EXHIBIT 1.1
GRANT PRIDECO ESCROW CORP.
$175,000,000
9% SENIOR NOTES DUE 2009
PURCHASE AGREEMENT
November 25, 2002
DEUTSCHE BANK SECURITIES INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
c/o Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Grant Prideco Escrow Corp., a Delaware corporation (the
"Company"), and Grant Prideco, Inc., a Delaware corporation ("Grant Prideco"),
hereby confirm their agreement with you (the "Initial Purchasers"), as set forth
below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$175,000,000 aggregate principal amount of its 9% Senior Notes due 2009 (the
"Notes"). The Notes are to be issued under an indenture (the "Indenture") to be
dated as of December 4, 2002 by and between the Company and ▇▇▇▇▇ Fargo Bank,
N.A., as Trustee (the "Trustee"). In connection with the consummation of the
Transactions (as defined herein), as discussed in the Final Memorandum (as
defined herein), pursuant to an assumption agreement, by and among Grant
Prideco, the Guarantors (as defined herein) and the Company, and the related
supplemental indentures (together, the "Assumption Agreement"), (i) Grant
Prideco will assume (the "Assumption"), among other things, the obligations of
the Company under the Escrow Agreement (as defined herein), the Notes and the
Indenture, (ii) the Guarantors (as defined herein) will guarantee Grant
Prideco's obligations under the Notes and Indenture and will become parties to
this Agreement and the Escrow Agreement (as defined herein) for the purposes of
assuming the indemnification obligations thereunder and (iii) the Guarantors
that are not a party to the Registration Rights Agreement will become parties
thereto. Following the Assumption pursuant to the Assumption Agreement, the
Notes will become senior unsecured obligations of Grant Prideco.
The Notes, upon execution of the Assumption Agreement and
consummation of the transaction contemplated thereby, and the Exchange Notes and
the Private Exchange Notes (as each are defined in the Registration Rights
Agreement (as defined below)), when issued, will each be unconditionally
guaranteed (collectively, the "Guarantees") on a senior unsecured basis by each
of Grant Prideco's domestic subsidiaries existing on the date hereof
(the "Existing Guarantors" and together with the Company and Grant Prideco, the
"Issuers") and by each of Grant Prideco's domestic subsidiaries existing on the
date of the Acquisition (as defined below) (collectively with the Existing
Guarantors, the "Guarantors").
The Notes will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company and
Grant Prideco have prepared a preliminary offering memorandum dated November 13,
2002 (the "Preliminary Memorandum") and a final offering memorandum dated
November 25, 2002 (the "Final Memorandum"; the Preliminary Memorandum and the
Final Memorandum each herein being referred to as a "Memorandum") setting forth
or including a description of the terms of the Notes, the terms of the offering
of the Notes, a description of the Company and Grant Prideco and any material
developments relating to the Company and Grant Prideco occurring after the date
of the most recent historical financial statements included therein.
The Notes are being sold in connection with the consummation
of Grant Prideco's acquisition (the "Acquisition") of substantially all of the
assets and business operations of ▇▇▇▇-Hycalog ("▇▇▇▇"), which assets and
operations comprise the drill bits business of, and are directly or indirectly
wholly-owned by, Schlumberger Technology Corporation ("Schlumberger"), pursuant
to an acquisition agreement by and between Schlumberger and Grant Prideco, dated
as of October 25, 2002 (the "Acquisition Agreement").
The Offering, the Acquisition and the Assumption and the
transactions contemplated thereby and hereby are collectively referred to as the
"Transactions."
The Initial Purchasers and their direct and indirect
transferees of the Notes will be entitled to the benefits of the Registration
Rights Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which Grant Prideco and the
Existing Guarantors have agreed, among other things, to file a registration
statement (the "Registration Statement") following the consummation of the
Transactions with the Securities and Exchange Commission (the "Commission")
registering the Notes or the Exchange Notes under the Act.
On the Closing Date (as defined in Section 3 below), the
Company will deposit with the Trustee, as escrow agent, the net proceeds (the
"Escrowed Funds") of the Offering, together with certain other funds made
available by the Company. Upon the satisfaction of certain conditions as set
forth in an escrow agreement to be dated as of the Closing Date between the
Company and the Trustee, as escrow agent (the "Escrow Agreement"), including the
Assumption pursuant to the Assumption Agreement, the Escrowed Funds will be
released to Grant Prideco.
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2. Representations and Warranties. The Company and Grant
Prideco represent and warrant to and agree with the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof
nor the Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as defined
in Section 3 below) contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 2(a) do not apply to statements or omissions made in reliance
upon and in conformity with information relating to the Initial Purchasers
furnished to the Company and Grant Prideco in writing by the Initial Purchasers
expressly for use in the Preliminary Memorandum, the Final Memorandum or any
amendment or supplement thereto.
(b) To the knowledge of Company and Grand Prideco, all the
representations and warranties set forth in the Acquisition Agreement were true
and correct in all material respects as of the time as of which such
representations and warranties were made and shall be true and correct in all
material respects as of the Closing Date as if such representations and
warranties were made on and as of such date (unless such representation or
warranty is given as of a specific date).
(c) As of September 30, 2002 after giving effect to the
Acquisition, Grant Prideco will have the authorized, issued and outstanding
capitalization set forth in the Final Memorandum. All of the subsidiaries of
Grant Prideco of which more than 50% of the total voting power of shares of
capital stock or similar equity interests entitled (without regard to the
occurence of any contingency) to vote in the election of directors, managers or
trustees of the entity is owned or controlled, directly or indirectly, at such
time by Grant Prideco are listed in Schedule 2 attached hereto (except
Voest-Alpine Stahlrohr ▇▇▇▇▇▇▇▇ GmbH and Voiestalpine Tubulars GmbH & Co KG and
each of their direct and indirect subsidiaries, each, a "Subsidiary" and
collectively, the "Subsidiaries"); all of the outstanding shares of capital
stock of Grant Prideco and the Subsidiaries have been, and as of the Closing
Date will be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights; except as set forth on Schedule 3 attached hereto, all of the
outstanding shares of capital stock of each of the Subsidiaries will be free and
clear of all liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and the securities or "Blue
Sky" laws of certain jurisdictions) or voting; except as set forth in the Final
Memorandum, there are no (i) options, warrants or other rights to purchase
(other than options under Grand Prideco's officer, director or employee benefit
plans), (ii) agreements or other obligations to issue or (iii) other rights to
convert any obligation into, or exchange any securities for, shares of capital
stock of or ownership interests in the Company, Grant Prideco or any of the
Subsidiaries outstanding. Except for the Subsidiaries or as disclosed in the
Final Memorandum or set forth on Schedule 4 attached hereto, Grant Prideco does
not own, directly or indirectly, any shares of capital stock or
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any other equity or long-term debt securities or have any equity interest in any
firm, partnership, joint venture or other entity.
(d) Each of the Company, Grant Prideco and the Subsidiaries is
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization and has all
requisite corporate, limited liability company or other organizational power and
authority to own its properties and conduct its business as now conducted and as
described in the Final Memorandum; each of the Company, Grant Prideco and the
Subsidiaries is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, consolidated financial condition, stockholders' equity, prospects or
results of operations of Grant Prideco and the Subsidiaries, taken as a whole
(any such event, a "Material Adverse Effect").
(e) The Company has all requisite corporate power and
authority to execute, deliver and perform each of its obligations under the
Notes and Grant Prideco has all requisite corporate power and authority perform
each of its obligations under Notes upon execution of the Assumption Agreement.
The Notes, when issued, will be in the form contemplated by the Indenture. The
Notes have been duly and validly authorized by the Company and Grant Prideco
and, when executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Indenture and, when delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Company and, upon
execution of the Assumption Agreement, will constitute valid and legally binding
obligations of Grant Prideco entitled to the benefits of the Indenture, and
enforceable against the Company and, upon execution of the Assumption Agreement,
enforceable against Grant Prideco, in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(f) Grant Prideco has all requisite corporate power and
authority to execute, deliver and perform each of its obligations under the
Exchange Notes and the Private Exchange Notes. The Exchange Notes and the
Private Exchange Notes, when issued, will be in the form contemplated by the
Indenture and the Registration Rights Agreement. The Exchange Notes and the
Private Exchange Notes have been duly and validly authorized by Grant Prideco
and, when executed by Grant Prideco and authenticated by the Trustee in
accordance with the provisions of the Indenture and, when issued in accordance
with the Indenture and the Registration Rights Agreement, will constitute valid
and legally binding obligations of Grant Prideco entitled to the benefits of the
Indenture, and enforceable against Grant Prideco in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to
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creditors' rights generally, and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(g) Each of the Existing Guarantors has all requisite
corporate, limited liability company or other organizational power and
authority, as the case may be, to execute, deliver and perform its obligations
under the Guarantees. The Guarantees, when issued, will be in the form
contemplated by the Indenture. The Guarantees have each been duly and validly
authorized by the Existing Guarantors and, when the Guarantees have been
executed and delivered by the Guarantors, upon execution of the Assumption
Agreement and the consummation of the transactions contemplated thereby
(assuming the due authorization, execution and delivery of the Guarantees by the
Guarantors other than the Existing Guarantors) the Guarantees will constitute
valid and legally binding obligations of the Guarantors, entitled to the
benefits of the Indenture and enforceable against the Guarantors in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(h) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Indenture.
The Indenture meets the requirements for qualification under the Trust Indenture
Act of 1939, as amended (the "TIA"). The Indenture has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Trustee), will
constitute a valid and legally binding agreement of the Company, and upon
execution of the Assumption Agreement, of Grant Prideco, enforceable against the
Company and Grant Prideco in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(i) Each of Grant Prideco and the Existing Guarantors has all
requisite corporate, limited liability company or other organizational power and
authority to execute, deliver and perform its obligations under the Registration
Rights Agreement. The Registration Rights Agreement has been duly and validly
authorized by each of Grant Prideco and the Existing Guarantors and, when
executed and delivered by Grant Prideco and the Guarantors (assuming the due
authorization, execution and delivery by the Initial Purchasers and the
Guarantors other than the Existing Guarantors), will constitute a valid and
legally binding agreement of each of Grant Prideco and the Guarantors,
enforceable against each of Grant Prideco and the Guarantors in accordance with
its terms, except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
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(j) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Escrow
Agreement. The Escrow Agreement has been duly and validly authorized by the
Company and, when duly executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Trustee, as escrow agent), will
constitute a valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(k) The Escrow Agreement has been duly and validly authorized
by each of Grant Prideco and the Existing Guarantors and, upon execution of the
Assumption Agreement (assuming the due authorization, execution and delivery by
the Guarantors other than the Existing Guarantors), will constitute a valid and
legally binding agreement of each of Grant Prideco and the Guarantors,
enforceable against each of Grant Prideco and the Guarantors in accordance with
its terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought.
(l) Each of the Issuers has all requisite corporate, limited
liability company or other organizational power and authority to execute,
deliver and perform its obligations under the Assumption Agreement and to
consummate the transactions contemplated thereby. The Assumption Agreement and
the consummation by the Issuers of the transaction contemplated thereby have
been duly and validly authorized by each of the Issuers.
(m) The Company and Grant Prideco have all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the consummation by the Company and Grant Prideco of the transactions
contemplated hereby have been duly and validly authorized by the Company and
Grant Prideco. This Agreement has been duly executed and delivered by the
Company and Grant Prideco.
(n) Each of the Existing Guarantors has all requisite
corporate limited liability company or other organizational power and authority
to become a party to, and perform its obligations under this Agreement with
respect to the indemnification provisions in Section 9 hereof and to consummate
the transactions contemplated hereby. This Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by each
of the Existing Guarantors.
(o) No consent, approval, authorization or order of any court
or governmental agency or body, or third party is required for the issuance and
sale by the Company of the Notes to the Initial Purchasers or the consummation
by the Issuers of the other transactions contemplated hereby, including the
Transactions, except such as have been obtained and such
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as may be required under state securities or "Blue Sky" laws in connection with
the purchase and resale of the Notes by the Initial Purchasers and except with
respect to the registration of the Exchange Notes and the Private Exchange Notes
(if applicable) and the qualification of the Indenture under the TIA. None of
the Issuers is (i) in violation of its certificate of incorporation or bylaws
(or similar organizational document), (ii) in breach or violation of any
statute, judgment, decree, order, rule or regulation applicable to any of them
or any of their respective properties or assets, except for any such breach or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect, or (iii) in breach of or default under (nor has any event
occurred that, with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which any of them is a party or to which any of them or their
respective properties or assets is subject (collectively, "Contracts"), except
for any such breach, default, violation or event that would not, individually or
in the aggregate, have a Material Adverse Effect.
(p) The execution, delivery and performance by the Company of
the Indenture and the Escrow Agreement; the execution, delivery and performance
by the Company and Grant Prideco of this Agreement; the execution, delivery and
performance by Grant Prideco and the Existing Guarantors of the Registration
Rights Agreement; and the execution, delivery and performance by each of the
Company, Grant Prideco and the Guarantors of the Assumption Agreement, and the
consummation by the Company, Grant Prideco and the Guarantors of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Notes to the Initial Purchasers) will not conflict with
or constitute or result in a breach of or a default under (or an event which
with notice or passage of time or both would constitute a default under) or
violation of any of (i) the terms or provisions of any Contract, except for any
such conflict, breach, violation, default or event that would not, individually
or in the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of any of the
Issuers or any of the Subsidiaries or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8 hereof)
any statute, judgment, decree, order, rule or regulation applicable to the
Issuers or any of the Subsidiaries or any of their respective properties or
assets, except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
(q) The audited consolidated financial statements of Grant
Prideco, the Subsidiaries and, to the knowledge of the Company and Grant
Prideco, of ▇▇▇▇ included in the Final Memorandum present fairly in all material
respects the financial position, results of operations and cash flows of Grant
Prideco, the Subsidiaries and ▇▇▇▇ at the dates and for the periods to which
they relate and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, except as otherwise stated
therein. The summary and selected financial and statistical data of the Company
and Grand Prideco in the Final Memorandum present fairly in all material
respects the information shown therein and
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have been prepared and compiled on a basis consistent with the audited financial
statements included therein, except as otherwise stated therein. To the
knowledge of the Company and Grant Prideco, the summary and selected financial
and statistical data of ▇▇▇▇ in the Final Memorandum present fairly in all
material respects the information shown therein and have been prepared and
compiled on a basis consistent with the audited financial statements included
therein, except as otherwise stated therein. Each of Ernst & Young LLP and
PricewaterhouseCoopers LLP (the "Independent Accountants") is an independent
public accounting firm within the meaning of the Act and the rules and
regulations promulgated thereunder.
(r) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the applicable
requirements of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (ii) have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and (iii) have been properly computed on the bases described therein;
the assumptions used in the preparation of the pro forma financial data included
in the Final Memorandum are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(s) There is not pending or, to the knowledge of the Company
or Grant Prideco, threatened any action, suit, proceeding, inquiry or
investigation to which the Company or Grant Prideco or any of the Subsidiaries
is a party, or to which the property or assets of the Company or Grant Prideco
or any of the Subsidiaries are subject, before or brought by any court,
arbitrator or governmental agency or body that, if determined adversely to the
Company or Grant Prideco or any of the Subsidiaries, would, individually or in
the aggregate, have a Material Adverse Effect or that seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Notes to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(t) Each of the Company, Grant Prideco and the Subsidiaries
possesses all licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Memorandum ("Permits"), except where the
failure to obtain such Permits would not, individually or in the aggregate, have
a Material Adverse Effect; each of the Company, Grant Prideco and the
Subsidiaries has fulfilled and performed all of its obligations with respect to
such Permits and no event has occurred that allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit; and none of
the Company, Grant Prideco or the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit, except as
described in the Final Memorandum and except where such
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revocation or modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(u) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described therein, (i) none of the
Company, Grant Prideco or the Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business, which liabilities, obligations, transactions or contracts would,
individually or in the aggregate, be material to the general affairs,
management, business, condition (financial or otherwise), prospects or results
of operations of the Company, Grant Prideco and the Subsidiaries, taken as a
whole, (ii) none of the Company, Grant Prideco or the Subsidiaries has purchased
any of its outstanding capital stock (other than pursuant to employee benefit
plans), nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock (other than with respect to any of such Subsidiaries,
the purchase of, or dividend or distribution on, capital stock owned by Grant
Prideco or the Subsidiaries) and (iii) there shall not have been any material
change in the capital stock or long-term indebtedness of Grant Prideco or the
Subsidiaries.
(v) Each of the Company, Grant Prideco and the Subsidiaries
has filed all necessary federal, state and foreign income and franchise tax
returns, except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect, and has paid
all taxes shown as due thereon; and other than tax deficiencies which the
Company, Grant Prideco or any Subsidiary, as the case may be, is contesting in
good faith and for which the Company, Grant Prideco or such Subsidiary, as the
case may be, has provided adequate reserves, there is no tax deficiency that has
been asserted against the Company, Grant Prideco or any of the Subsidiaries that
would have, individually or in the aggregate, a Material Adverse Effect.
(w) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Company, Grant
Prideco and the Subsidiaries believe to be reliable and accurate.
(x) None of the Company, Grant Prideco, the Subsidiaries or
any agent acting on their behalf has taken or will take any action that might
cause this Agreement or the sale of the Notes to violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in effect,
or as the same may hereafter be in effect, on the Closing Date.
(y) Each of the Company, Grant Prideco and the Subsidiaries
has good and indefeasible title to all real property and good title to all
personal property described in the Final Memorandum as being owned by it and
good and indefeasible title to a leasehold estate in the real and personal
property described in the Final Memorandum as being leased by it free and clear
of all liens, charges, encumbrances or restrictions, except as described in the
Final Memorandum or to the extent the failure to have such title or the
existence of such liens,
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charges, encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect. All leases, contracts and agreements
to which the Company, Grant Prideco or any of the Subsidiaries is a party or by
which any of them is bound are valid and enforceable against the Company, Grant
Prideco or such Subsidiary, and are valid and enforceable against the other
party or parties thereto and are in full force and effect with only such
exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company, Grant Prideco and the Subsidiaries own or possess
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by them as described in the Final Memorandum, and none
of the Company, Grant Prideco or the Subsidiaries has received any notice of
infringement of or conflict with (or knows of any such infringement of or
conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how that, if such
assertion of infringement or conflict were sustained, would have a Material
Adverse Effect.
(z) There are no legal or governmental proceedings involving
or affecting the Company, Grant Prideco or any Subsidiary or any of their
respective properties or assets that would be required to be described in a
prospectus pursuant to the Act that are not described in the Final Memorandum,
nor are there any material contracts or other documents that would be required
to be described in a prospectus pursuant to the Act that are not described in
the Final Memorandum.
(aa) Except as would not, individually or in the aggregate,
have a Material Adverse Effect (A) each of the Company, Grant Prideco and the
Subsidiaries is in compliance with and not subject to liability under applicable
Environmental Laws (as defined below), (B) each of the Company, Grant Prideco
and the Subsidiaries has made all filings and provided all notices required
under any applicable Environmental Law, and has and is in compliance with all
Permits required under any applicable Environmental Laws and each of them is in
full force and effect, (C) there is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the knowledge
of the Company, Grant Prideco or any of the Subsidiaries, threatened against the
Company, Grant Prideco or any of the Subsidiaries under any Environmental Law,
(D) no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company, Grant Prideco or any of the
Subsidiaries, (E) none of the Company, Grant Prideco or the Subsidiaries has
received notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or any comparable state law, (F) no property or
facility of the Company, Grant Prideco or any of the Subsidiaries is (i) listed
or proposed for listing on the National Priorities List under CERCLA or is (ii)
listed in the Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or on any comparable
list maintained by any state or local governmental authority.
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For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii) underground
and above ground storage tanks and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(bb) There is no strike, labor dispute, slowdown or work
stoppage with the employees of the Company, Grant Prideco or any of the
Subsidiaries that is pending or, to the knowledge of the Company, Grant Prideco
or any of the Subsidiaries, threatened.
(cc) Each of the Company, Grant Prideco and the Subsidiaries
carries insurance in such amounts and covering such risks as it reasonably
believes is adequate for the conduct of its business and the value of its
properties.
(dd) None of the Company, Grant Prideco or the Subsidiaries
has any liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension, profit
sharing or other plan which is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), to which the Company, Grant Prideco
or any of the Subsidiaries makes or ever has made a contribution and in which
any employee of the Company, Grant Prideco or of any Subsidiary is or has ever
been a participant. With respect to such plans, the Company, Grant Prideco and
each Subsidiary is in compliance in all material respects with all applicable
provisions of ERISA.
(ee) Each of the Company, Grant Prideco and the Subsidiaries
(i) makes and keeps accurate books and records and (ii) maintains internal
accounting controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B) transactions are
recorded as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is permitted
only in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at reasonable
intervals.
(ff) None of the Company, Grant Prideco or the Subsidiaries
will be an "investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(gg) The Notes, the Indenture, the Registration Rights
Agreement and the Escrow Agreement will conform in all material respects to the
descriptions thereof in the Final Memorandum.
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(hh) No holder of securities of the Company, Grant Prideco or
any Subsidiary will be entitled to have such securities registered under the
registration statements required to be filed by Grant Prideco pursuant to the
Registration Rights Agreement other than as expressly permitted thereby.
(ii) Immediately after (i) the issuance of the Notes pursuant
to this Agreement and (ii) consummation of the Transactions, the fair value and
present fair saleable value of the assets of each of the Company, Grant Prideco
and the Subsidiaries (each on a consolidated basis) will exceed the sum of its
stated liabilities and identified contingent liabilities; none of the Company,
Grant Prideco or the Subsidiaries (each on a consolidated basis) is, nor will
any of the Company, Grant Prideco or the Subsidiaries (each on a consolidated
basis) be, after giving effect to (i) the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby and
(ii) the consummation of the Transactions (a) left with unreasonably small
capital with which to carry on its business as it is proposed to be conducted,
(b) unable to pay its debts (contingent or otherwise) as they mature or (c)
otherwise insolvent.
(jj) None of the Company, Grant Prideco, the Subsidiaries or
any of their respective Affiliates (as defined in Rule 501(b) of Regulation D
under the Act) has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any "security"
(as defined in the Act) which is or could be integrated with the sale of the
Notes in a manner that would require the registration under the Act of the Notes
or (ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Notes or in any manner involving a public offering within the
meaning of Section 4(2) of the Act. Assuming the accuracy of the representations
and warranties of the Initial Purchasers in Section 8 hereof, it is not
necessary in connection with the offer, sale and delivery of the Notes to the
Initial Purchasers in the manner contemplated by this Agreement to register any
of the Notes under the Act or to qualify the Indenture under the TIA.
(kk) No securities of the Company, Grant Prideco or any
Subsidiary are of the same class (within the meaning of Rule 144A under the Act)
as the Notes and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system.
(ll) None of the Company, Grant Prideco or the Subsidiaries
has taken, nor will any of them take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Notes.
(mm) None of the Company, Grant Prideco, the Subsidiaries, any
of their respective Affiliates or any person acting on its or their behalf
(other than the Initial Purchasers) has engaged in any directed selling efforts
(as that term is defined in Regulation S under the Act ("Regulation S")) with
respect to the Notes; the Company, Grant Prideco, the Subsidiaries
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and their respective Affiliates and any person acting on its or their behalf
(other than the Initial Purchasers) have complied with the offering restrictions
requirement of Regulation S.
Any certificate signed by any officer of the Company, Grant
Prideco or any of the Subsidiaries and delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a joint and several
representation and warranty by the Company, Grant Prideco and each of the
Subsidiaries to the Initial Purchasers as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Notes. (a) On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Notes in the respective amounts
set forth on Schedule 1 hereto from the Company at 100.00% of their principal
amount. One or more certificates in definitive form for the Notes that the
Initial Purchasers have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 36 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer (same day funds), to such account or accounts as the
Company shall specify prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. Such delivery of and payment for
the Notes shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M., New York time, on December 4, 2002, or
at such other place, time or date as the Initial Purchasers, on the one hand,
and the Company, on the other hand, may agree upon, such time and date of
delivery against payment being herein referred to as the "Closing Date." The
Company will make such certificate or certificates for the Notes available for
checking by the Initial Purchasers at the offices of Deutsche Bank Securities
Inc. in New York, New York, or at such other place as Deutsche Bank Securities
Inc. may designate, at least 24 hours prior to the Closing Date.
(b) Each of the Company and Grant Prideco, jointly and
severally, agrees to pay the Initial Purchasers on the earlier of (x) the
Special Mandatory Redemption Date (as defined in the Escrow Agreement) and (y)
the closing date of the Acquisition, by wire transfer of immediately available
funds, a fee of 2.375% of the net proceeds of the Offering (i.e., $4,156,250).
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Notes at the price and upon the terms set
forth in the Final Memorandum as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company and Grant Prideco. The Company and
Grant Prideco covenant and agree with the Initial Purchasers that:
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(a) Neither the Company nor Grant Prideco will amend or
supplement the Final Memorandum or any amendment or supplement thereto of which
the Initial Purchasers shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have given their
consent. The Company and Grant Prideco will promptly, upon the reasonable
request of the Initial Purchasers or counsel for the Initial Purchasers, make
any amendments or supplements to the Preliminary Memorandum or the Final
Memorandum that may be necessary or advisable in connection with the resale of
the Notes by the Initial Purchasers.
(b) The Company and Grant Prideco will cooperate with the
Initial Purchasers in arranging for the qualification of the Notes for offering
and sale under the securities or "Blue Sky" laws of which jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in effect
for as long as may be necessary to complete the resale of the Notes; provided,
however, that in connection therewith, neither the Company nor Grant Prideco
shall be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself to taxation
in excess of a nominal dollar amount in any such jurisdiction where it is not
then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes or the Private Exchange
Notes (if applicable), any event occurs or information becomes known as a result
of which the Final Memorandum as then amended or supplemented would include any
untrue statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Final Memorandum to comply with applicable
law, the Company or Grant Prideco will promptly notify the Initial Purchasers
thereof and will prepare, at the expense of the Company and Grant Prideco, an
amendment or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Company and Grant Prideco will, without charge,
provide to the Initial Purchasers and to counsel for the Initial Purchasers as
many copies of the Preliminary Memorandum and the Final Memorandum or any
amendment or supplement thereto as the Initial Purchasers may reasonably
request.
(e) The Company and Grant Prideco will apply the net proceeds
from the sale of the Notes as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For so long as any of the Notes remain outstanding, the
Company and Grant Prideco will furnish to the Initial Purchasers copies of all
reports and other communications (financial or otherwise) furnished by the
Company or Grant Prideco to the Trustee or to the holders of the Notes and, as
soon as available, copies of any reports or financial statements furnished to or
filed by the Company or Grant Prideco with the Commission or any national
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securities exchange on which any class of securities of the Company or Grant
Prideco may be listed.
(g) Prior to the Closing Date, the Company or Grant Prideco
will furnish to the Initial Purchasers at their request, as soon as they have
been completed, a copy of any unaudited interim financial statements of Grant
Prideco for any period subsequent to the period covered by the most recent
financial statements appearing in the Final Memorandum.
(h) None of the Company, Grant Prideco or any of their
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Notes in a manner that would require the
registration under the Act of the Notes.
(i) None of the Company or Grant Prideco will, and will not
permit the Subsidiaries to, engage in any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Notes or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Notes remain outstanding, the
Company and Grant Prideco will make available at their expense, upon request, to
any holder of such Notes and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless Grant Prideco is then subject
to Section 13 or 15(d) of the Exchange Act.
(k) The Company and Grant Prideco will use their reasonable
best efforts to (i) permit the Notes to be designated PORTAL securities in
accordance with the rules and regulations adopted by the NASD relating to
trading in the Private Offerings, Resales and Trading through Automated Linkages
market (the "Portal Market") and (ii) permit the Notes to be eligible for
clearance and settlement through The Depository Trust Company.
(l) In connection with Notes offered and sold in an off shore
transaction (as defined in Regulation S) the Company and Grant Prideco will not
register any transfer of such Notes not made in accordance with the provisions
of Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Notes in the form of definitive
securities.
6. Expenses. The Company and Grant Prideco agree to pay all
costs and expenses incident to the performance of their obligations under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated pursuant to Section 11 hereof, including all
costs and expenses incident to (i) the printing, word processing or other
production of documents with respect to the transactions contemplated hereby,
including any costs of printing the Preliminary Memorandum and the Final
Memorandum and any amendment or supplement thereto, and any "Blue Sky"
memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or
-15-
advisors retained by the Company and Grant Prideco, (iv) preparation (including
printing), issuance and delivery to the Initial Purchasers of the Notes, (v) the
qualification of the Notes under state securities and "Blue Sky" laws, including
filing fees and fees and disbursements of counsel for the Initial Purchasers
relating thereto, (vi) expenses in connection with the "roadshow" and any other
meetings with prospective investors in the Notes, (vii) fees and expenses of the
Trustee including fees and expenses of counsel, (viii) all expenses and listing
fees incurred in connection with the application for quotation of the Notes on
the PORTAL Market and (ix) any fees charged by investment rating agencies for
the rating of the Notes. If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Company or Grant Prideco to perform all obligations and satisfy all conditions
on their part to be performed or satisfied hereunder (other than solely by
reason of a default by the Initial Purchasers of their obligations hereunder
after all conditions hereunder have been satisfied in accordance herewith), the
Company and Grant Prideco agree to promptly reimburse the Initial Purchasers
upon demand for all out-of-pocket expenses (including fees, disbursements and
charges of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers) that
shall have been incurred by the Initial Purchasers in connection with the
proposed purchase and sale of the Notes.
7. Conditions of the Initial Purchasers' Obligations. The
obligation of the Initial Purchasers to purchase and pay for the Notes shall, in
their sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinions, dated as of the Closing Date and addressed to the Initial
Purchasers, of (i) Fulbright & ▇▇▇▇▇▇▇▇, LLP, counsel for the Company and Grant
Prideco, in substantially the same form as Exhibit B hereof and (ii) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, General Counsel of Grant Prideco, in substantially the same form as
Exhibit C hereof and, in each case, as satisfactory to the counsel for the
Initial Purchasers.
(b) On the Closing Date, the Initial Purchasers shall have
received the opinion, in form and substance satisfactory to the Initial
Purchasers, dated as of the Closing Date and addressed to the Initial
Purchasers, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers, with
respect to certain legal matters relating to this Agreement and such other
related matters as the Initial Purchasers may reasonably require. In rendering
such opinion, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall have received and may rely upon such
certificates and other documents and information as it may reasonably request to
pass upon such matters.
(c) The Initial Purchasers shall have received from each of
the Independent Accountants a comfort letter or letters dated the date hereof
and the Closing Date, in form and substance satisfactory to counsel for the
Initial Purchasers.
(d) The representations and warranties of the Company and
Grant Prideco contained in this Agreement shall be true and correct on and as of
the date hereof and on and
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as of the Closing Date as if made on and as of the Closing Date; the statements
of the Company's and Grant Prideco's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be true and correct on
and as of the date made and on and as of the Closing Date; the Company and Grant
Prideco shall have performed all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior to
the Closing Date; and, except as described in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), subsequent to the
date of the most recent financial statements in such Final Memorandum, there
shall have been no event or development, and no information shall have become
known, that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect.
(e) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), none of Grant Prideco or any of the Subsidiaries
shall have sustained any loss or interference with respect to its business or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any strike, labor dispute, slow down or work
stoppage or from any legal or governmental proceeding, order or decree, which
loss or interference, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(g) The Initial Purchasers shall have received a certificate
of the Company and Grant Prideco, dated the Closing Date, signed on behalf of
the Company and Grant Prideco by Grant Prideco's Chairman of the Board,
President or any Senior Vice President and the Chief Financial Officer to the
effect that:
(i) the representations and warranties of the Company and
Grant Prideco contained in this Agreement are true and correct on and
as of the date hereof and on and as of the Closing Date, and each of
the Company and Grant Prideco have performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) at the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development has occurred, and no information has
become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect;
(iii) the sale of the Notes hereunder has not been enjoined
(temporarily or permanently); and
-17-
(iv) to their knowledge, the audited financial statements,
and other financial information included therein, for the years ended
December 31, 2000, December 31, 1999, December 31, 1998 and December
31, 1997, fairly present in all material respects the financial
condition, results of operations and cash flows of Grant Prideco as of,
and for, the periods presented therein.
(h) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by Grant Prideco and each of
the Existing Guarantors and such agreement shall be in full force and effect at
all times from and after the Closing Date.
(i) On the Closing Date, the Escrow Agreement shall have been
executed and delivered by all parties thereto.
On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of each of the Company, Grant
Prideco and the Subsidiaries as they shall have heretofore reasonably requested
from the Company and Grant Prideco.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. The
Company and Grant Prideco shall furnish to the Initial Purchasers such conformed
copies of such documents, opinions, certificates, letters, schedules and
instruments in such quantities as the Initial Purchasers shall reasonably
request.
8. Offering of Notes; Restrictions on Transfer. (a) Each of
the Initial Purchasers (as to itself only) agrees with the Company and Grant
Prideco that (i) it has not and will not solicit offers for, or offer or sell,
the Notes by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; and (ii) it has
and will solicit offers for the Notes only from, and will offer the Notes only
to (A) in the case of offers inside the United States, persons whom the Initial
Purchasers reasonably believe to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as fiduciary
or agent, only when such person has represented to the Initial Purchasers that
each such account is a QIB, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A and (B) in the case of offers outside the United
States, to persons other than U.S. persons ("foreign purchasers," which term
shall include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)); provided, however, that, in the case of this clause (B), in
purchasing such Notes such persons are deemed to have represented and agreed as
provided under the caption "Notice to Investors" contained in the Final
Memorandum (or, if the Final Memorandum is not in existence, in the most recent
Memorandum).
-18-
(b) Each of the Initial Purchasers represents and warrants
with respect to offers and sales outside the United States that (i) it has and
will comply with all applicable laws and regulations in each jurisdiction in
which it acquires, offers, sells or delivers Notes or has in its possession or
distributes any Memorandum or any such other material, in all cases at its own
expense; (ii) the Notes have not been and will not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Act or pursuant to an exemption from the
registration requirements of the Act; and (iii) it has offered the Notes and
will offer and sell the Notes (A) as part of its distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the offering
and the Closing Date, only in accordance with Rule 903 of Regulation S and,
accordingly, neither it nor any persons acting on its behalf have engaged or
will engage in any directed selling efforts (within the meaning of Regulation S)
with respect to the Notes, and any such persons have complied and will comply
with the offering restrictions requirement of Regulation S.
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) Each of the Company
and Grant Prideco agrees to indemnify and hold harmless each Initial Purchaser
and each person, if any, who controls any Initial Purchasers within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which any Initial Purchasers or such
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company or Grant Prideco in Section 2 hereof;
(ii) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or
supplement thereto; or
(iii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto, a material fact
required to be stated therein or necessary to make the statements
therein not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, the Company
and Grant Prideco will not be liable in any such case to the extent that any
such loss, claim, damage, or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Memorandum or any amendment or supplement thereto in reliance upon and in
conformity with written information concerning the Initial Purchasers furnished
to the Company or Grant Prideco by the Initial Purchasers specifically for
-19-
use therein. The indemnity provided for in this Section 9 will be in addition to
any liability that the Company and Grant Prideco may otherwise have to the
indemnified parties. The Company and Grant Prideco shall not be liable under
this Section 9 for any settlement of any claim or action effected without Grant
Prideco's prior written consent, which shall not be unreasonably withheld.
(b) Each Initial Purchasers, severally and not jointly, agrees
to indemnify and hold harmless the Company and Grant Prideco, their respective
directors, officers and each person, if any, who controls the Company or Grant
Prideco within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company, Grant Prideco or any such director, officer or controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Memorandum or any amendment or
supplement thereto, or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning the Initial
Purchasers, furnished to the Company or Grant Prideco by such Initial Purchasers
specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses incurred by the Company, Grant Prideco or any such director,
officer or controlling person in connection with investigating or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action in respect thereof. The indemnity provided
for in this Section 9 will be in addition to any liability that the Initial
Purchasers may otherwise have to the indemnified parties. The Initial Purchasers
shall not be liable under this Section 9 for any settlement of any claim or
action effected without their consent, which shall not be unreasonably withheld.
The Company and Grant Prideco shall not, without the prior written consent of
the Initial Purchasers, effect any settlement or compromise of any pending or
threatened proceeding in respect of which the Initial Purchasers are or could
have been a party, or indemnity could have been sought hereunder by any Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the
-20-
extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Company and Grant Prideco in the case
of paragraph (b) of this Section 9, representing the indemnified parties under
such paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. All fees and expenses reimbursed pursuant to this paragraph
(c) shall be reimbursed as they are incurred. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 9, in which
case the indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect
-21-
thereof), each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect (i) the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other from the offering of the Notes or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company and
Grant Prideco on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company and Grant Prideco bear to
the total discounts and commissions received by such Initial Purchaser. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and Grant Prideco on the one hand, or such Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company, Grant Prideco and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial Purchaser
shall be obligated to make contributions hereunder that in the aggregate exceed
the total discounts, commissions and other compensation received by such Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchasers, and each director of the Company and Grant Prideco, each
officer of the Company and Grant Prideco and each person, if any, who controls
the Company or Grant Prideco within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company and Grant Prideco.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, Grant Prideco, their officers and the Initial Purchasers set forth in
this Agreement or made by or on behalf of them pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, Grant Prideco, any of their officers or directors, the
Initial Purchasers or any controlling person referred to in Section 9 hereof and
(ii) delivery of and
-22-
payment for the Notes. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6, 9, 10 and 15 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the
discretion of the Initial Purchasers by notice to Grant Prideco given prior to
the Closing Date in the event that the Company or Grant Prideco shall have
failed, refused or been unable to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) any of the Company, Grant Prideco or the Subsidiaries
shall have sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any strike,
labor dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference, in the judgment of the Initial
Purchasers, has had or has a Material Adverse Effect, or there shall
have been, in the judgment of the Initial Purchasers, any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of Grant Prideco or the Subsidiaries),
except in each case as described in the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities of Grant Prideco or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the NASDAQ National Market shall have been suspended or materially
limited or minimum or maximum prices shall have been established on any
such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities or a material disruption in
commercial banking or securities settlement or clearance services in
the United States;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Final Memorandum; or
(v) subsequent to the date hereof, any securities of Grant
Prideco shall have been downgraded or placed on any "watch list" for
possible downgrading by Moodys' Investors Service, Inc. or Standard &
Poors Ratings Group, Inc.
-23-
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The
statements set forth in the last paragraph on the front cover page regarding
delivery of the Notes and in the third and fourth sentences of the third
paragraph under the heading "Private Placement" concerning the terms of the
offering by the Initial Purchasers, and the sixth paragraph under the heading
"Private Placement" concerning stabilization, syndicate covering transactions
and penalty bids, in the Final Memorandum (to the extent such statements relate
to the Initial Purchasers) constitute the only information furnished by the
Initial Purchasers to the Company and Grant Prideco for the purposes of Sections
2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, (i) if sent to the Initial Purchasers, shall be mailed or delivered to
Deutsche Bank Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Finance Department, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.;
and (ii) if sent to any Issuer, shall be mailed or delivered to such Issuer at
Grant Prideco, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to Fulbright & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Company, Grant Prideco and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company and Grant Prideco contained in Section 9 of this
Agreement shall also be for the benefit of any person or persons who control any
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Company and Grant Prideco, their officers and any person or persons who
control the Company or Grant Prideco within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act. No purchaser of Notes from the Initial
Purchasers will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN
-24-
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN,
WITHOUT GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-25-
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among the
Company, Grant Prideco and the Initial Purchasers.
Very truly yours,
GRANT PRIDECO ESCROW CORP.
By:
------------------------------------
Name:
Title:
GRANT PRIDECO, INC.
By:
------------------------------------
Name:
Title:
-26-
The foregoing Agreement is hereby confirmed
and accepted as of the date first
above written.
DEUTSCHE BANK SECURITIES INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: DEUTSCHE BANK SECURITIES INC.
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
-27-
Schedule 1
Principal
Amount of
Initial Purchasers Notes
------------------ ---------
Deutsche Bank Securities Inc........................................... $148,750,000
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated........................................... 26,250,000
------------
Total .................................................. $175,000,000
-28-
Schedule 2
Subsidiaries of Grant Prideco
Jurisdiction of
Name Incorporation
---- ---------------
XL Systems Antilles N.V. Netherlands Antilles
XL Systems Europe B.V. Netherlands
XL Systems International, Inc. Delaware
GP Expatriate Services, Inc. Delaware
Enerpro de Mexico S.A. de C.V. Mexico
Pridecomex Holding, S.A. de C.V. Mexico
Grant Prideco S.A. de C.V. Mexico
T.F. de Mexico, S.A. de C.V. Mexico
Immobiliaria Industrial de Veracruz, S.A. de C.V. Mexico
Grant Prideco (Singapore) Pte Ltd Singapore
Grant Prideco Holding, LLC Delaware
XL Systems, L.P. Texas
Grant Prideco, L.P. Delaware
Plexus Deepwater Technologies Ltd. Texas
Grant Prideco PC Composites Holdings, LLC Texas
Grant Prideco USA, LLC Delaware
Star Operating Company Delaware
TA Industries, Inc. Delaware
GP Italy Holding S.r.l. Italy
C.M.A. Canavera S.p.a. Italy
Tube Alloy Capital Corporation Texas
Tube Alloy Corporation Louisiana
Texas Arai, Inc. Delaware
Grant Prideco Services, Ltd. Cayman
Grant Prideco Mauritius Limited Mauritius
Jiangsu ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Prideco Tubular Company Limited China
Tianjin Grant TPCO Drilling Tools Company Limited China
Grant Prideco Limited U.K.
Grant Prideco Canada Ltd. Canada
Voest-Alpine Stahlrohr Kindberg GmbH Austria
Voiestalpine Tubulars GmbH & Co KG Austria
Voest Alpine Tubular Corporation Delaware
Voset Alpine South America, C.A. Venezuela (Dormant)
Voest Alpine Middle East Free Zone Establishment UAE
Grant Prideco Foreign Sales Corporation Barbados
Grant Prideco de Venezuela, S.A. Venezuela
Grant Prideco Jersey Limited Jersey Islands
P.T. H-Tech Oilfield Equipment Indonesia
Intellipipe, Inc. Delaware
Grant Prideco Norway Holding AS Norway
Rotator AS Norway
Grant Prideco Marine Products and Services International Inc. Delaware
GP USA Holding, LLC Delaware
Grant Prideco Escrow Corp. Delaware
-2-
Schedule 3
Liens, Encumbrances, Equities and Claims or
Restrictions on Transferability or Voting
The stock of each of Grant Prideco, Inc.'s domestic subsidiaries and
approximately 66% of its foreign subsidiaries is pledged pursuant as collateral
pursuant to that certain Amended and Restated Pledge Agreement, by Grant
Prideco, Inc.'s subsidiaries in favor of Transamerica Business Credit
Corporation, as agent, in connection with that certain Amended and Restated Loan
and Security Agreement, dated July 10, 2000, among Grant Prideco, Inc. and
certain of its subsidiaries, the Lenders identified therein and Transamerica
Business Credit Corporation, as agent, as amended.
A third party with whom Grant Prideco, Inc. and/or its Subsidiaries
have licensing arrangements has a right of first refusal or similar rights
restricting the ability of Grant Prideco, Inc. and its Subsidiaries to transfer
their interests in Plexus Deepwater Technologies Ltd.
In addition, the other equity holders in the following entities have
rights of first refusal on Grant Prideco, Inc.'s and its subsidiaries equity
interests in such entities:
Rotator AS
Jiangsu ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Prideco Tubular Company Limited
Tianjin Grant TPCO Drilling Tools Company Limited
P.T. H-Tech Oilfield Equipment
Intelliserve, Inc.
Schedule 4
Other Equity Interests
Grant Prideco PC Composites Holdings, LLC owns a 1% general partner interest in
PC Composites, LP (Texas)
Grant Prideco USA, LLC owns a 49% limited partner interest in PC Composites,
L.P. (Texas)
Intellipipe, Inc. owns a 50% interest in Intelliserve, Inc. (Delaware)
Grant Prideco, Inc. owns 100 shares (representing less than a 0.1% interest) in
Voest Alpine ▇▇▇▇▇ ▇▇ (Austria)
Exhibit B
Opinion of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
Based upon the foregoing, subject to the exceptions,
qualifications and limitations hereinafter set forth, and having regard for such
legal considerations as we deem relevant, we are of the opinion that:
1. The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of 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.
2. The Indenture has been duly authorized by Grant Prideco and
the Existing Guarantors and, upon execution of the Assumption Agreement
and the related supplemental indenture and, assuming due authorization,
execution and delivery thereof by the Trustee and the Guarantors other
than the Existing Guarantors, constitutes a valid and legally binding
obligation of each of Grant Prideco and the Guarantors, enforceable
against each of Grant Prideco and the Guarantors in accordance with its
terms, subject to (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of 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.
3. The Registration Rights Agreement has been duly authorized,
executed and delivered by Grant Prideco and each of the Existing
Guarantors and, assuming due authorization, execution and delivery
thereof by or on behalf of the Initial Purchasers and the Guarantors
other than the Existing Guarantors, constitutes a valid and binding
obligation of Grant Prideco and each Guarantor enforceable against each
of Grant Prideco and the Guarantors in accordance with its terms,
subject to (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of 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 and provided that
the provisions for indemnification and contribution thereunder may be
limited by equitable principles and public policy considerations.
-2-
4. The Notes have been duly authorized, executed and issued by
the Company and, assuming due authentication thereof by the Trustee,
upon payment and delivery in accordance with the terms of the
Purchase
Agreement, will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture subject to (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of 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.
5. The Notes have been duly authorized by Grant Prideco and,
upon execution of the Assumption Agreement and the related supplemental
Indenture, will constitute valid and legally binding obligations of
Grant Prideco enforceable against Grant Prideco in accordance with
their terms and entitled to the benefits of the Indenture subject to
(i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of 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.
6. The Exchange Notes have been duly authorized by Grant
Prideco and, when executed and delivered by Grant Prideco and assuming
the authentication by the Trustee, upon consummation of the Exchange
Offer contemplated by the Registration Rights Agreement, will
constitute valid and legally binding obligations of Grant Prideco,
enforceable against Grant Prideco in accordance with their terms and
entitled to the benefits of the Indenture, subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of 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.
7. The Private Exchange Notes have been duly authorized by
Grant Prideco, and, when executed and delivered by Grant Prideco and
assuming the authentication by the Trustee, upon consummation of the
Exchange Offer contemplated by the Registration Rights Agreement, will
constitute valid and legally binding obligations of Grant Prideco,
enforceable against Grant Prideco in accordance with their terms and
entitled to the benefits of the Indenture, subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity
-3-
(regardless of 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.
8. Upon execution of the Assumption Agreement, the Guarantees
will be in the form contemplated by the Indenture. The Guarantees have
been duly and validly authorized by each of the Existing Guarantors
and, when duly executed and delivered by the Guarantors upon execution
of the Assumption Agreement and the consummation of the transactions
contemplated thereby (assuming the due authorization, execution and
delivery of the Guarantees by the Guarantors other than the Existing
Guarantors), will constitute valid and legally binding obligations of
each of the Guarantors, entitled to the benefits of the Indenture and
enforceable against each of the Guarantors in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of 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.
9. The guarantees of the Exchange Notes and the Private
Exchange Notes have been duly and validly authorized by each of the
Existing Guarantors, and, when the guarantees of the Exchange Notes and
the Private Exchange Notes are duly executed and delivered by each of
the Guarantors in accordance with the terms of the Registration Rights
Agreement and the Indenture (assuming the due authorization, execution
and delivery of the Indenture by the Trustee and due authentication and
delivery of the Exchange Notes and the Private Exchange Notes by the
Trustee in accordance with the Indenture and assuming the due
authorization, execution and delivery of the guarantees of the Exchange
Notes and Private Exchange Notes by the Guarantors other than the
Existing Guarantors), will constitute the valid and legally binding
obligations of each of the Guarantors, entitled to the benefits of the
Indenture, and enforceable against each of the Guarantors in accordance
with their terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought.
10. The Escrow Agreement has been duly authorized, executed
and delivered by the Company and, assuming the due authorization,
execution and delivery by the Trustee, as escrow agent, will constitute
a valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
fraudulent
-4-
conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of 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.
11. Each of Grant Prideco and the Existing Guarantors has all
requisite corporate power and authority to perform its obligations
under the Escrow Agreement. The Escrow Agreement, upon execution of the
Assumption Agreement (assuming the due authorization, execution and
delivery of the Assumption Agreement by the Guarantors other than the
Existing Guarantors), will constitute a valid and legally binding
agreement of each of Grant Prideco and the Guarantors, enforceable
against each of Grant Prideco and the Guarantors in accordance with its
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of 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.
12. Each of the Company, Grant Prideco and the Existing
Guarantors have all requisite corporate power and authority to execute,
deliver and perform their obligations under the Assumption Agreement.
The Assumption Agreement has been duly and validly authorized by the
Company, Grant Prideco and the Existing Guarantors and, when duly
executed and delivered by the Company, Grant Prideco and the Guarantors
(assuming the due authorization, execution and delivery of the
Assumption Agreement by the Guarantors other than the Existing
Guarantors), will constitute a valid and legally binding agreement of
each of the Company, Grant Prideco and the Guarantors, enforceable
against each of the Company, Grant Prideco and the Guarantors in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of 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.
13. The
Purchase Agreement has been duly authorized, executed
and delivered by the Company and Grant Prideco.
14. The Indenture complies as to form in all material respects
with the requirements of the Trust Indenture Act, and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder; and it is not necessary in connection with the
offer, sale and delivery of the Notes to the Initial Purchasers in the
-5-
manner contemplated by the
Purchase Agreement or in connection with the
initial resale of the Notes by the Initial Purchasers in the manner
contemplated by the Final Memorandum pursuant to the Act to qualify the
Indenture under the Trust Indenture Act.
15. No registration under the Act of the Notes is required in
connection with the sale of the Notes to the Initial Purchasers as
contemplated by the
Purchase Agreement and the Final Memorandum or in
connection with the initial resale of the Notes by the Initial
Purchasers in accordance with Section 8 of the
Purchase Agreement,
assuming (i) (A) that the purchasers who buy such Notes in the initial
resale thereof are qualified institutional buyers as defined in Rule
144A promulgated under the Act ("QIBs") or (B) that the offer or sale
of the Notes is made in an offshore transaction as defined in
Regulation S, (ii) the accuracy of the Initial Purchasers'
representations in Section 8 and those of the Company and Grant Prideco
contained in the
Purchase Agreement regarding the absence of a general
solicitation in connection with the sale of such Notes to the Initial
Purchasers and the initial resale thereof and (iii) the due performance
by the Initial Purchasers of the agreements set forth in Section 8 of
the
Purchase Agreement.
16. To our knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company, Grant Prideco
or any of the Subsidiaries is a party or to which any of the properties
of the Company, Grant Prideco or any of the Subsidiaries is subject,
other than proceedings which we believe are not likely to have a
material adverse effect on the Company, Grant Prideco or any of the
Subsidiaries, or on the power or ability of the Company, Grant Prideco
or any of the Subsidiaries to perform their obligations under the
Purchase Agreement, the Registration Rights Agreement, the Indenture,
the Notes, the Exchange Notes, the Assumption Agreement or the Escrow
Agreement or to consummate the transactions contemplated by the Final
Memorandum.
17. The statements contained in the Final Memorandum under the
captions "Certain Relationships and Related Transactions", "Description
of Other Indebtedness", "Description of the Notes" and "Certain United
States Federal Income Tax Considerations", insofar as they describe
charter documents, contracts, statutes, rules and regulations and other
legal matters, constitute an accurate summary thereof in all material
respects.
18. The execution, delivery and performance of the Indenture
and Escrow Agreement by the Company; the execution, delivery and
performance of the
Purchase Agreement by the Company and Grant Prideco;
the execution, delivery and performance of the Registration Rights
Agreement by Grant Prideco and the Guarantors; the
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execution, delivery and performance of the Assumption Agreement by the
Company, Grant Prideco and the Guarantors; and the consummation of the
transactions contemplated thereby will not:
(a) contravene the provisions of the charter, bylaws, or
other organizational documents of the Company, Grant
Prideco or any of the Existing Guarantors;
(b) violate or any material law or statute applicable to
the Company, Grant Prideco or the Existing
Guarantors;
(c) constitute a breach of, or a default under, any
material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which
the Company, Grant Prideco or the Existing Guarantors
is a party and which is identified on Schedule A
hereto; or
(d) to our knowledge, violate any order, rule or
regulation of any court or governmental agency or
body having jurisdiction over the Company, Grant
Prideco or the Existing Guarantors or any of their
respective properties or assets; provided that the
provisions for indemnification and contribution may
be limited by equitable principles and public policy
considerations.
17. Except as may be required in connection with the
registration under the Act of the Notes, the Exchange Notes, the
Private Exchange Notes, the Guarantees or the guarantees of the
Exchange Notes and of the Private Exchange Notes in accordance with the
Registration Rights Agreement, qualification of the Indenture under the
Trust Indenture Act and compliance with the securities or Blue Sky laws
of various jurisdictions, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance
of any of the aforementioned documents by the Company, Grant Prideco or
the Guarantors, as applicable, and the consummation of the transactions
contemplated thereby.
18. To our knowledge, except as provided in the Registration
Rights Agreement, there are no contracts, agreements or understandings
between the Company, Grant Prideco or any Subsidiary and any person
granting such person the right to require the Company, Grant Prideco or
any Subsidiary to include any securities of Grant Prideco owned or to
be owned by such person in the securities registered pursuant to the
Exchange Offer Registration Statement or Shelf Registration Statement
(in each case, as defined in the Registration Rights Agreement).
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19. Neither the Company, Grant Prideco nor any Subsidiary is,
and upon the sale of the Notes and the application of the proceeds of
such sale as described in the Final Memorandum, neither the Company,
Grant Prideco nor any Subsidiary will be, an "investment company" as
defined in the Investment Company Act.
In addition to the foregoing, we advise you that we have
participated in conferences with officers and other representatives of the
Company and Grant Prideco and counsel for the Initial Purchasers at which the
contents of the Preliminary Memorandum and Final Memorandum and related matters
were discussed and, although we are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Final Memorandum and have made no independent check or
verification thereof (except to the extent set forth in paragraph 17 above), on
the basis of the foregoing (relying as to materiality to a certain extent upon
the opinions of officers and other representatives of Grant Prideco), no facts
have come to our attention that cause us to believe that, as of the date thereof
or as of the Closing Date, the Final Memorandum contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of circumstances
under which they were made, not misleading; provided that we offer no advice or
belief with respect to financial statements and financial data included in the
Final Memorandum, including the notes thereto and the auditors report thereon.
Exhibit C
Opinion of General Counsel
Based upon the foregoing, subject to the qualifications
hereinafter set forth, and having regard for such legal considerations as we
deem relevant, we are of the opinion that:
(1) each of the Company, Grant Prideco and each
Subsidiary has been duly incorporated or formed and
is validly existing as a corporation, limited
partnership or limited liability company, as
applicable, in good standing under the laws of its
respective jurisdiction of formation and has all
power and authority necessary to own or hold its
respective properties and conduct the businesses in
which it is engaged;
(2) each of the Indenture and the Escrow Agreement has
been duly authorized, executed and delivered by the
Company; the Purchase Agreement has been duly
authorized, executed and delivered by the Company and
Grant Prideco; the Registration Rights Agreement has
been duly authorized, executed and delivered by Grant
Prideco and each of the Existing Guarantors; and the
Assumption Agreement and each of the transactions
contemplated thereby have been duly authorized, by
the Company, Grant Prideco and each of the
Guarantors;
(3) the Notes have been duly authorized, executed and
issued by the Company, the Notes have been duly
authorized by Grant Prideco, and the Exchange Notes
and the Private Exchange Notes have been duly
authorized by Grant Prideco. The Guarantees and the
guarantees of the Exchange Notes and Private Exchange
Notes have been duly authorized by each of the
Existing Guarantors;
(4) Grant Prideco has the authorized issued and
outstanding capitalization set forth in the Final
Memorandum and all of the issued shares of capital
stock of Grant Prideco has been duly and validly
authorized and issued, are fully paid and
non-assessable and free of preemptive or similar
rights;
(5) all of the issued shares of capital stock or limited
partnership or limited liability company interests,
as applicable, of each Existing Guarantor (other than
Tube Alloy Corporation, a Louisiana corporation) have
been duly and validly authorized and issued and are
fully paid, non-assessable and are owned directly or
indirectly by Grant Prideco, free and clear of all
liens, encumbrances, equities or claims, except as
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described in the Final Memorandum or set forth on
Schedule __ attached hereto;
(6) to my knowledge, there are no legal or governmental
proceedings pending to which the Company, Grant
Prideco or any of the Subsidiaries is a party or of
which any property or assets of the Company, Grant
Prideco or any of the Subsidiaries is the subject
which, if determined adversely to the Company, Grant
Prideco or any of the Subsidiaries, could reasonably
be expected to have a Material Adverse Effect; and,
to my knowledge, no such proceedings are threatened
or contemplated by governmental authorities or
threatened by others;
(7) the execution, delivery and performance of the
Indenture and Escrow Agreement by the Company; the
execution, delivery and performance of the Purchase
Agreement by the Company and Grant Prideco; the
execution, delivery and performance of the
Registration Rights Agreement by Grant Prideco and
the Guarantors; the execution, delivery and
performance of the Assumption Agreement by the
Company, Grant Prideco and the Guarantors; and the
consummation of the transactions contemplated thereby
will not:
(A) contravene the provisions of the charter,
bylaws, or other organizational documents of
the Company, Grant Prideco or any of the
Existing Guarantors;
(B) to my knowledge, constitute a breach of, or
a default under, any material indenture,
mortgage, deed of trust, loan agreement or
other agreement or instrument to which the
Company, Grant Prideco or the Existing
Guarantors is a party;
(C) to my knowledge, violate any order, rule or
regulation of any court or governmental
agency or body having jurisdiction over the
Company, Grant Prideco or the Existing
Guarantors or any of their respective
properties or assets, provided that the
provisions for indemnification and
contribution may be limited by equitable
principles and public policy consideration;
(8) none of the Company, Grant Prideco nor any of the
Existing Guarantors is in violation of its respective
charter, bylaws or other organization documents and,
to my knowledge, neither the Company, Grant Prideco
nor any of the Subsidiaries is in default in the
performance of any obligation, agreement, covenant or
condition contained in any agreement,
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indenture, mortgage, lease or other instrument that
is material to the Company, Grant Prideco and the
Subsidiaries, taken as a whole, to which the Company,
Grant Prideco or any of the Subsidiaries is a party
or by which the Company, Grant Prideco or any of the
Subsidiaries or their respective property is bound,
in each case which default could reasonably be
expected to have a Material Adverse Effect.