AGREEMENT AND PLAN
OF RECAPITALIZATION
dated January 30, 2001
Among
HALLIBURTON COMPANY,
THE SELLER NAMED HEREIN,
AND
DEG ACQUISITIONS, LLC
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions............................................... 1
Section 1.02. Rules of Construction..................................... 1
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities........................... 2
Section 2.02. Sale and Purchase of BV Companies......................... 4
Section 2.03. Cash Consideration........................................ 4
Section 2.04. The Closings.............................................. 4
Section 2.05. Pre-Closing Transactions.................................. 5
Section 2.06. Transactions at the First Closing......................... 5
Section 2.07. Transactions at the Second Closing........................ 6
Section 2.08. Adjustment of the Preliminary Purchase Price.............. 7
Section 2.09. Procedures for Calculating the Purchase Price Adjustment.. 8
Section 2.10. Adjustments to Net Equity................................. 11
Section 2.11. Allocation of Purchase Price Adjustment................... 12
Section 2.12. Amendments to Effect Recapitalization..................... 12
Section 2.13. Delayed Purchases......................................... 13
Section 2.14. Joint Ventures............................................ 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES
Section 3.01. Organization and Qualification............................ 14
Section 3.02. Authorization of Agreement................................ 15
Section 3.03. Approvals................................................. 15
Section 3.04. No Violation.............................................. 16
Section 3.05. No Brokers................................................ 16
Section 3.06. Title to Securities....................................... 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Section 4.01. Organization.............................................. 17
Section 4.02. Authorization of Agreement................................ 17
Section 4.03. Approvals................................................. 17
Section 4.04. No Violation.............................................. 17
Section 4.05. Title to Securities....................................... 18
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Agreement and Plan of Recapitalization
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS OF THE COMPANY GROUPS
Section 5.01. Organization; Subsidiaries............................. 18
Section 5.02. Organizational Documents; Authorization; No Violation.. 19
Section 5.03. Capitalization......................................... 20
Section 5.04. Title to Properties.................................... 20
Section 5.05. Financial Statements................................... 22
Section 5.06. Authorizations......................................... 22
Section 5.07. Compliance With Laws; Regulation of Businesses......... 23
Section 5.08. Taxes.................................................. 23
Section 5.09. Principal Contracts.................................... 25
Section 5.10. Employees.............................................. 25
Section 5.11. Environmental Matters.................................. 29
Section 5.12. Litigation............................................. 30
Section 5.13. Material Adverse Changes............................... 30
Section 5.14. Customers and Suppliers................................ 31
Section 5.15. Adequacy of Assets..................................... 31
Section 5.16. Full Disclosure........................................ 31
Section 5.17. Disclaimers............................................ 31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Section 6.01. Organization and Qualification......................... 32
Section 6.02. Authorization of Agreement............................. 32
Section 6.03. Approvals.............................................. 33
Section 6.04. No Violation........................................... 33
Section 6.05. Commitment Letters..................................... 33
Section 6.06. No Brokers............................................. 33
Section 6.07. Transitory Merger Sub.................................. 33
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Section 7.01. Organization........................................... 34
Section 7.02. Authorization of Agreement............................. 34
Section 7.03. Approvals.............................................. 34
Section 7.04. No Violation........................................... 34
Section 7.05. Investment in Securities............................... 35
ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding Operation of the
Businesses............................................. 35
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Section 8.02. Negative Covenants Regarding the Operation of the
Businesses................................................ 36
Section 8.03. Access to Information..................................... 40
Section 8.04. Insurance Benefits........................................ 40
Section 8.05. Compliance with Competition Laws Applicable to
Designated Regulatory Assets.............................. 41
Section 8.06. Covenant Not to Compete................................... 43
Section 8.07. Nonsolicitation........................................... 44
Section 8.08. Accountants' Opinion and Consents......................... 44
Section 8.09. Financing................................................. 45
Section 8.10. Financial Statements...................................... 46
Section 8.11. Assignments............................................... 46
Section 8.12. Release of Liens.......................................... 46
Section 8.13. Environmental Schedules................................... 46
Section 8.14. Use of Dresser Name....................................... 46
ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement................................. 47
Section 9.02. Corporate Name............................................ 47
Section 9.03. Surety Arrangements....................................... 47
Section 9.04. Dresser Valve Division Contracts.......................... 47
ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation.............................................. 48
Section 10.02. Ancillary Agreements..................................... 50
Section 10.03. Public Announcements..................................... 50
Section 10.04. Transfer Taxes........................................... 51
Section 10.05. Expenses................................................. 51
Section 10.06. Tax Matters.............................................. 51
Section 10.07. Offers to Employees...................................... 54
Section 10.08. Related Party Contracts.................................. 55
Section 10.09. Litigation Support....................................... 55
Section 10.10. Post-Closing Matters..................................... 56
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of Each Party Under This
Agreement................................................ 57
Section 11.02. Additional Conditions to the Parent's Obligations........ 57
Section 11.03. Additional Conditions to the Acquiror's Obligations...... 58
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ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties, Covenants and
Agreements............................................... 61
Section 12.02. General Indemnification by the Parent.................... 62
Section 12.03. General Indemnification by the Acquiror.................. 65
Section 12.04. Procedures............................................... 67
Section 12.05. Special Environmental Indemnification Provisions......... 69
Section 12.06. Punitive Damages......................................... 72
Section 12.07. Failure of Acquiror to Close............................. 72
Section 12.08. No Right of Contribution................................. 73
Section 12.09. Specific Performance..................................... 73
Section 12.10. Sole Remedy.............................................. 73
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination.............................................. 73
Section 13.02. Effect of Termination.................................... 74
Section 13.03. Amendment................................................ 74
Section 13.04. Waiver................................................... 74
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices.................................................. 75
Section 14.02. Headings................................................. 76
Section 14.03. Severability............................................. 76
Section 14.04. Entire Agreement......................................... 77
Section 14.05. Assignment............................................... 77
Section 14.06. Successors; Parties in Interest.......................... 77
Section 14.07. Failure or Indulgence Not Waiver;
Remedies Cumulative...................................... 77
Section 14.08. Disclosure Letters....................................... 77
Section 14.09. Governing Law............................................ 77
Section 14.10. Arbitration.............................................. 78
Section 14.11. Confidentiality Agreements............................... 78
Section 14.12. Counterparts............................................. 78
Section 15.10. Governing Law............................................ 23
Section 15.11. Arbitration.............................................. 24
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ANNEXES
Annex A - Definitions.
Annex B - Reorganization (Components and Procedure).
Annex C - List of the Seller, Buyers and BV Companies and BV Allocable
Purchase Price.
Annex D - Allocation Procedures for Purchase Price Adjustment.
APPENDICES
Appendix I - Form of Merger Agreement.
Appendix II - Forms of Releases of Intercompany Indebtedness.
Appendix III - Forms of Releases of Claims.
Appendix IV - Form of Assignment of Name.
Appendix V - Form of Highway 6 Lease Agreement.
Appendix VI - Form of Employee Benefits Agreement.
Appendix VII - Terms of Transition Services Agreement.
Appendix VIII - Terms of Stockholders' Agreement.
Appendix IX - Form of Category 2A Purchase and Sale Agreement.
Appendix X - Form of Opinion of Acquiror's Counsel.
Appendix XI - Form of Opinion of Parent's Counsel.
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AGREEMENT AND PLAN OF RECAPITALIZATION
This AGREEMENT AND PLAN OF RECAPITALIZATION (this "Agreement") dated as of
January 30, 2001 is by and among Halliburton Company, a Delaware corporation
(the "Parent"), Dresser B.V., a Netherlands company and a wholly owned indirect
Subsidiary of the Parent (the "Seller") and DEG Acquisitions, LLC, a Delaware
limited liability company (the "Acquiror").
R E C I T A L S:
The Parent has determined to redeploy a significant portion of its assets.
Accordingly, the Parent desires to sell, and the Acquiror has determined to
purchase, certain interests in the Parent's businesses relating to, among other
things, the design, manufacturing and marketing of engineered measurement, flow
control and power systems for customers primarily in the energy industry.
In order to accomplish this transaction, the Parent will, in consultation
with the Acquiror and in the manner set forth herein, prior to the First Closing
effect the Reorganization described in Annex B of the various legal entities
that comprise the Dresser Equipment Group.
After giving effect to the Reorganization, (a) the Parent desires to cause
Dresser Industries and DEGI to engage, and the Acquiror desires to engage, and
to cause Transitory Merger Sub to engage, in the transactions contemplated by
Article II herein at the First Closing and (b) immediately following the First
Closing, the Parent desires to cause the Seller to engage, and the Acquiror
desires to cause the Buyers to engage, in the transactions contemplated by
Article II herein at the Second Closing.
NOW, THEREFORE, the parties hereto, in consideration of the premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized and other terms used in this
-----------
Agreement are defined in Annex A attached hereto and are used herein with the
meanings ascribed to them therein.
Section 1.02. Rules of Construction.
---------------------
(a) Unless the context otherwise requires, as used in this Agreement:
(i) a term defined in Annex A has the meaning ascribed to it in
Annex A; (ii) an accounting term not defined herein has the
meaning ascribed to it in accordance with U.S. GAAP; (iii) "or"
is not exclusive; (iv) "including" means "including without
limitation;" (v) words in the singular include the plural and
vice versa; (vi) words applicable to
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Agreement and Plan of Recapitalization
one gender shall be construed to apply to each gender; (vii) the
terms "hereof," "herein," "hereby," "hereto" and derivative or
similar words refer to this entire Agreement, including the
Annexes and Appendices hereto; (viii) the terms "Article,"
"Section," "Annex" and "Appendix" shall refer to the specified
Article, Section, Annex or Appendix of or to this Agreement; (ix)
the term "Schedule" shall refer to the appropriate Schedule to
the Parent's Disclosure Letter or the Acquiror's Disclosure
Letter; and (x) the phrases "pursuant to," "as described in" and
"subject to the terms of," when used with reference to a
particular Section of this Agreement, or words of similar import,
shall refer to such Section and to any Schedule of the Parent's
Disclosure Letter or the Acquiror's Disclosure Letter referenced
therein.
(b) A reference to any Person includes such Person's successors and
permitted assigns.
(c) Any reference to "days" shall mean calendar days unless "Business
Days" (as defined in Annex A) are expressly specified.
(d) Each Annex and Appendix identified in this Agreement is
incorporated herein by reference and made a part hereof for all
purposes.
(e) The Parent and the Acquiror, each represented by legal counsel,
have each participated in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or
interpretation should arise, this Agreement shall be construed as
if drafted jointly by such parties and no presumption or burden
of proof shall arise favoring or burdening any party hereto by
virtue of the authorship of any of the provisions of this
Agreement.
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities. On the terms and subject
-------------------------------
to the conditions contained in this Agreement, the Parent agrees to cause DEGI
and Dresser Industries to engage at the First Closing in the following
transactions, and the Acquiror agrees to engage and to cause the Transitory
Merger Sub to engage at the First Closing in the following transactions:
(a) The Acquiror shall purchase from Transitory Merger Sub, upon
original issue, common stock of Transitory Merger Sub for
cash in an amount in U.S. Dollars (which the Acquiror
estimates will be approximately $400,000,000) equal to at
least the Purchase Price, plus fees and expenses incurred by
the Acquiror in connection with the transactions
contemplated hereby (other than fees or discounts related to
the Loan) less the Loan (the "Investment");
(b) DEGI shall borrow an amount in cash in U.S. Dollars equal to
at least $970,000,000 (nine hundred seventy million dollars)
(the net proceeds to DEGI pursuant to this clause (b), being
the "Loan"), comprised of (i)
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Agreement and Plan of Recapitalization
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borrowings from a syndicate of Lenders on Terms contemplated
by the Commitment Letter Term Sheet attached to the Bank
Commitment Letter and (ii) the proceeds from the issuance of
senior subordinated notes in a private placement of such
notes or borrowings from a syndicate of Lenders on the Terms
contemplated by the Commitment Letter Term Sheet attached to
the Bridge Commitment Letter; and
(c) The Acquiror and the Parent shall cause the merger (the
"Merger") of Transitory Merger Sub with and into DEGI, which
shall be the corporation surviving the Merger, to be
effected through execution and delivery of the Merger
Agreement and the filing thereof with the Secretary of State
of Delaware, pursuant to which:
(i) All the issued and outstanding capital stock of
Transitory Merger Sub shall be converted into an
aggregate number of shares of common stock of DEGI
("DEGI Common Stock") equal to (i) the total number
of shares of DEGI Common Stock outstanding
immediately prior to the Merger multiplied by (ii)
0.949;
(ii) subject to the provisions of clause (iii) of this
subsection (c), the number of shares of DEGI Common
Stock owned by Dresser Industries equal to (i) the
total number of shares of DEGI Common Stock
outstanding immediately prior to the Merger
multiplied by (ii) 0.949 shall be converted into the
right to receive cash in an aggregate amount equal
to (A) the DEGI Group Preliminary Purchase Price
Percentage times the Preliminary Purchase Price as
adjusted by (B) a portion of the Purchase Price
Adjustment determined in accordance with the
Allocation Procedures (the "Merger Consideration")
(with the balance of the shares of DEGI Common Stock
owned by Dresser Industries to remain outstanding);
and
(iii) if any Management Shares are outstanding at the
effective date of the Merger, then (A) the number of
shares of DEGI Common Stock converted into the right
to receive cash pursuant to clause (ii) of this
subsection (c) shall be increased by a number equal
to the number of Management Shares and (B) the
consideration payable to Dresser Industries in
connection with the Merger shall be increased by the
amount of the cash consideration received by DEGI
against the issuance of such Management Shares.
(d) Any Management Shares issued by DEGI prior to the First
Closing shall be sold to management employees at a price per
share not less than an amount equal to the Merger
Consideration plus the BV Consideration divided by the
number of shares of DEGI Common Stock to be converted by
Dresser Industries in the Merger as determined pursuant to
clause (ii) of subsection 2.01(c) before giving effect to
clause (iii) of subsection 2.01(c).
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Section 2.02. Sale and Purchase of BV Companies. On the terms and
---------------------------------
subject to the conditions contained in this Agreement, the Parent agrees to
cause the Seller to engage at the Second Closing in the following transactions,
and the Acquiror agrees to cause each of the Buyers to engage at the Second
Closing in the following transactions: The Seller shall assign to the
appropriate Buyer as indicated on Annex C hereto, and such Buyer shall accept,
the Equity Securities of the BV Company whose name is set forth next to the name
of such Buyer on Annex C hereto. In consideration for such assignments, the
Buyers shall pay to the Seller cash in U.S. Dollars in an aggregate amount equal
to (a) the BV Preliminary Purchase Price Percentage times the Preliminary
Purchase Price as adjusted by (b) a portion of the Purchase Price Adjustment
determined in accordance with the Allocation Procedures (the "BV
Consideration").
Section 2.03. Cash Consideration.
------------------
(a) The aggregate cash consideration to be paid to Dresser Industries and
the Seller for engaging in the transactions contemplated by Sections
2.01 and 2.02 herein shall consist of the Purchase Price. The
"Purchase Price" shall be equal to the Preliminary Purchase Price as
adjusted by the Purchase Price Adjustment in accordance with Sections
2.08 and 2.09.
(b) The parties hereto have agreed that the "Preliminary Purchase Price"
shall be equal to (i) U.S. $1,309,111,797 (one billion three hundred
nine million one hundred eleven thousand seven hundred ninety-seven
dollars) less (ii) the amount which, when taken together with the
aggregate consideration paid to acquire the Management Shares, equals
5.1% of the Equity of DEGI.
Section 2.04. The Closings.
------------
(a) The transactions contemplated by Section 2.01 shall be consummated
(the "First Closing") on the date and at the time and place determined
pursuant to this subsection (a). The First Closing shall be held at
the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ on the Closing Date. The "Closing Date" shall be the fifteenth
(15th) Business Day following the date on which the Closing Conditions
(other than conditions that can be satisfied only by delivery of
certificates or other documents at the Closings and where such
delivery is in the control of a party hereto) have been fulfilled or
waived. If such date is not a Business Day, then the Closing Date
shall be the next succeeding Business Day.
(b) Upon fulfillment or waiver of the Closing Conditions to which
reference is made in subsection (a) of this Section, either the Parent
or the Acquiror may give the other notice thereof (the "Closing
Notice") and the date of receipt of such Closing Notice determined in
accordance with Section 14.01 shall be the first Business Day of the
time periods therein referenced.
(c) Immediately following the First Closing, the transactions contemplated
by Section 2.02 shall be consummated (the "Second Closing"). The
Second Closing shall be
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held at the same location as the First Closing. The consummation of
the Second Closing shall be a condition subsequent to the consummation
of the First Closing, such that if the Second Closing shall not occur
immediately following the First Closing either the Parent or the
Acquiror shall be entitled to cause the rescission of the transactions
consummated at the First Closing.
Section 2.05. Pre-Closing Transactions.
------------------------
(a) Prior to the First Closing, the Parent shall effect the Reorganization
described in Annex B. The Parent and the Acquiror shall cooperate
with each other with respect to the implementation of the
Reorganization described in Annex B, including actions involving
filings with Governmental Authorities, the execution of agreements,
transfer documents and similar instruments and the issuance of
securities. If the Parent and the Acquiror consent in writing to any
action that is inconsistent with the transactions described on Annex B
hereto, then Annex B shall, automatically and without further action
by the parties hereto, be deemed to have been amended to the extent
necessary to permit such action.
(b) The Parent shall prior to the First Closing cause the outstanding DEGI
Common Stock to be subdivided pursuant to a stock split on a basis
that is mutually satisfactory to the Acquiror and the Parent.
Section 2.06. Transactions at the First Closing. Subject to the terms and
---------------------------------
conditions of this Agreement, the Parent shall at the First Closing cause DEGI
to do and perform the following actions and to deliver the following documents,
and the Acquiror shall do and perform the following actions and deliver the
following documents. At the First Closing, the following events shall occur,
each event being (i) conditioned on the occurrence or waiver of each other event
and (ii) deemed to occur simultaneously with each other event:
(a) Financial Transactions:
(i) The Acquiror shall purchase from the Transitory Merger Sub upon
original issue shares of common stock for cash in the amount of
the Investment;
(ii) DEGI shall execute and deliver the Loan Documents against the
funding of the full amount of the Loan to DEGI by wire transfer
of immediately available funds to the wire transfer address of
DEGI provided in written instructions to the Acquiror not less
than three (3) Business Days prior to the Closing Date; and
(iii) the Parent and the Acquiror shall cause the Merger to be
effected in accordance with subsection (c) of Section 2.01;
provided, however, that the amount of cash to be paid to
Dresser Industries pursuant to the Merger at the time of the
First Closing (subject to adjustment pursuant to Sections 2.08
and
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Agreement and Plan of Recapitalization
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2.09) shall be an aggregate amount equal to the DEGI Group
Preliminary Purchase Price Percentage times the Estimated
Purchase Price. The consideration to be received by Dresser
Industries pursuant to the Merger shall be paid to Dresser
Industries by wire transfer of immediately available funds to
the wire transfer address of Dresser Industries provided in
written instructions by the Acquiror not less than three (3)
Business Days prior to the Closing Date.
(b) Ancillary Agreements. The parties to each Ancillary Agreement
shall execute and deliver such Ancillary Agreement.
(c) Intercompany Indebtedness. Any Intercompany Indebtedness owed at
the Closing Date by any member of the Parent Group to any member
of the DEGI Group or by any member of the DEGI Group to any
member of the Parent Group shall be discharged, whether, at the
election of the Parent (provided, that the Parent shall cooperate
with the Acquiror to structure such discharge in the manner that
is most tax-efficient to all the parties), by payment by the
obligor or by release and forgiveness by the obligee pursuant to
a written release, in form and substance substantially similar to
the form thereof attached hereto as Appendix II, executed and
delivered at the First Closing. The Intercompany Indebtedness has
not been reflected in the Initial Balance Sheet, and will not be
reflected in the Estimated or Closing Balance Sheet, as an asset
or liability and, consequently, shall have no effect on the
calculation of the Purchase Price Adjustment hereunder.
(d) The Parent shall at the First Closing execute, where appropriate,
and deliver to the Acquiror the following documents:
(i) A release, in form and substance substantially similar to
the form thereof attached hereto as Appendix III, by the
Parent on behalf of itself and the Parent Group of all
claims that they may have against any member of the DEGI
Group with respect to the operation or conduct of the
Businesses prior to the Closing Date;
(ii) A certificate in the form required by Treasury Regulation
Section 1.1445-2; and
(iii) such other documents and instruments as shall evidence
fulfillment or waiver of the Closing Conditions.
(e) The Acquiror shall at the First Closing execute, where
appropriate, and deliver to the Parent such documents and
instruments as shall evidence fulfillment or waiver of the
Closing Conditions.
Section 2.07. Transactions at the Second Closing. Subject to the terms of
----------------------------------
this Agreement and to the condition that the First Closing shall have been
effected, the Parent shall cause the Seller
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at the Second Closing to do and perform the following actions and to deliver the
following documents, and the Acquiror shall do and perform the following actions
and cause the Buyers at the Second Closing to do and perform the following
actions and to deliver the following documents. At the Second Closing, the
following events shall occur, each event being (i) conditioned on the occurrence
or waiver of each other event and (ii) deemed, except as otherwise provided in
subsection (b) of this Section, to occur simultaneously with each other event:
(a) The Parent shall cause the Seller to deliver, in the sequence provided
on Annex C, to the appropriate Buyer the certificate or certificates
evidencing the Equity Securities of the BV Companies to be sold by it
at the Second Closing in accordance with Annex C, which certificates
shall be duly endorsed for transfer or accompanied by duly executed
stock transfer powers or other appropriate instruments of assignment
and transfer in favor of the Buyer;
(b) The Acquiror shall cause the Buyers to deliver or cause to be
delivered to the Seller cash in the amount of the BV Preliminary
Purchase Price Percentage times the Estimated Purchase Price. Such
amount shall be paid in United States Dollars by wire transfer of
immediately available funds to the wire transfer address of the Seller
provided in written instructions by the Seller not less than three (3)
Business Days prior to the Closing Date.
(c) Any Intercompany Indebtedness owed at the Closing Date by any member
of the Parent Group to any member of the BV Group or by any member of
the BV Group to any member of the Parent Group shall be discharged,
whether, at the election of the Parent (provided, that the Parent
shall cooperate with the Acquiror to structure such discharge in the
manner that is most tax-efficient to all the parties), by payment by
the obligor or by release and forgiveness by the obligee pursuant to a
written release, in form and substance substantially similar to the
form thereof attached hereto as Appendix II, executed and delivered at
the Second Closing. The Intercompany Indebtedness has not been
reflected in the Initial Balance Sheet, and will not be reflected in
the Estimated or Closing Balance Sheet, as an asset or liability and,
consequently, shall have no effect on the calculation of the Purchase
Price Adjustment hereunder.
(d) The Parent shall at the Second Closing execute, where appropriate, and
deliver to the Acquiror, a release, in form and substance
substantially similar to the form thereof attached hereto as Appendix
III, by the Parent on behalf of itself and the Parent Group of all
claims that they may have against any member of the BV Group with
respect to the operation or conduct of the Businesses prior to the
Closing Date.
Section 2.08. Adjustment of the Preliminary Purchase Price.
--------------------------------------------
(a) By no later than five (5) Business Days after the delivery of a
Closing Notice, the Parent shall deliver to the Acquiror on a
consolidated basis, (i) the balance sheet of the Businesses as of
December 31, 2000 and the related statement of results of
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Agreement and Plan of Recapitalization
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operations for the twelve months then ended (the "Year-End Financial
Statements") and (ii) the balance sheet (the "Estimated Balance
Sheet") as of the close of business on the last day of the most
recently completed calendar month for which internal management
financial statements are available (the "Estimated Balance Sheet
Date") and the related statement of results of operations of the
Businesses for the period beginning on January 1, 2001 and ending on
the Estimated Balance Sheet Date (together with the Estimated Balance
Sheet, the "Estimated Financial Statements"). The Year End Financial
Statements and the Estimated Financial Statements shall be prepared in
accordance with U.S. GAAP applied consistently with the Initial
Financial Statements. The Year End Financial Statements shall present
fairly the financial position and the results of operations of the
Businesses as of the date and for the period then ended and the
Estimated Financial Statements shall, to the extent reasonably
practicable in light of the purpose for which they were prepared and
the time parameter provided in this subsection, present fairly the
financial position and results of operations of the Businesses as of
the date and for the period then ended.
(b) The "Estimated Purchase Price" shall mean the Preliminary Purchase
Price adjusted by the Estimated Purchase Price Adjustment. The
Preliminary Purchase Price shall be increased by a positive Estimated
Purchase Price Adjustment and decreased by a negative Estimated
Purchase Price Adjustment.
(c) The "Estimated Purchase Price Adjustment" shall be an amount equal to
the increase (positive) or decrease (negative) in the Net Equity as of
the Initial Balance Sheet Date to the Estimated Balance Sheet Date,
determined, in accordance with Section 2.10, by comparing the amount
of Net Equity as of the Initial Balance Sheet Date with the amount of
Net Equity as of the Estimated Balance Sheet Date; provided, however,
that, if the amount of such Estimated Purchase Price Adjustment is
less than U.S. $10,000,000 (ten million dollars), whether positive or
negative, the Estimated Purchase Price Adjustment shall be deemed to
be $0.
(d) For purposes of the determination of the Estimated Purchase Price
Adjustment and the Purchase Price Adjustment, Intercompany
Indebtedness shall be classified and reflected in each of the Initial
Balance Sheet, the Estimated Balance Sheet and the Closing Balance
Sheet neither as an asset nor a liability.
Section 2.09. Procedures for Calculating the Purchase Price Adjustment.
--------------------------------------------------------
(a) Following the end of the calendar month in which the First Closing
shall occur, the Acquiror shall cause to be prepared and delivered to
the Parent, no later than ninety (90) days following the end of such
month, on a consolidated basis, the Closing Financial Statements,
prepared in accordance with U.S. GAAP applied consistently with the
Initial Financial Statements which shall be certified by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP as presenting fairly the financial position of the
Businesses as of the Closing Date. Thereafter, the Acquiror shall
promptly provide to the Parent such supporting work papers or other
supporting information as may be reasonably requested by the
Halliburton Company
Agreement and Plan of Recapitalization
8
Parent, including access to the work papers of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
prepared in connection with the audit of the Initial Financial
Statements and the audit of the Closing Financial Statements. To the
extent that the judgment of management of the Businesses is relied
upon for any estimate used to prepare the Closing Balance Sheet as
required or permitted by U.S. GAAP, such judgment shall not differ in
any material respect from the judgment relied upon for the same or any
similar estimate used to prepare the Initial Financial Statements
unless there has been a material change since the date of the Initial
Financial Statements in the facts upon which such judgment is based.
(b) If the Parent shall have any objections to the Closing Balance Sheet,
the Parent shall within twenty (20) Business Days following receipt of
the Closing Balance Sheet so notify the Acquiror, stating in
reasonable detail the basis for any such objections; provided,
however, that the only bases for objection shall be (i) non-compliance
with the standards set forth in subsection (a) of this Section for the
preparation of the Closing Balance Sheet and (ii) computational
errors. If the Parent fails to notify the Acquiror of any such
objections in writing within such twenty (20) Business Day period, the
Parent shall be deemed to have concurred with the Closing Balance
Sheet. Otherwise, following any such notification, the Acquiror and
the Parent shall endeavor in good faith for a period not to exceed
twenty (20) Business Days to resolve their differences (the
"Differences"). If the parties are unable to resolve all their
Differences and have not agreed in writing to extend the resolution
period, either the Parent or the Acquiror shall, if the aggregate
amount of the unresolved Differences does not exceed U.S. $10 million,
be entitled for a period of twenty (20) additional Business Days to
request the Accounting Firm to resolve the unresolved Differences or,
if the aggregate amount of the unresolved Differences exceeds $10
million, to apply for arbitration pursuant to the provisions of
Section 14.10. If the parties are unable to resolve all their
Differences but neither party shall apply to the Accounting Firm or
for arbitration for resolution of the remaining Differences, the
determinations set forth in the Closing Balance Sheet, as adjusted for
those Differences that the parties were able to resolve, shall be
deemed to be dispositive.
(c) If either party shall request the Accounting Firm to resolve the
unresolved Differences, both parties shall cooperate with the
Accounting Firm and its representatives by providing access to all
relevant Books and Records and access at reasonable times to personnel
having relevant information. The Accounting Firm shall be requested
to use all reasonable efforts to resolve such Differences in favor of
the Parent in their entirety or in favor of the Acquiror in their
entirety within twenty (20) Business Days after the matter is referred
to it on the basis of the standards set forth in subsection (a) of
this Section or as soon thereafter as possible. Upon completion of
its task, the Accounting Firm shall notify each party of its
determination of the matters subject to the Differences, which
determination shall be conclusive. The fees and expenses of the
Accounting Firm shall be borne 50% by the Parent and 50% by the
Acquiror.
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Agreement and Plan of Recapitalization
9
(d) If either party shall apply for arbitration to resolve the unresolved
Differences, or if the Accounting Firm is unable to resolve the
Differences, both parties shall cooperate with the arbitration
tribunal and its representatives by providing access to all relevant
Books and Records and access at reasonable times to personnel having
relevant information. The arbitration tribunal shall be requested to
use all reasonable efforts to resolve such Differences in favor of the
Parent in their entirety or in favor of the Acquiror in their entirety
within twenty (20) Business Days after the matter is referred to it on
the basis of the standards set forth in subsection (a) of this Section
or as soon thereafter as possible. The determination of the
arbitration tribunal with respect to the Differences shall be
conclusive. Unless differently awarded by the arbitration tribunal,
the fees and expenses of arbitration shall be borne 50% by the Parent
and 50% by the Acquiror.
(e) The "Purchase Price Adjustment" shall mean an amount equal to the
increase (positive) or decrease (negative) in the Net Equity of the
Businesses from the Initial Balance Sheet Date to the Closing Date in
accordance with Section 2.10, determined by comparing the amount of
Net Equity as of the Initial Balance Sheet Date with the amount of Net
Equity as of the Closing Date (based on the Closing Balance Sheet as
finally determined pursuant to subsections (a) through (d) of this
Section).
(f) The result obtained by subtracting the Estimated Purchase Price
Adjustment from the Purchase Price Adjustment is referred to as the
"Post-Closing Payment Amount." The Post-Closing Payment Amount shall
be paid by the Acquiror to the Parent if it is positive or by the
Parent to the Acquiror if it is negative, in cash in United States
Dollars, by wire transfer of immediately available funds to the wire
transfer address of the Acquiror provided in written instructions to
the Parent or to the wire transfer address of the Parent provided in
written instructions to the Acquiror, as appropriate, on the third
(3rd) Business Day following the date on which the procedures in this
Section 2.09 have been completed. The Post-Closing Payment Amount
shall bear simple interest at the lowest interest rate applicable
under the revolving credit agreement referred to in the Commitment
Letter Term Sheets from the Closing Date to the date of such payment,
inclusive.
(g) If, notwithstanding the representations and warranties set forth in
subsection (a) of Section 5.05 herein, it shall be determined that the
Initial Financial Statements were not in fact prepared in accordance
with U.S. GAAP, the Closing Financial Statements prepared pursuant to
subsection (a) of Section 2.09 need not be prepared consistently with
the Initial Financial Statements to the extent and only to the extent
that such Initial Financial Statements were not prepared in accordance
with U.S. GAAP. If the Closing Financial Statements are not prepared
consistently with the Initial Financial Statements pursuant to this
subsection (g) of Section 2.09 and such inconsistency results in a
decrease in the amount of the Purchase Price Adjustment, any
indemnification to be paid by the Parent to the Acquiror with respect
to any such breach of the representations and warranties in Section
5.05 that caused the Purchase Price Adjustment shall be reduced by the
amount of such decrease.
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Agreement and Plan of Recapitalization
10
Section 2.10. Adjustments to Net Equity. In determining the Estimated
-------------------------
Purchase Price Adjustment and the Purchase Price Adjustment pursuant to Sections
2.08 and 2.09, the Net Equity reflected in the Initial Balance Sheet, the
Estimated Balance Sheet and the Closing Balance Sheet shall be adjusted as
follows:
(a) Solely for the purpose of determining Net Equity in calculating the
Estimated Purchase Price Adjustment and the Purchase Price Adjustment,
the Net Equity reflected in each of such Balance Sheets shall be
adjusted to exclude the following assets and liabilities in order that
these assets and liabilities shall have no effect on the Estimated
Purchase Price Adjustment or the Purchase Price Adjustment: (i) The
Highway 6 Real Property; (ii) the accumulated projected benefit
obligation for the postretirement medical and life benefits; (iii)
assets transferred in excess of liabilities assumed of the DICON
defined benefit retirement plan (Plan No. 164); (iv) reserves for
uninsured litigation; and (v) the self-insurance reserves for workers'
compensation, general liability, product liability and automobile
liability. For the purpose of clarity of identification of the
foregoing items, the amounts reflected on, or missing from, the
Initial Balance Sheet for each of the above listed items is as
follows: (A) Real Property subject to the Highway 6 Deed: $12.4
million, (B) the accumulated projected benefit obligation for the
post-retirement medical and life benefits: $128.3 million, (C) assets
transferred in excess of liabilities assumed of the DICON defined
benefit retirement plan (Plan No. 164): $9.0 million, (D) reserves for
uninsured litigation: $10 million, and (E) the self-insurance
reserves, including case reserves and IBNR, for workers'
compensation, general liability, product liability and automobile
liability: $21.7 million.
(b) The Initial Balance Sheet includes an asset in the amount of
$14,708,000 (fourteen million seven hundred and eight thousand
dollars) representing the assets in excess of liabilities of the
Dresser Canada Retirement Income Plan. This $14,708,000 asset is not
an asset of a member of a Company Group and should not have been
included in the Initial Financial Statements. In computing Net Equity
at the Initial Balance Sheet Date, the Net Equity shall be reduced by
$14,708,000, but this reduction shall not be made to the Net Equity to
be determined as of either the Estimated Balance Sheet Date or the
Closing Balance Sheet Date. The Parent shall not be entitled to make
further adjustments to Net Equity reflected in the Initial Balance
Sheet (other than those adjustments identified in this Agreement)
after the date hereof. If it is determined by the Acquiror during the
period from the date hereof to the date on which the Closing Balance
Sheet is delivered to the Parent that any liabilities reflected in the
Initial Balance Sheet are not liabilities of a member of a Company
Group or that any assets of a member of a Company Group are not
reflected in the Initial Balance Sheet, then the Net Equity determined
by reference to the Initial Balance Sheet shall be increased to
exclude such liabilities or to include such assets up to $14,780,000
in order that they shall have no effect on the Estimated Purchase
Price Adjustment or the Purchase Price Adjustment.
Halliburton Company
Agreement and Plan of Recapitalization
11
(c) No adjustments will be recorded in the Estimated Balance Sheet or the
Closing Balance Sheet related to the allocation of the purchase price
in connection with the acquisition of NIMCO.
(d) Solely for the purpose of determining Net Equity in calculating the
Estimated Purchase Price Adjustment and the Purchase Price Adjustment,
cash and cash equivalents (net of the aggregate amount of (i)
outstanding checks and overdrafts drawn on bank accounts of all
members of the Company Groups and (ii) any notes payable by any member
of either Company Group) ("Net Cash") shall be deemed to be $11.5
million on the Initial Balance Sheet notwithstanding the $23 million
in Net Cash actually reflected in the Initial Balance Sheet. No
adjustment shall be made to the actual Net Cash on the Estimated
Balance Sheet or Closing Balance Sheet.
(e) To the extent that Net Cash reflected in the Estimated Balance Sheet
or Closing Balance Sheet exceeds $11.5 million in compliance with
Section 11.03 (f), such excess will contribute positively to any
Purchase Price Adjustment calculation to the benefit of the Parent.
No other adjustments will be made to the Net Equity reflected in each of
the Initial Balance Sheet, the Estimated Balance Sheet or the Closing Balance
Sheet for the purpose of computing the Estimated Purchase Price Adjustments or
the Purchase Price Adjustment. Accordingly, any changes in the amounts of other
assets or liabilities reflected in the Estimated Balance Sheet or the Closing
Balance Sheet as compared with the Initial Balance Sheet will have an effect on
the Estimated Purchase Price Adjustment or the Purchase Price Adjustment or
both.
Section 2.11. Allocation of Purchase Price Adjustment. The Purchase
---------------------------------------
Price Adjustment shall be allocated among Dresser Industries and the Seller in
accordance with the Allocation Procedures of Annex D. Dresser Industries and
the Seller shall be deemed to hold that portion of the Purchase Price Adjustment
that it has theretofore received in constructive trust pending allocation of the
entire Purchase Price Adjustment in accordance with such Allocation Procedures.
Upon completion of the allocation, Dresser Industries and the Seller shall make
such payments of cash in U.S. Dollars as shall be necessary to give effect to
the allocation and the Parent shall, promptly after completion of the
allocation, provide to the Acquiror a copy of the allocation, together with
evidence, reasonably satisfactory to the Acquiror, of such payments.
Section 2.12. Amendments to Effect Recapitalization. The parties
-------------------------------------
acknowledge that certain amendments to the structure of the transactions
contemplated hereby may be necessary in order to record such transactions as a
Recapitalization for financial reporting purposes, as well as amendments to
provide for the adjustment of the Purchase Price to account for the retention of
equity by the Parent and the rollover of management equity, and the parties
shall cooperate in good faith to effect such amendments.
Halliburton Company
Agreement and Plan of Recapitalization
12
Section 2.13. Delayed Purchases. Notwithstanding any provisions to the
-----------------
contrary herein,
(a) If at the time of the First Closing any of the Category 2A
Requirements applicable to the First Closing shall not have been
satisfied, the Acquiror may elect, in its sole discretion, to delay
the purchase of the Equity Securities of the DEGI Group member located
in such jurisdiction in which such Category 2A Requirements shall not
have been satisfied until such time as such requirements have been
satisfied; provided that the Acquiror shall have given written notice
to the Parent of such election no later than ten (10) Business Days
prior to the Closing Date. In such event, (i) prior to the First
Closing, the Parent shall (A), if the assets subject to delayed
purchase have not theretofore been transferred to the DEGI Group,
cause a Retained Subsidiary to retain such assets or, if the assets
subject to delayed purchase have theretofore been transferred to the
DEGI Group, cause the appropriate member of the DEGI Group to transfer
such Equity Securities to a member of the Parent Group; (ii) the
Preliminary Purchase Price and the Merger Consideration shall be
reduced by the dollar amount allocated to such Equity Securities on
Schedule 2.13 to the Parent's Disclosure Letter; (iii) for any
determination of Net Equity, the transfer of such Equity Securities
pursuant to this subsection (a) shall be disregarded; and (iv) at the
First Closing, the Acquiror shall execute and deliver to the Parent a
Purchase and Sale Agreement, in form and substance substantially
similar to the form thereof attached hereto as Appendix IX.
(b) If at the time of the Second Closing any of the Category 2A
Requirements applicable to the Second Closing shall not have been
satisfied, the Acquiror may elect, in its sole discretion, to delay
the purchase of the Equity Securities of the BV Group member located
in such jurisdiction in which such Category 2A Requirements shall not
have been satisfied until such time as such requirements have been
satisfied; provided that the Acquiror shall have given written notice
to the Parent of such election no later than ten (10) Business Days
prior to the Closing Date. In such event, (i) prior to the Second
Closing, the Parent shall (A), if the assets subject to delayed
purchase have not theretofore been transferred to the BV Group, cause
a Retained Subsidiary to retain such assets or, if the assets subject
to delayed purchase have theretofore been transferred to the BV Group,
cause the appropriate member of the BV Group to transfer such Equity
Securities to a member of the Parent Group; (ii) the Preliminary
Purchase Price and the BV Consideration shall be reduced by the dollar
amount allocated to such Equity Securities on Schedule 2.13 to the
Parent's Disclosure Letter; (iii) for any determination of Net Equity,
the transfer of such Equity Securities pursuant to this subsection (b)
shall be disregarded; and (iv) at the Second Closing, the Acquiror
shall execute and deliver to the Parent a Purchase and Sale Agreement,
in form and substance substantially similar to the form thereof
attached hereto as Appendix IX.
(c) If the Equity Securities of any member of the DEGI Group or the BV
Group are subject to delayed purchase pursuant to subsection (a) or
(b) of this Section 2.13 and the operations of such member are
conducted in more than one jurisdiction, the
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Agreement and Plan of Recapitalization
13
Parent and the Acquiror shall cooperate in amending Annex B to
preserve the assets of such member that are located in any
jurisdiction other than the Category 2A Jurisdiction resulting in the
delayed purchase.
Section 2.14. Joint Ventures.
--------------
(a) If prior to the First Closing, a third Person has, with respect to its
rights under any Contractual Transfer Restrictions relating to any
DEGI Joint Venture, (i) (A) exercised a right to acquire the Equity
Securities of the DEGI Joint Venture owned indirectly by DEGI (giving
effect to the Reorganization), (B) failed to waive any such rights or
(C) failed to provide a required consent and (ii) consummation of the
transactions contemplated hereby would violate the terms of such
Contractual Transfer Restriction, then (x) such DEGI Joint Venture
shall be deemed not to be a member of the DEGI Group; (y) the
Preliminary Purchase Price and the Merger Consideration shall be
reduced by the dollar amount allocated to such DEGI Joint Venture on
Schedule 2.14 to the Parent's Disclosure Letter; and (z) for any
determination of Net Equity, such DEGI Joint Venture shall be
disregarded.
(b) If prior to the Second Closing, a third Person has, with respect to
its rights under any Contractual Transfer Restrictions relating to any
BV Joint Venture, (i) (A) exercised a right to acquire the Equity
Securities of the BV Joint Venture owned indirectly by a BV Company
(giving effect to the Reorganization), (B) failed to waive any such
rights or (C) failed to provide a required consent and (ii)
consummation of the transactions contemplated hereby would violate the
terms of such Contractual Transfer Restriction, then (x) such BV Joint
Venture shall be deemed not to be a member of the BV Group; (ii) the
Preliminary Purchase Price and the BV Consideration shall be reduced
by the dollar amount allocated to such BV Joint Venture on Schedule
2.14 to the Parent's Disclosure Letter; and (iii) for any
determination of Net Equity, such BV Joint Venture shall be
disregarded.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES
Except as set forth in the Parent's Disclosure Letter and subject to the
limitations set forth in Section 12.01, the Parent represents and warrants to
the Acquiror that:
Section 3.01. Organization and Qualification. The Parent is a corporation
------------------------------
duly organized, validly existing and in good standing under the Laws of the
State of Delaware, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. The Parent is duly qualified to do business as a foreign corporation
and is in good standing (in those jurisdictions in which the concept of good
standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to affect materially and adversely the
Parent's ability to
Halliburton Company
Agreement and Plan of Recapitalization
14
perform its obligations under this Agreement or any Ancillary Agreement. Dresser
Industries is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified to do business as a
foreign corporation and is in good standing (in those jurisdictions in which the
concept of good standing is applicable) in each jurisdiction in which the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing could not reasonably be expected to affect materially and
adversely the Parent's ability to cause Dresser Industries to consummate the
transactions contemplated under this Agreement or
any Ancillary Agreement.
Section 3.02. Authorization of Agreement. The Parent has all requisite
--------------------------
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by the Parent of this Agreement and
each of the Ancillary Agreements to which it will be a party and the performance
by the Parent of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Parent.
No vote of, or consent by, the holders of any class or series of capital stock
or voting debt issued by the Parent is necessary to authorize the execution and
delivery by the Parent of this Agreement or any Ancillary Agreement to which it
will be a party or the performance by the Parent of its obligations hereunder or
thereunder. This Agreement has been, and each Ancillary Agreement to which the
Parent will be a party will at the First Closing have been, duly executed and
delivered by the Parent and (assuming due authorization, execution and delivery
hereof by the Acquiror and thereof by each other party thereto) constitutes or,
in the case of each such Ancillary Agreement, will at the First Closing
constitute the legal, valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms, except as enforcement hereof or
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the
enforcement of creditors' rights generally and legal principles of general
applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).
Section 3.03. Approvals. Except for (a) such filings and approvals as may
---------
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Parent from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Parent or
any of its Affiliates (excluding the Seller and the members of the Company
Groups) to permit the Parent to execute, deliver or perform this Agreement or
any Ancillary Agreement to which it will be a party or to permit the Parent to
consummate the transactions contemplated hereby or thereby.
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Agreement and Plan of Recapitalization
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Section 3.04. No Violation. Assuming effectuation of all filings and
------------
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 3.03, neither the execution
and delivery by the Parent of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Parent of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to rights under any Contractual Transfer Restrictions under
(i) any Legal Requirement applicable to the Parent or Dresser Industries, (ii)
the Organizational Documents of the Parent or Dresser Industries, or (iii) any
contract or agreement to which the Parent or Dresser Industries is a party or by
which the Parent or Dresser Industries or any of their properties or assets is
bound (including any provision thereof requiring any Third Person Consents) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in clauses (a)(i) and (a)(iii) of this
Section that could not reasonably be expected, individually or in the aggregate,
to prevent the Parent from performing this Agreement or any Ancillary Agreement
to which it will be a party in all material respects or to have a Material
Adverse Effect on the Businesses.
Section 3.05. No Brokers. No broker, finder or investment banker (other
----------
than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Incorporated) is entitled to any brokerage,
finder's or investment banking fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Parent or its Affiliates. All fees and expenses of the Parent
and its Affiliates incurred pursuant to the engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Incorporated will be discharged by the Parent.
Section 3.06. Title to Securities. Dresser Industries has, or after
-------------------
giving effect to the Reorganization will have, directly or indirectly, good
title to the Equity Securities of each member of the DEGI Group indicated as
owned, directly or indirectly, by DEGI on Schedule 5.03(a) to the Parent's
Disclosure Letter, free and clear of any Liens, and there are no contracts,
agreements, commitments or arrangements of the Parent or any of its Subsidiaries
obligating Dresser Industries (other than pursuant to this Agreement and the
Reorganization) to sell or to offer to sell any Equity Securities of any such
member of the DEGI Group or to purchase or acquire, or to offer to purchase or
acquire, any outstanding Equity Securities of any such member of the DEGI Group.
Upon consummation of the transactions contemplated hereby, the Acquiror will
acquire good title to such Equity Securities to be acquired by Acquiror
hereunder directly or indirectly, free and clear of any such Liens (other than
any created by the Acquiror).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Except as set forth in the Parent's Disclosure Letter and subject to the
limitations set forth in Section 12.01, the Parent and the Seller, jointly and
severally, represent and warrant to the Acquiror that:
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Agreement and Plan of Recapitalization
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Section 4.01. Organization. The Seller is a legal entity duly organized,
------------
validly existing and in good standing under the Laws of its jurisdiction of
incorporation or organization and has all requisite organizational power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. The Seller is duly qualified to do business as a
foreign corporation and is in good standing (in those jurisdictions in which the
concept of good standing is applicable) in each jurisdiction in which the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary in order for the Seller to perform this
Agreement and any Ancillary Agreement to which it is a party in all material
respects.
Section 4.02. Authorization of Agreement. The Seller has all requisite
--------------------------
organizational power and authority to execute and deliver this Agreement and
each Ancillary Agreement to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
The execution and delivery by the Seller of this Agreement and each Ancillary
Agreement to which it will be a party and the performance by the Seller of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite organizational action on the part of the Seller and, to the extent
required by Law, Regulation or the Seller's Organizational Documents, by the
holder of the Seller's Equity Securities. This Agreement has been, and any
Ancillary Agreement to which it will be a party will at the Second Closing have
been, duly executed and delivered by the Seller and (assuming due authorization,
execution and delivery hereof by the Acquiror and of any Ancillary Agreement by
each Buyer) constitutes or, in the case of any such Ancillary Agreement, will at
the Second Closing constitute the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except as
enforcement hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity or at law or
under applicable legal codes).
Section 4.03. Approvals. Except for (a) such filings and approvals as may
---------
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Seller from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Seller to
permit the Seller to execute, deliver or perform this Agreement or any Ancillary
Agreement to which it will be a party or to consummate the transactions
contemplated hereby.
Section 4.04. No Violation. Assuming effectuation of all filings and
------------
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 4.03, neither the execution
and delivery by the Seller of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Seller of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to any rights under
Halliburton Company
Agreement and Plan of Recapitalization
17
(i) any Legal Requirement applicable to the Seller, or (ii) the Organizational
Documents of the Seller, or (iii) any contract or agreement to which such Seller
is a party or by which it or any of its properties or assets is bound (including
any provisions thereof requiring any Third Person Consents) or (b), with the
passage of time, the giving of notice or the taking of any action by a third
Person, have any of the effects set forth in clause (a) of this Section, except
in any such case for any matters described in clauses (a)(i) and (a)(iii) of
this Section that could not reasonably be expected, individually or in the
aggregate, to prevent the Seller from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses.
Section 4.05. Title to Securities. The Seller has, or after giving effect
-------------------
to the Reorganization will have, good title to the Equity Securities of each BV
Company to be sold by the Seller hereunder as provided on Annex C, free and
clear of any Liens, and there are no contracts, agreements, commitments or
arrangements of any Person obligating the Seller (other than pursuant to this
Agreement and the Reorganization) to sell or to offer to sell any Equity
Securities of any such BV Company or to purchase or acquire, or to offer to
purchase or acquire, any outstanding Equity Securities of any such BV Company.
Upon consummation of the transactions contemplated hereby, each Buyer will
acquire good title to the Securities to be purchased by such Buyer hereunder as
provided on Annex B, free and clear of any such Liens (other than any created by
the Acquiror or such Buyer).
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING
MEMBERS OF THE COMPANY GROUPS
Except for the representations and warranties set forth in Sections 5.01,
5.02, and 5.03, to the extent that any of the representations and warranties set
forth in this Article V is made with respect to any member of a Company Group
that is a Non-Controlled Entity, the representation and warranty is qualified as
being given only to the Knowledge of the Parent. Each of the representations
and warranties contained in this Article V, other than those made in subsection
(b) of Section 5.02 but including those that are made only as of the date
hereof, gives effect to the Reorganization as if the Reorganization had been
effected on the date of this Agreement. Subject to the preceding provisions of
this Article V, to the matters set forth in the Parent's Disclosure Letter and
to the limitations set forth in Section 12.01, the Parent and the Seller,
jointly and severally, represent and warrant to the Acquiror that:
Section 5.01. Organization; Subsidiaries. Each member of each Company
--------------------------
Group is a legal entity duly organized, validly existing and in good standing
(in those jurisdictions in which the concept of good standing is applicable)
under the Laws of its jurisdiction of incorporation or organization and has all
requisite organizational power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, other than
any matters that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Businesses. Each member of
each Company Group is duly qualified to do business as a foreign corporation or
entity and is in good standing (in those jurisdictions in which the concept of
good
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standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where any such failure to be so qualified or in
good standing, could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect on the Businesses. Schedule
5.01 of the Parent's Disclosure Letter sets forth a true and complete list, as
of the date of this Agreement, of the members of each Company Group, together
with (a) a specification of the nature of the legal organization of each such
entity, (b) the jurisdiction of incorporation or other organization of each such
entity, (c) the magnitude (expressed as a percentage of the aggregate ordinary
voting power of all outstanding Equity Securities of such legal entity) of the
direct or indirect equity investment of the Parent (and, if different, the
economic interest) in each such entity and (d) the identity of the Business to
be conducted by each member of each Company Group after giving effect to the
Reorganization.
Section 5.02. Organizational Documents; Authorization; No Violation.
-----------------------------------------------------
(a) The Parent has heretofore made available to the Acquiror complete and
correct copies of the Organizational Documents, in each case as
amended or restated to the date hereof, of each member of each Company
Group. None of the members of either Company Group is in violation of
any of the provisions of its Organizational Documents, except for any
such violations that could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on the Businesses.
(b) At the time of the Reorganization, each member of each Company Group
will, to the extent required, have all requisite organizational power
and authority to consummate the Reorganization and the other
transactions contemplated to be consummated by it by this Agreement,
and the consummation of the Reorganization and such other transactions
will have been, to the extent required, duly and validly authorized by
all requisite company action on the part of each such entity.
(c) The consummation of the Reorganization and the other transactions
contemplated by this Agreement will not (i) violate or breach the
terms of or cause a default or give rise to rights under any
Contractual Transfer Restrictions under (A) any Legal Requirement
applicable to any member of either Company Group, (B) the
Organizational Documents of any member of either Company Group or (C)
any contract or agreement to which any member of either Company Group
is a party or by which it or its properties or assets are bound
(including any provision thereof requiring any Third Person Consent)
or (ii), with the passage of time, the giving of notice or the taking
of any action by a third Person, have any of the effects set forth in
clause (i) of this subsection (c), except for any matters described in
clauses (A) and (C) of clause (i) of this subsection (c) that could
not reasonably be expected, individually or in the aggregate, to
prevent any member of either Company Group from consummating the
Reorganization or the other transactions contemplated by this
Agreement in all material respects or to have a Material Adverse
Effect on the Businesses.
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Section 5.03. Capitalization.
--------------
(a) The authorized Equity Securities of each member of each Company Group,
the total outstanding Equity Securities of each such Company Group
member and the name of the record holders of all the outstanding
Equity Securities of each such Company Group member, in each case as
of the date of this Agreement, are as set forth in Schedule 5.03(a) of
the Parent's Disclosure Letter.
(b) No Equity Securities of any member of either Company Group are
reserved for issuance, and there are no outstanding options, warrants,
calls, pre-emptive rights, subscriptions or other rights, contracts,
agreements, commitments or arrangements obligating any such Company
Group member to offer, sell, issue or grant any of its Equity
Securities or to redeem, purchase or acquire, or offer to purchase or
acquire, any of its outstanding Equity Securities.
(c) Except as required by this Agreement and the Reorganization, there are
no options, warrants, calls, pre-emptive rights, subscriptions or
other rights, contracts, agreements, commitments or arrangements
obligating any such Company Group member (A) to offer, sell, issue,
grant, pledge, dispose of or encumber any Equity Securities of any
other Company Group member or (B) to purchase or acquire, or offer to
purchase or acquire, any outstanding Equity Securities of any other
Company Group member or (C) to grant any Lien on any outstanding
Equity Securities of any other Company Group member.
(d) All the issued and outstanding Equity Securities of each member of
each Company Group that are owned directly or indirectly by the Parent
have been duly authorized and are validly issued and, with respect to
capital stock, are fully paid and nonassessable. All such issued and
outstanding Equity Securities that are owned directly or indirectly by
the Parent are owned free and clear of all Liens.
(e) Except for matters contemplated by this Agreement or the Ancillary
Agreements and for revocable proxies, if any, granted by any member of
either Company Group with respect to the capital stock of another
Company Group member, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which
any member of either Company Group is a party or by which it is bound
with respect to the voting of any Equity Securities of any Company
Group member.
Section 5.04. Title to Properties.
-------------------
(a) Schedule 5.04(a)(i) sets forth all of the Real Property owned by any
member of either Company Group and Schedule 5.04(a)(ii) sets forth all
of the Real Property leased by any member of either Company Group
other than any such leased Real Property that is not individually or
in the aggregate Material to the Businesses. The appropriate member
of each Company Group has (i) good and marketable title to all of the
Real Property marked as "designated" (the "Designated Real Property")
on
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Schedule 5.04(a)(i) to the Parent's Disclosure Letter and (ii) good
and defensible title to the other properties reflected in the Initial
Financial Statements (other than, in the case of this clause (ii), (A)
any properties sold or otherwise disposed of in the ordinary course of
business since the Initial Balance Sheet Date, and (B) any properties
that are not material to the Businesses) free and clear of Liens,
other than (X) Liens securing debt, the existence of which is
reflected in the Initial Financial Statements, (Y) Permitted
Encumbrances and (Z) Liens that are not, individually or in the
aggregate, Material to the Businesses. The appropriate member of each
Company Group holds under valid lease agreements (i) all Material Real
Property reflected in Schedule 5.04(a)(ii) to the Parent's Disclosure
Letter and (ii) all other properties reflected in the Initial
Financial Statements as being held under capitalized leases or
operating leases and enjoys peaceful and undisturbed possession of
such properties under such leases, other than, in the case of clause
(ii), (A) any properties as to which such leases have terminated in
the ordinary course of business since the Initial Balance Sheet Date
without any liability of such Company Group member party thereto that
is Material to the Businesses and (B) any properties that are not,
individually or in the aggregate, Material to the Businesses. Each
such lease is valid and enforceable against the Company Group member
party thereto and, to the Knowledge of the Parent, each other party
thereto, in accordance with its terms and there is not under any such
lease any existing default by the Company Group member party thereto
or, to the Knowledge of the Parent, any other party thereto, or any
condition, event or act which, with notice or lapse of time or action
of a third Person, would constitute such a default, except in each
case for matters that could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect on the
Businesses. Neither the Parent, the Seller nor any Company Group
member has received any written notification of any adverse claim to
the title to any properties owned by such Company Group member or with
respect to any lease under which any properties are held by it, other
than any claims that could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on the Businesses.
(b) Schedule 5.04(b) to the Parent's Disclosure Letter sets forth, as of
the date hereof, to the extent material to a Business, all
Intellectual Property owned by or registered in the name of any member
of either Company Group or in which any such entity has any rights
including the name of the Company Group member in whose name such
Intellectual Property is registered or which has such rights and the
Business to which such Intellectual Property relates. Except as could
not reasonably be expected to have a Material Adverse Effect on the
Businesses, as of the date hereof the members of the Company Groups
own, or have the valid right to use, all of the Intellectual Property.
Except as could not reasonably be expected to have a Material Adverse
Effect on the Businesses, after giving effect to the Reorganization,
the members of the Company Groups which conduct each Business will
own, or have the valid right to use, all of the Intellectual Property
used in such Business.
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Section 5.05. Financial Statements.
--------------------
(a) The Initial Financial Statements (i) are attached as Schedule 5.05 to
the Parent's Disclosure Letter, (ii) have been prepared in accordance
with U.S. GAAP consistently applied, (iii) fairly present the combined
financial position of the Businesses as of the respective dates
thereof and the combined results of operations of the Businesses for
the periods indicated and (iv) reflect all material "loss
contingencies" as determined under Statement of Financial Accounting
Standards No. 5 other than those for which, at the time of preparation
of the Initial Financial Statements, the members of the Parent Group
were expected to be responsible after giving effect to the
transactions contemplated hereby.
(b) There exist no liabilities, obligations or commitments, whether direct
or indirect, absolute or contingent, of the members of either Company
Group that are Material to the Businesses and that would be required
to be reflected or reserved for under U.S. GAAP in an historical
combined balance sheet of the members of the Company Groups, other
than (i) liabilities or obligations that are reflected or reserved for
in the Initial Financial Statements, (ii) liabilities or obligations
excluded from the Initial Financial Statements as described in note 2
to such Initial Financial Statements, (iii) liabilities or obligations
incurred in the ordinary course of business of the Businesses since
the Initial Balance Sheet Date and (iv) liabilities or obligations
incurred since the Initial Balance Sheet Date of the nature of
liabilities that may be incurred after the date of this Agreement
pursuant to subsection (b) of Section 8.02. None of the liabilities
described in clauses (iii) and (iv) of the preceding sentence has or
could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Businesses.
(c) The books, records and accounts of the members of the Company Groups,
in reasonable detail, accurately and fairly reflect in the aggregate
the transactions and dispositions of the assets of the Businesses. No
member of either Company Group has engaged in any Material
transaction, maintained any Material bank account or used any Material
corporate funds except for transactions, bank accounts and funds that
have been and are reflected in the normally maintained Books and
Records of such member of either Company Group.
(d) The notes to the Initial Financial Statements fairly reflect in all
material respects all transactions between or among any member of
either Company Group and any Affiliate thereof (other than
transactions solely between or among the members of the Company
Groups).
Section 5.06. Authorizations. Each member of each Company Group has
--------------
obtained all Authorizations that are necessary to carry on the Business related
thereto as currently conducted, except for any such Authorizations that its
failure to possess, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Businesses. Each such
Authorization (i) is in full force and effect, (ii) has not been violated in any
respect and (iii) is not
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subject to any suspension, revocation or cancellation, other than for matters,
in any such case, that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Businesses. There is no
action, proceeding or investigation pending or, to the Knowledge of the Parent,
threatened regarding suspension, revocation or cancellation of any of such
Authorizations, except in any circumstances in which the suspension, revocation
or cancellation of such Authorizations could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Businesses.
Section 5.07. Compliance With Laws; Regulation of Businesses. Each member
----------------------------------------------
of each Company Group is and, to the extent that any noncompliance could
reasonably be expected to have current consequences, has been in compliance with
all applicable Laws and Regulations and any Orders applicable to any such
entity, other than Environmental Laws and, to the extent applicable to the
execution, delivery and performance of this Agreement, foreign competition Laws
and except such events of noncompliance or defaults that, individually or, with
respect to multiple events of noncompliance or defaults arising out of the same
facts or circumstances, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Businesses. To the Knowledge of the
Parent, each member of each Company Group has at all times been in compliance
with, and continues to comply with, the Foreign Corrupt Practices Act of 1977,
as amended.
Section 5.08. Taxes. Except for any matter that could not reasonably be
-----
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Businesses:
(a) (i) all Tax Returns that were required to be filed by or with respect
to any member of a Company Group, or any member of the Parent Group
insofar as it affects any member of a Company Group, have been duly
and timely filed, (ii) all items of income, gain, loss, deduction and
credit or other items ("Tax Items") required to be included in each
such Tax Return have been so included and all such Tax Items and any
other information provided in each such Tax Return are true, correct
and complete insofar as such items are related to or affect a member
of a Company Group, (iii) all Taxes shown as due on each such Tax
Return have been timely paid in full insofar as such Taxes are related
to or affect a member of a Company Group, (iv) insofar as such items
are related to or affect a member of a Company Group, no penalty,
interest or other charge is or will become due with respect to the
late filing of any such Tax Return or late payment of any such Tax and
(v) all Tax withholding and deposit requirements imposed on or with
respect to any member of a Company Group, or any member of the Parent
Group insofar as it affects any member of a Company Group, have been
satisfied in full in all respects;
(b) no member of a Company Group (or the Parent Group insofar as it
affects any member of a Company Group) has in force any waiver of any
statute of limitations in respect of Taxes or any extension of time
with respect to a Tax assessment or deficiency;
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(c) there are no pending Tax audits or examinations and no proposed
deficiencies or other claims for unpaid Taxes of any member of a
Company Group for which written notice has been received;
(d) Schedule 5.08(d) to the Parent's Disclosure Letter contains a list as
of the date hereof of (i) all tax allocation or sharing agreements to
which any member of either Company Group is a party and (ii) each
member of a Company Group that has any liability for the Taxes of any
other Person (other than members of its respective Company Group)
under United States Treasury Regulation section 1.1502-6 (or any
similar provision of state, local or foreign law);
(e) the aggregate unpaid Taxes of all members of the Company Groups
(computed with respect to each such member on the basis of the income,
operations and activities of such member through the Closing Date as
if the applicable taxable year of such member ended on the Closing
Date) did not, as of the date of the Closing, exceed the amounts
reserved for Tax liability (as distinguished from any reserve for
deferred taxes established to reflect timing differences between book
and tax income) in the reserve for Taxes set forth on the face of
(rather than in any notes to) the Closing Financial Statements;
(f) none of the assets of any member of any Company Group is property
required to be treated as being owned by any other Person pursuant to
the "safe harbor lease" provisions of former Section 168(f)(8) of the
Code;
(g) none of the assets of any member of any Company Group directly or
indirectly secures any debt the interest on which is tax-exempt under
Section 103(a) of the Code;
(h) none of the assets of any member of any Company Group is "tax-exempt
use property" within the meaning of Section 168(h) of the Code;
(i) each member of each Company Group that is not a corporation is
properly classified for United States federal income tax purposes as a
partnership or a disregarded entity, and not as an association or
publicly traded partnership taxable as a corporation. No member of a
Company Group is a party to any joint venture, partnership, limited
liability company agreement, or other arrangement or contract that
could be treated as a partnership for federal income tax purposes;
(j) the Parent is the common parent of the affiliated group within the
meaning of Section 1504(a) of the Code that includes Dresser
Industries and each member of the DEGI Group that is a domestic
corporation;
(k) the Parent is eligible to make an election under Section 338(h)(10) of
the Code (and any comparable election under state, local or foreign
tax law) with respect to each member of each Company Group that is a
domestic corporation; and
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Agreement and Plan of Recapitalization
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(l) no claim has been made by a jurisdiction where any member of any
Company Group does not file Tax Returns or otherwise comply with local
taxation requirements (e.g., through a withholding tax regime) that
such member is or may be subject to taxation in that jurisdiction.
Section 5.09. Principal Contracts.
-------------------
(a) Schedule 5.09(a) to the Parent's Disclosure Letter contains a list as
of the date hereof of all Principal Contracts, other than Related
Party Contracts and Surety Arrangements, including the name of the
Company Group member that is a party thereto and the Business to which
each such Principal Contract relates. Each such Principal Contract is
in full force and effect, and neither the member or members of either
Company Group party thereto nor, to the Knowledge of Parent, any other
party thereto, has failed to perform its obligations thereunder to
date, other than any failure of a Principal Contract to be in full
force and effect or of any nonperformance thereof that could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Businesses. To the Knowledge of the
Parent, no party to any such Principal Contract has given or received
any notice of cancellation or termination of such Principal Contract.
(b) Schedule 5.09(b) to the Parent's Disclosure Letter contains a list as
of the date hereof of all Principal Contracts that are Related Party
Contracts, including the name of each Company Group member that is a
party thereto and the Business to which each such Related Party
Contract relates, and identifies each Retained Subsidiary of the
Parent that is the party to each such Related Party Contract. Each
Related Party Contract is in full force and effect and each party
thereto has performed its obligations thereunder to date.
(c) Schedule 5.09(c) to the Parent's Disclosure Letter contains a list as
of the date hereof of all Surety Arrangements, including the name of
each Company Group member that is a beneficiary thereof and the
Business to which the Surety Arrangement relates, and identifies each
surety in such arrangement, whether that be the Parent or a Retained
Subsidiary. To the Knowledge of the Parent, all such Surety
Arrangements are in full force and effect, no Parent or Retained
Subsidiary is in default thereunder and no party to any Surety
Arrangement has given or received any notice of cancellation or
termination of any Surety Arrangement.
Section 5.10. Employees.
---------
(a) Except for matters that could not reasonably be expected to have a
Material Adverse Effect on the Businesses, (i) no collective
bargaining or similar agreement is being negotiated by any member of
either Company Group, (ii) there is no pending or, to the Knowledge of
the Parent, threatened labor dispute, strike, slowdown, lockout or
work stoppage against any member of either Company Group, (iii) none
of the members of the Company Groups is a party to or bound by any
collective bargaining
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or similar agreement with any union or work rules or practices agreed
to with any labor organization or employee association applicable to
employees of any member of either Company Group, (iv) none of the
employees of any member of either Company Group is represented by any
labor organization and, to the Knowledge of the Parent, there are no
current union organizing activities among the employees of any member
of either Company Group and (v), to the Knowledge of the Parent, no
member of either Company Group is engaged in any unfair labor practice
in connection with the operation of the related Business, which unfair
labor practice is actionable under applicable Laws and Regulations.
Except for matters that could not reasonably be expected to have a
Material Adverse Effect on the Businesses, since January 1, 1998, none
of the members of either Company Group has (A), without fully
complying with the notice and other requirements of the WARN Act,
effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any such
Company Group member covered by the WARN Act or (ii) a "mass layoff"
(as defined in the WARN Act) affecting any site of employment or
facility of any such Company Group member covered by the WARN Act; or
(B) engaged in layoffs or employment terminations sufficient to imply
application of any foreign, state or local Laws or Regulations
relating to plant closing or mass layoffs and requiring notice to
employees in the event thereof without complying with such Laws and
Regulations.
(b) Schedule 5.10(b) to the Parent's Disclosure Letter sets forth as of
the date hereof a true and complete list of the Significant Benefit
Plans. Schedule 5.10(b) to the Parent's Disclosure Letter also
identifies which of the Significant Benefit Plans constitute Parent
Benefit Plans. The Parent has made available to the Acquiror copies
of all Significant Benefit Plans and, for each such Significant
Benefit Plan, copies of (i) the most recent annual report (if any)
required to be filed with an applicable Governmental Authority, (ii) a
copy of the most recent actuarial report and valuation of the assets
and liabilities subject thereto to the extent that any such report or
valuation is required to be prepared by applicable Laws and
Regulations, (iii) a copy of the organizational documents relating to
any funding vehicle established thereunder and a copy of the summary
plan description (if any) therefor, (iv) where applicable, the most
recent determination letter issued by the Internal Revenue Service,
(v) a complete description of any unwritten Significant Benefit Plans,
and (vi) summary plan descriptions, summaries of material
modifications, and any other material communications distributed to
participants. Except for the Parent Benefit Plans, no Person that is
not a member of a Company Group is a participating employer or sponsor
of any Significant Benefit Plan. The Parent has made available to the
Acquiror copies of any retention agreements with any management
employees of any member of either Company Group that were executed in
contemplation of the transactions that are the subject of this
Agreement.
(c) Except for matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the
Businesses:
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(i) no Benefit Plan is subject to section 412 of the Code, section
302 of ERISA or Title IV of ERISA, and each Benefit Plan
intended to be qualified under section 401(a) of the Code (A)
satisfies in form the requirements of such section except to
the extent amendments are not required by law to be made until
a date after the Closing Date and (B) has received a favorable
determination letter from the Internal Revenue Service
regarding such qualified status;
(ii) each Benefit Plan has been operated and administered in
compliance with its governing documents and all applicable
Legal Requirements;
(iii) each member of each Company Group has performed all
obligations, whether arising by Legal Requirement or by
contract, required to be performed by it in connection with the
Benefit Plans;
(iv) there are no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the
Parent, threatened against, or with respect to, any of the
Benefit Plans or their assets;
(v) all contributions required to be made to the Benefit Plans
pursuant to their terms and the provisions of all applicable
Legal Requirements have been timely made;
(vi) other than routine applications, filings and amendments and
modifications, there is no matter pending with respect to any
of the Benefit Plans before any Governmental Authority;
(vii) each member of each Company Group is in substantial compliance
with all applicable Legal Requirements mandating benefits for
their employees;
(viii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not
(except as otherwise provided in this Agreement or pursuant to
the terms of a Benefit Plan as in effect on the date of this
Agreement) (A) require any member of either Company Group to
make a larger contribution to, or pay greater benefits or
accelerate vesting or other rights or provide other rights
under, any Benefit Plan than it otherwise would, whether or not
some other subsequent action or event would be required to
cause such payment or provision to be triggered or (B) create
or give rise to any additional vested rights or service credits
or accruals under any such Benefit Plan;
(ix) in connection with the consummation of the transactions
contemplated by this Agreement, no payment of money or other
property, acceleration of benefits or provision of other rights
has been or could be made under this Agreement, any Ancillary
Agreement, any Benefit Plan or otherwise that would be
reasonably likely to be nondeductible for United States federal
income tax
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purposes by any member of either Company Group that is a United
States person (within the meaning of section 7701(a)(30) of the
Code) solely by virtue of section 162(m) or section 280G of the
Code or that would be reasonably likely to be an "excess
parachute payment" pursuant to Section 280G of the Code or that
would be an "excess parachute payment," but for the application
of Section 280G(b)(5) of the Code;
(x) to the Knowledge of the Parent neither any member of either
Company Group nor any fiduciary of any Benefit Plan has engaged
in any transaction in violation of Sections 404 or 406 of ERISA
or any non-exempt "prohibited transaction" as defined in
Section 4975(c)(i) of the Code, or has otherwise violated the
provisions of Part 4 of Title I, Subtitle B of ERISA, and, to
the Knowledge of the Parent, no member of either Company Group
has knowingly participated in a violation of Part 4 of Title I,
Subtitle B of ERISA by any fiduciary of a Benefit Plan (or
other employee benefit plan subject to ERISA) and, to the
Knowledge of the Parent, no member of either Company Group has
been assessed any civil penalty under Section 502(a) of ERISA
of a material amount which has not been paid in full or accrued
as a liability in the financial statements;
(xi) except pursuant to one or more of those Significant Benefit
Plans set forth on Schedule 5.10(b) to the Parent's Disclosure
Letter, none of the Parent, either Company Group, or any
Benefit Plan has any present or future obligation to provide
any benefits to or make any payment with respect to any current
or former employee, director, officer, consultant or agent of
any Company Group pursuant to any Significant Benefit Plan that
is a retiree medical benefit plan or other retiree welfare plan
and no condition exists that would prevent the Parent or either
Company Group from amending or terminating any such plan;
(xii) to the Knowledge of the Parent, each Benefit Plan that is a
"group health plan" has been operated in all Material respects
in compliance with the provisions of Part 6 of Title I,
Subtitle B;
(xiii) to the Knowledge of the Parent, neither the Parent nor any
member of either Company Group nor any ERISA Affiliate has
announced, proposed, or agreed to any changes to any Benefit
Plan that would cause an increase in benefits (or the creation
of new benefits) under any such Benefit Plan or that would
cause a material increase in the cost of maintaining such
Benefit Plan with respect to a Company Group; and
(xiv) to the Knowledge of the Parent, each Benefit Plan that covers
current or former employees, directors, officers or consultants
and that is not subject to ERISA and the Code has been
maintained in material compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations (including any special provisions
relating to the
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tax status of contributions to, earnings of or distributions
from such Benefit Plans where each such Benefit Plan was
intended to have tax status) and has been maintained in good
standing with applicable statutes, orders, rules and
regulations (including any special provisions relating to the
tax status of contributions to, earnings of or distributions
from such Benefit Plans where each such Benefit Plan was
intended to have tax status) and has been maintained in good
standing with applicable regulatory authorities.
(d) There does not now exist, nor do any circumstances exist that could
result in, any Controlled Group Liability of the Parent or any of its
ERISA Affiliates that could reasonably be expected to become a
liability of any member of either Company Group following the First
Closing. No liability under Title IV of ERISA (including liabilities
pursuant to Sections 4064, 4069 or 4204 of ERISA) has been incurred by
any member of either Company Group since the effective date of ERISA
that has not been satisfied in full and no such liability is
reasonably expected to arise with respect to any member of either
Company Group. To the extent that the representation in the preceding
sentence applies to any section of ERISA pursuant to which either
Controlled Group could have liability with respect to an ERISA
Affiliate, it is made not only with respect to the Benefit Plans but
also with respect to any employee benefit plan subject to Title IV of
ERISA to which any member of either Company Group or any ERISA
Affiliate made, or was required to make, contributions during the six-
year period preceding the date of this Agreement. The Pension Benefit
Guaranty Corporation has not instituted proceedings pursuant to
section 4042 of ERISA to terminate any of the Benefit Plans subject to
Title IV of ERISA or, to the Knowledge of the Parent, any plan
maintained by any other entity that would be considered a single
employer with any member of either Company Group pursuant to section
4001(b)(1) of ERISA. As to any Benefit Plan subject to Title IV of
ERISA, there has been no "reportable event" (as defined in Section
4043(c) of ERISA and the regulations under such section and for which
the disclosure requirements of Regulation section 4043.1 et. seq.,
promulgated by the Pension Benefit Guaranty Corporation, have not been
waived) and no member of the Company Groups nor Parent nor any ERISA
Affiliate is subject to Section 4043(b) of ERISA and no analogous
event has occurred under applicable foreign law. Within the past six
years, neither any Benefit Plan nor any other plan maintained by any
entity that would be considered a single employer with any member of
either Company Group pursuant to section 4001(b)(1) of ERISA is or was
a "multiemployer plan" (as such term is defined in section 3(37) of
ERISA).
Section 5.11. Environmental Matters. Notwithstanding anything to the
---------------------
contrary in this Article V or in any other section of this Agreement, the
representations and warranties set forth in this Section 5.11 are the only
representations and warranties thereof of the Parent in any way relating to
environmental matters, including the Environmental Laws, Authorizations under
any Environmental Laws and Hazardous Materials, and the remaining
representations and warranties in this Agreement shall be construed not to apply
to such matters. Employee health and safety matters are covered by Section
5.07. Except for matters that could not reasonably be expected to have a
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Agreement and Plan of Recapitalization
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Material Adverse Effect on the Businesses, Schedule 5.11 to the Parent's
Disclosure Letter sets forth:
(a) to the Knowledge of the Parent, all Hazardous Materials Contamination
on, about or under the Real Property as of the date of this Agreement;
(b) to the Knowledge of the Parent, all Environmental Compliance Matters
related to the Businesses as of the date of this Agreement;
(c) all existing, pending or, to the Knowledge of the Parent, threatened
actions, suits, investigations, CERCLA potentially responsible party
notices, inquiries and proceedings by or before any Court or
Governmental Authority under any applicable Environmental Laws as of
the date of this Agreement against any member of either Company Group;
and
(d) Schedule 5.11 to the Parent's Disclosure Letter includes a listing of
all the environmental site assessment reports prepared in connection
with the transactions contemplated hereby, all of which have
heretofore been delivered to the Acquiror.
Section 5.12. Litigation. There are no actions, suits, arbitrations,
----------
proceedings or investigations pending or, to the Knowledge of the Parent,
threatened against the Parent, the Seller or any member of either Company Group,
including any involving a claim for indemnification pursuant to any statute,
Organizational Document or contract relating to any other action, suit,
arbitration, proceeding or investigation, in or before any Court or before or by
any Governmental Authority, except actions, suits, proceedings or investigations
as disclosed in the Parent's Disclosure Letter pursuant to Section 5.07, 5.10 or
5.11 or that, individually or, with respect to multiple actions, suits or
proceedings that allege similar theories of recovery based on the same or
substantially the same facts or occurrences, in the aggregate, could not
reasonably be expected, in the case of any member of either Company Group, to
have a Material Adverse Effect on the Businesses or, in the case of any of the
Parent or the Seller, to prevent, enjoin or delay materially the performance of
this Agreement, and the Parent has no Knowledge of any facts which could give
rise to any such action, suit, arbitration, proceeding or investigation.
Neither the Parent nor the Seller nor any member of either Company Group is
subject to any judgment, injunction, order, ruling or decree that could
reasonably be expected, individually or in the aggregate, in the case of any
member of either Company Group, to have a Material Adverse Effect on the
Businesses or, in the case of the Parent or the Seller, to prevent or enjoin or
delay materially the performance of this Agreement.
Section 5.13. Material Adverse Changes.
------------------------
(a) Since the Initial Balance Sheet Date, no event, condition or
circumstance has occurred resulting in any change in or effect on any
Business (except for (i) such changes or effects resulting from
changes in general economic, regulatory or political conditions
(including foreign exchange rate movements or devaluations), (ii) such
changes or effects affecting generally the industry in which such
Business participates and (iii) any such changes or effects disclosed
in the Parent's Disclosure Letter pursuant to any other representation
or warranty contained in this Article V)
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that has had or could reasonably be expected to constitute or have a
Material Adverse Effect on the Businesses.
(b) During the period from the Initial Balance Sheet Date to the date of
this Agreement, no member of either Company Group has engaged in any
conduct that is proscribed during the period from the date of this
Agreement to the Closing Date by clauses (i) through (xvi) of
subsection (b) of Section 8.02.
Section 5.14. Customers and Suppliers. Schedule 5.14 to the Parent's
-----------------------
Disclosure Letter sets forth a true and correct list of (a) the 20 largest
customers of each Business, in terms of sales during each of the fiscal years
ended December 31, 1999 and 2000, setting forth the total sales to each such
customer during such period and (b) the 10 largest suppliers of each Business,
in terms of purchases during each of the fiscal years ended December 31, 1999
and 2000, setting forth for each such supplier the total purchases from each
such supplier during such period. Since the Initial Balance Sheet Date, to the
Knowledge of the Parent, there has not been any change in the business
relationship of the relevant members of either Company Group with any customer
or supplier named in Schedule 5.14 to the Parent's Disclosure Letter that could
reasonably be expected to have a Material Adverse Effect on the Businesses.
Section 5.15. Adequacy of Assets. The assets and properties of the
------------------
members of the Company Groups constitute all of the assets, rights and
properties that are necessary for the conduct of the Businesses as now
conducted.
Section 5.16. Full Disclosure. The Acquiror shall be entitled to rely
---------------
upon, and shall not be deemed to have knowledge of facts other than those set
forth in, the representations and warranties of the Parent and the Seller made
in this Agreement (including the Schedules to the Parent's Disclosure Letter
related hereto) and in the certificates delivered by or on behalf of the Parent
and the Seller confirming the accuracy of such representations and warranties
and pursuant to any disclosures in writing made to the Acquiror pursuant to
Section 12.02(c).
Section 5.17. Disclaimers. The Acquiror acknowledges that except as
-----------
expressly provided in this agreement the Parent has not made, and the Parent
hereby expressly disclaims and negates, and the Acquiror hereby expressly
waives, any representation or warranty, express, implied, at common law, by
statute or otherwise relating to, and the Acquiror hereby expressly waives and
relinquishes any and all rights, claims and causes of action against the Parent
and its Representatives in connection with, the accuracy, completeness or
materiality of any information, data or other materials (written or oral),
heretofore furnished to the Acquiror and its representatives by or on behalf of
the Parent. Except as expressly provided in this Agreement, the Parent
expressly disclaims and negates, and the Acquiror hereby waives, as to personal
property, equipment and fixtures constituting a part of the assets owned or
operated by the Businesses, (i) any implied or express warranty of
merchantability, (ii) any implied or express warranty of fitness for a
particular purpose, (iii) any implied or express warranty of conformity to
models or samples of materials, (iv) any rights of purchasers under appropriate
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Agreement and Plan of Recapitalization
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Legal Requirements to claim diminution of consideration, (v) any claims by
Acquiror for damages because of any latent or patent defects or other defects,
whether known or unknown and (vi) any and all implied warranties existing under
applicable Legal Requirements; it being the express intention of the Parent and
the Acquiror that, except as expressly provided elsewhere in this Agreement, the
tangible property, including real property, immovables, personal property,
movables, equipment and fixtures owned by or in the possession of the Seller or
any member of either Company Group are to be conveyed in their then present
condition and state of repair, "as is" and "where is" with all faults. The
Parent and the Acquiror agree that, to the extent required by applicable legal
requirements to be effective, the disclaimers of the warranties contained in
this section are "conspicuous."
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Subject to the matters set forth in the Acquiror's Disclosure Letter and to
the limitations set forth in Section 12.01, the Acquiror represents and warrants
to the Parent that:
Section 6.01. Organization and Qualification. The Acquiror is a
------------------------------
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Acquiror is duly qualified to do business as a foreign
company and is in good standing (in those jurisdictions in which the concept of
good standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to prevent the Acquiror from
performing this Agreement and each Ancillary Agreement in all material respects.
Section 6.02. Authorization of Agreement. The Acquiror has all requisite
--------------------------
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by the Acquiror of this Agreement and each of the
Ancillary Agreements and the performance by the Acquiror of its obligations
hereunder and thereunder have been duly and validly authorized by all requisite
company action on the part of the Acquiror. This Agreement has been, and each
Ancillary Agreement will at the First Closing have been, duly executed and
delivered by the Acquiror and (assuming due authorization, execution and
delivery hereof by the Parent and thereof by each other party thereto)
constitutes or, in the case of the Ancillary Agreements, will at the First
Closing constitute the legal, valid and binding obligation of the Acquiror,
enforceable against the Acquiror in accordance with its terms, except as
enforcement hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
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Agreement and Plan of Recapitalization
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equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).
Section 6.03. Approvals. Except for (a) such filings and approvals as may
---------
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Acquiror from performing this Agreement or the
Ancillary Agreements in all material respects, no filing or registration with,
no waiting period imposed by, and no Authorization of, any Governmental
Authority is required under any Legal Requirement applicable to the Acquiror to
permit the Acquiror to execute, deliver or perform this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby.
Section 6.04. No Violation. Assuming effectuation of all filings and
------------
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, each Court and Governmental
Authority indicated as required pursuant to Section 6.03, neither the execution
and delivery by the Acquiror of this Agreement or any Ancillary Agreement nor
the performance by the Acquiror of its obligations hereunder or thereunder will
(a) violate or breach the terms of or cause a default under (i) any Legal
Requirement applicable to the Acquiror, (ii) the Organizational Documents of the
Acquiror or (iii) any contract or agreement to which the Acquiror or any of its
Subsidiaries is a party or by which it or any of its properties or assets is
bound (including any provision thereof requiring any Third Person Consent) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in this Section that could not
reasonably be expected to prevent the Acquiror from performing this Agreement
and the Ancillary Agreements in all material respects.
Section 6.05. Commitment Letters. The Acquiror has delivered to the
------------------
Parent true and complete copies of the Commitment Letters. The Commitment
Letters have not been amended or modified and are in full force and effect.
Section 6.06. No Brokers. No broker, finder or investment banker is
----------
entitled to any brokerage, finder's or investment banking fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Acquiror.
Section 6.07. Transitory Merger Sub. Transitory Merger Sub is not and has
---------------------
never been a party to any material agreements and has not conducted any
activities other than in connection with its organization, the negotiation and
execution of the Merger Agreement, the Loan, the Investment and the consummation
of the transactions contemplated hereby. Transitory Merger Sub has no
Subsidiaries.
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Agreement and Plan of Recapitalization
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Each of the representations and warranties contained in this Article VII
gives effect to the Reorganization as if the Reorganization had been effected on
the date of this Agreement. Subject to the limitations set forth in Section
12.01, each of the Parent and the Acquiror represents and warrants to the other
as of the Second Closing that:
Section 7.01. Organization. Each Buyer is a legal entity duly organized,
------------
validly existing and in good standing (if the concept of good standing is
applicable in that jurisdiction) under the Laws of its jurisdiction of
incorporation or organization, and has all requisite organizational power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted.
Section 7.02. Authorization of Agreement. Each Buyer has all requisite
--------------------------
organizational power and authority to execute and deliver the Ancillary
Agreements, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by each Buyer of
each Ancillary Agreement to which it is a party and the performance by such
Buyer of its obligations thereunder have been duly and validly authorized by all
requisite organizational action on the part of such Buyer and, to the extent
required by Law, Regulation or such Buyer's Organizational Documents, by the
holder or holders of such Buyer's Equity Securities. Each Ancillary Agreement
to which it is a party will at the Second Closing have been duly executed and
delivered by each Buyer and (assuming due authorization, execution and delivery
thereof by each other party thereto) at the Second Closing each Ancillary
Agreement to which it is a party will constitute the legal, valid and binding
obligation of such Buyer, enforceable against such Buyer in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).
Section 7.03. Approvals. Except for (a) such filings and approvals as may
---------
be required under the HSR Act, (b) other Regulatory Transfer Restrictions and
(c) applicable Legal Requirements, if any, noncompliance with which, in the case
of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent any Buyer from performing any Ancillary Agreement to which
it is a party in all material respects, no filing or registration with, no
waiting period imposed by and no Authorization of, any Governmental Authority or
Court is required under any Legal Requirement applicable to such Buyer to permit
such Buyer to execute, deliver or perform each Ancillary Agreement to which it
is a party or to consummate the transactions contemplated thereby.
Section 7.04. No Violation. Assuming effectuation of all filings and
------------
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 7.03, neither the execution
and delivery by any Buyer of any Ancillary Agreement to which
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Agreement and Plan of Recapitalization
34
it is a party nor the performance by the Buyer of its obligations thereunder
will (a) violate or breach the terms of or cause a default under (i) any Legal
Requirement applicable to such Buyer, (ii) the Organizational Documents of such
Buyer or (iii) any contract or agreement to which such Buyer is a party or by
which it or any of its properties or assets is bound or (b), with the passage of
time, the giving of notice or the taking of any action by a third Person, have
any of the effects set forth in clause (a) of this Section 7.04, except in any
such case for any matters described in this Section 7.04 that could not
reasonably be expected to prevent such Buyer from performing each Ancillary
Agreement to which it is a party in all material respects.
Section 7.05. Investment in Securities. Each Buyer is acquiring the
------------------------
Securities to be purchased by it for its own account and not with a view to a
distribution thereof within the meaning of that term as used in the U.S.
Securities Act of 1933 (the "Securities Act").
ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding Operation of the Businesses.
-----------------------------------------------------------
(a) The Parent and the Seller, jointly and severally, hereby covenant and
agree that, from the date hereof to the Closing Date, except as set
forth in Schedule 8.01(a) to the Parent's Disclosure Letter, as
otherwise contemplated by this Agreement or as approved in writing by
the Acquiror, they will cause each member of each Company Group (other
than any Non-Controlled Entity):
(i) to operate in the usual and ordinary course consistent with
past practices;
(ii) to use all commercially reasonable efforts to preserve
substantially intact its business organization and goodwill, to
maintain its rights, privileges and immunities, to retain the
services of its key employees (subject to work force
requirements and compliance with the Parent's normal employee
policies), to perform in all material respects the Principal
Contracts to which it is a party and to maintain its
relationships with its customers, regulators, and suppliers;
(iii) to use all commercially reasonable efforts consistent with past
practice to maintain and to keep its properties and assets in
as good repair and condition as at present, ordinary wear and
tear excepted, and to maintain supplies and inventories in
quantities consistent with past practice;
(iv) to use all commercially reasonable efforts to maintain in full
force and effect insurance, performance bonds, bank guarantees
and letters of credit to the extent consistent with the
ordinary course of business consistent with past practice;
Halliburton Company
Agreement and Plan of Recapitalization
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(v) to use all commercially reasonable efforts to maintain in full
force and effect all existing Authorizations pursuant to which
they operate and to obtain timely any additional Authorizations
or renewals thereof to the extent Material to its ongoing
operations; and
(vi) to comply in all Material respects with all applicable Legal
Requirements;
except for any matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Businesses.
(b) The Parent and the Seller, jointly and severally, agree that, from the
date hereof to the Closing Date, except as otherwise contemplated by
this Agreement or as approved in writing by the Acquiror, they will
use all commercially reasonable efforts to cause each Non-Controlled
Entity to conduct its business affairs in accordance with the
provisions of clauses (i) through (vi), inclusive, of subsection (a)
of this Section, except for any matters that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Businesses. In this regard, the Acquiror acknowledges
that none of the Non-Controlled Entities is under the direct or
indirect control of the Parent.
Section 8.02. Negative Covenants Regarding the Operation of the
-------------------------------------------------
Businesses.
----------
(a) The Parent and the Seller, jointly and severally, covenant and agree
that, except as set forth in Schedule 8.02(a) to the Parent's
Disclosure Letter, as otherwise contemplated by this Agreement
(including the Reorganization), or as approved in writing by the
Acquiror, from the date of this Agreement until the Closing Date, they
will not directly or indirectly through any of their Affiliates offer,
issue, sell, transfer or otherwise dispose of, or grant any Lien with
respect to, any Equity Securities of any member of either Company
Group or authorize any of the foregoing.
(b) The Parent and the Seller, jointly and severally, covenant and agree
that, except as set forth in Schedule 8.02(b) to the Parent's
Disclosure Letter, as otherwise contemplated by this Agreement
(including the Reorganization), or as approved in writing by the
Acquiror, from the date of this Agreement until the Closing Date, they
will not permit any member of a Company Group (other than any Non-
Controlled Entity) to do any of the following:
(i) (A) increase Significantly the compensation payable to or to
become payable to any director or officer named in Schedule
8.02(b)(i) to the Parent's Disclosure Letter, (B) except as
otherwise provided in clause (ii) of this subsection (b), grant
any severance or termination pay, (C) amend or take any other
actions to increase Significantly the amount of, or accelerate
the payment or vesting of, any benefit under any Benefit Plan or
(D) contribute, transfer or otherwise provide any Significant
amount of cash, securities or other property to any grantee,
trust, escrow or other arrangement that has the
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Agreement and Plan of Recapitalization
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effect of providing or setting aside assets for benefits
payable pursuant to any termination, severance or other change
in control agreement; except (x) pursuant to the terms of any
Principal Contract of any member of a Company Group or any
Benefit Plan, contract, agreement or other legal obligation
existing at the Initial Balance Sheet Date or (y) in the case
of severance or termination payments, pursuant to the
severance policy of any member of a Company Group existing at
the Initial Balance Sheet Date the terms of which are usual
and customary for similarly situated entities or any Benefit
Plan, contract, agreement or other legal obligation existing
at the Initial Balance Sheet Date;
(ii) (A) enter into any employment or severance agreement with any
director or executive officer of any member of either Company
Group, either individually or as part of a class of similarly
situated persons, or (B) establish, adopt or enter into any
new Benefit Plan; except employment and severance agreements
and Benefit Plans for the benefit of any newly employed or
promoted officers or employees, in which case the terms of
such agreements and Benefit Plans shall be reasonably
consistent with those existing at the Initial Balance Sheet
Date, and except Benefit Plans relating to health and life
insurance benefits established or adopted in the ordinary
course of business consistent with past practice;
(iii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any of its outstanding Equity Securities or those of
any other member of a Company Group, (B) effect any
reorganization, liquidation, dissolution, merger,
consolidation, restructuring or recapitalization, (C) split,
combine or reclassify any of its capital stock or other Equity
Securities or (D) declare, set aside or pay any dividend on or
make any other distribution in respect of its capital stock or
other Equity Securities, except (X) dividends or distribution
of cash by DEGI to Dresser Industries in excess of the cash
requirements set forth in subsection (f) of Section 11.03 and
(Y) dividends by any direct or indirect wholly owned
Subsidiary of DEGI or any BV Company to DEGI or such BV
Company or to any other direct or indirect wholly owned
Subsidiary of DEGI or such BV Company;
(iv) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any of its capital stock or other Equity
Securities;
(v) acquire on behalf of any member of either Company Group,
whether by purchasing an equity interest or otherwise, any
business or any corporation, partnership, association or other
business organization or division thereof other than any such
acquisition transaction that is not Material to the
Businesses;
Halliburton Company
Agreement and Plan of Recapitalization
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(vi) acquire or construct for its account or that of any other
member of either Company Group any assets or properties other
than (A) any assets and properties that are not Material to
the Businesses, (B) assets and properties acquired or
constructed by making capital expenditures approved prior to
the date hereof and (C) the acquisition of assets from
suppliers or vendors in the ordinary course of business and
consistent with past practice;
(vii) make any significant loan, advance or capital contribution to,
or any significant investment in, any Person other than a
direct or indirect wholly owned Subsidiary of DEGI or any BV
Company;
(viii) sell, lease, license, exchange or otherwise dispose of
(including any disposition through any permitted lapse of any
Intellectual Property rights), or grant any Lien with respect
to, any of its assets, except for dispositions of assets and
inventories in the ordinary course of business consistent with
past practice and purchase money Liens incurred in connection
with the original acquisition of assets secured by such
assets;
(ix) adopt any amendments to its Organizational Documents;
(x) (A) make any change in any of its methods of accounting in
effect at the Initial Balance Sheet Date, except as may be
required to comply with U.S. GAAP, or seek any regulations or
rulings from any Governmental Authority regarding the same,
(B) make or rescind any election relating to any Taxes (other
than any election that must be made periodically and that is
made consistent with past practice) or change any of its
methods of reporting income or deductions for income tax
purposes from such methods adopted and currently in effect
prior to the date of this Agreement, except as may be required
by Law, or (C) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, except, in each case, as may be
required by Law or for matters that could not reasonably be
expected to be adverse and Significant;
(xi) incur any obligations for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument, except Intercompany
Indebtedness, purchase money indebtedness as to which Liens
may be granted pursuant to clause (viii) of this subsection
(b), drawings under credit lines existing at the date of this
Agreement and borrowings evidenced by obligations having a
term of up to five years issued in the ordinary course of
business consistent with past practice, or assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingent, or otherwise) for any Significant
obligations of any Person (other than a direct or indirect
wholly owned Subsidiary of DEGI or any BV Company);
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(xii) (A) except in connection with the elimination or satisfaction
of a Contractual Transfer Restriction required in order to
consummate the Reorganization, pay, repay, discharge,
purchase, repurchase or satisfy any other obligation for a
Significant amount of indebtedness for borrowed money owed by
it or any other member of either Company Group except in
accordance with its scheduled maturities; or (B) modify the
terms of any obligation for a Significant amount of
indebtedness for borrowed money owed by it or any member of
either Company Group, other than modifications of short term
debt that are not, in the aggregate, Material;
(xiii) exclusive of those subject to clause (xii) of this subsection
and other than with respect to Intercompany Indebtedness, pay,
prepay, discharge, or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) that are Material to the Businesses,
other than in the ordinary course of business consistent with
past practice (including the payment of final and unappealable
judgments);
(xiv) enter into any new Related Party Contract or any Principal
Contract with any third Person, other than any distributorship
or sales representation agreement entered into in the ordinary
course of business, that provides that third Person with an
exclusive arrangement relating to a particular line of
business or geographic area;
(xv) initiate any proceeding before any federal, national, state,
regional or local regulatory agency in any country (other than
with respect to any Regulatory Transfer Restriction required
by any applicable Law, Regulation or Order), which proceeding
could reasonably be expected to have a Material Adverse Effect
on the Businesses except for proceedings related to Taxes
undertaken in the ordinary course of business with respect to
submitting or perfecting a claim for refund or defending or
preserving rights with respect to an assessed deficiency; or
(xvi) agree to do any of the foregoing.
(c) The Parent and the Seller, jointly and severally, hereby covenant and
agree that, prior to the Closing Date, except as otherwise expressly
contemplated by this Agreement or as approved in writing by the
Acquiror, they will use all commercially reasonable efforts consistent
with their fiduciary obligations, if any, to prevent each Non-
Controlled Entity from taking any of the actions contemplated by
clauses (i) through (xvi) of subsection (b) of this Section. In this
regard, the Acquiror acknowledges that none of the Non-Controlled
Entities is under the direct or indirect control of the Parent.
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Agreement and Plan of Recapitalization
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Section 8.03. Access to Information.
---------------------
(a) Subject to any limitations on disclosures to which the Parent and the
Acquiror agreed in the Confidentiality Agreement, the Parent shall,
prior to the Closing Date, cause each member of each Company Group
(or, in the case of any Company Group member that is a Non-Controlled
Entity, use commercially reasonable efforts to cause such Non-
Controlled Entity) (i) to afford to the Acquiror and its
Representatives access, at reasonable times upon reasonable prior
notice, to the officers, employees, agents, properties, offices and
other facilities of the Company Group member and to its Books and
Records and (ii) to furnish promptly to the Acquiror and its
Representatives such information concerning the properties, contracts,
records and personnel (including financial, operating and other data
and information) related to the Businesses as may be reasonably
requested, from time to time, by or on behalf of the Acquiror;
provided, that Acquiror's Representatives (i) comply with the
provisions of the Confidentiality Agreement, (ii) comply with all
applicable safety and other rules of conduct of such offices and
facilities and (iii) do not unreasonably interfere with the operation
of such offices or facilities or the personnel involved. In this
regard, the Acquiror acknowledges that none of the Non-Controlled
Entities is under the direct or indirect control of the Parent.
(b) Subject to any limitations on disclosures to which the Parent and the
Acquiror agreed in the Confidentiality Agreement, the Parent shall, at
any time following the issuance of a press release or similar
disclosure announcing the execution of this Agreement and prior to the
Closing Date, cause each member of each Company Group to afford to the
Acquiror and its Representatives access, at reasonable times and upon
reasonable prior notice, to the customers and suppliers of such
Company Group member.
(c) All information provided to the Acquiror and the Acquiror's
Representatives pursuant to the Parent's Disclosure Letter and
otherwise pursuant to subsection (a) of this Section shall be deemed
to be "Evaluation Material" as that term is defined in the
Confidentiality Agreement but subject to the exclusions and exceptions
described therein.
Section 8.04. Insurance Benefits. If, with respect to any of the Assumed
------------------
Obligations or, to the extent that the Acquiror is not then entitled to
indemnification therefor pursuant to Article XII, any of the Excluded
Liabilities, the Parent has prior to the Closing Date carried one or more
policies of insurance for the benefit of a member of a Company Group that may
provide coverage for such Assumed Obligation, then after the Closing Date the
Parent shall assist the Acquiror and its relevant Subsidiary in making a claim
for the benefits of such insurance; provided, however, that the Parent shall
have no liability with respect to the success or failure of such claim. Neither
the Acquiror nor, following the Closing Date, any Subsidiary of the Acquiror
shall have any rights as provided in this Section 8.04 with regard to any
insurance policies of the Parent that are in effect self insurance, such as
retrospectively rated, deductible or captive reinsured policies.
Halliburton Company
Agreement and Plan of Recapitalization
40
Section 8.05. Compliance with Competition Laws Applicable to Designated
---------------------------------------------------------
Regulatory Assets.
-----------------
(a) Subject to the Acquiror's compliance with subsection (a) of Section
10.01 and the satisfaction of the conditions contained in subsection
(b) of this Section, at any time after the Closing Date and prior to
the second anniversary of the Closing Date, the Acquiror may elect to
require, by giving notice to the Parent of such election, the Parent
or, if the Parent so desires, an Affiliate of the Parent to repurchase
any Designated Regulatory Assets for cash consideration equal to the
value allocated to such Designated Regulatory Assets in the column
entitled "Allocated Dollar Amount" in Schedule 2.13 to the Parent's
Disclosure Letter within 90 days after the receipt of such notice by
the Parent, and the Parent or, at the election of the Parent, an
Affiliate of the Parent shall purchase such Designated Regulatory
Assets for such cash consideration within such period. To the extent
that an amount set forth in Schedule 2.13 to the Parent's Disclosure
Letter becomes the purchase price for any such entity as a Designated
Regulatory Asset, such amount shall be reduced by the amount of any
payment by the Parent to the Acquiror under Article XII directly
related to such entity.
(b) It shall be a condition to the Acquiror's right to exercise the option
with respect to any Designated Regulatory Assets as provided in
subsection (a) of this Section that:
(i) such assets became Designated Regulatory Assets no more than 90
days prior to the exercise of such option;
(ii) such Designated Regulatory Assets shall be transferred to the
Parent or an Affiliate of the Parent, as applicable, free and
clear of all Liens (other than Liens in existence immediately
prior to the Closing) and shall not be subject to an aggregate
amount of liabilities materially in excess of the aggregate
liabilities to which such Designated Regulatory Assets were
subject immediately prior to the Closing;
(iii) the Acquiror shall agree, for a period of five years from the
date of the transfer of such Designated Regulatory Assets to the
Parent or an Affiliate of the Parent, to provide or cause to be
provided to or to purchase or cause to be purchased from, as the
case may be, the Parent or an Affiliate of the Parent, as
applicable, such quantity and quality of products, components,
spare parts and services as the other operations of the
Businesses have historically provided to, or purchased from, as
the case may be, such Designated Regulatory Assets at the
applicable Adjusted Price for such product, component, spare
part or service and
(iv) at the dates of exercise of the option and at the date of
transfer of such Designated Regulatory Assets, the Acquiror
shall represent and warrant to the Parent or an Affiliate of the
Parent, as applicable, that the matters set forth in clauses (i)
and (ii) of this subsection (b) are true and correct and that
Halliburton Company
Agreement and Plan of Recapitalization
41
since the Closing Date, the Acquiror or any other Person owning,
operating or managing such Designated Regulatory Assets has, in
all Material respects:
(A) operated such Designated Regulatory Assets in the usual and
ordinary course consistent with past practices;
(B) used all commercially reasonable efforts to preserve
substantially intact the business organization and goodwill,
if any, associated with such Designated Regulatory Assets,
to maintain the rights, privileges and immunities, if any,
of such Designated Regulatory Assets, to retain the services
of any key employees of such Designated Regulatory Assets,
to perform in all material respects the material contracts
and agreements relating to such Designated Regulatory Assets
and to maintain the relationships with customers, regulators
and suppliers of such Designated Regulatory Assets;
(C) used all commercially reasonable efforts consistent with
past practice to maintain and to keep such Designated
Regulatory Assets in as good repair and condition as at the
Closing Date, ordinary wear and tear excepted, and to
maintain supplies and inventories of such Designated
Regulatory Assets in quantities consistent with past
practice;
(D) used all commercially reasonable efforts to maintain in full
force and effect insurance, performance bonds, bank
guarantees and letters of credit on behalf of or with
respect to such Designated Regulatory Assets to the extent
consistent with the ordinary course of business consistent
with past practice;
(E) used all commercially reasonable efforts to maintain in full
force and effect all existing Authorizations pursuant to
which such Designated Regulatory Assets operate and to
obtain timely any additional Authorizations or renewals
thereof to the extent material to the ongoing operations of
such Designated Regulatory Assets; and
(F) complied with all Legal Requirements applicable to such
Designated Regulatory Assets.
(c) The Acquiror shall have 60 days from and after the repurchase by a
member of the Parent Group of Designated Regulatory Assets under
subsection (a) of this Section 8.05 to present the Parent with a
reasonably viable plan pursuant to which (i) one or more members of a
Company Group would again purchase all or a portion of such Designated
Regulatory Assets or (ii) such member or members of a Company Group
would enter into a contractual relationship with one or more
Subsidiaries of the Parent that would provide to the Parent and the
Acquiror approximately the same economic benefits and obligations as
such a purchase of all or a portion of the
Halliburton Company
Agreement and Plan of Recapitalization
42
Designated Regulatory Assets which plan (x) is reasonably likely to be
acceptable to all Governmental Authorities having jurisdiction over
such Designated Regulatory Assets and (y) may be accomplished in no
more than 24 months from the date of repurchase by the member of the
Parent Group. The Parent and the Acquiror agree to negotiate in good
faith and pursue such plan on commercially reasonable terms so long as
it is practicable to do so but in any event no longer than 90 days.
Section 8.06. Covenant Not to Compete. For a period commencing on the
-----------------------
Closing Date and ending on the third anniversary of the Closing Date, the
Parent, the Seller and their respective Subsidiaries (whether now existing or
hereafter acquired or created and for so long as the Seller and such
Subsidiaries remain as Subsidiaries of the Parent) shall not directly or
indirectly engage in any geographical area in any business of the same type as
that conducted by any of the Businesses as of the Closing Date in that
geographical area (a "Competing Business"); provided, however, that the
foregoing shall not prohibit (a) the ownership by the Parent, the Seller or any
of their respective Subsidiaries (whether now existing or hereafter acquired or
created) of less than 5% of the outstanding stock of any publicly-traded
corporation engaged in a Competing Business, (b) activities by the Parent, the
Seller or their respective Affiliates that were existing activities of the
Parent, the Seller or their respective Affiliates as of the Closing Date other
than activities of the Businesses, (c) providing services similar to the
services provided by the Businesses to only the Parent, the Seller and their
Affiliates, provided, that the Parent and the Seller hereby represent that the
Parent, the Seller or any Affiliate thereof does not, as of the date hereof or
as of the Closing Date, have any current intention of providing any such
services, (d) the acquisition of the Parent, the Seller or any of their
Affiliates by a third party whose operations involve a Competing Business, (e)
the acquisition by the Parent, the Seller or any of their Affiliates of a third
party which engages in a Competing Business, provided that the primary purpose
of any such acquisition referred to in this clause (e) is not the acquisition of
such Competing Businesses, and provided further that such Competing Business
referred to in this clause (e) either (i), together with the revenues for any
prior acquisition exempted from the provisions of this Section 8.06 by this
clause (e)(i), accounts for less than U.S. $50,000,000 in revenues for the last
fiscal year of such third party for which financial statements are available or
(ii) is divested by the Acquiror within 270 days from the date it is acquired or
(f) the Parent or any of its Affiliates acquiring any Designated Regulatory
Assets pursuant to subsection (a) of Section 8.05; provided, however, that if
significant progress has been made and is continuing with respect to such
divestiture by the end of such period, the period shall be extended at the
request of the Parent for an additional ninety (90) days. If the final judgment
of a Court of competent jurisdiction declares that any term or provision of this
Section 8.06 is invalid or unenforceable, the parties agree that the Court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid and unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. The Parent
and the Seller acknowledge that the provisions of this Section 8.06 are
reasonable in time and scope and necessary to protect the legitimate interests
of the Acquiror and each Buyer and that any violation of this Section 8.06 will
result in irreparable injury to the Acquiror, each Buyer and to the Businesses,
the exact amount of which will be difficult to ascertain, and that the remedies
at law for
Halliburton Company
Agreement and Plan of Recapitalization
43
any such violation would not be reasonable or adequate compensation to the
Acquiror, the Buyers and the Businesses. Accordingly, the Parent and the Seller
agree that, if any of them or any of their Subsidiaries (whether now existing or
hereafter acquired or created) violates this Section 8.06, the Acquiror, any of
the Buyers and the members of each Company Group (following consummation of the
transactions contemplated hereby) shall be entitled, in addition to any other
remedy that may be available at law or in equity, to specific performance and
injunctive relief, without posting bond or other security and without the
necessity of proving actual damages.
Section 8.07. Nonsolicitation. The Parent hereby covenants and agrees
---------------
that, prior to the Closing Date, the Parent shall not and shall not permit the
Seller or any member of either Company Group, (whether directly or indirectly
through its officers, directors, advisors, agents or other intermediaries) to
(i) solicit, initiate or take any action to facilitate the submission of
inquiries, proposals or offers from any Person or group relating to (A) any
acquisition or purchase of any portion of any Business or any Securities, (B)
any merger, consolidation, recapitalization, sale of all or substantially all of
the assets, liquidation, dissolution or similar transaction involving any member
of either Company Group other than in connection with the Reorganization or
transactions contemplated by this Agreement or (C) any other transaction that,
if agreed to by the Parent or any of its Subsidiaries, would contractually
prohibit the Parent or the Seller from consummating all or any part of the
transactions contemplated by this Agreement (each such transaction described in
clauses (A), (B) and (C) being referred to herein as an "Acquisition Proposal"),
or agree to or endorse any Acquisition Proposal, (ii) enter into or participate
in any discussions or negotiations regarding any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person (other than any Buyer) to do or seek
any of the foregoing. The Parent shall, and shall cause the Seller and each
member of both Company Groups immediately (i) to cease and cause its officers,
directors, advisors, agents and other intermediaries to cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and (ii) to provide written
notification to the Acquiror of any submissions, proposals, offers or inquiries
relating to an Acquisition Proposal made prior to the Closing Date but shall not
be required to disclose the contents of such proposal or the identity of the
bidder. The Parent and the Seller hereby represent that they are not now
engaged in discussions or negotiations with any party other than Acquiror with
respect to any Acquisition Proposal. After the Closing Date, the Parent shall
provide the Acquiror with copies of all written submissions, proposals, offers
and inquiries relating to Acquisition Proposals except to the extent that the
provisions of such information would violate any contractual obligation of the
Parent or its Retained Subsidiaries.
Section 8.08 Accountants' Opinion and Consents. The Parent shall use all
----------------------------------
commercially reasonable efforts to cause ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to provide the
Acquiror, at the Acquiror's expense, with all opinions and consents (including
audit reports) with respect to the consolidated financial statements of the
Businesses necessary for inclusion in any offering memoranda prepared in
connection with any offering of securities pursuant to Rule 144A promulgated
under the Securities Act, or for the completion of filings with the SEC under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), until such time as such financial statements,
opinions and consents are no longer required to be included in such filings by
the Securities Act, the Securities Exchange Act or the rules and regulations
promulgated thereunder.
Halliburton Company
Agreement and Plan of Recapitalization
44
Section 8.09. Financing.
---------
(a) Subject to subsection (b) of this Section 8.09, prior to the Closing
Date, the Parent agrees to use all commercially reasonable efforts to
provide, and to cause the Seller and each member of each Company
Group, their advisers and the personnel of each member of each Company
Group to provide, all necessary cooperation in connection with the
arrangement of any financing that is to be consummated
contemporaneously with the First Closing or within twelve months after
the Closing Date in respect of the transactions contemplated by this
Agreement, including participation in meetings, due diligence
sessions, road shows, the preparation of offering memoranda, private
placement memoranda, prospectuses and similar documents ("Offering
Documents"), completion of a 2000 year-end audit, the execution and
delivery of any commitment letters, underwriting or placement
agreements, pledge and security documents, other definitive financing
documents, or other requested certificates or documents, including a
certificate of the chief financial officer of each member of each
Company Group with respect to solvency matters, comfort letters of
accountants and legal opinions as may be reasonably requested by the
Acquiror, provided, however, that the advisors and personnel of the
Parent shall not be required to participate in meetings, due diligence
sessions, or road shows after the six month anniversary of the Closing
Date.
(b) The Acquiror agrees that it will provide the Parent with a reasonable
opportunity to review each Offering Document and that it will not, and
will cause its Affiliates and its and their agents, advisors,
underwriters and placement agents to not, distribute such Offering
Document to any investor or potential investor in any of the
securities offered or to be offered pursuant to such Offering Document
without obtaining the prior written approval of the Parent (which
approval shall not be unreasonably withheld) of all information
contained in such Offering Document that relates in any way to the
Businesses.
(c) The Parent shall cooperate and shall cause the Seller and each member
of each Company Group to cooperate with any reasonable requests of the
Acquiror or the SEC related to the recording of the transaction
contemplated hereby as a Recapitalization for financial reporting
purposes, including assisting the Acquiror and its Affiliates with any
presentation to the SEC with regard to such recording. Unless
otherwise required by Law or by any pronouncement of the SEC or by any
authoritative accounting association after the Closing Date, the
Parent agrees that it will not report the transaction contemplated
hereby for financial accounting or other public disclosure purposes in
a manner inconsistent with such recording.
(d) The Acquiror agrees to reimburse the Parent promptly for all
reasonable costs and expenses incurred by the Parent or any of its
Affiliates in connection with the Parent's obligations under this
Section 8.09.
Halliburton Company
Agreement and Plan of Recapitalization
45
Section 8.10. Financial Statements.
--------------------
(a) From the date hereof to the Closing Date, the Parent shall provide the
Acquiror with (i) monthly management reports on the Businesses, (ii)
an unaudited consolidated and consolidating balance sheet of the
Businesses and the related consolidated and consolidating statements
of operations of the Businesses for each calendar month within 20 days
after the end of such calendar month and (iii) any other financial
reports prepared routinely by management of the Company Groups.
(b) The Parent shall use all commercially reasonable efforts to provide to
the Acquiror, on or before February 28, 2001, consolidating statements
of assets contemplated for sale and liabilities expected to be
transferred of the Dresser Equipment Group as of December 31, 2000 and
December 31, 1999 and the related consolidating statements of revenues
and expenses and cash flows for the years ended December 31, 2000,
1999 and 1998, each prepared in accordance with U.S. GAAP (including
the related notes thereto) and audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP.
Section 8.11. Assignments. To the extent that any assets listed in the
-----------
Parent's Disclosure Letter or that are otherwise Material to the Businesses are
not held by a member of any Company Group, the Parent shall, prior to the
Closing, effect the assignment of such assets to a member of a Company Group
designated by the Acquiror. To the extent that time does not permit proper
recordation of such assignments, as for example in the case of certain
assignments of Intellectual Property, the Parent shall cause the assignment of
beneficial title to be effected prior to the Closings and, subsequent to the
Closings, will provide such assistance and cooperation as necessary to effect
recordable assignments of such assets.
Section 8.12. Release of Liens. To the extent that any Liens exist with
----------------
respect to any assets and properties of any member of the Company Groups
securing debt of any member of the Parent Group, the Parent agrees to use all
commercially reasonable efforts to cause such Liens, to the extent they attach
to such assets and/or properties, to be released as soon as practicable.
Section 8.13. Environmental Schedules. The Parent agrees that the Parent
-----------------------
will prepare and deliver to the Acquiror at the First Closing a schedule of all
matters described in clause (a), (c) and (e) of the definition of Indemnifiable
Environmental Matters as of the Closing Date, which Schedule shall (a)
constitute a representation and warranty, which shall survive until the fifth
anniversary of the Closing Date, as to such matters as of the Closing Date
subject to the provisions of clause (i) of subsection (a) of Section 12.02 and
(ii) govern the matters subject to indemnification pursuant to the provisions of
Article XII as that Article applies to such Indemnifiable Environmental Matters.
Section 8.14. Use of Dresser Name. Prior the Closing, the Parent agrees
-------------------
that it will not directly or indirectly organize any new Subsidiary, or rename
any existing Subsidiary, using the name Dresser or any variation thereof.
Halliburton Company
Agreement and Plan of Recapitalization
46
ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement. The parties hereto hereby
-------------------------
incorporate by reference the provisions of paragraphs 1 to 3, inclusive, and 8
to 11, inclusive of the Confidentiality Agreement (including any addenda
thereto).
Section 9.02. Corporate Name. Neither the Acquiror nor any Buyer shall
--------------
acquire, and no member of either Company Group shall acquire or retain, any
rights to the name "Halliburton" (or any variation thereof) or any trademarks,
trade names or symbols related thereto. The Acquiror shall, as soon as
reasonably practicable after the Closing Date (and in any event, within 60 days
thereafter), cause each member of each Company Group to amend its Organizational
Documents to the extent necessary to remove the "Halliburton" name (and any
variations thereof) from the name of such company and to remove all trademarks,
trade names, logos and symbols related to such name from the properties and
assets (including all signs) of the members of the Company Groups.
Section 9.03. Surety Arrangements. The Acquiror acknowledges the list of
-------------------
Surety Arrangements set forth on Schedule 5.09(c) to the Parent's Disclosure
Letter. The Acquiror agrees to use all commercially reasonable efforts prior to
the Closing Date to substitute the credit of the Acquiror or a Subsidiary of the
Acquiror for that of the Parent or the Retained Subsidiary of the Parent in each
such Surety Arrangement, such substitution to take effect at the First Closing.
The Acquiror agrees that it will, from and after the Closing Date, indemnify and
hold the Parent and each Retained Subsidiary harmless from and against any and
all losses, claims and damages arising from any Surety Arrangement extant at the
First Closing and, to the extent that the Acquiror is not able to effect such a
substitution prior to the Closing Date, the Acquiror also agrees (a) to continue
to use, and to cause each Buyer to use, its commercially reasonable efforts
thereafter to effect such a substitution with respect to each Surety Arrangement
and (b) to provide to the Parent at the First Closing a letter of credit issued
by a responsible commercial bank reasonably acceptable to the Parent against
which the Parent and the Retained Subsidiaries may draw to the extent of any
loss or damage they may incur or suffer as a result of being required to perform
any obligations under any Surety Arrangements from and after the Closing Date.
Section 9.04. Dresser Valve Division Contracts. From and after the
--------------------------------
Closing Date, the Acquiror shall cause its Subsidiaries engaged in the Dresser
Valve Division Business to use their commercially reasonable efforts to amend
the executory alliance contracts, master purchase agreements and purchase orders
of the Dresser Valve Division Business that do not contain any provision
expressly prohibiting awards of consequential damages as a partial remedy for
breach of such contract to include such a provision prior to the first renewal
or extension thereof.
Halliburton Company
Agreement and Plan of Recapitalization
47
ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation. The covenants in this Section 10.01 shall
-----------
apply to the parties hereto from and after the date of this Agreement:
(a) Each of the Parent and the Acquiror shall use, and shall cause each of
its respective Affiliates to use, all commercially reasonable efforts
(i) to take, or to cause to be taken, all actions, and to do, or to
cause to be done, all things that, in either case, are necessary,
proper or advisable under applicable Legal Requirements (other than
foreign competition Laws except those of the Category 1, 2A and 2B
Jurisdictions) or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) subject to the
provisions of clause (iii) of this subsection (a), to obtain from any
Governmental Authorities and Courts any Authorizations or Orders
required to be obtained by the Parent or the Acquiror or any of their
Affiliates in connection with the authorization, execution, delivery
and performance of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and (iii) to make
all necessary filings as expeditiously as reasonably practicable, and
thereafter to make promptly any other required submissions, with
respect to this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby required under the HSR
Act, any foreign competition Laws of a Category 1 Jurisdiction, a
Category 2A Jurisdiction or a Category 2B Jurisdiction that are
applicable to the transactions contemplated by this Agreement and any
other applicable Legal Requirements (other than foreign competition
Laws). With respect to the Laws of the Covered Jurisdictions, the
Parent and the Acquiror shall furnish or cause to be furnished all
information required for any application or other filing to be made
pursuant to any such Laws or any applicable Regulations in connection
with the transactions contemplated by this Agreement.
(b) Each of the Parent and the Acquiror shall timely give or cause to be
given any notices to third Persons, and use, and cause its respective
Affiliates to use, commercially reasonable efforts to obtain any Third
Person Consents (i) necessary, proper or advisable for Parent or the
Acquiror, as the case may be, to consummate the transactions
contemplated by this Agreement or to satisfy any of the Closing
Conditions, (ii) in the case of the Parent and its Affiliates,
otherwise required under any Principal Contracts in connection with
the consummation of the transactions contemplated hereby or (iii) in
the case of the Parent and its Affiliates, required in order to
prevent a Material Adverse Effect on the Businesses from occurring
prior to or after the Closing Date; provided, however, that, with
respect to Third Person Consents set forth on Schedule 5.02(c), the
Parent shall use, and cause its Affiliates to use, efforts that are
deemed customary and usual in the jurisdiction in which any such Third
Person Consent is required to obtain any such Third Person Consent;
provided, further, that the Parent shall not be required to expend an
amount of money
Halliburton Company
Agreement and Plan of Recapitalization
48
that would be unreasonable in light of local custom and practice in
order to obtain any such Third Person Consent. The Parent and Acquiror
shall cooperate with each other in connection with the giving of all
such notices and the preparation of all consent or waiver requests or
agreement amendments. The Parent and the Acquiror shall cooperate with
each other in providing copies of all such documents to the other
party and its advisors, and, if requested, shall accept all reasonable
additions, deletions or changes suggested in connection therewith. The
Parent and Acquiror shall furnish or cause to be furnished all
information requested by the other party in connection with this
subsection (b).
(c) Each of the Parent and the Acquiror shall give, and shall cause its
Affiliates to give, prompt notice to the other of (i) any notice or
other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated hereby, (ii) any notice or other communication from any
Governmental Authority in connection with the transactions
contemplated hereby, (iii) any actions, suits, claims, investigations
or proceedings commenced or threatened in writing against, relating to
or involving or otherwise affecting the Parent, the Acquiror or any
member of a Company Group that relate to the consummation of the
transactions contemplated hereby and (iv) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which
would be reasonably likely (A) to cause any Closing Condition relating
to the obligations of the other party not to be satisfied, (B) to
cause a breach of the covenants of such party under this Agreement or
(C) to delay or impede the ability of either the Parent or the
Acquiror to consummate the transactions contemplated by this Agreement
or to fulfill their respective obligations set forth herein. No
delivery of any notice pursuant to clause (iv) of this subsection (c)
shall cure any breach of any representation or warranty of the party
giving such notice contained in this Agreement or otherwise limit or
affect the remedies available hereunder to the party receiving such
notice.
(d) Each of the Parent and the Acquiror agree to cooperate and to use, and
to cause their Affiliates to cooperate and to use, all commercially
reasonable efforts, vigorously to contest and to resist any action,
including legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any Order (whether temporary,
preliminary or permanent) of any Court or Governmental Authority that
is in effect and that restricts, prevents or prohibits the
consummation of the transactions contemplated by this Agreement,
including the vigorous pursuit of all available avenues of
administrative and judicial appeal and all available legislative
action. Each of the Parent and the Acquiror also agree to use all
commercially reasonable efforts to take, or to cause to be taken, any
and all actions, including the disposition (by the Acquiror) or
retention (by the Parent) of assets or the withdrawal from doing
business in particular jurisdictions, required by any Court or
Governmental Authority as a condition to the granting of any
Authorization or Order necessary for the consummation of the
transactions contemplated hereby or as may be required to avoid, lift,
vacate or reverse any legislative, administrative or judicial
Halliburton Company
Agreement and Plan of Recapitalization
49
action to the extent that such action would otherwise cause any
condition to the First Closing not to be satisfied or would restrict,
prevent or prohibit the consummation of the transactions contemplated
hereby; provided, however, that in no event shall the Parent be
required to take, or cause to be taken, any action that could
reasonably be expected to have a Material Adverse Effect on the Parent
or on the Businesses or shall the Acquiror be required to take, or
cause to be taken, any action that could reasonably be expected to
have a Material Adverse Effect on the Acquiror or on the Businesses.
(e) The Parent shall use its commercially reasonable efforts consistent
with its fiduciary obligations to cause any Non-Controlled Entity in
which it has a direct or indirect ownership interest to take action
consistent with its other obligations under this Section 10.01
including (i), where appropriate, voting, directly or indirectly, the
Equity Securities owned by it directly or indirectly in such Non-
Controlled Entity in a manner consistent with such obligations and
(ii) instructing each director or similar official of such Non-
Controlled Entity appointed, directly or indirectly, by it to act in a
manner consistent with such obligations so long as any such action
does not violate such director's or official's fiduciary duties. In
this regard, the Acquiror acknowledges that none of the Non-Controlled
Entities in which the Parent has a direct or indirect ownership
interest is under the direct or indirect control of the Parent.
(f) Nothing in this Section 10.01 shall be deemed to require divestiture
of any securities or other assets owned prior to the Closing Date by
the Acquiror, any direct or indirect holder of Equity Securities in
the Acquiror or any Affiliate of the foregoing Persons.
Section 10.02. Ancillary Agreements. The Parent and the Acquiror agree to
--------------------
execute and deliver at the First Closing:
(i) the Merger Agreement;
(ii) the Assignment of Name;
(iii) the Highway 6 Lease Agreement;
(iv) the Employee Benefits Agreement;
(v) the Transition Services Agreement; and
(vi) the Stockholders' Agreement.
Section 10.03. Public Announcements. Promptly following the execution and
--------------------
delivery of this Agreement, the Parent and the Acquiror shall issue concurrent
press releases with respect to the subject matter of this Agreement. Pending
the Closing Date, the Acquiror and the Parent shall consult with, and obtain the
prior approval of, the other, which shall not be unreasonably withheld,
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Agreement and Plan of Recapitalization
50
before issuing any other press release or otherwise making any public statements
with respect to the transactions contemplated hereby. Neither the Parent nor the
Acquiror shall permit any of its Affiliates to make any press release or public
statement with respect to the transactions contemplated hereby. Notwithstanding
the foregoing, this Section shall not preclude any party from issuing such press
releases, making such other public statements or making such filings with or
applications to Governmental Authorities, including a filing of a Current Report
on Form 8-K by the Parent with the SEC with respect to the transactions
contemplated hereby, as such party in good faith believes to be required under
applicable Legal Requirements.
Section 10.04. Transfer Taxes. The Parent and the Acquiror shall
--------------
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer, sales, use, and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes that become payable as a direct result of the
transactions contemplated hereby ("Transfer Taxes"). The Transfer Taxes that
become payable as a result of the transfers included in the Reorganization and
as a result of the sale of the Securities shall be paid 50% by the Acquiror and
50% by the Parent.
Section 10.05. Expenses. Except as otherwise expressly provided herein,
--------
all costs and expenses incurred by the Parent in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Parent, and all
costs and expenses incurred by the Acquiror in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Acquiror.
Notwithstanding the foregoing, the Acquiror shall be responsible for and shall
pay or reimburse the Parent for (i) all expenses incurred in connection with
steps I-7, ▇-▇, ▇-▇, ▇-▇▇, ▇-▇▇, ▇▇-▇, ▇▇-▇▇, ▇▇▇-▇, ▇▇▇-▇, ▇▇▇-▇, ▇▇-▇, ▇▇-▇,
▇-▇, ▇-▇, ▇-▇, V-11, V-12, V-16, V-19, and V-27 in the Reorganization described
in Annex B and any actions taken at the direction of the Acquiror or any
individual that the Acquiror has identified in written notice to the Parent and
(ii) any Taxes that would not have been incurred but for such actions and steps.
Section 10.06. Tax Matters.
-----------
(a) Within 240 days after the Closing Date, the Acquiror in its sole
discretion may cause to be made a timely and effective election under
section 338(g) of the Code (a "Section 338 Election") with respect to
a qualified stock purchase (within the meaning of Section 338 of the
Code) of any member of a Company Group that is a foreign corporation.
(b) The Acquiror shall indemnify and hold harmless the Parent and each
member of the affiliated group of which the Parent is the common
parent (within the meaning of section 1504 of the Code) from and
against any United States federal or state income or franchise Tax
Consequence arising solely by reason of any Section 338 Election made.
A "Tax Consequence" shall include (by way of example and not
limitation) a reduction in or change in characterization of available
foreign taxes under sections 901 or 902 of the Code.
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(c) The Parent and the Acquiror shall make a joint election under section
338(h)(10) of the Code and any similar election under the applicable
income tax law of any state or political subdivision of the United
States (collectively, the "Section 338(h)(10) Elections") with respect
to the Acquiror's purchase of the Securities of DEGI and any deemed
purchase of the Securities of any Subsidiary of DEGI that is a
domestic corporation within the meaning of Section 7701 of the Code.
The Acquiror shall prepare and submit to the Parent a proposed
allocation of the aggregate deemed sales price (as defined in Treasury
Regulation Section 1.338-4T) for each member of the DEGI Group among
the assets of each such member as soon as practicable but not later
than 240 days after the Closing Date. The Parent shall approve and
agree to the proposed allocation unless the Parent reasonably
determines that the proposed allocation is improper. Neither the
Acquiror nor the Parent shall take any action inconsistent with, or
fail to take any action necessary for, the validity of the Section
338(h)(10) Elections, and, if an allocation schedule is agreed to by
the Acquiror and the Parent, the Acquiror and the Parent shall adopt
and utilize the asset values as determined on the allocation schedule
for the purpose of all Tax Returns filed by them unless otherwise
required by applicable law. Not later than 240 days after the Closing
Date, the Acquiror shall prepare and deliver to the Parent an Internal
Revenue Service Form 8023 and any similar form under applicable state
income tax law (the "Forms") with respect to the Section 338(h)(10)
Elections, together with any completed schedules required to be
attached thereto, which Forms shall have been duly executed by an
authorized person for the Acquiror. The Parent shall cause the Forms
to be duly executed by an authorized person for the Parent and shall
provide an executed copy of the Forms to the Acquiror, whereupon each
shall duly and timely file the Forms as prescribed by Treasury
Regulation 1.338(h)(10)-1T or the corresponding provisions of the
applicable income tax law of any state or political subdivision of the
United States. Each such executed Form provided to the Parent shall
be accompanied by a certificate of the secretary of the Acquiror that
documents the authority of the signatory to make the Section
338(h)(10) Election.
(d) The Parent shall cause to be included in the consolidated U.S. federal
income Tax Returns (and the U.S. state income Tax Returns of any U.S.
state that permits consolidated, combined or unitary income Tax
Returns, if any) of the affiliated group of corporations of which the
Parent is the common parent corporation for all periods ending on or
before the Closing Date, all Tax Items of each member of each Company
Group that are required to be included therein, shall cause such Tax
Returns to be timely filed with the appropriate taxing authorities,
and shall be responsible for the timely payment (and entitled to any
refund) of all Taxes due with respect to the periods covered by such
Tax Returns. To the extent permitted by law or administrative
practice, (A) the taxable year of DEGI and each of its Subsidiaries
(after reflecting the Reorganization) that is a domestic corporation
that includes the Closing Date shall be treated as closing on (and
including) the Closing Date and (B) all transactions occurring on the
Closing Date but after the Closings shall have occurred shall be
reported on the Acquiror's consolidated United States federal income
tax return to the extent permitted by Treasury Regulation
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Agreement and Plan of Recapitalization
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Section 1.1502-76(b)(1)(ii)(B) and shall be similarly reported on
other Tax Returns of the Acquiror or its Affiliates.
(e) With respect to all Tax Returns required to be filed after the Closing
Date by or with respect to any member of a Company Group other than
those Tax Returns described in subsection (d) of this Section, the
Acquiror shall cause each such Tax Return to be prepared, shall cause
to be included in each such Tax Return all Tax Items required to be
included therein, shall cause each such Tax Return to be timely filed
with the appropriate taxing authorities, and shall be responsible for
the timely payment (and entitled to any refund or credit) of all Taxes
due with respect to the period covered by each such Tax Return. Any
Tax Return to be prepared pursuant to the provisions of this
subsection (e) with respect to a taxable year that includes any period
on or before the Closing Date shall be prepared in a manner consistent
with practices followed in prior years with respect to similar Tax
Returns, except for changes required by changes in law or fact.
(f) With respect to all Tax Returns filed by or with respect to any member
of a Company Group on or prior to the Closing Date, the Parent shall
be responsible for the payment of all Taxes and shall be entitled to
all refunds or credits of any Taxes attributable to the periods
covered by such Tax Returns and shall have the right, at its sole cost
and expense, to control the defense, prosecution, settlement or
compromise of any proceeding involving any such Tax Return or the
period covered thereby, and the Acquiror shall take such action in
connection with any such proceeding as the Parent shall request from
time to time, including the selection of counsel and experts and the
execution of powers of attorney; provided, however, that if Acquiror
or any member of a Company Group would bear any liability for Taxes at
issue in such proceeding for which Acquiror would not be indemnified
pursuant to Article XII, or if Acquiror or any member of a Company
Group would be bound by the results of such proceeding for Tax periods
(or portions thereof) beginning after the Closing Date, then (i) the
Acquiror may also participate in such proceeding at its own expense
and (ii) neither party may settle any such proceeding without the
written consent of the other party (which consent shall not be
unreasonably withheld). The Parent shall give written notice to the
Acquiror of, and the Acquiror shall, and shall cause each member of a
Company Group to, give written notice to the Parent, of its receipt of
any notice of any audit, examination, claim or assessment for any Tax
which could result in any such proceeding, within 20 Business Days
after the receipt of such notice. Failure of the Acquiror or any BV
Company or Subsidiary to give the Parent written notice of any such
audit, examination, or assessment within such 20 Business Day period
shall cause the provisions of Article XII to be inapplicable to any
Losses realized with respect to such Tax but only to the extent Parent
was actually prejudiced by such failure.
(g) The Acquiror and the Parent shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section 10.06 and any audit,
litigation or other proceeding with respect to
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Agreement and Plan of Recapitalization
53
Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which
are reasonably relevant to any such proceeding and making employees
(including employees of any member of a Company Group) available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Acquiror and the
Parent agree (i) to retain all Books and Records with respect to Tax
matters pertinent to the any member of a Company Group relating to any
taxable period beginning before the Closing Date until the expiration
of the statute of limitations (and, to the extent notified by the
Acquiror or the Parent, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or
discarding any such Books and Records and, if the other party so
requests, the Acquiror or the Parent, as the case may be, shall allow
the other party to take possession of such Books and Records. The
Acquiror and the Parent further agree, upon request, to use their best
efforts to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby). The Acquiror and the Parent further agree, upon
request, to provide the other party with all information that either
party may be required to report pursuant to Section 6043 of the Code
and the Treasury Regulations promulgated thereunder.
Section 10.07. Offers to Employees.
-------------------
(a) The Parent has listed in Schedule 10.07(a) to the Parent's Disclosure
Letter the names and positions of certain of those employees of the
Parent or one of the Retained Subsidiaries that have been seconded to
members of the Company Groups. The Acquiror agrees that, pending the
Closing Date and for a period of six (6) months thereafter, neither
the Acquiror nor any of its Subsidiaries, including the Buyers and
(after the Closing Date) their Subsidiaries, will make any offer of
employment or solicit any request for employment to or from any of the
employees so listed, except (i) for any such employees included in an
agreed list contained in a letter of even date herewith from the
Parent to the Acquiror or (ii) with the prior written consent of the
Parent. For purposes of the preceding sentence, the term "employment"
shall include an employee/employer relationship and/or a consulting
relationship.
(b) The Parent and the Acquiror shall, and shall cause their respective
Subsidiaries to, use reasonable efforts to cause each individual
listed on Schedule 10.07(b) to enter into an employment agreement with
a member of a Company Group on terms reasonably satisfactory to the
Acquiror. In this regard, the Acquiror agrees to offer terms of
employment to such individuals that are as good or better than their
existing terms of employment taken in the aggregate for each employee.
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Agreement and Plan of Recapitalization
54
Section 10.08. Related Party Contracts. Schedule 5.09(b) to the Parent's
-----------------------
Disclosure Letter provides a complete and accurate list of the Related Party
Contracts. To the extent that the Parent controls the parties to such Related
Party Contracts, the Parent agrees to cause such parties to terminate each such
Related Party Contract specified in Schedule 5.09(b) to the Parent's Disclosure
Letter prior to the Closing, such Related Party Contracts to be replaced by the
Transition Services Agreement and the Highway 6 Deed and the Highway 6 Lease.
Any contract that is between any member of the Parent Group and any member of
the Company Group but does not constitute a Principal Contract shall terminate
at the Closing.
Section 10.09 Litigation Support.
------------------
(a) If and for so long as the Acquiror, any Buyer or any member of either
Company Group is actively contesting or defending against any charge,
complaint, claim or demand (a "Claim") or any action, suit,
proceeding, investigation or hearing (an "Action") based thereon in
connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure
to act or transaction on or prior to the Closing Date involving any
member of either Company Group, the Parent and the Seller shall, if
neither the Parent nor any of its Subsidiaries is a party to or
involved in such Claim or Action, reasonably cooperate with the
contesting or defending party and its counsel in the contest or
defense, make reasonably available their personnel and provide such
testimony and reasonable access to their Books and Records as shall be
necessary in connection with the contest or defense, the out-of-pocket
expense of which shall be for the account of the contesting or
defending party. The covenant contained in this subsection (a) shall
not apply to any matter that is subject to the indemnification
obligations of the parties under Article XII, other than a Proceeding
as to which an Indemnifying Party has assumed the legal defense in
accordance with subsection (d) of Section 12.04 or under Section
12.05.
(b) If and for so long as the Parent, the Seller or any of their
respective Affiliates is actively contesting or defending against any
Claim or Action based thereon in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act or transaction involving any
of the Businesses, the Acquiror, each Buyer and each member of each
Company Group shall, if neither the Acquiror nor any of its
Subsidiaries is a party to or involved in such Claim or Action,
reasonably cooperate with the contesting or defending party and its
counsel in the contest or defense, make reasonably available their
personnel and provide such testimony and reasonable access to their
Books and Records as shall be necessary in connection with the contest
or defense, the out-of-pocket expense of which shall be for the
account of the contesting or defending party. The covenant contained
in this subsection (b) shall not apply to any matter that is subject
to the indemnification obligations of the parties under Article XII,
other than a Proceeding as to which an Indemnifying Party has assumed
the legal defense in accordance with subsection (d) of Section 12.04
or under Section 12.05.
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Agreement and Plan of Recapitalization
55
Section 10.10. Post-Closing Matters.
--------------------
(a) From and after the Closing Date, each party hereto agrees to execute
such further instruments or documents as any other party may from time
to time reasonably request in order to confirm or carry out the
transactions contemplated by this Agreement; provided, however, that
no such instrument or document shall increase a party's liability
beyond that contemplated hereby.
(b) From and after the Closing Date, the Acquiror and each Buyer shall
cause each member of each Company Group (other than any Non-Controlled
Entity), and shall use all commercially reasonable efforts to cause
each Non-Controlled Entity, to maintain copies of all Books and
Records in the possession of such members of the Company Groups and
the Non-Controlled Entities at the Closing Date and shall prevent such
members of the Company Groups, and shall use all commercially
reasonable efforts to prevent each Non-Controlled Entity, from
destroying any of such Books and Records for a period of six years
following the Closing Date or, to the extent applicable, the period
specified in clause (i) of subsection 10.06(g). During the period of
retention of such Books and Records, the Acquiror and the Buyers shall
cause such members of each Company Group, and shall use all
commercially reasonable efforts to cause each Non-Controlled Entity,
(i) to grant to the Parent or the appropriate Seller and its
Representatives reasonable cooperation, access and staff assistance at
all reasonable times and upon reasonable notice to all of such Books
and Records of such entities relating to the period prior to the
Closing Date (including workpapers and correspondence with taxing
authorities) that are not otherwise protected by legal privilege, (ii)
to afford the Parent or the appropriate Seller and its Representatives
the right, at the Parent's expense, to take extracts therefrom and to
make copies thereof and (iii) to have access to the employees of the
members of the Company Groups, all to the extent reasonably necessary
or appropriate for general business purposes, including the
preparation of tax returns and the handling of tax audits, disputes
and litigation; provided, however, that such requested cooperation,
access and assistance shall not unreasonably interfere with the normal
operations of the Businesses. In this regard, the Parent acknowledges
that the Non-Controlled Entities will not be under the direct or
indirect control of the Acquiror.
(c) To the extent that the Acquiror shall, directly or indirectly, sell or
otherwise transfer its interests in any member of either Company Group
subsequent to the Closing Date, the Acquiror agrees to use all
reasonable efforts to obtain from the transferee of such interests an
obligation to comply with the provisions of subsection (b) of this
Section, which obligation shall be enforceable by the Parent as a
third party beneficiary.
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Agreement and Plan of Recapitalization
56
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of Each Party Under This
--------------------------------------------------
Agreement. The respective obligations of the Parent and the Acquiror to
---------
consummate the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the First Closing of the following conditions, any
or all of which may be waived by the parties hereto, in whole or in part, to the
extent permitted by applicable Law:
(a) No Governmental Authority or Court shall, following the date of this
Agreement, have enacted, issued, promulgated, enforced or entered any
Legal Requirement (other than any Legal Requirement constituting or
under foreign competition Laws) (whether temporary, preliminary or
permanent) that is in effect and prohibits or renders illegal the
transactions contemplated hereby in a manner that is Material and
adverse to the Parent, the Acquiror or the Businesses.
(b) The waiting period under the HSR Act shall have expired or been
terminated and all Category 1 Requirements shall have been satisfied.
(c) The parties hereto shall have obtained each Authorization required
under any applicable Regulatory Transfer Restriction (other than any
foreign competition Laws) required for consummation of all or any part
of the transactions contemplated hereby.
(d) The Reorganization shall have been effected.
(e) The Parent shall have obtained each Third Person Consent listed on
Schedules 3.03 and 4.03 of the Parent's Disclosure Letter, and the
Acquiror shall have obtained each Third Party Consent listed on
Schedule 6.03 to the Acquiror's Disclosure Letter.
(f) The Releases of Intercompany Indebtedness shall have been executed and
delivered as required by subsection (c) of Section 2.06.
Section 11.02. Additional Conditions to the Parent's Obligations. The
-------------------------------------------------
obligations of the Parent to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Parent, in whole or in
part, to the extent permitted by applicable Law:
(a) Each of the representations and warranties of the Acquiror contained
in this Agreement that is qualified as to Materiality shall be true
and correct in all respects, and each of such representations and
warranties that is not so qualified shall be true and correct in all
Material respects, as of the date of this Agreement and as of the
Closing Date as though made again on and as of the Closing Date
(except to the extent that any such representations or warranties were
made as of a specified date,
Halliburton Company
Agreement and Plan of Recapitalization
57
in which event such representations and warranties shall continue on
the Closing Date to have been true and correct at and as of such
specified date). The Parent shall have received a certificate of the
Chief Executive Officer or the President and the Chief Financial
Officer of the Acquiror, dated the Closing Date, to such effect.
(b) The Acquiror shall have performed or complied in all Material respects
with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to Closing Date. The
Parent shall have received a certificate of the Chief Executive
Officer or the President and the Chief Financial Officer of the
Acquiror, dated the Closing Date, to such effect.
(c) The Acquiror, the Transitory Merger Sub or another Subsidiary of the
Acquiror, as appropriate, shall have executed and delivered the
Ancillary Agreements.
(d) No action, suit, arbitration or investigation (other than any action,
suit, arbitration or investigation disclosed in the Parent's
Disclosure Letter) shall be pending or threatened in writing against
any member of the Parent Group that is based on or arises out of the
transactions contemplated by this Agreement by:
(i) any Governmental Authority that could reasonably be expected to
have a Material Adverse Effect on the Parent Group and the
success of which on the merits is at least "reasonably possible"
as that term is used in Financial Accounting Standards Board's
Statement of Accounting Standards No. 5 ("FAS No. 5"); or
(ii) any third Person who claims damages that are Material and the
success of which on the merits is at least "reasonably possible"
as that term is used in FAS No. 5.
(e) The Parent shall have received an opinion from outside counsel (which
may consist of opinions from more than one outside counsel) to the
Acquiror, dated the Closing Date and in form and substance
substantially similar to the form thereof attached hereto as Appendix
X.
Section 11.03. Additional Conditions to the Acquiror's Obligations. The
---------------------------------------------------
obligations of the Acquiror to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Acquiror, in whole or in
part, to the extent permitted by applicable Law:
(a) (i) Each of the representations and warranties of the Parent and the
Seller contained in this Agreement that is qualified as to
Materiality shall be true and correct in all respects, and each
of such representations and warranties that is not so qualified
shall be true and correct in all Material respects, as of the
date of this Agreement and as of the Closing Date as though made
again on and as of the Closing Date (except to the extent that
any such
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Agreement and Plan of Recapitalization
58
representations or warranties were made as of a specified date,
in which event such representations and warranties shall continue
on the Closing Date to have been true and correct at and as of
such specified date). The Acquiror shall have received a
certificate of the Chief Executive Officer and the Chief
Financial Officer of the Parent, dated the Closing Date, to such
effect.
(ii) All of the representations and warranties of the Parent and the
Seller contained in this Agreement shall be true and correct at
and as of the Closing Date as though made again on and as of the
Closing Date (except to the extent that any such representations
or warranties were made as of a specified date, in which event
such representations and warranties shall continue on the Closing
Date to have been true and correct as of such specified date),
except where any untruth and incorrectness of such
representations and warranties could not, singly or in the
aggregate, be reasonably expected to have an adverse effect
measured in monetary terms of U.S. $50,000,000 or more. Solely
for purposes of determining the monetary effect to which
reference is made in the next preceding sentence of this clause
(ii) of this subsection (a), the representations and warranties
of the Parent and the Seller contained in this Agreement shall be
deemed to have been made without any qualification as to
materiality and, accordingly, all references in such
representations and warranties to "Material," "Materially,
"Material Adverse Effect," and similar terms and phrases
(including references to the dollar thresholds therein) shall be
deemed to be deleted therefrom.
(b) The Parent and the Seller shall have performed or complied in all
Material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to
Closing Date. The Acquiror shall have received a certificate of the
Chief Executive Officer and the Chief Financial Officer of each of the
Parent and the Seller, dated the Closing Date, to such effect.
(c) None of the Authorizations required in order to consummate the
transactions contemplated by this Agreement are subject to any
conditions that, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect on the
Acquiror or the Businesses.
(d) The Parent or a Retained Subsidiary, as appropriate, shall have
executed and delivered each of the Ancillary Agreements.
(e) No action, suit, arbitration or investigation (other than any action,
suit, arbitration or investigation disclosed in the Parent's
Disclosure Letter) shall be pending or threatened in writing against
any member of either Company Group by:
(i) any Governmental Authority that could reasonably be expected to
have a Material Adverse Effect on the Businesses and the success
of which on its merits is at least "reasonably possible" as that
term is used in FAS No. 5; or
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Agreement and Plan of Recapitalization
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(ii) any third Person who claims damages that are Material and the
success of which on the merits is at least "reasonably possible"
as that term is used in FAS No. 5.
(f) After giving effect to the forgiveness of Intercompany Indebtedness
contemplated by subsection (c) of Section 2.06 and subsection (c) of
Section 2.07, the members of the Company Groups at the First Closing
shall in the aggregate have not less than U.S. $30,000,000 (thirty
million dollars) in cash and cash equivalents (net of the aggregate
amount of (i) outstanding checks and overdrafts drawn on bank accounts
of all members of the Company Groups and (ii) any notes payable by any
member of either Company Group) and the Acquiror shall have received a
certificate from the Chief Financial Officer of the Parent to such
effect.
(g) The Acquiror shall have obtained an aggregate of U.S. $970 million of
debt financing from the lenders referred to in the Commitment Letters
on the terms and structure contemplated by the Commitment Letter Term
Sheets attached to the Commitment Letters.
(h) A member of a Company Group shall have entered into an employment
agreement with at least 23 out of the 35 people listed on Schedule
10.07(b) to the Parent's Disclosure Letter on terms reasonably
satisfactory to the Acquiror, and such employment agreements shall
remain in full force and effect on the Closing Date and shall not have
been amended, modified or restated without the consent of the
Acquiror.
(i) No authoritative pronouncement shall have been issued subsequent to
the date of this Agreement by the SEC or by a self regulatory board of
the U.S. accounting profession that would prohibit the Acquiror from
(A) recording the transactions contemplated by this Agreement as a
Recapitalization for financial reporting purposes or (B) restructuring
such transactions in a manner that would preserve the economic effects
of recording such transactions as a Recapitalization for financial
reporting purposes.
(j) The Parent shall have executed and delivered to the Acquiror the
Release contemplated by clause (i) of subsection 2.06(d) and the
Parent shall have prepared, executed and delivered to the Acquiror the
tax certificate referenced in clause (ii) of subsection 2.06(d).
(k) The Parent shall have executed and delivered to the Acquiror the
Highway 6 Deed.
(l) The Acquiror shall have received an opinion from outside counsel
(which may consist of opinions from more than one outside counsel) to
the Parent, dated the Closing Date and in form and substance
substantially similar to the form thereof attached hereto as Appendix
XI.
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(m) The Acquiror shall have received the financial statements referred to
in Section 8.10(b) prior to the First Closing.
ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties, Covenants and
------------------------------------------------------
Agreements.
----------
(a) Except as set forth in subsection (b) of this Section, the
representations, warranties, covenants and agreements of each party
hereto shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any other party hereto,
any Person controlling any such party or any of their officers,
directors, representatives or agents whether prior to or after the
execution of this Agreement.
(b) (i) The representations and warranties of the Parent contained in
Articles III and IV and in Sections 5.01, 5.02 and 5.03 and
those of the Acquiror contained in Article VI shall survive the
Closings and any investigation by the parties with respect
thereto without contractual restriction, but the representations
and warranties of the Parent and the Acquiror contained in
Article VII shall terminate at the Closing and be of no further
force or effect.
(ii) The representations and warranties of the Parent contained in
Article V (other than those in Sections 5.01, 5.02, 5.03, 5.08,
5.10, 5.11 and 5.12) shall survive the Closings and any
investigation by the parties with respect thereto, but shall
terminate and be of no further force or effect on the date that
is 90 days following the completion of an audit of the
Businesses or portions thereof for the calendar year in which
the Closing Date shall occur (but in any event no later than
June 30, 2002).
(iii) The representations and warranties of the Parent contained in
Section 5.10 and Section 5.08 shall survive the Closings and any
investigation by the parties with respect thereto until the
expiration of the applicable statute of limitations (including
extensions thereof) plus 90 days.
(iv) The representations and warranties of the Parent contained in
Section 5.11 shall survive the Closings and any investigation by
the parties with respect thereto, but shall terminate and be of
no further force or effect on the third anniversary of the
Closing Date.
(v) The representations and warranties of the Parent contained in
Section 5.12 shall survive the Closings and any investigation by
the parties with respect thereto, but shall terminate and be of
no further force or effect on the third anniversary of the
Closing Date.
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(vi) Notwithstanding any of the foregoing clauses of this subsection
(b), any such representation or warranty as to which a bona fide
claim relating thereto is asserted in writing (which states with
specificity the basis therefor) in accordance with Section 12.04
or Section 12.05 during such applicable survival period shall,
with respect only to such claim, continue in force and effect
beyond such applicable survival period pending resolution of the
claim. The covenants and agreements in this Article XII shall
survive the Closings and shall remain in full force and effect
for such period as is necessary to resolve any bona fide claim
made with respect to any representation or warranty contained in
this Agreement during the survival period thereof. The remaining
covenants and agreements of the parties hereto contained in this
Agreement shall survive the Closings without any contractual
limitation on the period of survival.
Section 12.02. General Indemnification by the Parent.
-------------------------------------
(a) If the transactions contemplated hereby to occur at the Closings are
effected and subject to the provisions of subsection (b) of Section
12.01, the Parent and the Seller, jointly and severally, hereby agree
(each, in such capacity, an "Indemnifying Party"), from and after the
Closing Date, to indemnify and hold harmless the Acquiror, the Buyers,
their Affiliates and the directors, officers and employees of such
Persons (each, in such capacity, an "Indemnified Party") against any
losses, claims, demands, damages, judgments, settlements, liabilities,
charges and deficiencies, in each case whether arising out of third
party claims or otherwise, and any reasonable legal or other expenses
incurred in connection with investigating or defending against the
foregoing (collectively, "Losses") that such Indemnified Party shall
actually incur, to the extent that such Losses (or actions, suits or
proceedings in respect thereof and any appeals therefrom
("Proceedings")):
(i) arise out of or result from the untruth or breach of any
representation or warranty made in Article III, IV or V for the
benefit of the Acquiror; or
(ii) arise out of or result from the nonperformance in accordance
with its terms of any covenant or agreement made herein for the
benefit of the Indemnified Party by the Indemnifying Party; or
(iii) arise out of or result from the nonpayment or nonperformance of
any Excluded Liability; or
(iv) arise out of any Taxes payable as a result of the transactions
contemplated by the Reorganization other than in connection with
the steps listed in, and actions contemplated by, Section 10.05;
provided, however, that the Parent shall be entitled to any net
refunds of any such Taxes (including interest thereon);
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(v) arise out of or result from any Indemnifiable Environmental
Matter to the extent that the Acquiror has given notice to the
Parent of any claim for indemnification pursuant to Section
12.04(a) prior to the fifth anniversary of the Closing Date; or
(vi) arise out of the failure to obtain any Third Person Consent that
continues at the Closing Date to be required under any Agreement
identified on Schedule 5.02(c) to the Parent's Disclosure
Letter.
Notwithstanding the foregoing, the Indemnifying Party shall be liable
to the Indemnified Party under this Section 12.02 only if and to the
extent that the amount of Losses incurred by the Indemnified Party
exceeds U.S. $15,000,000 (fifteen million dollars) in the aggregate
(the "Deductible Amount"); provided, however, that:
(A) no Loss subject to indemnification pursuant to clause (a),
(c) or (e) of the definition of Indemnifiable Environmental
Matters, no Loss subject to indemnification for breach of
Section 5.11 pursuant to Section 12.02(a)(i), and no Loss
subject to indemnification as an Excluded Liability shall be
subject to nor counted toward the Deductible Amount;
(B) no Loss or aggregation of similar Losses based on the same
or substantially similar facts and circumstances shall be
subject to indemnification pursuant to clause (i) of
subsection (a) of Section 12.02 unless it involves more than
(1) U.S. $500,000 (five hundred thousand dollars), in the
case of any such Loss or Losses based on facts and
circumstances of which officers of the Parent listed on
Schedule 12.02(a)(B) to the Parent's Disclosure Letter had
no actual knowledge on the date of this Agreement or (2)
U.S. $100,000 (one hundred thousand dollars) in the case of
any such Loss or Losses based on facts and circumstances of
which officers of the Parent listed on Schedule 12.02(a)(B)
to the Parent's Disclosure Letter had actual knowledge on
the date of this Agreement;
(C) the amount of such Losses that are subject to
indemnification hereunder shall not exceed U.S.$950,000,000;
and
(D) the Losses incurred by an Indemnified Party shall, for
purposes of determining the maximum amount or threshold
level thereof in accordance with this sentence and otherwise
with respect to the obligations of the Indemnifying Parties
hereunder, be offset by (i) the proceeds of any insurance
received directly or indirectly by the Indemnified Party
with respect thereto and (ii) the amount of any income tax
benefit actually realized by the Indemnified Party with
respect thereto.
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For purposes of clause (i) of this subsection (a), the representations
and warranties of the Parent contained in this Agreement shall, except
for each instance in which a representation and warranty regarding the
completeness or accuracy of a list or Schedule to the Parent's
Disclosure Letter is qualified as to materiality, be deemed to have
been made without any qualification as to materiality and,
accordingly, all references in such representations and warranties to
"Material", "Materially," "Material Adverse Effect" and similar terms
and phrases (including references to dollar thresholds therein) shall
be deemed to be deleted therefrom.
(b) Notwithstanding anything to the contrary in this Agreement, the
liability of the Parent as an Indemnifying Party under this Agreement
shall also be limited as follows:
(i) The amount payable by the Parent in respect of any Losses
incurred by an entity partially owned, directly or indirectly,
by an Indemnified Party shall be determined by multiplying the
total amount that would otherwise be payable in respect of such
Losses by a percentage equal to the percentage of the Equity
Securities of such entity transferred to the Acquiror, directly
or indirectly, pursuant to this Agreement.
(ii) The Parent shall not be liable for any Losses resulting from a
breach of any of the representations and warranties set forth in
Articles III, IV or V of this Agreement to the extent that:
(A) the liability for such breach occurs or is increased as a
result of the adoption or imposition of any Law, Regulation
or Order not in force at the date of this Agreement or as a
result of any increase in rates of taxation after the date
of this Agreement; or
(B) the Losses would not have arisen but for a change in
accounting policy or practice of the Acquiror or any member
of the Company Groups after the Closing Date (other than
changes required for any such accounting policy or practice
to comply with U.S. GAAP as in effect on the Closing Date).
(iii) The Parent shall be liable for any Loss resulting from a breach
of any of the representations and warranties set forth in
Section 5.08 only if and to the extent that such Loss is not
offset by a deferred Tax asset that would properly be reflected
in the Closing Financial Statements. Notwithstanding the
foregoing, if the amount of such Loss exceeds $20.0 million, the
amount of such Loss shall only be offset by the present value of
any such deferred Tax asset, which present value shall be
determined (A) using a discount rate equal to DEGI's average
cost of capital at the date of the Loss and (B) on the
assumption that the corresponding Tax benefit is utilized as
soon as possible and at the maximum rate of Tax under applicable
Laws, without regard to any limitations arising from any Tax
attributes of the taxpayer.
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(iv) The Parent shall not be liable for any Loss incurred by the
Acquiror, the Buyers or any member of either Company Group that
arises out of or results from the implementation of the steps of
the Reorganization referred to in the last sentence of Section
10.05 or from any action taken at the direction of the Acquiror
or any individual that the Acquiror had identified in written
notice to the Parent.
(c) Notwithstanding anything herein to the contrary, to the extent that
the Acquiror waives satisfaction of one or more conditions set forth
in subsection (a) or (b) of Section 11.03, which conditions were not
satisfied due to one or more events, conditions or circumstances that
occurred after the date of this Agreement and that were specifically
disclosed in writing to the Acquiror prior to the Closing Date, the
Parent shall not have any liability hereunder for such matter or
matters to the extent so disclosed.
(d) The procedures set forth in Section 12.04 shall govern the disposition
of claims for indemnification brought pursuant to this Section 12.02
except that any claim for indemnification regarding an Indemnifiable
Environmental Matter shall, in addition, be subject the provisions of
Section 12.05. In the event of a conflict between the provisions of
Section 12.04 and Section 12.05, the provisions of the latter shall
govern.
Section 12.03. General Indemnification by the Acquiror.
---------------------------------------
(a) If the transactions contemplated hereby to occur at the Closings are
effected and subject to the provisions of subsection (b) of Section
12.01, the Acquiror hereby agrees (in such capacity, an "Indemnifying
Party"), from and after the Closing Date, to indemnify and hold
harmless the Parent and the Seller, their Affiliates, directors,
officers and employees (in such capacity, an "Indemnified Party")
against any Losses that such Indemnified Party shall actually incur,
to the extent that such Losses (or Proceedings):
(i) arise out of or result from the untruth or breach of any
representation or warranty made in Article VI for the benefit of
the Parent; or
(ii) arise out of or result from the nonperformance in accordance
with its terms of any covenant or agreement made herein for the
benefit of the Indemnified Party by the Indemnifying Party; or
(iii) arise out of or result from any acts or omissions to act after
the Closing Date by any Buyer or any member of either Company
Group hereunder; or
(iv) arise out of or result from the nonpayment or nonperformance of
any of the Assumed Obligations; or
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(v) arise out of or result from the implementation of the steps of
the Reorganization referred to in the last sentence of Section
10.05 or from any actions taken at the direction of the Acquiror
or any individual that the Acquiror has identified in written
notice to the Parent; or
(vi) arise out of or result from any matter set forth in clause (i)
through (vii), inclusive, of subsection (d) of Section 12.05
arising after the Closing Date.
Notwithstanding the foregoing, the Indemnifying Party shall be liable
to the Indemnified Party under this Section 12.03 only in the event
and to the extent that the amount of Losses incurred by the
Indemnified Party exceeds the Deductible Amount; provided, however,
that:
(A) no Loss subject to indemnification pursuant to clause (iii)
or (iv) of this Section shall be subject to or counted
toward the Deductible Amount;
(B) the amount of such Losses that are subject to
indemnification hereunder shall not exceed $950,000,000
(nine hundred fifty million dollars); and
(C) the Losses incurred by an Indemnified Party shall, for
purposes of determining the maximum amount or threshold
level thereof in accordance with this sentence and otherwise
with respect to the obligations of the Indemnifying Parties
hereunder, be offset by (i) the proceeds of any insurance
received directly or indirectly by the Indemnified Party
with respect thereto and (ii) the amount of any income tax
benefit actually realized by the Indemnified Party with
respect thereto.
For purposes of clause (i) of this subsection (a), the representations
and warranties of the Acquiror contained in this Agreement shall,
except for each instance in which a representation and warranty
regarding the completeness or accuracy of a list or Schedule to the
Acquiror's Disclosure Letter is qualified as to materiality, be deemed
to have been made without any qualification as to materiality and,
accordingly, all references in such representations and warranties to
"Material", "Materially," "Material Adverse Effect" and similar terms
and phrases (including references to dollar thresholds therein) shall
be deemed to be deleted therefrom.
(b) Notwithstanding anything to the contrary in this Agreement, the
Acquiror shall not be liable for any Losses resulting from a breach of
any of the representations and warranties set forth in Article VI of
this Agreement to the extent that the liability for such breach occurs
or is increased as a result of the adoption or imposition of any Law,
Regulation or Order not in force at the date of this Agreement or as a
result of any increase in rates of taxation after the date of this
Agreement.
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(c) Notwithstanding anything herein to the contrary, to the extent that
the Parent waives satisfaction of one or more conditions set forth in
subsection (a) or (b) of Section 11.02, which conditions were not
satisfied due to one or more events, conditions or circumstances that
occurred after the date of this Agreement and that were specifically
disclosed in writing to the Parent prior to the Closing Date, the
Acquiror shall not have any liability hereunder for such matter or
matters to the extent so disclosed.
(d) The procedures set forth in Section 12.04 shall govern the disposition
of claims for indemnification brought pursuant to this Section 12.03.
Section 12.04. Procedures.
----------
(a) Promptly after (i) discovery by an Indemnified Party hereunder of a
Loss or (ii) receipt by the Indemnified Party of notice of the
commencement of any Proceeding, in each case, against which it
believes it is indemnified under this Article, the Indemnified Party
shall, if a claim in respect thereto is to be made against the
Indemnifying Party under this Article, notify the Indemnifying Party
in writing of the discovery or commencement thereof (the
"Indemnification Notice"); provided, however, that the omission so to
notify the Indemnifying Party shall not relieve it from any liability
that it may have to the Indemnified Party to the extent that the
Indemnifying Party is not prejudiced by such omission; and provided,
further, that with respect to any Loss or Proceeding in existence on
the Closing Date with respect to an Excluded Liability or with respect
to any Indemnifiable Environmental Matter to which reference is made
in clause (a), (c) or (e) of the definitions of that term, the
Acquiror shall be deemed to have given notice thereof to the Parent
pursuant to this subsection (a) and the Parent shall be deemed to have
responded to such notice in accordance with clause (ii) of subsection
(b) of this Section, all effective as of the Closing Date.
(b) The Indemnifying Party shall, within thirty (30) days after receipt of
an Indemnification Notice, either (i) in writing acknowledge
liability, as between the Indemnifying Party and the Indemnified
Party, for such Loss or the amount in controversy in such Proceeding
and pay the Indemnified Party the amount of such Loss or the amount in
controversy in such Proceeding in cash in immediately available funds
(or establish by agreement with the Indemnified Party an alternative
payment arrangement), (ii) in writing acknowledge liability, as
between the Indemnifying Party and the Indemnified Party, for such
Loss or the amount in controversy in such Proceeding but disavow the
validity of the Loss or Proceeding or the amount thereof and, in the
case of a Proceeding to the extent that it shall so desire in
accordance with subsection (d) of this Section, assume the legal
defense thereof or (iii) in writing object (or reserve the right to
object until additional information is obtained) to the claim for
indemnification or the amount thereof and set forth the grounds
therefor in reasonable detail. If the Indemnifying Party does not
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respond to the Indemnified Party as provided in this subsection within
such thirty (30) day period, the Indemnifying Party shall be deemed to
have acknowledged its liability for such indemnification claim in
accordance with clause (i) of this subsection and the Indemnified
Party may exercise any and all of its rights under applicable Law to
collect such amount.
(c) An Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened Proceeding in
respect of which indemnification or contribution is sought hereunder.
If the Indemnifying Party has responded to the Indemnified Party
pursuant to clause (i) of subsection (b) of this Section, the
Indemnified Party may settle or compromise or consent to the entry of
any judgment with respect to the Proceeding that was the subject of
notice to the Indemnifying Party pursuant to subsection (b) of this
Section without the consent of the Indemnifying Party (but no such
settlement, compromise or consent shall increase the indemnification
obligation of the Indemnifying Party to which it has consented
pursuant to clause (i) of subsection (b) of this Section). Except as
otherwise provided in the immediately preceding sentence and in
subsection (d) of this Section, an Indemnified Party shall not,
without the prior written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened Proceeding, but, if such Proceeding is settled or
compromised or if there is entered any judgment with respect to any
such Proceeding, in either case with the consent of the Indemnifying
Party, or if there be a final judgment for the plaintiff in any such
Proceeding, the Indemnifying Party shall indemnify and hold harmless
any Indemnified Party from and against any Loss by reason of such
settlement, compromise or judgment in accordance with the other
provisions of this Article XII.
(d) If a Proceeding shall be brought against an Indemnified Party and it
shall notify the Indemnifying Party thereof in accordance with
subsection (a) of this Section, the Indemnifying Party shall, if it
shall have responded to such notice in accordance with clause (ii) of
subsection (b) of this Section, be entitled to assume the legal
defense thereof at the expense of the Indemnifying Party with counsel
reasonably satisfactory to the Indemnified Party. The Indemnified
Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Indemnified
Party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Indemnifying Party or (ii)
the Indemnifying Party shall have failed to assume the defense of such
action or (iii) the named parties to any such Proceeding (including
any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised
by such counsel that there is one or more legal defenses available to
it that are different from or additional to those available to the
Indemnifying Party. In any such case, the Indemnifying Party shall
not, in connection with any one action or separate but
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substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for the Indemnified
Party. Except as aforesaid, after notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such
claim or such action, the Indemnifying Party shall not be liable to
the Indemnified Party under this Section for any attorney's fees or
other expenses (except reasonable costs of investigation) subsequently
incurred by the Indemnified Party in connection with the defense
thereof. If the Indemnifying Party does not assume the defense of a
Proceeding as to which it has acknowledged liability, as between
itself and the Indemnified Party, pursuant to clause (ii) of
subsection (b) of this Section, the Indemnified Party may require the
Indemnifying Party to reimburse it on a current basis for its
reasonable expenses of investigation, reasonable attorney's fees and
expenses and reasonable out-of-pocket expenses incurred in the defense
thereof and the Indemnifying Party shall be bound by the result
obtained with respect thereto by the Indemnified Party.
(e) In the case of a Loss as to which the Indemnifying Party shall have
responded pursuant to clause (iii) of subsection (b) above, the
parties shall attempt in good faith to resolve their differences for a
period of sixty (60) days following receipt by the Indemnified Party
of the response of the Indemnifying Party pursuant to subsection (b)
above and, if the parties are unable to resolve their differences
within such period, the Indemnified Party may submit the matter to
arbitration in accordance with the provisions of Section 14.10.
Section 12.05. Special Environmental Indemnification Provisions.
------------------------------------------------
(a) The Parent shall have the sole and exclusive right to control the
defense, response, proceedings, settlement and resolution of any
Indemnifiable Environmental Matters, including any investigations,
removals, remediations, response actions, enforcement actions or
administrative proceedings; provided that the Parent shall not agree
to any response, settlement or resolution that unreasonably interferes
with any operations of the Business. The Acquiror shall cooperate in
all reasonable ways with the Parent in the defense, contest,
settlement of or prosecution of any Indemnifiable Environmental
Matters.
(b) With respect to any Indemnifiable Environmental Matters that require
corrective actions, the Parent's indemnification obligations under
clause (v) of subsection (a) of Section 12.02 shall be applicable to
any investigation, removal, remediation or other response action
("Environmental Activities") only if and to the extent the conditions
giving rise to such matter require reporting to a Governmental
Authority and require corrective action under applicable Environmental
Laws or, if such conditions were known to a Governmental Authority
having jurisdiction over the matter, the Governmental Authority would
be entitled to bring an enforcement action to require the
Environmental Activities, but then only to the extent necessary to
bring the appropriate member of a Company Group into compliance with
the requirements
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of applicable Environmental Laws in effect as of the Closing Date.
(The Acquiror shall be responsible for any additional Environmental
Activities which may be required by Environmental Laws enacted or
adopted after the Closing Date.) The Parent, in its sole discretion,
shall determine the applicable cleanup standard for Covered Known
Hazardous Materials Contamination and Unknown Hazardous Materials
Contamination that are Indemnifiable Environmental Matters, in
consultation with the Agency. Neither the Acquiror, any Buyer nor any
member of a Company Group may use the properties of any member of any
Company Group for any residential, health care, childcare or school
purposes. The Acquiror acknowledges and agrees that any title transfer
documents relating to the Real Property delivered to the Acquiror may
contain restrictions on the use of the Real Properties. The Acquiror
further agrees and binds itself to execute and file any and all
documents restricting the use of the properties of the members of the
Company Groups as may be required in connection with the Environmental
Activities. Notwithstanding anything in this Section 12.05 to the
contrary, no cleanup standards, use restrictions or institutional
controls shall be required that unreasonably interfere with any
operations of the Business. The Acquiror shall not encourage or invite
any Agency to require any Environmental Activities or enforcement
action; provided, however, that the Acquiror may cause the Buyers and
the members of the Company Groups to comply with all applicable
Environmental Laws in the use, ownership or occupation of the Real
Property or the operations of the Businesses.
(c) The Acquiror acknowledges that, prior to the Closing Date, the Parent
may have initiated Environmental Activities as a result of the
Parent's obligation to applicable Agencies, and that such
Environmental Activities may continue after the Closing Date. The
Acquiror further acknowledges that any Environmental Activities
conducted after the Closing Date in accordance with this Section 12.05
or continued from Environmental Activities prior to the Closing Date
may involve the filing of land use and deed restrictions,
institutional and engineering controls, groundwater use restrictions,
soil management requirements, access and easement rights, and
restrictive covenants (including a prohibition against installation of
water ▇▇▇▇▇ on the properties of the members of the Company Groups).
The Acquiror shall at all times cooperate with the Parent in obtaining
and maintaining any necessary documents, permits or conditions, and
the Acquiror shall not take any action in contravention of such land
use or deed restrictions or other requirements. The Acquiror further
acknowledges that the Parent's environmental obligations hereunder may
include sampling and excavating soil, the sampling, operation and
maintenance of groundwater monitoring and recovery ▇▇▇▇▇, associated
piping, groundwater pumping and treatment equipment and other
facilities or equipment. The Acquiror shall, without further
compensation, costs or fees to the Parent, grant and provide, after
reasonable advance notice, all necessary access to the Parent, the
Parent's employees, agents, contractors, subcontractors,
representatives and Agency representatives to enter onto the
properties of the members of the Company Groups after the Closing Date
to undertake any Environmental Activities. The Parent's rights of
access to use the properties of the members of the Company Groups are
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non-exclusive and shall endure as long as is necessary to complete the
Environmental Activities. The Parent shall, to the extent practicable
and consistent with sound investigation and remediation practices,
undertake the Environmental Activities in a manner that will not
unreasonably interfere with the use of the properties of the members
of either of the Company Groups and shall indemnify and hold harmless
the Acquiror against any Losses arising out of such rights of access
except for any such Losses that arise out of or result from the
negligence of the Acquiror or any Persons acting on its behalf. The
Acquiror shall cause the Buyers and the members of the Company Groups
to take all necessary precautions to avoid any damage to or loss of
any equipment or facilities placed on the properties of the members of
the Company Groups by the Parent as part of the Environmental
Activities, and shall pay for all damages to or loss of such equipment
or facilities resulting from any negligent acts or omissions of the
Buyers or members of the Company Groups, or their ownership, use or
occupancy of their properties.
(d) The Parent's indemnity obligations with respect to Indemnifiable
Environmental Matters under clause (v) of subsection (a) of Section
12.02 shall not apply to any Losses: (i) caused by the Acquiror's
inspection of the properties of the members of the Company Groups;
(ii) arising from the use or occupancy of the properties of the
members of the Company Groups by the Acquiror or any of its Affiliates
prior to the Closing Date; (iii) with respect to any Indemnified
Environmental Matter known to Acquiror, arising from, caused by, or
exacerbated by the use, occupancy or ownership of the Real Property or
the operation of the Businesses or omissions of the Acquiror after the
first anniversary of Acquiror gaining such knowledge, (iv) arising
after the expiration of any applicable indemnity period, (v) based on
Hazardous Materials Contamination, Environmental Compliance Matters or
other conditions that did not exist as of the Closing Date; (vi) that
constitute Known Hazardous Materials Contamination that is not Covered
Known Hazardous Materials Contamination; (vii) incurred in connection
with the management, removal or abatement of asbestos-containing
material from any structure or equipment during any demolition or
renovation of any facility or structure after the Closing Date; or
(viii) arising from the migration of Hazardous Materials or Hazardous
Materials Contamination onto the Real Property of any members of any
of the Company Groups from an offsite source. The Parent, may at its
own cost and option, participate in the defense of any such claim.
(e) Except as set forth in this Article XII, the Acquiror unconditionally
releases the Parent from any and all Losses arising out of or
resulting from any Hazardous Materials or Hazardous Materials
Contamination, Environmental Compliance Matters or related
environmental conditions (including Known Hazardous Materials
Contamination, Unknown Hazardous Materials Contamination Known
Environmental Compliance Matters, Unknown Environmental Compliance
Matters and Indemnifiable Environmental Matters, regardless of how or
when discovered). Provided that the Parent is in material compliance
with its obligations under this Article XII, the Acquiror hereby
covenants and agrees that neither the Acquiror nor
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any Affiliate under its control will file suit or name the Parent or
any of its Affiliates in any lawsuit arising from any of the
foregoing. The Acquiror understands and expressly agrees that releases
set forth in this Section:
(i) shall constitute releases of liability under all applicable
Environmental Laws, including the United States Comprehensive
Environmental Response, Compensation and Liability Act, as
currently in effect, the United States Resource Conservation
Recovery Act, as currently in effect, and any similar or
equivalent laws in the jurisdiction of any Governmental
Authority in which any properties of any member of a Company
Group are located;
(ii) shall constitute an assumption of future liabilities;
(iii) are made with the knowledge of the prior commercial or
industrial use of the properties of the members of the Company
Groups and the possible presence of Hazardous Materials on such
properties; and
(iv) are supported by separate consideration, the receipt and
sufficiency of which are expressly acknowledged and confessed
by the Acquiror.
Section 12.06. Punitive Damages. Neither party to this Agreement nor any
----------------
of its Affiliates or Representatives shall be liable to any other party hereto
or any of its Affiliates or Representatives for claims for punitive, special,
exemplary or incidental damages, regardless of whether a claim is based on
contract, tort (including negligence), strict liability, violation of any
applicable deceptive trade practices act or similar Law or any other legal or
equitable principle. No party shall be entitled to rescission of this Agreement
as a result of breach of any other party's representations, warranties,
covenants or agreements, or for any other matter.
Section 12.07. Failure of Acquiror to Close. The Parent and the Acquiror
----------------------------
have agreed that if the Acquiror shall fail to consummate the transactions
contemplated hereby for any reason under its control that does not confer upon
the Acquiror a right to terminate this Agreement under Section 13.01, the
Acquiror shall pay to the Parent, on or before the fifth (5th) Business Day
following the date on which the Acquiror failed to consummate such transactions
in violation of the terms of this Agreement or, if such date is not
determinable, the Termination Date, an amount in cash in U.S. Dollars equal to
$20 million less professional fees and expenses incurred on behalf of the
Acquiror prior to, on or after the date hereof by wire transfer of immediately
available funds to the wire transfer address of Parent provided in written
instructions to the Acquiror. Such amount shall be deemed to be liquidated
damages and, in that regard, it is expressly stipulated by the parties that the
actual amount of any damages resulting from the Acquiror's failure to complete
the transactions contemplated by this Agreement would be difficult if not
impossible to determine accurately because of the unique nature of this
Agreement, the unique nature of the Securities, the uncertainties of the
relevant markets in which the Businesses operate and differences of opinion with
respect to such matters, and that the liquidated damages provided for herein are
a reasonable estimate by the parties of such damages.
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Agreement and Plan of Recapitalization
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Section 12.08. No Right of Contribution. After the Closing Date, no
------------------------
member of either Company Group shall be obligated to indemnify either the
Acquiror, any Buyer, the Parent or the Seller on account of the breach of any
representation or warranty or the nonfulfillment of any covenant or agreement of
the Parent or the Seller; and neither Parent nor the Seller shall have any right
of contribution against any member of either Company Group for any such breach
or nonfulfillment.
Section 12.09. Specific Performance. The Parent hereby agrees that
--------------------
irreparable damage would occur to the Acquiror if the Parent failed to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement, and, accordingly, the Parent and the Acquiror agree that the
Acquiror shall be entitled to enforce specifically the performance of the
transactions contemplated hereby in the United States federal court for the
Southern District of New York or in any other court having jurisdiction without
posting bond or other security, this being in addition to any other remedy to
which it is entitled at law or in equity.
Section 12.10. Sole Remedy. From and after the Closing Date, the
-----------
provisions of this Article XII shall, except as provided in subsection 2.09(g),
be the sole and exclusive remedy of each party hereto for (i) any breach of the
other party's representations or warranties contained in this Agreement or (ii)
any breach of the other party's covenants or agreements contained in this
Agreement (other than any covenant or agreement to be performed after the
Closing Date).
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination. This Agreement may be terminated at any time
-----------
prior to the Closing Date:
(a) by mutual written consent of the Parent and the Acquiror;
(b) by the Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of the Acquiror set forth in this Agreement
or if any representation or warranty of the Acquiror shall have become
untrue, in either case, such that the conditions set forth in
subsection (a) or (b) of Section 11.02 would not be satisfied (a
"Terminating Acquiror Breach"); provided, however, that, if such
Terminating Acquiror Breach is curable by the Acquiror through the
exercise of its reasonable efforts and for so long as the Acquiror
continues to exercise such reasonable efforts, the Parent may not
terminate this Agreement under this subsection (b) until September 30,
2001;
(c) by the Acquiror, upon a breach of any representation, warranty,
covenant or agreement on the part of the Parent set forth in this
Agreement or if any representation or warranty of the Parent shall
have become untrue, in either case, such that the conditions set forth
in subsection (a) or (b) of Section 11.03 would not be satisfied (a
"Terminating Parent Breach"); provided, however, that, if such
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Terminating Parent Breach is curable by the Parent through the
exercise of its reasonable efforts and for so long as the Parent
continues to exercise such reasonable efforts, the Acquiror may not
terminate this Agreement under this subsection (c) until September 30,
2001;
(d) by either the Parent or the Acquiror, if the Closing Date contemplated
hereby shall not have occurred on or before June 30, 2001 (the
"Termination Date"); provided, however, that the right to terminate
this Agreement under this subsection (d) shall not be available to
either Party whose failure to fulfill any obligation under this
Agreement has been, directly or indirectly, the cause of, or resulted
in, the failure of the Closing Date to occur on or before such date;
provided, further, that, if on the Termination Date the conditions to
the First Closing set forth in subsection (b) or (c) of Section 11.01
shall not have been fulfilled but all other conditions to the First
Closing have been fulfilled or are capable of being fulfilled, then
the Termination Date shall be extended to September 30, 2001.
The right of any party hereto to terminate this Agreement pursuant to this
Section 13.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their Representatives, whether prior to or
after the execution of this Agreement.
Section 13.02. Effect of Termination. If terminated pursuant to Section
---------------------
13.01, this Agreement shall, except for Sections 9.01, 10.05, 10.07(a), 12.06,
12.07 and 12.09 of this Agreement, forthwith become void and (i) there shall be
no liability on the part of the Parent, the Seller, the Acquiror or any of their
respective officers or directors to any other party and (ii) all rights and
obligations of any party hereto shall cease; provided, however, that nothing
herein shall relieve the Parent, the Seller or the Acquiror from liability for
any misrepresentation of any representation and warranty or breach of any
covenant or agreement under this Agreement occurring prior to the date of such
termination.
Section 13.03. Amendment. This Agreement may not be amended except by an
---------
instrument in writing authorized by the Parent, the Seller and the Acquiror and
signed by the Parent, the Seller and the Acquiror.
Section 13.04. Waiver. Either the Parent or the Acquiror hereto may (a)
------
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other parties with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party to be
bound thereby.
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ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices. All notices and other communications given or
-------
made pursuant hereto shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
If to the Parent, to:
Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
and Chief Financial Officer
Telephone: 713/▇▇▇-▇▇▇▇
Telecopier: 713/676-7799
Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
and General Counsel
Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: 214/▇▇▇-▇▇▇▇
Telecopier: 214/978-2658
If to the Acquiror, to:
c/o First Reserve Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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Agreement and Plan of Recapitalization
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Copy to:
▇▇▇ ▇▇▇▇▇▇▇
First Reserve Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Odyssey Investment Partners, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopier number as the Parent or the Acquiror may,
from time to time, designate in a written notice given in a like manner. Notice
given by telecopier shall be deemed delivered on the day the sender receives
telecopier confirmation that such notice was received at the telecopier number
of the addressee. Notice given by mail as set out above shall be deemed to be
delivered on the fifth Business Day following deposit in the U.S. mail.
Section 14.02. Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14.03. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this
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Agreement and Plan of Recapitalization
76
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
Section 14.04. Entire Agreement. This Agreement (together with the
----------------
Ancillary Agreements, the Annexes and Appendices hereto, the Parent's Disclosure
Letter and the Acquiror's Disclosure Letter) constitutes the entire agreement of
the parties, and supersedes all prior agreements, deliveries, disclosures and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
Section 14.05. Assignment. Without the prior written consent of the other
----------
party hereto, the rights and obligations of a party hereto under this Agreement
may not be assigned except by operation of Law; provided, however, that the
Acquiror may (i) assign its rights and obligations hereunder without the consent
of any other party hereto to any wholly owned Subsidiary of the Acquiror, in
which event the Acquiror shall remain liable for all of its obligations under
this Agreement, and the assignee shall, together with the Acquiror, be jointly
and severally liable for such obligations and (ii) assign as collateral its
rights and obligations hereunder without the consent of any other party hereto
to the Lenders referred to in the Commitment Letters or a collateral agent
acting on their behalf.
Section 14.06. Successors; Parties in Interest. This Agreement shall be
-------------------------------
binding upon and inure solely to the benefit of each party hereto and their
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. Except as set
forth in Section 12.10, all rights and remedies existing under this Agreement
are cumulative with, and not exclusive of, any rights or remedies otherwise
available.
Section 14.08. Disclosure Letters. Each of the Parent's Disclosure Letter
------------------
and the Acquiror's Disclosure Letter have been arranged in paragraphs or
schedules corresponding to the relevant Sections of this Agreement. Any matter
disclosed by the Parent in the Parent's Disclosure Letter or by the Acquiror in
the Acquiror's Disclosure Letter pursuant to any Section of this Agreement shall
be deemed to have been disclosed by such party for purposes of each other
Section of this Agreement to which such disclosure would reasonably relate.
Section 14.09. Governing Law. This Agreement shall be construed (both as
-------------
to validity and performance) and enforced in accordance with, and governed by,
the laws of the State of New York applicable to agreements made and to be
performed wholly within such jurisdiction. Any judicial proceeding brought
against any of the parties hereto with respect to this Agreement shall be
brought in the United States District Court for the Southern District of New
York sitting in New York County and any appellate court of that District Court
irrespective of where such party may be located
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Agreement and Plan of Recapitalization
77
at the time of such proceeding, and by execution and delivery of this Agreement,
each of the parties hereto hereby consents to the exclusive jurisdiction of such
court and waives any defense or opposition to such jurisdiction.
Section 14.10. Arbitration. Any dispute referenced in subsection (b) of
-----------
Section 2.09 or in subsection (e) of Section 12.04 shall be resolved by binding
arbitration under the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"). This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration Act,
9 U.S.C. Sections 1 -14. The parties hereto agree that, pursuant to Section 9
of the Federal Arbitration Act, a judgment of a United States District Court of
competent jurisdiction shall be entered upon the award made pursuant to the
arbitration. Three arbitrators, who shall have the authority to allocate the
costs of any arbitration initiated under this paragraph, shall be selected in
accordance with the following sentence within ten (10) days of the submission to
the AAA of the response to the statement of claim or the date on which any such
response is due, whichever is earlier. The selection shall be made as follows:
one by the Parent, one by the Acquiror and one by the two so selected, provided,
however, that only the third arbitrator shall be required to be neutral. The
arbitrators shall conduct the arbitration in accordance with the Federal Rules
of Evidence. The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to enter
any award of monetary or injunctive relief (including the power to issue
permanent injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court in response
to a request therefor by either of the parties), including the power to render
an award as provided in Rule 43 of the AAA Rules; provided, however, that the
arbitrators shall not have the power to award punitive or consequential damages
under any circumstances (whether styled as punitive, exemplary, or treble
damages, or any penalty or punitive type of damages) regardless of whether such
damages may be available under applicable Law, the parties hereby waiving their
rights, if any, to recover any such damages, whether in arbitration or
litigation. Unless differently awarded by the arbitration tribunal, the fees and
expenses of the arbitrators shall be paid 50% by the Acquiror and 50% by the
Parent. The arbitration award may be enforced in any court having jurisdiction
over the parties and the subject matter of the arbitration. The arbitration
shall be held in New York, New York.
Section 14.11. Confidentiality Agreements. The Parent agrees that, until
--------------------------
the second anniversary of the Closing Date, it will not terminate, or waive any
provision of, any confidentiality agreement relating to information regarding
any of the Businesses entered into at any time during the period of two years
immediately preceding the date of this Agreement.
Section 14.12. Counterparts. This Agreement may be executed in multiple
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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Agreement and Plan of Recapitalization
78
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
PARENT
HALLIBURTON COMPANY
By: _____________________________
Name: _____________________________
Title: _____________________________
ACQUIROR
DEG ACQUISITIONS, LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name: _____________________________
Title: _____________________________
SELLER
DRESSER B.V.
By: _____________________________
Name: _____________________________
Title: _____________________________
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Agreement and Plan of Recapitalization
79
ANNEX A
DEFINITIONS
"AAA" shall have the meaning ascribed to such term in Section 14.10.
"AAA Rules" shall have the meaning ascribed to such term in Section 14.10.
"Accounting Firm" shall mean Ernst & Young LLP, independent public
accountants, Houston office.
"Acquiror" shall have the meaning ascribed to such term in the introductory
paragraph to this Agreement.
"Acquiror's Disclosure Letter" shall mean that letter, together with the
associated schedules, of even date herewith from the Acquiror to the Parent
setting forth, as required hereby, the information called for herein and the
discrepancies from the representations, warranties and covenants of the Acquiror
contained herein.
"Action" shall have the meaning ascribed to such term in subsection (a) of
Section 10.09.
"Adjusted Price" with respect to a particular product, component, spare
part or service supplied or rendered by the Businesses to any Designated
Regulatory Assets transferred to Parent pursuant to Section 8.05 shall mean the
price of such product, component, spare part or service on the date of such
transfer subject to such "cost of living" adjustments as are fair and reasonable
under the circumstances.
"Affiliate" shall mean a Person controlling, controlled by or under common
control with another Person. For this purpose, control shall mean the ability
to direct the management and affairs of a Person, whether through ownership of
securities, by contract or otherwise.
"Agency" shall mean any Governmental Authority entitled and empowered to
administer and enforce Environmental Laws.
"Agreement" shall have the meaning ascribed to such term in the
introductory paragraph of this instrument.
"Allocation Procedures" shall mean the procedures for allocation of the
Purchase Price Adjustment set forth on Annex ▇.
▇▇▇▇▇▇▇▇▇▇▇ Company
Agreement and Plan of Recapitalization
Annex A
"Ancillary Agreements" shall mean the Merger Agreement, the Assignment of
Name, the Highway 6 Lease Agreement, the Employee Benefits Agreement, the
Transition Services Agreement and the Stockholders' Agreement.
"Acquisition Proposal" shall have the meaning ascribed to such term in
Section 8.07.
"Asbestos Liability Claim" shall mean any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
giving rise to any liability or obligation (whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due), whether
based on strict liability or negligence, in respect of the exposure of any
Person of any of the Businesses to asbestos or in respect of any product
containing asbestos manufactured and sold or distributed by the Businesses.
Asbestos Liability Claim shall not include any Indemnifiable Environmental
Matter.
"Assignment of Name" shall mean an Assignment of Name between the Parent
and the Acquiror dated the Closing Date with respect to the use of the Dresser
name in form and substance substantially similar to the form thereof attached
hereto as Appendix IV.
"Assumed Contracts" shall mean all agreements and contracts, including all
indentures, mortgages, deeds of trust, chattel mortgages, conditional sales
agreements, supply contracts, sales contracts, purchase orders, real property
leases, equipment and vehicle leases, distribution agreements, joint venture
agreements, collective bargaining agreements and employment agreements, all as
the same may exist from time to time, to which any member of a Company Group is
a party or by which it is bound. The Assumed Contracts shall include (A) the
Principal Contracts, and (B) any Principal Contracts to which any member of a
Company Group shall become a party subsequent to the date hereof to the extent
such Principal Contracts are entered into in accordance with this Agreement and
are in effect as of the Closing Date.
"Assumed Obligations" shall mean all debts, liabilities, taxes and
obligations, contractual and otherwise, whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due, of any
member of a Company Group, except Excluded Liabilities and any other such
debts, liabilities, taxes and obligations with respect to which the Acquiror,
the Buyers, their Affiliates and the directors, officers and employees of such
Persons are entitled to indemnification pursuant to Article XII. Subject to the
foregoing, the Assumed Obligations shall include those of each member of each
Company Group (i) that were reflected in the Initial Financial Statements
(except to the extent such liabilities are excluded from the determination of
Net Equity pursuant to subsection (a) of Section 2.10), (ii) that were accrued
in the ordinary course of business of the Businesses conducted in accordance
with past practice during the period from the Initial Balance Sheet Date to the
Closing Date, (iii) that constitute contingent liabilities that arise out of or
are based on events occurring on or before the Closing Date, (iv) that
constitute the obligations of any member of a Company Group under Assumed
Contracts or (v) that constitute obligations assumed by DEGI pursuant to the
General Indenture between DEGI and Dresser Industries, a copy of which is
provided in Schedule A-1 to the Parent's Disclosure Letter. Notwithstanding the
foregoing, the Assumed Obligations shall not include (x) any such obligations
and liabilities that constitute federal, state, local and foreign income, sales,
use, property and other taxes, the
Halliburton Company
Agreement and Plan of Recapitalization
Annex A-2
disposition of which is governed by the provisions of Section 10.06 herein, and
(y) any such obligations and liabilities other than those included in clauses
(i) and (ii) above that relate to the Benefit Plans, the disposition of which is
governed by the Employee Benefit Agreement.
"Authorization" shall mean any franchise, permit, license, authorization,
order, certificate, registration or other consent or approval granted or
required by any Court or Governmental Authority.
"Bank Commitment Letter" shall mean the Senior Bank Commitment Letter dated
January 30, 2001 to DEG Acquisitions, LLC from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding
Inc. and Credit Suisse First Boston.
"Benefit Plan" shall mean any pension, profit sharing, retirement, life,
health, unemployment, accident, disability, stock bonus, stock ownership, stock
option, stock purchase, stock appreciation rights, phantom stock, other stock-
based, severance, employment, change-in-control, deferred compensation, bonus or
incentive compensation plan, agreement, program or policy (whether written or
oral) sponsored, maintained or contributed to by any member of either Company
Group for the benefit of or pursuant to which any Company Group member could
have liability with respect to any of their present or former directors,
officers, employees, agents, consultants or other similar representatives;
provided, however, that such term shall not include (a) routine employment
policies and procedures developed and applied in the ordinary course of business
and consistent with past practice and local custom, including wage, vacation,
holiday and sick or other leave policies, (b) programs mandated by applicable
Law and (c) directors' and officers' liability insurance.
"Books and Records" shall mean all books and records of a Person relating
to that Person's business, operations and activities, including all general and
other ledgers, records of corporate or organizational proceedings, tax records,
financial statements, documents of title to real/immovable and personal/movable
property, personnel records, salary and wage records, production records,
inventory records, sales documentation, correspondence, customer lists,
employment records and contracts and agreements to which such Person is a party
or by which it is bound, as well as related computer programs and files.
"Bridge Commitment Letter" shall mean the Bridge Commitment Letter dated
January 30, 2001 to DEG Acquisitions, LLC from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding,
Inc. and Credit Suisse First Boston.
"Business" shall mean any of (i) the Dresser Valve Business, (ii) the
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business, (iii) the Dresser Waukesha Business and (iv) the Dresser
Instrument - DMD - Roots Business; provided, however, the term "Business" shall
not include any Discontinued Product or Service Line. The term "Businesses"
shall mean all the Businesses, taken as a whole.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday unless such day shall be a day when financial institutions in the City of
New York, New York are authorized by Law to close.
Halliburton Company
Agreement and Plan of Recapitalization
Annex A-3
"Buyers" shall mean the companies identified as such in Annex C.
"BV Allocable Purchase Price" shall mean the portion of the Preliminary
Purchase Price allocated to the BV Companies as set forth on Annex C.
"BV Companies" shall mean the companies identified as such in Annex C.
"BV Group" shall mean, after giving effect to the Reorganization, each of
the BV Companies and their respective Subsidiaries and Non-Controlled Entities,
each of which is a "member" of the BV Group.
"BV Joint Venture" shall mean each of the following entities:
Penaga Grove Sdn. Bhd.
Dresser Tankanlagen GmbH & Co. Service KG
"BV Preliminary Purchase Price Percentage" shall mean the BV Allocable
Purchase Price divided by the Preliminary Purchase Price.
"Category 1 Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 2A Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 2B Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 3 Jurisdictions" shall mean the countries identified as such on
Schedule 2.13 to the Parent's Disclosure Letter.
"Category 1 Requirements" shall mean the expiration or termination of any
waiting period required under, any authorization required by or any other Legal
Requirement of the competition Laws of each Category 1 Jurisdiction with respect
to the transactions contemplated hereby.
"Category 2A Requirements" shall mean the expiration or termination of any
waiting period required under, any authorization required by or any other Legal
Requirement of the competition Laws of each Category 2A Jurisdiction with
respect to the transactions contemplated hereby.
"Category 2B Requirements" shall mean the expiration or termination of any
waiting period required under, any authorization required by or any other Legal
Requirement of the competition Laws of each Category 2B Jurisdiction with
respect to the transactions contemplated hereby.
"Claim" shall have the meaning ascribed to such term in subsection (a) of
Section 10.09.
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"Closing Balance Sheet" shall mean the audited consolidated balance sheets
of the Businesses included in the Closing Financial Statements.
"Closing Conditions" shall mean those conditions to the First Closing of
the transactions contemplated hereby contained in Article XI.
"Closing Date" shall have the meaning ascribed to such term in subsection
(a) of Section 2.04.
"Closing Financial Statements" shall mean the consolidated balance sheet of
the Businesses as of the Closing Date and the consolidated statements of results
of their operations for the interim period then ended, together with the notes
thereto, all prepared by the Acquiror in accordance with U.S. GAAP consistently
applied with the principles used in connection with the Initial Financial
Statements and audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP as set forth in their report with
respect thereto.
"Closing Notice" shall have the meaning ascribed to such term in subsection
(b) of Section 2.04.
"Closings" shall mean both the First Closing and the Second Closing.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Commitment Letters" shall mean the Bank Commitment Letter and the Bridge
Commitment Letter.
"Commitment Letter Term Sheets" means those certain term sheets attached as
Exhibits to the Commitment Letter(s).
"Company Group" shall mean the DEGI Group or the BV Group.
"Competing Business" shall have the meaning ascribed to such term in
Section 8.06.
"Confidentiality Agreement" shall mean the Confidentiality Agreement dated
September 14, 2000 between Dresser Industries and First Reserve Corporation, as
amended or supplemented from time to time.
"Contractual Transfer Restriction" shall mean obligations imposed by
Organizational Documents of a Person or by contract limiting or prohibiting the
alienation by a Person of any of the Securities or the Equity Securities of any
other member of a Company Group or creating a default, obligation, right (with
or without due notice, the passage of time, or action of any third Person) or a
right to acceleration of a payment obligation under any agreement or instrument
to which such Person is a party or by which any of them or their respective
properties or assets is bound.
"Controlled Group Liability" shall mean any and all liabilities (i) under
Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under sections 412 and
4971 of the Code, (iv) as a result of
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the failure to comply with the continuation of coverage requirements of section
601 et. seq. of ERISA and section 4980B of the Code, and (v) under corresponding
or similar provisions of foreign Laws and Regulations.
"Court" shall mean (i) any court established and functioning under the Laws
of any nation or state, including the United States of America, or any political
subdivision thereof, including any state of the United States of America or (ii)
any arbitration tribunal established and functioning under the rules of any
nationally or internationally recognized arbitration association or forum.
"Covered Jurisdictions" shall mean Category 1 Jurisdictions, Category 2A
Jurisdictions, Category 2B Jurisdictions and Category 3 Jurisdictions.
"Deductible Amount" shall have the meaning ascribed to such term in
subsection (a) of Section 12.02.
"DEGI" shall mean Dresser Equipment Group, Inc., a Delaware corporation.
"DEGI Common Stock" shall have the meaning ascribed to such term in
subsection (c) of Section 2.01.
"DEGI Group" shall mean each of DEGI and, after giving effect to the
Reorganization, its Subsidiaries and Non-Controlled Entities, each of which is a
"member" of the DEGI Group.
"DEGI Group Preliminary Purchase Price Percentage" shall mean the
percentage determined by subtracting the BV Preliminary Purchase Price
Percentage from 100%.
"DEGI Joint Venture" shall mean each of the following entities:
Dresser Al-Rushaid Valve and Instrument Company, Ltd.
Dresser-Nagano, Inc.
Manufacturas Petrolanos Venezolanos, S.A.
DS Controls
Saber Technologies, L.L.C.
GazDMD Avtomatika
"Designated Real Property" shall have the meaning ascribed to such term in
subsection (a) of Section 5.04.
"Designated Regulatory Assets" shall mean any assets located in a Category
2B Jurisdiction that were acquired directly or indirectly (by the acquisition of
Securities) by the Acquiror or any of its Affiliates pursuant to this Agreement
that a Governmental Authority or Court of competent jurisdiction has ordered
(which order is final and not subject to appeal) the Acquiror or any of its
Affiliates to dispose of (either directly or indirectly through the sale of
securities) in order to satisfy any Category 2B Requirements of such Category 2B
Jurisdiction.
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"Differences" shall have the meaning ascribed to such term in subsection
(b) of Section 2.09.
"Discontinued Product or Service Line" shall mean any product line or
services line formerly produced or provided by any member of a Company Group or
any predecessor of any of them that constituted a part of the Businesses but was
discontinued in its entirety prior to the date of this Agreement and was not
replaced with a product or service line designed for essentially the same use or
purpose as the discontinued product or service line.
"Dresser Industries" shall mean Dresser Industries, Inc., a Delaware
corporation and a wholly owned subsidiary of the Parent.
"Dresser Instrument - DMD - Roots Business" shall mean the business of the
manufacture, sale and distribution of pressure and temperature instruments,
rotary gas meters, specialty piping products, regulators and commercial blowers,
as conducted by the members of the Company Groups.
"Dresser Valve Business" shall mean the business of the manufacture, sale
and distribution of control valves, on/off valves, safety and safety relief
valves, actuators and control solutions, as conducted by the members of the
Company Groups.
"Dresser Waukesha Business" shall mean the business of the manufacturing of
gaseous-fueled industrial engines, as conducted by the members of the Company
Groups.
"▇▇▇▇▇▇▇ ▇▇▇▇▇ Business" shall mean the business of providing retail
fueling solutions, integrating fuel dispensers, pumps and peripherals, providing
point-of-sale systems and software, site services and maintenance for the retail
fueling segment of the energy value chain, as conducted by the members of the
Company Groups.
"Employee Benefits Agreement" shall mean an Employee Benefits Agreement
entered into as of the Closing Date between the Parent and the Acquiror, in form
and substance substantially similar to the form thereof attached hereto as
Appendix VI.
"Environmental Activities" shall have the meaning ascribed to such term in
subsection (b) of Section 12.05.
"Environmental Compliance Matter" shall mean any failure to be in
compliance with applicable Environmental Laws.
"Environmental Laws" shall mean any Laws or any Regulations of any
applicable Governmental Authority with legal jurisdiction of the Businesses and
the properties of the members of the Company Groups where such Laws and
Regulations pertain to pollution or protection of the environment or the impact
of environmental quality on human health and are applicable to a specified
Person or any of its Subsidiaries.
"Equity of DEGI" shall mean the aggregate of (i) the Investment by the
Acquiror, (ii) the aggregate consideration paid for Management Shares and (iii)
after the Merger, the investment in DEGI retained by Dresser Industries pursuant
to the provisions of subsection (b) of Section 2.03.
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"Equity Securities" shall mean (i) the shares of capital stock of a
corporation, (ii) the general or limited partnership interests in any
partnership, (iii) the membership or other ownership interest in any limited
liability company, (iv) the equity securities of or other ownership interests or
rights in any other legal entity; or (v) any option, warrant or other right to
convert into or otherwise receive any of the foregoing; in any such case,
whether owned or held beneficially or legally.
"ERISA" shall mean the United States Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" shall mean, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in section 414(b), (c), (m) or (o) of the Code or section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to section 4001(a)(14) of ERISA.
"Estimated Balance Sheet" shall have the meaning ascribed to such term in
subsection (a) of Section 2.08.
"Estimated Balance Sheet Date" shall have the meaning ascribed to such term
in subsection (a) of Section 2.08.
"Estimated Financial Statements" shall have the meaning ascribed to such
term in subsection (a) of Section 2.08.
"Estimated Purchase Price" shall have the meaning ascribed to such term in
subsection (b) of Section 2.08.
"Estimated Purchase Price Adjustment" shall have the meaning ascribed to
such term in subsection (c) of Section 2.08.
"Evaluation Material" shall have the meaning ascribed to such term in
subsection (c) of Section 8.03.
"Excluded Liability" shall mean all debts, liabilities, taxes and
obligations, contractual and otherwise, whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due, of the
Parent or any of its Subsidiaries that do not arise as a result of the operation
of the Businesses and are not accounted for as part of, the Businesses,
including any Product Liability Claim or Product Warranty Claim against any
member of a Company Group based on, or arising out of, any product, component or
other item manufactured, sold, designed or produced by, or service rendered by
or on behalf of, a member of a Company Group or any predecessor thereof pursuant
to any Discontinued Product or Service Line. The Excluded Liabilities shall, in
addition, include: (i) any other Product Liability Claim made on or prior to
the Closing Date, (ii) any Asbestos Liability Claim against any member of a
Company Group based on or arising out of events or occurrences with respect to
the Businesses prior to the First Closing, (iii) any loss, liability,
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damage or expense resulting from any action, suit or proceeding against any
member of either Company Group initiated prior to the Closing Date, (iv) any
loss, liability, damage or expense resulting from claims against any member of
either Company Group relating to insured risks, to wit: workmen's compensation,
general liability and automobile liability risks, arising out of or based on
events or occurrences prior to the Closing Date as to which the Acquiror has
notified the Parent prior to the third anniversary of the Closing Date, and (v)
any loss, liability, damage or expense of the Dresser Valve Business based on or
arising out of the absence in any alliance contract, any master purchase
agreement or any purchase order of any provision that expressly prohibits awards
of consequential damages as a partial remedy for breach of such contract;
provided, however, that no such loss, liability, damage or expense based on or
arising out of the absence of such an express prohibition in any such contract
after the first renewal or extension thereof following the Closing Date shall be
an Excluded Liability (and, whether or not actually renewed, all such contracts
shall for this purpose be deemed renewed on the second anniversary of the
Closing Date).
"Expenses" shall have the meaning ascribed to such term in Section 10.05.
"FAS No. 5" shall have the meaning ascribed to such term in subsection (d)
of Section 11.02.
"First Closing" shall have the meaning ascribed to such term in subsection
(a) of Section 2.04.
"Forms" shall have the meaning ascribed to such term in subsection (c) of
Section 10.06.
"Governmental Authority" shall mean any national, federal, regional, state,
local or other governmental agency, authority, administrative agency, regulatory
body, commission or instrumentality (other than a Court), including any
multinational authority having governmental or quasi-governmental powers.
"Hazardous Materials" shall mean any (A) petroleum or petroleum products or
petroleum wastes (including crude oil or any fraction thereof), radioactive
materials emitting radiation in excess of local background conditions, friable
asbestos or friable asbestos-containing material, urea formaldehyde foam
insulation, and polychlorinated biphenyls, or (B) chemicals, materials or
substances which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "dangerous
substances," "dangerous wastes," "pollutants" or "toxic pollutants," or words of
similar import, under any Environmental Law or Regulation.
"Hazardous Materials Contamination" shall mean the existence of Hazardous
Materials on, about or under a property at or in excess of levels that could
reasonably be expected to require investigation, remediation or monitoring under
applicable Environmental Laws in the jurisdiction in which the property is
located.
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"Highway 6 Deed" shall mean a general warranty deed from an affiliate of
the Parent to the Acquiror or a Subsidiary of the Acquiror dated the Closing
Date with respect to the real property described in the Highway 6 Lease.
"Highway 6 Lease" shall mean a lease agreement between the Acquiror or a
Subsidiary of the Acquiror, as lessor, and the Parent or a Retained Subsidiary,
as lessee, and an access agreement between the same parties relating to a
certain transite test well, each in form and substance substantially similar to
the forms thereof attached hereto as Appendix V and relating to the real
property therein described.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnifiable Environmental Matters" shall mean:
(a) Hazardous Materials Contamination existing on any current Real
Property that is (i) identified in environmental site assessment
reports and studies listed in Schedule 5.11 to the Parent's Disclosure
Letter ("Known Hazardous Materials Contamination") and (ii) requires
Environmental Activities (under the standards set forth in subsection
(b) of Section 12.05) as of the Closing Date under applicable
Environmental Laws existing as of the Closing Date (together, "Covered
Known Hazardous Materials Contamination");
(b) Hazardous Materials Contamination existing on any current or former
Real Property of any member of any Company Group or generated by any
member of any Company Group, other than Known Environmental
Conditions, that requires Environmental Activities (under the
standards set forth in subsection (b) of Section 12.05) as of the
Closing Date under applicable Environmental Laws existing as of the
Closing Date ("Unknown Hazardous Materials Contamination");
(c) Environmental Compliance Matters that are identified in Schedule 5.11
to the Parent Disclosure Letter ("Known Environmental Compliance
Matters");
(d) Environmental Compliance Matters as of the Closing Date related to the
Businesses and any member of either Company Group, other than any
Known Environmental Compliance Matters ("Unknown Environmental
Compliance Matters"); and
(e) any matter set forth in the Parent's Disclosure Letter as an exception
to subsection (c) of Section 5.11.
"Indemnification Notice" shall have the meaning ascribed to such term in
subsection (a) of Section 12.04.
"Indemnified Party" shall mean the Person or Persons entitled to
indemnification under Section 12.02 or 12.03.
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"Indemnifying Party" shall mean the Person or Persons obligated to
indemnify the Indemnified Parties under Section 12.02 or 12.03.
"Initial Balance Sheet" shall mean the audited combined balance sheet as of
September 30, 2000 included in the Initial Financial Statements.
"Initial Balance Sheet Date" shall mean September 30, 2000.
"Initial Financial Statements" shall mean the consolidating statements of
assets contemplated for sale and liabilities expected to be transferred of the
Dresser Equipment Group as of September 30, 2000 and December 31, 1999 and the
related consolidating statements of revenues and expenses excluding certain
items for the nine month period ended September 30, 2000 and for the year ended
December 31, 1999 and 1998, pursuant to the Halliburton Company Information
Memorandum and the draft purchase and sale agreement, together with the notes
thereto, all as audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP as set forth in their report
dated December 11, 2000 with respect thereto and for which the basis of
presentation is set forth in note (2) thereto.
"Intellectual Property" shall mean all domestic or foreign patents, patent
applications, inventions, disclosures, trademarks, service marks and
registrations therefor, trade names, copyrights, copyright registrations, trade
secrets, knowhow, processes, logos, proprietary computer software, proprietary
technology, slogans, research and development projects and all other proprietary
rights of any kind or character, wherever located, that are used or being
developed in connection with the Businesses and the confidential information
owned by or licensed to and used in connection with such knowhow or processes or
in the conduct of the Businesses ("Intellectual Property"), but which in no
event shall include the name "Halliburton" (or any version or variation thereof)
or any trademarks, trade names or symbols related thereto, together with such
additions, deletions and changes to the Intellectual Property as may be
permitted by this Agreement prior to the Closing Date.
"Intercompany Account" shall mean all the accounts maintained by the Parent
and its Subsidiaries in their Books and Records to reflect indebtedness owed by
the Parent and its Subsidiaries to other Subsidiaries and by Subsidiaries of the
Parent to other Subsidiaries or to the Parent.
"Intercompany Indebtedness" shall mean indebtedness reflected in the
Intercompany Account, including any obligation to contribute to the consolidated
federal income tax liability, whether or not evidenced by a promissory note or
other security and whether payable on demand or having a scheduled maturity,
owing either (A) from any member of either Company Group to any member of the
Parent Group or (B) from any member of the Parent Group to any member of either
Company Group.
"Investment" shall have the meaning ascribed to such term in Section 2.01.
"Knowledge" shall mean, with respect to the Parent, the actual knowledge of
any of the individuals listed on Schedule A-2 to the Parent's Disclosure Letter.
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Annex A-11
"Laws" shall mean all laws, statutes and ordinances of any nation or state,
including the United States of America, and any political subdivision thereof,
including any state of the United States of America, including all decisions of
Courts having the effect of law in any such jurisdiction.
"Legal Requirements" shall mean the obligations applicable to a specific
Person imposed by Laws, Regulations and Orders.
"Lenders" shall mean the lenders under the Bank Commitment Letter and the
Bridge Commitment Letter.
"Lien" shall mean any mortgage, pledge, security interest, adverse claim,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature thereof or the filing of or agreement to give any financing
statement under the Laws of any jurisdiction; provided, however, that the term
Lien shall not include a Permitted Encumbrance.
"Loan" shall have the meaning ascribed to such term in Section 2.01.
"Loan Documents" shall mean the documents relating to the Loan to be made
to DEGI pursuant to the Commitment Letters.
"Losses" shall have the meaning ascribed to such term in subsection (a) of
Section 12.02.
"Management Shares" shall mean the aggregate number of shares of DEGI
Common Stock purchased prior to the First Closing by those individuals who will
constitute members of management of the Acquiror and (after the Closings) its
Subsidiaries to the extent that such shares of DEGI Common Stock qualify as
retained equity for purposes of the Recapitalization of DEGI.
"Material" shall mean:
(a) when used in any representation, warranty, covenant or condition of
the Acquiror, material to the business, assets, results of operations,
condition (financial and otherwise) or prospects of the Acquiror and
its Subsidiaries, taken as a whole; or
(b) when used in the context of any representation, warranty, covenant or
condition of the Parent or the Seller to be confirmed as required by
any Closing Condition, material to the business, assets, results of
operations, condition (financial and otherwise) or prospects of the
Businesses or, in the case of any matter susceptible of monetary
quantification, any condition, circumstance, event, change or effect
that could reasonably be expected to have an adverse effect measured
in monetary terms equal to U.S. $15,000,000 or more; provided,
however, that, when used with reference to the Parent, the term shall
apply to the Parent and its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean:
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(a) when used in any representation, warranty, covenant or condition of
the Acquiror, any condition, circumstance, event, change or effect
that could reasonably be expected to have a material and adverse
effect on the business, assets, results of operations, condition
(financial and otherwise) or prospects of the Acquiror and its
Subsidiaries, taken as a whole; or
(b) when used (i) in the context of any representation, warranty, covenant
or condition of the Parent or the Seller to be confirmed as required
by any Closing Condition, any condition, circumstance, event, change
or effect that could reasonably be expected to have a material and
adverse effect on the business, assets, results of operations,
condition (financial and otherwise) or prospects of the Businesses,
or, in the case of any matter susceptible of monetary quantification,
any condition, circumstance, event, change or effect that could
reasonably be expected to have an adverse effect measured in monetary
terms of U.S. $15,000,000 or more; provided, however, that, when used
with reference to the Parent, the term shall apply to any condition,
circumstance, event, change or effect that could reasonably be
expected to have a material and adverse effect on the business,
assets, results of operations, condition (financial and otherwise) or
prospects of the Parent and its Subsidiaries, taken as a whole.
"Merger" shall have the meaning ascribed to such term in subsection (c) of
Section 2.01.
"Merger Agreement" shall mean a Merger Agreement dated the Closing Date
among Dresser Industries, DEGI and Transitory Merger Sub in form and substance
substantially similar to the form thereof attached hereto as Appendix I and
pursuant to which the Transitory Merger Sub shall merge with and into DEGI.
"Merger Consideration" shall have the meaning ascribed to such term in
subsection (c) of Section 2.01.
"Net Equity" shall mean the difference between the consolidated total
assets and the consolidated total liabilities of the Businesses as determined as
of the Initial Balance Sheet Date, the Estimated Balance Sheet Date or the
Closing Date and presented in the Initial Balance Sheet, the Estimated Balance
Sheet or the Closing Balance Sheet, respectively.
"Non-Controlled Entity" shall mean each of the following entities:
Dresser Al-Rushaid Valve and Instrument Company, Ltd.
Manufacturas Petrolanos Venezolanos, S.A.
Penaga Grove Sdn. Bhd.
DS Controls
Dresser Tankanlagen GmbH & Co. Service KG
GazDMD Avtomatika
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"Offering Documents" shall have the meaning ascribed to such term in
subsection (a) of Section 8.09.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority of competent jurisdiction.
"Organizational Documents" shall mean, with respect to any entity, the
certificate of incorporation, by-laws, articles of organization, limited
liability company agreement, partnership agreement, formation agreement, joint
venture agreement or other similar organizational documents of such entity.
"Parent" shall have the meaning ascribed to such term in the introductory
paragraph to this Agreement.
"Parent Benefit Plans" shall mean, collectively, (i) the Benefit Plans that
are also sponsored, maintained or contributed to by one or more members of the
Parent Group for the benefit of any of their present or former directors,
officers, employees, agents, consultants or other similar representatives and
(ii) any other Material pension, profit sharing, retirement, life, health,
unemployment, accident, disability, stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock, other stock-based,
severance, employment, change-in-control, deferred compensation, bonus or
incentive compensation plan, agreement, program or policy, whether written or
oral, sponsored, maintained, or contributed to by the Parent or the Seller
pursuant to which the Parent or the Seller could have any Material liability
with respect to, any of the present or former directors, officers, employees,
agents, consultants or other similar representatives of the Company Groups but
solely with respect to any such individual's capacity as a present or former
director, officer, employee, agent, consultant or similar representative of a
Company Group.
"Parent Group" shall mean the Parent and each of the Subsidiaries of the
Parent other than any member of either Company Group.
"Parent's Disclosure Letter" shall mean that letter, together with the
associated schedules, of even date herewith, from the Parent to the Acquiror
setting forth, as required hereby, the information called for herein and the
discrepancies from the representations, warranties and covenants of the Parent
contained herein.
"Permitted Encumbrances" shall mean the following:
(a) liens for taxes, assessments and other governmental charges not
delinquent or which are currently being contested in good faith by
appropriate proceedings; provided that, in the latter case, the
specified Person or one of its Subsidiaries shall have set aside on
its books adequate reserves with respect thereto in accordance with
U.S. GAAP;
(b) mechanics' and materialmen's liens not filed of record and similar
charges not delinquent or which are filed of record but are being
contested in good faith by
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appropriate proceedings; provided that, in the latter case, the
specified Person or one of its Subsidiaries shall have set aside on
its books adequate reserves with respect thereto in accordance with
U.S. GAAP;
(c) liens in respect of judgments or awards with respect to which the
specified Person or one of its Subsidiaries shall in good faith
currently be prosecuting an appeal or other proceeding for review and
with respect to which such Person or such Subsidiary shall have
secured a stay of execution pending such appeal or such proceeding for
review; provided that, such Person or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto;
(d) easements, leases, reservations or other rights of others in, or minor
defects and irregularities in title to, property or assets of a
specified Person or any of its Subsidiaries; provided that, such
easements, leases, reservations, rights, defects or irregularities do
not materially impair the use of such property or assets for the
purposes for which they are held; and
(e) any lien or privilege vested in any lessor, licensor or permittor for
rent or other obligations of a specified Person or any of its
Subsidiaries thereunder so long as the payment of such rent or the
performance of such obligations is not delinquent.
"Person" shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but shall not include a Court or Governmental Authority.
"Post-Closing Payment Amount" shall have the meaning ascribed to such term
in subsection (f) of Section 2.09.
"Preliminary Purchase Price" shall have the meaning ascribed to such term
in subsection (b) of Section 2.03.
"Principal Contract" shall mean any contract, written or oral, to which any
member of either Company Group is a party (in the latter case, that relates to
one or more of the Businesses) that is not terminable without substantial
penalty at the option of such member of a Company Group on sixty days' notice or
less and under which the monetary value to the Businesses of the executory
portion of the contract exceeds U.S. $1 million or the monetary cost to the
Businesses of the executory portion of the contract exceeds U.S. $1 million;
provided, however, that no purchase order relating to products or services of
the Businesses entered into in the ordinary course of business shall constitute
a Principal Contract.
"Proceedings" shall have the meaning ascribed to such term in subsection
(a) of Section 12.02.
"Product Liability Claim" shall mean any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand giving rise to any liability
or obligation (whether known or
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unknown, accrued, absolute, contingent or otherwise, and whether due or to
become due), whether based on strict liability or negligence, in respect of any
product, component or other item manufactured, sold, designed or produced at any
time by, or service rendered at any time by or on behalf of, a specified Person
in connection with any of the Businesses.
"Product Warranty Claim" shall mean any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand giving rise to any liability
or obligation (whether known or unknown, accrued, absolute, contingent or
otherwise, and whether due or to become due) under any guaranty, warranty,
indemnity or other contract, express or implied, with respect to any product,
component or other item manufactured, sold, designed or produced at any time by,
or service rendered at any time by or on behalf of, a specified Person in
connection with any of the Businesses.
"Purchase Price" shall have the meaning ascribed to such term in subsection
(a) of Section 2.03.
"Purchase Price Adjustment" shall have the meaning ascribed to such term in
subsection (e) of Section 2.09.
"Real Property" shall mean all real property used in the Businesses,
whether owned or leased by any member of the Company Groups.
"Recapitalization" shall mean a transaction in which the Acquiror acquires
the majority but not substantially all of DEGI (as distinct from the BV
Companies) under circumstances in which "push-down" accounting is not required
with respect to the books of DEGI by the application of the SEC's Staff
Accounting Bulletin No. 54.
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any self-
regulatory organization, such as a national securities exchange in the United
States of America.
"Regulatory Transfer Restriction" shall mean any Legal Requirement that
imposes an obligation on the Parent or any of its Affiliates or on the Acquiror
or any of its Affiliates to obtain the consent or approval of any Court or
Governmental Authority in connection with the transfer of the Securities to the
Acquiror or any Buyer.
"Related Party Contract" shall mean a Principal Contract between a member
of a Company Group and a member of the Parent Group (but which does not include
any Surety Arrangement); provided, however, that any contract to which a Person
that is not an Affiliate of the Parent is a party shall not be a Related Party
Contract; and provided, further, that no purchase order or contract or agreement
for the purchase or sale of supplies or services in the ordinary course of
business shall be deemed to be a Related Party Contract.
"Release" shall have the meaning specified in the United States
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA"), as currently in effect; provided however, that, to the extent the
Environmental Laws of the state or locality in which
Halliburton Company
Agreement and Plan of Recapitalization
Annex A-16
the properties of any member of either Company Group are located establish a
meaning for "Release" that is broader than that specified in CERCLA such broader
meaning shall apply.
"Reorganization" shall mean the aggregate of the corporate and other
organizational transfers, combinations and separations to which reference is
made in Annex B and that are necessary to result in the overall corporate
structure necessary to permit the transactions contemplated by this Agreement.
"Representatives" shall mean, with respect to the Parent or the Acquiror,
its officers, directors, employees, accountants, consultants, legal counsel,
agents and other representatives.
"Retained Subsidiary" shall mean any Subsidiary of the Parent other than
any member of either Company Group.
"SEC" shall mean the Securities and Exchange Commission.
"Second Closing" shall have the meaning ascribed to such term in subsection
(c) of Section 2.04.
"Section 338 Election" shall have the meaning ascribed to such term in
subsection (a) of Section 10.06.
"Section 338(h)(10) Elections" shall have the meaning ascribed to such term
in subsection (c) of Section 10.06.
"Securities" shall mean those shares of DEGI Common Stock owned by Dresser
Industries that are to be converted into cash pursuant to the Merger Agreement,
the shares of DEGI Common Stock to be issued to the Acquiror in the Merger and
the issued and outstanding Equity Securities of each BV Company that are to be
sold pursuant to this Agreement.
"Securities Act" shall have the meaning ascribed to such term in Section
7.05.
"Securities Exchange Act" shall have the meaning ascribed to such term in
Section 8.08.
"Seller" shall have the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"Significant" and any variation thereof shall mean, when used to modify an
obligation, an obligation or increase in an obligation having a monetary value
of (i) U.S. $50,000 or more in case of any such value for an individual or (ii)
U.S. $250,000 or more in case of any such value for a Person other than an
individual.
"Significant Benefit Plan" shall mean (a) a Benefit Plan with aggregate
benefit liabilities or assets as of the date of this Agreement of U.S. $500,000
or more, (b) a Benefit Plan that is reasonably expected to cost the Company
Groups in the aggregate U.S. $500,000 or more per annum
Halliburton Company
Agreement and Plan of Recapitalization
Annex A-17
to maintain or (c) any Parent Benefit Plan of the type described in clause (ii)
of the definition of "Parent Benefit Plan" that is reasonably expected to cost
the Company Groups in the aggregate U.S. $500,000.
"Stockholders' Agreement" shall mean a Stockholders' Agreement to be
entered into as of the Closing Date between the Parent and the Acquiror, the
terms of which are attached hereto as Appendix VIII and which shall be in form
and substance reasonably satisfactory to the Parent and the Acquiror.
"Subsidiary" shall mean, with respect to a specified Person, any
corporation, partnership, limited liability company, joint venture or other
legal entity of which the specified Person (either alone or through or together
with any other Subsidiary) owns, directly or indirectly, more than fifty percent
(50%) of the Equity Securities the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
"Surety Arrangements" shall mean a contract or agreement under which the
Parent or any Retained Subsidiary shall have agreed to act as guarantor or
surety with respect to any obligation of any member of a Company Group, whether
by guaranty, suretyship contract, letter of credit (including as the
reimbursement party in connection with any letter of credit), indemnity
agreement, performance bond or otherwise.
"Tax" or "Taxes" means any and all federal, state, local or foreign taxes,
levies, imposts or withholdings of any nature whatsoever imposed by or on behalf
of any Governmental Authority (including income (gross and net), franchise,
gross receipt, capital stock, production, business and occupation, disability,
employment, payroll, license, estimated, ad valorem, sales, rental, use,
turnover, value added, property (tangible and intangible), windfall profit,
goods and services, excise and stamp taxes), together with any and all
assessments, penalties, fines, additions and interest relating thereto.
"Tax Consequence" shall have the meaning ascribed to such term in
subsection (b) of Section 10.06.
"Tax Items" shall have the meaning ascribed to such term in subsection (a)
of Section 5.08.
"Tax Returns" shall mean any report, return, declaration, claim for refund
or statement of other information with respect to Taxes, including any schedule,
attachment or amendment thereto.
"Terminating Acquiror Breach" shall have the meaning ascribed to such term
in subsection (b) of Section 13.01.
"Terminating Parent Breach" shall have the meaning ascribed to such term in
subsection (c) of Section 13.01.
"Termination Date" shall have the meaning ascribed to such term in
subsection (d) of Section 13.01.
Halliburton Company
Agreement and Plan of Recapitalization
Annex A-18
"Third Person Consents" shall mean any approval, consent, amendment or
waiver of a Person, other than a wholly owned Subsidiary of the Parent, that is
required under any Organizational Document relating to the Parent, the Seller or
any member of either Company Group or the Acquiror or any Buyer or under any
contract to which any of the foregoing is a party or by which any of them or any
of their properties or assets is bound in order to effect the transactions
contemplated hereby or any part thereof, including waivers and consents by
lenders and waivers of Transfer Restrictions.
"Transfer Restrictions" shall mean Regulatory Transfer Restrictions and
Contractual Transfer Restrictions.
"Transfer Taxes" shall have the meaning ascribed to such term in Section
10.04.
"Transition Services Agreement" shall mean a Transition Services Agreement
entered into as of the Closing Date between the Parent and the Acquiror, the
terms of which are attached hereto as Appendix VII and which shall be in form
and substance reasonably satisfactory to the Parent and the Acquiror.
"Transitory Merger Sub" shall mean DEG Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of the Acquiror.
"United States Dollars" (including "Dollars," "U.S. Dollars" and "U.S. $")
shall mean the lawful currency of the United States of America.
"U.S. GAAP" shall mean accounting principles generally accepted in the
United States of America, including generally accepted accounting principles as
interpreted by the SEC. For the avoidance of doubt, the term, "U.S. GAAP," when
used herein, shall mean the accounting principles generally accepted by the SEC
as reflected in Regulation S-X promulgated under the Securities Exchange Act as
in effect from time to time.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended.
"Year End Financial Statements" shall have the meaning ascribed to such
term in subsection (a) of Section 2.08.
Halliburton Company
Agreement and Plan of Recapitalization
Annex A-19
ANNEX B
REORGANIZATION
The Parent shall cause the following steps to be completed on or prior to the
Closing Date.
I. Europe
1. Dresser Europe G.m.b.H. distributes the DM 28.3 million note received on
December 29, 2000 for shares of Baroid G.m.b.H. and DB Stratabit G.m.b.H.
to Dresser Europe S.P.R.L.
2. Dresser Europe S.P.R.L. sells the assets of its non-DEG operations to
Dresser B.V. in exchange for a note.
3. Dresser Europe S.P.R.L. distributes the notes received in steps 1 and 2
above to Dresser B.V.
4. Dresser Produits Industriels S.A.S. distributes the shares of Dresser Congo
S.A.R.L. and ▇▇▇▇▇▇▇ France S.A. to Dresser B.V.
5. Masoneilan International, L.L.C. contributes its 75% of the shares of
Masoneilan S.A. to Halliburton Holding B.V.
6. Halliburton Holding B.V. contributes the 75% of the shares of Masoneilan
S.A. received in step 5 above to Dresser B.V.
7. Dresser Equipment Group, Inc. forms Dresser International, Inc., a Delaware
corporation.
8. Dresser Industries, Inc. sells its shares of Dresser Valves Europe G.m.b.H.
to Dresser Europe G.m.b.H. for a note in the amount of $11.1 million.
9. Dresser Industries, Inc. contributes the $11.1 million note received in
step 8, above, to Dresser Equipment Group, Inc.
10. Dresser Netherlands B.V. sells the shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇ AB to Dresser
B.V. for $10.
11. Dresser Equipment Group, Inc. purchases the Lira note receivable held by
Dresser Ireland Finance Company.
12. Dresser International, Inc. creates the following new entities:
a. Italy Newco S.R.L.
b. France Newco S.A.S.
c. Belgium Newco S.A.
d. Netherlands Newco B.V.
Halliburton Company
Agreement and Plan of Recapitalization
Annex B
e. Sweden Newco ▇▇
▇▇. Latin America
1. Dresser International, Inc. forms Ven Newco S.R.L., a Venezuelan sociedad
de responsibilidad limitada.
2. Servicios Halliburton de Venezuela C.A. sells the assets of its DMD/Roots
operation to Ven Newco S.R.L. in exchange for a note.
3. Halliburton de Mexico S.A. de C.V. sells the shares of Dresser Valve de
Mexico S.A. de C.V. and Dresser Instruments S.A. de C.V. to Dresser
International, Inc. for a note.
4. Dresser Industries, Inc. loans an amount equal to the note described in
step 3 above to Dresser Equipment Group, Inc.
5. Dresser Equipment Group, Inc. loans funds from step 4 above to Dresser
International, Inc.
6. Dresser International, Inc. pays the note to Halliburton de Mexico S.A. de
C.V. described in step 3 above.
7. [Intentionally omitted.]
8. Dresser International, Inc. purchases the shares of Dresser Industria e
Commercio Ltda. from Dresser Industries, Inc.
9. Dresser Industries, Inc. contributes its 44.75% of the shares of
Manufacturas Petroleros Venezolanos S.A. to Dresser Equipment Group, Inc.
10. Dresser Equipment Group, Inc. contributes the 44.75% of the shares of
Manufacturas Petroleros Venezolanos S.A. received in step 9 above to
Dresser International, Inc.
III. United Kingdom
1. Dresser International, Inc. forms a new U.K. limited company, DEG U.K. Ltd.
2. Dresser UK Limited sells the tangible assets of its Valve, ▇▇▇▇▇ and IDR
divisions to DEG U.K. Ltd.
3. Grove T.K. Valve Ltd. sells the tangible assets of its Valve division to
DEG U.K. Ltd.
4. Dresser UK Limited sells the intangible assets of its Valve, ▇▇▇▇▇ and IDR
divisions to Dresser International, Inc.
Halliburton Company
Agreement and Plan of Recapitalization
Annex B-2
5. Grove T.K. Valve Ltd. sells the intangible assets of its Valve division to
Dresser International, Inc.
IV. Canada
1. Dresser International, Inc. forms a new Canadian corporation, DEG (Canada)
Inc.
2. Halliburton Group Canada, Inc. sells its DEG tangible assets to DEG
(Canada) Inc.
3. Halliburton Group Canada, Inc. sells its DEG intangible assets to Dresser
International, Inc.
V. Miscellaneous Jurisdictions
1. Dresser International, Inc. creates Japan Newco Ltd.
2. Dresser Industries, Inc. sells the shares of Niigata Masoneilan Co. Ltd. to
Japan Newco Ltd.
3. Dresser Industries, Inc. contributes the shares of Dresser Russia, Inc. to
Dresser Equipment Group, Inc.
4. Dresser Equipment Group, Inc. contributes the shares of Dresser Russia,
Inc. received in step 3 above to Dresser International, Inc.
5. Dresser Industries, Inc. contributes the shares of Dresser Korea Inc. to
Dresser Equipment Group, Inc.
6. Dresser Equipment Group, Inc. contributes the shares of Dresser Korea Inc.
received in step 5 above to Dresser International, Inc.
7. Dresser Industries, Inc. contributes its 49.9% interest in Saber
Technologies, L.L.C. to Dresser Equipment Group, Inc.
8. Dresser Industries, Inc. contributes its 71.4% of the shares of Dresser-
Nagano Inc. to Dresser Equipment Group, Inc.
9. Masoneilan International, L.L.C. distributes the shares of Dresser Latvia
Ltd. to Dresser Industries, Inc.
10. Dresser Industries, Inc. contributes the shares of Dresser Latvia Ltd.
received in step 9 above to Dresser Equipment Group, Inc.
11. Dresser Equipment Group, Inc. contributes the shares of Dresser Latvia Ltd.
to Dresser International, Inc.
Halliburton Company
Agreement and Plan of Recapitalization
Annex B-3
11A. Dresser International, Inc. contributes the shares of Dresser Latvia
Ltd. received in step 11 above to Netherlands Newco B.V.
12. Dresser International, Inc. forms a new Singapore private limited company,
DEG Singapore Pte. Ltd.
13. Dresser Singapore Pte. Ltd. sells the assets of its DEG operations to DEG
Singapore Pte. Ltd.
14. Masoneilan International, L.L.C. distributes the shares of Dresser Valve
India Pte. Ltd. to Dresser Industries, Inc.
15. Dresser Industries, Inc. contributes the shares of Dresser Valve India
Pte. Ltd. received in step 14 above to Dresser Equipment Group, Inc.
16. Dresser Equipment Group, Inc. contributes the shares of Dresser Valve
India Pte. Ltd. received in step 15 above to Dresser International, Inc.
16A. Dresser International, Inc. contributes the shares of Dresser Valve India
Pte. Ltd. received in step 16 above to Netherlands Newco B.V.
17. Masoneilan International, LLC distributes the assets of its Dubai Branch
(UAE) to Dresser Industries, Inc.
18. Dresser Industries, Inc. contributes the Dubai Branch (UAE) assets
received in step 17 above to Dresser Equipment Group, Inc.
19. Dresser Equipment Group, Inc. contributes the Dubai Branch (UAE) assets
received in step 18 above to Dresser International, Inc.
20. Dresser AG sells its 49% interest in Dresser Al-Rushaid Valve & Instrument
Company, Ltd. (Saudi Arabia) to Dresser International, Inc.
21. Dresser Equipment Group, Inc. distributes the shares of Dresser Holding,
Inc., to Dresser Industries, Inc.
22. Dresser Singapore Pte. Ltd. transfers the registration of its Beijing Rep.
Office to Dresser International, Inc.
23. Dresser Industries, Inc. transfers the registration of its China Rep.
Office to Dresser International, Inc.
24. Dresser AG sells the assets of its South African Branch to Dresser
International, Inc.
25. Stock of newly-formed Nigerian Limited Company is transferred to the
entities designated by the Acquiror.
Halliburton Company
Agreement and Plan of Recapitalization
Annex B-4
26. Dresser Industries, Inc. contributes its 31% of the stock of GAZDMD
Avtomatika, a Russian closed joint stock company, to Dresser Equipment
Group, Inc.
27. Dresser Equipment Group, Inc. transfers the 31% of the stock of GAZDMD
Avtomatika received in step 26 above to Dresser International, Inc.
28. Dresser International, Ltd. merges into Dresser Equipment Group, Inc.
Halliburton Company
Agreement and Plan of Recapitalization
Annex B-5
ANNEX C
LIST OF THE SELLER, BUYERS AND BV COMPANIES,
AND BV ALLOCABLE PURCHASE PRICE
Allocation of BV
Allocable Purchase
Seller Buyer BV Company Price/1/
----------------------- --------------------------- --------------------- --------------------
(millions)
1. Dresser B.V. Italy Newco S.R.L. Dresser Italia S.R.L. $124.9
2. Dresser B.V. (75%) Dresser International, Inc. Masoneilan S.A. 3.9
3. Dresser B.V. France Newco S.A.S. Dresser Produits 67.6
Industries S.A.S.
4. Dresser B.V. Japan Newco Dresser Japan Ltd. 1.6
5. Dresser B.V. Sweden Newco ▇▇▇▇▇▇▇ ▇▇▇▇▇ AB 18.2
6. Dresser B.V. Belgium Newco S.P.R.L. Dresser Europe 23.3
S.P.R.L.
7. Dresser B.V. Netherlands Newco B.V. Dresser Industrial 15.4
Products B.V.
8. Dresser B.V. Netherlands Newco B.V. Dresser Netherlands 1.7
B.V.
9. Dresser B.V. Netherlands Newco B.V. Dresser Polska Sp. 5.0
Zo.o
10. Dresser B.V. Netherlands Newco B.V. Dresser Finland Oy .2
------
BV Allocable Purchase Price $261.8
======
1 The allocation of the BV Allocable Purchase Price among the BV Companies, as
set forth above, has been agreed among the Parent, the Acquiror and the Seller
on the basis of available financial data. Upon further analysis, the Parent, the
Seller and the Acquiror may agree in writing to amend the allocation of the BV
Allocable Purchase Price as among the BV Companies set forth above.
Halliburton Company
Agreement and Plan of Recapitalization
Annex C
ANNEX D
ALLOCATION PROCEDURES FOR PURCHASE PRICE ADJUSTMENT
The Purchase Price Adjustment, if any, shall be allocated as follows:
To the extent that the Net Equity of any BV Company set forth on Annex C
hereto increases or decreases from the Initial Balance Sheet Date to the Closing
Date, the Purchase Price allocated to that BV Company shall be increased or
decreased accordingly. The balance of any Purchase Price Adjustment shall be
allocated to DEGI.
Halliburton Company
Agreement and Plan of Recapitalization
Annex D
Appendix I
FORM OF
AGREEMENT AND PLAN OF MERGER
By and Among
Dresser Industries, Inc.,
Dresser Equipment Group, Inc.
and
DEG Acquisition Corporation
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of ___________, 2001 (this
"Merger Agreement"), is by and among Dresser Industries, Inc., a Delaware
corporation ("Dresser Industries"), Dresser Equipment Group, Inc., a Delaware
corporation and a wholly owned subsidiary of Dresser Industries ("DEGI") and DEG
Acquisition Corporation, a Delaware corporation ("Transitory Merger Sub") and a
wholly owned subsidiary of DEG Acquisitions, LLC, a Delaware limited liability
company (the "Acquiror").
RECITALS:
Halliburton Company, a Delaware corporation ("Halliburton") and the owner
of all the outstanding capital stock of Dresser Industries, the Acquiror and the
Seller named therein have executed and delivered an Agreement and Plan of
Recapitalization ("the Agreement") dated January 30, 2001 relating to certain
transactions pursuant to which, when consummated, Dresser Industries will
effectively have transferred to the Acquiror in excess of 94% of its capital
stock interest in DEGI and, following the Reorganization, the Subsidiaries of
DEGI and the Non-Controlled Entities (the "Dresser Equipment Group").
One of the transactions contemplated by the Agreement is the Merger
provided for herein.
The Boards of Directors of Halliburton, the Acquiror and the Seller have
approved the Agreement and desire to consummate the transactions contemplated
thereby.
The Boards of Directors of DEGI and Transitory Merger Sub have approved and
adopted this Merger Agreement and the Board of Directors of Dresser Industries
as the owner of all the issued and outstanding capital stock of DEGI has
approved this Merger Agreement and the Merger.
[Before entering into this Merger Agreement, the 1,000 shares of DEGI
Common Stock issued and outstanding were, pursuant to the authorization of the
Board of Directors of DEGI and the Board of Directors of Dresser Industries as
the sole stockholder of DEGI, divided, on the basis of _________ shares for each
outstanding share of DEGI Common Stock, into ____________ shares of DEGI Common
Stock, all of which is owned of record and beneficially by Dresser Industries
immediately prior to the Merger contemplated hereby.]
Upon the terms of this Merger Agreement and in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"),
Transitory Merger Sub will merge with and into DEGI (the "Merger") and DEGI will
be the surviving corporation.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as
follows:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-2
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Certain capitalized and other terms used in
-----------
this Merger Agreement are defined in Annex A to the Agreement and are used
herein with the meanings ascribed to them therein.
SECTION 1.02 Rules of Construction. Unless the context otherwise
---------------------
requires, as used in this Merger Agreement: (a) a term has the meaning ascribed
to it; (b) an accounting term not otherwise defined has the meaning ascribed to
it in accordance with U.S. GAAP; (c) "or" is not exclusive; (d) "including"
means "including, without limitation;" (e) words in the singular include the
plural; (f) words in the plural include the singular; (g) words applicable to
one gender shall be construed to apply to each gender; (h) the terms "hereof,"
"herein," "hereby," "hereto" and derivative or similar words refer to this
entire Merger Agreement; and (i) the terms "Article" or "Section" shall refer to
the specified Article or Section of this Merger Agreement.
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger. Subject to the terms contained herein,
----------------
Transitory Merger Sub shall merge with and into DEGI at the effective time (the
"Effective Time"). The terms and conditions of the Merger and the mode of
carrying the same into effect shall be as set forth in this Agreement. As a
result of the Merger, the separate corporate existence of each of the
constituent corporations shall cease and DEGI shall continue as the surviving
corporation.
SECTION 2.02 Effective Time. Promptly after execution and delivery of
--------------
this Merger Agreement (the timing of which is governed by the Agreement), the
parties hereto shall cause the Merger to be consummated by filing a certified
copy of this Merger Agreement with the Secretary of State of the State of
Delaware.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
--------------------
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of the Transitory Merger Sub and DEGI shall
vest in the surviving corporation, and all debts, liabilities and duties of the
Transitory Merger Sub and DEGI shall become the debts, liabilities and duties of
the surviving corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. At the Effective Time,
------------------------------------
the certificate of incorporation and the bylaws of DEGI, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the surviving corporation.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-3
SECTION 2.05 Directors and Officers. The directors of the Transitory
----------------------
Merger Sub immediately prior to the Effective Time shall be the directors of the
surviving corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the surviving corporation, and the officers of
Transitory Merger Sub immediately prior to the Effective Time shall be the
officers of the surviving corporation, in each case until their respective
successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
----------------------------------------------------
Securities. At the Effective Time, by virtue of the Merger and without any
----------
action on the part of Dresser Industries, DEGI or the holders of any of the
following securities:
(a) Subject to the other provisions of this Article III, each share of
common stock of the Transitory Merger Sub ("Transitory Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time
shall be converted into one full share of common stock of DEGI ("DEGI
Common Stock"). Notwithstanding the foregoing, if between the date of this
Merger Agreement and the Effective Time the outstanding shares of the
Transitory Merger Sub Common Stock or DEGI Common Stock shall have been
changed into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the exchange ratio specified in
this subsection (a) shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) Each of an aggregate of ______ shares of DEGI Common Stock issued
and outstanding immediately prior to the Effective Time shall be converted
into the right to receive US. $______ in cash, and each of the then
remaining shares of DEGI Common Stock shall continue to be issued and
outstanding.
SECTION 3.02 Exchange of Certificates.
------------------------
(a) Certificates. Promptly following the Effective Time, Dresser
------------
Industries shall deliver to DEGI a certificate or certificates evidencing
the number of shares of DEGI Common Stock that were converted into the
right to receive cash as provided in subsection (b) of Section 3.01 herein
and DEGI shall pay or cause to be paid to Dresser Industries an amount in
cash equal to the number of shares of DEGI Common Stock so converted
pursuant to subsection (b) of Section 3.01 multiplied by the amount of cash
into which each such share was so converted. If, and to the extent, the
aggregate number of shares of DEGI Common Stock evidenced by the
certificates so delivered exceed the number of shares specified in
subsection (b) of Section 3.01, DEGI shall cancel or cause to be cancelled
all
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-4
such certificates and shall issue or cause to be issued one or more
additional certificates evidencing those shares of DEGI Common Stock not so
converted pursuant to subsection (b) of Section 3.01.
(b) Promptly following the Effective Time, Acquiror shall deliver to
DEGI a certificate or certificates formerly representing all of the issued
and outstanding shares of Transitory Merger Sub Common Stock and DEGI shall
issue or cause to be issued one or more additional certificates evidencing
an equal number of shares of DEGI Common Stock to Acquiror in exchange
therefor.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01 Termination. This Merger Agreement may be terminated at any
-----------
time prior to the Effective Time:
(a) by mutual consent of Transitory Sub and DEGI;
(b) by either Transitory Sub or DEGI, if the Merger shall not have
been consummated before _________, 2001;
(c) upon a termination of the Agreement.
SECTION 4.02 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to Dresser Industries or DEGI, to:
Dresser Industries, Inc.
c/o Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
Telecopier No.:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-5
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
First City Tower
▇▇▇▇ ▇▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Transitory Merger Sub, to:
c/o First Reserve Corporation
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
c/o Odyssey Investment Partners, LLC
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▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-6
number of the addressee. Notice given by mail as set out above shall be deemed
delivered three days after the date the same is postmarked.
SECTION 4.03 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 4.04 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Merger Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 4.05 Entire Agreement. This Merger Agreement constitutes the
----------------
entire agreement of the parties, and supersedes all prior agreements and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
SECTION 4.06 Assignment. This Merger Agreement shall not be assigned by
----------
operation of Law or otherwise.
SECTION 4.07 Governing Law. This Merger Agreement shall be governed by,
-------------
and construed in accordance with, the Laws of the State of Delaware, and any
matter involving the internal corporate affairs of any party hereto shall be
governed by the provisions of the DGCL.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-7
IN WITNESS WHEREOF, each of the parties hereto has caused this Merger
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DRESSER INDUSTRIES, INC.
By: ________________________________
DEG ACQUISITION CORPORATION
By: ________________________________
By: ________________________________
DRESSER EQUIPMENT GROUP, INC.
By: ________________________________
Halliburton Company
Agreement and Plan of Recapitalization
Appendix I-8
Appendix II-A
RELEASE OF INTERCOMPANY INDEBTEDNESS
BY PARENT AT THE FIRST CLOSING
This Release of Intercompany Indebtedness ("Release") dated as of
___________, 2001 is granted by Halliburton Company, a Delaware corporation (the
"Parent"), for itself and on behalf of each of the other members of the Parent
Group, as such term in defined in the Agreement, as defined below, and is
accepted by Dresser Equipment Group, Inc., a Delaware corporation ("DEGI"), for
itself and on behalf of each of the other members of the DEGI Group, as such
term is defined in the Agreement.
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Agreement and Plan of
Recapitalization dated that date (the "Agreement") relating to the sale of
certain of the Parent's businesses relating to, among other things, the design,
manufacturing and marketing of engineered measurement, flow control and power
systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, each of the
members of the Parent Group shall release all claims that they may have against
any member of the DEGI Group that constitute Intercompany Indebtedness as of the
First Closing.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Parent, for itself and on behalf of each of the other members of
the Parent Group, does hereby release DEGI and each of the other members of the
DEGI Group from any and all liabilities, obligations, duties and debts arising
with respect to any and all Intercompany Indebtedness owed by DEGI or any other
member of the DEGI Group to any member of the Parent Group. Parent, for itself
and of behalf of each of the other members of the Parent Group, acknowledges and
agrees that, from and after the date hereof, none of DEGI or any other member of
the DEGI Group shall have any liability, obligation, duty or debt whatsoever to
any member of the Parent Group with respect to Intercompany Indebtedness.
This Release may be executed in any number of counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
but a single instrument.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-A
IN WITNESS WHEREOF, the Parent, acting through the officer thereof named
below, thereunto duly authorized, has executed this Release as of the ____ day
of ___________, 2001.
HALLIBURTON COMPANY,
for itself and on behalf of each of the
other members of the Parent Group
By: _______________________________
Name:
Title:
Accepted as of the day written above
for itself and on behalf of each of
the other members of the DEGI Group:
DRESSER EQUIPMENT GROUP, INC.
By: __________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-A-2
Appendix II-B
RELEASE OF INTERCOMPANY INDEBTEDNESS
BY DEGI AT THE FIRST CLOSING
This Release of Intercompany Indebtedness ("Release") dated as of
___________, 2001 is granted by Dresser Equipment Group, Inc. a Delaware
corporation ("DEGI"), for itself and on behalf of each of the other members of
the DEGI Group, as such term is defined in the Agreement, as defined below, and
is accepted by Halliburton Company, a Delaware corporation (the "Parent"), for
itself and on behalf of each of the other members of the Parent Group, as such
term in defined in the Agreement.
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Agreement and Plan of
Recapitalization dated that date (the "Agreement") relating to the sale of
certain of the Parent's businesses relating to, among other things, the design,
manufacturing and marketing of engineered measurement, flow control and power
systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, each of the
members of the DEGI Group shall release all claims that they may have against
any member of the Parent Group that constitute Intercompany Indebtedness as of
the First Closing.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, DEGI, for itself and on behalf of each other member of the DEGI
Group, does hereby release Parent and each of the other members of the Parent
Group from any and all liabilities, obligations, duties and debts arising with
respect to any and all Intercompany Indebtedness owed by the Parent or any other
member of the Parent Group to any member of the DEGI Group. DEGI, for itself
and on behalf of each of the other members of the DEGI Group, acknowledges and
agrees that, from and after the date hereof, none of the Parent or any other
member of the Parent Group shall have any liability, obligation, duty or debt
whatsoever to the any member of the DEGI Group with respect to Intercompany
Indebtedness.
This Release may be executed in any number of counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
but a single instrument.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-B
IN WITNESS WHEREOF, DEGI, acting through the officer thereof named below,
thereunto duly authorized, has executed this Release as of the ____ day of
___________, 2001.
DRESSER EQUIPMENT GROUP, INC.,
for itself and on behalf of each of the
other members of the DEGI Group
By: ________________________________
Name:
Title:
Accepted as of the day written above
for itself and on behalf of each of
the other members of the Parent Group:
HALLIBURTON COMPANY
By: ___________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-B-2
Appendix II-C
RELEASE OF INTERCOMPANY INDEBTEDNESS
BY PARENT AND THE SELLER AT THE SECOND CLOSING
This Release of Intercompany Indebtedness ("Release") dated as of
___________, 2001 is granted by Halliburton Company, a Delaware corporation (the
"Parent"), and the Seller, for themselves and on behalf of each other member of
the Parent Group, as such term is defined in the Agreement, as defined below,
and is accepted by each of the BV Companies, for themselves and on behalf of
each other member of the BV Group, as such term is defined in the Agreement.
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Agreement and Plan of
Recapitalization dated that date (the "Agreement") relating to the sale of
certain of the Parent's businesses relating to, among other things, the design,
manufacturing and marketing of engineered measurement, flow control and power
systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, each of the
members of the Parent Group shall release all claims that they may have against
any member of the BV Group that constitute Intercompany Indebtedness as of the
Second Closing.
The BV Companies accepting this Release on behalf of each member of the BV
Group are the BV Companies, the Securities of which are, pursuant to the
Agreement, being sold and purchased at the Second Closing.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent and the Seller, for themselves and on behalf of each
other member of the Parent Group, do hereby release each member of the BV Group
from any and all liabilities, obligations, duties and debts arising with respect
to any and all Intercompany Indebtedness owed by any such member of the BV Group
to any member of the Parent Group. The Parent and the Seller, for themselves
and of behalf of each other member of the Parent Group, acknowledge and agree
that, from and after the date hereof, no member of the BV Group shall have any
liability, obligation, duty or debt whatsoever to any member of the Parent Group
with respect to Intercompany Indebtedness.
This Release may be executed in any number of counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
but a single instrument.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-C
IN WITNESS WHEREOF, the Parent and the Seller, acting through the officers
thereof named below, thereunto duly authorized, has executed this Release as of
the ____ day of ___________, 2001.
HALLIBURTON COMPANY
By: ______________________________
Name:
Title:
DRESSER B.V.
By: ______________________________
Name:
Title:
Accepted as of the day
written above on behalf of each member
of the BV Group:
[BV COMPANY]
By: ___________________________
Name:
Title:
[BV COMPANY]
By: ___________________________
Name:
Title:
[BV COMPANY]
By: ___________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-C-2
[BV COMPANY]
By: __________________________
Name:
Title:
[BV COMPANY]
By: __________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-C-3
Appendix II-D
RELEASE OF INTERCOMPANY INDEBTEDNESS
BY THE BV COMPANIES AT THE SECOND CLOSING
This Release of Intercompany Indebtedness ("Release") dated as of
___________, A2001 is granted by the BV Companies, as such term is defined in
the Agreement, as defined below, for themselves and on behalf of each other
member of the BV Group, as such term is defined in the Agreement, and is
accepted by Halliburton Company, a Delaware corporation (the "Parent"), for
itself and on behalf of each of the other members of the Parent Group, as such
term in defined in the Agreement.
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Agreement and Plan of
Recapitalization dated that date (the "Agreement") relating to the sale of
certain of the Parent's businesses relating to, among other things, the design,
manufacturing and marketing of engineered measurement, flow control and power
systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, each of the
members of the BV Group shall release all claims that they may have against any
member of the Parent Group that constitute Intercompany Indebtedness as of the
Second Closing.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the BV Companies, for themselves and on behalf of each other
member of the BV Group, do hereby release Parent and each of the other members
of the Parent Group from any and all liabilities, obligations, duties and debts
arising with respect to any and all Intercompany Indebtedness owed by the Parent
or any other member of the Parent Group to any member of the BV Group. The BV
Companies, for themselves and on behalf of each other member of the BV Group,
acknowledges and agrees that, from and after the date hereof, none of the Parent
or any other member of the Parent Group shall have any liability, obligation,
duty or debt whatsoever to the any member of the BV Group with respect to
Intercompany Indebtedness.
This Release may be executed in any number of counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
but a single instrument.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-D
IN WITNESS WHEREOF, the BV Companies, acting through the officers thereof
named below, thereunto duly authorized, has executed this Release as of the ____
day of ___________, 2001.
[BV COMPANY]
By: _________________________
Name:
Title:
[BV COMPANY]
By: _________________________
Name:
Title:
[BV COMPANY]
By: _________________________
Name:
Title:
[BV COMPANY]
By: _________________________
Name:
Title:
[BV COMPANY]
By: _________________________
Name:
Title:
Accepted as of the day
written above on behalf of each member
of each Parent Group:
HALLIBURTON COMPANY
By: _________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix II-D-2
Appendix III-A
RELEASE OF CLAIMS
BY PARENT AT THE FIRST CLOSING
This Release of Claims ("Release") dated as of ___________, 2001 is granted
by Halliburton Company, a Delaware corporation (the "Parent"), for itself and on
behalf of each other member of the Parent Group, as such term is defined in the
Agreement, as defined below, and is accepted by Dresser Equipment Group, Inc., a
Delaware corporation ("DEGI") for itself and on behalf of each other member of
the DEGI Group, as such term is defined in the Agreement.
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Agreement and Plan of
Recapitalization dated that date (the "Agreement") relating to the sale of
certain of the Parent's businesses relating to, among other things, the design,
manufacturing and marketing of engineered measurement, flow control and power
systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, the Parent Group
shall release all claims that it may have against any member of the DEGI Group
with respect to the Businesses prior to the Closing Date.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent, for itself and for its affiliates, successors, assigns
and the stockholders of each of them, hereby fully releases, discharges,
disclaims, waives and renounces any and all claims, controversies, demands,
rights, disputes and causes of action of whatever kind or nature, whether known
or unknown, contingent or absolute, at common law, statutory or otherwise that
the Parent or any other member of the Parent Group has had, may now have or may
ever have against DEGI or any other member of the DEGI Group or against any
officer, director, employee, consultant or attorney, past or present, of the
companies so released, arising out of or in any way resulting from or related to
any act or omission by any of such Persons in the operation and conduct of the
Businesses at any time prior to the date hereof; provided, however, that there
shall be excluded from the scope and reach of this Release any claims,
controversies, demands, rights, disputes or causes of action that (i) relate to
any Related Party Contract that is continued in effect after the date hereof in
accordance with the terms of the Agreement or (ii) are based upon or arise out
of any provision of the Agreement. The Parent agrees and covenants never to ▇▇▇
or otherwise look to DEGI or any other member of the DEGI Group or any officer,
director, employee, consultant or attorney, past or present, of the companies so
released,
Halliburton Company
Agreement and Plan of Recapitalization
Appendix III-A
for payment or satisfaction of such released claims, controversies, demands,
rights, disputes or causes of action. The Parent hereby covenants and agrees
that it has not heretofore assigned any claims or causes of action released
hereby.
IN WITNESS WHEREOF, the Parent, acting herein through the officer thereof
named below, thereunto duly authorized, have executed this Release as of the ___
day of __________, 2001.
HALLIBURTON COMPANY,
for itself and on behalf of each other
member of the Parent Group
By: _________________________
Name:
Title:
Accepted as of the day written above,
for itself and on behalf of each other
member of the DEGI Group
DRESSER EQUIPMENT GROUP, INC.
By: _____________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix III A-2
Appendix III-B
RELEASE OF CLAIMS
BY PARENT AT THE SECOND CLOSING
This Release of Claims ("Release") dated as of ___________, 2001 is granted
by Halliburton Company, a Delaware corporation (the "Parent"), and the Seller,
for themselves and on behalf of each other member of the Parent Group, as such
term is defined in the Agreement, as defined below, and is accepted by each of
the BV Companies, as such term is defined in the Agreement, for themselves and
on behalf of each other member of the BV Group, as such term is defined in the
Agreement.
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror named therein executed and delivered an Agreement and Plan of
Recapitalization dated that date (the "Agreement") relating to the sale of
certain of the Parent's businesses relating to, among other things, the design,
manufacturing and marketing of engineered measurement, flow control and power
systems for customers primarily in the energy industry.
The Agreement provides that, in connection with such sale, the Parent Group
shall release all claims that it may have against any member of the BV Group
with respect to the Businesses prior to the Closing Date.
The BV Companies accepting this Release on behalf of each member of the BV
Group are the BV Companies, the Securities of which are, pursuant to the
Agreement, being sold and purchased at the Second Closing.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent and the Seller, for themselves, for each other member
of the Parent Group, and for the affiliates, successors, assigns and the
stockholders of each of them, hereby fully release, discharge, disclaim, waive
and renounce any and all claims, controversies, demands, rights, disputes and
causes of action of whatever kind or nature, whether known or unknown,
contingent or absolute, at common law, statutory or otherwise that the Parent,
the Seller or any other member of the Parent Group has had, may now have or may
ever have against the BV Companies or any other member of the BV Group or
against any officer, director, employee, consultant or attorney, past or
present, of the companies so released, arising out of or in any way resulting
from or related to any act or omission by any of such Persons in the operation
and conduct of the Businesses at any time prior to the date hereof;
Halliburton Company
Agreement and Plan of Recapitalization
Appendix III-B
provided, however, that there shall be excluded from the scope and reach of this
Release any claims, controversies, demands, rights, disputes or causes of action
that (i) relate to any Related Party Contract that is continued in effect after
the date hereof in accordance with the terms of the Agreement or (ii) are based
upon or arise out of any provision of the Agreement. The Parent and the Seller
agree and covenant never to ▇▇▇ or otherwise look to the BV Companies or any
other member of the BV Group or any officer, director, employee, consultant or
attorney, past or present, of the companies so released, for payment or
satisfaction of such released claims, controversies, demands, rights, disputes
or causes of action. The Parent and the Seller hereby covenant and agree that
they have not heretofore assigned any claims or causes of action released
hereby.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix III-B-2
IN WITNESS WHEREOF, the Parent and the Seller, acting herein through the
officers thereof named below, thereunto duly authorized, have executed this
Release as of the ___ day of __________, 2001.
HALLIBURTON COMPANY
By: _______________________
Name:
Title:
DRESSER B.V.
By: _______________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix III-B-3
Accepted as of the day
written above on behalf of each member
of the BV Group:
[BV COMPANY]
By: _____________________
Name:
Title:
[BV COMPANY]
By: _____________________
Name:
Title:
[BV COMPANY]
By: _____________________
Name:
Title:
[BV COMPANY]
By: _____________________
Name:
Title:
[BV COMPANY]
By: _____________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix III-B-4
Appendix IV
HALLIBURTON COMPANY
TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT
THIS TRADEMARK ASSIGNMENT AND LICENSE Agreement (this "Agreement"),
effective as of _________________ (the "Effective Date"), is entered into by and
between Halliburton Company, having a principal place of business at 3600
Lincoln Plaza, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, hereinafter referred
to as "ASSIGNOR," and _______________, having a principal place of business at
__________________, hereinafter referred to as "ASSIGNEE."
WHEREAS, ASSIGNOR and its Affiliates have adopted and are using the ▇▇▇▇
"DRESSER" and "DRESSER and Design" as trademarks and service marks for a broad
range of goods and services in the United States and elsewhere throughout the
world, and has on file with the trademark offices of various countries pending
trademark and service ▇▇▇▇ applications and registrations covering the above-
mentioned Marks, a listing of which is attached hereto as Appendix A
(hereinafter collectively referred to as the "Marks");
WHEREAS, ASSIGNEE is acquiring substantially all of the capital stock of
the Dresser Equipment Group, Inc. ("Dresser Equipment Group"), pursuant to a
certain Agreement and Plan of Recapitalization among ASSIGNOR, DEG Acquisitions,
LLC and the Seller named therein dated January 30, 2001 (the "Recapitalization
Agreement"), and as a condition to the completion of the transactions
contemplated by the Reorganization Agreement ASSIGNOR and ASSIGNEE are entering
into this Agreement pursuant to which ASSIGNEE will acquire any and all right,
title and interest in and to the Marks together with the goodwill of the
business symbolized thereby, subject to the Existing Licenses (as defined
below), the General License (as defined below) and the Exclusive License (as
defined below); and
WHEREAS, ASSIGNOR and ASSIGNEE agree that ASSIGNEE shall not use the name
DRESSER INDUSTRIES, that ASSIGNEE shall be limited in its use of the Marks in
the Upstream Oilfield Business (as defined below) for the period of time set
forth herein, and that covenants of ASSIGNEE set forth below are necessary and
reasonable to ensure that the parties' intentions in these regards are fulfilled
during the term hereof;
NOW, THEREFORE, in consideration of the mutual covenants of the parties,
the execution of the Recapitalization Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
both parties, the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the following terms
-----------
shall have the
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV
meaning ascribed to them in this Article 1, whether plural or singular.
"Affiliate" of a specified entity shall mean an entity that directly, or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, the entity specified. For the purpose
of this definition, "control" means (a) the legal or beneficial ownership
of: (i) 50% or more of the outstanding voting stock of a company; or (ii)
50% or more of the equity of a company, partnership or joint venture; or
(b) the power to direct (whether directly or through one or more
intermediaries) the management or policies of an entity.
"Assignment" shall have the meaning ascribed to such term in Section 2.1.
"Existing Licenses" shall have the meaning ascribed to such term in Section
8.1.
"Exclusive License" shall have the meaning ascribed to such term in Section
2.3.
"General License" shall have the meaning ascribed to such term in Section
2.2.
"Investor Group" shall mean any one or more of First Reserve Corporation,
Odyssey Investment Partners, LLC and each of their affiliated investment
partnerships and portfolio investments.
"Subsidiary" shall mean any entity in which Dresser Equipment Group holds
any direct or indirect interest.
"Upstream Oilfield Business" shall mean the upstream oilfield business of
the ASSIGNOR as described in Appendix B hereto.
ARTICLE 2 - ASSIGNMENT AND LICENSES
2.1 Assignment. ASSIGNOR hereby assigns to ASSIGNEE all right, title and
-----------
interest in and to the Marks, together with the goodwill of the business
symbolized thereby, and all rights to damages and profits, due or accrued,
arising out of past infringements of the Marks, and the right to ▇▇▇ for
and recover the same (the "Assignment"); provided, however, that ASSIGNEE
agrees and acknowledges that the Assignment is subject to and encumbered by
all outstanding license agreements between ASSIGNOR, its Affiliates and
third parties in effect as of the Effective Date, as more fully set forth
in Section 8.1. Subject to the foregoing, ASSIGNOR will execute such
further assurances as may reasonably be required in order to permit
ASSIGNEE to hold and enjoy the Marks. It is the intention of Assignor to
assign hereby to Assignee all of the trademarks and service marks using the
▇▇▇▇ "DRESSER" and "DRESSER and Design" in connection with the sale,
promotion, design, manufacture or development of products or services in
the United States and elsewhere throughout the world, that are on file with
the trademark offices of various
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-2
countries on behalf of ASSIGNOR and its Affiliates. ASSIGNOR covenants and
agrees to execute subsequent assignments or amendments to this Assignment
conveying any additional Marks which Assignor may own relating to the
Dresser name or design which ASSIGNOR may discover from time to time
including, but not limited to, the Trademark License Agreement attached
hereto as Appendix C.
2.2 General License to Marks. ASSIGNEE grants to ASSIGNOR and its
------------------------
Affiliates as of the date hereof a nonexclusive, irrevocable, worldwide,
royalty-free and nontransferable license to use the Marks for a transition
period of up to three years to ASSIGNOR to effect promptly, using
commercially reasonable efforts, the liquidation and/or change the names of
those specific entities which are using the Marks as of the Effective Date
other than Dresser Equipment Group and its Subsidiaries. This limited
license is not transferable, perpetual, exclusive, irrevocable, worldwide,
and royalty free. All of the license rights conveyed in this Section 2.2
shall comprise the "General License."
2.3 Exclusive License to "Dresser Industries" Name. Independent from the
----------------------------------------------
General License granted in Section 2.2, ASSIGNEE grants to ASSIGNOR and its
Affiliates as of the date hereof a perpetual, exclusive, irrevocable,
worldwide, royalty-free and nontransferable license to use the name
"DRESSER INDUSTRIES"; provided, however, that neither ASSIGNOR nor any of
its Affiliates shall use or sublicense the "DRESSER INDUSTRIES" name,
directly or indirectly, in connection with the raising of capital, the
sale, promotion, design, manufacture or development of goods or services or
other activity which would create confusion in the capital markets or with
customers of ASSIGNEE and its Affiliates regarding ASSIGNEE's ownership of
the Marks. In addition, ASSIGNEE grants to ASSIGNOR the limited license to
use the "Dresser Industries, Inc." name for use as a holding company name
and not for use (i) in the sale, promotion, design, manufacture,
development or delivery of any product or service or (ii) in commerce,
fundraising or financing activities. All of the license rights conveyed in
this Section 2.3 shall comprise the "Exclusive License."
ARTICLE 3 - COVENANTS OF ASSIGNEE
3.1 Covenant Not to Use Marks in Upstream Oilfield Business. For a
-------------------------------------------------------
period of seven years following the Effective Date, ASSIGNEE covenants and
agrees that it and its Affiliates will not use or license the Marks directly
in connection with the sale, promotion, design, manufacture or development
of goods or services in the Upstream Oilfield Business. The foregoing
prohibition against use and licensing the Marks includes, without
limitation, any contract or agreement by the Assignee or any Affiliates
thereof under which the Assignee or such Affiliate purports to transfer to a
third person, or permit a third person to use, any of the Marks; provided,
however, that after the third anniversary of the Effective Date, ASSIGNEE
may identify its Upstream Oilfield Businesses, if any, as being a "Dresser
Company" (assuming that Dresser Equipment
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-3
Group is the ASSIGNEE or parent entity of the ASSIGNEE).
3.2 Covenant Not to Use the Marks. For a period of three years following
-----------------------------
the Effective Date, no ASSIGNEE or ASSIGNEE Affiliate (for purposes of
clarity, this shall not include affiliates of the Investor Group, other than
Dresser Equipment Group and its Subsidiaries) shall, during a period of time
where a direct or indirect parent entity of such Affiliate uses the Marks,
directly or indirectly (whether as owner, partner, contractor or otherwise),
engage in any activity that is competitive with ASSIGNOR or its Affiliates
in the Upstream Oilfield Business anywhere in the world, whether alone or on
behalf of or in conjunction with any other person, persons, company,
partnership or corporation. The parties hereto agree and acknowledge that
this covenant is ancillary to the Recapitalization Agreement, and is
reasonably calculated to enforce covenants in the Recapitalization Agreement
and this Agreement.
3.3 Exceptions. Notwithstanding the foregoing provisions of this Article 3,
----------
nothing in this Agreement shall prohibit:
(a) the ownership by the ASSIGNEE or any of its Affiliates (whether now
existing or hereafter acquired or created) of less than 5% of the
outstanding stock of any publicly-traded corporation engaged in an
Upstream Oilfield Business;
(b) the acquisition of the ASSIGNEE or any of its Affiliates by a third
party whose operations involve an Upstream Oilfield Business;
(c) the acquisition by the ASSIGNEE or any of its Affiliates of a third
party which engages in an Upstream Oilfield Business, provided that
the primary purpose of any such acquisition referred to in this
clause (c) is not the acquisition of such Upstream Oilfield
Businesses, and provided further that such Upstream Oilfield
Business referred to in this clause (c) either (i), together with
the revenues for any prior acquisition exempted from the provisions
of this Article 3 by this clause (c)(i), accounts for less than
U.S. $50,000,000 in revenues for the last fiscal year of such third
party for which financial statements are available or (ii) is
divested by the ASSIGNEE or its Affiliate within 270 days from the
date it is acquired;
(d) any action of the Investor Group and investments of and other
entities controlled by the Investor Group, individually or in the
aggregate, other than with respect to Dresser Equipment Group, Inc.
and its Subsidiaries;
(e) any commercial relationship (as distinguished from an equity
relationship) where ASSIGNEE sells services or products which are
currently provided by ASSIGNOR or are logical extensions of such
businesses as provided in the last proviso of Appendix B; or
(f) any joint venture relationship in which (1) the joint venture does
not use any Dresser name, (2) the ASSIGNEE has a minority equity
interest, (3) the services or products provided by the ASSIGNEE to
such joint venture are currently provided, serviced, sold or
manufactured by ASSIGNEE or are logical extensions of such
businesses as provided in the last proviso of Appendix B and (4)
ASSIGNOR has a minority and non-controlling role in the management
of such
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-4
joint venture.
ARTICLE 4 - INJUNCTIVE RELIEF AND LIQUIDATED DAMAGES
FOR BREACH OF COVENANTS BY ASSIGNEE
4.1 Injunctive Relief for Breach of Covenants and Terms of Licenses.
---------------------------------------------------------------
ASSIGNOR and ASSIGNEE agree and acknowledge that due to the important
nature of the covenants set forth in Article 3 and the licenses granted
pursuant to Article 2 any violation (in the case of Article 2, an "ASSIGNOR
Breach" and, in the case of Article 3, an "ASSIGNEE Breach") thereof will
result in immediate and irreparable harm to the non-breaching party.
ASSIGNEE and ASSIGNEE recognizes that the remedies of the non-breaching
party at law may be inadequate, and that the non-breaching party shall have
the right to injunctive relief in addition to any other remedy available to
it. In the case of an Assignor Breach or an Assignee Breach, the non-
breaching party shall have the right to a court-ordered injunction, as well
as any and all other remedies and damages, to compel the enforcement of the
terms stated herein. If court action is taken to enforce this Agreement,
the party prevailing in such action shall be entitled to reimbursement from
the other party for its reasonable attorneys' fees and court costs.
ARTICLE 5 - QUALITY OF GOODS AND SERVICES
5.1 Quality Control. ASSIGNOR shall use the Marks only as described in
---------------
this Agreement, and only in accordance with the guidance and directions
furnished to ASSIGNOR by ASSIGNEE, or its representatives or agents, but
the quality of the goods and services under the General License and the
quality of the documentation shall always be reasonably satisfactory to
ASSIGNEE or as reasonably specified by it. ASSIGNEE agrees and
acknowledges that the manner in which ASSIGNOR is currently using the Marks
fully meets the quality standards of ASSIGNEE.
ARTICLE 6 - INSPECTION
6.1 Inspection. ASSIGNOR shall permit an independent accounting firm
-----------
selected by ASSIGNEE to inspect, at the expense of ASSIGNEE, the ASSIGNOR's
use of the Marks during normal business hours and with at least 10 business
days notice, for the purpose of ascertaining or determining compliance with
Article 2 hereof. Such inspection shall occur no more than once annually.
It shall be a condition to the exercise by ASSIGNEE of rights under this
Article 6 that the accounting firm selected shall enter into an agreement
with ASSIGNOR reasonably satisfactory to ASSIGNEE obligating the accounting
firm to confidentiality prior to conducting such inspection. ASSIGNOR
shall use its best efforts to cause its Affiliates to permit inspection by
ASSIGNEE of such Affiliates' use of the Marks on the same terms as apply to
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-5
inspection of ASSIGNOR.
ARTICLE 7 - USE OF MARKS
7.1 Compliance with Laws. When using the Marks under this Agreement, each
--------------------
party undertakes to comply substantially with all laws pertaining to
service marks and trademarks in force at any time in the United States and
all foreign jurisdictions in which the Marks are used.
7.2 No Sublicensing. The ASSIGNOR and its Affiliates may not sublicense
---------------
the Marks to any party.
ARTICLE 8 - THIRD PARTY LICENSEES
8.1 Assignment Subject to Third Party Licenses. The Assignment, the
------------------------------------------
General License and the Exclusive License are subject to the rights to the
Marks granted to Dresser-Rand Company and Ingersoll-Dresser Pump Company
arising in connection with the divestiture of the Dresser Rand and
Ingersoll Dresser Pump joint ventures in February 2000 and granted to
Bredero-▇▇▇▇. [Schedule any others]
ARTICLE 9 - DISCLAIMER OF WARRANTIES AND MUTUAL INDEMNITIES
9.1 DISCLAIMER OF WARRANTIES. EXCEPT AS SET FORTH IN THE RECAPITALIZATION
------------------------
AGREEMENT AND IN SECTION 2.1 HEREOF, ASSIGNOR MAKES NO REPRESENTATION OR
WARRANTY AS TO OWNERSHIP OR TITLE TO THE MARKS, OR AS TO FREEDOM OF THE
MARKS FROM PRE-EXISTING LICENSES, LIENS OR ENCUMBRANCES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE
MARKS. NEITHER PARTY ASSUMES ANY LIABILITY TO THE OTHER OR THIRD PARTIES IN
CONNECTION WITH THE PERFORMANCE CHARACTERISTICS OF THE SERVICES OR GOODS
RENDERED BY THE OTHER PARTY.
ARTICLE 10 - TERMINATION
10.1 Term. Except as otherwise provided herein, this Agreement shall
----
remain in full force and effect in perpetuity.
10.2 Termination. If ASSIGNOR makes an assignment of assets or business
-----------
for the benefit of creditors, or a trustee or receiver is appointed to
conduct its business or affairs
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-6
or it is adjudged in any legal proceeding to be either a voluntary or
involuntary bankrupt, the General License shall forthwith cease and
terminate without any prior written notice or legal action by ASSIGNEE.
10.3 Effect of Termination. Notwithstanding anything to the contrary, the
---------------------
Assignment is irrevocable and shall survive any termination of this
Agreement. Furthermore, notwithstanding anything to the contrary, the
Exclusive License set forth in Section 2.3 is perpetual and irrevocable,
and shall not be terminated for any reason.
ARTICLE 11 - OWNERSHIP OF MARKS
11.1 ASSIGNEE's Ownership of the Marks. Subject to the Existing Licenses,
---------------------------------
ASSIGNOR and all parties to this agreement acknowledge ASSIGNEE's exclusive
right, title in and to the Marks and any registrations that have issued or
may issue thereon, and will not at any time do or cause to be done any act
or thing contesting or in any way impairing or tending to impair part of
such right, title and interest. In connection with its use of the Marks,
ASSIGNOR shall not in any manner represent that it has any ownership in the
Marks or registrations thereof, and both parties acknowledge that use of
the Marks shall inure to the benefit of ASSIGNEE. Subject to the Exclusive
License, which shall survive, upon termination of the General License in
any manner provided herein, ASSIGNOR will cease and desist from all use of
the Marks in any way and will deliver up to ASSIGNEE or its duly authorized
representatives all material and papers upon which the Marks appear; and;
furthermore, ASSIGNOR will not at any time adopt or use without ASSIGNEE's
prior written consent any word or ▇▇▇▇ that is likely to be similar to or
confused with the Marks.
11.2 Reasonable Assistance. ASSIGNOR shall take all reasonable steps to
---------------------
advise ASSIGNEE promptly of any infringement or apparent infringement as
soon as it becomes known to ASSIGNOR and to provide information and other
reasonable assistance in defense of such infringement, provide that
ASSIGNEE shall reimburse ASSIGNOR for all out-of-pocket costs and expenses
incurred in connection with such assistance. ASSIGNEE shall have sole
authority to initiate and pursue legal proceedings, as it deems
appropriate, for infringement of the Marks, and ASSIGNOR shall cooperate
fully, at ASSIGNEE'S expense, with ASSIGNEE in respect of any such
proceedings.
ARTICLE 12 - MISCELLANEOUS
12.1 Entire Agreement; Amendments. This Agreement and the Recapitalization
----------------------------
Agreement (including the appendices attached hereto and thereto)
constitutes the entire agreement between the parties concerning the subject
matter hereof, and supersedes prior or contemporaneous representations,
inducements, promises, or agreements, oral or otherwise, between the
parties. No modification or amendment to this Agreement
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-7
will be valid or binding unless reduced to writing and duly executed and
delivered by the party to be bound thereby. No terms in any written order
or acknowledgment that add to or change the terms of this Agreement shall
be of any force or effect, whether or not the party receiving the same
signs the order or acknowledgment or otherwise indicates its acceptance,
unless such party expressly refers to the specific addition or change in
question as a modification of this Agreement.
12.2 Notices. Any notices required or permitted to be given under this
-------
Agreement shall be deemed sufficiently given if mailed by registered mail,
postage prepaid, addressed to the party to be notified at its address shown
below, or at such other address as may be furnished in writing to the
notifying party.
12.3 Governing Law. This Agreement shall be construed (both as to
-------------
validity and performance) and enforced in accordance with, and governed by,
the laws of the State of New York applicable to agreements made and to be
performed wholly within such jurisdiction. Any judicial proceeding brought
against either of the parties hereto with respect to this Agreement shall
be brought in the United States Federal Court for the Southern District of
New York irrespective of where such party may be located at the time of
such proceeding, and by execution and delivery of this Agreement, each of
the parties hereto hereby consents to the exclusive jurisdiction of such
court and waives any defense or opposition to such jurisdiction.
12.4 Intentional Risk Allocation. ASSIGNOR AND ASSIGNEE EACH ACKNOWLEDGES
---------------------------
THAT THE PROVISIONS OF THIS Agreement WERE NEGOTIATED TO REFLECT AN
INFORMED, VOLUNTARY ALLOCATION BETWEEN THEM OF ALL RISKS (BOTH KNOWN AND
UNKNOWN) ASSOCIATED WITH THE SUBJECT MATTER OF THIS Agreement.
12.5 Effect of Partial Invalidity. If any one or more of the provisions
----------------------------
of this Agreement should be ruled wholly or partly invalid or unenforceable
by competent authority, then: (a) the validity and enforceability of all
provisions of this Agreement not ruled to be invalid or unenforceable will
be unaffected; (b) the effect of the ruling will be limited to competent
authority making the ruling; and (c) the provision(s) held wholly or partly
invalid or unenforceable will be deemed amended, and such competent
authority is authorized to reform the provision(s), to the minimum extent
necessary to render them valid and enforceable in conformity with the
parties' intent as manifested herein.
12.6 No Waiver. The failure of either party at any time to require
---------
performance by the other party of any provision of this Agreement shall in
no way affect the right of such party to require performance of that
provision. Any waiver by either party of any breach of any provision of
this Agreement shall not be construed as a waiver of any continuing or
succeeding breach of such provision, a waiver of the provision itself or a
waiver of any right under this Agreement.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-8
12.7 Survival of Covenants. The provisions of Article 1, Sections 2.1 and
---------------------
2.3, Article 8, Article 9, Section 10.3 and Article 12 shall survive
termination of this Agreement for any reason. Termination of this
Agreement for any reason shall not release either party from any
liabilities or obligations set forth in this Agreement that the parties
have expressly agreed shall survive any such termination, remain to be
performed or by their nature would be intended to be applicable following
any such termination.
12.8 Independent Parties. ASSIGNOR and ASSIGNEE are independent
-------------------
contractors. No partnership or joint venture is intended to be created by
this Agreement, nor any principal-agent or employer-employee relationship.
Neither party has, and neither party shall attempt to assert, the authority
to make commitments for or to bind the other party to any obligation.
12.9 Headings. The section headings and the table of contents used herein
--------
are for reference and convenience only, and shall not enter into the
construction of this Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section or other subdivision.
12.10 Breaches by Affiliates. Each party shall be responsible for any
----------------------
action or omission by the Affiliates of such party which, if taken or made
by such party, would constitute a breach of those provisions of this
Agreement that are expressly binding upon Affiliates of such party.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-9
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
ASSIGNOR ASSIGNEE
Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Ph)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
By: ______________________________ By:______________________________
______________________________ ______________________________
Typed or Printed Name Typed or Printed Name
Title:_____________________________ Title:___________________________
Date:______________________________ Date:____________________________
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-10
APPENDIX A
TRADEMARKS ASSIGNED TO ASSIGNEE
Country ▇▇▇▇ App/Reg No. Classes
-------------------------------------------------------------------------
USA DRESSER & Design (Swish Logo) 75/934721 6, 7, 9 & 11
USA DRESSER 1,396,487 7
USA DRESSER (IN OVAL DESIGN) 855814 6, 9, 11
USA DRESSER 556039 17
USA ▇▇▇▇▇▇▇▇ 140464
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇, ▇▇
▇▇▇▇▇▇▇▇▇ DRESSER (LOGO) 987960 5
Argentina DRESSER 1716239 1
Argentina DRESSER 1745773 37
Argentina DRESSER 1716238 ▇▇
▇▇▇▇▇▇▇▇▇ DRESSER (LOGO) 1205793 7
Argentina DRESSER (LOGO) 987961 6
Argentina DRESSER (LOGO) 1633334 9
Argentina DRESSER 1662345 6
Argentina DRESSER 21662346 2
Argentina DRESSER 1662347 9
Argentina DRESSER 1662348 21
Argentina DRESSER (LOGO) 1551864
Argentina DRESSER (LOGO) 1449932
Argentina DRESSER (LOGO) 1009727
Argentina DRESSER (LOGO) 1449933
Australia DRESSER (LOGO) B227171 9
Australia DRESSER (LOGO) B227172 11
Australia DRESSER (LOGO) B227169 6
Australia DRESSER (LOGO) B227170 7
Australia DRESSER (LOGO) B227168
Australia DRESSER 748420 17, 37, 42
Benelux DRESSER 71980 2, 6
Benelux DRESSER 402844 7, 12
Benelux DRESSER (LOGO) ▇▇▇▇▇▇
▇▇▇▇▇▇ DRESSER 5027640 17
Brazil DRESSER 3470172 19
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-11
Country ▇▇▇▇ App/Reg No. Classes
-----------------------------------------------------------------------
Brazil DRESSER (LOGO) 7537697 9
Brazil DRESSER (LOGO) 7537700 19
Brazil DRESSER (LOGO) 7537670 7
Canada DRESSER & Design (Swish Logo) 1056174
Canada DRESSER & DESIGN 496290
Canada DRESSER 337835
Canada DRESSER TMA537417
Canada DRESSER 169/43214
Canada DRESSER (LOGO) ▇▇▇▇▇▇
▇▇▇▇▇ DRESSER 467045 6
Chile DRESSER (LOGO) 379115 7, 9, 12
▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇) ▇▇▇▇▇▇ ▇
▇▇▇▇▇ DRESSER (LOGO) 355697 6, 19
China DRESSER 1208841 1
China DRESSER 1103400 6
China DRESSER 1159058 7
China DRESSER 1108419 9
China DRESSER 1097340 11
China DRESSER 1093369 17
China DRESSER 1115803 37
China DRESSER 1115397 42
China DRESSER (Chinese characters) 1099926 1
China DRESSER (Chinese characters) 1103399 6
China DRESSER (Chinese characters) 1113826 7
China DRESSER (Chinese characters) 1131254 9
China DRESSER (Chinese characters) 1091278 11
China DRESSER (Chinese characters) 1093368 17
China DRESSER (Chinese characters) 1115820 37
China DRESSER (Chinese characters) 1115396 42
Columbia DRESSER (LOGO) 167872 9A AND 10A
Columbia DRESSER 37632A 21
Columbia DRESSER (LOGO) 167873 6
Columbia DRESSER (LOGO) 167874 7
Columbia DRESSER 211337 1
Columbia DRESSER 211557 17
Columbia DRESSER 211299 37
Columbia DRESSER 97067530 42
Denmark DRESSER (LOGO) 910/1970 1, 6-7, 9
Denmark DRESSER 456/1959 6, 17
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-12
Country ▇▇▇▇ App/Reg No. Classes
------------------------------------------------------------------------
EU DRESSER (Design) 82024 1, 6, 7, ▇, ▇▇,
▇▇, ▇▇, ▇▇,
▇▇, ▇▇, ▇▇
▇▇▇▇▇▇▇ DRESSER 34632 6, 17
France DRESSER 1290898 7, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇, ▇▇
▇▇▇▇▇▇ DRESSER (LOGO) 1456533 1-42
Great Britain DRESSER (LOGO) 1049983 1
Great Britain DRESSER 1226896 7
Great Britain DRESSER 1232984 12
Great Britain DRESSER (LOGO) 940220 11
Great Britain DRESSER (LOGO) 940225 6
Great Britain DRESSER (LOGO) 940223 9
Great Britain DRESSER (LOGO) 940226 1
Great Britain DRESSER (LOGO) 940224 7
Great Britain DRESSER 789415 17
Great Britain DRESSER 781960 6
Great Britain DRESSER (LOGO) 1436935 9
Great Britain DRESSER (LOGO) 1436936 11
Great Britain DRESSER (LOGO) 1436937 13
Great Britain DRESSER (LOGO) 1436938 17
Germany DRESSER 1101313 6, 7, 9, 12
Germany DRESSER 1083148 7, 12
Germany DRESSER 702484/6 6, 9
Germany DRESSER (LOGO) 910087 ▇, ▇-▇, ▇▇, ▇▇, ▇▇, ▇▇
▇▇▇▇▇▇ DRESSER (LOGO) 41686 6, 7, 9, 11
Greece DRESSER (LOGO) 55209 1
Greece DRESSER 22248 6, 11, 17
Hong Kong DRESSER 229/59 6
India DRESSER 187549 6
India DRESSER 778171 1
India DRESSER 778172 7
India DRESSER 778173 9
India DRESSER 778174 17
India DRESSER 778175 11
Indonesia DRESSER 286991 6, 7
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-13
Country ▇▇▇▇ App/Reg No. Classes
---------------------------------------------------------------------
Israel DRESSER 17192 6
Israel DRESSER 17512 17
Italy DRESSER (LOGO) 555420 ▇, ▇, ▇, ▇, ▇, ▇▇, ▇▇, ▇▇
▇▇▇▇▇ DRESSER (LOGO) 723804 1
Japan DRESSER (LOGO) 976273 ▇▇
▇▇▇▇▇ DRESSER (LOGO) 1046390 9
Japan DRESSER (LOGO) 1019191 ▇▇
▇▇▇▇▇ DRESSER (LOGO) 1062193 ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇ DRESSER 664656 ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇ DRESSER 827882 7
Japan DRESSER 583487 17
Kuwait DRESSER (LOGO) 25752 6
Kuwait DRESSER (LOGO) 25904 9
Malaysia DRESSER 90/05269 6
Malaysia DRESSER (LOGO) 90/05270 6
Malaysia DRESSER 98/02189 7
Malaysia DRESSER 98/02188 9
Malaysia DRESSER 98/02190 11
Malaysia DRESSER 97/19726 37
Malaysia DRESSER 97/19729 42
Mexico DRESSER (LOGO) 150734 13
Mexico DRESSER (LOGO) 149964 26
Mexico DRESSER (LOGO) 149072 23
Mexico DRESSER (LOGO) 149070 21
Mexico DRESSER 84757 13
Mexico DRESSER 571411 1
Mexico DRESSER 569623 37
Mexico DRESSER 569624 42
New Zealand DRESSER 284592 1
New Zealand DRESSER 284593 7
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇▇ DRESSER 284595 ▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇ DRESSER 284597 42
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-14
Country ▇▇▇▇ App/Reg No. Classes
--------------------------------------------------------
Nigeria DRESSER 56251 1, 37, 42
Nigeria DRESSER (LOGO) 20566 6
Nigeria DRESSER (LOGO) 20567 7
Nigeria DRESSER (LOGO) 20568 9
Nigeria DRESSER (LOGO) 50329 17
Nigeria DRESSER (LOGO) 50331 11
Norway DRESSER (LOGO) 99164 1, 19
Norway DRESSER (LOGO) 80188 6, 7, 9, 11
Norway DRESSER 52833 ▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇
▇▇▇▇ DRESSER (LOGO) 5217 7
▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇) ▇▇▇▇ ▇
▇▇▇▇ DRESSER (LOGO) 5239 11
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇ DRESSER 104021 17
Russia DRESSER 98705452 ▇, ▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇/▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER 42195 ▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER ▇▇▇/▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇/▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER 42199 ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER (LOGO) 69/0888 ▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇) ▇▇/▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER (LOGO) 69/0885 ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER (LOGO) 69/0887 ▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇/▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ DRESSER 59/114 6
South Korea DRESSER 442913 ▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ DRESSER 54973 112
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-15
Country ▇▇▇▇ App/Reg No. Classes
------------------------------------------------------------
Singapore DRESSER 5618/90 6
Singapore DRESSER (LOGO) 5619/90 6
Singapore DRESSER 14045/97 1
Singapore DRESSER 14046/97 7
Singapore DRESSER T97/14047H 9
Singapore DRESSER 14048/97 11
Singapore DRESSER T97/14049D 17
Singapore DRESSER 14050/97 37
Singapore DRESSER 14051/97 42
Sweden DRESSER (LOGO) 156194 ▇, ▇, ▇, ▇▇
▇▇▇▇▇▇ DRESSER (LOGO) 154249 1
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ DRESSER (LOGO) 280417 1, 4, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇, ▇, ▇▇
▇▇▇▇▇▇▇▇ DRESSER 87123 1
Thailand DRESSER 379864 6
Venezuela DRESSER (LOGO) 62705 1
Venezuela DRESSER (LOGO) 62715 19
Venezuela DRESSER (LOGO) 62718 26
Venezuela DRESSER (LOGO) 62704 23
Venezuela DRESSER (LOGO) 62702 13
Venezuela DRESSER (LOGO) 62703 21
Venezuela DRESSER 118240 23
Venezuela DRESSER 33110 13
Venezuela DRESSER 22.748/97 42
Venezuela DRESSER 11.522/98 37
Venezuela DRESSER 22.749/97 37
Vietnam DRESSER 10238 17
Vietnam DRESSER N-5319/93
Vietnam DRESSER 31528 7, 9, 37
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-16
APPENDIX B
DEFINITION OF UPSTREAM OILFIELD BUSINESS
ENERGY SERVICES GROUP
Halliburton Energy Services
Well Construction:
Baroid - various drilling fluid systems needed for drilling operations,
------
brines of all types for completion/workover operations and filtration
equipment for the brines
Security Diamont Boart Stratabit - solutions for drilling and evaluation
--------------------------------
needs primarily with rock removal at the cutting element/formation
interface and reservoir sampling
Zonal Isolation - processes used to ensure optimum reservoir access and
---------------
fluid zone protection - establishing connection between the geological
formation and the well
Drilling and Reservoir Evaluation:
Logging and Perforating - Open Hole and Cased Hole services including
-----------------------
fluids and formation evaluation, visualization, sampling, rock
mechanics, slim hole and hostile well logging, data acquisition and
evaluation, advanced wireline and drillpipe conveyed logging,
cementing evaluation, reservoir monitoring, production analysis,
perforating, pipe evaluation, pipe recovery, and mechanical services
Sperry-Sun Drilling Services - drilling and formation evaluation services
----------------------------
including directional and horizontal drilling, multilateral drilling
and completion systems, Measurement While
Drilling/LoggingWhileDrilling and drilling optimization services,
steam-assisted gravity drainage, surface data logging, wellbore
surveying services, drillstring design, and well planning and rigsite
information management systems
Well Completions:
Completion Products and Services - systems for any completion and
--------------------------------
production operation including subsurface safety valves and flow
control equipment,
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-17
surface safety systems, packers and specialty completion equipment,
production automation, well screens, and slickline equipment and
services
Pipeline and Process Services - pipeline testing, commissioning and
-----------------------------
cleaning services which include pipeline flooding, gauging,
hydrotesting, dewatering and drying and conditioning
Production Enhancement - optimizing well performance through reservoir
----------------------
understanding and integrating intelligent stimulation and completions
including carbon dioxide, coiled tubing, frac/acid, nitrogen, sand
control, well control and hydraulic workover
Special Services - provides quality core and support personnel for
----------------
Frac/Acid, Zonal Isolation, Sand Control, Coiled Tubing and Hydraulic
Workover jobs globally along with complete Production Enhancement
crews deployed in North America - also technicians to provide global
instrument technical support for job preparations, data acquisition
and remote control personnel and equipment needs along with telephone
answering assistance to Boots & ▇▇▇▇▇ and Well Control
Tools, Testing & Tubing Conveyed Perforating - obtaining accurate reservoir
--------------------------------------------
information through service and well testing tools, data acquisition
services, production applications, and perforating systems
Solutions Group:
Integrated Technology Products - rapid development and commercialization of
------------------------------
emerging multi-psl technology solutions that maximize the performance
of clients' reservoirs through understanding and assessing the needs
of the reservoir
Reservoir Description - provides innovative and integrated Design
---------------------
Engineering that may include all aspects of Asset Evaluation,
Development and Management focusing on the integration of reservoir
understanding, well/production technologies and facilities engineering
Halliburton Subsea - subsea construction expertise of Rockwater, remote
technology expertise of Subsea International and subsea engineering expertise as
a single integrated solutions provider - including standard inspection,
maintenance, operations and repair tasks on pipelines, jackets and subsea
structures along with emergency and major accident prevention plans
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-18
Wellstream - provides top quality flexible pipe products used primarily in the
offshore oil and gas industry for both topside and subsea applications - this
product is very compatible to the latest technology utilized in the development
of subsea ▇▇▇▇▇ and is easy to install and retrieve ensuring a more economic
solution for total field development
Granherne Ltd - provides engineering and project management services to
customers who are mainly oil and gas production, gas processing and oil refining
industries
EMC (European Marine Contractors Ltd) - jointly owned by ▇▇▇▇▇ & Root and Saipem
to operate the most comprehensive fleet of pipelay vessels in the world
Bredero-▇▇▇▇ - strategic pipe coating alliance with ▇▇▇▇ Industries Ltd and
Bredero Price
EPC (Engineering, Procurement & Construction) - direction, coordination and
control of major projects, alliances and joint ventures
For purposes of clarity with respect to non-compete, the following shall not
violate this Agreement: (a) natural extensions of the existing business of the
Dresser Valve Business or the Dresser Instrument - DMD - Roots Business (each as
defined in the Recapitalization Agreement) of the design, manufacture, service
and sale of valves, instruments and related products into additional areas of
surface and subsurface applications will not be considered a conflict with
respect to ASSIGNOR's business listed above, as long as that extension does not
also include the installation, maintenance or service of valves, instruments or
related products in the well bore; (b) any business acquired by the ASSIGNEE or
its Affiliates pursuant to the Recapitalization Agreement; and (c) any business
listed above in which the ASSIGNOR and its Affiliates cease to conduct the
corresponding activities listed above, whether as a result of divestiture or
discontinuation for a period of more than 60 days.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-19
APPENDIX C
HALLIBURTON COMPANY
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT, effective as of December 1, 2000, by and between
Halliburton Company , having a principle place of business at 3600 Lincoln
Plaza, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ , hereinafter referred to as
"LICENSOR," and _______________, having a principle place of business at
______________________________________, hereinafter referred to as "LICENSEE."
WHEREAS, LICENSOR has adopted and is using the word, "▇▇▇▇▇▇▇▇" and
"▇▇▇▇▇▇▇▇ and Design " as trademarks and service marks for a broad range of
goods and services in the United States and elsewhere throughout the world
(hereinafter collectively referred to as the "Marks"), and has on file with the
trademark offices of various countries pending trademark and service ▇▇▇▇
applications and registrations covering the above-mentioned Marks, a listing of
which is attached hereto as Appendix A; and
WHEREAS, ASSIGNEE is acquiring the Dresser Equipment Group from ASSIGNOR,
pursuant to a certain Agreement and Plan of Recapitalization among ASSIGNOR,
ASSIGNEE and the seller named therein dated January 30, 2001 (the
"Recapitalization Agreement"), and in connection with such acquisition would
like to acquire any and all right, title and interest in and to the Marks
together with the goodwill of the business symbolized thereby, subject to the
Existing Licenses (as defined below), the General License (as defined below) and
the Exclusive License (as defined below); and
NOW, THEREFORE, in consideration of the mutual covenants of the parties in
this Agreement and the Recapitalization Agreement, and the sum of ten dollars
($10.00) herewith paid by LICENSEE to LICENSOR, the receipt and sufficiency of
which is hereby acknowledged by said LICENSOR, the parties hereby agree as
follows:
ARTICLE 1 - LICENSE
LICENSOR grants to LICENSEE the non-transferable right to use the Marks in
the Field of Use and to use the Marks in documentation related to the Field
of Use. This license is exclusive within the Field of Use. The "Field of
Use" includes valves for industrial use. The foregoing conveyance is
referred to herein as the "License."
LICENSEE acknowledges that the License and any subsequent assignment is
subject to license and ownership rights of other parties to the ▇▇▇▇▇▇▇▇
marks in International Class 7 for pumps. LICENSEE consents to the use of
the ▇▇▇▇▇▇▇▇ marks by such parties within International Class 7.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-20
ARTICLE 2 - QUALITY OF GOODS AND SERVICES
LICENSEE shall use the Marks only as described in the grant in Article 1,
and only in accordance with the guidance and directions furnished to
LICENSEE by LICENSOR, or its representatives or agents, but always the
quality of the LICENSED GOODS AND SERVICES and the quality of the
documentation shall always be satisfactory to LICENSOR or as specified by
it. LICENSOR shall be the sole judge, in its commercially reasonable
discretion, as to whether or not LICENSEE has met or is meeting the
standards of quality so established.
ARTICLE 3 - INSPECTION
LICENSEE shall permit duly authorized representatives of LICENSOR to
inspect the LICENSED GOODS and the documentation during normal business
hours and with at least 10 days' notice prior to any distribution of same,
for the purpose of ascertaining or determining compliance with Articles 1
and 2 hereof.
ARTICLE 4 - USE OF MARKS
When using the Marks under this agreement, LICENSEE undertakes to comply
substantially with all laws pertaining to service marks and trademarks in
force at any time in the United States and all foreign jurisdictions in
which the marks are used. This provision includes compliance with marking
requirements, showing that the Marks are owned by Halliburton Company.
ARTICLE 5 - EXTENT OF LICENSE
The right granted in paragraph 1 hereof shall be exclusive within the Field
of Use, but subject to any outstanding license agreements which LICENSOR
may currently have in force with other third parties. This license is not
assignable or transferable in any manner whatsoever, nor does LICENSEE have
the right to grant any sub-licenses except to affiliates, unless LICENSEE
has obtained prior written consent of LICENSOR.
ARTICLE 6
NEW APPLICATIONS AND AMENDMENT OF EXISTING REGISTRATIONS
(a) Prior to the Effective Date, LICENSOR owned title to registrations for
the marks for pumps in International Class 7 and valves in International
Class 9. LICENSOR agrees to use commercially reasonable efforts to file
and prosecute
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-21
trademark applications in the United States of America and in the CTM
office of the European Community for: "▇▇▇▇▇▇▇▇" and "▇▇▇▇▇▇▇▇" (Stylized)
for valves in International Class 9.
(b) LICENSEE consents to the filing of the above applications recited in
paragraph (a).
(c) LICENSOR agrees that upon registration of the ▇▇▇▇▇▇▇▇ ▇▇▇▇ for valves
in International Class 9, it will assign the rights in and to such ▇▇▇▇,
along with the related goodwill, to LICENSEE. Following such assignment,
all obligations of LICENSOR to LICENSEE, including the License, shall
terminate.
(d) After termination of this License, LICENSOR consents to the ownership
and filing of future applications by LICENSEE of marks incorporating the
term "▇▇▇▇▇▇▇▇" within the Field of Use only.
(e) LICENSEE agrees that it will not file any applications for registration
of any marks incorporating the term "▇▇▇▇▇▇▇▇" for use on any goods or
services other than within the Field of Use. This clause shall survive the
termination of this License.
ARTICLE 7 -- ASSIGNMENT
As set forth in Article 6, LICENSOR agrees to assign the newly filed U.S.
and CTM Registrations for Class 9 valves to Licensee[, contingent upon
issuance of a registration and the filing and acceptance of a Section 8 and
15 Affidavit of Continuous Usage by the U.S. Patent and Trademark Office
for the U.S. applications identified in paragraph 5(a).]
ARTICLE 8 - INDEMNITY AND DISCLAIMER OF WARRANTIES
LICENSOR assumes no liability to LICENSEE or to third parties with the
performance characteristics of the services or goods rendered by LICENSEE.
Furthermore, LICENSEE shall indemnify LICENSOR against damages, costs and
losses incurred as a result of claims of third parties against LICENSOR
involving the marketing or sale of LICENSEE's goods or services, including,
but not limited to, liability for any claim of third parties relating to
trademark, patent, copyright, or trade secret infringement by LICENSEE or
in connection with LICENSEE's goods or services.
ARTICLE 9 -- TERMINATION
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-22
Except as otherwise provided, herein, this agreement shall remain in full
force and effect. If LICENSEE makes any assignments of assets or business
for the benefit of creditors, or a trustee or receiver is appointed to
conduct its business or affairs or it is adjudged in any legal proceeding
to be either a voluntary or involuntary bankruptcy, the rights granted
herein shall forthwith cease and terminate without any prior written notice
or legal action by LICENSOR. If LICENSEE materially breaches this
agreement, such as by using the Marks outside the granted scope of this
license, LICENSOR may cancel the License immediately. Upon assignment of
the ▇▇▇▇▇▇▇▇ ▇▇▇▇ in International Class 9 to LICENSEE in accordance with
Articles 6 and 7, this Agreement will terminate.
ARTICLE 10 - OWNERSHIP OF MARKS
LICENSEE and all parties to this agreement acknowledge LICENSOR's exclusive
right, title in and to the Marks and any registrations that have issued or
may issue thereon, and will not at any time due or cause to be done in the
act or thing contesting or in any way impairing or tending to impair part
of such right, title and interest. In connection with its use of the
Marks, neither LICENSEE nor any other party hereto shall in any manner
represent that he or it has any ownership in the Marks or registrations
thereof, and all parties acknowledge that use of the Marks shall inure to
the benefit of LICENSOR. On termination of this agreement in any manner
provided herein, LICENSEE will cease and desist from all use of the Marks
in any way and will deliver up to LICENSOR, or its duly authorized
representatives, all material and papers upon which the Marks appear; and
furthermore, LICENSEE will not at any time adopt or use without LICENSOR's
prior written consent, any word or ▇▇▇▇ which is likely to be similar to or
confusing with the Marks.
LICENSEE shall take all reasonable steps to promptly advise LICENSOR of any
infringement or apparent infringement as soon as it becomes known to
LICENSEE. LICENSOR shall have sole control to take proceedings, as it
deems appropriate, for infringement of the Marks, and LICENSEE shall
cooperate fully, at LICENSOR'S expense, with LICENSOR in respect of any
such proceedings.
ARTICLE 11 - MISCELLANEOUS
Any notices required or permitted to be given under this agreement shall be
deemed sufficiently given if mailed by registered mail, postage prepaid,
addressed to the party to be notified at its address shown below, or at
such other address as may be furnished in writing to the notifying party.
Governing Law. This Agreement shall be construed (both as to validity and
-------------
performance) and enforced in accordance with, and governed by, the laws of
the
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-23
State of Texas applicable to agreements made and to be performed wholly
within such jurisdiction. Any judicial proceeding brought against either of
the parties hereto with respect to this Agreement shall be brought in the
United States federal court for the Southern District of Texas irrespective
of where such party may be located at the time of such proceeding, and by
execution and delivery of this Agreement, each of the parties hereto hereby
consents to the exclusive jurisdiction of such court and waives any defense
or opposition to such jurisdiction.
Arbitration. Any dispute relating to this Agreement shall be resolved by
-----------
binding arbitration under the Commercial Arbitration Rules (the "AAA
Rules") of the American Arbitration Association (the "AAA"). This
arbitration provision is expressly made pursuant to and shall be governed
by the Federal Arbitration Act, 9 U.S.C. Sections 1-14. The parties hereto
agree that, pursuant to Section 9 of the Federal Arbitration Act, a
judgment of a United States District Court of competent jurisdiction shall
be entered upon the award made pursuant to the arbitration. Three
arbitrators, who shall have the authority to allocate the costs of any
arbitration initiated under this paragraph, shall be selected in accordance
with the following sentence within ten (10) days of the submission to the
AAA of the response to the statement of claim or the date on which any such
response is due, whichever is earlier. The selection shall be made as
follows: one by the LICENSOR, one by the LICENSEE and one by the two so
selected, provided, however, that only the third arbitrator shall be
required to be neutral. The arbitrators shall conduct the arbitration in
accordance with the Federal Rules of Evidence. The arbitrators shall
decide the amount and extent of pre-hearing discovery which is appropriate.
The arbitrators shall have the power to enter any award of monetary or
injunctive relief (including the power to issue permanent injunctive relief
and also the power to reconsider any prior request for immediate injunctive
relief by either of the parties and any order as to immediate injunctive
relief previously granted or denied by a court in response to a request
therefor by either of the parties), including the power to render an award
as provided in Rule 43 of the AAA Rules; provided, however, that the
arbitrators shall not have the power to award punitive or consequential
damages under any circumstances (whether styled as punitive, exemplary, or
treble damages, or any penalty or punitive type of damages) regardless of
whether such damages may be available under applicable Law, the parties
hereby waiving their rights, if any, to recover any such damages, whether
in arbitration or litigation. The arbitrators shall award the prevailing
party its costs and reasonable attorney's fees, and the losing party shall
bear the entire cost of the arbitration, including the arbitrators' fees.
The arbitration award may be enforced in any court having jurisdiction over
the parties and the subject matter of the arbitration. The arbitration
shall be held in Houston, Texas.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-24
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
LICENSOR LICENSEE
Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Ph)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
By: ______________________________ By:______________________________
______________________________ _________________________________
Typed or Printed Name Typed or Printed Name
Title:_____________________________ Title:___________________________
Date:______________________________ Date:____________________________
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-25
APPENDIX A
TRADEMARKS LICENSED TO LICENSEE
▇▇▇▇ Reg. No. International Class/Goods
---- -------- -------------------------
▇▇▇▇▇▇▇▇ U.S. Reg. No. 1,388,818 Class 7/ Pumps
Class 9/ Automatic Control Valves
▇▇▇▇▇▇▇▇ U.S. Reg. No. 1,388,817 Class 7/ Pumps
(Stylized) Class 9/ Automatic Control Valves
▇▇▇▇▇▇▇▇ CTM Reg. No. 81836 Class 7/ Pumps & Valves
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IV-26
Appendix V
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT ("Lease Agreement"), made and entered into as of this
___ day of __________, 2001 by and between DRESSER EQUIPMENT GROUP, INC., a
Delaware corporation, having its offices at _____________, ________, _______
________, (hereinafter referred to as "Landlord") and HALLIBURTON ENERGY
SERVICES, INC., a Delaware corporation, having offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ (hereinafter referred to as "Tenant").
1. LEASED PREMISES. Subject to the terms and provisions hereinafter set
----------------
forth, and in consideration of the rent to be paid by Tenant, Landlord does
hereby lease, demise and let unto Tenant, and Tenant does hereby hire and take
from Landlord, for the uses and purposes hereinafter set out, the following
portions of a building (the "Facility") located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇: (a) approximately 40,878 rentable square feet of
office space (the "Primary Space") as shown on Exhibit "A" attached hereto and
made a part hereof for all purposes, together with the right to use, at no cost
to Tenant, up to 130 parking spaces and access to and from same, and (b) an
additional approximately 12,152 rentable square feet of office space and 8,873
rentable square feet of warehouse/manufacturing/laboratory space ("Month to
Month Space"), as more fully described on Exhibit "B" attached hereto and made a
part hereof for all purposes, together with the right to use, at no cost to
Tenant, three (3) parking spaces per each 1,000 rentable square feet of such
Month to Month Space. The Primary Space and the Month to Month Space together
with all rights and appurtenances; any improvements; and any and all personal
property, fixtures and equipment located upon or in the Primary Space and the
Month to Month Space, at the time Tenant takes possession thereof, being
hereinafter called the "Leased Premises."
2. TERM.
-----
A. Initial Term. The term ("Initial Term") of this Lease Agreement for
-------------
the Primary Space shall be a period of twelve (12) months, commencing on
____________ __, 2001 ("Commencement Date") and ending on __________ __, _______
("Expiration Date"), unless terminated earlier as provided in this Lease.
Tenant shall lease the Month to Month Space on a month to month basis at the
then current Rent as provided in this Lease Agreement for such space, as
applicable, commencing on the Commencement Date and terminable by either
Landlord or Tenant upon thirty (30) days' prior written notice to the other
party.
B. Renewal. Provided that the Lease Agreement has not been terminated or
--------
that Tenant is not in default of any provision of this Lease beyond applicable
cure periods, the Initial Term for the Primary Space may be extended, at the
option of Tenant, for two (2) additional twelve (12) month periods, (each an
"Extended Term"). Notice of the exercise of (each) such option to extend the
Initial Term or any Extended Term shall be given by Tenant, in writing,
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V
to Landlord not less than sixty (60) days prior to the expiration of the current
term. Any Extended Term shall be upon the same terms as provided for in the
Initial Term except for rent as determined in Article 3.C. below.
C. Option to Lease Additional Space. For and in consideration of the sum of
--------------------------------
TEN AND NO/100 Dollars ($10.00), the receipt and sufficiency of which are
hereby acknowledged by Landlord, Landlord hereby grants to Tenant the option
to lease an additional approximately 35,156 rentable square feet of office
space ("Option Space") on the first floor of the Facility, as described on
Exhibit "C" attached hereto and made a part hereof for all purposes, at the
then applicable Rent for office space under this Lease Agreement. In the event
Tenant exercises this option, any portion of the Option Space taken by the
Tenant ("Expansion Space") shall be part of the Leased Premises as defined in
this Lease Agreement.
3. RENT.
-----
A. Rent. As used in this Lease Agreement "Rent" shall mean all amounts
----
provided for in this Lease Agreement to be paid by Tenant, all of which shall
constitute gross Rent in consideration for the leasing of the Leased Premises.
The Rent shall be paid at the times and in the amounts provided for herein in
legal tender of the United States of America. The Rent shall be paid without
notice, demand, abatement, deduction or offset except as may be expressly set
forth in this Lease Agreement.
B. Base Rent. The base rent ("Rent") for the Initial Term shall be (a)
---------
TWELVE AND 00/100 DOLLARS ($12.00) per rentable square foot per year for office
space; and SEVEN AND 20/100 DOLLARS ($7.20) per rentable square foot per year
for warehouse/manufacturing/laboratory space, i.e., a total annual Rent of
$________ subject to adjustment as provided for herein.
C. Extended Term Rent. Rent for any Extended Term shall be the then
-------------------
current market rental rate for comparable space and conditions. In the event
Landlord and Tenant are unable to agree on what constitutes current market rent,
Landlord and Tenant shall secure the opinion of two (2) real estate brokers
specializing in the leasing of similar space, one chosen by Landlord and the
other chosen by Tenant, and the then current market rental rate shall be
determined to be the average of the market rates suggested by such real estate
brokers. Landlord and Tenant shall be responsible for compensation of the broker
each of them shall have retained. In no event, however, shall the Base Rent be
less than $12.00 per rentable square foot per year for office space or $7.20 per
rentable square foot per year of warehouse/manufacturing/laboratory space for
any Extended Term.
4. PAYMENTS. All Rent payments and other payments to Landlord by Tenant
---------
hereunder shall be paid to Landlord at _______, ________, ______, Attention:
__________, or at such other address as Landlord may, from time to time, specify
by written notice to Tenant.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-2
5. OPERATING EXPENSES.
-------------------
A. Except as provided for in Article 5.B below, Landlord shall be
responsible for all operating expenses to maintain the Leased Premises in
accordance with sound and reasonable practices for facilities of a like kind and
character. Such operating expenses shall include all expenses, costs and
disbursements of every kind and nature which Landlord shall pay or become
obligated to pay because of or in connection with the ownership, operation,
maintenance and security of the Leased Premises, including, but not limited to,
the following:
(i) Wages and salaries of all employees, including employees of
Landlord, engaged in the direct operation, maintenance and security
of the Leased Premises;
(ii) The cost of all supplies, tools, equipment and materials used in the
operation and maintenance of the Leased Premises;
(iii) Except as otherwise specifically provided in this Lease Agreement,
the cost of all utilities for the Leased Premises;
(iv) Cost of all maintenance and service agreements for the Leased
Premises and the equipment therein including, without limitation,
janitorial service, security service, landscape maintenance, pest
control service, trash removal service, alarm service, window
cleaning and elevator maintenance;
(v) Cost of all insurance relating to the Leased Premises, including,
without limitation, physical damage to Landlord's property and third
party liability insurance premiums applicable to the Leased
Premises;
(vi) All taxes and assessments and governmental charges, whether federal,
state, county or municipal attributable to the Leased Premises;
B. Notwithstanding the foregoing, Tenant agrees to pay the following:
(i) Electrical Service used by Tenant at the Leased Premises, for which
Tenant shall pay Landlord the sum of TWO AND NO/100 DOLLARS ($2.00)
per rentable square foot of the Leased Premises per year.
(ii) Any increase in Landlord's insurance costs for the Leased Premises
directly attributable to Tenant's occupancy of the Leased Premises.
(iii) Any increase in Landlord's property taxes for the Leased Premises or
its contents directly attributable to Tenant's occupancy of the
Leased Premises.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-3
6. DELIVERY OF LEASED PREMISES. Landlord shall deliver the Leased Premises
----------------------------
to Tenant, no later than the Commencement Date, in good repair with all
electrical, security and intercom systems in good working order.
7. WAIVER OF ALL WARRANTIES AND ACCEPTANCE OF PREMISES.
----------------------------------------------------
A. Acceptance of Premises. Tenant is familiar with said Leased Premises,
-----------------------
its condition, state of repair and everything connected therewith, and except as
is specifically stated herein to the contrary, it is expressly agreed by Tenant
that the Leased Premises are being leased in their strict "AS IS, WHERE IS"
condition, and "WITH ALL FAULTS", and Tenant accepts said Leased Premises in the
condition thereof at the date of this Lease Agreement and agrees that no other
representations of any kind concerning said premises or any part thereof shall
be binding upon Landlord. Tenant has had all right and access and opportunity to
inspect the Leased Premises, and is aware that past use of the Leased Premises
has been, among other things, for industrial purposes. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, LANDLORD HAS MADE NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER TO TENANT AS TO THE LEASED PREMISES, THE CONDITION THEREOF, OR ANY
OTHER MATTERS RELEVANT THERETO, AND TENANT EXPRESSLY WAIVES ANY AND ALL
WARRANTIES, EXPRESS OR IMPLIED, RELEVANT TO THE LEASED PREMISES.
B. Warranty Disclaimer of Landlord. LANDLORD MAKES NO WARRANTY, EXPRESS
--------------------------------
OR IMPLIED, REGARDING THE COMMERCIAL SUITABILITY OR ENVIRONMENTAL QUALITY OF THE
LEASED PREMISES FOR TENANT'S INTENDED USE. TENANT ACKNOWLEDGES THAT TENANT'S
KNOWLEDGE OF TENANT'S INTENDED USE OF THE LEASED PREMISES IS EQUAL OR SUPERIOR
TO THAT OF LANDLORD, AND LANDLORD CANNOT OFFER, AND HAS NOT OFFERED, ANY
WARRANTY, EXPRESS OR IMPLIED, WITH REGARD TO TENANT'S INTENDED COMMERCIAL USE.
THIS PARAGRAPH DOES NOT LIMIT LANDLORD'S EXPRESS OBLIGATIONS UNDER THIS LEASE
AGREEMENT.
C. USE OF PREMISES. Tenant's use of the Leased Premises under this
----------------
Lease Agreement shall be for laboratory, research and development, limited
production, and office activities in connection with Tenant's usual business.
Tenant also agrees that it will not use, or suffer or permit any person to use
the said Leased Premises or any portion or portions thereof for any use or
purpose in violation of the laws of the United States, or the State of Texas or
other governmental subdivision having jurisdiction, and neither suffer nor
permit nuisances upon said Leased Premises. Tenant shall not use the Leased
Premises in an extra hazardous manner. In the event that, by reasons of acts of
Tenant, there shall be any increase in the rate of insurance on the Leased
Premises then Tenant hereby agrees to pay the amount of such increase upon
receipt of written demand by Landlord. Failure of Tenant to pay such amount on
demand shall constitute a default under this Lease Agreement.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-4
9. ACCESS TO LEASED PREMISES.
--------------------------
A. Landlord and Tenant acknowledge that the Facility was constructed as
a single user facility. Landlord grants to Tenant a non-exclusive easement
during the Initial Term and any extended Term for access purposes over and
across drives, parking areas, parking areas used for storage, sidewalks, loading
docks, restrooms and cafeteria facilities of the Facility (or otherwise serving
the Facility and owned by Landlord) for the purposes of facilitating vehicular
and pedestrian ingress and egress to and from the Leased Premises. This right is
for the benefit of Tenant, its employees, agents, independent contractors, and
business invitees. Use of the Facility for ingress and egress purposes shall be
subject to the reasonable rules and regulations of Landlord. The Landlord shall
maintain the area subject to this right in good repair consistent with the
current condition thereof, reasonable wear and tear excepted.
B. Landlord grants to Tenant a non-exclusive license to use the internal
hallways of the Facility during the normal business hours of the Facility for
the purpose of ingress and egress to and from the Leased Premises. In using
this license, Tenant shall comply with reasonable rules and regulations
promulgated by Landlord from time to time. This license shall be for the benefit
of Tenant, its employees, agents, independent contractors, and business
invitees. To the extent that Tenant desires to operate outside normal business
hours, on a schedule of up to 24 hours a day, seven days a week, the parties
shall cooperate to enable Tenant to obtain access to the Leased Premises during
such period at no incremental cost to Tenant.
C. Landlord retains access to the Leased Premises during the normal
business hours of Tenant for the following purposes:
(i) for provision of services required by this Lease Agreement;
(ii) to inspect the general condition and state of repair of the Leased
Premises;
(iii) to provide maintenance and make repairs required or permitted under
this Lease Agreement; and
(iv) to exercise it's other rights under this Lease Agreement.
D. Except in case of emergency, Landlord's access shall be subject to
prior notice, and right of Tenant to determine the timing and conditions of
access, which shall not be unreasonable. No entry by Landlord shall interfere
with the activities of Tenant.
E. Landlord agrees to restrict information which would provide access to
the Leased Premises (whether by traditional key, card key, key pad or
otherwise,) in order to minimize the number of individuals with the right of
access to the Leased Premises. In the event of need of emergency access to the
Leased Premises, Landlord agrees to, if practicable,
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-5
contact Tenant, and notify it of the need of access. If Tenant's contact
individuals (or their successors) cannot be immediately located by telephone,
then access may be gained by Landlord to the Leased Premises by key or other
means. Tenant's contact individuals shall be promptly contacted by telephone as
soon as possible after the emergency access has been gained in order to advise
them of the emergency, the fact that access has been gained and a description of
any activities necessary in the future to be taken by Landlord or Tenant.
10. BUILDING SERVICES TO BE PROVIDED BY LANDLORD. Landlord agrees to furnish
---------------------------------------------
or cause to be furnished to the Leased Premises, the utilities and services
detailed below, in accordance with the standards which shall not be materially
less than the level of service of similar office buildings located in the
vicinity of the Facility.
(a) Water - Landlord shall furnish only at those points of supply for
lavatory purposes and drinking fountain purposes, hot and cold potable
water in sufficient quantities, and at such other points as may be
agreed to by Landlord and Tenant.
(b) Heat and air conditioning service, maintenance and repair.
(c) Janitorial services and waste removal.
(d) Building security and alarm service.
(e) Elevator service, maintenance and repair.
Landlord's failure to provide any of the services provided in this Section 10
shall not constitute a constructive eviction of Tenant. If Landlord fails to
provide any such services and such failure continues for more than five business
days after written notice from Tenant, then Tenant: (a) may cure such failure
and offset Tenant's reasonable cure costs against Rent; and (b) obtain an
equitable abatement of Rent to the extent that such failure prevents Tenant from
reasonably operating (and accordingly Tenant ceases operating) its business in
any substantial portion of the Leased Premises.
11. SECURITY. Landlord acknowledges that Tenant desires the ability to insure
---------
that the Leased Premises are secure in order to protect its employees, property
and the confidentiality of Tenant's activities at the Leased Premises. Landlord
shall cooperate with Tenant to facilitate its security needs. Landlord shall
allow the installation of additional security systems and the use of additional
security personnel. Tenant may, at Tenant's expense, implement security
procedures regarding access to the Leased Premises. Landlord's security
personnel and Tenant's security personnel shall exercise good faith efforts to
coordinate their activities.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-6
12. MAINTENANCE OF LEASED PREMISES.
-------------------------------
A. Landlord Maintenance. Subject to the provisions of Article 5
---------------------
(Operating Expenses), Article 20 (Damage and Destruction) and Article 21
(Condemnation) and except for damage caused by any act or omission of Tenant,
Landlord shall keep the yards and grounds, landscaping, paving, foundation,
roof, mechanical equipment, electrical facilities, plumbing, exterior windows
and the structural portion of exterior walls of the Facility in good order,
condition and repair. Landlord shall not be obligated to make any repairs under
this Section until a reasonable time after receipt of written notice from Tenant
of the need of such repairs under this Section. If any repairs are required to
be made by Landlord, Tenant shall, at Tenant's sole cost and expense, promptly
remove Tenant's fixtures, inventory, equipment and other property, to the extent
required to enable Landlord to make such repairs. Landlord's liability for
failure to make any such repairs or corrections shall be limited to the cost of
such repairs or corrections. Landlord shall make all repairs in a diligent and
expeditious manner, minimizing any interference with Tenant's business.
B. Tenant Maintenance. Except as otherwise provided for herein, Tenant
-------------------
agrees to maintain and keep the interior of the Leased Premises in good repair
and condition at Tenant's expense. Tenant agrees not to commit or allow any
waste or damage to be committed on any portion of the Leased Premises. Tenant
shall promptly repair any damage to the Leased Premises caused by the neglect,
misuse, negligence or willful misconduct of Tenant, its employees, agents,
licensees or invitees. Tenant shall promptly give Landlord written notice of
any material damage to the Premises. At Tenant's request, Landlord shall, at
the reasonable cost and expense of Tenant, repair or replace any damage or
injury to the Leased Premises not done by, but the responsibility of, Tenant.
C. Landlord Performing Tenant Maintenance. If Tenant fails to maintain
---------------------------------------
and repair the Leased Premises as required by this Article 12, Landlord may, on
five (5) business days prior written notice, enter the Leased Premises and
perform such maintenance or repair on behalf of Tenant, except that no notice
shall be required in case of emergency, and Tenant shall pay Landlord
immediately upon demand for all such reasonable costs incurred in performing
such maintenance or repair as is required herein.
13. INDEMNITIES.
------------
A. Indemnification by Tenant. Tenant will not in any manner deface,
--------------------------
damage or injure any building or fixture on the Leased Premises. Tenant shall
defend, protect indemnify and hold harmless Landlord from any and all losses,
damages, demands, claims, costs, penalties, fines, judgments and expenses,
including, but not limited to reasonable attorney fees, engineering, expert or
environmental consultant fees, or causes of action arising out of injury to or
death of persons, damage to or destruction or loss of property, that directly or
indirectly may be caused by or resulting from (a) Tenant's use and operations
on, in or about the Leased Premises, and (b) Tenant's use of public or private
roadways traversing other lands adjacent to or in the vicinity of the Leased
Premises, including the use of such roadways for ingress and
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-7
egress to and from the Leased Premises, and (c) any claims, costs, penalties,
fines, judgments, liabilities and expenses which Landlord may incur arising out
of or in connection with Tenant's non-compliance with applicable federal, state
or local laws or regulations of the presence or release of any Hazardous
Materials (as defined below) caused by Tenant or by persons claiming through
Tenant on, in or under the Leased Premises, on or after the date Tenant takes
possession of the Leased Premises, except to the extent such conditions arise
from the acts or omissions of Landlord or Landlord's agents. Tenant's
obligations hereunder shall survive the expiration or early termination of this
Lease Agreement.
B. Indemnification by Landlord. Landlord shall defend, protect,
----------------------------
indemnify and hold harmless Tenant from any and all losses, damages, demands,
claims, costs, penalties, fines, judgments and expenses, including, but not
limited to reasonable attorney fees, engineering, expert or environmental
consultant fees, or causes of action arising out of injury to or death of
persons, damage to or destruction or loss of property, that directly or
indirectly may be caused by or result from (a) Landlord's use of and operations
on, in and about the Leased Premises; (b) Landlord's use of public or private
roadways and waterways traversing other lands owned by Landlord adjacent to or
in the vicinity of the Leased Premises, including the use of such roadways and
waterways for ingress and egress to and from the Leased Premises; and (c) any
claims, costs, penalties, fines, judgments, liabilities and expenses which
Tenant may incur arising out of the presence or release of any Hazardous
Materials (as defined below) on, in or under the Leased Premises, except to the
extent such conditions arise from the acts or omissions of Tenant, and except
when Tenant fails to advise Landlord of the matter as is required in this Lease
Agreement and such failure materially prejudices Landlord. Landlord's
obligations hereunder shall survive the expiration or early termination of this
Lease Agreement, except in the event of Tenant's purchase of the property, in
which event Landlord shall cease to have any obligation hereunder to Tenant upon
the closing of the sale unless the parties agree otherwise in writing.
14. RELEASE. Except as otherwise expressly provided for herein, Landlord and
--------
Tenant unconditionally mutually release one another from and against any and all
liability to one another for any environmental damages or requirements or
conditions, or the presence of any Hazardous Materials placed on, under, or
about the Leased Premises while Landlord or Tenant occupied the Leased Premises.
15. COMPLIANCE WITH GOVERNMENT LAWS AND REGULATIONS.
------------------------------------------------
A. General Compliance. Tenant shall comply in all material respects with
-------------------
all applicable federal, state and local laws, ordinances, rules and regulations
with respect to its occupancy of the Leased Premises.
B. Environmental Compliance. Tenant agrees that any condition(s) arising
-------------------------
after commencement of this Lease Agreement which result directly or indirectly
from Tenant's occupancy and use of said Leased Premises, including, but not
limited to, any release or threatened release of Hazardous Materials, Hazardous
Materials Contamination, installation of
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-8
devices or structures, Hazardous Materials generation/storage or any negligent
acts or omissions by Tenant occurring on or about the Leased Premises that are
determined to be in violation of any environmental laws or ordinances of the
United States or the State of Texas, or other Governmental subdivisions having
jurisdiction, but specifically excluding any acts of the Landlord or other third
parties not in Tenant's control, shall be the sole responsibility of Tenant.
Tenant further agrees to indemnify, defend and hold harmless Landlord for any
reasonable costs, loss, damage or liability arising out of such conditions
pursuant to the terms set forth in Article 15. Notwithstanding anything to the
contrary in this Lease Agreement, in no event shall Tenant have any liability to
Landlord for any condition that existed before the commencement of this Lease
Agreement.
C. Definitions. For the purposes hereof and for greater certainty, the
------------
term "Hazardous Materials" shall mean and include:
(i) such "solid waste or hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. (S) 6901 et seq.),
as amended from time to time, and the regulations promulgated
thereunder;
(ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. (S) 9601 et seq.), as amended from time to time, and the
regulations promulgated thereunder;
(iii) asbestos;
(iv) polychlorinated biphenyls, as defined by the Federal Toxic Substance
Control Act (15 U.S.C. (S) 2601 et seq.), as amended from time to
time, and the regulations promulgated thereunder;
(v) any substance the presence of which on the Leased Premises is
prohibited by any laws, regulations, or ordinances (collectively, the
"Laws"), relating to or at the Leased Premises;
(vi) petroleum based materials;
(vii) Naturally Occurring Radioactive Material ("NORM"); and
(vii) any other substance which is defined as hazardous, toxic, infectious,
or radioactive by any Laws relating to the Leased Premises.
For the purposes hereof, the term "Hazardous Materials Contamination" shall
mean the contamination of the Leased Premises to levels of noncompliance with
applicable laws and regulations as a direct result of Hazardous Materials
released or located upon the Leased Premises due to actions of the Tenant.
D. Remedial Work. In the event any investigation or monitoring of the
--------------
Leased Premises or any cleanup, containment, restoration, removal, or other
remedial work of the Leased Premises (collectively referred to as "Remedial
Work"), is required in connection with Tenant's use or its operation at the
Leased Premises, under any applicable federal, state, or local law or
regulation, or by any judicial order, or by any governmental entity, or in order
to comply with any agreements of any governmental authority, Landlord (or at
Tenant's option, Tenant) shall perform or cause to be performed the Remedial
Work in compliance with such law,
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-9
regulation, order or governmental authorities at Tenant's cost and expense.
E. Access. Tenant agrees to provide all reasonable and appropriate
-------
access to the Leased Premises to Landlord or any designated representative of
Landlord during the term of this Lease Agreement, if necessary, for purposes of
starting, continuing and/or completing of any Remedial Work on the Leased
Premises being undertaken by Landlord or its designated representative.
F. Americans With Disabilities Act. Tenant specifically agrees to assume
--------------------------------
the responsibility for and to comply with the public accommodations and
commercial facilities provisions of the Americans with Disabilities Act ("ADA")
and the regulations promulgated pursuant to the ADA as they apply to the Leased
Premises, but only to the extent that such ADA requirements arise as a result of
the particular nature of Tenant's use of the Leased Premises.
16. GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities" as used
-------------------------
herein shall mean "all statutes, ordinances, rules, orders, regulations a and
requirements of the Federal, State, County and Local Government and of any and
all Departments or Bureaus thereof." Tenant covenants and agrees that it will,
at its own cost and expense, hold Landlord, Landlord's affiliates, employees,
directors, officers, agents and servants harmless and will promptly execute and
comply with all Governmental Authorities applicable to the use or occupancy of
said Leased Premises or for the correction, prevention and abatement of
nuisances, violations and other grievances, in, upon or connected with said
Leased Premises during the term of this Lease Agreement and arising out of
Tenant's use and occupancy of the Leased Premises. Tenant shall also promptly
comply with and execute all rules, orders and regulations respecting fire, fire
hazards, sanitation and pollution and relating to Tenant's use and occupancy of
the Leased Premises.
17. ALTERATIONS. Tenant shall not make any alterations or improvements to the
------------
Leased Premises without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed. However, Tenant at
its own cost and expense, without the creation of mechanic's or materialman's
liens, and in a good workmanlike manner, may make such minor alterations as it
may deem advisable. Such minor alterations shall be without altering the basic
character or structure of the building or improvements, and in each case
complying with all applicable governmental laws, ordinances, regulations, and
other requirements. At the termination of this Lease Agreement, Tenant shall, if
Landlord so elects by written notice at least 30 days before such termination
(unless such termination occurred because of Tenant's default), remove all
alterations that are of a nature or scope that would cause the next user or
occupant of the Leased Premises to incur demolition and removal expenses
substantially greater than would be normal and typical for similar space (such
as raised concrete floors, vaults, installed heavy machinery, permanently
installed inventory racks, or other special purpose equipment). Otherwise, such
improvements shall be delivered up to Landlord in their "as is" condition at the
end of the term of this Lease, except for any damage resulting from waste caused
by Tenant or Tenant's failure to perform its obligations under this Lease. All
such removals and restoration shall be accomplished under the same standards as
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-10
is set forth above in this paragraph for any alterations, except that Tenant
shall not be obligated to restore any nonstructural damage caused by Tenant's
removal of any alterations that Tenant is required to remove, provided that such
removal is performed in a reasonable manner and with due care under the
circumstances.
18. SIGNS. Tenant shall not place any signs or other objects upon the roof of
------
the building, or paint or otherwise deface the exterior walls of the building,
except with the prior written approval of the Landlord. Subject to the prior
written approval of Landlord, not to be unreasonably withheld, Tenant shall have
the right to erect such other signs as it may desire, subject to any applicable
governmental laws, ordinances, regulations, and other requirements. Tenant
shall remove all signs at the termination of this Lease Agreement. Such
installation and removals shall be made in such manner as to avoid injury,
defacement or overloading of the buildings and other improvements. Landlord may
place customary "For Sale" or (during the last year of the Lease) "For Lease"
signs on the property.
19. INSURANCE.
A. TENANT INSURANCE. During the term and existence of this Lease
-----------------
Agreement, Tenant shall, at its sole cost and expense, carry insurance on forms
subject to approval of Landlord, with an insurance company or companies
authorized to do business in the State of Texas and which are otherwise
satisfactory to Landlord, or through blanket, self-insurance, or captive
insurance arrangements consistent with Tenant's ordinary insurance practices, as
follows:
1. Commercial General Liability Insurance with limits of not less
than: Bodily Injury/Property Damage $5,000,000 each occurrence (combined single
limit). Said insurance as is provided by this policy must apply to the
contractual liability assumed by Tenant for bodily injury and property damage
under the provisions of this Lease Agreement.
2. Comprehensive Automobile Liability Insurance with limits of not
less than: Bodily Injury/Property Damage $2,000,000 each occurrence (combined
single limit)
3. Statutory Worker's Compensation Coverage Pursuant to State Law.
4. To the extent required by Tenant's ordinary insurance practices,
all risk, fire and extended coverage insurance or similar type of physical
damage to property insurance covering, inter alia, the perils of fire,
lightning, windstorm, tornado, hail, explosion, riot, civil commotion,
vandalism, malicious mischief, theft, smoke, aircraft or land vehicle damage in
an amount not less than the replacement cost of Tenant's vehicles, inventory,
equipment, furniture, fixtures or other such similar property on the Leased
Premises.
5. Landlord will be named as an additional insured on policies
detailed in paragraphs A., B., and D. above but only to the extent of Tenant's
obligations and liabilities under this Lease. Landlord will be provided with a
waiver of subrogation on policies detailed
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-11
in paragraph C. above. Upon request of Landlord from time to time, Tenant shall
provide insurance certificates evidencing such above insurance coverage.
6. The above insurance shall be on an occurrence basis and shall
include a requirement that the Insurer(s) provide Landlord with 30 days' written
notice prior to the effective date of any cancellation or material change of
said insurance. Tenant shall provide Landlord with a Certificate of Insurance
complying with Landlord's reasonable and customary requirements. Any and all
deductible(s), self-insured retention(s) retrospective adjustments and the like
in connection with Tenant's policies are solely for Tenant's account. All
insurance required herein shall be endorsed to provide that Tenant's insurance
shall be primary insurance, as respects the additional insured, irrespective of
any "excess" or "other insurance" clauses contained in policies maintained
solely by Landlord.
B. LANDLORD'S INSURANCE. During the Term of this Lease Agreement,
Landlord shall keep and maintain: (1) Property Insurance covering the Facility
against damage and destruction by fire, vandalism, and other perils so called
"All Risks" perils; and (2) Commercial General Liability Insurance with limits
of not less than: Bodily Injury/Property Damage $5,000,000 each occurrence
(combined single limit). The "All Risks" perils shall also include the perils of
Earth Movement, Flood, and Boiler and Machinery. The amount of the Property
Insurance shall be equal to the full replacement value of the Building, as the
value may exist from time to time. The Property Insurance shall include a
replacement cost endorsement subject to no co-insurance. The Commercial General
Liability Insurance shall apply to all contractual liability of Landlord for
bodily injury and property damage under the provisions of this Lease Agreement.
20. DAMAGE OR DESTRUCTION.
----------------------
A. Notice. If the building or other improvements situated on the Leased
-------
Premises should be damaged or destroyed by fire, tornado or other casualty,
Tenant shall immediately give written notice thereof to Landlord.
B. Partial Damage. If the building or other improvements situated on the
---------------
Leased Premises are damaged by fire, tornado, or other casualty but not to such
an extent that rebuilding or repairs cannot reasonably be completed within one
hundred and twenty days (120) days from the date Landlord receives written
notification by Tenant of the happening of the damage, this Lease Agreement
shall not terminate, but Landlord shall proceed forthwith and use reasonable
diligence to rebuild or repair such building and other improvements on the
Leased Premises (other than leasehold improvements made by Tenant or any
assignee, subtenant or other occupant of the Leased Premises) to substantially
the same condition in which they existed prior to such damage. Landlord's
obligation under this Section 20.B to use reasonable diligence to rebuild or
repair such building and other improvements on the Leased Premises shall not
exceed the proceeds received by Landlord from any insurance policy maintained by
Landlord or Tenant under this Lease Agreement. If the casualty occurs during
the final eight (8) months of the Lease Term, Landlord may elect not to rebuild
or repair such
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-12
damage, provided the Tenant does not immediately elect to exercise its renewal
option, if applicable. This Lease Agreement shall terminate upon Landlord's
election and the Rent shall be abated for the remaining unused portion of this
Lease Agreement, effective from the date of actual receipt by Landlord of the
written notification of the damage. If the building and other improvements are
to be rebuilt or repairs made which cause the Leased Premises to be untenantable
in whole or in part following such damage, the installments of Rent payable
hereunder during the period in which they are untenantable shall be adjusted
equitably.
C. Substantial or Total Destruction. If the Facility is substantially or
---------------------------------
totally destroyed by fire, tornado, or other casualty, or so damaged that
rebuilding or repairs cannot reasonably be completed within one hundred twenty
(120) days from the date Landlord receives written notification by Tenant of the
happening of the damage, this Lease Agreement shall terminate at the option of
either Landlord or Tenant and all future monthly installments of Rent shall be
abated for the unexpired portion of this Lease Agreement. If this Lease
Agreement is not terminated, the building and the improvements shall be rebuilt
or repaired at Landlord's expense and the installments of Rent abated to the
extent provided under Article 20.B hereof. Landlord's obligation to rebuild or
repair under this Section 20.C shall not exceed the proceeds received by
Landlord from any insurance policy maintained by Landlord or Tenant under this
Lease Agreement.
21. CONDEMNATION. If there is any taking by eminent domain that materially
-------------
affects Tenant's use of the Leased Premises, this Lease Agreement shall
terminate when title vests in the authority exercising the right of eminent
domain. The Rent shall be apportioned as of the day of termination, and any
Rent paid for a period beyond that date shall be repaid to Tenant. Tenant shall
not be entitled to any part of the award to Landlord for the taking but Tenant
may file a claim for an award on Tenant's behalf. If there is a partial taking
by eminent domain that does not materially affect Tenant's use of the Leased
Premises, then there shall be no reduction of Rent payable by Tenant to
Landlord, nor any right of termination by either party.
22. BANKRUPTCY OR INSOLVENCY.
-------------------------
A. Neither this Lease Agreement nor any interest therein nor any estate
thereby created, shall pass to any trustee or receiver in bankruptcy, or to any
receiver or assignee for the benefit of creditors or otherwise by operation of
law.
B. In the event that the Tenant shall become bankrupt or shall make a
voluntary assignment for benefit of creditors, or in the event that a receiver
of the Tenant shall be appointed, then, at the option of the Landlord and upon
fifteen (15) days written notice to the Tenant of the exercise of such option,
this Lease Agreement shall cease and come to an end.
23. DEFAULT.
--------
A. Events of Default. If any Rent payable by Tenant shall be or remain
------------------
unpaid for
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-13
more than ten (10) days after written notice from Landlord that same is due and
payable, or if Tenant shall violate or make default in any of the other
covenants, agreements, stipulations or conditions herein, and Tenant does not
commence the correction of such default within twenty (20) days after receipt by
Tenant from Landlord of written notice of such violation or default, stating the
nature of such default, and thereafter continue the correction thereof with
promptness and dispatch until the same is fully rectified, then it shall be
optional for Landlord to terminate this Lease Agreement and receive from Tenant
as damages for Tenant's breach, an amount equal to the discounted value of such
Rents payable under the terms of this Lease Agreement for the residue of the
term hereof, less the discounted value of the Rents to be received from the new
Tenant or terminate Tenant's right of possession and to re-enter said Leased
Premises, with or without process of law, using such force as may be necessary
to remove all persons or chattels therefrom; but notwithstanding such re-entry
by Landlord, the liability of Tenant for the Rent provided for herein shall not
be relinquished or extinguished for the balance of the term of this Lease
Agreement.
B. Retaking. In the event Landlord terminates Tenant's right of
---------
possession under the terms and provisions of the previous paragraph and Landlord
retakes the possession of the Leased Premises under the authority contained
herein, all claims for damage incurred by reason of any such re-entry by
Landlord are expressly waived by Tenant. It is further expressly understood and
agreed that Landlord may resume possession of the Leased Premises and relet the
same for the remainder of the term of this Lease Agreement on commercially
reasonable terms for the account of Tenant, who shall make good any deficiency.
Any such deficiency or part thereof may be recovered by Landlord from time to
time from Tenant as such deficiency or part thereof is determined, or Landlord
may elect to receive from Tenant as damages for Tenant's breach, an amount equal
to the discounted value of such Rents payable under the terms of this Lease
Agreement for the residue of the term hereof, less the discounted fair market
rental value of the Leased Premises for the residue of the term hereof.
The discount rate to be used for purposes of determining the discounted
value of Rents and the discounted fair market rental value as provided in this
Section 23 shall be a per annum rate equal to the "Prime Rate" as published on
the date this Lease is terminated by The Wall Street Journal, Southwest Edition,
in its listing of "Money Rates" minus one percent.
C. Non-waiver. If Landlord should delay in enforcing any obligation of
-----------
Tenant hereunder, or should waive the performance of any such obligation, or
should accept payment of rent after the occurrence of any default by Tenant,
then such action or forbearance by Landlord shall not be construed as a waiver
of any default in any other obligation of Tenant hereunder, regardless of
whether such default was then existing or had previously occurred or should
thereafter occur. In the event Landlord employs an attorney to enforce any of
its rights under this Lease Agreement, Tenant agrees to pay any reasonable
attorney fees arising out of the enforcement of such rights.
D. Tenant's Remedies. Landlord shall not be in default hereunder unless
-----------------
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-14
Landlord fails to perform any of its obligations hereunder within thirty (30)
days after written notice from Tenant specifying such failure (unless such
performance will, when, due to the nature of the obligation, require a period of
time in excess of thirty (30) days, then after such period of time as is
reasonably necessary). This shall not limit Tenant's rights to cure Landlord's
default and offset Rent or to obtain an equitable abatement of Rent, all as
otherwise expressly provided for in this Lease. All obligations of Landlord
hereunder shall be construed as covenants, not conditions; and except as may be
otherwise expressly provided in this Lease Agreement, Tenant may not terminate
this Lease Agreement for breach of Landlord's obligations hereunder All
obligations of Landlord under this Lease Agreement will be binding upon Landlord
only during the period of ownership of the Leased Premises by Landlord and not
thereafter. Any liability of Landlord under this Lease Agreement shall be
limited solely to Landlord's interest in the Leased Premises, and in no event
shall any personal liability be asserted against Landlord in connection with
this Lease Agreement nor shall Tenant have any recourse against any other
property or assets of Landlord.
24. TERMINATION AND RENTS. Notwithstanding anything to the contrary herein,
----------------------
the termination of this Lease Agreement for any reason shall not release Tenant
from any liability to Landlord for Rents previously due and unpaid and shall not
release Tenant from performance of any other obligation accrued prior to the
time of such termination.
25. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease Agreement
--------------------------
nor sublet the Leased Premises, in whole or in part, without the prior written
consent of Landlord. Such consent by Landlord shall not be unreasonably
withheld. Any assignment or subletting, even if consented to by Landlord, shall
nevertheless be expressly subject to all of the terms, provisions and conditions
of this Lease Agreement and shall not in any way release or impair the
liabilities of Tenant hereunder. Notwithstanding the foregoing, Tenant may,
without the prior written consent of Landlord, sublet the Leased Premises or any
part thereof to an Affiliate, or assign this Lease Agreement to an Affiliate or
permit occupancy of any portion of the Premises by an Affiliate. The term
"Affiliate" shall mean (i) any corporation which, directly or indirectly,
controls or is controlled by, or is under common control with Tenant; (ii) any
corporation not less than fifty percent (50%) of whose outstanding stock shall,
at the time be owned directly or indirectly by Tenant or Tenant's parent
corporation; or (iii) any corporation that acquires all or substantially all of
Tenant's assets. For purposes hereof, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities or by contract or otherwise.
26. QUIET ENJOYMENT. Landlord covenants, warrants and represents that it has
----------------
full right and power to execute and perform this Lease Agreement, and to grant
the estate demised herein, and that Tenant upon paying the Rent specified herein
and performing the covenants and agreements contained herein, shall and may
peaceably and quietly hold the Leased Premises for the term herein provided.
27. SURRENDER OF LEASED PREMISES AT TERMINATION. At the expiration
--------------------------------------------
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-15
or termination of this Lease Agreement, or any extension or renewal hereof,
Tenant agrees to surrender the Leased Premises to Landlord in as good condition
and state of repair as when received, ordinary and reasonable wear and tear
excepted, except as this Lease otherwise provides. Determination of the
condition of the Premises prior to Tenant's move in and move out will be
performed by visual inspection photographically recorded and agreed to by both
Landlord and Tenant.
28. HOLDING OVER. In the event Tenant remains in possession of the Leased
-------------
Premises after the expiration or termination of this Lease Agreement, for any
reason, including to perform and complete any Remedial Work on the Leased
Premises, such holding over shall not serve to renew or extend this Lease
Agreement and Tenant shall be deemed to be occupying the Leased Premises as
Landlord's Tenant from month to month subject to all of the conditions,
provisions and obligations of this Lease Agreement insofar as the same are
applicable to a month to month tenancy. The Rent for such holding over shall be
paid within 10 days after demand, and be at the rate of One Hundred Fifty
Percent (150%) of the prior Rent in effect at the termination of this Lease. If
a hold over continues for less than seven days after the expiration or
termination of this Lease Agreement, then such holdover Rent shall be prorated
daily.
29. NOTICES. All notices or demands required or provided for in this Lease
--------
Agreement shall be in writing and may be given or served personally, or shall be
sent by United States registered or certified mail with postage or charges
prepaid, addressed to the party to whom such notice is to be given at the
address of such party as set forth on Page 1 hereof, or to such other address as
may hereafter be designated by either party by written notice to the other party
hereto. In addition, notice shall also be given as follows:
Tenant: Landlord:
Halliburton Energy Services, Inc. __________________________
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, 03-903G __________________________
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ __________________________
Attention: Real Estate Services Attention: _______________
30. SUCCESSORS AND ASSIGNS. Except as may be herein specifically provided to
-----------------------
the contrary, this Lease Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and assigns.
31. GOVERNING LAW. This Lease Agreement shall be governed and construed in
--------------
accordance with the laws of the State of Texas.
32. ENTIRE AGREEMENT. This Lease Agreement, together with all exhibits and
----------------
addenda thereto, contains all of the agreements of the parties hereto with
respect to any
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-16
matter covered or mentioned in this Lease Agreement, and no prior agreement,
understanding or representation pertaining to any such matter shall be effective
for any purpose. No provision of this Lease Agreement may be amended or added to
except by an agreement in writing signed by the parties hereto or their
respective successors in interest.
IN WITNESS WHEREOF, this instrument is executed in duplicate originals effective
the day and year first set forth above.
"TENANT" "LANDLORD"
HALLIBURTON ENERGY DRESSER EQUIPMENT
SERVICES, INC., GROUP, INC.
a Delaware corporation a Delaware corporation
By:____________________________ By:______________________________
Name:__________________________ Name: ___________________________
Title:_________________________ Title:___________________________
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-17
ACCESS AGREEMENT
1. THIS ACCESS AGREEMENT, is made and entered into this __________ day of
_____, 2001, by and between Dresser Equipment Group, Inc. ("Property Owner"),
with offices at ____________________ and Halliburton Energy Services, Inc.
("Halliburton"), with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The
preceding entities are referred to collectively herein as the "Parties."
2. Property Owner currently owns certain property described as set forth
in Attachment "A" hereto (the "Property"). Halliburton requires access to the
Property for use of the transite test well ("Test Well") situated on the
Property.
3. The Parties desire to enter into this Access Agreement to provide for
Halliburton's use of the Test Well. In consideration of the premises and mutual
covenants set forth herein, the Parties agree to the terms of this Access
Agreement.
4. Property Owner hereby grants, without compensation, costs or fees to
Halliburton, access to Halliburton, its employees, representatives, agents,
contractors, subcontractors, and their subcontractors to enter upon the Property
to permit Halliburton's use of the Test Well on the Property. The rights of
Halliburton's access to the Property to use the Test Well are non-exclusive.
5. The Access Agreement shall be effective as of the date set forth above
and shall continue until the earlier to occur of: (a) twelve (12) months from
the date of this Access Agreement; or (b) Halliburton's need for the Test Well
ends. Halliburton will notify Property Owner when this Access Agreement
terminates.
6. Halliburton shall, to the extent practicable and consistent with sound
business practices, undertake the use of the Test Well in a manner that will not
unreasonably interfere with Property Owner's use of the Property. Property
Owner is aware that Halliburton's use of the Test Well may involve the placement
of other equipment on the Property. Property Owner's acceptance of this
Agreement will serve as Property Owner's acceptance of these conditions and
agreement that these conditions will not constitute unreasonable interference
with Property Owner's use of the Property.
7. Halliburton agrees to release, defend, indemnify and hold harmless
Property Owner from and against all liability, cost and expense ("Claims")
including, loss of or damage to the Property or for injury to or death of any
person directly arising out of the negligent use of the Test Well by
Halliburton, its employees, representatives, agents, contractors or
subcontractors on the Property pursuant to this Access Agreement, but only to
the extent or degree such negligence proximately causes such loss of or damage
to the Property or injury to or death of any person. In addition, Halliburton
shall release, indemnify, defend, and hold harmless Property Owner from any and
all Claims for injuries to or death of its own employees, agents, and
representatives, or damage to their property arising our of its activities under
this Access Agreement including, without limitation, the
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-18
plug and abandonment and any environmental compliance or cleanup liability
related to the test well or its use. In no event shall Halliburton be liable for
any consequential, incidental, special, or exemplary damages, including without
limitation, loss of use, loss of profit, or diminution in value.
8. No provision of this Access Agreement nor any action under or by
reason of this Access Agreement shall in any action, proceeding or litigation
operate or be construed as an admission by any Party of any violation of law or
regulation, any liability, fault, or past or present wrongdoing, or any breach
of duty at any time.
9. Failure by any Party to enforce or exercise its rights under any term,
condition or covenant of this Access Agreement shall not be construed as a
waiver of such rights or of such term, covenant or condition.
10. Any notices of statements herein requested or required to be given by
any party to other party(ies) shall be in writing. Delivery of such written
notices, demands or statements shall be conclusively taken as sufficient when
delivered in person or deposited in the United States Mail, registered or
certified, postage fully prepaid, addressed to the addresses set forth below.
Any party hereto may by written notice change the address to which such demands,
notices or statements may be sent.
11. The contents of this Access Agreement are the entire agreement among
the Parties regarding access rights and supersede all written or oral
communication between the Parties prior to its execution, all understandings and
negotiations regarding the same having been merged herein, it being their
intention that this be an integrated agreement. This Access Agreement shall not
be modified except by written agreement of the Parties.
12. Nothing in this Access Agreement shall waive or prejudice any right,
claim, cause of action or defense that any Party otherwise may have under the
law.
13. Nothing in this Access Agreement shall confer any rights upon non-
parties hereto, whether owners of other properties in the area of the Property
or any other persons.
14. This Access Agreement may be executed in counterparts which, taken
together, shall constitute one and the same agreement.
15. This Access Agreement shall be governed by the laws of the State of
Texas.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-19
IN WITNESS WHEREOF, the Parties' duly authorized representatives have
signed this Agreement as of the day and year first above written.
PROPERTY OWNER
DRESSER EQUIPMENT GROUP, INC.
Address: _____________________________
_____________________________
By:______________________________________
Printed Name:____________________________
Title:___________________________________
Date:____________________________________
HALLIBURTON ENERGY SERVICES, INC.
Address: P. O. Box 3 (03-903)
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
By:______________________________________
Printed Name:____________________________
Title:___________________________________
Date:____________________________________
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-20
ATTACHMENT "A"
THE PROPERTY
Halliburton Company
Agreement and Plan of Recapitalization
Appendix V-21
Appendix VI
FORM OF EMPLOYEE BENEFITS AGREEMENT
This Employee Benefits Agreement, dated as of the _____ day of
_______________, 2001, is by and among Halliburton Company, a Delaware
corporation (the "Parent"), the Seller named on the signature page of the
Agreement and Plan of Recapitalization Dated _________________________, 2001
among Halliburton Company, the Seller Named Therein, and DEG Acquisitions, LLC,
a Delaware limited liability company (the "Acquiror"), and each of the Buyers
named on the signature page thereto (the "Recapitalization Agreement").
RECITALS:
--------
The Parent, the Seller, the Acquiror, and the Buyers desire to enter into
this Employee Benefits Agreement with respect to implementation of matters
concerning employees and employee benefits in connection with the
recapitalization set forth in the Recapitalization Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter expressed, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Terms used in this Employee Benefits Agreement with initial capitalization
shall have the same meanings as are ascribed to such terms under the
Recapitalization Agreement, except as otherwise specifically indicated herein.
ARTICLE II
EMPLOYEE MATTERS
Section 2.1 Employment. The Acquiror and the Buyers agree that all of the
----------
employees of each member of each Company Group on the applicable Closing Date
for the purchase of such member will be retained in employment (the "Continued
Employees"). The applicable Closing Date with respect to a group of employees
shall be hereinafter referred to as the "Effective Date." Nothing in this
Employee Benefits Agreement shall create any obligation on the part of the
Acquiror or any Buyer to continue the employment of any Continued Employee for
any definite period of time following the applicable Effective Date.
Section 2.2 Equivalent Compensation. For a period commencing on the
-----------------------
Effective Date and ending on December 31, 2001, the Acquiror Group shall provide
for Continued Employees in the aggregate, other than those covered by a
collective bargaining agreement or similar agreement, employee compensation and
employee benefit plans, programs, and policies that are in the aggregate
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI
no less favorable than those in effect with respect to similarly situated
employees of the Company Groups immediately prior to the Effective Date.
Section 2.3 Credit for Service. Continued Employees shall be given credit
------------------
for all service with the Parent, each Seller, and each ERISA Affiliate thereof
under all employee benefit plans, programs, and fringe benefit arrangements of
the Acquiror Group in which they become participants. The service credit given
is for purposes of eligibility, vesting, and service related benefits, but not
benefit accrual, except as otherwise provided in this Employee Benefits
Agreement.
Section 2.4 Participation in Parent Benefit Plans. Except as set forth
-------------------------------------
herein, prior to the Effective Date, the Parent shall cause the members of each
Company Group to withdraw as participating employers or to cease to be
designated as participating employers in the Parent Group's employee benefit
plans effective as of the Effective Date.
Section 2.5 Vacation. Vacation entitlement accrued but not utilized by a
--------
Continued Employee for the year in which the Effective Date occurs under the
vacation policy applicable to such Continued Employee immediately prior to the
Effective Date shall be recognized by the Acquiror Group following the Effective
Date.
Section 2.6 Other Liabilities. Except as otherwise provided in Articles
-----------------
VI, VII and VIII, notwithstanding any other provision in this Employee Benefits
Agreement or the Recapitalization Agreement to the contrary, (a) all liabilities
related to employees of the Businesses arising from events occurring either
before or after the Effective Date shall be the responsibility of the Acquiror,
including, but not limited to liabilities incurred by reason of the sale of the
Businesses pursuant to the Recapitalization Agreement but excluding (i) any
Losses for which an Indemnified Party is entitled to indemnification pursuant to
Section 12.02(a)(i) of the Recapitalization Agreement, (ii) Parent's obligations
pursuant to Sections 3.1(b) and 3.2(b) of this Employee Benefits Agreement, and
(iii) any loss, liability, damage or expense (net of applicable insurance
proceeds) resulting from claims related to insured risks involving workers
compensation arising out of or based on events or occurrences prior to the
Closing Date as to which the Acquiror has notified the Parent prior to the third
anniversary of the Closing Date, and (b) the Acquiror and the Buyers hereby
jointly and severally indemnify and hold the Parent, the Seller, and their ERISA
Affiliates harmless from and against any and all such liabilities described in
the foregoing clause (a) and any damages, claims and expenses with respect
thereto.
ARTICLE III
WELFARE PLANS
Section 3.1 Active Employee Welfare Plans.
-----------------------------
(a) Effective as of 12:00 midnight on the day prior to the Effective Date,
the members of each Company Group shall withdraw as participating employers from
each employee welfare benefit plan, as defined in Section 3(1) of ERISA, and
each plan that would be an employee welfare
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-2
benefit plan if it were subject to ERISA (such as a plan maintained outside the
United States), sponsored by the Parent or a member of the Parent Group (the
"Prior Welfare Plans"), and all Continued Employees shall cease to participate
in such plans as of such date. Except as otherwise provided in any applicable
collective bargaining agreements or similar agreements, the Acquiror and each
Buyer shall (i) cause the Continued Employees to commence participation in
similar benefit plans of the Acquiror Group on the Effective Date (the
"Replacement Welfare Plans"), (ii) waive all limitations as to pre-existing
condition exclusions and waiting periods that were in effect with respect to the
Continued Employees under the Replacement Welfare Plans, other than, but only to
the extent of, limitations or waiting periods that were in effect with respect
to such employees under the Prior Welfare Plans and that have not been satisfied
as of the Effective Date, and (iii) provide each Continued Employee with credit
for any co-payments and deductibles paid prior to the Effective Date in
satisfying any deductible or out-of-pocket requirements under the Replacement
Welfare Plans (on a pro-rata basis in the event of a difference in plan years).
(b) Claims for benefits by Continued Employees arising out of occurrences
on or subsequent to the Effective Date shall be covered by the Replacement
Welfare Plans in accordance with the terms of such plans. Claims for benefits
by Continued Employees arising out of occurrences prior to the Effective Date
shall be covered by the Prior Welfare Plans in accordance with the terms of such
plans, and Parent shall retain any liabilities for premiums, payments, or other
costs with respect to such claims under the Prior Welfare Plans, provided,
however, that any such obligation that is reflected as an accrued liability on
the Closing Financial Statements shall remain as a liability of the Company
Group. For this purpose, (i) claims for medical, dental, prescription drug, and
vision benefits by Continued Employees shall be considered to have occurred on
the date of purchase or the date service or treatment was rendered, as
applicable, (ii) claims for life insurance and accidental death and
dismemberment insurance benefits shall be considered to have occurred on the
date of death or the date the accident occurred, and (iii) claims for disability
benefits shall be considered to have occurred on the date the disability
commenced.
Section 3.2 Retiree Medical and Life Benefits.
---------------------------------
(a) Effective as of the Effective Date, all retiree medical and life
benefit liabilities with respect to the Continued Employees, employees who
retired from employment with a member of a Company Group, and any other
employees who retired from employment connected to the Businesses ("Prior
Retirees") and their eligible dependents provided under the Subplans to the
Halliburton Company Welfare Benefits Plan (Plan 526) that are listed on Schedule
A attached hereto shall be assumed by the Acquiror and the Buyers (the "Assumed
Retiree Benefits"). In connection with such assumption, the Acquiror and the
Buyers shall assume sponsorship of the portion of Plan 526 that constitutes the
Assumed Retiree Benefits and shall, (i) with respect to Subplan 501 of Plan 526,
maintain the Assumed Retiree Benefits under the same terms as in effect on the
Effective Date without any reduction in the amount or form of benefits provided
thereunder (except to the extent required by law and except to the extent that
any modifications thereto are consistent with changes in the medical plans
provided by the Acquiror and Buyers for similarly situated active employees) and
(ii) with respect to all other subplans listed on Schedule A, maintain the
Assumed Retiree Benefits in accordance with the collective bargaining agreements
governing such subplans as
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-3
negotiated from time to time. The Parent Group shall not be responsible for
providing the Assumed Retiree Benefits (a) to any Prior Retiree or to any
dependent thereof, nor (b) to any Continued Employee who retires or terminates
employment subsequent to the Effective Date. The Acquiror and the Buyers hereby
jointly and severally indemnify and hold the Parent, the Seller, and their ERISA
Affiliates harmless from and against any and all damages, liabilities, claims or
expenses incurred for post-retirement medical and life benefits made by any
Continued Employee or Prior Retiree with respect to the Assumed Retiree
Benefits.
(b) The Acquiror may request, by written notice to the Parent no later
than 60 days following the date hereof, that the Parent notify, in writing and
prior to the Effective Date, any Continued Employees, employees who retired from
employment with a member of a Company Group, and Prior Retirees, in each case
who received retiree medical and/or retiree life benefits under plans other than
the Subplans to Plan 526 that are listed on Schedule A attached hereto, that
such retiree medical and/or retiree life benefits shall no longer be provided to
such employees and retirees after the Effective Date. The Parent shall permit
the Acquiror to review and approve any such communication prior to its
distribution to such employees and retirees.
Section 3.3 Flexible Spending Accounts. Effective as of the Effective
--------------------------
Date with respect to Continued Employees participating in health care and/or
dependent care flexible spending account plans sponsored by the Parent, the
Acquiror Group shall have in effect health care and dependent care flexible
spending account plans for the benefit of each such Continued Employee, the
terms of which shall (i) be substantially similar in all material respects to
the flexible spending account plans sponsored by the Parent for such Continued
Employees, (ii) give full effect to, and continue in effect, salary reduction
elections made under such flexible spending account plans sponsored by the
Parent, and (iii) place such Continued Employees in the same status with respect
to account balances and claims paid as such Continued Employees were under the
flexible spending account plans sponsored by the Parent as of the Effective
Date. The net aggregate balances of the health care and dependent care flexible
spending accounts with respect to Continued Employees (reflecting contributions
to and claims paid through the Effective Date) shall be reflected on the Closing
Financial Statements. Any claims made by Continued Employees with respect to
the health care and dependent care flexible spending accounts that have not
been paid as of the Effective Date shall be paid by the Acquiror Group subject
to and in accordance with the terms of the health care and/or dependent care
flexible spending account plans of the Acquiror Group.
Section 3.4 COBRA. The Parent shall be responsible for providing
-----
continuation coverage as required by Section 4980B of the Code or similar state
law ("COBRA"), under a group health plan maintained by the Parent or an
affiliate of the Parent, to any employee, officer, director, consultant, or
agent of the Company Group, and other qualified beneficiaries under COBRA with
respect to such individuals, who have a COBRA qualifying event (due to
termination of employment with the Parent or otherwise) prior to or on the
Effective Date (the "Continuees"). The Parent shall indemnify and hold the
Acquiror and the Buyers harmless from any and all damages, liabilities, claims
or expenses incurred by the Acquiror and the Buyers by reason of the Parent or
any members of its controlled group (as determined for purposes of COBRA)
ceasing to maintain a group health plan.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-4
ARTICLE IV
DOMESTIC RETIREMENT PLANS
Section 4.1 Assumption of Retirement Plans. Effective as of the Effective
------------------------------
Date, the Acquiror and the Buyers shall assume sponsorship of the following
plans in their entireties:
Dresser Industries, Inc. Pension Plan for the International Association of
Machinists and Aerospace Workers, AFL-CIO, Local 2218, Dresser Valve and
Controls Division, Alexandria , LA (Plan No. 002)
Dresser Industries, Inc. Dresser Manufacturing Division (Bradford) Pension
Plan for Local 1644 (Plan No. 006)
Dresser Industries, Inc. Pension Plan for United Automobile, Aerospace and
Agricultural Implement Workers of America, Local 1118 of Roots Blower
Division, Connersville, IN (Plan No. 016)
Dresser Industries, Inc. Pension Plan for Truck Drivers, Chauffeurs,
Warehousemen Helpers, Union Local 707, Dresser Manufacturing Division,
Chicago, Illinois (Frozen) (Plan No. 059)
Dresser Industries, Inc. Pension Plan for Office and Professional Employees
International Union, Local 465, AFL-CIO, Valve and Controls Division,
Alexandria, Louisiana (Plan No. 067)
Dresser Industries, Inc. Pension Plan for the United Paperworkers
International Union, AFL-CIO, Local No. 7399, Instrument Division, Berea,
Kentucky (Plan No. 075)
Dresser Industries, Inc. Pension Plan for Hourly Employees of Instrument
Division, Newtown, Connecticut (Plan No. 078)
Dresser Industries, Inc. Pension Plan for Hourly Employees of Nil-Cor
Operations, Alliance, Ohio (Frozen) (Plan No. 123)
Dresser Industries, Inc. Pension Plan for UAW, Local 470, Dresser Valve and
Controls Division, Avon and Canton, Mass. (Plan No. 158)
Dresser Industries, Inc. Pension Plan for Graphic Communications Union
Local 388, Dresser Valve and Controls Division, Montebello, California
(closed plan) (Plan No. 159)
Dresser Industries, Inc. Retirement Plan for IAM, District 10, Waukesha
Engine Division, Waukesha, Wisconsin (Plan No. 169)
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-5
▇▇▇▇▇ Division (Salisbury, Maryland) of Dresser Industries, Inc. Pension
Plan for International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America, Local 354 (Plan No. 178)
Dresser Industries, Inc. Retirement Plan for Local 145 of International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America,
Hourly Employees and Draftsmen, Instrument Division, Stratford, Connecticut
(Plan No. 180)
Dresser Industries, Inc. Retirement Plan for Local 145 of International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America,
Office Unit, Instrument Division, Stratford, Conn. (Plan No. 183)
Dresser Industries, Inc. Union Plan (401(k)) (Plan No. 196).
Effective immediately before the Effective Date, the members of the Parent Group
shall withdraw from participation in and sponsorship of the foregoing plans and
shall not be responsible for providing any benefits under such plans. For
purposes of the Closing Balance Sheet, the Projected Benefit Obligation (the
"PBO") calculated in accordance with United States Statement of Financial
Accounting Standards No. 87 ("FAS 87") with respect to the plans listed in this
Section 4.1 shall be determined using the same actuarial assumptions used for
determining such obligation for the Initial Balance Sheet. The Acquiror and the
Buyers hereby jointly and severally indemnify and hold the members of the Parent
Group and their ERISA Affiliates harmless from and against any and all damages,
claims, liabilities or expenses arising from such plans.
Section 4.2 Spin-off of Plan 164. Effective as of the Effective Date, the
--------------------
Acquiror and the Buyers shall cause to be established a defined benefit pension
plan (the "Acquiror Defined Benefit Plan") for the benefit of participants
(including retired and deferred vested participants) in the Dresser Industries,
Inc. Consolidated Salaried Retirement Plan (Plan No. 164) ("DICON") as of the
Effective Date who are Continued Employees or whose employment prior to their
retirement or termination of employment was in connection with the Businesses
("Former Business Employees") (including alternate payees related thereto) (such
participants and alternate payees being hereinafter referred to as the
"Transferred DICON Participants"). The Acquiror Defined Benefit Plan shall have
terms substantially similar to DICON as in effect immediately before the
Effective Date, preserving all accrued benefits with respect to the Transferred
DICON Participants. The Continued Employees shall be given credit in the
Acquiror Defined Benefit Plan for service with the Acquiror and its ERISA
Affiliates for purposes of determining Vesting Service under the Acquiror
Defined Benefit Plan. In connection with the foregoing, the following actions
will be taken:
(i) At the time and in the manner set forth in paragraph (ii) below, the
Parent shall cause to be transferred to the Acquiror Defined Benefit
Plan a pro-rata portion of the assets of DICON in an amount equal to
the total assets of DICON as of the Effective Date multiplied by the
accumulated benefit obligations with respect to the Transferred DICON
Participants under DICON as of the Effective Date divided by the
total
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-6
accumulated benefit obligations with respect to all participants
under DICON as of the Effective Date.
(ii) The accumulated benefit obligations pursuant to paragraph (i) above
shall be determined by ▇▇▇▇▇▇ Associates in accordance with FAS 87
and based on the actuarial assumptions set forth on Schedule B
attached hereto; provided, however, that the transfer pursuant to
paragraph (i) above shall be subject to satisfaction of the
requirements of section 414(l) of the Code and any other applicable
governmental requirements as determined by ▇▇▇▇▇▇ Associates and
subject further to the review of such determinations by the Acquiror
as set forth in Section 12.1. The transfer of assets will take place
as soon as administratively practicable after the completion of the
calculation and the obtaining of any required governmental approvals
or otherwise complying with applicable governmental requirements. The
amount transferred will be determined as of the Effective Date and
will also include interest at seven percent per annum from the
Effective Date until the day immediately preceding the transfer. The
assets will be transferred in cash (or other property reasonably
acceptable to the Acquiror).
(iii) Benefit payments to Transferred DICON Participants in pay status
shall continue to be made from DICON following the Effective Date and
until the date of the asset transfer described in paragraph (ii). Any
such payments, adjusted for applicable interest, shall be deducted
from the amount required to be transferred to the Acquiror Defined
Benefit Plan pursuant to paragraph (ii).
(iv) Acquiror and the Buyers agree to apply for a favorable Internal
Revenue Service determination letter as to the qualified status of
the Acquiror Defined Benefit Plan as soon as administratively
practicable after the Effective Date. Acquiror and the Buyers agree
to make any operational or form changes with respect to the Acquiror
Retirement Plan as may be required by the Internal Revenue Service so
that such a favorable determination letter will be issued.
Following any such transfer of assets, the Acquiror and the Buyers shall assume
all obligations and liabilities of the Parent Group under DICON with respect to
the Transferred DICON Participants, and the Parent Group shall have no further
liability to the Acquiror and the Buyers or any Transferred DICON Participant
with respect thereto. The Acquiror and the Buyers hereby jointly and severally
indemnify and hold the members of the Parent Group and their ERISA Affiliates
harmless from and against any and all damages, claims, liabilities, and expenses
arising from DICON with respect to the Transferred DICON Participants.
Section 4.3 Administration of Terminated Retirement Plan: Effective as of
--------------------------------------------
the Effective Date, the Acquiror and the Buyers shall assume all
responsibilities for the administration of the group annuity contracts issued by
The Prudential Insurance Company of America (the "Group Annuity Contracts") in
connection with the termination of the Dresser Industries, Inc. Retirement
Income Plan under ERISA, as constituted on April 1, 1986 ("Plan 19") with
respect to those
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-7
participants (including retired and deferred vested participants) who are
Continued Employees or Former Business Employees (including alternate payees
related thereto) (such participants being hereafter referred to as the
"Transferred Plan 19 Participants"). Effective immediately before the Effective
Date, the members of the Parent Group shall relinquish administration of the
Group Annuity Contracts with respect to Transferred Plan 19 Participants and
shall not be responsible for providing any such administration with respect to
such contracts. The Acquiror and the Buyers hereby jointly and severally
indemnify and hold the Parent, the Seller, and their ERISA Affiliates harmless
from and against any and all damages, claims, liabilities and expenses
associated with the administration of the Group Annuity Contracts with respect
to the Transferred Plan 19 Participants.
Section 4.4 Spin-off of 401(k) Plan:
-----------------------
(a) Effective as of the Effective Date, the Acquiror and the Buyers shall
have in effect a tax-qualified defined contribution plan that includes a
qualified cash or deferred arrangement within the meaning of Section 401(k) of
the Code ("Acquiror 401(k) Plan") and that provides terms that are identical to
the Halliburton Retirement and Savings Plan (Plan No. 001) with respect to the
pension equalizer contribution formula thereunder as it applies to the Continued
Employees who are entitled to such pension equalizer contribution immediately
before the Effective Date, but taking into account any retirement benefits
provided to the Continued Employees by any plan or program of the Acquiror and
the Buyers after the Effective Date (the "Pension Equalizer") and shall maintain
such terms with respect to the pension equalizer contribution formula without
revision (provided, however, that if changes in the law require any such terms
to be modified, such terms may be changed to comply with such laws). At such
time after the Effective Date that the Parent is reasonably satisfied that the
Acquiror 401(k) Plan meets the requirements for qualification under Section
401(a) of the Code, the Parent shall cause to be transferred to the Acquiror
401(k) Plan in a trust to trust transfer in cash (or other property reasonably
acceptable to the Acquiror) assets equal to the value of the accounts (but not
including assets reflecting any matching or other Parent contributions accrued
but not yet contributed as of the Effective Date to the extent such
contributions are accrued liabilities on the Closing Financial Statements) of
the participants (including retired and deferred vested participants) in the
Halliburton Retirement and Savings Plan (Plan No. 001) and the Halliburton
Savings Plan (Plan No. 145) who are Continued Employees or Former Business
Employees (including alternate payees related thereto) (such participants and
alternate payees being hereinafter referred to as the "Transferred 401(k)
Participants"); provided that any outstanding loans to Transferred 401(k)
Participants from the Halliburton Retirement and Savings Plan (Plan No. 001) and
the Halliburton Savings Plan (Plan No. 145) shall be transferred in kind. After
the Effective Date and prior to any such transfer, the Acquiror and the Parent
shall cooperate in the administration of distributions to and loan repayments
from the Transferred 401(k) Participants.
(b) Following any such transfer of assets, the Acquiror and the Buyers
shall assume all obligations and liabilities of the Parent Group under the
Halliburton Retirement and Savings Plan (Plan No. 001) and Halliburton Savings
Plan (Plan No. 145) with respect to the Transferred 401(k) Participants, and the
Parent Group shall have no further liability to the Acquiror and the Buyers or
any Transferred 401(k) Participant with respect thereto. The Acquiror and the
Buyers hereby jointly
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-8
and severally indemnify and hold the members of the Parent Group and their ERISA
Affiliates harmless from and against any and all damages, claims, liabilities
and expenses arising from the Halliburton Retirement and Savings Plan (Plan No.
001) and the Halliburton Savings Plan (Plan No. 145) with respect to the
Transferred 401(k) Participants.
ARTICLE V
FOREIGN RETIREMENT PLANS
Section 5.1 Assumption of Foreign Retirement Plans. Effective as of the
--------------------------------------
Effective Date, the Acquiror and the Buyers shall assume sponsorship of the
following plans in their entireties:
Belgium
-------
Plan 0104 - Reglement de l'Assurance de Groupe Deces/Retraite de la Societe
Dresser Europe S.A. (DB Plan)
Brazil
------
Contrato de Instituicao de Plano Previdenciario de Beneficios nao Definidos (DC
Pension Fund)
France
------
Plan 2501 Masoneilan Retirement Indemnity
Germany
-------
Plan 2201 - Grundzuge der betrieblichen Altersversorgung fur die Beschaftigten
der firma Dresser Europe S.A. (Einbeck and Bremen Branches) (Pension)
Plan 2202 - Betriebliche Altersversorgung fur Fuhrungskrafte der International
Harvester Company (Management)(Pension)
Plan 2203 - Richtlinien uber die Pensionszusagen der International Harvester
Company (Pension)
Plan 2205 - Pan Geo Atlas (Pension)
Plan 2209 - Betriebsvereinbarung uber den Pensionsplan fur die Mitarbeiter der
Dresser Europe S.A., Niederlassung Baesweiler (Pension)
Dresser Europe S.A., ASS
Plan 2210 - Dresser Europe GmbH (aka Dresser Europe S.A.)
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-9
Hong Kong
---------
National Mutual Central Provident Fund
Italy
-----
TFR Plans (Nos. 5641, 5981, and 5983)
Japan
-----
DVD - Nimco Qualified Pension Plan for Retirement
Netherlands
-----------
Bedrijfspensioenfonds Voor de Metaal (Industry-wide DB plan)
Excedent Pension Plan Delta ▇▇▇▇▇ (Top Hat DB plan)
Plan 58457 - Excedent Verzeuering (Top Hat Pension Insurance Regulations)
Norway
------
Plan ▇▇▇▇▇ - ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ (▇▇ ▇▇▇▇)
▇▇▇▇▇ ▇▇▇▇▇▇
------------
Plan ▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Staff Pension Scheme (DB Plan)
Metal Industries Provident Fund (Industry-wide DC Plan)
Sweden
------
▇▇▇▇▇ Plan (DC Plan for Managing Director)
STP Plan for Wage Earner (centralized industry-wide pension plan)
ITP Plan for Salaried Employees (centralized industry-wide pension plan)
Book reserve for current retirees and terminated vesteds
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-10
Switzerland
-----------
Plan 11525 - Kurzbeschrieb Des Personalvorsorgeplanes (DB plan)
Effective immediately before the Effective Date, the members of the Parent Group
shall withdraw from participation in and sponsorship of the foregoing plans and
shall not be responsible for providing any benefits under such plans. For
purposes of the Closing Balance Sheet, the PBO calculated in accordance with FAS
87 with respect to the plans listed in this Section 5.1, where applicable, shall
be determined using the same actuarial assumptions used for determining such
obligation for the Initial Balance Sheet. The Acquiror and Buyers hereby
indemnify and hold the members of the Parent Group harmless from and against any
and all damages, claims, liabilities and expenses arising from such plans.
Section 5.2 Spin-off of Foreign Retirement Plans. Effective as of the
------------------------------------
Effective Date, the Acquiror and the Buyers shall cause to be established
defined benefit pension plans ("Acquiror Foreign Defined Benefit Plans") for the
benefit of participants in the Dresser Canada Retirement Income Plan (the
"Canadian Plan") and the Halliburton UK Pension Plan (collectively, the "Foreign
Pension Plans") who are Continued Employees or Former Business Employees or any
other individuals whose benefits are derived therefrom (the "Transferred Foreign
Pension Plan Participants"). The Acquiror Foreign Defined Benefit Plans shall
have substantially similar terms as the Foreign Pension Plans as in effect
immediately before the Effective Date, preserving all accrued benefits with
respect to the Transferred Foreign Pension Plan Participants. The Continued
Employees shall be given credit in the relevant Acquiror Foreign Defined Benefit
Plan for service credited under the relevant Foreign Pension Plan for purposes
of determining vesting service (and eligibility for other service-related
ancillary benefits such as early retirement) under the Acquiror Foreign Defined
Benefit Plan. In connection with the foregoing, the following actions will be
taken:
(i) At the time, in the amounts, and in the manner set forth in paragraph
(ii) below, the Parent shall cause assets from the Foreign Pension
Plans to be transferred to the relevant Acquiror Foreign Defined
Benefit Plan as of the Effective Date.
(ii) The amount of assets to be transferred shall be determined by the
Parent's appointed actuary for each Foreign Pension Plan in accordance
with local country law and practice but subject to the review of such
determinations by the Acquiror as set forth in Section 12.1 and
subject to the following provisions of this subparagraph 5.2(ii).
(A) With respect to the Halliburton UK Pension Plan, to the extent
permitted by local law or practice, the amount of assets to be
transferred will be equal to the PBO calculated in accordance
with FAS 87 using the assumptions described in Schedule C. To
the extent that a payment in excess of such PBO is transferred
pursuant to the requirements of local law or practice, the amount
of such surplus shall be reflected on the Closing Balance Sheet.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-11
(B) With respect to the Canadian Plan, to the extent permitted by
applicable Law, the amount of assets to be transferred will be a
pro-rata portion of the assets of the Canadian Plan equal to the
total assets of the Canadian Plan as of the Effective Date
multiplied by the PBO with respect to the Transferred Foreign
Pension Plan Participants under the Canadian Plan as of the
Effective Date divided by the PBO with respect to all
participants under the Canadian Plan as of the Effective Date.
The PBO pursuant to the foregoing sentence will be determined in
accordance with FAS 87 and based on the actuarial assumptions set
forth on Schedule C attached hereto. To the extent that the
amount of assets to be transferred pursuant to this paragraph
5.2(ii)(B) exceeds the PBO with respect to the Transferred
Foreign Pension Plan Participants under the Canadian Plan
calculated in accordance with this paragraph 5.2(ii)(B), the
amount of such surplus shall be reflected on the Closing Balance
Sheet.
The transfer of assets will take place as soon as administratively
practicable after the completion of the calculations and the
obtaining of any required governmental approvals or otherwise
complying with applicable governmental or other legal requirements.
The amount transferred will be determined as of the Effective Date
and will also include interest as set out in Schedule C from the
Effective Date until the day immediately preceding the transfer. The
assets will be transferred in cash (or other property reasonably
acceptable to the Acquiror). The Parent and the Acquiror agree to
provide such data and information as necessary to assist the
appointed actuary in the preparation of the calculation of the
transfer amount and the filing of any governmental or other forms.
(iii) Benefit payments to Transferred Foreign Pension Plan Participants
shall continue to be made from the relevant Foreign Pension Plan
following the Effective Date and until the date of the asset transfer
described in paragraph (ii). Any such payments, adjusted for
applicable interest, shall be deducted from the amount required to be
transferred to the Acquiror Foreign Defined Benefit Plans pursuant to
paragraph (ii).
Following any such transfer of assets, the Acquiror and the Buyers shall assume
all obligations and liabilities of the Parent Group under the Foreign Pension
Plans with respect to the Transferred Foreign Pension Plan Participants, and the
Parent Group shall have no further liability to the Acquiror and the Buyers or
former Foreign Pension Plan participant with respect thereto. The Acquiror and
Buyers hereby indemnify and hold the members of the Parent Group harmless from
and against any and all damages, claims, liabilities and expenses arising from
such plans with respect to the Transferred Foreign Pension Plan Participants.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-12
ARTICLE VI
NONQUALIFIED DEFERRED COMPENSATION PLANS
Section 6.1 Assumption of Liabilities. The Acquiror and the Buyers shall
-------------------------
assume the accrued liabilities as of the Effective Date of the Continued
Employees under the following nonqualified deferred compensation plans sponsored
by the Parent or members of the Parent Group: the Dresser Industries, Inc.
Deferred Compensation Plan, the Halliburton Elective Deferral Plan, the
Halliburton Company Senior Executives' Deferred Compensation Plan, the ERISA
Excess Benefit Plan for Dresser Industries, Inc., and the Supplemental Executive
Retirement Plan of Dresser Industries, Inc. (the "Parent Group Nonqualified
Plans").
Section 6.2 Creation of Acquiror Plan(s). The Acquiror and the Buyers
----------------------------
shall create one or more nonqualified deferred compensation plans (the "Acquiror
Nonqualified Plan(s)") to reflect such assumed liabilities, to provide for
continued earnings credits thereon, and to provide for payment of the accrued
liabilities under the terms of the Parent Group Nonqualified Plans as in effect
immediately prior to the Effective Date. The Acquiror Nonqualified Plan(s)
shall not be required to allow continued deferrals or accrual of benefits (other
than earnings) thereunder. With respect to accrued liabilities assumed from the
Dresser Industries, Inc. Deferred Compensation Plan, the Acquiror Nonqualified
Plan(s) shall convert valuations based on stock of the Parent to equivalent
valuations based on stock of the Acquiror, or at the Acquiror's election, to a
cash equivalent based on the valuation method set forth in Section VI. 1. of the
Dresser Industries, Inc. Deferred Compensation Plan. The parties hereto agree
to cooperate and assist each other with all matters relating to the deferred
compensation arrangements set forth in this Article VI, including the
establishment of successor plans.
ARTICLE VII
EQUITY COMPENSATION
Section 7.1 Stock Options and Restricted Stock. The options to purchase
----------------------------------
common stock of the Parent and the outstanding awards of restricted common stock
of the Parent, in each case held on the Effective Date by those Continued
Employees selected by the Acquiror by written notice to the Parent no later than
60 days following the date hereof, shall be assumed by the Acquiror and shall be
converted into options to purchase stock of the Acquiror, or restricted stock of
the Acquiror, as the case may be. Such conversion shall be made on a fair and
equitable basis, reflecting the relative values of the stock of the Parent and
the stock of the Acquiror and, with respect to options, the applicable option
purchase price; provided that in the case of any option to which section 421 of
the Code applies by reason of qualification under section 422 of the Code, such
conversion shall be made in a manner that complies with section 424(a) of the
Code.
Section 7.2 Creation of Equity Plan(s). The Acquiror and the Buyers shall
--------------------------
create one or more plans to effectuate the assumption and substitution of the
restricted stock and options set forth in Section 7.1. The parties hereto agree
to cooperate and assist each other with all matters relating
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-13
to the assumption and conversion of the options and restricted stock set forth
in this Article VII, including the establishment of successor plans.
ARTICLE VIII
RETENTION AGREEMENTS
The payments set forth in each of the retention agreements entered into
between Dresser Equipment Group, Inc., the Parent, and certain Continued
Employees, copies of which have been furnished to the Acquiror (the "Retention
Agreements"), shall be paid by the Parent to each such Continued Employee in
accordance with the terms of the Retention Agreements, provided that, in lieu of
the foregoing, subject to obtaining any required consents of the affected
Continued Employees, the Acquiror may elect, by written notice to the Parent no
later than 60 days following the date hereof, that the liability for the
payments under any or all of the Retention Agreements shall be assumed by the
Acquiror, and the Acquiror shall create one or more nonqualified deferred
compensation plans which shall reflect such assumed liabilities as book reserves
hypothetically invested as either (a) units of "phantom equity" of the Acquiror
or (b) cash earning interest at a rate determined by the Acquiror in its
discretion.
ARTICLE IX
EMPLOYMENT OBLIGATIONS
Except as otherwise provided herein, effective as of the Effective Date,
the Acquiror and the Buyers shall assume all liability and responsibility for
all obligations connected with employment of the Continued Employees and with
respect to the Former Business Employees, including, but not limited to, social
security, retirement/termination indemnities, and participation in mandated
employee benefit plans (whether due to Law or collective bargaining or similar
agreement) without regard to when such obligations were incurred. The Acquiror
and the Buyers hereby jointly and severally indemnify and hold the members of
the Parent Group harmless from and against any and all claims or liabilities
arising from such employment obligations.
ARTICLE X
APPLICATION TO SUBSEQUENT PURCHASERS
In the event that any other business entity (regardless of its relationship
to the Acquiror Group) acquires all or a portion of a member of a Company Group
(whether as a stock purchase or asset purchase), (a) the Acquiror and the Buyers
will require any such entity (i) to maintain the benefits described in Section
3.2 and to maintain a defined contribution plan which provides the Pension
Equalizer to those Transferred 401(k) Participants who are eligible to
participate in the Pension Equalizer immediately before the Effective Date, (ii)
to provide indemnities identical to those set forth in Sections 3.2 and 4.4
herein in favor of the Acquiror and Buyers, and (iii) to require any and all
successor entities to comply with the foregoing clauses (i) and (ii) in the
event any other business entity subsequently acquires all or a portion of such
member of the Company Group.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-14
Notwithstanding the foregoing, the indemnities set forth in Sections 3.2 and 4.4
shall survive without qualification in the event that any other business entity
(regardless of its relationship to the Acquiror Group) acquires all or a portion
of a member of the Company Group.
ARTICLE XI
MUTUAL COOPERATION
The Parent Group and the Acquiror Group shall cooperate with each other to
effectuate the provisions of this Employee Benefits Agreement, including, but
not limited to, obtaining any required consents of Continued Employees to the
benefit changes described in Articles VI, VII, and VIII. Promptly after the
Effective Date, in addition to any other actions required to be taken by the
Parent under this Employee Benefits Agreement, the Parent shall furnish the
Acquiror with any and all data, reports, compilations, calculations, and working
papers not then in the possession of the Acquiror that relate to the benefit
liabilities that are being assumed by the Acquiror Group hereunder and that are
reasonably necessary to enable the Acquiror Group to fulfill any and all
obligations they have assumed under this Employee Benefits Agreement.
ARTICLE XII
DISPUTED CALCULATIONS
Section 12.1 Calculation of DICON and Foreign Pension Plan Spin-Offs. The
-------------------------------------------------------
calculations contemplated in Sections 4.2 and 5.2 shall first be made by the
Parent's actuary. The Parent shall provide a copy of such calculations to the
Acquiror's actuary promptly upon completion thereof along with such other
information as such Acquiror's actuary may reasonably request, which information
shall be true and correct in all material respects. If the Acquiror's actuary
concludes that the calculations made by the Parent's actuary are incorrect or
inconsistent with Sections 4.2 or 5.2, as applicable, the parties shall seek to
resolve the difference among themselves or, if they are unable to do so, shall
resolve such matter in accordance with the procedure set forth in Section 12.3.
Section 12.2 Calculations of Assumed Retiree Benefits. In the event an
----------------------------------------
error in the Census Data (as defined below) with respect to the retiree medical
and retiree life benefits assumed by the Acquiror and the Buyers pursuant to
Section 3.2 is discovered by the Parent, the Seller, the Acquiror, or the Buyers
(collectively, the "Contracting Parties") or any affiliate or any agent
(including an actuary or actuaries) of any of the Contracting Parties prior to
the six month anniversary of the Effective Date, such Contracting Party has the
obligation to notify the Parent and the Acquiror of such error in the Census
Data in writing within 30 days of the six month anniversary of the Effective
Date in accordance with the notice provisions of Section 14.01 of the
Recapitalization Agreement. If the actuary or actuaries of any Contracting
Party determine that the Cumulative Effect of all errors in Census Data
discovered prior to the six month anniversary of the Effective Date nets to
$500,000 or more, such Contracting Party shall supply all Contracting Parties
with such determination, along with such other information as any Contracting
Party shall reasonably request, within 60 days following the six month
anniversary of the Effective Date and the Affected Party (as
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-15
defined below) shall have 30 days to review such determination. In the event the
Affected Party disputes such determination, any such dispute shall be resolved
between the Parent and the Acquiror, or if they are unable to do so, such
dispute shall be resolved according to Section 12.3, with the 30 day period
referred to in Section 12.3(a) commencing on the date the Affected Party
receives such determination. In the event the Cumulative Effect (as defined
below) of all errors in Census Data is determined under the foregoing provisions
to exceed $500,000 (a) if such Cumulative Effect is a net decrease in liability,
the Acquiror shall pay to Parent the amount of any such net decrease in
liability and (b) if such Cumulative Effect is a net increase in liability, the
Parent shall pay to Acquiror the amount of any such net increase in liability.
Any such payment shall be made within 30 days that the amount of such Cumulative
Effect is finally determined pursuant to this Section 12.2 and pursuant to
Section 12.3, if applicable.
For purposes of this Section 12.2 the following terms shall have the
following meanings:
(i) "Affected Party" shall mean the Parent or the Acquiror, as
applicable, to whom another Contracting Party has provided an
actuarial determination pursuant to this Section 12.2 that would
require a payment from such party pursuant to this Section.
(ii) "Census Data" shall mean the following basic demographic information
with respect to Continued Employees, Prior Retirees and their
eligible dependents (according to the status of such individuals as
eligible dependents as of May 1, 2000) (hereinafter "Assumed
Retirees"): identification of such individuals, date of birth, date
of hire, gender, amount of life insurance coverage in effect on May
1, 2000, the benefit and level of retiree medical coverage elected on
May 1, 2000 (if applicable), and with respect to individuals who as
of May 1, 2000, were not yet eligible for retiree medical or retiree
life insurance benefits, the identification of which programs and
benefits such individuals may become eligible for as of May 1, 2000.
Any change effective after May 1, 2000, in the following information
shall not be considered to be an error in census data for purposes of
this Employee Benefits Agreement: (i) changes in coverage elections,
(ii) eligible dependent status, (iii) available coverages, and (iv)
accrual of service and normal aging from and after May 1, 2000.
(iii) "Cumulative Effect" shall mean (A) the net aggregate effect of each
error in Census Data on the total liability for retiree medical and
retiree life with respect to Assumed Retirees calculated as of May 1,
2000; provided, however, for these purposes such liability shall be
the Accumulated Post Retirement Benefit Obligation (APBO) as
described in Statement of Financial Accounting Standards No. 106 as
of May 1, 2000, as calculated by ▇▇▇▇▇▇ Associates using the same
actuarial assumptions and methods as used to determine the APBO as
reflected in the Initial Financial Statements, multiplied by (B) a
factor of 1.21.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-16
Section 12.3 Resolution of Disputes With Respect to Calculations.
----------------------------------------------------
(a) If the parties do not reach a final resolution within 30 days
following the date the Parent has provided the calculations to the
Acquiror's actuary under Section 12.1 or within 30 days following the
date an Affected party has received a "determination" from a
Contracting Party under Section 12.2, as applicable, unless the
parties mutually agree to continue their efforts to resolve such
differences, an actuary selected jointly by the Parent's actuary and
the Acquiror's actuary (or, if such actuaries are unable to jointly
agree on such an actuary, an arbitrator selected by the New York, NY
office of the American Arbitration Association (the "Arbitrator"))
shall resolve such differences in the manner provided below. The
Parent and the Acquiror shall each be entitled to make a presentation
to the Arbitrator, pursuant to procedures agreed to among the Parent,
the Acquiror and the Arbitrator, advocating the merits of the
calculations espoused by such party, and the Arbitrator shall be
required to resolve the differences between the parties and determine
the appropriate calculations within ten business days thereafter.
Such determination shall be conclusive and binding upon such parties,
absent fraud or manifest error.
(b) Nothing herein shall be construed to authorize or permit the
Arbitrator to determine any questions or matters whatsoever under or in
connection with this Employee Benefits Agreement except for resolution of
difference between the parties regarding the calculations set forth in this
Article XII.
(c) The Parent and the Acquiror shall share equally the fees and expenses
of the Arbitrator; provided that if the Arbitrator determines that one
-------------
party has adopted a position or positions with respect to the calculations
referenced in this Article XII that is frivolous or clearly without merit,
the Arbitrator may, in his or her discretion, assign a greater portion of
any such fees or expenses to such party.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1 Governing Law. EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL
-------------
LAW, THIS EMPLOYEE BENEFITS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 13.2 Invalid Provisions. If any provision of this Employee
------------------
Benefits Agreement is held to be illegal, invalid, or unenforceable under any
present of future Law, and if the rights or obligations of either party under
this Employee Benefits Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Employee Benefits
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Employee Benefits Agreement
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-17
will remain in full force and effect and will not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom; and (d) in
lieu of such illegal, invalid, or unenforceable provision, there will be added
automatically as a part of this Employee Benefits Agreement a legal, valid, and
enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible.
Section 13.3 Counterparts. This Employee Benefits Agreement may be
------------
executed in counterparts, each of which shall be deemed an original but all of
which taken together shall constitute but one and the same agreement.
Section 13.4 Headings. The article and section headings herein are for
--------
convenience only and shall not affect the construction hereof.
Section 13.5 Entire Agreement. This Employee Benefits Agreement and the
----------------
Recapitalization Agreement collectively constitute the entire agreement and
supersede all other prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof; provided,
however, that in the event of any inconsistencies between this Employee Benefits
Agreement and the Recapitalization Agreement, the terms of this Employee
Benefits Agreement shall control.
Section 13.6 Use of Certain Words, Terms, and Phrases. Unless the context
----------------------------------------
of this Employee Benefits Agreement otherwise requires the Rules of Construction
under the Recapitalization Agreement, including Section 1.01 shall govern
herein; provided however that (a) the terms "hereof," "herein," "hereby,"
"hereto," and derivative or similar words will refer to this entire Employee
Benefits Agreement; and (b) the terms "Article" or "Section" will refer to the
specified article or section of this Employee Benefits Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Employee
Benefits Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PARENT
HALLIBURTON COMPANY
By:______________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-18
ACQUIROR
DEG ACQUISITIONS, LLC
By:_________________________________
Name:
Title:
SELLER
DRESSER B.V.
By:_________________________________
Name:
Title:
BUYERS
[Buyer]
By:_________________________________
Name:
Title:
[Buyer]
By:
Name:
Title:
[Buyer]
By:
Name:
Title:
[Buyer]
By:
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-19
[Buyer]
By:_________________________________
Name:
Title:
[Buyer]
By:_________________________________
Name:
Title:
[Buyer]
By:_________________________________
Name:
Title:
[Buyer]
By:_________________________________
Name:
Title:
[Buyer]
By:_________________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-20
SCHEDULE A
Assumed Retiree Benefits
The following Subplans of the Halliburton Company Welfare Benefits Plan (Plan
526) are those with respect to which the Acquiror and the Buyers are assuming
the Assumed Retiree Benefits, as such term is defined in Section 3.2 (the
Subplan numbers correspond to the former Dresser Industries, Inc. welfare
benefits plan numbers):
. Subplan 501 for non-union salaried and hourly employees grandfathered for
Dresser retiree medical.
. Subplan 511 for hourly employees of Roots Division, Connersville, Indiana,
represented by the United Automobile, Aerospace and Agricultural Implement
Workers of America, Local No. 1118.
. Subplan 519 for employees of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, represented by UAW Local 354.
. Subplan 537 for employees of Waukesha Engine.
. Subplan 540 for employees of Waukesha, Clinton, Iowa.
. Subplans 542 and 543 for Hourly Retirees of the Instrument Division -
Stratford of Dresser, International Brotherhood of Teamsters Local #145 for
Retirees Retiring on or after May 15, 1995.
. Subplan 544 for hourly employees of Instrument Division, at Berea, Kentucky,
who are in a job classification represented for collective bargaining
purposes by United Paper Workers International Union AFL-CIO, Local No. 7399.
. Subplan 545 for employees of DVD, Alexandria, represented by IAM Local 2518.
. Subplan 546 for employees of DVD, Alexandria, represented by OPEIO Local 465.
. Subplan 549 for hourly employees of DMD Division, at Bradford, Pennsylvania,
who are in a job classification represented for collective bargaining
purposes by International Association of Machinists and Aerospace Workers,
AFL-CIO, Local No. 1644.
. Subplan 552 for the hourly employees of DMD, Wellsboro.
. Subplan 693 for employees of Masoneilan, Dresser Valve Division, a
Halliburton Company and the International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America (UAW) and its Local No. 470.
. Subplan 746 for Texsteam Inc. Collectively Bargained Employees.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-21
SCHEDULE B
Actuarial Assumptions for Spin-off of Plan Assets from
Dresser Industries, Inc. Consolidated Salaried Retirement Plan
Interest Rate 7.00% per year.
Salary Scale Not applicable.
Retirement Rates Retirement is assumed to occur based on rates that
vary by age (assumed mid-year decrement).
Sample rates are shown below:
Age Rate Age Rate
--- ---- --- ----
55 4.000% 63 15.517%
56 4.167% 64 12.245%
57 4.348% 65 88.372%
58 4.546% 66 20.000%
59 4.762% 67 25.000%
60 6.250% 68 33.333%
61 6.6667% 69 50.000%
62 17.143% 70 100.000%
Participants eligible for benefits under the Vested
Termination provisions of the Plan are assumed to
commence payment of their benefit at age 65.
Mortality Rates
Active and Inactive Lives 1983 Group Annuitant's Mortality Table.
Withdrawal Rates Table A attached.
Disability Rates None assumed.
Marriage Rates 85% of participants are assumed to be married. Males
are assumed to be three years older than females.
Lump Sum 90% of the participants eligible for a lump sum of
their pre-1986 benefit are assumed to elect a lump
sum upon decrement. The lump sum is calculated using
the 83 GATT mortality table and 6.75% interest.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-22
Actuarial Assumptions and Methods
Table A
Probability of Withdrawal in a One-Year Period
Current Age Males Females
----------- ----- -------
20 .1392 .1914
21 .1320 .1815
22 .1272 .1749
23 .1224 .1683
24 .1176 .1617
25 .1128 .1551
26 .1080 .1485
27 .1032 .1419
28 .0984 .1353
29 .0936 .1287
30 .0888 .1221
31 .0840 .1155
32 .0792 .1089
33 .0768 .1056
34 .0720 .0990
35 .0672 .0924
36 .0648 .0891
37 .0600 .0825
38 .0576 .0792
39 .0552 .0759
40 .0528 .0726
41 .0504 .0693
42 .0504 .0693
43 .0480 .0660
44 .0456 .0627
45 .0432 .0594
46 .0408 .0561
47 .0384 .0528
48 .0360 .0495
49 .0336 .0462
50 .0312 .0429
51 .0288 .0396
52 .0264 .0363
53 .0240 .0330
54 .0216 .0297
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-23
SCHEDULE C
Actuarial Assumptions for Spin-off of Plan Assets from
Dresser Canada, Inc. Retirement Income Plan
Interest Rate 7.0% per year.
Salary scale 4.5% per year
YMPE increases 3.75% per year
Increase in ITA maximum 3.75% per year starting 2005
Mortality table 1983 GAM
Assumed retirement age 63.5
Withdrawal rates (percent per year) Age Males Females
--- ----- -------
20 11.6% 16%
25 9.4% 12.9%
30 7.4% 10.2%
35 5.6% 7.7%
40 4.4% 6.1%
45 3.6% 5.0%
50 2.6% 3.6%
55 1.6% 2.2%
60 Zero Zero
Disability rates None
Percentage married 85% of participants are assumed to be
married at retirement age. Males are
assumed to be 3 years older than female
spouses
Interest rate to be applied from the Actual rate of return of plan assets from
Effective Date until the date the Effective Date until the day
immediately preceding the immediately preceding the transfer
transfer
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-24
Actuarial Assumptions for Spin-off of Plan Assets from
Halliburton UK Pension Plan
Interest Rate 6.5% per year
Salary scale 4.5% per year
Pension increase/price inflation 2.5% per year
Assumed retirement age Normal retirement age (or earliest age at
which no actuarial reduction factor
applies to the benefit tranche in
question)
Post retirement mortality table PA(90) rated down by 3 years for both
males and females
Pre retirement mortality table A 1967/70 ultimate, unadjusted for males
and rated down by 4 years for females
Withdrawal rates (percent per year) Age Males Females
--- ----- -------
20 26.0% 30.0%
25 23.0% 27.0%
30 13.0% 17.0%
35 8.0% 8.0%
40 5.0% 3.0%
45 2.5% Zero
50 Zero Zero
55 Zero Zero
60 Zero Zero
Disability rates None
Percentage married Age Males Females
--- ----- -------
20 10.7% 30.3%
30 81.0% 88.1%
40 86.9% 88.8%
50 87.5% 83.5%
60 86.0% 69.6%
70 78.0% 44.4%
80 59.0% 21.0%
90 30.0% 5.0%
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-25
Interest rate to be applied from the Actual rate of return of plan assets from
Effective Date until the date the Effective Date until the day
immediately preceding the immediately preceding the transfer
transfer
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VI-26
Appendix VII
TERMS OF TRANSITION SERVICES AGREEMENT
Guiding Principles for Transition Services Agreement
The Parent will enter into a Transition Services Agreement with DEG as of
the Closing Date whereby the Parent will agree to provide to DEG or receive from
DEG the specific transition services described in the attached Annex A based on
the principles contained herein:
(1) The Parent has not had an opportunity to review this request with each
of the departments who currently provide these services to DEG or
receive these services from DEG. If the Parent determines that it
does not currently provide or receive any specific services listed on
Annex A, then it will not be required to provide or receive those
services under the Transition Services Agreement.
(2) The Parent will cause its managers who are currently responsible for
providing each of the services listed on Annex A (the "Service
Providers") to meet with the managers who have requested these
specific services (the "Service Receiver"). The Service Receiver will
have the right to decide which services listed on Annex A will be
provided. These individuals will jointly prepare a document (the
"Service Level Agreement") that explains how each of the specific
services, if any, will be performed, identifies the length of time
that such service will be provided and that identifies the costs that
will be charged for each of these services (subject to the costing
principles set forth below). These Service Level Agreements will be
completed and the costs that will be billed for each of the specific
services will be agreed before the Transition Services Agreement is
executed and before the Closing Date.
(3) The Parent or DEG will ▇▇▇▇ for the transition services at its cost
and no other amounts or ▇▇▇▇-ups will be added to these costs. Cost
is defined as the actual costs that are recorded on the accounting
cost center ledger that is maintained for the Service Provider in
accordance with the normal accounting practices of the Parent. These
actual costs include personnel costs, costs paid to third parties and
costs charged internally for specific services received from other
departments or functions of the Parent. Costs will be charged by the
Service Provider using one of the following two methods:
(a) Those Service Providers who normally ▇▇▇▇ their services using
established rates that are applied to the actual quantity of
specific services provided will agree specific rates with the
Service Receiver. Where applicable, the rates charged to the
Service Receiver will be the same rates charged by the Service
Provider to other departments or functions of the Parent. The
agreed rates
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII
will be applied to the actual quantity of the related service
that is provided to the Service Receiver. Once established, the
rates will not be changed during the term of the Service Level
Agreement, however the Service Receiver will be allowed to
increase or decrease the quantity of such service as provided for
in the Service Level Agreement.
(b) Those Service Providers who do not ▇▇▇▇ their services using
established rates will agree to a fixed monthly amount with the
Service Receiver. These fixed monthly amounts will be determined
by (i) multiplying the total actual costs incurred by the Service
Provider to provide the services to all departments, functions or
operations of the Parent by (ii) the estimated percentage of the
Service Provider's time or effort spent providing the services to
DEG. Once established, the fixed monthly billing amount for the
services will not be changed during the term of the Service Level
Agreement.
(4) The Parent and DEG will each designate one or more individuals who
will oversee and administer the Transition Services Agreement. These
individuals will cooperate to resolve any differences between the
Service Receivers and Service Providers. These individuals will also
establish procedures for billing and paying the Transition Services.
(5) If DEG can identify a third party service provider who agrees to
provide all of the services on a Service Level Agreement to DEG for a
lower cost than that specified in the Service Level Agreement then DEG
will have the right to request that the Parent reduce its cost to an
amount equal to the cost offered by the third party. The Parent shall
have the right to either accept or reject any such cost reduction
requests. If the Parent decides to reject any such request, then DEG
will have the right to terminate the specific Service Level Agreement
with the Parent (subject to the notice provisions below) and DEG will
have the right to obtain such services directly from the third party
service provider.
(6) The term for each of the services will be established on each Service
Level Agreement. However, it is generally understood that the
services will be provided for up to six months from Closing, except
for Human Resources or Employee Benefits services which will be
provided until the end of 2001. Both DEG and the Parent agree to
reasonably cooperate with each other in ending the use of the
Transition services prior to the Closing, where possible.
(7) Annex A identifies certain services that are currently provided by
third party vendors pursuant to contracts between the Parent or DEG
and the third party vendor ("Vendor Services"). Each party will use
its reasonable best efforts to obtain any required consents of the
Vendors, if necessary, so that these Vendor Services can be provided
to the other party. If such consents are not obtained then the Parent
or DEG, as
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-2
appropriate will use its reasonable best efforts to assist the other
party in obtaining these services directly from the third party
vendor.
(8) DEG will have the right to terminate any Service Level Agreement
covering services provided by the Parent at any time but DEG is
required to provide at least 60 days notice to the Parent. Similarly,
the Parent will have the right to terminate any Service Level
Agreement covering services provided by DEG at any time by providing
60 days notice. If either party terminates a Service Level Agreement
without providing proper notice, then the Service Receiver will be
required to pay for two months of services at either (i) the agreed
fixed monthly rate or (ii) the average of all previous months' bills
if the costs are rate based.
(9) After the Transition Services Agreement is executed, either party may
identify additional services which were provided to the other party
prior to the sale. If such additional services are identified, then
the parties will use reasonable commercial efforts to enter into a new
Service Level Agreement following the same procedures set forth above.
Such new Service Level Agreement will be considered to be an amendment
to the Transition Services Agreement.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-3
Annex A
Transition Services To Be Provided By Halliburton To DEG
(1) Provide information Technology devices, infrastructure and support
services at sites where Halliburton is host to elements of DEG.
Examples include desktop/laptop support, LAN access, WAN access,
file/print and application servers, e-mail services including SMTP,
VPN services, Internet/Intranet access and services, RJE operations at
selected sites, etc. Specific domestic servers include DCCNTDB1,
DCCNTDBD, DCCNTND, DCCNTB, SHIVA, GENUITY, HP-OPENVIEW, DALDC1,
DALRTR, DALBKUP, DALVPN, DCCNTN, DCCNTCCM, DCCNTMTA, DCCEXCON,
CARRPDL001 and HOUWEBCON. Support to certain elements of LAN/WAN,
which serve DEG Business Units, but pass through Halliburton
facilities and/or interconnect with Halliburton IT infrastructure.
Planning and project execution assistance in re-designing these
WAN/LAN elements for a fully divested DEG.
(2) Coordination of sales and service support by various vendors now under
contract to Halliburton. Examples include:
. Xerox, for copiers/duplicators/fax
. FedEx/DHL/others, for overnight and courier services
. Various common carriers for freight services
. Various providers of fleet vehicles, direct and under lease
agreements
. Various providers of office furniture and equipment
. Various providers of employee relocation services, including
realtors and moving companies
. Various suites of desktop/laptop/server software used by both DEG
and Halliburton, including suites licensed by Microsoft, Oracle
and Norton
(3) Accounting services in support of DEG Headquarters and Business
Unit functions, including services provided by vendors under contract
to Halliburton. Examples include:
. SAP corporate ledger transactions and reporting
. Fixed Asset transactions and reporting
. Accounts payable transactions and reporting
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-4
. Accounts Receivable transactions and reporting with reconciliation
with cash receipts/lockbox
. HR/Benefits Administration accounting, billing, reporting, filing
of statutory/third party reports (5500s, ▇▇▇▇, etc.)
. Risk Management Administration accounting, billing, reporting,
filing of statutory/third-party reports
. Interim use of Hyperion software for Consolidation Accounting at
DEG Headquarters and Business Unit
. Payroll tax-related data collection/reporting services, using FLS,
now provided by Payroll/▇▇▇▇▇▇ for all domestic DEG Business Units
(4) Treasury services in support of DEG Headquarters and Business Unit
functions, including services provided by vendors under contract to
Halliburton. Examples include:
. Cash management, including lockbox services, analysis of cash
receipts vs. Accounts Receivable
. Establishment and administration of bank accounts to support
Payroll, Accounts Payable, and other disbursements including wire
transfer functions
. Establishment and administration of guarantees, bid bonds, custom
bonds, letters of credit, etc.
. Preparation of translation analyses and reports
. Establishment and administration of hedge/derivative functions
(5) Tax services in support of DEG Headquarters and Business Unit
functions, including services provided by vendors under contract to
Halliburton. Examples include:
. Administration and reporting of Payroll-related taxes; e.g.,
local/state/Federal, FICA, Medicare, all levels of unemployment
taxes, etc.
. Administration, analysis and reporting of estimated taxes for
various domestic and overseas taxing authorities
. Administration of compliance, reporting and preparation of
statutory reports/returns for all domestic and overseas taxing
authorities; e.g., statutory (local, state, Federal), sales and
use, VAT, franchise, property-related, etc.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-5
(6) Risk Management services in support of DEG Headquarters and
Business Unit functions, including services provided by vendors under
contract to Halliburton. Examples include:
. Administration of data collection, claims management, record
keeping, reporting and vendor services in support of all aspects of
Risk Management; e.g., Workers Comp, Property and Casualty,
General/Excess Liability, Auto, FCIA Credit Policy, etc.
. Coordinate analysis and reporting with affected shared services
functions (e.g., Accounting, Human Resources, Real Estate Services)
and DEG Headquarters and Business Unit and Business Units.
(7) Human Resources services in support of DEG Headquarters and Business
Unit functions, including services provided by vendors under contract
to Halliburton. Examples include:
. International HR, including record keeping, compensation, payroll,
benefits administration, employee relations, expatriate pay
calculation factors, etc.
. Employee Relations, including the Halliburton Dispute Resolution
Program and resolution of open issues, the Halliburton Employee
Assistance Program, Education/Training programs, Matching
Gift/Halliburton Foundation, etc.
. Benefits Administration, including all functions now performed by
Halliburton HR and its key HR/BA services suppliers: Health and
Welfare, Defined Benefit Plans, Defined Contribution Plans,
creation and revision of Summary Plan Descriptions now in process,
administration of COBRA, etc. Expert assistance in the development
of an overall plan for the transfer of DEG-specific HR/BA data and
files to the divested DEG. Provide employee and workgroup access to
Benefits information on Internet/Extranet sites, for all HR/BA
service providers
. Support to special HR-related services and reporting, including
1099-Rs for selected retired employees, Federal Multiple Worksite
Reporting, Federal 940/941s, Federal Unemployment Reporting, State
Unemployment Reporting, W-2-related reporting to local, state and
Federal agencies, etc.
(8) Real Estate Services in support of DEG Headquarters and Business Unit
functions, including services provided by vendors under contract to
Halliburton. Examples include:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-6
. Facility support services at sites where Halliburton is host to
elements of DEG; e.g., HES/Carrollton, North Belt Center/Houston,
numerous overseas locations, etc. These services include HVAC,
guard and mail services, etc.
. Facility security services, on an interim basis, at DVD-Grove's
▇▇▇▇▇▇▇▇ facility, including monitoring of CCTV,
preparation/administration of badges and badge access, etc.
. Employee relocation services
. Travel services, including DEG access to Halliburton preferred
pricing in airline/rental car/hotel agreements, Corporate Amex
card and associated administrative services, travel security
alerts/information and SOS services in support of international
travelers
. 1 Voice/fax services now provided, on-site and remote, as HSDN
(Halliburton Software Defined Network) including HSDN calling
cards and cellular/mobile/satellite services now provided by
several vendors
(9) Audit Services in support of DEG Headquarters and Business Unit
functions, including services provided by vendors under contract to
Halliburton. Examples include:
. Conduct general controls/financial/operational/investigative
audits and report findings
. Coordinate corrective actions recommended and agreed as part of
the audit process
. Provide supplemental support from Halliburton Security Services
as may be required in the conduct of investigative audits
(10) Provide HSE/RES/Legal services, including contracted services as
appropriate, to resolve open/pending environmental issues directly
related to DEG facilities and sites.
(11) Provide HR record keeping and payroll services to DEG units which now
depend on Halliburton for these services. For example: DVD (Houston
and Hammond, LA) and several overseas sites. These interim services
include all data feeds and reporting to third party entities: local,
state, federal, outsourced services, etc.
(12) Assist DEG in resolution of open/pending HR/Legal issues, including
EEOC claims, labor relations incidents/problems, etc.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-7
(13) Specialized legal advice from Halliburton to DEG Corporate Counsel.
Transition Services To Be Provided By DEG To Halliburton
(1) Management of mainframe data processing/data storage services now
provided by ADS to selected Business Units within Halliburton,
including ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇ Ltd., ▇▇▇▇▇▇▇▇▇, Security, HSDN Voice
Services, HES/North Belt, Wellstream, etc. These DEG provided services
include management and administration of licensed software vendors and
network providers associated with these mainframe services and
preparation and distribution of monthly resource usage reports for
billing purposes.
(2) Data Collection services now provided by DEG to elements of
HES/Houston in support of HR/Benefits Administration. Data elements
include TBA fields, demographics, Flexible Spending, etc.
(3) Access to ADS-provided mainframe data processing/data storage
services, via OpenConnect, used by HSDN Voice Services and IT
Infrastructure Support/Carrollton.
(4) Management and administration of the SSA/BPCS contract and support
services in behalf of selected Halliburton Business Units; e.g., Mono,
Security, ▇▇▇▇.
(5) Routine processing and support to unemployment-related data
collection/reporting/data submitted to Sheakley Uniservice (was R.E.
▇▇▇▇▇▇▇▇▇▇) in behalf of HES/Domestic Business Units which utilize the
Infinium Payroll; e.g., Baroid, Security, Sperry Sun, Wheatley, Fann,
Monoflo, Westport, etc.
(6) Routine processing and support to the International Savings Plan,
which includes participants within several Halliburton Business Units;
e.g., Baroid Export, Baroid UK, Sperry Sun and Security DBS.
(7) Agreement to permit the HES Wire Line Technical Services group access
to the transite lined test well at HWY 6 - obviously post divestiture
of the facility. HES will require the periodic use of the test well
for the next twelve (12) months. HES assumes responsibility for
closure and plugging of the well upon agreement expiration.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VII-8
Appendix VIII
TERMS OF STOCKHOLDERS' AGREEMENT
Registration Rights: (1) Demand and Piggyback Rights: Parent would have
---------------------------
customary registration rights. The specific terms of
such registration rights would include the following:
(i) 180 days after IPO, one demand registration upon
request of Parent; (ii) unlimited piggyback
registrations, subject to customary cut back
provisions, in connection with registrations of shares
for the account of the Company or selling shareholders
exercising demand rights; (iii) customary cut-back
provisions providing that (a) shares included in demand
registrations are allocated first to Parent, then the
other Demand stockholders, then to other holders
requesting inclusion in the registration, and then to
the Company (an offering in which a demand registrant
is cut back to less than 80% of its initial demand
shall be treated as a piggy-back registration for the
purposes hereof), and (b) shares included in piggyback
registrations are subject to underwriter determination
that inclusion will not adversely affect offering and
(iv) 90 day deferral permitted two times in any 12
month period.
(2) Expenses: The Company would bear the registration
--------
expenses (excluding underwriting discounts and
commissions but including all other expenses related to
the registration) of all such demand and piggyback
registrations, including one counsel to the holders.
(3) Termination: The registration rights would not
-----------
apply to any holder who can sell all of such holder's
shares in a single transaction without registration
pursuant to Rule 144 promulgated under the ▇▇▇▇ ▇▇▇.
(4) Transfer: The registration rights may be assigned
--------
in connection with any "Permitted Transfer," if such
assignee agrees to be subject to the Investor Rights
Agreement.
(5) Lockup: Parent prohibited from effecting any sale
------
during the 90 day period (or such longer period
required by the underwriters in such offering)
beginning on the effective date of a registration
statement filed by the Company
Sales by Stockholders: (1) Restrictions on Transfer: Prior to _______, 2003,
------------------------
no transfers except for "Permitted Transfers."
Permitted Transfers are (i) those approved in advance
by the Company's Board of Directors, and
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VIII
(ii) transfers to affiliates of Parent.
(2) Right of First Offer. Until the closing of
--------------------
an IPO, Stock that Parent wishes to sell to a
third party must be offered first to the Company
and next to certain other stockholders. Such
offer may only be accepted as to all, and not
part, of the stock so offered.
(3) Co-Sale Right. Until the closing of an IPO,
-------------
Parent may participate in the sale of 5% or more
of the Company stock by any other shareholder to
a third party pro rata to Parent's ownership of
the Company, excluding certain permitted
transactions.
(4) Rights to Compel Transfer. Until the closing
-------------------------
of an IPO, if one or more principal stockholders
propose to transfer shares (pursuant to a merger,
sale of shares or otherwise) to a transferee who,
after the transfer, (i) will hold at least 50% of
the fully diluted common stock and (ii) is not an
affiliate of such stockholder, then such
stockholder can compel a sale of shares held by
Parent on the same basis as and in the same pro
rata amount as sold by the principal stockholders
and/or a vote in favor of such transaction.
Transactions with Affiliates: Until the closing of an IPO, the Company will not
enter into any transactions with affiliates,
subject to agreed upon exceptions, unless (i) in
the case of transactions in excess of $10 million
but less than $50 million, the Company obtains a
resolution of the Board approved by a majority of
disinterested directors certifying as to the
fairness of such transaction; and (ii) in the
case of transactions equal to or in excess of $50
million, the Company obtains a fairness opinion
from a nationally recognized investment banking
firm. It being understood that any transaction
with First Reserve affiliates would, by nature of
its partnership requirements and the fact that
other investments are invariably owned by
different combinations of partnerships, be
treated as a potential conflict of interest
transaction and would require the independent
approval of First Reserve's outside board of
advisors.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix VIII-2
Appendix IX
FORM OF
CATEGORY 2A ASSETS PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement") dated as of
___________, 2001 is by and between Halliburton Company, a Delaware corporation
(the "Parent") and DEG Acquisitions, LLC, a Delaware limited liability company
(the "Acquiror").
RECITALS:
On January 30, 2001, the Parent and the Seller named therein and the
Acquiror executed and delivered an Agreement and Plan of Recapitalization dated
that date (the "Original Agreement") relating to the sale of certain of the
Parent's businesses relating to, among other things, the design, manufacturing
and marketing of engineered measurement, flow control and power systems for
customers primarily in the energy industry.
Section 2.13 of the Original Agreement provides that, if at the time of the
[First][Second] Closing any of the Category 2A Requirements applicable to such
Closing shall not have been satisfied, the Acquiror may elect, in its sole
discretion, to delay the purchase of the assets located in such jurisdiction in
which such Category 2A Requirements shall not have been satisfied until such
time as such requirements have been satisfied. The Acquiror has made such an
election and, pursuant to Section 2.13 of the Original Agreement, the Acquiror
is executing and delivering this Agreement regarding the purchase of such assets
at such time as such Category 2A Requirements are satisfied.
Capitalized terms used but not defined herein are defined in the Agreement
and are used herein with the same meanings as ascribed to them therein. For
ease of reference, Annex A to the Agreement containing the definitions used
therein is attached hereto as Exhibit A.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Acquiror agrees that it will purchase or cause an Affiliate of
the Acquiror to purchase, and the Parent agrees that it will cause a Subsidiary
of the Parent to sell, [description of assets subject to a delayed purchase
under Section 2.13 of the Agreement] (the "Assets") for cash in the amount of
U.S. $_____________ (repeat) payable by wire transfer of immediately available
funds to a wire transfer address of the Parent or such Subsidiary provided by
the Parent to the Acquiror. The closing of such purchase and sale shall be
effected at the principal executive offices of the Parent in Houston, Texas on
the fifteenth (15th) Business Day following receipt of the Authorization
specified below.
It shall be a condition to the Acquiror's obligation to purchase the Assets
pursuant to this Agreement that:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IX
(i) The Acquiror shall have obtained each Authorization under the
applicable foreign competition Laws specified in Category 2A on Schedule 2.13 to
the Parent's Disclosure Letter required in order for such purchase of the Assets
to comply with such foreign competition Laws;
(ii) such Assets shall be transferred to the Acquiror or an Affiliate of
the Acquiror, as applicable, free and clear of all Liens (other than Liens in
existence immediately prior to the First Closing) and shall not be subject to an
aggregate amount of liabilities materially in excess of the aggregate
liabilities to which such Assets were subject immediately prior to the First
Closing;
(iii) at the date of purchase of such Assets, the Parent shall represent
and warrant to the Acquiror or an Affiliate of the Acquiror, as applicable, that
the matters set forth in clause (ii) of this paragraph are true and correct and
that since the First Closing, the Parent or any Affiliate of the Parent that
owned such Assets has, in all Material respects:
(A) operated such Assets in the usual and ordinary course consistent
with past practices;
(B) used all commercially reasonable efforts to preserve
substantially intact the business organization and goodwill, if any,
associated with such Assets, to maintain the rights, privileges and
immunities, if any, of such Assets, to retain the services of any key
employees of such Assets, to perform in all material respects the material
contracts and agreements relating to such Assets and to maintain the
relationships with customers, regulators and suppliers of such Assets;
(C) used all commercially reasonable efforts consistent with past
practice to maintain and to keep such Assets in as good repair and
condition as at the First Closing Date, ordinary wear and tear excepted,
and to maintain supplies and inventories of such Assets in quantities
consistent with past practice;
(D) used all commercially reasonable efforts to maintain in full
force and effect insurance, performance bonds, bank guarantees and letters
of credit on behalf of or with respect to such Assets to the extent
consistent with the ordinary course of business consistent with past
practice;
(E) used all commercially reasonable efforts to maintain in full
force and effect all existing Authorizations pursuant to which such Assets
operate and to obtain timely any additional Authorizations or renewals
thereof to the extent material to the ongoing operations of such Assets;
and
(F) complied with all Legal Requirements applicable to such Assets.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
but a single instrument.
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IX-2
IN WITNESS WHEREOF, the Acquiror and the Parent, acting through their
respective officers named below, thereunto duly authorized, have executed this
Agreement as of the ____ day of ___________, 2001.
DEG ACQUISITIONS, LLC
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
HALLIBURTON COMPANY
By: _______________________________
Name:
Title:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix IX-3
Appendix X
FORM OPINION OF COUNSEL TO THE ACQUIROR
Ladies and Gentlemen:
We have acted as counsel to DEG Acquisitions, LLC, a Delaware limited
liability company (the "Acquiror") and DEG Acquisition Co., a Delaware
corporation (the "Sub"), in connection with the acquisition by the Acquiror of
shares of capital stock of Dresser Equipment Group, Inc., a Delaware corporation
("Dresser"), pursuant to that certain Agreement and Plan of Recapitalization,
dated as of January __, 2001 (the "Agreement") between Halliburton Company, the
Seller party thereto and the Acquiror (the "Transaction").
This opinion is rendered to you pursuant to Section 11.03(e) of the
Agreement. Capitalized terms defined in the Agreement, used herein, and not
otherwise defined herein shall have the meanings given them in the Agreement.
As such counsel, we have examined such matters of fact and questions
of law as we have considered appropriate for purposes of rendering the opinions
expressed below, except where a statement is qualified as to knowledge or
awareness, in which case we have made no or limited inquiry as specified below.
With your consent we have relied upon the foregoing and other
certificates of officer(s) of the Acquiror and of public officials with respect
to certain factual matters. We have not independently verified such factual
matters. Whenever a statement herein is qualified by "to the best of our
knowledge" or a similar phrase, it is intended to indicate that those attorneys
in this firm who have rendered legal services in connection with the Transaction
do not have current actual knowledge of the inaccuracy of such statement.
However, except as otherwise expressly indicated, we have not undertaken any
independent investigation to determine the accuracy of any such statement.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States, the internal laws of the State of New
York, the Delaware General Corporation ("DGCL") and the Delaware Limited
Liability Company Act ("DLLCA") and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws or as to any matters of
municipal law or the laws of any other local agencies within any state. Our
opinions set forth in paragraph 4 below are based upon our consideration of only
those statutes, rules and regulations which, in our experience, are normally
applicable to recapitalization transactions.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix X
The Acquiror is a limited liability company, duly formed, validly
existing and in good standing under the DLLCA with the requisite power and
authority to enter into the Agreement and each of the Ancillary Agreements
(collectively, the "Documents") to which it is a party and perform its
obligations thereunder. The Sub is a corporation, duly formed, validly existing
and in good standing under the DGCL with corporate power and authority to enter
into the Merger Agreement and perform its obligations thereunder.
The execution, delivery and performance of the Documents to which it
is a party have been duly authorized by all necessary action of each of the
Acquiror and Sub, and the Documents to which it is a party have been duly
executed and delivered by each of the Acquiror and Sub.
Each of the Documents to which it is a party constitutes a legally
valid and binding obligation of each of the Acquiror and Sub, enforceable
against each of the Acquiror and Sub in accordance with its terms. [NOTE:
Enforceability with respect to documents not governed by New York law will be
provided by separate counsel].
The execution and delivery of the Documents to which it is a party by
the Acquiror and Sub, and the performance of the obligations of the Acquiror or
Sub under the Documents on the date hereof do not: (i) violate any federal or
New York statute, rule or regulation applicable to the Acquiror or Sub, (ii)
violate the provisions of the Organizational Documents of the Acquiror or Sub,
(iii) to the best of our knowledge, result in the breach of or a default under
any of the agreements to which the Acquiror or Sub is a party that have been
identified to us by Acquiror or Sub, as applicable, as material to such person
(the "Material Agreements"), or (iv) except as set forth in Schedule 6.04 to the
Acquiror's Disclosure Letter, require any consents, approvals, authorizations,
registrations, declarations or filings by the Acquiror or Sub under any federal
or New York statute, rule or regulation applicable to the Acquiror.
No opinion is expressed in paragraph 4 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law or of any antifraud laws, securities laws or antitrust or trade regulation
laws.
The opinions expressed in paragraph 3 above are further subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to or affecting the rights or remedies of creditors;
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought; and
(c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party
Halliburton Company
Agreement and Plan of Recapitalization
Appendix X-2
with respect to a liability where such indemnification or contribution
is contrary to public policy.
In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements: (i) we have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state, (ii) to the extent that any questions of legality or legal
construction have arisen in connection with our review, we have applied the laws
of the State of New York in resolving such questions, (iii) we express no
opinion with respect to the effect of any action or inaction by the Acquiror or
Sub under the Documents or the Material Agreements which may result in a breach
or default under any Material Agreement, and (iv) we express no opinion with
respect to any matters which require us to perform a mathematical calculation or
make a financial or accounting determination. We advise you that certain of the
Material Agreements may be governed by other laws, that such laws may vary
substantially from the law assumed to govern for purposes of this opinion, and
that this opinion may not be relied upon as to whether or not a breach or
default would occur under the law actually governing such Material Agreements.
To the extent that the obligations of the Acquiror or Sub may be
dependent upon such matters, we assume for purposes of this opinion that: all
parties to the Documents other than the Acquiror and Sub are duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of organization; all parties to the Documents other than Acquiror
and Sub have the requisite power and authority to execute and deliver the
Documents and to perform their respective obligations under the Documents to
which they are a party; and the Documents to which such parties other than the
Acquiror and Sub are a party have been duly authorized, executed and delivered
by such parties and constitute their legally valid and binding obligations,
enforceable against them in accordance with their terms. We express no opinion
as to compliance by any parties to the Documents with any state or federal laws
or regulations applicable to the subject transactions because of the nature of
their business.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent.
Very truly yours,
Halliburton Company
Agreement and Plan of Recapitalization
▇▇▇▇▇▇▇▇ ▇▇-▇
Appendix XI
____________, 2001
DEG Acquisitions, LLC
____________________
____________________
Re: Dresser Equipment Group
Ladies and Gentlemen:
We are acting as counsel to Halliburton Company, a Delaware corporation
(the "Parent"), in connection with a series of transactions contemplated by that
certain Agreement and Plan of Recapitalization (the "Agreement") dated January
__, 2001 among the Parent, DEG Acquisitions, LLC, a Delaware limited liability
company (the "Acquiror"), and the Seller named therein pursuant to which, when
consummated, the Parent will have transferred to the Acquiror in excess of 94%
of the Parent's capital stock interest in Dresser Equipment Group, Inc., a
Delaware corporation ("DEGI") and, following the Reorganization, the
Subsidiaries of DEGI and the Non-Controlled Entities (the "Dresser Equipment
Group"). This opinion is being rendered pursuant to the requirements of Section
11.03(l) of the Agreement. Capitalized terms used but not defined in this
opinion are defined in the Agreement and are used herein with the same meanings
as ascribed to them therein. The opinion attached hereto addresses various
matters relating to the Seller.
In our capacity as counsel to the Parent, Dresser Industries and DEGI, we
examined the Agreement and each of the Ancillary Agreements. We also examined
the certificate of incorporation and by-laws of the Parent, Dresser Industries
and DEGI and the minutes of all meetings and all unanimous consents of the board
of directors of the Parent, Dresser Industries and DEGI and any committees
thereof relating to the authorization of the Agreement, each Ancillary Agreement
and the transactions contemplated thereby. In addition, we examined and relied
upon certificates and telegrams of public officials and certificates of officers
of the Parent and we made such other investigations and examined such other
documents as we deemed necessary as a basis for the opinions hereinafter
expressed. In the course of the foregoing investigations and examinations, we
assumed the genuineness of all signatures on, and the authenticity of, all
documents and instruments submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies and the due
authorization, execution and delivery by the parties thereto of all documents
and instruments examined by us.
Based on the foregoing and subject to the qualifications set forth below,
we are of the opinion that:
Halliburton Company
Agreement and Plan of Recapitalization
Appendix XI
(i) Each of the Parent, Dresser Industries and DEGI has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) Each of the Parent, Dresser Industries and DEGI has the corporate
power and authority to execute, deliver and perform the Agreement and each of
the Ancillary Agreements to which it is a party.
(iii) The Agreement has been duly authorized, executed and delivered by
the Parent and (assuming it has been duly authorized, executed and delivered by
the Acquiror) constitutes a legal, valid and binding agreement of the Parent,
enforceable against it in accordance with its terms, except as enforcement
thereof may limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(vi) To the extent that any of the Parent, Dresser Industries or DEGI is
a party to any of the Ancillary Agreements, each of the Ancillary Agreements has
been duly authorized, executed and delivered by such party and (assuming it has
been duly authorized, executed and delivered by each other party thereto)
constitutes a legal, valid and binding agreement of such party, enforceable
against it in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(v) The authorized capital of DEGI consists solely of [50,000,000]
shares of DEGI Common Stock, of which all [50,000,000] shares have been validly
issued and are fully paid and nonassessable. All of such shares of Common Stock
were, immediately prior to the Merger, owned of record by Dresser Industries.
(vi) No Authorization or Order of any Court or Governmental Authority is
required that has not been obtained in connection with the consummation by DEGI
or Dresser Industries of the Merger (other than any Authorization required under
foreign competition Laws, as to which we, consistent with limitation of the Laws
under which this opinion is rendered, express no opinion).
(vii) The execution and delivery of each of the Agreement and the
Ancillary Agreements to which it is a party by the Parent or DEGI, and the
performance of the obligations of the Parent or DEGI under the Agreement or the
Ancillary Agreements will not: (i) violate any federal, New York or Texas
statute, rule or regulation applicable to the Parent or DEGI, (ii) violate the
provisions of the Organizational Documents of the Parent or DEGI or (iii) result
in the breach of or a default under any of the agreement to which the Parent is
a party that has been identified to us by the Parent as material to the Parent
and its subsidiaries, taken as a whole.
(viii) Upon the issuance of the Common Stock of DEGI to the Acquiror
pursuant to the Merger in accordance with the terms of the Agreement and the
Merger Agreement, the Acquiror
Halliburton Company
Agreement and Plan of Recapitalization
Appendix XI-2
will (assuming it is a purchaser without notice of any adverse claim) acquire
good title to such shares free and clear of any Liens (other than any created by
the Acquiror).
The opinions herein expressed are limited to the federal laws of the United
States, the laws of the States of Texas and New York and the General Corporation
Law of the State of Delaware, all as in effect on the date hereof.
This opinion is furnished pursuant to Section 11.03(l) of the Agreement.
Each of the Lenders is entitled to rely on the opinions expressed herein as
fully as if such Lender were an addressee hereof. No other person shall be
entitled to rely hereon, nor may this opinion be quoted or otherwise referred to
or furnished to any other person, without our express prior written consent.
Very truly yours,
201
Halliburton Company
Agreement and Plan of Recapitalization
Appendix XI-3