquiror or Merger
Sub, (iii) result in the breach of or a default under any of the agreements to
which the Acquiror or Merger Sub is a party set forth on Schedule A hereto,
which are all of the agreements that have been identified to us by Acquiror as
material to the Acquiror and Merger Sub taken as a whole (the "Material
Agreements"), or (iv) require any consents, approvals, authorizations,
registrations, declarations or filings by the Acquiror or Merger Sub under any
federal or New York statute, rule or regulation applicable to the Acquiror or
Sub.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors;
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX X-2
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion
of the court before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such
fees to be reasonable.
No opinion is expressed in paragraph 4 as to the applicability of
Section 547 and 548 of the United States Bankruptcy Code or applicable state law
(including, without limitation, Article 10 of the New York Debtor and Creditor
Law) relating to preferences and fraudulent transfers and obligations, or of any
antifraud laws, securities laws, antitrust or trade regulation laws.
In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements: (i) we have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state, (ii) to the extent that any questions of legality or legal
construction have arisen in connection with our review, we have applied the laws
of the State of New York in resolving such questions, (iii) we express no
opinion with respect to the effect of any action or inaction by the Acquiror or
Merger Sub under the Transaction Documents or the Material Agreements which may
result in a breach or default under any Material Agreement, and (iv) we express
no opinion with respect to any matters which require us to perform a
mathematical calculation or make a financial or accounting determination. We
advise you that certain of the Material Agreements may be governed by other
laws, that such laws may vary substantially from the law assumed to govern for
purposes of this opinion, and that this opinion may not be relied upon as to
whether or not a breach or default would occur under the law actually governing
such Material Agreements.
To the extent that the obligations of the Acquiror or Merger Sub may
be dependent upon such matters, we assume for purposes of this opinion that: all
parties to the Transaction Documents other than the Acquiror and Merger Sub are
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization; all parties to the Transaction
Documents other than the Acquiror and Merger Sub have the requisite power and
authority to execute and deliver the Transaction Documents and to perform their
respective obligations under the Transaction Documents to which they are a
party; and the Transaction Documents to which such parties other than the
Acquiror and Merger Sub are a party have been duly authorized, executed and
delivered by such parties and constitute their legally valid and binding
obligations, enforceable against them in accordance with their terms.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX X-3
We express no opinion as to compliance by any parties to the Transaction
Documents with any state or federal laws or regulations applicable to the
subject transactions because of the nature of their business.
This opinion is rendered only to you and is solely for your benefit
in connection with the transactions covered hereby. This opinion may not be
relied upon by you for any other purpose, or furnished to, quoted to or relied
upon by any other person, firm or corporation for any purpose, without our prior
written consent.
Very truly yours,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX X-4
SCHEDULE A
1. Sponsor Rights Agreement, dated as of April 10, 2001, by and among Dresser,
Inc., DEG Acquisitions, LLC, First Reserve Fund VIII, L.P., First Reserve Fund
IX, L.P., Odyssey Investment Partners Fund, LP, Odyssey Coinvestors, LLC and DI
Coinvestment, LLC.
2. Placement Agreement, dated April 4, 2001, among DEG Acquisition Corporation,
Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation and
UBS Warburg LLC.
3. Credit Agreement dated as of April 10, 2001, among the Dresser, Inc., D.I.
Luxembourg, S.A.R.L., DEG Acquisitions, LLC, the Subsidiary Guarantors, the
Lender Parties party thereto, and Wells Fargo Bank N.A., as Swing Line Bank,
Morgan Stanley & Co. Incorporated, as Collateral Agent, Morgan Stanley Senior
Funding, Inc., as Administrative Agent for the Lender Parties, and Credit Suisse
First Boston, Cayman Islands Branch, as Syndication Agent.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX X-5
Appendix XI
DEG Acquisitions, LLC
c/o First Reserve Corporation
411 W. Putnam Ave., Suite 109
Greenwich, CT 06830
and
c/o Odyssey Investment Partners
280 Park Ave.
38th Floor
New York, NY 10017
Re: Dresser, Inc.
Ladies and Gentlemen:
We are acting as counsel to Halliburton Company, a Delaware corporation
(the "Parent"), in connection with a series of transactions contemplated by that
certain Amended and Restated Agreement and Plan of Recapitalization (the
"Agreement") dated April 10, 2001 among the Parent, DEG Acquisitions, LLC, a
Delaware limited liability company (the "Acquiror"), and the Seller named
therein pursuant to which, when consummated, the Parent will have transferred to
the Acquiror in excess of 94% of the Parent's capital stock interest in Dresser
Equipment Group, Inc., a Delaware corporation ("DEGI") and, following the
Reorganization, the Subsidiaries of DEGI and the Non-Controlled Entities (the
"Dresser Equipment Group"). This opinion is being rendered pursuant to the
requirements of Section 11.03(l) of the Agreement. Capitalized terms used but
not defined in this opinion are defined in the Agreement and are used herein
with the same meanings as ascribed to them therein. The opinion attached hereto
addresses various matters relating to the Seller.
In our capacity as counsel to the Parent, Dresser Industries and DEGI, we
examined the Agreement and each of the Ancillary Agreements. We also examined
the certificate of incorporation and by-laws of the Parent, Dresser Industries
and DEGI and the minutes of all meetings and all unanimous consents of the board
of directors of the Parent, Dresser Industries and DEGI and any committees
thereof relating to the authorization of the Agreement, each Ancillary Agreement
and the transactions contemplated thereby. In addition, we examined and relied
upon certificates and telegrams of public officials and certificates of officers
of the Parent and we made such other investigations and examined such other
documents as we deemed necessary as a basis for the opinions hereinafter
expressed. In the course of the foregoing investigations and examinations, we
assumed the genuineness of all signatures on, and the authenticity of, all
documents and instruments submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies and the due
authorization, execution and delivery by the parties thereto of all documents
and instruments examined by us.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX XI
Based on the foregoing and subject to the qualifications set forth below,
we are of the opinion that:
(i) Each of the Parent, Dresser Industries and DEGI has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) Each of the Parent, Dresser Industries and DEGI has the corporate
power and authority to execute, deliver and perform the Agreement and each of
the Ancillary Agreements to which it is a party.
(iii) The Agreement has been duly authorized, executed and delivered by
the Parent and (assuming it has been duly authorized, executed and delivered by
the Acquiror) constitutes a legal, valid and binding agreement of the Parent,
enforceable against it in accordance with its terms, except as enforcement
thereof may limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(vi) To the extent that any of the Parent, Dresser Industries or DEGI is a
party to any of the Ancillary Agreements, each of the Ancillary Agreements has
been duly authorized, executed and delivered by such party and (assuming it has
been duly authorized, executed and delivered by each other party thereto)
constitutes a legal, valid and binding agreement of such party, enforceable
against it in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law); provided, however, that we
express no opinion as to the enforceability of the Merger Agreement or that
certain Investors Rights Agreement dated the Closing Date by and among the
Parent, the Acquiror, DEGI and certain Employee Stockholders named therein (and
referred to in the Agreement as the Stockholders' Agreement).
(v) The authorized capital of DEGI consists solely of 13,000,000 shares of
Class A Common Stock, par value $0.001 per share and 2,000,000 shares of Class B
Common Stock, par value $0.001 per share, of which, immediately prior to the
Merger, 1,000,000 shares of Class A Common Stock have been validly issued and
are fully paid and nonassessable. All of such shares of Class A Common Stock
were, immediately prior to the Merger, owned of record by Dresser Industries.
(vi) No Authorization or Order of any Court or Governmental Authority is
required that has not been obtained in connection with the consummation by DEGI
or Dresser Industries of the Merger (other than any Authorization required under
foreign competition Laws, as to which we, consistent with limitation of the Laws
under which this opinion is rendered, express no opinion).
(vii) The execution and delivery of each of the Agreement and the
Ancillary Agreements to which it is a party by the Parent or DEGI, and the
performance of the obligations
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX XI-2
of the Parent or DEGI under the Agreement or the Ancillary Agreements will not:
(i) violate any federal, New York or Texas statute, rule or regulation
applicable to the Parent or DEGI, (ii) violate the provisions of the
Organizational Documents of the Parent or DEGI or (iii) result in the breach of
or a default under any of the agreement to which the Parent is a party that has
been identified to us by the Parent as material to the Parent and its
subsidiaries, taken as a whole.
(viii) Upon the issuance of the Class A Common Stock and Class B Common
Stock of DEGI to the Acquiror pursuant to the Merger in accordance with the
terms of the Agreement and the Merger Agreement, the Acquiror will (assuming it
is a purchaser without notice of any adverse claim) acquire good title to such
shares free and clear of any Liens (other than any created by the Acquiror).
The opinions herein expressed are limited to the federal laws of the
United States, the laws of the States of Texas and New York and the General
Corporation Law of the State of Delaware, all as in effect on the date hereof.
This opinion is furnished pursuant to Section 11.03(l) of the Agreement.
Each of the Lenders is entitled to rely on the opinions expressed herein as
fully as if such Lender were an addressee hereof. No other person shall be
entitled to rely hereon, nor may this opinion be quoted or otherwise referred to
or furnished to any other person, without our express prior written consent.
Very truly yours,
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
APPENDIX XI-3