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EXHIBIT 10.13
PREFERRED SUPPLIER AGREEMENT
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PREFERRED SUPPLIER AGREEMENT
This Agreement dated March 22, 2000, by and between Grant Prideco,
Inc., a Delaware corporation ("Grant Prideco"), and Weatherford International,
Inc., a Delaware corporation ("Weatherford"), will become effective on the
Distribution Date, as defined in the Distribution Agreement dated of even date
herewith by and between Weatherford and Grant Prideco.
WITNESSETH:
WHEREAS, Weatherford wishes to enter into a long term supply contract
with Grant Prideco for the purchase by Weatherford and its Affiliates (as
defined below) of Drill Stem Products (as defined below) on the terms and
subject to the conditions set forth herein; and
WHEREAS, Grant Prideco and its Affiliates manufacture and produce
Drill Stem Products and desire to supply Weatherford and its Affiliates with
Drill Stem Products on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, Weatherford and Grant Prideco, each on behalf of
itself and its Affiliates, hereby agree as follows:
ARTICLE 1. DEFINITIONS
(a) "AFFILIATE" means, with respect to Weatherford or Grant
Prideco, any Person that, directly or indirectly, is in
control of, is controlled by, controls or is under common
control of Weatherford or Grant Prideco, as the case may be.
For purposes of this definition, control shall include the
ownership of 50% or more of the legal or beneficial interest
in any Person or the power to direct or cause the direction
of the management and policies of such Person, whether
through the ownership of voting securities, by contract or
otherwise. A Person who is an Affiliate shall only be
considered an Affiliate for so long as that Person meets the
definition of an Affiliate. An officer, director, general
partner, managing member or trustee of a Person or Affiliate
of such Person shall not be considered to be an Affiliate
unless such Person is under the direct or indirect control or
common control of Weatherford or Grant Prideco, as the case
may be. For purposes of clarity, neither Weatherford nor
Grant Prideco shall be considered to be an Affiliate of the
other, nor shall National Oilwell, Grey Wolf Inc. or any
other company in which a director or officer of Weatherford
is also a director, officer or shareholder be considered an
Affiliate of Weatherford unless Weatherford itself controls
such company.
(b) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Houston,
Texas are authorized or required to close.
(c) Unless the context otherwise requires, "BUYER" means
Weatherford and its Affiliates.
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(d) "DRILL STEM CREDITS" mean those Drill Stem Products purchase
credits that have been granted to Weatherford and its
Affiliates by Grant Prideco in the amount of $30 million
pursuant to Section 6.6.
(e) "DRILL STEM EXPENDITURES" mean, in respect of any period, the
dollar amount of purchases made by Weatherford and its
Affiliates of Drill Stem Products from Persons that are not
Affiliated with Weatherford at the time of purchase. Drill
Stem Expenditures shall include (i) charges for coating and
commissions and procurement charges that may be paid by
Weatherford and its Affiliates for the purchase of the Drill
Stem Products and (ii) any import or export duties paid by
Weatherford or its Affiliates in respect of the original
purchase and delivery of the Drill Stem Products. Drill Stem
Expenditures shall exclude (i) rebates, refunds, discounts
provided to Weatherford and its Affiliates in respect of any
Drill Stem Product purchase (other than the Drill Stem
Credits) and (ii) charges for, fees, taxes, shipping,
shipping insurance and other similar charges and expenses.
(f) "DRILL STEM PRODUCTS" mean (i) drill pipe, (ii) heavyweight
drill pipe, (iii) drill collars and (iv) drill stem
accessories (including, without limitation, pup joints,
thread protectors, lift subs, lift plugs, rotary plugs and
rotary kellys).
(g) "DRILL STEM PURCHASE OBLIGATION" means the obligation of
Weatherford and its Affiliates to purchase Drill Stem
Products as provided in Section 2.1.
(h) "EVENT OF FORCE MAJEURE" shall mean any circumstance not
within the reasonable control of the party affected and that,
despite the exercise of reasonable diligence, such party is
unable to prevent, avoid or remove. Events of Force Majeure
shall include without limitation: (i) acts of God; (ii)
expropriation, confiscation or requisitioning of facilities
or compliance with any law, decree, regulation, order,
directive or request of any governmental authority or
person(s) purporting to act therefor that affects to a degree
not presently existing the supply, availability or use of
materials, equipment or labor; (iii) acts or inaction on the
part of any governmental authority or person purporting to
act therefor; (iv) acts of war or the public enemy whether
war be declared or not; (v) public disorders, insurrection,
rebellion, sabotage, riots or violent demonstrations; (vi)
explosions, fires, earthquakes or other natural calamities;
and (vii) strikes or lockouts or other industrial action by
workers or employees of the Supplier.
(i) "GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
(j) "PERSON" shall mean an individual, partnership, corporation,
business trust, limited liability company, limited liability
partnership, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other
entity of whatever nature.
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(k) Unless the context otherwise requires, "SUPPLIER" means Grant
Prideco and its Affiliates.
ARTICLE 2. PURCHASE AND SUPPLY COMMITMENT
SECTION 2.1 WEATHERFORD'S PURCHASE OBLIGATION
(a) Weatherford agrees that during the term of this Agreement it and
its Affiliates shall purchase from Grant Prideco or one of its Affiliates at
least 70% of Weatherford's and its Affiliates' total purchases of Drill Stem
Products for each calendar year during the term of this Agreement beginning
with the year 2000. Compliance with this obligation shall be based on the
dollar amount of Drill Stem Expenditures made by Weatherford and its Affiliates
during the applicable year, subject to the exceptions provided below.
(b) Except for those orders that are needed on an expedited basis or
as may otherwise be agreed to by Grant Prideco, Weatherford agrees that all
firm orders for Drill Stem Products by Weatherford and its Affiliates shall be
placed in writing with Grant Prideco or one of its Affiliates no later than 120
days prior to the required delivery date unless industry practice at the time
of the order has changed and shorter or longer periods become standard, in
which case the delivery period shall be adjusted accordingly. Notwithstanding
the foregoing, Grant Prideco shall provide for shorter delivery times if
requested by Weatherford and such requested delivery periods are not shorter
than those offered by Grant Prideco to its best similarly situated customers
for similar orders. Weatherford shall consult with Grant Prideco on at least a
quarterly basis with respect to Weatherford's anticipated Drill Stem Product
requirements for the following two quarters. No deposits shall be required to
be placed by Weatherford or its Affiliates with respect to any order. Grant
Prideco or the Affiliate with whom the order is placed shall either accept or
reject such order within three Business Days of receiving the order. All
acceptances or rejections shall be required to be in writing. All confirmations
of acceptances shall be pursuant to the terms of this Agreement and the terms
may not be modified through the confirmation unless signed in writing by
Weatherford or the Affiliate placing the order. All confirmations of acceptance
shall provide to Weatherford or such Affiliate the expected delivery date.
Unless otherwise instructed in writing by Grant Prideco, all orders by
Weatherford shall be directed to Randall Edwards, Houston, Texas.
(c) In calculating the percentage of Drill Stem Products purchased by
Weatherford and its Affiliates, there shall be excluded from the calculation
any Drill Stem Expenditures for Drill Stem Products to the extent such Drill
Stem Products (i) are purchased by Weatherford or one of its Affiliates for an
unAffiliated third party, (ii) are not required to be purchased from Grant
Prideco or its Affiliates under Section 2.1(e), or (iii) are acquired in
connection with the acquisition of another company or substantially all of the
operating assets of another company or division thereof provided that such
acquisition is not effected as a means to circumvent the provisions of this
Agreement.
(d) Unless otherwise agreed to by Weatherford, all Drill Stem Products
shall be manufactured at Grant Prideco facilities approved by Weatherford and
utilizing raw materials sourced from mills approved by Weatherford from time to
time. Unless otherwise reasonably objected to by Weatherford, mills in the
United States and Western Europe that are owned or controlled by Grant Prideco
or with which it is affiliated shall be deemed approved by Weatherford.
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(e) Weatherford and its Affiliates shall not be required to purchase
any particular Drill Stem Products, and Weatherford's purchase obligation under
this Section 2.1 shall not apply, under the following circumstances:
(i) Grant Prideco is unable to assure Weatherford and
its Affiliates of the delivery of that Drill Stem
Product at the location required by Weatherford or
an Affiliate of Weatherford within the time period
required by Weatherford or such Affiliate;
(ii) The purchase of that Drill Stem Product by
Weatherford or its Affiliate would constitute a
violation of law or regulation;
(iii) Grant Prideco is unable to assure Weatherford and
its Affiliate that such Drill Stem Product meets the
product specification and technical requirements of
Weatherford or such Affiliate;
(iv) Weatherford or its Affiliate reasonably requires the
Drill Stem Product on an expedited basis and Grant
Prideco is unable to provide the Drill Stem Product
within the time required, provided Weatherford or
such Affiliate provides Grant Prideco with such
reasonable opportunity as may be practical under the
circumstances to satisfy such requirement;
(v) There is a local content requirement for such Drill
Stem Product in the market or location in which such
Drill Stem Product is to be used;
(vi) There is a requirement by the rental customer of
Weatherford or its Affiliate for a Drill Stem
Product manufactured by another company and
Weatherford or such Affiliate does not already have
in inventory such Drill Stem Product that could be
used for such customer without unreasonable cost or
delay;
(vii) Grant Prideco or one of its Affiliates does not
accept and confirm the order for the Drill Stem
Product within the time period required in Section
2.1(b), provided that Weatherford or such Affiliate
that placed the order places an order for such Drill
Stem Product with another manufacturer within ten
days after the date on which Grant Prideco and its
Affiliates were required to accept or reject the
order; or
(viii) If at the time of the purchase or the placement of
the order for the purchase, Grant Prideco is in
material breach of this Agreement.
(f) Weatherford agrees to cause its Affiliates to comply with the
terms of this Agreement and to purchase from Grant Prideco and its Affiliates
Drill Stem Products as provided herein.
(g) In the event Weatherford and its Affiliates do not purchase the
required amount of Drill Stem Products from Grant Prideco and its Affiliates
during any calendar year, Weatherford shall be required to pay to Grant Prideco
an amount of cash equal to the product of (x) the amount of Drill Stem
Expenditures paid by Weatherford and its Affiliates to third parties during the
calendar
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year for Drill Stem Products that would have been required to have been paid to
Grant Prideco and its Affiliates to comply with the Drill Stem Purchase
Obligation for that year (with the calculation to be based on an assumption
that the Drill Stem Expenditures paid to the other parties were paid to Grant
Prideco and its Affiliates) and (y) 40%. The payment to be made by Weatherford
in such case shall be paid no later than 120 days following the end of the
calendar year for which the payment is to be made, with interest thereon from
January 1 of the year following the year for which the payment relates to the
date of payment. Interest shall be at an annual rate of 8% compounded
quarterly.
SECTION 2.2 GRANT PRIDECO'S SUPPLY OBLIGATION
(a) Grant Prideco agrees to use its commercially reasonable efforts to
provide directly or through one or more of its Affiliates Weatherford's and its
Affiliates' requirements of Drill Stem Products as provided in Section 2.1.
(b) Grant Prideco agrees that such Drill Stem Products shall be
provided to Weatherford and its Affiliates on delivery and pricing terms equal
to or better than those provided to Grant Prideco's and its Affiliates' best
rental tool customer or customers that are purchasing the Drill Stem Products
for rental purposes (but taking into account any expedited delivery
requirements, special order requests or unusual delivery requirements that
reasonably should increase pricing and taking into account order quantity) for
the same or similar Drill Stem Products. Weatherford shall not be obligated to
provide any deposits, letters of credit or similar items to obtain such terms
and shall not be obligated to purchase any minimum quantities or amounts to be
eligible for such terms other than, subject to the provisions of Section 2.1,
the obligation provided herein that at least 70% of Weatherford's and its
Affiliates' total purchases of Drill Stem Products are purchased from Grant
Prideco and its Affiliates during each calendar year during the term of this
Agreement beginning with the year 2000. Weatherford and its Affiliates shall be
entitled to apply any Drill Stem Credits held by them against the purchase
price of any Drill Stem Products to be purchased by them from Grant Prideco and
its Affiliates subject to a maximum of 20% of the purchase price of any Drill
Stem Products being satisfied with a Drill Stem Credit.
(c) Grant Prideco agrees to purchase used drill pipe from Weatherford
and its Affiliates from time to time to the extent Grant Prideco and its
Affiliates are then offering to customers the right to trade in or sell used
drill pipe to Grant Prideco and its Affiliates. The terms of such purchases
shall be terms at least as good as the terms offered to Grant Prideco's and its
Affiliates' best rental tool customer or customers that are purchasing the
Drill Stem Products for rental purposes (but taking into account any expedited
delivery requirements, special order requests or unusual delivery requirements
that reasonably should increase pricing and taking into account order
quantity). Grant Prideco and its Affiliates may prorate purchases to the extent
limitations are placed on the quantities to be purchased by it.
(d) Grant Prideco agrees to cause its Affiliates to comply with the
terms of this Agreement and to supply Weatherford and its Affiliates with Drill
Stem Products as provided herein.
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SECTION 2.3 COMPLIANCE REPORT
(a) Grant Prideco shall be entitled to obtain on request an annual
certificate of Weatherford, signed by the Chief Financial Officer or Chief
Accounting Officer of Weatherford, certifying Weatherford's and its Affiliates'
compliance with the terms of this Agreement and setting forth (i) the total
Drill Stem Expenditures during such calendar year and (ii) the amount of Drill
Stem Expenditures made by Weatherford and its Affiliates from (x) Grant Prideco
and its Affiliates and (y) other parties. This certificate may be requested
within 60 days following the end of the calendar year to which it relates and
must be provided to Grant Prideco within 120 days following the end of the
calendar year to which it relates.
(b) Weatherford shall be entitled to obtain on request an annual
certificate of Grant Prideco, signed by the Chief Financial Officer or Chief
Accounting Officer of Grant Prideco, certifying Grant Prideco's and its
Affiliates' compliance with the terms of this Agreement. This certificate may
be requested within 60 days following the end of the calendar year to which it
relates and must be provided to Weatherford within 120 days following the end
of the calendar year to which it relates.
SECTION 2.4 ADDITIONAL PRODUCTS
Weatherford and Grant Prideco agree to discuss from time to time the
addition to this Agreement of other products manufactured by Grant Prideco and
its Affiliates, including rental tubulars and casing. Neither party shall be
obligated to agree to such additions, and the addition of other products to
this Agreement will be subject to the parties agreeing in writing in their sole
discretion on the specific products, pricing, delivery and specifications of
the products to be so added.
ARTICLE 3. TERMS
Unless otherwise agreed in writing with respect to any particular
purchase order for Drill Stem Products, the following terms shall apply to
sales of Drill Stem Products by a Supplier to a Buyer during the term of this
Agreement.
SECTION 3.1 PAYMENT
Payment of the price for the Drill Stem Product shall be made in U.S.
Dollars (or through utilization of Drill Stem Credits) in accordance with
payment terms offered to its best rental tool customers (excluding payment
terms associated with warranty claims, disputed claims, workouts, isolated
promotional sales, sales of slow moving inventory and other similar
situations).
SECTION 3.2 DELIVERY PERIODS
All periods for delivery of Drill Stem Products shall commence on the
date on which the applicable purchase order is delivered by Buyer and shall be
not less than 120 days, unless industry practice changes and shorter or longer
periods become standard, in which case the delivery period shall be adjusted
accordingly. Notwithstanding the foregoing, Grant Prideco shall provide for
shorter
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delivery times if requested by Weatherford and such requested delivery periods
are not shorter than those offered by Grant Prideco to its best rental tool
customers for similar orders.
SECTION 3.3 WARRANTY
All Drill Stem Products sold to Weatherford and its Affiliates
pursuant to this Agreement shall be sold subject to Grant Prideco's and its
Affiliates then standard warranty provided to its customers for the Drill Stem
Product sold. To the extent Grant Prideco or its Affiliates provides to certain
of its customers a more favorable warranty for Drill Stem Products (other than
in connection with isolated sales or tenders), Grant Prideco and its Affiliates
shall provide such more favorable warranty to Weatherford and its Affiliates
for such Drill Stem Products of the type and nature to which such more
favorable warranty is provided.
SECTION 3.4 FORCE MAJEURE
(a) The parties' failure to perform their obligations under a purchase
contract shall not be deemed a breach of the obligation arising from the
purchase contract if such failure is caused by or the result of an Event of
Force Majeure.
(b) Immediately following the date of commencement of any Event of
Force Majeure, if either party desires to invoke such Event of Force Majeure as
a cause for delay in the performance of any obligation under the purchase
contract, it shall advise the other party in writing of such date and the
nature and expected duration of such Event of Force Majeure. Within a
reasonable time following the date of termination of such Event of Force
Majeure, the party having invoked such Event of Force Majeure as a cause for
such delay shall submit to the other party reasonable proof of the nature of
such delay. The parties shall thereupon consult with one another concerning the
effect of such delay upon the relevant schedule of delivery and the schedule of
delivery shall be equitably adjusted by the parties to take into account such
effect and the ability of the affected party to avoid or minimize overall
delays resulting from the Event of Force Majeure. Both parties shall make all
reasonable efforts to prevent and reduce to a minimum and mitigate the effect
of any delay occasioned by any Event of Force Majeure including recourse to
alternate acceptable sources of Drill Stem Products.
SECTION 3.5 RESOLUTION OF DISPUTES
All disputes, controversies or claims arising out or in connection
with any purchase agreement for Drill Stem Products, including any questions as
to the existence, validity, termination, discharge, breach or enforceability of
the purchase agreement arising thereunder, shall be finally settled by the
procedures outlined in Section 5.2.
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ARTICLE 4. TERM; TERMINATION
SECTION 4.1 DURATION
(a) This Agreement shall become effective as of the date hereof and,
subject to earlier termination as provided in Section 4.2 or extension as
provided in Section 4.1(b), shall continue in effect until March 31, 2003.
(b) This Agreement shall automatically be extended for a period of one
year if neither party provides the other party with written notice of its
desire for this Agreement not to be so extended on or prior to March 31, 2003.
Thereafter, this Agreement shall be extended for successive one-year periods
unless a party provides notice to the other party of its desire that this
Agreement not be so extended on or prior to March 31 of the year in which the
Agreement is to otherwise terminate.
SECTION 4.2 RIGHT TO TERMINATE
The parties may terminate this Agreement for the reasons and as
provided in this section.
(a) Default
If a party fails to observe or perform any of its material
promises, agreements or undertakings under this Agreement, and fails to remedy
any such breach within 120 days of notice to do so from the other party, then
the aggrieved party may, upon expiration of the 120-day notice period, give
written notice of termination of this Agreement either forthwith or at a future
date designated by the aggrieved party.
(b) Bankruptcy, Liquidation
If either of the parties shall become voluntarily or
involuntarily the subject of proceedings under any bankruptcy or insolvency
law, or other law or procedure for the relief of financially distressed
debtors, or is unable, or admits in writing its inability, to pay its debts as
they mature, or takes or suffers any action for its liquidation or dissolution
other than in the context of a merger of consolidation, or has a receiver or
liquidator appointed for all or any part of its assets and, in the event any
act of the aforesaid character is involuntary, the consequences thereof are not
cured within 60 days, the party not affected by such circumstances may give to
the affected party written notice of its decision immediately to terminate this
Agreement. In the event that such notice is not given for any reason, the
affected party shall remain fully responsible for its obligations set forth in
this Agreement at the times required.
SECTION 4.3 SURVIVAL
The provisions of Articles 5 and 6 shall survive any termination of
this Agreement.
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ARTICLE 5. GOVERNING LAW; DISPUTES
SECTION 5.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas, without regard to or the application
of the rules of conflicts of laws set forth in such laws.
SECTION 5.2 RESOLUTION OF DISPUTES
(a) In the event there shall exist any dispute or controversy with
respect to this Agreement or any matter relating hereto or the transactions
contemplated hereby, the parties hereto agree to seek to resolve such dispute
or controversy by mutual agreement. If the parties hereto are unable to resolve
such dispute or controversy by agreement within 90 days following notice by any
party hereto of the nature of such dispute or controversy setting forth in
reasonable detail the circumstances and basis of such dispute or controversy,
the parties agree that such dispute or controversy be resolved by binding
arbitration pursuant to the provisions of this Section 5.2 and in accordance
with the then-current Commercial Arbitration Rules of the American Arbitration
Association. If a party elects to submit such matter to arbitration, such party
shall provide notice to the other party of its election to do so, which notice
shall name one arbitrator. Within 10 Business days after the receipt of such
notice, the other party shall provide written notice to the electing party
naming a second arbitrator. The two arbitrators so appointed shall name a third
arbitrator, or failing to do so, a third arbitrator shall be appointed pursuant
to the Commercial Arbitration Rules of the American Arbitration Association.
(b) All arbitration proceedings shall be held in Houston, Texas.
(c) Each arbitrator selected to act hereunder shall be qualified by
education and experience to pass on the particular question in dispute and
shall be independent and not Affiliated with any of the parties hereto or an
associate thereof. A person associated or affiliated with the legal counsel for
either of the parties or their Affiliates will not be considered independent.
(d) The arbitrators shall resolve all disputes in controversy in
accordance with the Texas substantive law. All statutes of limitations that
would otherwise be applicable shall apply to any arbitration proceeding. The
arbitrators shall not be authorized to order any equitable remedies and shall
only be empowered to make monetary awards and determinations with respect to
compliance by a party and its Affiliates in accordance with the terms hereof.
(e) The arbitrators appointed pursuant to this Section 5.2 shall
promptly hear and determine (after due notice and hearing and giving the
parties reasonable opportunity to be heard) the questions submitted, and shall
endeavor to render their decision within 60 days after appointment of the third
arbitrator or as soon as practical thereafter. If within such period a decision
is not rendered by the board or a majority thereof, new arbitrators may be
named and shall act hereunder at the election of either party in like manner as
if none had previously been named.
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(f) The decision of the arbitrators, or a majority thereof, made in
writing, shall absent manifest error be final and binding upon the parties
hereto as to the questions submitted, and each party shall abide by such
decision.
(g) The cost of the arbitration shall be borne by the parties thereto
as unanimously determined by the arbitrators.
(h) NOTWITHSTANDING THE AGREEMENT BY THE PARTIES TO ARBITRATION,
EITHER PARTY MAY SEEK FROM A COURT OF COMPETENT JURISDICTION INJUNCTIVE AND
OTHER EQUITABLE RELIEF IN AID OF ARBITRATION. EACH PARTY HERETO ON ITS OWN
BEHALF AND ON BEHALF OF ITS AFFILIATES IRREVOCABLY AGREES THAT ANY SUCH RELIEF
SHALL FIRST BE SOUGHT IN FEDERAL OR STATE COURT IN HARRIS COUNTY, TEXAS.
ARTICLE 6. MISCELLANEOUS
SECTION 6.1 ASSIGNMENT
This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
duly permitted assigns. Neither Weatherford or any of its Affiliates nor Grant
Prideco or any of its Affiliates may assign their rights and/or obligations
under this Agreement other than with the express written consent of the other
party. Nothing in this Section 6.1 shall be deemed to prohibit a merger,
consolidation or conversion of Weatherford or Grant Prideco or a sale of all or
substantially all of the business operations of Weatherford or Grant Prideco as
long as the successor to the obligations of Weatherford or Grant Prideco
assumes Weatherford's or Grant Prideco's, as the case may be, obligations
hereunder.
SECTION 6.2 WAIVER
The failure of either party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of any
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be made in writing.
SECTION 6.3 NOTICES
All notices and other communications (other than communications in the
ordinary course of business relating to purchases and sales of Drill Stem
Products) to be given or made hereunder shall be in writing and shall be (a)
personally delivered with signed receipt obtained acknowledging delivery; (b)
transmitted by postage prepaid registered mail, return receipt requested (air
mail if international); or (c) transmitted by facsimile; to a party at the
address set out below (or at such other address as it may have provided
notification for the purposes hereof to the other party hereto in accordance
with this Section).
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If to Supplier: Grant Prideco, Inc.
1450 Lake Robbins Drive, Suite 600
The Woodlands, Texas 77380
Fax number: (281) 297-8569
Attention: President
If to Buyer: Weatherford International, Inc.
515 Post Oak Boulevard, Suite 600
Houston, TX 77027
Fax Number: (713) 693-4484
Attention: General Counsel
With a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Fax number: (713) 651-5246
Attention: Charles L. Strauss
SECTION 6.4 SEVERABILITY
Any provision of this Agreement that is determined by arbitration as
provided herein or a court of competent jurisdiction to be invalid, illegal or
unenforceable shall be ineffective to the extent of such invalidity, illegality
or unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of this
Agreement invalid, illegal or unenforceable, so long as the material purposes
of this Agreement can be determined and effectuated. Should any provision of
this Agreement be so declared invalid, illegal or unenforceable, the parties
shall agree on a valid provision to substitute for it.
SECTION 6.5 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes any existing
agreements between them whether oral or written. In case of a conflict between
this Agreement and a purchase order or purchase order confirmation contemplated
hereunder, the terms of this Agreement shall govern unless the parties
otherwise agree in writing. The terms of this Agreement shall only be amended,
modified or supplemented as set forth herein or in writing signed by or on
behalf of each party.
SECTION 6.6 DRILL STEM CREDITS
(a) Grant Prideco hereby grants to Weatherford and its Affiliates
drill stem purchase credits in the aggregate amount of $30 million, which
Weatherford and its Affiliates may apply against the purchase price of Drill
Stem Products during the term of this Agreement. Weatherford shall utilize such
credit by giving written notice to Grant Prideco at the time of payment of the
invoice relating to the applicable Drill Stem Products, which notice shall set
forth the invoice (or
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related invoices) for which the Drill Stem Credits are being utilized and the
amount of such credit being utilized.
(b) Drill Stem Credits can be utilized to satisfy only up to 20% of
the invoice amount for each applicable invoice, with the remaining invoice
amount being due in accordance with its terms.
(c) On a quarterly basis, Grant Prideco shall provide Weatherford with
a summary of the Drill Stem Credits balance and a statement of activity with
respect to the Drill Stem Credits. The parties shall work in good faith to
reconcile any discrepancies between the parties' records.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
GRANT PRIDECO, INC. WEATHERFORD INTERNATIONAL, INC.
By: /s/ John C. Coble By: /s/ Curtis W. Huff
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Name: John C. Coble Name: Curtis W. Huff
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Title: President Title: Executive Vice President
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