<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1995
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 1-7867
WEATHERFORD ENTERRA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-1681642
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1360 POST OAK BOULEVARD
SUITE 1000
HOUSTON, TEXAS
77056
(Address of principal executive offices)
(Zip code)
(713) 439-9400
(Registrant's telephone number, including area code)
WEATHERFORD INTERNATIONAL INCORPORATED
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x]. No [ ].
There were 50,899,665 shares of Common Stock, $.10 par value, of the registrant
outstanding as of October 31, 1995, including 9,879,127 shares deemed to be
outstanding pending the exchange of shares of common stock of Petroleum
Equipment Tools Co., H & H Oil Tool Co., Inc., and Enterra Corporation but
excluding 30,132 shares classified as Treasury Stock.
(Page 1 of 21)
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEATHERFORD INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 13,163 $ 22,324
Receivables, net of allowance of $8,029 and $7,610. 121,533 104,424
Inventories, net of allowance of $9,939 and $9,352. 59,745 54,381
Deferred tax assets................................ 1,211 1,148
Prepayments and other.............................. 8,889 7,251
-------- --------
Total current assets.............................. 204,541 189,528
-------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST.............. 567,901 544,199
Less -- Accumulated depreciation................... 348,576 329,043
-------- --------
219,325 215,156
-------- --------
GOODWILL, NET....................................... 35,517 34,970
-------- --------
OTHER ASSETS........................................ 15,227 14,309
-------- --------
$474,610 $453,963
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt.................................... $ 122 $ 113
Current portion of long-term debt.................. 9,676 16,262
Accounts payable................................... 16,350 27,299
Accrued income taxes............................... 7,902 6,329
Other accrued liabilities.......................... 44,759 49,586
-------- --------
Total current liabilities......................... 78,809 99,589
-------- --------
LONG-TERM DEBT...................................... 66,114 55,701
-------- --------
DEFERRED TAX LIABILITIES............................ 2,605 2,597
-------- --------
OTHER LONG-TERM LIABILITIES......................... 13,231 13,876
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par; shares authorized
1,000,000; none issued............................ -- --
Common stock, $.10 par; shares authorized
80,000,000; issued 27,214,996 and 27,128,217...... 2,721 2,713
Paid-in capital.................................... 280,748 279,827
Retained earnings (deficit)........................ 26,707 (1,552)
Cumulative translation adjustment.................. 4,280 2,013
Treasury stock, 32,104 and 51,202 common
shares, at cost................................... (605) (801)
-------- --------
313,851 282,200
-------- --------
$474,610 $453,963
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
WEATHERFORD INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------- ---------------------
1995 1994 1995 1994
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
REVENUES:
International................. $ 56,625 $48,577 $159,250 $135,072
United States................. 48,494 46,026 144,956 139,928
-------- ------- -------- --------
Total revenues.............. 105,119 94,603 304,206 275,000
-------- ------- -------- --------
COSTS AND EXPENSES:
Cost of sales and services.... 75,298 69,049 219,544 197,455
Selling, general and
administrative expenses..... 14,841 14,887 43,206 43,978
Research and development...... 1,032 748 2,803 2,132
Equity in earnings of
unconsolidated affiliates... (381) (36) (1,280) (807)
Foreign currency (gain), net.. (137) (1,400) (406) (3,427)
Other (income) expense, net... (393) 390 (2,219) 294
Acquisition-related costs..... -- 2,500 -- 2,500
-------- ------- -------- --------
Total costs and expenses.... 90,260 86,138 261,648 242,125
-------- ------- -------- --------
OPERATING INCOME:
International................. 7,895 6,631 26,047 20,557
United States................. 8,089 1,592 19,512 11,499
Corporate..................... (1,125) 242 (3,001) 819
-------- ------- -------- --------
Total operating income...... 14,859 8,465 42,558 32,875
Interest expense.............. 1,829 1,657 5,437 3,820
Interest income............... (189) (255) (571) (751)
-------- ------- -------- --------
INCOME BEFORE INCOME TAXES..... 13,219 7,063 37,692 29,806
Income taxes.................. 3,342 2,064 9,433 7,904
-------- ------- -------- --------
NET INCOME..................... $ 9,877 $ 4,999 $ 28,259 $ 21,902
======== ======= ======== ========
Weighted average common
and common equivalent
shares outstanding............ 27,429 27,280 27,322 27,218
======== ======= ======== ========
Income per common and common
equivalent share.............. $0.36 $0.18 $1.03 $0.80
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
WEATHERFORD INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED CUMULATIVE
COMMON PAID-IN EARNINGS TRANSLATION TREASURY
STOCK CAPITAL (DEFICIT) ADJUSTMENT STOCK TOTAL
------ -------- --------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994.. $2,713 $279,827 $(1,552) $2,013 $(801) $282,200
Shares issued under
employee benefit plans... 1 140 -- -- -- 141
Stock grants and options
exercised................ 7 781 -- -- 196 984
Currency translation
adjustment............... -- -- -- 2,267 -- 2,267
Net income................ -- -- 28,259 -- -- 28,259
------ -------- ------- ------ ----- --------
BALANCE, SEPTEMBER 30, 1995. $2,721 $280,748 $26,707 $4,280 $(605) $313,851
====== ======== ======= ====== ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
WEATHERFORD INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED-IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
---------------------
1995 1994
---------- ---------
<S> <C> <C>
NET INCOME........................................................ $ 28,259 $ 21,902
Income items not requiring (providing) cash:
Depreciation and amortization................................... 33,918 25,502
Undistributed earnings of affiliates............................ (497) 564
Gain on disposal of property, plant and equipment, net.......... (4,552) (2,660)
Unrealized foreign currency gain................................ -- (3,502)
Deferred income tax provision (benefit)......................... (171) 84
Increase(decrease) in cash from changes in operating accounts:
Receivables, net.............................................. (15,462) (6,633)
Inventories, net.............................................. (56) (9,378)
Prepayments and other......................................... (1,543) (2,231)
Accounts payable and accrued liabilities...................... (15,401) 3,941
Other long-term liabilities................................... (844) (788)
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES............................. 23,651 26,801
-------- --------
Purchases of property, plant and equipment........................ (36,910) (29,103)
Acquisitions, net of notes issued and cash acquired............... (6,068) (66,938)
Proceeds from disposition of assets............................... 8,959 5,805
Other net cash flows from investing activities.................... (519) 2,370
-------- --------
CASH USED IN INVESTING ACTIVITIES................................. (34,538) (87,866)
-------- --------
Proceeds from bank borrowings..................................... 23,982 84,766
Repayments of indebtedness........................................ (20,159) (29,531)
Net cash flows from currency hedging transactions................. (3,107) (1,212)
Proceeds from sale of stock to employee benefit plans and stock
option exercises................................................ 1,125 1,299
Payment of deferred loan costs.................................... -- (812)
-------- --------
CASH PROVIDED BY FINANCING ACTIVITIES............................. 1,841 54,510
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH........................... (115) (124)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS............................. (9,161) (6,679)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................... 22,324 21,905
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......................... $ 13,163 $ 15,226
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest........................................................ $ 4,069 $ 2,481
Income taxes.................................................... 8,002 5,646
Purchase of equipment financed by debt............................ -- 830
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
WEATHERFORD INTERNATIONAL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The consolidated financial statements of Weatherford International
Incorporated and its subsidiaries (the "Company" or "Weatherford") included
herein have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. In the opinion of
management, the information furnished reflects all adjustments, consisting only
of normal recurring adjustments, which are necessary for a fair presentation of
the results of the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading.
Certain reclassifications were made to previously reported amounts in the
consolidated financial statements and notes to make them consistent with the
current presentation format.
It is suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994. No significant
accounting changes have occurred during the nine months ended September 30,
1995. Subsequent to September 30, 1995, the Company completed a significant
merger accounted for as a pooling of interests. See Note 5.
(2) INCOME PER COMMON AND COMMON EQUIVALENT SHARE. Income per common and common
equivalent share is computed on the basis of the weighted average number of
shares of common stock and common stock equivalents (if dilutive) outstanding
during the respective periods. Fully diluted earnings per share are equal to
primary earnings per share in all periods presented.
(3) INVENTORIES. Consolidated net inventories consist of the following (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
Spare parts and components.. $18,561 $17,593
Raw materials............... 5,190 4,984
Work in process............. 6,193 5,211
Finished goods.............. 29,801 26,593
------- -------
$59,745 $54,381
======= =======
</TABLE>
(4) SUMMARIZED FINANCIAL INFORMATION OF 50% OR LESS-OWNED AFFILIATES. The
Company owns a 49% interest in each of two Saudi Arabian companies and an Abu
Dhabi joint venture, which are included in other assets in the accompanying
consolidated balance sheets. The Company owned a 50% interest in a U.S.
partnership that was dissolved in 1994. Summarized financial information for
these affiliates is as follows (in thousands):
6
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets........... $3,939 $3,591
Non-current assets....... 998 947
------ ------
Total assets............ $4,937 $4,538
====== ======
Current liabilities...... $1,978 $1,462
Non-current liabilities.. 264 391
------ ------
Total liabilities....... $2,242 $1,853
====== ======
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
--------------------
1995 1994
------ ------
INCOME STATEMENT DATA:
Revenues................. $5,974 $7,404
Gross profit............. 2,974 2,117
Net income............... 2,610 1,655
</TABLE>
(5) SUBSEQUENT EVENTS. On October 5, 1995, the Company completed a merger (the
"Enterra Merger") with Enterra Corporation ("Enterra") and changed its name to
"Weatherford Enterra, Inc." Enterra was a worldwide provider of specialized
services and products to the oil and gas industry through its oilfield, pipeline
and compression services and equipment businesses. After giving effect to a
contemporaneous one-for-two reverse stock split, the Company issued
approximately 23,500,000 shares of Common Stock in exchange for all the
outstanding shares of Enterra common stock based on an exchange ratio of 0.845
of a share of Weatherford Common Stock for each share of Enterra common stock
outstanding. The consolidated financial statements contained herein have been
restated for all periods presented to reflect the impact of the reverse stock
split, but not for the Enterra Merger.
The Enterra Merger will be accounted for as a pooling of interests.
Accordingly, future consolidated financial statements will be restated to
include the accounts and results of operations of Enterra with those of the
Company, as if the two companies had been combined since inception. See
supplemental condensed consolidated financial statements of Weatherford Enterra,
Inc. contained elsewhere herein.
In connection with the Enterra Merger, the Company entered into new bank
credit facilities (the "Facilities") consisting of a $200,000,000 term loan (the
"Term Loan") and a $200,000,000 revolving credit facility (the "Revolving Credit
Facility"). The Facilities replaced the primary bank credit facilities that
Weatherford and Enterra previously had in place. The Term Loan is repayable in
23 equal quarterly installments commencing March 31, 1996. The Revolving Credit
Facility matures on September 30, 2000. Amounts outstanding under the Facilities
accrue interest at a variable rate, depending on the Company's total debt-to-
total capitalization ratio. The applicable interest rate on amounts outstanding
at October 31, 1995 was 6.4%. A commitment fee ranging from 0.15% to 0.225% per
annum is payable quarterly on the unused portion of the Revolving Credit
Facility. The Company is required under the Facilities agreement to maintain
certain financial ratios and is limited thereby in its ability to incur
indebtedness, make investments and dispose of assets. The balances outstanding
at October 31, 1995 under the Term Loan and Revolving Credit Facility were
$200,000,000 and $15,000,000, respectively, and the Company had $185,000,000
available to borrow under the Revolving Credit Facility.
7
<PAGE>
On September 20, 1995, Enterra entered into a definitive agreement with
Zapata Corporation ("Zapata") to acquire Zapata's natural gas compression
businesses ("Zapata Energy Industries") for cash of $130,000,000 and the
assumption of certain liabilities. The Company succeeded to Enterra's rights and
obligations under the Zapata Energy Industries agreement as a result of the
Enterra Merger. Zapata Energy Industries is engaged in the business of
fabricating, selling, installing, renting and servicing natural gas compressor
packages used in the oil and gas industry. The Zapata Energy Industries
acquisition, which is subject to the approval of Zapata shareholders, is
expected to close in December 1995. The Company expects to finance this
acquisition with proceeds from new borrowings under the Revolving Credit
Facility.
8
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 31,453 $ 36,106
Receivables, net....................................... 239,082 232,882
Inventories, net....................................... 150,591 153,191
Other current assets................................... 33,993 27,807
---------- ----------
Total current assets.................................. 455,119 449,986
PROPERTY, PLANT AND EQUIPMENT, net...................... 456,100 462,299
GOODWILL, net........................................... 212,627 221,397
OTHER ASSETS............................................ 23,161 20,288
---------- ----------
$1,147,007 $1,153,970
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of long-term debt.. $ 26,058 $ 17,926
Accounts payable....................................... 47,597 64,250
Accrued liabilities.................................... 106,889 116,032
---------- ----------
Total current liabilities............................. 180,544 198,208
LONG-TERM DEBT.......................................... 171,195 178,746
DEFERRED TAX AND OTHER LONG-TERM LIABILITIES............ 29,021 42,382
STOCKHOLDERS' EQUITY.................................... 766,247 734,634
---------- ----------
$1,147,007 $1,153,970
========== ==========
</TABLE>
The accompanying notes are an integral part of these supplemental condensed
consolidated financial statements.
9
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------- ---------------------
1995 1994 1995 1994
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
REVENUES.......................... $218,424 $179,765 $644,199 $449,704
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales and services....... 134,476 109,759 400,156 271,728
Selling, general and
administrative expenses........ 38,650 33,654 114,977 87,517
Depreciation and amortization.... 22,644 18,045 68,717 46,919
Other (income) expense, net...... (2,573) (1,994) (8,336) (6,675)
Acquisition-related costs and
other unusual charges.......... -- 2,500 28,297 2,500
-------- -------- -------- --------
OPERATING INCOME.................. 25,227 17,801 40,388 47,715
Interest, net..................... 3,875 2,048 11,358 3,227
-------- -------- -------- --------
Income before income taxes
and minority interests........... 21,352 15,753 29,030 44,488
Income taxes...................... 7,678 5,264 4,373 13,054
-------- -------- -------- --------
Income before minority interests.. 13,674 10,489 24,657 31,434
Minority interests................ (526) 115 (215) 181
-------- -------- -------- --------
NET INCOME........................ $ 13,148 $ 10,604 $ 24,442 $ 31,615
======== ======== ======== ========
Weighted average common and
common equivalent shares
outstanding...................... 50,967 46,360 50,804 42,854
======== ======== ======== ========
Income per common and common
equivalent share................. $0.26 $0.23 $0.48 $0.74
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these supplemental condensed
consolidated financial statements.
10
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) The supplemental condensed consolidated financial statements represent
the combined results of Weatherford and Enterra on a "pooling of interests"
basis as if the two companies had been combined since inception. No adjustments
have been made to reflect the pending acquisition of Zapata Energy Industries.
Certain reclassifications have been made to historical amounts to conform the
financial presentation of the two companies. Specifically, net proceeds from
involuntary sales of Enterra oilfield equipment totaling $1,734,000 and
$1,296,000 for the three-month periods ended September 30, 1995 and 1994,
respectively, and $4,651,000 and $3,882,000 for the nine-month periods ended
September 30, 1995 and 1994, respectively, have been reclassified from Revenues
to Other (income) expense, net. In addition, with respect to Weatherford,
depreciation and amortization charges of $10,973,000 and $9,468,000 for the
three-month periods ended September 30, 1995 and 1994, respectively, and
$32,804,000 and $26,180,000 for the nine-month periods ended September 30, 1995
and 1994, respectively, have been reclassified from Cost of sales and services,
Selling, general and administrative expenses and Other (income) expense, net, to
Depreciation and amortization.
(2) INCOME PER COMMON AND COMMON EQUIVALENT SHARE. Income per common and
common equivalent share is computed on the basis of the combined weighted
average number of shares of common stock and common stock equivalents of
Weatherford and Enterra for each period presented based upon the conversion rate
of 0.845 of a share of Weatherford Common Stock for each share of Enterra common
stock, after giving effect to a one-for-two reverse stock split of Weatherford
Common Stock. Fully diluted earnings per share are equal to primary earnings
per share in all periods presented.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS REVIEW
Weatherford is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the oil and gas
industry. Weatherford's principal businesses consist of providing tubular
running services, renting specialized oilfield equipment and providing fishing
services and related tools, and manufacturing and selling cementation products
and other equipment. Weatherford operates in virtually every oil and gas
exploration and production region in the world.
Weatherford has grown significantly through acquisition in recent years,
having acquired 21 businesses since November 1991. As a result of these
acquisitions, the Company is an industry leader in each of its principal
businesses and has expanded its product and service lines, improved its U.S.
market position and realized significant consolidation cost savings.
On October 5, 1995, the Company completed the Enterra Merger, which
represents Weatherford's most significant business combination to date. The
Enterra Merger strengthens the Company's position as the worldwide leader in the
rental tools and fishing tool services business and adds gas compression,
pipeline construction services and several manufacturing businesses to the
Company. In connection with the Enterra Merger, the Company effected a one-for-
two reverse stock split and changed its name to "Weatherford Enterra, Inc." The
Company issued approximately 23,500,000 shares of Common Stock in exchange for
all the outstanding shares of Enterra common stock based on an exchange ratio of
0.845 of a share of Weatherford Common Stock (reflecting the reverse stock
split) for each share of Enterra common stock outstanding. The Enterra Merger
will be accounted for as a pooling of interests. Accordingly, future
consolidated financial statements will be restated to include the accounts and
results of operations of Enterra with those of the Company, as if the two
companies had been combined since inception.
The following table sets forth Weatherford's revenues attributable to each of
its principal businesses (in thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ----------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Oilfield services and rentals:
Tubular running services $ 94,876 $ 80,624 $109,503 $105,715 $103,360
Rental tools and fishing
tool services 131,867 125,786 170,387 130,943 53,651
Other services 12,075 8,393 12,264 14,118 8,819
-------- -------- -------- -------- --------
Total services and rentals 238,818 214,803 292,154 250,776 165,830
-------- -------- -------- -------- --------
Oilfield products and equipment:
Cementation products 33,233 31,652 43,201 41,734 30,160
Other products and equipment 32,155 28,545 36,959 40,573 26,974
-------- -------- -------- -------- --------
Total products and equipment 65,388 60,197 80,160 82,307 57,134
-------- -------- -------- -------- --------
Total revenues $304,206 $275,000 $372,314 $333,083 $222,964
======== ======== ======== ======== ========
</TABLE>
12
<PAGE>
Demand for the Company's services and products depends primarily upon the
number of oil and gas wells being drilled, the depth and drilling conditions of
such wells, the volume of production, the number of well completions and the
level of workover activity. Drilling activity is largely dependent on the level
and volatility of oil and natural gas prices. The following table sets forth
selected statistics reflecting industry conditions and the Company's financial
results:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------
1995 1994 1994 1993 1992
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Average drilling rig count (a):
United States...................... 711 759 775 754 721
International...................... 985 989 997 960 959
------ ------ ------ ------ ------
Worldwide.......................... 1,696 1,748 1,772 1,714 1,680
Revenue per rig (in thousands)(b):
United States...................... $ 204 $ 184 $ 240 $ 233 $ 115
International...................... 162 137 187 164 146
Worldwide.......................... 179 157 210 194 133
- --------
</TABLE>
(a) Calculated by averaging rig count figures as published by Baker Hughes
Incorporated.
(b) Calculated by dividing revenues by average rig count.
FINANCIAL CONDITION
The Company's operations provided cash of $ 23,651,000 during the first
nine months of 1995 compared to $26,801,000 during the first nine months of
1994. Net income before depreciation and amortization of $62,177,000 in the
first nine months of 1995 increased $14,773,000 when compared to the same period
in 1994. Changes in working capital and other operating accounts used cash of
$33,306,000 during the first nine months of 1995 compared to $15,089,000 in the
same period of 1994, primarily as a result of increased payments in 1995 related
to capital assets and inventories purchased in the fourth quarter of 1994 and
increased receivable balances caused by higher revenues.
Capital expenditures increased to $36,910,000 during the nine months ended
September 30, 1995 compared to $29,103,000 for the same period in 1994. The
increase was primarily attributable to the international segment, where the
Company expanded its operations during 1994 with acquisitions in the North Sea,
the Asia-Pacific Region and South America.
The Company's consolidated indebtedness increased slightly from $72,076,000
at December 31, 1994 to $75,912,000 at September 30, 1995. The Company's total
debt-to-total capitalization ratio improved to 19% at September 30, 1995
compared to 20% at December 31, 1994.
In connection with the Enterra Merger, the Company entered into new bank
credit facilities consisting of a $200,000,000 Term Loan and a $200,000,000
Revolving Credit Facility. The Facilities replaced the primary bank credit
facilities that Weatherford and Enterra previously had in place. The Term Loan
is repayable in 23 equal quarterly installments commencing March 31, 1996. The
Revolving Credit Facility matures on September 30, 2000. Amounts outstanding
under the Facilities accrue interest at a variable rate, depending on the
Company's total debt-to-total capitalization ratio. The applicable interest
rate on amounts outstanding at October 31, 1995 was 6.4%. A commitment fee
ranging from 0.15% to 0.225% per annum is payable quarterly on the unused
portion of the Revolving Credit Facility. The Company is required under the
Facilities agreement to maintain certain financial ratios and is limited thereby
in its ability to incur indebtedness, make investments and dispose of assets. At
October 31, 1995, the balances outstanding under the Term Loan and the Revolving
13
<PAGE>
Credit Facility were $200,000,000 and $15,000,000, respectively, and the Company
had $185,000,000 available to borrow under the Revolving Credit Facility. In
addition, at September 30, 1995, the Company had $9,478,000 available for
borrowing under working capital facilities of certain of its international
subsidiaries.
On September 20, 1995, Enterra entered into a definitive agreeement with
Zapata to acquire Zapata Energy Industries for cash of $130,000,000 and the
assumption of certain liabilities. The Company succeeded to Enterra's rights and
obligations under the Zapata Energy Industries agreement as a result of the
Enterra Merger. Zapata Energy Industries is engaged in the business of
fabricating, selling, installing, renting and servicing natural gas compressor
packages used in the oil and gas industry. The Zapata Energy Industries
acquisition, which is subject to the approval of Zapata shareholders, is
expected to close in December 1995. The Company expects to finance this
acquisition with proceeds from new borrowings under the Revolving Credit
Facility.
The Company has entered into forward exchange contracts as a hedge against
certain existing economic exposures. The market value gains and losses
recognized on the hedges offset foreign currency transaction gains and losses
recognized on the related exposures. Settlement of forward exchange contracts
resulted in net cash outflows totaling $3,107,000 during the first nine months
of 1995.
Management believes the combination of working capital, the unused portion of
existing credit facilities and cash flows from operations provide the Company
with sufficient capital resources and liquidity to manage its routine
operations. The Company continues to seek opportunities to enhance its
competitiveness through strategic acquisitions. Management believes that any
borrowings made in connection with any such acquisitions will not have a
materially adverse impact on the Company's liquidity.
Like most multinational oilfield service companies, the Company has
operations in certain international areas, including parts of the Middle East,
North and West Africa, Latin America, the Asia-Pacific Region and the
Commonwealth of Independent States (the "CIS"), that are inherently subject to
risks of civil disturbance and political activities that may disrupt oil and
gas exploration and production activities, restrict the movement of funds or
limit access to markets for periods of time. Historically, the economic impact
of such disruptions has been temporary and oil and gas exploration and
production activities have eventually resumed in relation to market forces.
Certain areas, including the CIS, Algeria and Nigeria, have been subjected to
political disruption or social unrest in the past twelve months. Generally,
business interruptions resulting from civil or political disruptions negatively
impact near-term results of operations; however, in the opinion of management,
it is unlikely that any specific business disruption caused by existing or
foreseen civil or political instability will have a materially adverse impact on
the financial condition or liquidity of the Company.
The Company has not declared dividends on Common Stock since December
1982 and management does not anticipate paying dividends on Common Stock at
any time in the foreseeable future.
14
<PAGE>
RESULTS OF OPERATIONS
THIRD QUARTER 1995 COMPARED TO THIRD QUARTER 1994. Revenues increased 11%
from $94,603,000 in the third quarter of 1994 to $105,119,000 in the third
quarter of 1995, which represented the highest quarterly revenue figure in the
Company's history. International revenues increased $8,048,000, or 17%, to
$56,625,000 compared to $48,577,000 during the third quarter of 1994, primarily
due to increased service activity in the North Sea, Africa, the Middle East and
Latin America. During the third quarter of 1995, the average international rig
count (excluding Canada) was 6% higher than in the same period of 1994. United
States revenues increased $2,468,000, or 5%, to $48,494,000 in the third quarter
of 1995 compared to $46,026,000 for the same period of 1994, primarily as a
result of increased service activity in certain regions. The average U.S.
drilling rig count was 5% lower in the third quarter of 1995 than in the third
quarter of 1994.
Gross profit increased $4,267,000, or 17%, to $29,821,000 from $25,554,000
when comparing the third quarter of 1995 to the third quarter of 1994. As a
percentage of revenues, gross profit improved from 27.0% to 28.4%, primarily
reflecting increased rental activity in the United States and cost savings
achieved in consolidating the operations of H & H Oil Tool Co., Inc. ("H & H")
into Weatherford. H & H was a U. S. rental and fishing tool company acquired by
merger in September 1994 in a transaction accounted for as a pooling of
interests. International gross margins were lower in the third quarter of 1995
compared to the third quarter of 1994, primarily as a result of a difference in
the revenue mix geographically and with respect to the services and products
provided, increased costs in certain markets and lower activity levels in the
Asia-Pacific Region.
Selling, general and administrative expenses were virtually unchanged despite
the increased revenues, decreasing $46,000 to $14,841,000 in the third quarter
of 1995 compared to $14,887,000 in the third quarter of 1994. As a percentage
of revenues, selling, general and administrative expenses improved from 15.7% to
14.1%, primarily as a result of the revenue growth and cost savings achieved in
consolidating the operations of H & H.
Research and development costs increased 38% from $748,000 in the third
quarter of 1994 to $1,032,000 in the third quarter of 1995, primarily reflecting
the expansion of the Company's development activities to support its three
principal businesses.
The Company owns a 49% interest in each of two Saudi Arabian companies and an
Abu Dhabi joint venture. The Company owned a 50% interest in a U.S. partnership
that was dissolved in 1994. The Company's equity in the earnings of these
affiliates increased $345,000 to $381,000 in the third quarter of 1995,
primarily as a result of losses incurred by the U.S. partnership during the
third quarter of 1994.
As a result of the fluctuation of the U.S. dollar against the major foreign
currencies in which the Company conducts business, the Company recorded net
exchange transaction gains of $137,000 in the third quarter of 1995 compared to
net exchange transaction gains of $1,400,000 in the third quarter of 1994. A
substantial portion of the 1994 gain represented an unrealized currency gain
related to certain intercompany loans.
Other (income) expense improved from a net expense of $390,000 in the third
quarter of 1994 to income of $393,000 in the same period of 1995, primarily as a
result of increased gains on sales of used rental equipment in the normal course
of business.
15
<PAGE>
The Company recorded acquisition-related costs totaling $2,500,000 in the
third quarter of 1994 related to the H & H merger, primarily representing
transaction fees and employee termination and facility closure costs to
consolidate the H & H operations into Weatherford.
Operating income increased 76% to $14,859,000 in the third quarter of 1995
compared to $8,465,000 in the same period in 1994, primarily as a result of
higher gross profit in 1995 and the acquisition-related costs in 1994.
Net interest expense increased by $238,000 to $1,640,000 in the third quarter
of 1995 compared to $1,402,000 in the third quarter of 1994, primarily as a
result of higher market interest rates in 1995.
The income tax provision consists of taxes on foreign earnings, foreign taxes
withheld on certain remittances from international subsidiaries, U.S.
alternative minimum taxes and U.S. state income taxes. The income tax provision
does not include U.S. regular federal income tax due to the availability of U.S.
net operating loss carryforwards. The consolidated income tax provision
increased to $3,342,000 during the third quarter of 1995 compared to $2,064,000
in the third quarter of 1994, primarily reflecting higher pretax earnings. The
Company's overall effective tax rate decreased from 29% to 25%, primarily
reflecting higher earnings in the United States, where net operating loss
carryforwards are available.
The Company conducts a portion of its business in currencies other than the
U.S. dollar, including the German mark, the U.K. pound sterling, the Norwegian
krone and the Canadian dollar. As a result of a weaker U.S. dollar, the
weighted average currency exchange rates used to translate the statements of
income of the Company's international subsidiaries were generally lower during
the third quarter of 1995 compared to the same period in 1994, thereby
increasing the amount of U.S. dollars reflected on the Company's 1995
consolidated statements of income. Had the third quarter 1995 average exchange
rates been the same as in the third quarter of 1994, revenues for the third
quarter of 1995 would have been approximately $1,938,000 lower. The impact on
net income would not have been material.
NINE MONTHS 1995 COMPARED TO NINE MONTHS 1994. Revenues increased 11% from
$275,000,000 in the first nine months of 1994 to $304,206,000 in the first nine
months of 1995. International revenues increased $24,178,000, or 18%, to
$159,250,000 compared to $135,072,000 during the first nine months of 1994,
primarily as a result of the inclusion of the Odfjell Rental operations acquired
in April 1994, several smaller 1994 acquisitions and increased service activity
in certain markets, including the North Sea, Latin America and Africa. During
the first nine months of 1995, the average international rig count (excluding
Canada) was 2% higher than during the same period of 1994. United States
revenues increased 4% to $144,956,000 from $139,928,000 during the first nine
months of 1994, primarily due to a large export sale of products during the
first quarter of 1995 totaling $5,867,000, offset by the impact of lower U.S.
drilling activity. The average U.S. drilling rig count was 6% lower during the
first nine months of 1995 compared to the same period in 1994.
Gross profit increased $7,117,000, or 9%, to $84,662,000 from $77,545,000
when comparing the first nine months of 1995 to the same period in 1994. The
consolidated gross profit percentage decreased from 28.2% to 27.8%, reflecting
differences in the revenue mix geographically and with respect to the services
and products provided and increased costs in certain international markets.
Selling, general and administrative expenses decreased $772,000, or 2%, to
$43,206,000 in the first nine months of 1995 compared to $43,978,000 in the
first nine months of 1994, primarily as a result of the cost savings achieved in
consolidating the operations of H & H. As a percentage of revenues, selling,
general and administrative expenses improved from 16.0% to 14.2%, reflecting the
impact of revenue growth and the consolidation cost savings.
16
<PAGE>
Research and development costs increased $671,000, or 31%, to $2,803,000 in
the first nine months of 1995 compared to $2,132,000 in the first nine months of
1994, primarily reflecting the expansion of the Company's development activities
to support its three principal businesses.
The Company owns a 49% interest in each of two Saudi Arabian companies and an
Abu Dhabi joint venture. The company owned a 50% interest in a U.S. partnership
that was dissolved in 1994. The Company's equity in the earnings of these
affiliates increased $473,000, or 59%, to $1,280,000 in the first nine months of
1995, primarily as a result of improved 1995 operating results in Saudi Arabia.
As a result of the fluctuation of the U.S. dollar against the major foreign
currencies in which the Company conducts business, the Company recorded net
exchange transaction gains of $406,000 in the first nine months of 1995 compared
to net exchange transaction gains of $3,427,000 in the same period in 1994. A
substantial portion of the 1994 gain represented an unrealized currency gain
related to certain intercompany loans.
Other (income) expense improved from net expense of $294,000 in the first
nine months of 1994 to income of $2,219,000 in the same period of 1995,
primarily as a result of increased gains on sales of used rental equipment in
the normal course of business.
The Company recorded acquisition-related costs totaling $2,500,000 in the
third quarter of 1994 related to the H & H merger, primarily representing
transaction fees and employee termination and facility closure costs to
consolidate the H & H operations into Weatherford.
Operating income increased $9,683,000, or 29%, to $42,558,000 through the
first nine months of 1995 compared to $32,875,000 in the same period in 1994,
primarily as a result of the improved gross profit and other income and the
acquisition-related costs in 1994, partially offset by the large currency gain
in 1994.
Net interest expense increased by $1,797,000, or 59%, to $4,866,000 in the
first nine months of 1995 compared to $3,069,000 in the first nine months of
1994, primarily as a result of higher average debt balances outstanding in 1995
and higher market interest rates.
The income tax provision consists of taxes on foreign earnings, foreign taxes
withheld on certain remittances from international subsidiaries, U.S.
alternative minimum taxes and U.S. state income taxes. The income tax provision
does not include U.S. regular federal income tax due to the availability of U.S.
net operating loss carryforwards. The consolidated income tax provision
increased to $9,433,000 during the first nine months of 1995 compared to
$7,904,000 in the first nine months of 1994, primarily reflecting higher pretax
earnings. The Company's overall effective tax rate decreased from 27% for the
first nine months of 1994 to 25% for the first nine months of 1995, primarily
reflecting higher earnings in the United States where net operating loss
carryforwards were available.
The Company conducts a portion of its business in currencies other than the
U.S. dollar, including the German mark, the U.K. pound sterling, the Norwegian
krone and the Canadian dollar. As a result of a weaker U.S. dollar, the
weighted average currency exchange rates used to translate the statements of
income of the Company's international subsidiaries were generally lower during
the first nine months of 1995 compared to the same period in 1994, thereby
increasing the amount of U.S. dollars reflected on the Company's 1995
consolidated statements of income. Had the average exchange rates in the first
nine months of 1995 been the same as in the first nine months of 1994, revenues
for the first nine months of 1995 would have been approximately $7,515,000
lower. The impact on net income would not have been material.
17
<PAGE>
SUPPLEMENTAL COMBINED RESULTS OF OPERATIONS
The following table sets forth the combined revenues and operating income of
Weatherford and Enterra attributable to each principal business (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------------- --------------------------------
1995 1994(1) 1995(2) 1994(3)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Oilfield Services and Equipment:
United States services.................. $ 60,096 $ 57,083 $176,895 $164,537
International services.................. 64,411 50,914 181,588 144,285
Oilfield equipment...................... 53,504 40,890 157,099 83,981
-------- -------- -------- --------
178,011 148,887 515,582 392,803
-------- -------- -------- --------
Pipeline Services:
Rentals and services.................... 14,009 9,561 36,336 23,518
Sales................................... 5,196 4,565 17,683 16,631
-------- -------- -------- --------
19,205 14,126 54,019 40,149
-------- -------- -------- --------
Gas Compression:
Rentals and services................... 8,912 4,464 26,900 4,464
Sales.................................. 12,296 12,288 47,698 12,288
-------- -------- -------- --------
21,208 16,752 74,598 16,752
-------- -------- -------- --------
Total revenues............................ $218,424 $179,765 $644,199 $449,704
======== ======== ======== ========
OPERATING INCOME:
Oilfield Services and Equipment.......... $ 23,630 $ 16,040 $ 38,109 $ 48,321
Pipeline Services........................ 3,034 607 3,385 (222)
Gas Compression.......................... 976 2,094 6,382 2,094
Corporate................................ (2,413) (940) (7,488) (2,478)
-------- -------- -------- --------
$ 25,227 $ 17,801 $ 40,388 $ 47,715
======== ======== ======== ========
DEPRECIATION & AMORTIZATION(4):
Oilfield Services and Equipment.......... $ 17,592 $ 14,740 $ 53,094 $ 40,311
Pipeline Services........................ 1,091 1,254 3,848 3,746
Gas Compression.......................... 3,539 1,594 10,493 1,594
Corporate................................ 422 457 1,282 1,268
-------- -------- -------- --------
$ 22,644 $ 18,045 $ 68,717 $ 46,919
======== ======== ======== ========
</TABLE>
- --------------
(1) Operating results for the three months ended September 30, 1994 include (i)
acquisition-related costs of $2,500,000 in the oilfield services and
equipment segment related to Weatherford's acquisition of H & H and (ii) a
charge of $1,000,000 in the pipeline services segment related to the
Allseas project, a project to design and build specialized equipment for
installation on a large, state-of-the-art offshore pipe laying vessel.
(2) Operating results for the nine months ended September 30, 1995 include
unusual charges of $23,468,000, $4,562,000 and $252,000 in Enterra's
oilfield services and equipment, pipeline services and corporate segments,
respectively.
(3) Operating results for the nine months ended September 30, 1994 include (i)
acquisition-related costs of $2,500,000 in the oilfield services and
equipment segment related to Weatherford's acquisition of H & H and (ii) a
charge of $2,000,000 in the pipeline services segment related to the
Allseas project.
(4) Does not include amortization of deferred loan costs, which are included
in interest expense, totaling $359,000 and $382,000 for the three months
ended September 30, 1995 and 1994, respectively, and $1,114,000 and
$1,063,000 for the nine months ended September 30, 1995 and 1994,
respectively.
18
<PAGE>
During the second quarter of 1995, as a result of a review of its operating
strategies and the carrying values of its assets, Enterra recognized unusual
charges of $28,282,000. The charge included $10,041,000 related to the
writedown to expected net realizable values of certain oilfield equipment
businesses to be disposed and $12,367,000 of writedowns related to rental tools,
properties and certain inventories that were considered excess or obsolete. Also
included in the unusual charges were costs pursuant to formal restructuring
plans of $4,562,000 related to the closure and associated write-off of assets of
certain pipeline businesses and $1,312,000 to close certain oilfield service
administrative and operating locations.
OILFIELD SERVICES AND EQUIPMENT. Revenues increased 20% from $148,887,000
in the third quarter of 1994 to $178,011,000 in the third quarter of 1995,
primarily due to the inclusion of the Total Energy Services ("Total Energy")
operations, which were acquired by Enterra on August 12, 1994. For the nine
months ended September 30, 1995, revenues increased 31% to $515,582,000.
Compared to the same periods in 1994, U.S. services revenues increased
$3,013,000, or 5%, in the third quarter of 1995, and $12,358,000, or 8%, for the
nine months ended September 30, 1995, primarily as a result of increased service
activity in certain regions. International service revenues increased
$13,497,000, or 27%, in the third quarter of 1995, and $37,303,000, or 26%, for
the nine months ended September 30, 1995, primarily due to increased drilling
and service activity in the North Sea, Africa and Latin America. Oilfield
equipment revenues increased $12,614,000, or 31%, in the third quarter of 1995,
and $73,118,000, or 87%, for the nine months ended September 30,1 995, primarily
as a result of the Total energy acquisition in August 1994.
After considering Enterra's unusual charges in 1995 and Weatherford's
acquisition-related costs in 1994, operating income in the oilfield services and
equipment segment increased in the three-month and nine-month periods ended
September 30, 1995 compared to the same periods in 1994, primarily as a result
of the increased service revenues and cost savings from consolidating the
operations of H & H and Total Energy.
PIPELINE SERVICES. Pipeline services and equipment revenues increased
$5,079,000, or 36% in the third quarter of 1995 compared to the third quarter of
1994, due to increased worldwide demand for the pipe joint coating services
provided by the Company's U.K.-based operation and continued high demand for
rental of Autoweld equipment, primarily related to the Transmaghreb project in
Algeria. Operating income increased $2,427,000 in the third quarter of 1995
compared to the third quarter of 1994 due to the higher revenues and the effect
of a $1,000,000 charge recognized in the third quarter of 1994 related to the
Allseas project.
For the nine months ended September 30, 1995, revenues increased
$13,870,000, or 35%, due to an $8,270,000 increase in the Autoweld division's
international sales and rentals and a $6,030,000 increase in service revenues by
the Company's pipe joint coating business. Operating income increased to
$3,385,000 for the 1995 nine-month period as compared to a loss of $222,000 in
the same period in 1994. Exclusive of the restructuring and asset impairment
charges in the second quarter of 1995, and the Allseas charges recorded in the
second and third quarters of 1994, operating income was $7,947,000 in the 1995
period versus $1,778,000 in 1994. The increase is attributable to the increased
revenues, especially those associated with the higher margin Autoweld revenues.
GAS COMPRESSION. The gas compression segment was acquired as part of the
Total Energy acquisition in August 1994. Revenues from compressor rentals have
remained constant at approximately $9,000,000 per quarter since the acquisition
of this segment. Operating comparisons to specific periods ended September 30,
1994 are not meaningful due to the short period of ownership in 1994. While both
the average rental rate and average utilization have fallen slightly
since August 1994, additional higher horsepower units have been added to the
compressor fleet to offset the decline. This segment has experienced a
substantial decline in compressor sales in the third quarter of 1995, as many
customers have deferred the acquisition of units due to the relatively low
demand for natural gas. No significant improvement in compressor sales is
expected for the balance of 1995.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
4.1 Credit Agreement dated as of October 5, 1995 among Weatherford
Enterra, Inc., Weatherford Enterra U.S., Inc., Weatherford/Lamb,
Inc., Bank of America Illinois, as Documentation Agent, Texas
Commerce Bank National Association, as Administrative Agent,
Credit Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of
Montreal, First Interstate Bank of Texas, N.A., Arab Banking
Corporation (B.S.C.) and the other financial institutions parties
thereto.
*10.1 Change of Control Agreements with M. Timothy Carey and Steven C.
Grant.
*10.2 Indemnification Agreements with John A. Hill, William E. Macaulay,
Robert L. Parker, Sr., R. Rudolph Reinfrank, Roger M. Widmann,
M. Timothy Carey and Steven C. Grant.
*10.3 Consulting Agreement dated October 5, 1995, between Weatherford
Enterra, Inc. and D. Dale Wood.
27 Article 5 Financial Data Schedule
* Management contract or compensatory plan or arrangement
(B) Reports on Form 8-K
A report on Form 8-K dated June 23, 1995 was filed on July 6, 1995
by the Company reporting the Company's execution of the definitive
agreement to merge with Enterra Corporation.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEATHERFORD ENTERRA, INC.
(Registrant)
Date: November 13, 1995 By: /s/ NORMAN W. NOLEN
------------------------------------
NORMAN W. NOLEN
Senior Vice President, Chief Financial
Officer & Treasurer
21
<PAGE>
================================================================================
CREDIT AGREEMENT
DATED AS OF OCTOBER 5, 1995
AMONG
WEATHERFORD ENTERRA, INC.,
WEATHERFORD ENTERRA U.S., INC.,
WEATHERFORD/LAMB, INC.,
as Borrowers
BANK OF AMERICA ILLINOIS,
as Documentation Agent and as a Bank,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent, and as a Bank
CREDIT LYONNAIS NEW YORK BRANCH,
as Senior Co-Agent, and as a Bank
ABN AMRO BANK, N.V.,
as Co-Agent, and as a Bank
BANK OF MONTREAL,
as Co-Agent, and as a Bank
FIRST INTERSTATE BANK OF TEXAS, N.A.,
as Co-Agent, and as a Bank
ARAB BANKING CORPORATION (B.S.C.),
as Co-Agent, and as a Bank
and
THE OTHER FINANCIAL INSTITUTIONS PARTIES HERETO, AS BANKS
Arranged by
BA SECURITIES, INC.
CHEMICAL SECURITIES INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I DEFINITIONS................................................. 1
1.01 Certain Defined Terms....................................... 1
1.02 Other Interpretive Provisions............................... 16
1.03 Accounting Principles....................................... 17
ARTICLE II THE CREDITS................................................. 17
2.01 Amounts and Terms of Commitments............................ 17
2.02 Certain Pricing Terms....................................... 17
2.03 Procedure for Borrowing..................................... 18
2.04 Conversion and Continuation Elections....................... 19
2.05 Voluntary Termination or Reduction of Commitments........... 20
2.06 Optional Prepayments........................................ 20
2.07 Mandatory Prepayments; Mandatory Commitment Reductions...... 21
2.08 Repayment................................................... 22
2.09 Fees........................................................ 23
2.10 Computation of Fees and Interest............................ 24
2.11 Payments by the Company and/or the Borrowers................ 24
2.12 Payments by the Banks to the Administrative Agent........... 25
2.13 Sharing of Payments, Etc.................................... 25
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY...................... 26
3.01 Taxes....................................................... 26
3.02 Illegality.................................................. 27
3.03 Increased Costs and Reduction of Return..................... 28
3.04 Funding Losses.............................................. 28
3.05 Inability to Determine Rates................................ 29
3.06 Reserves on Eurodollar Rate Loans........................... 29
3.07 Certificates of Banks....................................... 30
3.08 Substitution of Banks....................................... 30
3.09 Survival.................................................... 30
3.10 Tax Forms................................................... 30
ARTICLE IV CONDITIONS PRECEDENT........................................ 30
4.01 Conditions of Initial Credit Extensions..................... 30
4.02 Conditions to All Credit Extensions......................... 32
ARTICLE V REPRESENTATIONS AND WARRANTIES.............................. 34
5.01 Corporate Existence and Power............................... 34
5.02 Corporate Authorization; No Contravention................... 34
5.03 Governmental Authorization.................................. 34
5.04 Binding Effect.............................................. 34
5.05 Litigation.................................................. 34
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
5.06 No Default.................................................. 35
5.07 ERISA Compliance............................................ 35
5.08 Use of Proceeds; Margin Regulations......................... 36
5.09 Title to Properties......................................... 36
5.10 Taxes....................................................... 36
5.11 Financial Condition......................................... 36
5.12 Environmental Matters....................................... 37
5.13 Regulated Entities.......................................... 37
5.14 No Burdensome Restrictions.................................. 37
5.15 Copyrights, Patents, Trademarks and Licenses, etc........... 37
5.16 Subsidiaries................................................ 38
5.17 Insurance................................................... 38
5.18 Full Disclosure............................................. 38
5.19 Solvency.................................................... 38
ARTICLE VI AFFIRMATIVE COVENANTS....................................... 38
6.01 Financial Statements........................................ 38
6.02 Certificates; Other Information; Pro Forma Balance Sheet.... 39
6.03 Notices..................................................... 39
6.04 Preservation of Corporate Existence, Etc.................... 40
6.05 Maintenance of Property..................................... 41
6.06 Insurance................................................... 41
6.07 Payment of Certain Obligations.............................. 41
6.08 Compliance with Laws........................................ 41
6.09 Compliance with ERISA....................................... 41
6.10 Inspection of Property and Books and Records................ 41
6.11 Environmental Laws.......................................... 42
6.12 Use of Proceeds............................................. 42
6.13 New Subsidiary Guarantors................................... 42
ARTICLE VII NEGATIVE COVENANTS.......................................... 42
7.01 Limitation on Liens......................................... 42
7.02 Disposition of Assets....................................... 44
7.03 Consolidations and Mergers.................................. 45
7.04 Transactions with Affiliates................................ 45
7.05 Margin Stock; Certain Acquisitions, Ineligible Securities... 45
7.06 Joint Ventures.............................................. 46
7.07 ERISA....................................................... 46
7.08 Change in Business.......................................... 46
7.09 Accounting Changes.......................................... 46
7.10 Capitalization Ratio........................................ 46
7.11 Minimum Net Worth........................................... 46
7.12 Interest Coverage Ratio..................................... 47
7.13 Foreign Subsidiary Indebtedness............................. 47
7.14 Subsidiary Dividends........................................ 47
ARTICLE VIII EVENTS OF DEFAULT........................................... 47
8.01 Event of Default............................................ 47
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
8.02 Remedies.................................................... 49
8.03 Rights Not Exclusive........................................ 50
8.04 Certain Financial Covenant Defaults......................... 50
ARTICLE IX THE ADMINISTRATIVE AGENT.................................... 50
9.01 Appointment and Authorization............................... 50
9.02 Delegation of Duties........................................ 51
9.03 Liability of Agent-Related Person........................... 51
9.04 Reliance by Administrative Agent............................ 51
9.05 Notice of Default........................................... 52
9.06 Credit Decision............................................. 52
9.07 Indemnification............................................. 53
9.08 Agents in Individual Capacities............................. 53
9.09 Successor Agent............................................. 53
9.10 Withholding Tax............................................. 54
9.11 Documentation Agent; Senior Co-Agent; Co-Agents; Arrangers.. 55
ARTICLE X MISCELLANEOUS............................................... 55
10.01 Amendments and Waivers...................................... 55
10.02 Notices..................................................... 56
10.03 No Waiver; Cumulative Remedies.............................. 57
10.04 Costs and Expenses.......................................... 57
10.05 Indemnity................................................... 57
10.06 Payments Set Aside.......................................... 58
10.07 Successors and Assigns...................................... 58
10.08 Assignments, Participations, etc............................ 58
10.09 Set-off..................................................... 60
10.10 Notification of Addresses, Lending Offices, Etc............. 61
10.11 Counterparts................................................ 61
10.12 Severability................................................ 61
10.13 No Third Parties Benefitted................................. 61
10.14 GOVERNING LAW AND JURISDICTION.............................. 61
10.15 WAIVER OF JURY TRIAL........................................ 62
10.16 Interest.................................................... 63
10.17 Company as Subsidiary Borrower Representative............... 63
10.18 Indemnity and Subrogation................................... 64
10.19 Entire Agreement............................................ 64
</TABLE>
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SCHEDULES
Schedule 2.01 Commitments
Schedule 2.02 Applicable Margins and Commitment Fees
Schedule 5.05 Litigation
Schedule 5.07 ERISA
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 7.01 Permitted Liens
Schedule 7.13 Foreign Subsidiary Indebtedness
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Compliance Certificate
Exhibit B-1 Form of Parent Guaranty
Exhibit B-2 Form of Domestic Subsidiary Guaranty
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Conversion/Continuation
Exhibit E Form of Revolving Credit Note
Exhibit F Form of Term Note
Exhibit G-1 Form of Legal Opinion of Company's Outside Counsel
Exhibit G-2 Form of Legal Opinion of Company's General Counsel
Exhibit H Form of Assignment and Acceptance
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 5, 1995, among
WEATHERFORD ENTERRA, INC., a Delaware corporation (the "Company"), WEATHERFORD
ENTERRA U.S., INC., a Delaware corporation ("WUSI"), WEATHERFORD/LAMB, INC., a
Delaware corporation ("WLI"), the several financial institutions from time to
time party to this Agreement (collectively, the "Banks"; individually, a
"Bank"), BANK OF AMERICA ILLINOIS, as the documentation agent for the Banks,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as the administrative agent for the
Banks, CREDIT LYONNAIS NEW YORK BRANCH, as the senior co-agent, and ABN AMRO
BANK, N.V., BANK OF MONTREAL, FIRST INTERSTATE BANK OF TEXAS, N.A., and ARAB
BANKING CORPORATION (B.S.C.), as the co-agents.
WHEREAS, the Banks have agreed to make available to the Borrowers a term
loan, available in multiple advances, and revolving credit facility, upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock of a corporation (or similar entity), which stock has ordinary voting
power for the election of the members of the acquiree's board of directors or
persons exercising similar functions, or the acquisition of in excess of 50% of
the equity of any Person not a corporation which acquisition gives the acquirer
the power to direct or cause the direction of the management and policies of the
acquiree or causes such Person to become a Subsidiary of the acquirer, or (c) a
merger or consolidation or any other combination with another Person (other than
a Person that is a Subsidiary of the acquirer).
"Administrative Agent" means TCB, in its capacity as administrative
agent for the Banks hereunder, and any successor administrative agent arising
under Section 9.09.
"Administrative Agent's Letter" has the meaning specified in
subsection 2.09(a).
"Administrative Agent's Payment Office" means the address for payments
set forth in Schedule 10.02 in relation to the Administrative Agent, or such
other address as the Administrative Agent may from time to time specify.
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"Adjustment Date" has the meaning specified in subsection 2.02(b).
"Affected Bank" has the meaning specified in Section 3.08.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agents" means BofA and TCB, in their respective capacities as
Documentation Agent and Administrative Agent for the Banks hereunder, and any
successor agent arising under Section 9.09.
"Agent-Related Persons" means BofA, TCB and any successor agents
arising under Section 9.09, together with their respective Affiliates
(including, in the case of BofA and TCB, the Arrangers), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, as applicable, the specified percent per
annum denominated "Eurodollar Margin" or "Base Rate Margin" as set forth on
Schedule 2.02, determined from time to time with reference to the relevant
Capitalization Ratio.
"Arrangers" means BA Securities, Inc., a Delaware corporation, and
Chemical Securities Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause hereto.
References to the "Banks" shall include BofA, including in its capacity as
Documentation Agent, and TCB, including in its capacity as Administrative Agent;
for purposes of clarification only, to the extent that BofA and/or TCB may have
any rights or obligations in addition to those of the Banks due to its status as
Administrative Agent or Documentation Agent, as applicable, its status as such
will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. (S)101, et seq.).
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time to time which rate per annum shall at all times be equal to the
highest of: (i) the rate of interest announced publicly by TCB, from time to
time, as TCB's prime rate, which
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may or may not be the lowest or best rate charged by TCB to its most preferred
customers; or (ii) one-half of one percent (.50%) per annum above the Federal
Funds Rate in effect from time to time.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"BofA" means Bank of America Illinois.
"Borrowers" means the Revolving Loan Borrowers and the Term Loan
Borrower.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
or Term Loans of the same Interest Rate Type made to the Company on the same day
by the Banks under Article II, and, other than in the case of Base Rate Loans,
having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York or Houston, Texas are
authorized or required by law to close and, if the applicable Business Day
relates to any Eurodollar Rate Loan, means such a day on which dealings are
carried on in the applicable eurodollar market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Leases" means capital leases determined in accordance with
GAAP.
"Capitalization Ratio" means, at any time, the ratio (expressed as a
percentage) of Funded Indebtedness to Total Capitalization.
"Change of Control" means (a) any "person" or "group" within the
meaning of Section 13(d) and 14(d)(2) of the Exchange Act (a "Group") purchases
or otherwise acquires, directly or indirectly, "beneficial ownership" (as such
term is defined in Rule 13d-3 under the Exchange Act) ("Beneficial Ownership")
of securities of the Company which, together with any securities owned
beneficially by any "affiliates" or "associates" of such Group (as such terms
are defined in Rule 12b-2 under the Exchange Act), shall represent more than
thirty percent (30%) of the combined voting power of the Company's securities
which are entitled to vote generally in the election of directors and which are
outstanding on the date immediately prior to the date of such purchase or
acquisition; (b) a sale of all or substantially all of the assets of the Company
and its Subsidiaries to any Person or Group; (c) the liquidation or dissolution
of the Company; or (d) the first day on which a majority of the Board of
Directors of the Company are not Continuing Directors (as herein defined). As
herein defined, "Continuing Directors" means any member of the Board of
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Directors of the Company who (x) is a member of such Board of Directors
immediately following the effectiveness of the Merger or (y) was nominated for
election or elected to such Board of Directors with the affirmative vote of two-
thirds of the Continuing Directors who were members of such Board of Directors
at the time of such nomination or election.
"Closing Date" means the date on which all conditions precedent set
forth in Sections 4.01 and 4.02 are satisfied or waived by all Banks.
"Co-Agents" means ABN AMRO Bank, N.V., Bank of Montreal, First
Interstate Bank of Texas, N.A., and Arab Banking Corporation (B.S.C.) in their
capacity as co-agents hereunder.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment" has, as to each Bank, the meaning specified in Section
2.01.
"Commitment Fee" has the meaning set forth in subsection 2.09(b).
"Company" has the meaning specified in the introductory clause hereto.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit A.
"Consolidated Subsidiaries" means, at any date, all Subsidiaries the
accounts of which, in accordance with GAAP, would be consolidated with those of
the Company in its consolidated financial statements if such statements were
prepared as of such date.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall, in the
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<PAGE>
case of Guaranty Obligations, be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof, and in the case of other Contingent Obligations,
shall be equal to the maximum reasonably anticipated liability in respect
thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.04, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Revolving
Loans hereunder, and (b) the making of any Term Loans hereunder.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Documentation Agent" means BofA, in its capacity as documentation
agent for the Banks hereunder.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBIT" means, for the relevant period, the sum of: (a) the
consolidated Net Income of the Company and its Consolidated Subsidiaries for
such period, (b) non-recurring costs incurred during such period by the Company
and its Consolidated Subsidiaries in connection with any Acquisition (including,
but without limitation, the Merger) consummated during such period, (c)
consolidated Interest Expense of the Company and its Consolidated Subsidiaries
for such period and (d) all taxes measured by income to the extent included in
the determination of such consolidated Net Income.
"Effective Amount" means, with respect to any Revolving Loans and Term
Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any Borrowings and prepayments or repayments of Revolving Loans
and Term Loans occurring on such date.
"EI" means Energy Industries, Inc., a Subsidiary of Zapata
Corporation.
"EI Acquisition" means the acquisition by the Company or a wholly-
owned Subsidiary of the Company of the assets of EI, Zapata Corporation and
Zapata Energies Industries, L.P. related to the natural gas compression
business, free and clear of any and all liens, claims and encumbrances (except
for Permitted Liens), on terms consistent with the disclosures made to the Banks
prior to the execution of this Agreement.
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"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $200,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $200,000,000,
provided that such bank is acting through a branch or agency located in the
United States; and (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a
Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a
Subsidiary.
"Enterra" means Enterra Corporation, a Delaware corporation.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for damage to the
environment.
"Environmental Laws" means all federal, state or local laws, statutes,
rules, regulations, ordinances and codes, together with all final administrative
orders, licenses, authorizations and permits of, and written agreements with,
any Governmental Authorities, in each case relating to the protection of the
environment or the disposal of hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate under ERISA
Section 4041(c), the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC
to terminate a Pension Plan or Multiemployer Plan; or (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the rate per annum at which deposits in U.S. dollars are offered to the
principal office of the Administrative Agent by first class banks in the
interbank eurodollar market selected by the
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Administrative Agent, as shown on the Dow Jones Telerate Screen (Pages 314, 872
and 4833) or, if the Dow Jones Telerate Screen is not available, as shown on the
Bloomberg Screen British Banker's LIBOR fixing, at or around 9:00 a.m. Houston,
Texas time two (2) Business Days before the first day of such Interest Period,
in an amount substantially equal to the amount of the Eurodollar Rate Loan of
the Administrative Agent comprising part of such Borrowing to be outstanding
during such Interest Period and for a period equal to such Interest Period.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Event of Default" means any of the events or circumstances specified
in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Enterra Credit Agreement" means that certain Second Amended
and Restated Credit Agreement dated as of July 17, 1995, among Enterra, Enterra
Canada Limited, Cherco-Barber Ltd, the financial institutions signatory thereto,
Wells Fargo Bank, N.A., as Agent, and First Interstate Bank of Texas, N.A., as
Co-Agent.
"Existing Weatherford Credit Agreement" means that certain Amended and
Restated Revolving and Term Credit Agreement, dated as of April 15, 1994, by and
among Weatherford, the Borrowers listed on the signature pages thereof, Credit
Lyonnais New York Branch, TCB, Arab Banking Corporation (B.S.C.) and the other
financial institutions listed on the signature pages thereof.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(Houston, Texas time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative Agent.
"Fee Letter" has the meaning specified in subsection 2.09(a).
"Foreign Subsidiary" means, as of any date of determination, a
Subsidiary which is incorporated or organized under the laws of any jurisdiction
other than the District of Columbia or the United States of America or any state
thereof.
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"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"Funded Indebtedness" means, for the Company and its Consolidated
Subsidiaries, at any time, without duplication, the sum of: (a) liability for
borrowed money or for the deferred purchase price of property or services (other
than trade payables entered into in the ordinary course of business on ordinary
terms), (b) obligations under leases which in accordance with GAAP should be
recorded as Capital Leases, and (c) all Redeemable Preferred Stock, valued at
the applicable redemption price.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantors" means the Company, WUSI and WLI, each in its capacity as
a guarantor, Enterra Compression Company, Enterra Petroleum Equipment Group,
Inc., CRC-Evans Pipeline International, Inc., Total Engineering Services Team,
Inc., and each other Subsidiary that signs a Guaranty.
"Guaranty" means a guaranty agreement substantially in the form of
Exhibit B-1 or B-2 attached hereto, in favor of the Administrative Agent and the
Banks, as the same may be amended, supplemented or otherwise modified from time
to time.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to Capital Leases; (g)
all net obligations with respect to Swap Contracts; (h) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which the holder
of such Indebtedness
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<PAGE>
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including accounts and contracts rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of such
Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in subsection 6.01(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of a debtor's creditors generally or any substantial
portion of such creditors undertaken under U.S. federal, state or foreign law,
including the Bankruptcy Code.
"Interest Coverage Ratio" means, at any time, the ratio of EBIT to
Interest Expense.
"Interest Expense" means, for the relevant period, the consolidated
interest expense of the Company and its Consolidated Subsidiaries for such
period as determined in accordance with GAAP.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the last Business Day of each calendar quarter and each date
such Loan is converted into another Interest Rate Type, and, as to any Term
Loan, the date on which any principal payment is due in respect thereof;
provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the date that falls three months (as the case may be)
after the beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Eurodollar Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a Eurodollar Rate Loan,
and ending on the date one, two, three or six months thereafter as selected by
the Company in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
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Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period; and
(iii) no Interest Period for any Term Loan shall extend beyond
the Term Loan Maturity Date and no Interest Period for any Revolving Loan
shall extend beyond September 30, 2000; and
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans unless the aggregate
principal amount of Term Loans represented by Base Rate Loans, or by
Eurodollar Rate Loans having Interest Periods that will expire on or before
such date, equals or exceeds the amount of such principal payment.
"Interest Rate Type" means, with reference to the Loans, a Base Rate
Loan or a Eurodollar Rate Loan.
"Invitation Letters" has the meaning specified in subsection 2.09(a).
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a single-purpose corporation, partnership, joint
venture or other similar legal arrangement (whether created by contract or
conducted through a separate legal entity) now or hereafter formed by the
Company or any of its Subsidiaries with another Person in order to conduct a
common venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 10.02, or such
other office or offices as such Bank may from time to time notify the Company
and the Administrative Agent.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the Company or any Subsidiary of the Company as
debtor, under the Uniform Commercial Code or any comparable law) and any
contingent or other agreement to provide any of the foregoing, but not including
the interest of a lessor under an operating lease.
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"Loan" means an extension of credit by a Bank to a Borrower or
Borrowers under Article II in the form of a Revolving Loan or a Term Loan, as
applicable.
"Loan Documents" means this Agreement, the Notes, the Guaranties, the
Fee Letter, the Administrative Agent's Letter, the Invitation Letters and all
other documents delivered to the Administrative Agent or any Bank in connection
herewith.
"Loan Type" means, with reference to the Loans, a Revolving Loan or a
Term Loan, as the case may be.
"Majority Banks" means at any time Banks then holding at least 66-2/3%
of the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, Banks then having at least 66-2/3% of the
Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
(b) a material impairment of the ability of the Company or any Subsidiary to
perform under any Loan Document to which it is a party; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Company or any Subsidiary of any Loan Document to which it is a
party.
"Merger" means the merger of Enterra with and into Weatherford,
pursuant to the terms, conditions and provisions set forth in the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
the 23rd day of June, 1995, between Weatherford and Enterra, as amended by (i)
Amendment No. 1 dated as of August 28, 1995 and (ii) Amendment No. 2 thereto.
"Multiemployer Plan" means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.
"Net Income" means, for any period, the consolidated net income (or
net loss) of the Company and its Consolidated Subsidiaries for such period
determined in accordance with GAAP.
"Net Proceeds" means, with respect to any issuance of capital stock or
other equity interest by the Company or any of its Consolidated Subsidiaries
after the Closing Date, 100% of the cash proceeds of such offering, as and when
received, net of the underwriters' discount and direct costs relating to the
offering.
"Net Worth" means, at any date, an amount equal to the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries, computed
in
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accordance with GAAP determined as of such date, excluding any Redeemable
Preferred Stock.
"Note" means a Revolving Credit Note or a Term Note, and "Notes" means
the Revolving Credit Notes and the Term Notes.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit C.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit D.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Borrowers to
any Bank, any Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"Oil Field Merger" means the merger of Weatherford U.S., Inc., a
Delaware corporation and wholly-owned Subsidiary of Weatherford, with and into
Enterra Oil Field Rental Company, a Delaware corporation and wholly-owned
Subsidiary of Enterra, followed immediately by the surviving corporation
effecting a change of its name to Weatherford Enterra U.S., Inc.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.
"Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company or any Subsidiary
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
Governmental Authority.
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"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any Subsidiary sponsors or maintains or to which the
Company makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pro Forma Balance Sheet" has the meaning set forth in subsection
6.02(b).
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the combined Commitments of all Banks.
"Redeemable Preferred Stock" means preferred stock that has, or is
convertible into any security that has, mandatory redemption or repurchase
requirements (other than those exercisable solely at the option of the issuer of
said stock) on or prior to the later of (x) the Term Loan Maturity Date or (y)
the Revolving Credit Termination Date.
"Replacement Bank" has the meaning specified in Section 3.08.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer of the
Company, the president of the Company, the chief financial officer or the
treasurer of the Company, the Director of Financial Accounting and Reporting of
the Company, any Senior Vice President of the Company, or any other officer
having substantially the same authority and responsibility.
"Revolving Credit Commitment" means Two Hundred Million Dollars
($200,000,000), as the same may be reduced from time to time pursuant to Section
2.05.
"Revolving Credit Note" means a promissory note in substantially the
form of Exhibit E attached hereto, duly executed and delivered to the
Administrative Agent by a Revolving Loan Borrower and payable to the order of a
Bank in the amount of such Bank's Pro Rata Share of the Revolving Credit
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Revolving Credit Termination Date" means the earlier to occur of:
(a) September 30, 2000; and
(b) the date on which the Revolving Credit Commitments terminate
in accordance with the provisions of this Agreement.
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"Revolving Loan" has the meaning specified in Section 2.01, and may be
a Base Rate Loan or a Eurodollar Rate Loan.
"Revolving Loan Borrowers" means each of the Company, WUSI and WLI.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Senior Co-Agent" means Credit Lyonnais New York Branch, in its
capacity as senior co-agent hereunder.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and such liabilities are evaluated for purposes of
Section 101(31) of the Bankruptcy Code; (b) the present fair saleable value of
the property of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; (c) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Company.
"Subsidiary Borrowers" means WUSI and WLI.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.
"Swap Contract" means any agreement (including any master agreement
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, forward foreign exchange agreement,
rate cap, collar or floor agreement, currency swap agreement, cross-currency
rate swap agreement, swaption, currency option or any other, similar agreement
(including any option to enter into any of the foregoing).
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each
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Bank and the Administrative Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Bank's net income by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Bank or the Administrative Agent, as the case may be, is organized or maintains
a lending office.
"TCB" means Texas Commerce Bank National Association, a national
banking association.
"Term Loan" has the meaning specified in Section 2.01, and may be a
Base Rate Loan or a Eurodollar Rate Loan.
"Term Loan Borrower" means the Company.
"Term Loan Commitment" means Two Hundred Million Dollars
($200,000,000), as the same may be reduced pursuant to Section 2.05.
"Term Loan Commitment Termination Date" means the earlier to occur of
(a) December 31, 1995 and (b) the funding of the EI Acquisition.
"Term Loan Maturity Date" means September 30, 2001.
"Term Note" means a promissory note in substantially the form of
Exhibit F attached hereto, duly executed and delivered to the Administrative
Agent by the Term Loan Borrower and payable to the order of a Bank in the amount
of such Bank's Pro Rata Share of the Term Loan Commitment, including any
amendment, modification, renewal or replacement of such promissory note.
"Total Capitalization" means, at any time, the sum of (a) Funded
Indebtedness and (b) Net Worth.
"Type" means, with respect to any Loan, Interest Rate Type or Loan
Type.
"Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States" and "U.S." each means the United States of America.
"Weatherford" means Weatherford International Incorporated, a Delaware
corporation.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
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1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agents merely because of the
Agents' or Banks' involvement in their preparation.
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1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments.
(a) The Term Loan Facility. Each Bank severally agrees, on the terms
and conditions set forth herein, to make loans to the Term Loan Borrower (each
such loan, a "Term Loan") from time to time on any Business Day during the
period from the Closing Date to the Term Loan Commitment Termination Date, in an
aggregate amount not to exceed such Bank's Pro Rata Share of the Term Loan
Commitment. Amounts borrowed as Term Loans which are repaid or prepaid by the
Term Loan Borrower may not be reborrowed.
(b) The Revolving Credit Facility. Each Bank severally agrees
further, on the terms and conditions set forth herein, to make loans to one or
more of the Revolving Loan Borrowers (each such loan, a "Revolving Loan") from
time to time on any Business Day during the period from the Closing Date to the
Revolving Credit Termination Date, in an aggregate amount not to exceed at any
time outstanding such Bank's Pro Rata Share of the Revolving Credit Commitment
(such amount, together with the Bank's Pro Rata Share of the Term Loan
Commitment, as the same may be reduced under Section 2.05 or Section 2.07 or
modified as a result of one or more assignments under Section 10.08, the Bank's
"Commitment"). Within the limits of each Bank's Commitment, and subject to the
other terms and conditions hereof, the Revolving Loan Borrowers may borrow under
this subsection 2.01(b), prepay under Section 2.06 and Section 2.07 and reborrow
under this subsection 2.01(b).
(c) The initial Pro Rata Share and initial Commitment of each of the
Banks signatories hereto are set forth on Schedule 2.01 attached hereto.
2.02 Certain Pricing Terms.
(a) Pricing Based on Capitalization Ratio. The Applicable Margins and
the Commitment Fee shall be equal to the specified percent per annum set forth
in Schedule 2.02, in each case based upon the Capitalization Ratio as measured
at the end of the preceding fiscal quarter of the Company.
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(b) Procedure for Adjustments. During the period from the Closing
Date through and including the first date on which financial statements and the
related Compliance Certificate are delivered pursuant to Sections 6.01(a) and
6.02 hereof, for purposes of the pricing chart set forth in Schedule 2.02, the
Capitalization Ratio shall be assumed to be an amount classified as "Level III"
therein. Thereafter, the Applicable Margins(s) and the Commitment Fee shall be
calculated in reliance on the most recent financial statements and Compliance
Certificate delivered pursuant to Sections 6.01 and 6.02 hereof. Each
adjustment of the Applicable Margin and the Commitment Fee shall be made by the
Administrative Agent as of the first day following the date of delivery of the
financial statements and Compliance Certificate pursuant to Sections 6.01 and
6.02 (the "Adjustment Date"). Such adjusted Applicable Margin and Commitment
Fee shall be effective as of the Adjustment Date, except that with respect to
all Eurodollar Loans outstanding on the Adjustment Date, the adjusted Applicable
Margin shall apply as of the first day of the Interest Period next following the
Adjustment Date. Notwithstanding the foregoing, in the event the Company shall
fail for any reason to deliver any of the requisite financial statements or
related Compliance Certificate by the applicable date specified in Sections 6.01
and 6.02, the Applicable Margin and Commitment Fee shall be determined, from the
first day after the date such financial statements and Compliance Certificate
were required to have been delivered pursuant to Sections 6.01 and 6.02 (without
regard to any grace or cure period applicable thereto pursuant to Article 8
hereof) until the same are delivered in accordance therewith, on the assumption
that the Capitalization Ratio is an amount classified in Schedule 2.02 as "Level
IV."
2.03 Procedure for Borrowing.
(a) Each Borrowing of Revolving Loans or Term Loans shall be made upon
the applicable Borrower's irrevocable written notice delivered to the
Administrative Agent in the form of a Notice of Borrowing (which notice must be
received by the Administrative Agent prior to 9:00 a.m. (Houston, Texas time)
(i) three (3) Business Days prior to the requested Borrowing Date, in the case
of Eurodollar Rate Loans, and (ii) one (1) Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $5,000,000 or any multiple of $1,000,000 in excess
thereof;
(B) the applicable Borrower or Borrowers;
(C) the requested Borrowing Date, which shall be a Business Day;
(D) the Interest Rate Type of Loans comprising the Borrowing, and
whether such Loans are to be Term Loans or Revolving Loans; and
(E) in the case of Eurodollar Rate Loans, the duration of the Interest
Period applicable to such Loans included in such notice. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any
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Borrowing comprised of Eurodollar Rate Loans, such Interest Period shall be
three months.
(b) The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the
applicable Borrower(s) at the Administrative Agent's Payment Office by 11:00
a.m. (Houston, Texas time) on the Borrowing Date requested by the applicable
Borrower(s) in funds immediately available to the Administrative Agent. The
proceeds of all such Loans will then be made available to the applicable
Borrower(s) by the Administrative Agent at such office by crediting the account
of the applicable Borrower(s) on the books of the Administrative Agent with the
aggregate of the amounts made available to the Administrative Agent by the Banks
and in like funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, there may not be more than
eight (8) different Interest Periods in effect.
2.04 Conversion and Continuation Elections.
(a) The Borrowers may, upon irrevocable written notice to the
Administrative Agent in accordance with subsection 2.04(b): (i) elect, as of
any Business Day, in the case of Base Rate Loans, or as of the last day of the
applicable Interest Period, in the case of Eurodollar Rate Loans, to convert any
such Loans (or any part thereof in an amount not less than $5,000,000, or that
is in an integral multiple of $1,000,000 in excess thereof) into Loans of any
other Interest Rate Type; or (ii) elect as of the last day of the applicable
Interest Period, to continue as Eurodollar Rate Loans any Revolving Loans or
Term Loans having Interest Periods expiring on such day (or any part thereof in
an amount not less than $5,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof); provided, that if at any time the aggregate
amount of Eurodollar Rate Loans in respect of any Borrowing is reduced, by
payment, prepayment, or conversion of part thereof to be less than $1,000,000,
such Eurodollar Rate Loans shall automatically convert into Base Rate Loans, and
on and after such date the right of the applicable Borrowers to continue such
Loans as, and convert such Loans into, Eurodollar Rate Loans shall terminate.
(b) The applicable Borrowers shall deliver a Notice of Conversion/
Continuation to be received by the Administrative Agent not later than 9:00 a.m.
(Houston, Texas time) at least (i) three (3) Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Eurodollar Rate Loans; and (ii) one (1) Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying: (A) the proposed Conversion/Continuation Date; (B) the
identity of the applicable Borrower or Borrowers, the Interest Rate Type of
Loans to be converted or continued and whether such Loans are Revolving Loans or
Term Loans; (C) the aggregate amount of Loans to be converted or continued; (D)
the Interest Rate Type of Loans resulting from the proposed conversion or
continuation; and (E) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest
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Period(s). If the Notice of Conversion/Continuation fails to specify the
duration of the Interest Period for any Borrowing comprised of Eurodollar Rate
Loans, such Interest Period shall be three (3) months.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Eurodollar Rate Loans, or if any Default or
Event of Default then exists, the applicable Borrowers shall be deemed to have
elected to convert such Eurodollar Rate Loans into Base Rate Loans effective as
of the expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the applicable Borrowers, the Administrative Agent will promptly
notify each Bank of the details of any automatic conversion. All conversions
and continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Bank.
(e) Unless the Majority Banks otherwise agree, during the existence of
a Default or Event of Default, the applicable Borrowers may not elect to have a
Loan converted into or continued as a Eurodollar Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than eight (8) different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five (5) Business Days' prior notice to the Administrative
Agent, terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Loans
made on the effective date thereof, the Effective Amount of all Revolving Loans
and Term Loans together would exceed the amount of the combined Commitments then
in effect. Once reduced in accordance with this Section, the Commitments may
not be increased. Any reduction of the Commitments shall be applied to each
Bank according to its Pro Rata Share. All accrued Commitment Fees to, but not
including, the effective date of any reduction or termination of Commitments,
shall be paid on the effective date of such reduction or termination. In the
event of any optional prepayment of Term Loans pursuant to Section 2.06 of this
Agreement, or any mandatory prepayment of Term Loans pursuant to Section 2.07 of
this Agreement, the Term Loan Commitment (and, correspondingly, the total
Commitments) automatically shall reduce by the amount of such prepayment.
2.06 Optional Prepayments. Subject to Section 3.04, the Borrowers may, at
any time or from time to time, upon not less than three (3) Business Days'
irrevocable notice to the Administrative Agent, prepay Base Rate Loans and/or
Eurodollar Rate Loans in whole or in part, in each such case in minimum amounts
of $5,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of each such prepayment, the
Interest Rate Type(s) of the Loans to be prepaid, the identity of the applicable
Borrower or Borrowers and whether such Loans are Revolving Loans or Term Loans.
The Administrative Agent will promptly notify each Bank of its receipt of any
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such notice, and of such Bank's Pro Rata Share of such prepayment. If such
notice is given by the applicable Borrower(s), the applicable Borrower(s) shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein, together with accrued interest to
each such date on the amount prepaid and any amounts required pursuant to
Section 3.04. Optional prepayments of the Term Loans shall be applied to the
then remaining installments payable in respect of the Term Loans on a pro rata
basis (based upon the scheduled principal amount of each such installment after
giving effect to all prior reductions thereto).
2.07 Mandatory Prepayments; Mandatory Commitment Reductions.
(a) If the Company or any of its Consolidated Subsidiaries issues
capital stock or other equity interests for cash proceeds after the Closing Date
(other than capital stock issued pursuant to the Company's employee or director
stock based plans), 100% of the Net Proceeds of such issuance shall be applied
in prepayment of the outstanding Loans, such amount to be applied 50% to the
outstanding Term Loans and 50% to the outstanding Revolving Loans. Such
prepayment shall be made on or before that date which is ten (10) days after the
date of such issuance.
(b) In addition to the foregoing, if the Company for any reason does
not consummate the EI Acquisition on or before the Term Loan Commitment
Termination Date, (i) the Revolving Credit Commitment of the Banks hereunder
automatically shall reduce by the amount of $65,000,000 (such that, for example,
absent any other reduction therein, the amount thereof would reduce
automatically to $135,000,000), (ii) the Term Loan Commitment of the Banks
hereunder automatically shall reduce by the amount of $65,000,000, (iii) the
Revolving Loan Borrowers shall prepay the Revolving Loans by an amount
sufficient to reduce the aggregate principal amount of indebtedness and
liabilities of the Revolving Loan Borrowers under the Revolving Notes to an
amount that is less than or equal to the then Revolving Credit Commitment (after
giving effect to the reduction thereof pursuant to this subsection 2.07(b)), and
(iv) the Term Loan Borrower shall prepay the Term Loans by an amount sufficient
to reduce the aggregate principal amount of indebtedness and liabilities of the
Term Loan Borrower under the Term Notes to an amount that is less than or equal
to the then Term Loan Commitment (after giving effect to the reduction thereof
pursuant to this subsection 2.07(b)).
(c) Any prepayment of the Term Loans pursuant to this Section 2.07
shall be applied pro rata to the then remaining installments payable in respect
of the Term Loans, and shall be applied, unless otherwise directed by the Term
Loan Borrower to the Administrative Agent in writing, first to any Base Rate
Loans then outstanding and then, to the extent available, to the Eurodollar
Loans then outstanding with the shortest Interest Periods remaining, and, in the
event of any such prepayment of the Term Loans, the Term Loan Commitment (and,
correspondingly, the total Commitments) automatically shall reduce by the amount
of such prepayment.
(d) Any prepayment of the Revolving Loans pursuant to this Section
2.07 shall be applied first to any Base Rate Loans then outstanding and then, to
the extent available, to any Eurodollar Rate Loans then outstanding with the
shortest Interest Periods remaining; provided, however, that, except as provided
in subsection (b) of this Section 2.07,
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such prepayment shall not have the effect of reducing the Revolving Credit
Commitment of the Banks hereunder.
(e) The Borrowers shall pay, together with each prepayment under this
Section 2.07, accrued interest on the amount prepaid and any amounts required
pursuant to Section 3.04.
2.08 Repayment.
(a) The Term Credit. The Term Loan Borrower shall repay the Term
Loans in twenty-three (23) installments, all of such installments, except for
the last, being in the amount, rounded to the nearest one-hundredth of a dollar,
equal to one twenty-third (1/23) of the aggregate principal balance of the Term
Loans outstanding on January 1, 1996, and the last and final installment being
in the amount of the then remaining unpaid principal balance thereof, the first
such installment of principal being due and payable on March 31, 1996, and a
subsequent installment of principal being due and payable on the last day of
each succeeding calendar quarter thereafter until the Term Loan Maturity Date,
when the then remaining unpaid balance of principal of the Term Loans, and all
accrued unpaid interest in respect thereof, shall be due and payable in full.
(b) The Revolving Credit. The Revolving Loan Borrowers shall repay to
the Banks on the Revolving Credit Termination Date the aggregate principal
amount of Revolving Loans outstanding on such date.
(c) Interest.
(i) Each Revolving Loan and each Term Loan shall bear interest on
the outstanding principal amount thereof from the applicable Borrowing Date
at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the
case may be (and subject to the Borrowers' right to convert to other
Interest Rate Types of Loans under Section 2.04), plus the Applicable
Margin.
(ii) Interest on each Revolving Loan and Term Loan shall be paid
in arrears on each Interest Payment Date. Interest shall also be paid on
the date of any prepayment of Loans under Section 2.06 or 2.07 for the
portion of the Loans so prepaid and upon payment (including prepayment) in
full thereof and, during the existence of any Event of Default, interest
shall be paid on demand of the Administrative Agent at the request or with
the consent of the Majority Banks.
(iii) Notwithstanding subsection (i) of this subsection 2.08(c),
while any Event of Default exists or after acceleration, the Borrowers
shall pay interest (after as well as before entry of judgment thereon to
the extent permitted by law) on the principal amount of all outstanding
Obligations, at a rate per annum equal to the Base Rate plus two percent
(2%).
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(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrowers to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for,
collecting, charging, taking, reserving or receiving such payment by such Bank
would be contrary to the provisions of any law applicable to such Bank limiting
the highest rate of interest that may be lawfully contracted for, collected,
charged, taken, reserved or received by such Bank, and in such event the
Borrowers shall pay such Bank interest as provided in Section 10.16.
2.09 Fees.
(a) Arrangement, Agency and Participation Fees. The Company shall (i)
pay an arrangement fee to the Arrangers for the Arrangers' own accounts, as
required by the fee letter (the "Fee Letter") among the Agents, the Arrangers
and Weatherford, dated August 28, 1995, (ii) pay an agency fee to the
Administrative Agent for the Administrative Agent's own account, as required by
the letter agreement (the "Administrative Agent's Letter") between Weatherford
and the Administrative Agent dated August 28, 1995, and (iii) pay participation
fees to the Administrative Agent, for the account of each of the Banks, as
provided in the invitation letters (the "Invitation Letters") from Weatherford
to the respective Banks.
(b) Commitment Fees. The Company also shall pay to the Administrative
Agent for the account of each Bank a fee (the "Commitment Fee") on the average
daily unused portion of such Bank's Commitment, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the daily
utilization for that quarter as calculated by the Administrative Agent, equal to
the applicable percent per annum denominated "Commitment Fee," determined from
time to time with reference to the relevant Capitalization Ratio, as set forth
on Schedule 2.02 attached hereto. For purposes of calculating utilization under
this subsection, the Commitments shall be deemed used to the extent of the
Effective Amount of Revolving Loans and Term Loans then outstanding. Such
commitment fee shall accrue from the Closing Date to the Revolving Credit
Termination Date and shall be due and payable quarterly in arrears on the last
Business Day of each calendar quarter commencing on December 31, 1995, with the
final payment to be made on the Revolving Credit Termination Date; provided
that, in connection with any reduction or termination of Commitments under
Section 2.05 or Section 2.07, the accrued Commitment Fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The Commitment Fee provided in this subsection shall accrue at all times
from and after the date of this Agreement.
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2.10 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans shall be made on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the basis
of a 360-day year and actual days elapsed (which results in more interest being
paid than if computed on the basis of a 365-day year). Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative Agent
shall be conclusive and binding on the Company, the Borrowers and the Banks in
the absence of manifest error. The Administrative Agent will, at the request of
the Company, the Borrowers or any Bank, deliver to the Company, the Borrowers or
the Bank, as the case may be, a statement showing the quotations used by the
Administrative Agent in determining any interest rate and the resulting interest
rate.
2.11 Payments by the Company and/or the Borrowers.
(a) All payments to be made by the Company and/or the Borrowers shall
be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company and/or the Borrowers
shall be made to the Administrative Agent for the account of the Banks at the
Administrative Agent's Payment Office, and shall be made in dollars and in
immediately available funds, no later than 10:00 a.m. (Houston, Texas time) on
the date specified herein. The Administrative Agent will promptly distribute to
each Bank its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Any payment received by the
Administrative Agent later than 10:00 a.m. (Houston, Texas time) shall be deemed
to have been received on the following Business Day and any applicable interest
or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Administrative Agent receives notice from the Company
and/or the Borrowers prior to the date on which any payment is due to the Banks
that the Company and/or the Borrowers will not make such payment in full as and
when required, the Administrative Agent may assume that the Company and/or the
Borrowers have made such payment in full to the Administrative Agent on such
date in immediately available funds and the Administrative Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each Bank
on such due date an amount equal to the amount then due such Bank. If and to
the extent the Company and/or the Borrowers have not made such payment in full
to the Administrative Agent, each Bank shall repay to the Administrative Agent
on demand such amount distributed to such Bank, together with interest thereon
at the Federal Funds Rate for each day from the date such amount is distributed
to such Bank until the date repaid.
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2.12 Payments by the Banks to the Administrative Agent.
(a) Unless the Administrative Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Bank will not make available as and when required hereunder to the
Administrative Agent for the account of the Borrowers the amount of that Bank's
Pro Rata Share of the Borrowing, the Administrative Agent may assume that each
Bank has made such amount available to the Administrative Agent in immediately
available funds on the Borrowing Date and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Borrowers on such date a corresponding amount. If and to the extent any
Bank shall not have made its full amount available to the Administrative Agent
in immediately available funds and the Administrative Agent in such
circumstances has made available to the Borrowers such amount, that Bank shall
on the Business Day following such Borrowing Date make such amount available to
the Administrative Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Administrative Agent submitted to
any Bank with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Administrative Agent shall constitute such Bank's Loan on the
date of Borrowing for all purposes of this Agreement. If such amount is not
made available to the Administrative Agent on the Business Day following the
Borrowing Date, the Administrative Agent will notify the Borrowers of such
failure to fund and, upon demand by the Administrative Agent, the Borrowers
shall pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.13 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company and
the Borrowers agree that any Bank so purchasing a participation from another
Bank may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 10.09) with
respect to such participation as fully as if
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such Bank were the direct creditor of the Company and/or the Borrowers in the
amount of such participation. The Administrative Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Any and all payments by the Company and/or the Borrowers to the
Banks or the Agents under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company and/or the Borrowers shall pay all Other Taxes.
(b) The Company and each of the Borrowers agrees to indemnify and hold
harmless each Bank and the Administrative Agent for the full amount of Taxes or
Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by the Bank or the Administrative Agent
and any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payment under this indemnification
shall be made within 30 days after the date the Bank or the Administrative Agent
makes written demand therefor, accompanied by the certificate described in
Section 3.07 of this Agreement.
(c) If the Company and/or the Borrowers shall be required by law to
deduct or withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to any Bank or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Bank or the Administrative Agent, as the case may be, receives an amount
equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Company and/or the Borrowers, as applicable, shall make
such deductions and withholdings;
(iii) the Company and/or the Borrowers, as applicable, shall pay
the full amount deducted or withheld to the relevant taxing authority or
other authority in accordance with applicable law; and
(iv) the Company and/or the Borrowers, as applicable, shall also
pay to each Bank or the Administrative Agent for the account of such Bank,
at the time interest is paid, all additional amounts which the respective
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Bank specifies as necessary to preserve the after-tax yield the Bank would
have received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Company and,
or, the Borrowers, as applicable, of Taxes or Other Taxes, the Company and/or
the Borrowers, as applicable, shall furnish the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to the Administrative Agent.
(e) If the Company and/or the Borrowers, as applicable, is required to
pay additional amounts to any Bank or the Administrative Agent pursuant to
subsection (c) of this Section, then such Bank shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its Lending Office so as to eliminate any such additional payment by the
Company and/or the Borrowers, as applicable, which may thereafter accrue, if
such change in the judgment of such Bank is not otherwise disadvantageous to
such Bank.
3.02 Illegality.
(a) If any Bank determines that the introduction of any Requirement of
Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make Eurodollar Rate Loans,
then, on notice thereof by the Bank to the Company through the Administrative
Agent, any obligation of that Bank to make Eurodollar Rate Loans shall be
suspended until the Bank notifies the Administrative Agent and the Company that
the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Eurodollar Rate Loan, the applicable Borrower(s) shall, upon receipt of notice
of such fact and demand from such Bank (with a copy to the Administrative
Agent), prepay in full such Eurodollar Rate Loans of that Bank then outstanding,
together with interest accrued thereon and amounts required under Section 3.04,
either on the last day of the Interest Period thereof, if the Bank may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
the Bank may not lawfully continue to maintain such Eurodollar Rate Loan. If a
Borrower is required to so prepay any Eurodollar Rate Loan, then concurrently
with such prepayment (unless the Borrower simultaneously prepays the
corresponding Eurodollar Rate Loans of every other Bank), such Borrower shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(c) If the obligation of any Bank to make or maintain Eurodollar Rate
Loans has been so terminated or suspended, all Loans which would otherwise be
made by the Bank as Eurodollar Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Eurodollar Rate Loans if such designation will avoid the need for
giving such notice or making such
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demand and will not, in the judgment of the Bank, be illegal or otherwise
disadvantageous to the Bank.
3.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the introduction of
or any change in or in the interpretation of any law or regulation or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Eurodollar Rate Loans, then the Company and the
Borrowers shall be liable for, and shall from time to time, upon written demand,
accompanied by the certificate described in Section 3.07 of this Agreement (with
a copy of such demand and certificate to be sent to the Administrative Agent),
pay to the Administrative Agent for the account of such Bank, additional amounts
as are sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
written demand of such Bank to the Company, accompanied by the certificate
described in Section 3.07 of this Agreement (with a copy of such demand and
certificate to be sent to the Administrative Agent), the Company and/or the
Borrowers, as applicable, shall pay to the Bank, from time to time as specified
by the Bank, additional amounts sufficient to compensate the Bank for such
increase.
3.04 Funding Losses. The Company and the Borrowers shall reimburse each
Bank and hold each Bank harmless from any loss or expense which the Bank may
sustain or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any payment
of principal of any Eurodollar Rate Loan;
(b) the failure of the Borrowers to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;
(c) the failure of the Borrowers to make any prepayment in accordance
with any notice delivered under Section 2.06;
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(d) the prepayment (including pursuant to Section 2.06 or Section
2.07) or other payment (including after acceleration thereof) of a Eurodollar
Rate Loan on a day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Eurodollar Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company and/or the Borrowers to
the Banks under this Section and under subsection 3.03(a), each Eurodollar Rate
Loan made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the reference
rate used in determining the Eurodollar Rate for such Eurodollar Rate Loan by a
matching deposit or other borrowing in the interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate applicable for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan, the
Administrative Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain Eurodollar Rate
Loans hereunder shall be suspended until the Administrative Agent upon the
instruction of the Majority Banks revokes such notice in writing. Upon receipt
of such notice, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such notice, the Banks shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Eurodollar Rate Loans.
3.06 Reserves on Eurodollar Rate Loans. The Company and/or the Borrowers
shall pay to each Bank, as long as such Bank shall be required under regulations
of the FRB to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by the Bank (as determined by the Bank in good faith, which
determination shall be conclusive absent manifest error), payable on each date
on which interest is payable on such Loan, provided the Company shall have
received at least 15 days' prior written notice (with a copy to the
Administrative Agent) of such additional interest from the Bank. If a Bank
fails to give notice 15 days prior to the relevant Interest Payment Date, such
additional interest shall be payable 15 days from receipt of such notice. Any
such notice shall be accompanied by the certificate described in Section 3.07 of
this Agreement.
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3.07 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and such certificate shall be conclusive
and binding on the Company and the Borrowers in the absence of manifest error.
All determinations by a Bank of a right to reimbursement or compensation under
this Article III shall be made in good faith and on a reasonable basis.
3.08 Substitution of Banks. Upon the receipt by the Company from any Bank
(an "Affected Bank") of a claim for compensation under Section 3.03, the Company
may: (i) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Company to acquire
and assume all or a ratable part of all of such Affected Bank's Loans and
Commitment (a "Replacement Bank"); (ii) request one or more of the other Banks
to acquire and assume all or part of such Affected Bank's Loans and Commitment;
or (iii) designate a Replacement Bank. Any such designation of a Replacement
Bank under clause (i) or (iii) shall be subject to the prior written consent of
the Administrative Agent (which consent shall not be unreasonably withheld).
3.09 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
3.10 Tax Forms. Each Bank that is not incorporated under the laws of
the United States of America or a state thereof hereby certifies, as of the date
such Bank became a "Bank" hereunder, that, to its knowledge, it is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. In the event that any such Bank fails to
deliver any forms required under Section 9.10(a), each of the Company's and the
Borrowers' obligations to pay additional amounts to such Bank under this Article
III shall be reduced to the amount that they would have been obligated to pay
had such forms been provided.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Credit Extensions. The obligation of each Bank
to make its initial Credit Extension hereunder is subject to the condition that
the Administrative Agent shall have received on or before the Closing Date all
of the following, in form and substance satisfactory to the Agents and each
Bank, and in sufficient copies for each Bank:
(a) Loan Documents. This Agreement, the Notes, the Guaranties and the
other Loan Documents executed by each party thereto;
(b) Certificate (Merger). A certificate signed by a Responsible
Officer on behalf of the Company, in form and substance reasonably satisfactory
to the Administrative Agent and the Banks, representing and warranting that:
(i) the Merger has been consummated in accordance with the terms and conditions
set forth in the Merger Agreement (including any consents pursuant to Section
7.1 of the Merger Agreement) and
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in compliance with all material Requirements of Law, and attaching thereto a
true and correct copy of (A) the Certificate of Merger issued by the Secretary
of State of the State of Delaware evidencing that the Merger is effective as of
such date, and (B) all amendments to the Merger Agreement subsequent to the
Amendment No. 1 thereto, if any; (ii) all shareholder approvals required for
consummation of the Merger have been obtained; (iii) all third party approvals
required for consummation of the Merger have been obtained; (iv) all necessary
material consents and approvals of and filings and registration with, and all
other material actions in respect of, all Governmental Authorities required for
consummation of the Merger have been obtained, given, filed or taken and are in
full effect and all waiting periods relating thereto have expired without, in
any such case, any action being taken by any competent authority which
restrains, prevents or imposes materially adverse conditions upon the
consummation of the Merger pursuant to the Merger Agreement; (v) the Merger
Agreement has not been amended, except as consented to by the Banks; all
material conditions precedent described in the Merger Agreement have been
fulfilled in all material respects in accordance with the terms and provisions
thereof; all amendments to the Merger Agreement, and waivers to any conditions
precedent described in the Merger Agreement, have been consented to by the
Banks; and the Company has complied with the Merger Agreement in all material
respects and (vi) the Oil Field Merger has been consummated in accordance with
all material Requirements of Law, and attaching a true and correct copy of the
Certificate of Merger issued by the Secretary of State of the State of Delaware
evidencing that the Oil Field Merger is effective as of such date;
(c) Existing Indebtedness. Evidence that all Indebtedness of the
Company and its Subsidiaries under (i) the Existing Weatherford Credit
Agreement, and (ii) the Existing Enterra Credit Agreement, shall have been (or
shall simultaneously be) repaid, all liens securing the same shall have been (or
shall simultaneously be) terminated and all commitments thereunder shall have
terminated or been cancelled;
(d) Organization Documents: Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors of the
Company and each Subsidiary that is a party to a Loan Document authorizing
the transactions contemplated hereby, certified as of the Closing Date by
the Secretary or an Assistant Secretary of such Person;
(ii) Copies of the articles or certificate of incorporation and
the bylaws of the Company and each Subsidiary party to any Loan Document as
in effect on the Closing Date, certified by the Secretary or Assistant
Secretary of the Company or such Subsidiary as of the Closing Date; and
(iii) A certificate of the Secretary or Assistant Secretary of
the Company and each Subsidiary that is a party to a Loan Document
certifying the names and true signatures of the officers of the Company or
such Subsidiary authorized to execute, deliver and perform, as applicable,
this Agreement, and all other Loan Documents to be delivered by it
hereunder;
(e) Good Standing. A certificate signed by a Responsible Officer on
behalf of the Company, in form and substance reasonably satisfactory to the
Administrative Agent
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and the Banks, representing and warranting that attached thereto are true and
correct copies of each of the following documents: a good standing and, where
separately available, a tax good standing certificate, in each case as of a
recent date, for the Company and each Subsidiary party to any Loan Document,
from the Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation and each state where the Company and the other
Borrowers have represented that the Company or such Subsidiary is qualified to
do business as a foreign corporation;
(f) Legal Opinions. (i) an opinion of Fulbright & Jaworski L.L.P.,
counsel to the Company and its Subsidiaries, addressed to the Agents and the
Banks, substantially in the form of Exhibit G-1; (ii) an opinion of H. Suzanne
Thomas, General Counsel to the Company and its Subsidiaries, addressed to the
Agents and the Banks, substantially in the form of Exhibit G-2; and (iii) an
opinion of Butler & Binion, L.L.P., special counsel to the Documentation Agent,
addressed to the Agents and the Banks;
(g) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, including without limitation all such fees arising under or
referenced in Section 2.09, together with Attorney Costs of the Documentation
Agent of the type described in Section 10.04 of this Agreement to the extent
invoiced prior to or on the Closing Date;
(h) Certificate (Representations and Warranties, Etc.). A certificate
signed by a Responsible Officer on behalf of the Company, dated as of the
Closing Date, stating that: (i) the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on and as
of such date; (ii) no Default or Event of Default exists or would result from
the Credit Extension; (iii) no litigation is pending or threatened against the
Company, any Borrower, any Guarantor, Weatherford, Enterra, EI, or any
Subsidiary of the Company, Weatherford, Enterra or EI, in which there is a
reasonable probability of an adverse decision which would result in a Material
Adverse Effect; (iv) there has occurred since December 31, 1994, no event or
circumstance that has resulted or could reasonably be expected to result in a
Material Adverse Effect; and (v) the conditions precedent set forth herein have
been fully satisfied;
(i) Prentice-Hall Corporation Letter. A letter confirming that The
Prentice-Hall Corporation System, Inc. has accepted appointment by each Borrower
and each Guarantor, and by each other Subsidiary of the Company who is a party
to any Loan Document, as its agent for service of process in New York; and
(j) Other Documents. Such other approvals, opinions, documents or
materials as the Agents or the Majority Banks (through the Administrative Agent)
may reasonably request.
4.02 Conditions to All Credit Extensions. The obligation of each Bank to
make any Loan to be made by it (including its initial Loans) or to continue or
convert any Loan under Section 2.04 is subject to the satisfaction of the
following conditions precedent, certified by the Company, on the relevant
Borrowing Date or Conversion/Continuation Date, as applicable:
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(a) Notice, Application. The Administrative Agent shall have received
(with, in the case of the initial Loans only, a copy for each Bank) a Notice of
Borrowing or a Notice of Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall exist
or shall result from such Borrowing or continuation or conversion;
(d) No Material Litigation. No litigation shall be pending or
threatened against the Company, any Borrower, any Guarantor, EI, or any
Subsidiary of the Company or EI, in which there is a reasonable probability of
an adverse decision which would result in a Material Adverse Effect;
(e) Additional Matters. All other legal matters in connection with
the transactions contemplated by this Agreement shall be reasonably satisfactory
to the Majority Banks;
(f) Closing Date. The Closing Date shall have occurred no later than
October 31, 1995;
(g) No Material Adverse Effect. There shall have occurred no event or
circumstance that has resulted in or could reasonably be expected to result in a
Material Adverse Effect; and
(h) Legality. The making of the Loans shall be permitted by the laws
and regulations of each jurisdiction to which the Agents, the Banks, the Company
or any of the Borrowers is subject and shall not subject the Agents or the Banks
to any penalty.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by
the Company and/or the Borrowers hereunder shall constitute a representation and
warranty hereunder, as of the date of each such notice and as of each Borrowing
Date or Conversion/Continuation Date, as applicable, that the conditions in
Sections 4.01 and 4.02 are satisfied.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company and each of the Borrowers represents and warrants to the
Administrative Agent and each Bank that:
5.01 Corporate Existence and Power. The Company and each of its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has the
power and authority and all material governmental licenses, authorizations,
consents and approvals to own its assets, carry on its business and to execute,
deliver, and perform its obligations under the Loan Documents; (c) is duly
qualified as a foreign corporation and is licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or license;
and (d) is in compliance with all Requirements of Law; except, in each case
referred to in clause (c) or clause (d), to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company and its Subsidiaries of this Agreement and each
other Loan Document to which such Person is party, have been duly authorized by
all necessary corporate action, and do not and will not: (a) contravene the
terms of any of that Person's Organization Documents; (b) conflict with or
result in any breach or contravention of, in any material respect, any document
evidencing any material Contractual Obligation to which such Person is a party
or result in the creation of any Lien under any such document, or (c) conflict
with or result in any breach or contravention of any material order, injunction,
writ or decree of any Governmental Authority to which such Person or its
property is subject; or (d) violate any material Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to which
the Company or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of the Company and any of its Subsidiaries to the extent
it is a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. (a) Except as specifically disclosed in Schedule 5.05,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against Weatherford, Enterra,
EI, the Company, or any of their
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respective Subsidiaries or any of their or their Subsidiaries' respective
properties which: (i) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby;
or (ii) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.
(b) No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of the Merger, the
Oil Field Merger, the EI Acquisition, this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company, the Borrowers or any of
the Guarantors. As of the Closing Date, neither the Company nor any Subsidiary
is in default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect, or that would, if such default had
occurred after the Closing Date, create an Event of Default under subsection
8.01(e).
5.07 ERISA Compliance. Except as specifically disclosed in Schedule 5.07:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law, except
where the failure to be in compliance would not, either individually or in the
aggregate, have a Material Adverse Effect. The Company's Foreign Subsidiaries
and any benefit plans maintained by any of them for the benefit of their
directors, officers, employees or former employees (or any of their
beneficiaries) are in compliance with applicable laws pertaining to such plans
in the jurisdictions of such subsidiaries, except where such failure to be in
compliance would not, either individually or in the aggregate, have a Material
Adverse Effect. Each Pension Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the IRS,
or filed with the IRS a request for (or is still within the applicable remedial
amendment period for filing) a favorable determination letter, and to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required
contributions to any Pension Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Pension
Plan. Each Plan that is intended to be a voluntary employee benefit association
has been submitted to and approved by the IRS as exempt from federal income tax
under Section 501(c)(9) of the Code or the applicable submission period relating
to any such Plan will not have ended prior to the Closing Date.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits (other than routine claims for benefits),
or action by any Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction (unless the Plan received or is
entitled to an exemption under Section 408 of ERISA or Section 4975 of the Code,
as applicable, or unless such transaction has been corrected and all applicable
excise taxes paid or waived), or violation of the fiduciary
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responsibility rules with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) as of the Closing Date, no Pension Plan has any Unfunded Pension
Liability; (iii) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (iv) neither the Company nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) or ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.05. Neither the Company nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company and each of its Subsidiaries has
indefeasible title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The audited consolidated financial
statements of Weatherford and its Consolidated Subsidiaries dated December 31,
1994, and the related consolidated and consolidating statements of income,
shareholders' equity and cash flows for the fiscal year ended on that date: (i)
were prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present the financial condition of Weatherford and its Consolidated Subsidiaries
as of the date thereof and results of operations for the period covered thereby;
and (iii) except as specifically disclosed in Schedule 5.11, show all material
indebtedness and other liabilities, direct or contingent, of Weatherford and its
Consolidated Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Contingent Obligations.
(b) The audited consolidated financial statements of Enterra and its
Consolidated Subsidiaries dated December 31, 1994, and the related consolidated
and consolidating statements of income, shareholders' equity and cash flows for
the fiscal year
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ended on that date: (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; (ii) fairly present the financial condition of Enterra and its
Consolidated Subsidiaries as of the date thereof and the results of operation
for the period covered thereby; and (iii) except as specifically disclosed in
Schedule 5.11, show all material indebtedness and other liabilities, direct or
contingent, of Enterra and its Consolidated Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(c) Since December 31, 1994, there has been no Material Adverse
Effect.
(d) The unaudited pro forma financial information contained in
the Joint Proxy Statement/Prospectus of Weatherford and Enterra on Form S-4
(Reg. No. 33-62195), based on the historical consolidated financial statements
identified therein, was prepared based upon assumptions deemed reasonable and
appropriate by Weatherford and Enterra when made; such assumptions continue to
be reasonable and appropriate as of the date of this Agreement; and nothing has
come to the attention of the Company on or before the Closing Date which has
caused, or could reasonably be expected to cause, the unaudited adjusted pro
forma balance sheet contained therein to be misleading in any material respect.
5.12 Environmental Matters. The Company and each of its Subsidiaries
monitors in the ordinary course of business the effect of existing Environmental
Laws and existing Environmental Claims on its business, operations and
properties, and as a result thereof the Company has reasonably concluded that,
except as specifically disclosed in Schedule 5.12, such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. Neither the Company nor any of its Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public utilities
code, or any other Federal or state statute or regulation limiting, in any such
case, its ability to incur Indebtedness.
5.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company and its
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person (except for any such conflict which could not reasonably be
expected to have a Material Adverse Effect). To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company or any Subsidiary infringes upon any rights held by any
other Person where
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such infringement could reasonably be expected to have a Material Adverse
Effect. Except as specifically disclosed in Schedule 5.05, no claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
5.16 Subsidiaries. As of the Closing Date (after giving effect to the
Merger), the Company has no Subsidiaries other than those specifically disclosed
in part (a) of Schedule 5.16 hereto and has no equity investments in any other
corporation or entity other than those specifically disclosed in part (b) of
Schedule 5.16.
5.17 Insurance. The properties of the Company and each of its Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Company, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Company or such Subsidiary
operates.
5.18 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
5.19 Solvency. Each of the Company and its Subsidiaries, taken as a whole,
and the Company, individually, each of the other Borrowers and each of the
Guarantors individually, is Solvent. Each of the Borrowers and each of the
Guarantors has received at least a reasonably equivalent value in exchange for
incurring the obligations to be incurred by it.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
consent in writing, the Company and each Borrower agrees that:
6.01 Financial Statements. The Company shall deliver to the Banks, in form
and detail reasonably satisfactory to the Administrative Agent and the Majority
Banks:
(a) as soon as available, but not later than 120 days after the end of
each fiscal year, a copy of the audited consolidated and consolidating balance
sheet of the
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Company and its Consolidated Subsidiaries as at the end of such year and the
related consolidated and consolidating statements of income, shareholders'
equity and cash flows for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, and accompanied by the opinion of
a nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial statements
present fairly the financial position and results of operations for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted
or limited examination by the Independent Auditor of any material portion of the
Company's or any Consolidated Subsidiary's records;
(b) as soon as available, but not later than 45 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
unaudited consolidated and consolidating balance sheet of the Company and its
Consolidated Subsidiaries as of the end of such quarter and the related
consolidated and consolidating statements of income, shareholders' equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP in the case of the consolidated statements (subject to
ordinary, good faith year-end audit adjustments and except for any non-
conformity with GAAP resulting from the absence of footnotes required by GAAP),
the financial position and the results of operations of the Company and its
Consolidated Subsidiaries; and
(c) As soon as available following the end of each fiscal year during
the term hereof, a Company-prepared annual budget for the succeeding fiscal
year.
6.02 Certificates; Other Information; Pro Forma Balance Sheet. (a) The
Company shall furnish to the Banks: (i) concurrently with the delivery of the
financial statements referred to in subsections 6.01(a) and (b), a Compliance
Certificate executed by a Responsible Officer; (ii) promptly, copies of all
financial statements and reports that the Company sends to its shareholders, and
copies of all financial statements and regular, periodical or special reports
(including Forms 10-K, 10-Q and 8-K) that the Company or any Subsidiary may make
to, or file with, the SEC; and (iii) promptly, such additional information
regarding the business, financial or corporate affairs of the Company or any
Subsidiary as the Administrative Agent, at the request of any Bank, may from
time to time request.
(b) At Closing if available, but in any event no later than forty-five (45)
days after consummation of the Merger, the Company shall provide to the Banks a
pro forma balance sheet reflecting the Net Worth of the Company and its
Consolidated Subsidiaries as of September 30, 1995 (but after giving effect to
the Merger) (the "Pro Forma Balance Sheet").
6.03 Notices. The Company shall promptly notify the Administrative Agent
and each Bank:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that reasonably foreseeably
will become a Default or Event of Default;
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(b) of any matter that has resulted or is reasonably likely to result
in a Material Adverse Effect, including any such matter resulting from (i)
breach or non-performance of, or any default under, a Contractual Obligation of
the Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Company or any
Subsidiary, including pursuant to any applicable Environmental Laws;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after the
Company obtains knowledge of such event), and deliver to the Administrative
Agent and each Bank a copy of any notice with respect to such event that is
filed with a Governmental Authority and any notice delivered by a Governmental
Authority to the Company or any ERISA Affiliate with respect to such event: (i)
an ERISA Event; (ii) a material increase in the Unfunded Pension Liability of
any Pension Plan; (iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its Consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 6.03(a) shall describe with particularity any and all clauses
or provisions of this Agreement or other Loan Document that have been (or
reasonably foreseeably will be) breached or violated.
6.04 Preservation of Corporate Existence, Etc. (a) The Company and each
Borrower shall preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its jurisdiction of
incorporation.
(b) The Company and the other Borrowers shall cause each of their
respective Subsidiaries to preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation, except where failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(c) The Company and the other Borrowers shall, and shall cause each of
their respective Subsidiaries to, preserve and maintain in full force and effect
all governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of their business except
in connection with transactions permitted by Section 7.03 and sales of assets
permitted by Section 7.02, except where failure to do so could not reasonably be
expected to have a Material Adverse Effect.
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6.05 Maintenance of Property. The Company and the other Borrowers shall
maintain, and shall cause each of their respective Subsidiaries to maintain, and
preserve all their property which is used or useful in their business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, except as permitted by Section 7.02. The Company and the other
Borrowers and each of their respective Subsidiaries shall use the standard of
care typical in the industry in the operation and maintenance of their
facilities.
6.06 Insurance. The Company and the other Borrowers shall maintain, and
shall cause each of their respective Subsidiaries to maintain, with financially
sound and reputable independent insurers, insurance with respect to their
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and in
such amounts as are customarily carried under similar circumstances by such
other Persons.
6.07 Payment of Certain Obligations. The Company and the other Borrowers
shall, and shall cause each of their respective Subsidiaries to, pay and
discharge as the same shall become due and payable (or, in the case of tax
liabilities, before they become delinquent), all their respective obligations
and liabilities, including: (a) all tax liabilities, assessments and
governmental charges or levies upon them or their properties or assets, unless
the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Company,
the other Borrowers or such Subsidiaries; and (b) all lawful claims which, if
unpaid, would by law become a Lien upon their property.
6.08 Compliance with Laws. The Company and the other Borrowers shall
comply, and shall cause each of their respective Subsidiaries to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over them or their business (including the Federal Fair
Labor Standards Act), except such as may be contested in good faith or as to
which a bona fide dispute may exist, and except to the extent that the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
6.09 Compliance with ERISA. The Company and the other Borrowers shall, and
shall cause each of their respective ERISA Affiliates to: (a) maintain each
Plan in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law; (b) cause each Pension Plan
which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Pension Plan
subject to Section 412 of the Code, if failure to do so could reasonably be
expected to have a Material Adverse Effect.
6.10 Inspection of Property and Books and Records. The Company and the
other Borrowers shall maintain and shall cause each of their respective
Subsidiaries to maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made
of all financial transactions and matters involving the assets and business of,
respectively, the Company, each Borrower and such Subsidiaries. The Company and
the other Borrowers shall permit, and shall cause each of
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their respective Subsidiaries to permit, representatives and independent
contractors of the Administrative Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Company and the applicable other Borrower(s) and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Company and the applicable other Borrower(s);
provided, however, when an Event of Default exists the Administrative Agent or
any Bank may do any of the foregoing at the expense of the Company and the
applicable other Borrower(s) at any time during normal business hours and
without advance notice.
6.11 Environmental Laws. The Company and the other Borrowers shall, and
shall cause each of their respective Subsidiaries to, conduct their operations
and keep and maintain their property in compliance with all Environmental Laws,
except to the extent that the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
6.12 Use of Proceeds. The Revolving Loan Borrowers and the Term Loan
Borrower shall use the proceeds of the Loans (a) to refinance bank debt of
Weatherford and Enterra existing at the time of the Merger, (b) to pay costs and
expenses related to the Merger, (c) to finance the EI Acquisition and (d) for
working capital and other general corporate purposes, including, but without
limitation, Acquisitions, not in contravention of any Requirement of Law or of
any Loan Document.
6.13 New Subsidiary Guarantors. If, at any time after the date of this
Agreement, there exists any Subsidiary incorporated in the United States of
America with total assets with a book value of $10,000,000 or more, then the
Company shall cause each such Subsidiary to do the following within 30 days
after the Subsidiary becomes a Subsidiary with assets having a book value of
$10,000,000 or more: (i) execute and deliver a Guaranty to the Administrative
Agent substantially in the form of Exhibit B-2 hereto and (ii) furnish the
Administrative Agent with a written opinion of counsel for each such Subsidiary
Guarantor covering the matters covered in Exhibits G-1 and G-2 hereto; the
Company will direct each such Subsidiary Guarantor to expressly instruct such
counsel to prepare its opinion and to deliver it to the Administrative Agent for
the benefit of the Banks and such opinion shall contain a statement to such
effect.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
consent in writing:
7.01 Limitation on Liens. The Company and the other Borrowers shall not,
and shall not permit any of their respective Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of their property, whether now owned or hereafter acquired,
other than the following ("Permitted Liens"):
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(a) any Lien existing on property of the Company, the other Borrowers
or any of their respective Subsidiaries on the Closing Date and set forth in
Schedule 7.01, together with all renewals, extensions, refinancings and
modifications (but not increases) of the Indebtedness secured thereby;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.07, provided that no notice
of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, pensions, unemployment insurance and other social
security legislation or public or statutory obligations;
(f) Liens on the property of the Company, the other Borrowers or their
respective Subsidiaries securing (i) the non-delinquent performance of bids,
tenders, contracts (other than for borrowed money), leases, statutory
obligations, (ii) contingent obligations on surety and appeal bonds, and (iii)
other non-delinquent obligations of a like nature; in each case, incurred in the
ordinary course of business, provided all such Liens in the aggregate would not
(even if enforced) cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
Liens in the aggregate at any time outstanding for the Company, the other
Borrowers and their respective Subsidiaries do not exceed $2,000,000;
(h) easements, rights-of-way, zoning restrictions, restrictions on use
and other similar encumbrances or minor irregularities in title incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the
businesses of the Company, the other Borrowers and their respective
Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries after
the date of this Agreement or upon property acquired subject thereto after the
date of this Agreement, provided, however, that such Liens existed at the time
the respective corporations became Subsidiaries or the time such property is
acquired, as applicable, and were not created in anticipation thereof;
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(j) Liens arising under title retention and conditional sale
agreements and purchase money security interests on any property acquired or
held by the Company, the other Borrowers or their respective Subsidiaries in the
ordinary course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property;
provided that (i) any such Lien attaches to such property concurrently with or
within 20 days after the acquisition thereof, (ii) such Lien attaches solely to
the property so acquired in such transaction, (iii) the principal amount of the
debt secured thereby does not exceed 100% of the cost of such property, and (iv)
the principal amount of the Indebtedness secured by any and all such title
retention and conditional sale agreements and purchase money security interests
shall not at any time exceed $10,000,000 in the aggregate;
(k) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company or the other Borrowers in excess of those set forth by
regulations promulgated by the FRB, and (ii) such deposit account is not
intended by the Company, the other Borrowers or any of their respective
Subsidiaries to provide collateral to the depository institution;
(l) Liens on assets of the Company, the other Borrowers or their
respective Subsidiaries, other than stock of Subsidiaries; provided that the
aggregate amount of Indebtedness secured by such Liens does not at any time
exceed $10,000,000; and
(m) inchoate Liens arising under ERISA.
7.02 Disposition of Assets. The Company and the other Borrowers shall not,
and shall not permit any of their respective Subsidiaries to, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus equipment,
all in the ordinary course of business;
(b) lost or significantly damaged equipment (e.g., lost in hole);
(c) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment; and
(d) dispositions not otherwise permitted hereunder which are made for
fair market value; provided, that (i) at the time of any disposition, no Event
of Default shall exist or shall result from such disposition, (ii) the aggregate
sales price from such disposition shall be paid in cash or otherwise on payment
terms satisfactory to the Company or the applicable other Borrower(s) or
Subsidiaries, and (iii) the aggregate book value of all assets
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of the Company, the other Borrowers and their respective Subsidiaries, together,
shall not be reduced at any time to an amount which is less than 80% of the
aggregate book value of all assets of the Company, the other Borrowers and their
respective Subsidiaries, together, on the Closing Date as reflected on the Pro
Forma Balance Sheet; provided, further, that this subsection 7.02(d) does not
authorize dispositions of accounts receivable, with or without recourse, except
in connection with the sale of the assets of a Subsidiary or an operating unit
or division thereof to whom such accounts receivable are payable.
7.03 Consolidations and Mergers. The Company and the other Borrowers
shall not, and shall not permit any of their respective Subsidiaries to, merge
or consolidate with or into any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that, if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation and, if any transaction shall be between
a Borrower and a non-Borrower, the Borrower shall be the continuing or surviving
corporation; and
(b) the Company or any Subsidiary of the Company may merge or
consolidate with any other Person other than the Company or a Subsidiary,
provided that (i) the Company or such Subsidiary is the survivor of such merger
or consolidation and (ii) such merger or consolidation is not otherwise
prohibited by the terms of this Agreement.
7.04 Transactions with Affiliates. The Company and the other Borrowers
shall not, and shall not permit any of their respective Subsidiaries to, enter
into any transaction with any Affiliate of the Company, except in the ordinary
course of business and upon fair and reasonable terms no less favorable to such
Borrower or Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such Subsidiary.
7.05 Margin Stock; Certain Acquisitions, Ineligible Securities.
(a) The Company and the other Borrowers shall not permit more than
twenty-five percent (25%) of the value of the assets of the Company and the
other Borrowers, respectively, and their respective Subsidiaries (within the
meaning of Regulation U of the FRB) to be Margin Stock.
(b) The Company and the other Borrowers shall not, and shall not
permit their respective Subsidiaries to, use any portion of the Loan proceeds,
directly or indirectly to make an Acquisition unless the prior, effective
written consent or approval to such Acquisition of the board of directors or
equivalent governing body of the acquiree is obtained.
(c) The Company and the other Borrowers shall not, directly or
indirectly, use any portion of the Loan proceeds (i) knowingly to purchase
Ineligible Securities from any Arranger during any period in which the Arranger
makes a market in such Ineligible Securities, (ii) knowingly to purchase during
the underwriting or placement period Ineligible
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Securities being underwritten or privately placed by any Arranger, or (iii) to
make payments of principal or interest on Ineligible Securities underwritten or
privately placed by any Arranger and issued by or for the benefit of the Company
or any Affiliate of the Company. The Arrangers are or may be registered broker-
dealers and permitted to underwrite and deal in certain Ineligible Securities;
and "Ineligible Securities" means securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
7.06 Joint Ventures. The Company and the other Borrowers shall not, and
shall not permit any of their respective Subsidiaries to enter into any Joint
Venture that is engaged, or will engage, in any material line of business
substantially different from those lines of business carried on by the Company
and the other Borrowers and their respective Subsidiaries on the date hereof.
7.07 ERISA. The Company and the other Borrowers shall not, and shall not
permit any of their respective ERISA Affiliates to: (a) engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which could reasonably be expected to have a Material Adverse Effect;
or (b) engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA if the effect of engaging in such transaction could reasonably be
expected to have a Material Adverse Effect.
7.08 Change in Business. The Company and the other Borrowers shall not,
and shall not permit any of their respective Subsidiaries to, engage in any
material line of business substantially different from those lines of business
carried on by the Company and the other Borrowers and their respective
Subsidiaries on the date hereof.
7.09 Accounting Changes. The Company and the other Borrowers shall not,
and shall not permit any of their respective Subsidiaries to, make any
significant change in accounting treatment or reporting practices, except as
required by GAAP, or change the fiscal year of the Company and the other
Borrowers or of any of their respective Subsidiaries (other than a change of the
fiscal year of a Subsidiary of the Company to a fiscal year corresponding with
the fiscal year of the Company).
7.10 Capitalization Ratio. The Company shall not permit its Capitalization
Ratio, as determined at the end of each fiscal quarter during the term hereof,
to exceed (a) 45%, during the period extending from and including the Closing
Date to and including September 30, 1996, nor (b) 40%, at any time from and
including October 1, 1996 until such time as the Obligations have been
irrevocably paid in full and the Banks have no further obligation to extend
credit hereunder.
7.11 Minimum Net Worth. The Company shall not permit its Net Worth, as
determined at the end of each fiscal quarter during the term hereof, to be less
than the sum of (a) 85% of the consolidated Net Worth of the Company and its
Consolidated Subsidiaries on September 30, 1995, as reflected on the Pro Forma
Balance Sheet plus (b) 50% of the consolidated Net Income of the Company and its
Consolidated Subsidiaries for each fiscal quarter ending after December 31,
1995, and on or before the effective date of such calculation (with no deduction
for net losses in any such fiscal quarter), plus (c) 100% of
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the Net Proceeds from the issuance of any capital stock or other equity interest
by the Company or any of its Consolidated Subsidiaries after the Closing Date.
7.12 Interest Coverage Ratio. The Company shall not permit its Interest
Coverage Ratio, calculated on a rolling four quarter basis, as determined at the
end of each fiscal quarter during the term hereof beginning with the fiscal
quarter ending December 31, 1995, to be less than 2.5 to 1.0; provided, however,
that for the first three fiscal quarters ending after the Closing Date, said
Interest Coverage Ratio shall be calculated for the period from September 30,
1995 through the last day of such fiscal quarter for purposes of this Section
7.12.
7.13 Foreign Subsidiary Indebtedness. The Company and the other Borrowers
shall not permit any Foreign Subsidiary to create, incur or suffer to exist any
Indebtedness or Contingent Obligations, except (i) Indebtedness owed to the
Company or to another wholly-owned Subsidiary of the Company, (ii) Indebtedness
in place as of the Closing Date, as identified on Schedule 7.13 of this
Agreement, and all renewals and extensions thereof, and refinancings thereof
with a new lender, but not increases thereof, and (iii) other Indebtedness and
Contingent Obligations in an aggregate amount for all such Foreign Subsidiaries
not in excess of five percent (5%) of the Net Worth of the Company and its
Consolidated Subsidiaries, determined as of the last day of the period covered
by the most recent financial statements delivered pursuant to Section 6.1.
7.14 Subsidiary Dividends. The Company and the other Borrowers will not,
and it will not permit any of their respective Subsidiaries to, be a party to or
enter into any agreement, instrument or other document (other than credit
agreements to which Foreign Subsidiaries are parties under which Indebtedness
permitted by Section 7.13 hereof has or may be incurred) which prohibits or
restricts in any way, or to otherwise, directly or indirectly, create or cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary of the Company or the other Borrowers to (i) pay
dividends or make any other distributions in respect of its capital stock or any
other equity interest or participation in any Subsidiary, or pay or repay any
Indebtedness owed to the Company, the other Borrowers or any of their respective
Subsidiaries, (ii) make loans or advances to the Company or the other Borrowers
or (iii) transfer any of its properties or assets to the Company, the other
Borrowers or any of their respective Subsidiaries (subject to the rights of any
holder of a Lien on any such properties or assets which Lien is a Permitted
Lien).
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company or any Borrower, as applicable, fails to
pay (i) when and as the same becomes due, any amount of principal of any Loan,
or (ii) within five (5) Business Days after the same becomes due, any interest,
fee or other amount payable hereunder or under any other Loan Document; or
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(b) Representation or Warranty. Any representation or warranty by the
Company, any Borrower, any Guarantor or any Subsidiary made or deemed made
herein or in any other Loan Document, or which is contained in any certificate,
document or other statement by or on behalf of the Company, any Borrower, any
Guarantor or any Subsidiary, furnished at any time under this Agreement, or in
or under any other Loan Document, is incorrect in any material respect on or as
of the date made or deemed made; or
(c) Specific Defaults. The Company or any Borrower fails to perform
or observe any term, covenant or agreement contained in any of Sections 6.03,
6.09 or 6.11 or in Article VII; or
(d) Other Defaults. The Company, any Borrower, any Guarantor or any
Subsidiary party thereto fails to perform or observe any other term or covenant
contained in this Agreement or any other Loan Document, and such default shall
continue unremedied for a period of 30 days after the earlier of (i) the date
upon which a Responsible Officer knew or reasonably should have known of such
failure or (ii) the date upon which written notice thereof is given to the
Company by the Administrative Agent or any Bank; or
(e) Cross-Default. The Company, any Borrower, any Guarantor or any of
their respective Subsidiaries (i) fails to make any payment in respect of any
Indebtedness or Contingent Obligation having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
$2,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure; or (ii) fails to perform or observe any other
condition or covenant, or any other event shall occur or condition exist, under
any agreement or instrument relating to any such Indebtedness or Contingent
Obligation, and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such failure
if the effect of such failure, event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company, any Borrower, any
Guarantor or any of their respective material Subsidiaries ceases or fails to be
solvent, or the Company, any Borrower, any Guarantor or any of their respective
Subsidiaries (i) generally fails to pay, or admits in writing its inability to
pay, its debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) commences any Insolvency
Proceeding with respect to itself; or (iii) takes any action to effectuate or
authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, any Borrower, any
Guarantor or any of their respective Subsidiaries, or any writ, judgment,
warrant of attachment, execution or similar process, is issued or levied against
a substantial part of the Company's, any Borrower's, any
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Guarantor's or any such Subsidiary's properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the Company, any
Borrower, any Guarantor or any of their respective Subsidiaries admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company, any Borrower, any Guarantor or any
of their respective Subsidiaries acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted in liability of the Company under
Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of $2,000,000; (ii) the aggregate amount of Unfunded
Pension Liability among all Pension Plans at any time exceeds $2,000,000; or
(iii) the Company or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $2,000,000;
(i) Monetary Judgments. One or more non-interlocutory judgments, non-
interlocutory orders, decrees or arbitration awards is entered against the
Company, any Borrower, any Guarantor or any of their respective Subsidiaries
involving in the aggregate a liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as to
any single or related series of transactions, incidents or conditions, of
$2,000,000 or more, and the same shall remain unsatisfied, unvacated and
unstayed pending appeal for a period of 10 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company, any Borrower, any Guarantor or any of
their respective Subsidiaries which does or would reasonably be expected to have
a Material Adverse Effect, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Guarantor Defaults. Any Guarantor fails in any material respect
to perform or observe any term, covenant or agreement in its Guaranty; or any
Guaranty is for any reason partially (including with respect to future advances)
or wholly revoked or invalidated, or otherwise ceases to be in full force and
effect, or any Guarantor or any other Person contests in any manner the validity
or enforceability thereof or denies that it has any further liability or
obligation thereunder; or any event described at subsections (f) or (g) of this
Section occurs with respect to any Guarantor.
8.02 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
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(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby expressly
waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent or any Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
8.04 Certain Financial Covenant Defaults. In the event that, after taking
into account any extraordinary charge to earnings taken or to be taken as of the
end of any fiscal period of the Company (a "Charge"), and if solely by virtue of
such Charge, there would exist an Event of Default due to the breach of any of
Sections 7.10, 7.11 or 7.12, as of such fiscal period end date, such Event of
Default shall be deemed to arise upon the earlier of (a) the date after such
fiscal period end date on which the Company announces publicly it will take, is
taking or has taken such Charge (including an announcement in the form of a
statement in a report filed with the SEC) or, if such announcement is made prior
to such fiscal period end date, the date that is such fiscal period end date,
and (b) the date the Company delivers to the Administrative Agent its audited
annual or unaudited quarterly financial statements in respect of such fiscal
period reflecting such Charge as taken.
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.01 Appointment and Authorization. Each Bank hereby irrevocably (subject
to Section 9.09) appoints, designates and authorizes the Administrative Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it, by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall
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not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
9.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care, and the Administrative
Agent shall not be responsible in any event for the negligence or misconduct of
any agent or attorney-in-fact selected by any other agent.
9.03 Liability of Agent-Related Person. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Company or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Subsidiaries or Affiliates.
9.04 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Majority Banks (or otherwise as required pursuant to Section 10.01) and such
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request and any action taken or failure to act pursuant thereto shall be binding
upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Banks,
unless the Administrative Agent shall have received written notice from a Bank
or the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article IX; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the Agent-
Related Persons has made any representation or warranty to it, and that no act
by any Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
the Agents that it has, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
and its Subsidiaries hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company, the Borrower, the Guarantors and all other
parties to the Loan Documents. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Administrative
Agent, the Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company or its Subsidiaries which may come into the
possession of any of the Agent-Related Persons.
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9.07 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from and against any
and all Indemnified Liabilities; provided, however, that no Bank shall be liable
for the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Agents upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by such Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that such Agent is not reimbursed for such expenses by or on
behalf of the Company. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of any
Agent.
9.08 Agents in Individual Capacities. TCB, BofA and their respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Company and its Subsidiaries and Affiliates as though TCB were not the
Administrative Agent and as if BofA were not the Documentation Agent and without
notice to or consent of the Banks. The Banks acknowledge that, pursuant to such
activities, TCB, BofA and their respective Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agents shall be under no obligation to
provide such information to them. With respect to its Loans, each of TCB and
BofA shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not an Agent hereunder.
9.09 Successor Agent. The Administrative Agent may, and at the request of
the Majority Banks shall, resign as Administrative Agent upon 30 days' notice to
the Banks, with a copy of such notice to the Company. If the Administrative
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Banks and the
Company, a successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article IX and
Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective
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and the Banks shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Majority Banks appoint a successor
agent as provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Administrative Agent, to deliver to the
Administrative Agent (with a copy to the Company):
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Forms 1001 and W-8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations to such Bank, such Bank agrees to notify the Administrative
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations to such Bank. To the extent of such percentage amount, the
Administrative Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount
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equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to the Administrative Agent, then the
Administrative Agent may withhold from any interest payment to such Bank not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Administrative Agent.
9.11 Documentation Agent; Senior Co-Agent; Co-Agents; Arrangers. None of
the Banks identified on the facing page, signature pages or otherwise herein of
this Agreement as "Documentation Agent," "Senior Co-Agent," "Co-Agent" or
"Arranger" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Banks. Without
limiting the foregoing, none of the Banks so identified as a "Documentation
Agent," "Senior Co-Agent," "Co-Agent" or "Arranger" shall have or be deemed to
have any fiduciary relationship with any Bank. Each Bank acknowledges that it
has not relied, and will not rely, on any of the Banks so identified in deciding
to enter into this Agreement or in taking or not taking action hereunder.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Administrative Agent at the written request of the Majority Banks)
and the Company and acknowledged by the Administrative Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks and
the Company and acknowledged by the Administrative Agent, do any of the
following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 8.02);
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(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment (including prepayments) of principal, interest,
fees or other amounts due to the Banks (or any of them) hereunder or under any
other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (iii) of the proviso below) any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder;
(e) amend this Section, or Section 2.13, or any provision herein
providing for consent or other action by all Banks; or
(f) release any Guarantor;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document, (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
Documentation Agent or affected Arranger, as applicable, in addition to the
Majority Banks or all of the Banks, as the case may be, affect the rights and
duties of the Documentation Agent or affected Arranger, as applicable, under
this Agreement or any other Loan Document, and (iii) the Administrative Agent's
Letter, the Fee Letter and the Invitation Letters, respectively, may be amended,
or rights or privileges thereunder waived, in a writing executed by the parties
thereto.
10.02 Notices.
(a) All notices, requests and other communications shall be in writing
(including, unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the Company, any Borrower,
any Guarantor or any of their respective Subsidiaries by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on Schedule 10.02, and (ii) shall be followed promptly by delivery of
a hard copy original thereof) and mailed, faxed or delivered, to the address or
facsimile number specified for notices on Schedule 10.02; or, as directed to the
Company or the Administrative Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Company and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX shall not be effective until actually
received by the Administrative Agent.
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(c) Any agreement of the Administrative Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Administrative Agent and the Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company or any Borrower to give such notice and the
Administrative Agent and the Banks shall not have any liability to the Company
or any Borrower or other Person on account of any action taken or not taken by
the Administrative Agent or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Company or any Borrower to repay the
Loans shall not be affected in any way or to any extent by any failure by the
Administrative Agent and the Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Administrative Agent and
the Banks of a confirmation which is at variance with the terms understood by
the Administrative Agent and the Banks to be contained in the telephonic or
facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company and the Borrowers jointly and
severally agree that they shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Documentation
Agent) and TCB (including in its capacity as Administrative Agent) within five
(5) Business Days after demand (subject to subsection 4.01(g)) for all
reasonable costs and expenses incurred by BofA and/or TCB, as applicable, in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by BofA and/or TCB, as applicable, with
respect thereto; and
(b) pay or reimburse the Agents, the Arranger and each Bank within
five (5) Business Days after demand (subject to subsection 4.01(g)) for all
costs and expenses (including Attorney Costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document during the existence of
an Event of Default or after acceleration of the Loans (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding).
10.05 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Company and each of the Borrowers, jointly and severally, shall
indemnify and hold the Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including
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Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Administrative Agent or replacement of any
Bank) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or arising out of
this Agreement or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company and the Borrowers shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
10.06 Payments Set Aside. To the extent that the Company, any Borrower or
any Guarantor makes a payment to the Administrative Agent or the Banks, or the
Administrative Agent or the Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b) each
Bank severally agrees to pay to the Administrative Agent upon demand its Pro
Rata Share of any amount so recovered from or repaid by the Administrative
Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that neither the Company nor any Borrower may
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Administrative Agent and each Bank.
10.08 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Company at all times
other than during the existence of an Event of Default and the Administrative
Agent, which consents of the Company and the Administrative Agent shall not be
unreasonably withheld, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Company or the Administrative
Agent shall be required in connection with any assignment and delegation by a
Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the Loans, the Commitments, and
the other rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000; provided, however, that the Company, the Borrowers and the
Administrative Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall
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have been given to the Company and the Administrative Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Company
and the Administrative Agent an Assignment and Acceptance in the form of Exhibit
H ("Assignment and Acceptance") together with any Note or Notes subject to such
assignment and (iii) the assignor Bank or Assignee has paid to the
Administrative Agent a processing fee in the amount of $2,500; provided,
further, that in the event a Bank assigns less than all of its interests
hereunder, it shall retain a Commitment of not less than $10,000,000 after the
consummation of the assignment.
(b) From and after the date that the Administrative Agent notifies the
assignor Bank that it has received (and provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five (5) Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and provided that it consents to such
assignment in accordance with subsection 10.08(a)), the Borrowers shall execute
and deliver to the Administrative Agent, new Notes evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Bank
pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company, the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with the originating Bank in connection with the originating Bank's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Bank shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Banks
as described in the first proviso to Section 10.01. In the case of any such
participation, the Participant shall be entitled to the benefit of Article III
and Section 10.05 as though it were also a Bank hereunder, and if amounts
outstanding
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under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Company and provided to it by the Company
or any Subsidiary, or by the Administrative Agent on such Company's or
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Bank; provided, however, that any Bank
may disclose such information (A) at the request or pursuant to any requirement
of any Governmental Authority to which the Bank is subject or in connection with
an examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which any Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Affiliate of such Bank, or to any Participant
or Assignee, actual or potential, provided that such Affiliate, Participant or
Assignee agrees to keep such information confidential to the same extent
required of the Banks hereunder, and (H) as to any Bank, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Company is party or is deemed party with such Bank.
(f) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Notes held by it in
favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
10.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company or the Borrowers or the Guarantors, any such notice
being waived by the Company and the Borrowers and the Guarantors to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of the Company or any Borrower or Guarantor against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
the Administrative Agent or such Bank shall have made demand under this
Agreement or any Loan Document and
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although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Administrative Agent after any such set-
off and application made by such Bank; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and application.
10.10 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
10.11 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.12 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.13 No Third Parties Benefitted. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Borrowers,
the Banks, the Agents, the Senior Co-Agent, the Co-Agents and the Agent-Related
Persons, and their permitted successors and assigns, and no other Person shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any of the other
Loan Documents.
10.14 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES); PROVIDED THAT THE AGENTS AND THE BANKS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENTS AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE AGENTS AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE BORROWERS HEREBY
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IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE PRENTICE-HALL CORPORATION
SYSTEM, INC., WITH OFFICES ON THE DATE HEREOF AT 15 COLUMBUS CIRCLE, NEW YORK,
NEW YORK, 10023, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY
AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWERS AGREE TO DESIGNATE A
NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES
OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE BORROWERS FURTHER IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE 10.02, SUCH SERVICE
TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWERS IN ANY OTHER JURISDICTION. THE BORROWERS, THE AGENTS AND
THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
10.15 WAIVER OF JURY TRIAL. THE BORROWERS, THE BANKS AND THE AGENTS EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWERS, THE
BANKS AND THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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10.16 Interest. It is the intention of the parties hereto to comply with
applicable usury laws; accordingly, notwithstanding any provision to the
contrary in this Agreement, the Notes or in any of the other Loan Documents
securing the payment hereof or otherwise relating hereto, in no event shall this
Agreement, the Notes or such other Loan Documents require the payment or permit
the payment, taking, reserving, receiving, collection or charging of any sums
constituting interest under applicable laws, if any, which exceed the maximum
amount permitted by such laws. If any such excess interest is called for,
contracted for, charged, taken, reserved, or received in connection with the
Loans evidenced by the Notes or in any of the Loan Documents securing the
payment thereof or otherwise relating thereto, or in any communication by the
Agents or the Banks or any other person to any Borrower or any other person, or
in the event all or part of the principal or interest thereof shall be prepaid
or accelerated, so that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for, charged, taken,
reserved, or received on the amount of principal actually outstanding from time
to time under the Notes shall exceed the maximum amount of interest permitted by
applicable usury laws, then in any such event it is agreed as follows: (i) the
provisions of this paragraph shall govern and control, (ii) neither any Borrower
nor any other person or entity now or hereafter liable for the payment of the
Notes shall be obligated to pay the amount of such interest to the extent such
interest is in excess of the maximum amount of interest permitted by applicable
usury laws, (iii) any such excess which is or has been received notwithstanding
this paragraph shall be credited against the then unpaid principal balance of
the Notes or, if the Notes have been or would be paid in full, refunded to the
applicable Borrower, and (iv) the provisions of this Agreement, the Notes and
the other Loan Documents securing the payment hereof and otherwise relating
hereto, and any communication to any Borrower, shall immediately be deemed
reformed and such excess interest reduced, without the necessity of executing
any other document, to the maximum lawful rate allowed under applicable laws as
now or hereafter construed by courts having jurisdiction hereof or thereof.
Without limiting the foregoing, all calculations of the rate of interest
contracted for, charged, taken, reserved, or received in connection with the
Notes or this Agreement which are made for the purpose of determining whether
such rate exceeds the maximum lawful rate shall be made to the extent permitted
by applicable laws by amortizing, prorating, allocating and spreading during the
period of the full term of the Loans, including all prior and subsequent
renewals and extensions, all interest at any time contracted for, charged,
taken, reserved, or received. The terms of this paragraph shall be deemed to be
incorporated in every document and communication relating to the Notes, the
Loans or any other Loan Document.
10.17 Company as Subsidiary Borrower Representative. Each Subsidiary
Borrower hereby irrevocably designates and appoints the Company as the agent of
such Subsidiary Borrower under this Agreement and the other Loan Documents for
the purpose of giving notices and taking other actions delegated to the Company
pursuant to the terms of this Agreement and the other Loan Documents. In
furtherance of the foregoing, each Subsidiary Borrower hereby irrevocably grants
to the Company such Subsidiary Borrower's power-of-attorney, and hereby
authorizes the Company, to act in place of such Subsidiary Borrower with respect
to matters delegated to the Company pursuant to the terms of this Agreement and
the other Loan Documents and to take such other actions as are reasonably
incidental thereto. The Company hereby agrees to provide prompt notice to the
relevant Subsidiary Borrower of any action taken by the Company under this
Agreement and the other Loan
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Documents in place of such Subsidiary Borrower; provided, that the failure to so
provide such notice shall not affect the obligations of such Subsidiary Borrower
hereunder. The Agent is hereby authorized to direct to the Company all invoices
and similar statements showing amounts due by the Borrowers hereunder and under
the Notes.
10.18 Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law, each
Borrower agrees that in the event a payment shall be made by any Guarantor under
a Guaranty in respect of a Loan to such Borrower, such Borrower shall indemnify
such Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the person to whom such payment shall have been made
to the extent of such payment subject to the provisions of the Guaranty executed
by such Guarantor. Notwithstanding any provision of this Agreement to the
contrary, all rights of the Guarantors under this Section 10.18 and all other
rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full of the
Obligations. No failure on the part of a Borrower to make the payments required
by this Section (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of any
Guarantor with respect to any Guaranty, and each Guarantor shall remain liable
for the full amount of the obligations of such Guarantor under each such
Guaranty in accordance therewith.
10.19 Entire Agreement. This Agreement supersedes in its entirety, the
commitment letter dated August 28, 1995, among Weatherford, BofA, TCB and the
Arrangers, which letter is hereby terminated. The Fee Letter, the
Administrative Agent's Letter and the Invitation Letters remain in full force
and effect in accordance with their terms. This Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding among the
Company, the Banks and the Agents, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN DOCUMENTS
EXECUTED IN CONNECTION HEREWITH, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
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WEATHERFORD ENTERRA, INC.
By: _________________________________
Norman W. Nolen
Senior Vice President, Chief
Financial Officer and Treasurer
WEATHERFORD ENTERRA U.S., INC.
By: _________________________________
Norman W. Nolen
Senior Vice President and
Treasurer
WEATHERFORD/LAMB, INC.
By: __________________________________
Norman W. Nolen
Senior Vice President and
Treasurer
BANK OF AMERICA ILLINOIS,
as Documentation Agent and as a
Bank
By: __________________________________
C. Paige DiMaggio
Vice President
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Administrative Agent and as a Bank
By: ___________________________________
Mona M. Foch
Vice President
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<PAGE>
CREDIT LYONNAIS NEW YORK
BRANCH, as Senior Co-Agent and as
a Bank
By: ___________________________________
Xavier Ratouis
Senior Vice President
ABN AMRO BANK N.V.,
as Co-Agent and as a Bank
By: ___________________________________
Cheryl I. Lipshutz
Vice President
By: ___________________________________
Name: _________________________________
Title: ________________________________
BANK OF MONTREAL, as
Co-Agent and as a Bank
By: ___________________________________
Don Skipper
Director
FIRST INTERSTATE BANK OF
TEXAS, N.A., as Co-Agent and as a
Bank
By: ___________________________________
Frank W. Schageman
Vice President
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ARAB BANKING CORPORATION
(B.S.C.), as Co-Agent and as a Bank
By: ___________________________________
Stephen Plauche
Vice President
THE BANK OF NEW YORK
By: ___________________________________
Alan Lyster
Vice President
THE BANK OF NOVA SCOTIA
By: ___________________________________
F.C. Ashby
Senior Manager
Loan Operations
FIRST NATIONAL BANK OF
COMMERCE
By: ___________________________________
J. Charles Freel, Jr.
Vice President
THE FUJI BANK, LIMITED
By: ___________________________________
David Kelley
Vice President and
Senior Manager
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THE MITSUBISHI BANK, LIMITED
By: ___________________________________
T. Yokokawa
Joint General Manager
NATIONSBANK OF TEXAS, N.A.
By: ___________________________________
James R. Allred
Vice President
THE YASUDA TRUST AND
BANKING COMPANY, LIMITED
By: ___________________________________
Gerald T. Gill
Vice President
68
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CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement by and between Weatherford Enterra, Inc.,
a Delaware corporation (the "Company"), and M. Timothy Carey (the "Executive"),
dated as of October 5, 1995.
RECITALS:
A. The Board of Directors of the Company (the "Board") has previously
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive, which are competitive with those of executives at other
corporations, will be satisfied.
B. To accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the second anniversary of the date hereof;
provided,
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however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate two year(s) after such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company,
(ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or
(iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b) Individuals, who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
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(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction") in each case, unless, following such Corporate
Transaction, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Corporate Transaction beneficially own, directly or indirectly, more than 60
percent of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Corporate Transaction; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements, authority, duties
and responsibilities) shall be at least commensurate in all material respects
with the most
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significant of those held, exercised and assigned at any time during the 120-day
period immediately preceding the Effective Date and (B) the Executive's services
shall be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to 12 times the highest monthly base salary paid or
payable, including any base salary which has been earned but deferred, to the
Executive by the Company and/or its affiliated companies in respect of the 60-
month period immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be reviewed no more
than 12 months after the last salary increase awarded to the Executive prior to
the Effective Date and thereafter at least annually. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in this Agreement,
the term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest
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bonus (whether in cash or Common Stock of the Company) under the Company's
annual incentive program for the last three full fiscal years prior to the
Effective Date (annualized in the event that the Executive was not employed by
the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each
such Annual Bonus shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive
(including any stock option or related plans, restricted stock plans or similar
plans), savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date, or if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
to participate in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the
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Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits (including without limitation, financial
planning services, payment of club dues, a car allowance or use of an automobile
and payment of related expenses, as appropriate) in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies in effect for
the Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(ix) Options/SARs. Upon the occurrence of a Change of Control
pursuant to which the Company is not the survivor (or survives only as a
subsidiary of another entity), the surviving corporation shall issue to the
Executive options and tandem stock appreciation rights ("SARs"), if applicable,
in substitution or replacement of all outstanding options or SARs previously
issued pursuant to a Company stock option plan or the Company's Stock
Appreciation Rights Plan, respectively, any such options and SARs to have terms
and conditions similar to the terms of any such original options and SARs.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below),
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<PAGE>
it may give to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective 30
days after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that within the 30-day period after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 360
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board of Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act, or failure to act, on the part
of the Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
of a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the
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good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof or the
Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
the Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of
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receipt of such notice, specifies the termination date (which date shall be not
more than 30 days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" shall mean:
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be;
(ii) if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination; and
(iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Good Reason; Other than for Cause, Death or Disability. If during
the Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability, or the Executive shall terminate employment
for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (2) the product of (x) the
higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than 12 full months or during
which the Executive was employed for less than 12 full months), for the most
recently completed fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case
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to the extent not theretofore paid (the sum of the amounts described in clauses
(1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"),
and
B. the amount equal to the product of (1) two and (2) the sum of (x)
the Executive's Annual Base Salary and (y) the Highest Annual Bonus, and
C. an amount equal to the excess of (a) the actuarial equivalent of
the benefit under the Company's qualified defined benefit retirement plan (the
"Retirement Plan") (utilizing actuarial assumptions no less favorable to the
Executive than those in effect under the Company's Retirement Plan immediately
prior to the Effective Date), and any excess or supplemental retirement plan
related to the Retirement Plan in which the Executive participates (together,
the "SERP"), which the Executive would receive if the Executive's employment
continued for two year(s) after the Date of Termination assuming for this
purpose that all accrued benefits are fully vested, and assuming that the
Executive's compensation in each of the two year(s) is that required by Sections
4(b)(i) and 4(b)(ii), over (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement Plan and the SERP
as of the Date of Termination, and
D. an amount equal to two times the total of the Employer Matching
Contribution credited to the Executive under the Company's 401(k) Savings Plan
(the "401(k) Plan") and the Supplemental Matching Accrual credited under the
Company's Supplemental Savings Plan (the "Excess Plan") during the 12-month
period immediately preceding the month of the Executive's Date of Termination,
such amount to be grossed up so that the amount the Executive actually receives
after payment of any federal or state taxes payable thereon equals the amount
first described above;
(ii) For two year(s) after the Executive's Date of Termination, or
such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to the
Executive and/or the Executive's family equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 4(b)(iv) of this Agreement if the Executive's employment
had not been terminated; provided, however, that with respect to any of such
plans, programs, practices or policies requiring an employee contribution, the
Executive shall continue to pay the monthly employee contribution for same, and
provided further, that if the Executive becomes reemployed by another employer
and is eligible to receive medical or other welfare benefits under another
employer provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility;
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(iii) The Company shall, at its sole expense as incurred, provide the
Executive with outplacement services, the scope and provider of which shall be
selected by the Executive in his sole discretion;
(iv) With respect to all options to purchase Common Stock held by the
Executive pursuant to a Company stock option plan on or prior to the Date of
Termination, irrespective of whether such options are then exercisable, the
Executive shall have the right, during the 60-day period after the Date of
Termination, to elect to surrender all or part of such options in exchange for a
cash payment by the Company to the Executive in an amount equal the number of
shares of Common Stock subject to the Executive's option multiplied by the
difference between (x) and (y) where (y) equals the purchase price per share
covered by the option and (x) equals the highest reported sale price of a share
of Common Stock in any transaction reported on the New York Stock Exchange
during the 60-day period prior to and including the Executive's Date of
Termination; and with respect to all SARs held by the Executive granted under
the Company's Stock Appreciation Rights Plan on or prior to the Date of
Termination, irrespective of whether such SARs are then exercisable, the
Executive shall have the right, during the 60-day period after the Date of
Termination, to elect to surrender all or part of such SARs in exchange for a
cash payment by the Company to the Executive in an amount equal to an amount
equal to the number of SARs held by the Executive multiplied by the difference
between (x) and (y) where (y) equals the fair market value of such SARs the date
on which awarded and (x) equals the price set forth above. Such cash payments
shall be made within 30 days after the date of the Executive's election;
provided, however, that if the Executive's Date of Termination is within six
months after the date of grant of a particular option or SAR held by the
Executive and the Executive is subject to Section 16(b) of the Securities
Exchange Act of 1934, any cash payments related thereto shall be made on the
date which is six months and one day after the date of grant of such option or
SAR. Notwithstanding the foregoing, if any right granted pursuant to the
foregoing would make a Change of Control transaction ineligible for pooling of
interests accounting treatment under APB No. 16 that but for this Section
6(a)(iv) would otherwise be eligible for such accounting treatment, the
Executive shall receive shares of Common Stock with a Fair Market Value equal to
the cash that would otherwise be payable hereunder in substitution for the cash,
provided that any such shares of Common Stock so granted to the Executive shall
be registered under the Securities Act of 1933; any options or SARs outstanding
as of the Date of Termination and not then exercisable shall become fully
exercisable as of the Executive's Date of Termination, and to the extent the
Executive does not elect to surrender same for a cash payment (or the equivalent
number of shares of Common Stock) as provided above, such options and SARs shall
remain exercisable for seven months after the Executive's Date of Termination or
until the stated expiration of the stated term thereof, whichever is shorter;
restrictions applicable to any shares of Common Stock granted to the Executive
under the
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Company's Restricted Stock Incentive Plan shall lapse, as of the date of the
Executive's Date of Termination;
(v) All country club memberships, luncheon clubs and other memberships
which the Company was providing for the Executive's use at the time of Notice of
Termination is given shall, to the extent possible, be transferred and assigned
to the Executive at no cost to the Executive (other than income taxes owed), the
cost of transfer, if any, to be borne by the Company;
(vi) The Company shall either transfer to the Executive ownership and
title to the Executive's Company car at no cost to the Executive (other than
income taxes owed) or, if the Executive receives a monthly car allowance in lieu
of a Company car, pay the Executive a lump sum in cash within 30 days after the
Executive's Date of Termination an amount equal to two times the Executive's
annual car allowance;
(vii) All benefits under the Company's Retirement Plan, the SERP, and
the 401(k) Plan and the Excess Plan, and any other similar plans, not already
vested shall be 100% vested, to the extent such vesting is permitted under the
Code (as defined below); and
(viii) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive's estate or beneficiaries, as applicable, in a lump sum in
cash within 30 days after the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
6(b) shall include, without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits equal to the benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, in effect on the date of the Executive's death.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
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terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days after the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, without limitation, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits equal to
those generally provided by the Company and its affiliated companies to disabled
peer executives and/or their families in accordance with such plans programs,
practices and policies relating to disability, if any, in effect generally with
respect to other peer executives and their families at any time of the
Disability.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In such
case, all Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days after the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains
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other employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expense which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereto (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net after-tax
benefit of at least $50,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination shall be made by Arthur
Andersen LLP or, as provided below, such other certified public accounting firm
as may be designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
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Company and the Executive within 15 business days after the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days after the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten business days after the Executive is
informed in writing of such claim, and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
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(iv) permit the Company to participate in any proceedings relating to
such claims; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such costs and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issues raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data
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relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies,
provided that it shall not apply to information which is or shall become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement), information that is developed by the
Executive independently of such information, or knowledge or data or information
that is disclosed to the Executive by a third party under no obligation of
confidentiality to the Company. After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: M. Timothy Carey
14111 Indian Wells Drive
Houston, TX 77069
If to the Company: Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1000
Houston, TX 77056
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
--------------------------------------
M. Timothy Carey
WEATHERFORD ENTERRA, INC.
By:
-----------------------------------
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CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement by and between Weatherford Enterra, Inc.,
a Delaware corporation (the "Company"), and Steven C. Grant (the "Executive"),
dated as of October 5, 1995.
RECITALS:
A. The Board of Directors of the Company (the "Board") has previously
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive, which are competitive with those of executives at other
corporations, will be satisfied.
B. To accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the first anniversary of the date hereof;
provided,
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however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Change of Control Period shall be automatically extended so as
to terminate one year(s) after such Renewal Date, unless at least 60 days prior
to the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company,
(ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or
(iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b) Individuals, who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
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(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction") in each case, unless, following such Corporate
Transaction, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Corporate Transaction beneficially own, directly or indirectly, more than 60
percent of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Corporate Transaction; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the first anniversary of such
date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements, authority, duties
and responsibilities) shall be at least commensurate in all material respects
with the most
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significant of those held, exercised and assigned at any time during the 120-day
period immediately preceding the Effective Date and (B) the Executive's services
shall be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to 12 times the highest monthly base salary paid or
payable, including any base salary which has been earned but deferred, to the
Executive by the Company and/or its affiliated companies in respect of the 60-
month period immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be reviewed no more
than 12 months after the last salary increase awarded to the Executive prior to
the Effective Date and thereafter at least annually. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in this Agreement,
the term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest
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bonus (whether in cash or Common Stock of the Company) under the Company's
annual incentive program for the last three full fiscal years prior to the
Effective Date (annualized in the event that the Executive was not employed by
the Company for the whole of such fiscal year) (the "Recent Annual Bonus").
Each such Annual Bonus shall be paid no later than the end of the third month of
the fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive (including any stock option or related plans, restricted stock plans
or similar plans), savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date, or
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
to participate in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the
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Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits (including without limitation, financial
planning services, payment of club dues, a car allowance or use of an automobile
and payment of related expenses, as appropriate) in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies in effect for
the Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(ix) Options/SARs. Upon the occurrence of a Change of Control
pursuant to which the Company is not the survivor (or survives only as a
subsidiary of another entity), the surviving corporation shall issue to the
Executive options and tandem stock appreciation rights ("SARs"), if applicable,
in substitution or replacement of all outstanding options or SARs previously
issued pursuant to a Company stock option plan or the Company's Stock
Appreciation Rights Plan, respectively, any such options and SARs to have terms
and conditions similar to the terms of any such original options and SARs.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below),
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it may give to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall terminate
effective 30 days after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that within the 30-day period after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 360 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board of Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act, or failure to act, on the part
of the Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
of a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the
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good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof or the
Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
the Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of
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receipt of such notice, specifies the termination date (which date shall be not
more than 30 days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" shall mean:
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be;
(ii) if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination; and
(iii) if the Executive's employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Good Reason; Other than for Cause, Death or Disability. If during
the Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability, or the Executive shall terminate employment
for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (2) the product of (x) the
higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than 12 full months or during
which the Executive was employed for less than 12 full months), for the most
recently completed fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case
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to the extent not theretofore paid (the sum of the amounts described in clauses
(1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"),
and
B. the amount equal to the product of (1) one and (2) the sum of (x)
the Executive's Annual Base Salary and (y) the Highest Annual Bonus, and
C. an amount equal to the excess of (a) the actuarial equivalent of
the benefit under the Company's qualified defined benefit retirement plan (the
"Retirement Plan") (utilizing actuarial assumptions no less favorable to the
Executive than those in effect under the Company's Retirement Plan immediately
prior to the Effective Date), and any excess or supplemental retirement plan
related to the Retirement Plan in which the Executive participates (together,
the "SERP"), which the Executive would receive if the Executive's employment
continued for one year(s) after the Date of Termination assuming for this
purpose that all accrued benefits are fully vested, and assuming that the
Executive's compensation in each of the one year(s) is that required by Sections
4(b)(i) and 4(b)(ii), over (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement Plan and the SERP
as of the Date of Termination, and
D. an amount equal to one times the total of the Employer Matching
Contribution credited to the Executive under the Company's 401(k) Savings Plan
(the "401(k) Plan") and the Supplemental Matching Accrual credited under the
Company's Supplemental Savings Plan (the "Excess Plan") during the 12-month
period immediately preceding the month of the Executive's Date of Termination,
such amount to be grossed up so that the amount the Executive actually receives
after payment of any federal or state taxes payable thereon equals the amount
first described above;
(ii) For ____ year(s) after the Executive's Date of Termination, or
such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to the
Executive and/or the Executive's family equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 4(b)(iv) of this Agreement if the Executive's employment
had not been terminated; provided, however, that with respect to any of such
plans, programs, practices or policies requiring an employee contribution, the
Executive shall continue to pay the monthly employee contribution for same, and
provided further, that if the Executive becomes reemployed by another employer
and is eligible to receive medical or other welfare benefits under another
employer provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility;
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(iii) The Company shall, at its sole expense as incurred, provide the
Executive with outplacement services, the scope and provider of which shall be
selected by the Executive in his sole discretion;
(iv) With respect to all options to purchase Common Stock held by the
Executive pursuant to a Company stock option plan on or prior to the Date of
Termination, irrespective of whether such options are then exercisable, the
Executive shall have the right, during the 60-day period after the Date of
Termination, to elect to surrender all or part of such options in exchange for a
cash payment by the Company to the Executive in an amount equal the number of
shares of Common Stock subject to the Executive's option multiplied by the
difference between (x) and (y) where (y) equals the purchase price per share
covered by the option and (x) equals the highest reported sale price of a share
of Common Stock in any transaction reported on the New York Stock Exchange
during the 60-day period prior to and including the Executive's Date of
Termination; and with respect to all SARs held by the Executive granted under
the Company's Stock Appreciation Rights Plan on or prior to the Date of
Termination, irrespective of whether such SARs are then exercisable, the
Executive shall have the right, during the 60-day period after the Date of
Termination, to elect to surrender all or part of such SARs in exchange for a
cash payment by the Company to the Executive in an amount equal to an amount
equal to the number of SARs held by the Executive multiplied by the difference
between (x) and (y) where (y) equals the fair market value of such SARs the date
on which awarded and (x) equals the price set forth above. Such cash payments
shall be made within 30 days after the date of the Executive's election;
provided, however, that if the Executive's Date of Termination is within six
months after the date of grant of a particular option or SAR held by the
Executive and the Executive is subject to Section 16(b) of the Securities
Exchange Act of 1934, any cash payments related thereto shall be made on the
date which is six months and one day after the date of grant of such option or
SAR. Notwithstanding the foregoing, if any right granted pursuant to the
foregoing would make a Change of Control transaction ineligible for pooling of
interests accounting treatment under APB No. 16 that but for this Section
6(a)(iv) would otherwise be eligible for such accounting treatment, the
Executive shall receive shares of Common Stock with a Fair Market Value equal to
the cash that would otherwise be payable hereunder in substitution for the cash,
provided that any such shares of Common Stock so granted to the Executive shall
be registered under the Securities Act of 1933; any options or SARs outstanding
as of the Date of Termination and not then exercisable shall become fully
exercisable as of the Executive's Date of Termination, and to the extent the
Executive does not elect to surrender same for a cash payment (or the equivalent
number of shares of Common Stock) as provided above, such options and SARs shall
remain exercisable for seven months after the Executive's Date of Termination or
until the stated expiration of the stated term thereof, whichever is shorter;
restrictions applicable to any shares of Common Stock granted to the Executive
under the
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Company's Restricted Stock Incentive Plan shall lapse, as of the date of the
Executive's Date of Termination;
(v) All country club memberships, luncheon clubs and other memberships
which the Company was providing for the Executive's use at the time of Notice of
Termination is given shall, to the extent possible, be transferred and assigned
to the Executive at no cost to the Executive (other than income taxes owed), the
cost of transfer, if any, to be borne by the Company;
(vi) The Company shall either transfer to the Executive ownership and
title to the Executive's Company car at no cost to the Executive (other than
income taxes owed) or, if the Executive receives a monthly car allowance in lieu
of a Company car, pay the Executive a lump sum in cash within 30 days after the
Executive's Date of Termination an amount equal to one times the Executive's
annual car allowance;
(vii) All benefits under the Company's Retirement Plan, the SERP, and
the 401(k) Plan and the Excess Plan, and any other similar plans, not already
vested shall be 100% vested, to the extent such vesting is permitted under the
Code (as defined below); and
(viii) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive's estate or beneficiaries, as applicable, in a lump sum in
cash within 30 days after the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
6(b) shall include, without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits equal to the benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, in effect on the date of the Executive's death.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
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terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days after the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, without limitation, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits equal to
those generally provided by the Company and its affiliated companies to disabled
peer executives and/or their families in accordance with such plans programs,
practices and policies relating to disability, if any, in effect generally with
respect to other peer executives and their families at any time of the
Disability.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In such
case, all Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days after the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains
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other employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expense which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereto (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net after-tax
benefit of at least $50,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination shall be made by Arthur
Andersen LLP or, as provided below, such other certified public accounting firm
as may be designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
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Company and the Executive within 15 business days after the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days after the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten business days after the Executive is
informed in writing of such claim, and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
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(iv) permit the Company to participate in any proceedings relating to
such claims; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such costs and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issues raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data
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relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies,
provided that it shall not apply to information which is or shall become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement), information that is developed by the
Executive independently of such information, or knowledge or data or information
that is disclosed to the Executive by a third party under no obligation of
confidentiality to the Company. After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
17
<PAGE>
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: Steven C. Grant
13610 Alchester
Houston, TX 77079
If to the Company: Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1000
Houston, TX 77056
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.
18
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
-----------------------------------
Steven C. Grant
WEATHERFORD ENTERRA, INC.
By:
--------------------------------
19
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and John A. Hill (the
"Director"), a director of the Company;
WHEREAS, in recognition of Director's need for substantial protection
against personal liability in order to enhance Director's continued service
to the Company in an effective manner and of Director's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Director under certain circumstances, and in part to provide Director with
specific contractual assurance that the protection promised by such By-Laws
will be available to Director (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Director to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Director under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Director
agreeing to serve or continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Director to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Director, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Director an "Expense Advance". Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Director shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Director against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a)
<PAGE>
shall be subject to the condition that the Reviewing Party (as defined
hereinafter) shall not have determined (in a written opinion, in any
case in which the special independent counsel referred to in Section 2
hereof is involved) that Director would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 1(a) shall be
subject to the condition that, if when and to the extent that the
Reviewing Party determines that Director would not be permitted to be
so indemnified under applicable law, the Company shall be entitled to
be reimbursed by Director (who hereby agrees to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Director has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Director should be
indemnified under applicable law, any determination made by the
Reviewing Party that Director would not be permitted to be indemnified
under applicable law shall not be binding and Director shall not be
required to reimburse the Company for any Expense Advance until a
final judicial determination is made with respect thereto (as to which
all rights of appeal therefrom have been exhausted or lapsed). If
there has not been a Change in Control, the Reviewing Party shall be
selected by the Board of Directors, and if there has been such a
Change in Control, the Reviewing Party shall be the special
independent counsel referred to in Section 2 hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party
determines that Director substantively would not be permitted to be
indemnified in whole or in part under applicable law, Director shall
have the right to commence litigation in any court in the states of
Texas or Delaware having subject matter jurisdiction thereof and in
which venue is proper, seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Director.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Director to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Director and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Director within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Director as to
whether and to what extent Director would be permitted to be
indemnified under applicable law. The Company agrees to pay the
reasonable fees of the special, independent counsel referred to above
2
<PAGE>
and to fully indemnify such counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant
hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including attorneys'
fees) and, if requested by Director, shall (within ten business days
after such written request) advance such expenses to Director, which
are incurred by Director in connection with any claim asserted against
or action brought by Director for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Idemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Director ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Director for
the portion thereof to which Director is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Director shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Director is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Director is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
director did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall be
in addition to any other rights Director may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded currently
under the Company's By-Laws and this Agreement, it is the intent of
the
3
<PAGE>
parties hereto that Director shall enjoy by this Agreement the greater
benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Director shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company director.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two- thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or
4
<PAGE>
participate in any Claim relating to any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Director is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Director in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Director is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Director, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Director to the extent Director has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Director
continues to serve as a director (or in one of the capacities
enumerated in Section 8(d) hereof) of the Company or of any other
enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
---------------------------
Name: Philip Burguieres
Title: President
/s/ John A. Hill
----------------------------
John A. Hill
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and William E. Macaulay
(the "Director"), a director of the Company;
WHEREAS, in recognition of Director's need for substantial protection
against personal liability in order to enhance Director's continued service
to the Company in an effective manner and of Director's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Director under certain circumstances, and in part to provide Director with
specific contractual assurance that the protection promised by such By-Laws
will be available to Director (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Director to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Director under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Director agreeing to
serve or continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Director to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Director, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Director an "Expense Advance". Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Director shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Director against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
<PAGE>
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined (in
a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Director
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant
to Section 1(a) shall be subject to the condition that, if when and to
the extent that the Reviewing Party determines that Director would not
be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Director (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Director has commenced legal proceedings in
a court of competent jurisdiction to secure a determination that
Director should be indemnified under applicable law, any determination
made by the Reviewing Party that Director would not be permitted to be
indemnified under applicable law shall not be binding and Director
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control, the Reviewing Party shall be the
special independent counsel referred to in Section 2 hereof. If there
has been no determination by the Reviewing Party or if the Reviewing
Party determines that Director substantively would not be permitted to
be indemnified in whole or in part under applicable law, Director
shall have the right to commence litigation in any court in the states
of Texas or Delaware having subject matter jurisdiction thereof and in
which venue is proper, seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Director.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Director to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Director and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Director within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Director as to
whether and to what extent Director would be permitted to be
indemnified under applicable law. The Company
2
<PAGE>
agrees to pay the reasonable fees of the special, independent counsel
referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including attorneys'
fees) and, if requested by Director, shall (within ten business days
after such written request) advance such expenses to Director, which
are incurred by Director in connection with any claim asserted against
or action brought by Director for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Idemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Director ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Director for
the portion thereof to which Director is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Director shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Director is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Director is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
director did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall be
in addition to any other rights Director may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded
3
<PAGE>
currently under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Director shall enjoy by this
Agreement the greater benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Director shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company director.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two- thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or
4
<PAGE>
participating in (including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to any Indemnifiable
Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Director is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Director in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Director is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Director, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Director to the extent Director has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Director
continues to serve as a director (or in one of the capacities
enumerated in Section 8(d) hereof) of the Company or of any other
enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
Title: President
/s/ William E. Macaulay
--------------------------------
William E. Macaulay
6
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and Robert L. Parker, Sr.
(the "Director"), a director of the Company;
WHEREAS, in recognition of Director's need for substantial protection
against personal liability in order to enhance Director's continued service
to the Company in an effective manner and of Director's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Director under certain circumstances, and in part to provide Director with
specific contractual assurance that the protection promised by such By-Laws
will be available to Director (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Director to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Director under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Director
agreeing to serve or continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Director to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Director, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Director an "Expense Advance". Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Director shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Director against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
<PAGE>
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined (in
a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Director
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant
to Section 1(a) shall be subject to the condition that, if when and to
the extent that the Reviewing Party determines that Director would not
be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Director (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Director has commenced legal proceedings in
a court of competent jurisdiction to secure a determination that
Director should be indemnified under applicable law, any determination
made by the Reviewing Party that Director would not be permitted to be
indemnified under applicable law shall not be binding and Director
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control, the Reviewing Party shall be the
special independent counsel referred to in Section 2 hereof. If there
has been no determination by the Reviewing Party or if the Reviewing
Party determines that Director substantively would not be permitted to
be indemnified in whole or in part under applicable law, Director
shall have the right to commence litigation in any court in the states
of Texas or Delaware having subject matter jurisdiction thereof and in
which venue is proper, seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Director.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Director to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Director and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Director within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Director as to
whether and to what extent Director would be permitted to be
indemnified under applicable law. The Company
2
<PAGE>
agrees to pay the reasonable fees of the special, independent counsel
referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including attorneys'
fees) and, if requested by Director, shall (within ten business days
after such written request) advance such expenses to Director, which
are incurred by Director in connection with any claim asserted against
or action brought by Director for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Idemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Director ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Director for
the portion thereof to which Director is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Director shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Director is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Director is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
director did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall be
in addition to any other rights Director may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded
3
<PAGE>
currently under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Director shall enjoy by this
Agreement the greater benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Director shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company director.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two- thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or
4
<PAGE>
participating in (including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to any Indemnifiable
Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Director is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Director in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Director is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Director, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Director to the extent Director has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Director
continues to serve as a director (or in one of the capacities
enumerated in Section 8(d) hereof) of the Company or of any other
enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
Title: President
/s/ Robert L. Parker, Sr.
--------------------------------
Robert L. Parker, Sr.
6
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and R. Rudolph Reinfrank
(the "Director"), a director of the Company;
WHEREAS, in recognition of Director's need for substantial protection
against personal liability in order to enhance Director's continued service
to the Company in an effective manner and of Director's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Director under certain circumstances, and in part to provide Director with
specific contractual assurance that the protection promised by such By-Laws
will be available to Director (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Director to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Director under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Director
agreeing to serve or continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Director to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Director, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Director an "Expense Advance". Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Director shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Director against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
<PAGE>
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined (in
a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Director
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant
to Section 1(a) shall be subject to the condition that, if when and to
the extent that the Reviewing Party determines that Director would not
be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Director (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Director has commenced legal proceedings in
a court of competent jurisdiction to secure a determination that
Director should be indemnified under applicable law, any determination
made by the Reviewing Party that Director would not be permitted to be
indemnified under applicable law shall not be binding and Director
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control, the Reviewing Party shall be the
special independent counsel referred to in Section 2 hereof. If there
has been no determination by the Reviewing Party or if the Reviewing
Party determines that Director substantively would not be permitted to
be indemnified in whole or in part under applicable law, Director
shall have the right to commence litigation in any court in the states
of Texas or Delaware having subject matter jurisdiction thereof and in
which venue is proper, seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Director.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Director to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Director and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Director within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Director as to
whether and to what extent Director would be permitted to be
indemnified under applicable law. The Company
2
<PAGE>
agrees to pay the reasonable fees of the special, independent counsel
referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including attorneys'
fees) and, if requested by Director, shall (within ten business days
after such written request) advance such expenses to Director, which
are incurred by Director in connection with any claim asserted against
or action brought by Director for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Idemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Director ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Director for
the portion thereof to which Director is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Director shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Director is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Director is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
director did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall be
in addition to any other rights Director may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded
3
<PAGE>
currently under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Director shall enjoy by this
Agreement the greater benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Director shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company director.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two- thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or
4
<PAGE>
participating in (including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to any Indemnifiable
Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Director is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Director in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Director is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Director, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Director to the extent Director has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Director
continues to serve as a director (or in one of the capacities
enumerated in Section 8(d) hereof) of the Company or of any other
enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
Title: President
/s/ R. Rudolph Reinfrank
--------------------------------
R. Rudolph Reinfrank
6
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and Roger M. Widmann (the
"Director"), a director of the Company;
WHEREAS, in recognition of Director's need for substantial protection
against personal liability in order to enhance Director's continued service
to the Company in an effective manner and of Director's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Director under certain circumstances, and in part to provide Director with
specific contractual assurance that the protection promised by such By-Laws
will be available to Director (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Director to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Director under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Director
agreeing to serve or continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Director to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Director, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Director an "Expense Advance". Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Director shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Director against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
<PAGE>
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined (in
a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Director
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant
to Section 1(a) shall be subject to the condition that, if when and to
the extent that the Reviewing Party determines that Director would not
be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Director (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Director has commenced legal proceedings in
a court of competent jurisdiction to secure a determination that
Director should be indemnified under applicable law, any determination
made by the Reviewing Party that Director would not be permitted to be
indemnified under applicable law shall not be binding and Director
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control, the Reviewing Party shall be the
special independent counsel referred to in Section 2 hereof. If there
has been no determination by the Reviewing Party or if the Reviewing
Party determines that Director substantively would not be permitted to
be indemnified in whole or in part under applicable law, Director
shall have the right to commence litigation in any court in the states
of Texas or Delaware having subject matter jurisdiction thereof and in
which venue is proper, seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Director.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Director to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Director and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Director within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Director as to
whether and to what extent Director would be permitted to be
indemnified under applicable law. The Company
2
<PAGE>
agrees to pay the reasonable fees of the special, independent counsel
referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including attorneys'
fees) and, if requested by Director, shall (within ten business days
after such written request) advance such expenses to Director, which
are incurred by Director in connection with any claim asserted against
or action brought by Director for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Idemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Director ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Director for
the portion thereof to which Director is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Director shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Director is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Director is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
director did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall be
in addition to any other rights Director may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded
3
<PAGE>
currently under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Director shall enjoy by this
Agreement the greater benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Director shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company director.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two- thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or
4
<PAGE>
participating in (including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to any Indemnifiable
Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Director is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Director in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Director is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Director, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Director to the extent Director has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Director
continues to serve as a director (or in one of the capacities
enumerated in Section 8(d) hereof) of the Company or of any other
enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
Title: President
/s/ Roger M. Widmann
--------------------------------
Roger M. Widmann
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and M. Timothy Carey (the
"Officer"), an officer of the Company;
WHEREAS, in recognition of Officer's need for substantial protection
against personal liability in order to enhance Officer's continued service
to the Company in an effective manner and of Officer's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Officer under certain circumstances, and in part to provide Officer with
specific contractual assurance that the protection promised by such By-Laws
will be available to Officer (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's Board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Officer to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Officer under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Officer agreeing to
serve or continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Officer was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Officer to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Officer, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Officer (an "Expense Advance"). Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Officer shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Officer against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
1
<PAGE>
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined (in
a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Officer
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant
to Section 1(a) shall be subject to the condition that, if, when and
to the extent that the Reviewing Party determines that Officer would
not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Officer (who hereby
agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Officer has commenced legal
proceedings in a court of competent jurisdiction to secure a
determination that Officer should be indemnified under applicable law,
any determination made by the Reviewing Party that Officer would not
be permitted to be indemnified under applicable law shall not be
binding and Officer shall not be required to reimburse the Company for
any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of Directors, and if
there has been such a Change in Control, the Reviewing Party shall be
the special independent counsel referred to in Section 2 hereof. If
there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Officer substantively would not be
permitted to be indemnified in whole or in part under applicable law,
Officer shall have the right to commence litigation in any court in
the states of Texas or Delaware having subject matter jurisdiction
thereof and in which venue is proper, seeking an initial determination
by the court or challenging any such determination by the Reviewing
Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Officer.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Officer to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Officer and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Officer within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Officer as to
whether and to what extent Officer would be permitted to be
indemnified under applicable law. The Company agrees to pay the
reasonable fees of the special, independent counsel referred to above
and to
2
<PAGE>
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Officer against any and all expenses (including attorneys'
fees) and, if requested by Officer, shall (within ten business days
after such written request) advance such expenses to Officer, which
are incurred by Officer in connection with any claim asserted against
or action brought by Officer for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Officer ultimately is determined to
be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Officer is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Officer for
the portion thereof to which Officer is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Officer has been successful on the merits or otherwise in defense
of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Officer shall be indemnified against all
Expenses incurred in connection therewith. In connection with any
determination by the Reviewing Party or otherwise as to whether
Officer is entitled to be indemnified hereunder, the burden of proof
shall be on the Company to establish that Officer is not so entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
Officer did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Officer hereunder shall be in
addition to any other rights Officer may have under the Company's By-
Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded currently
under the Company's By-Laws and this Agreement, it is the intent of
the parties hereto that Officer shall enjoy by this Agreement the
greater benefits so afforded by such change.
3
<PAGE>
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Officer shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company officer.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in any
Claim relating to any Indemnifiable Event.
4
<PAGE>
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Officer is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Officer in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Officer is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Officer, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Officer to the extent Officer has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Officer
continues to serve as a director or officer (or in one of the
capacities enumerated in Section 8(d) hereof) of the Company or of any
other enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
Title: Chairman, President and
Chief Executive Officer
/s/ M. Timothy Carey
--------------------------------
M. Timothy Carey
<PAGE>
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and Steven C. Grant (the
"Officer"), an officer of the Company;
WHEREAS, in recognition of Officer's need for substantial protection
against personal liability in order to enhance Officer's continued service
to the Company in an effective manner and of Officer's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Officer under certain circumstances, and in part to provide Officer with
specific contractual assurance that the protection promised by such By-Laws
will be available to Officer (regardless of, among other things, any
amendment to or revocation of such By-Laws, any change in the composition
of the Company's Board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Officer to the
fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Officer under the Company's directors' and
officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Officer agreeing to
serve or continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Officer was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Officer to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Officer, the Company shall advance (within
ten business days after such written request) any and all Expenses to
Officer (an "Expense Advance"). Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3 hereof,
prior to a Change in Control (as defined hereinafter), Officer shall
not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by Officer against the Company or
any director or officer of the Company, unless the Company has joined
in or consented to the initiation of such Claim.
1
<PAGE>
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined (in
a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Officer
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant
to Section 1(a) shall be subject to the condition that, if, when and
to the extent that the Reviewing Party determines that Officer would
not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Officer (who hereby
agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Officer has commenced legal
proceedings in a court of competent jurisdiction to secure a
determination that Officer should be indemnified under applicable law,
any determination made by the Reviewing Party that Officer would not
be permitted to be indemnified under applicable law shall not be
binding and Officer shall not be required to reimburse the Company for
any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of Directors, and if
there has been such a Change in Control, the Reviewing Party shall be
the special independent counsel referred to in Section 2 hereof. If
there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Officer substantively would not be
permitted to be indemnified in whole or in part under applicable law,
Officer shall have the right to commence litigation in any court in
the states of Texas or Delaware having subject matter jurisdiction
thereof and in which venue is proper, seeking an initial determination
by the court or challenging any such determination by the Reviewing
Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Officer.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights of
Officer to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by
Officer and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Officer within the last five years (other than in
connection with such matters). Such counsel, among other things,
shall render its written opinion to the Company and Officer as to
whether and to what extent Officer would be permitted to be
indemnified under applicable law. The Company agrees to pay the
reasonable fees of the special, independent counsel referred to above
and to
2
<PAGE>
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Officer against any and all expenses (including attorneys'
fees) and, if requested by Officer, shall (within ten business days
after such written request) advance such expenses to Officer, which
are incurred by Officer in connection with any claim asserted against
or action brought by Officer for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Officer ultimately is determined to
be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Officer is entitled under any
provision of this Agreement to indemnification by the Company of some
or a portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Officer for
the portion thereof to which Officer is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Officer has been successful on the merits or otherwise in defense
of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Officer shall be indemnified against all
Expenses incurred in connection therewith. In connection with any
determination by the Reviewing Party or otherwise as to whether
Officer is entitled to be indemnified hereunder, the burden of proof
shall be on the Company to establish that Officer is not so entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether
with or without court approval), conviction, or plea of nolo
contendere, or its equivalent, shall not create a presumption that
Officer did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Officer hereunder shall be in
addition to any other rights Officer may have under the Company's By-
Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether
by statute or judicial decision) or the Company's By-Laws permits
greater indemnification by agreement than would be afforded currently
under the Company's By-Laws and this Agreement, it is the intent of
the parties hereto that Officer shall enjoy by this Agreement the
greater benefits so afforded by such change.
3
<PAGE>
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Officer shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company officer.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities (as defined hereinafter), or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative or
investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in any
Claim relating to any Indemnifiable Event.
4
<PAGE>
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Officer is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not
done by Officer in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Officer is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of
the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Officer, who shall execute all papers
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable
the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim
made against Officer to the extent Officer has otherwise actually
received payment (under any insurance policy, By-Law or otherwise) of
the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Officer
continues to serve as a director or officer (or in one of the
capacities enumerated in Section 8(d) hereof) of the Company or of any
other enterprise at the Company's request.
5
<PAGE>
13. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by
a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
Title: Chairman, President and
Chief Executive Officer
/s/ Steven C. Grant
--------------------------------
Steven C. Grant
6
<PAGE>
D. DALE WOOD
CONSULTING AGREEMENT
This Consulting Agreement dated as of October 5, 1995 is entered into by
and between Weatherford Enterra, Inc., a Delaware corporation (the "Company"),
and D. Dale Wood ("Consultant").
W I T N E S S E T H:
WHEREAS, Consultant possesses valuable knowledge and experience in the oil
and gas industry, particularly the pipeline business; and
WHEREAS, the Company desires to engage Consultant to perform certain
services, as hereinafter specified; and
WHEREAS, Consultant is willing to enter into this Agreement with respect to
such services upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. Duties.
a. During the term of this Agreement, Consultant will perform certain
services at the Company's request, including without limitation the
following (the "Services"):
(i) Assistance in connection with the Company's pipeline business,
including without limitation customer contacts, industry
knowledge and sales efforts with respect to participation in the
pipeline repair work projected for the CIS and other areas;
(ii) Assistance with respect to personnel and management issues
related to the merger of Enterra Corporation into the Company;
and
(iii) Such other special projects as the Company and Consultant may
from time to time agree.
b. Consultant will report to Philip Burguieres, Chairman, President and
Chief Executive Officer of the Company during the term of this
Agreement.
1
<PAGE>
2. Term and Termination.
a. This Agreement will commence on October 5, 1995 and will continue
through October 4, 2000. Thereafter, this Agreement may continue on
terms agreed by the parties.
b. This Agreement shall terminate on the first to occur of the following
events:
(i) death of Consultant;
(ii) mutual written agreement of Consultant and a duly authorized
officer of the Company;
(iii) 30 days' notice by Consultant to the Company; or
(iv) breach by Consultant of any material term or condition of this
Agreement and failure by Consultant to cure such breach within
30 days after Consultant has received written notice thereof
from the Company.
3. Compensation.
a. As compensation for the Services rendered hereunder, the Company will
pay Consultant a fee of $50,000 per year, payable in monthly
installments of $4,166.67 on the first day of each month for the
current month.
b. In addition, the Company will grant Consultant an option to purchase
up to 84,500 shares (after giving effect to a one-for-two reverse
stock split effected on even date herewith) of the Company's Common
Stock, $.10 par value, in accordance with the terms of a Stock Option
Agreement dated as of the date of this Agreement. The option price
will be the fair market value of the Company's Common Stock on the
date of grant. Such option shall vest and become exercisable in five
equal annual installments, beginning October 5, 1996. Such option
will expire, if not exercised, on October 4, 2005.
4. Office Space; Expenses.
a. In the event the Company decides not to use the 6th floor of the
building located at 13100 Northwest Freeway, Houston, Texas (the
"Premises"), the premises currently occupied by Enterra Corporation,
for ongoing operations of the Company or a subsidiary and in the event
the Company or a subsidiary does not require the space for other
purposes, Consultant shall be allowed to use his current office at the
Premises up to and including December 31, 1995, at no cost to the
Consultant. Arrangements will be made by the parties with respect to
telephone and telefax usage, secretarial support, etc. to the extent
same are not related to the Services.
2
<PAGE>
b. Authorized expenses incurred by Consultant while performing the
Services for the Company, including expenses for entertainment,
travel, automobile mileage allowance and similar items, will be
reimbursed by the Company, provided such expenses are made in
accordance with the Company's policies at that time and approved by
the Company. The Company will reimburse Consultant on a monthly basis
or at the end of the term of this Agreement, as applicable, upon
presentment by Consultant of an itemized accounting of such
expenditures, including receipts, setting forth (in appropriate detail
with the date, place, amount, names, etc.) the individual items for
which reimbursement is sought. Major expense items, such as travel,
must be authorized prior to Consultant's incurring the expense.
5. Relationship Between the Parties.
a. Consultant is retained and engaged by the Company only for the
purposes and to the extent set forth in this Agreement, and his
relation to the Company and its subsidiary and affiliated companies
shall be that of an independent contractor. Consultant is solely
responsible for determining the manner in which the Services are to be
performed; however, Consultant will exercise professional judgment in
determining appropriate circumstances when Company management should
be involved.
b. Consultant will be expected to devote sufficient time as is reasonably
necessary to provide the Services in a manner satisfactory to the
Company; provided, however, in no event shall Consultant be required
to expend more than 200 hours per year providing such Services.
Except as provided in Section 8 below, Consultant shall be free to
dispose of such portion of his entire time, energy and skill during
regular business hours, as he is not obligated to devote hereunder to
the Company and its subsidiary and affiliated companies, to other
pursuits, persons, firms or corporations.
c. Consultant shall not be considered under the provisions of this
Agreement or otherwise as having an employee status and shall not be
entitled to participate in any plans, arrangements or distributions by
the Company or its subsidiary or affiliated companies pertaining to or
in connection with any pension, stock, bonus, insurance, profit
sharing or similar benefits for the Company's regular employees.
6. Taxes. Consultant will be liable for all taxes imposed on him or his
business by any government. Accordingly, the Company will not withhold
from Consultant's compensation any monies for payment of taxes, including
income taxes, social security taxes, etc. Consultant agrees to defend,
hold harmless and indemnify the Company from and against the payment of any
taxes on account of Consultant's performance hereunder.
3
<PAGE>
7. Restrictive Covenants. Consultant further agrees and binds himself as
follows:
a. Inventions and Developments.
(i) Consultant agrees to hold in complete trust for the benefit of
the Company, and to disclose promptly and fully to the Company
in writing and to assign, and Consultant hereby assigns to the
Company, any and all inventions, copyrightable works,
discoveries, innovations or other developments made, discovered,
conceived or developed by Consultant, solely or jointly with
others, including the Company, as the result of, in connection
with or related to the Services (the "Intellectual Property
Rights"). Any and all such Intellectual Property Rights,
including without limitation rights in inventions and
copyrightable works, shall be the sole and exclusive property of
the Company, whether patentable or not, and Consultant agrees
that Consultant will assist and fully cooperate in every proper
way, at the Company's expense, in securing and enforcing, for
the Company's sole benefit, patents and/or copyrights for such
Intellectual Property Rights in any and all countries.
(ii) Consultant agrees at the request of the Company (but without
additional compensation from the Company) to execute any and all
papers and perform all lawful acts that the Company deems
necessary for the preparation, filing, prosecution and
maintenance of applications for U.S. Letters Patent and foreign
letters patent and applications for U.S. copyright registration
and foreign copyrights on such Intellectual Property Rights and
to execute such instruments as are necessary to assign to the
Company, its successors, assigns or nominees, all of
Consultant's right, title and interest in such Intellectual
Property Rights and the like, so as to establish or perfect in
the Company, its successors, assigns or nominees, the entire
right, title and interest in and to such Intellectual Property
Rights, and also to execute any instruments necessary or that
the Company may deem desirable in connection with any
continuation, renewal or reissue thereof. All expenses incurred
by Consultant by reason of the performance of any of the
obligations set forth herein shall be borne by the Company.
b. Work Product. All work product and generally all materials of any
form (such as drawings, reports, calculations, analyses, etc.) that
recite or are based on secret, proprietary or confidential information
of the Company or corporations affiliated with the Company that are
received or prepared by Consultant while performing the Services are
"work for hire" and are the sole property of the Company. Upon
completion of the Services or earlier termination of this Agreement
for whatever reason, Consultant shall forthwith deliver to the Company
all such materials. No copies of the same or any part shall be
retained by Consultant.
4
<PAGE>
c. Trade Secrets and Confidential Information. Consultant recognizes,
understands and acknowledges that Consultant may have access to
certain trade secrets, financial information, strategic plans and
other confidential information of the Company and its subsidiary and
affiliated companies and that such information constitutes valuable,
special and unique property of the Company and such other companies.
Consultant shall use his best efforts and exercise utmost diligence to
protect and guard such information and shall keep such information
strictly confidential and will not, during the term of this Agreement,
and for a period of two years after the termination hereof, directly
or indirectly, disclose any of such trade secrets or confidential
information to any person, firm, corporation or other entity for any
reason or purpose whatsoever except to authorized representatives of
the Company. In the event of a breach or threatened breach by
Consultant of the provisions of this Agreement, the Company shall be
entitled to an injunction restraining Consultant from disclosing, in
whole or in part, such trade secrets and confidential information.
Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages from Consultant.
The restrictions on disclosures set forth herein shall not apply to
any portion of such trade secrets or confidential information that (i)
through no fault of Consultant is generally available to the public at
the time of such disclosure to Consultant or thereafter becomes
generally available to the public, but only when and to the extent
such information becomes public, (ii) is disclosed to Consultant by a
third party having the right to disclose such information or (iii) was
known to Consultant, as shown by suitable evidence, before such
information was received from the Company or its predecessors in
interest. It is understood, for the purpose of this paragraph, that
specific confidential information disclosed by the Company shall not
be deemed to be available to the public or in the possession of
Consultant merely because such information is embraced by more general
information available to the public or in the possession of
Consultant.
d. In the course of providing Services to the Company, Consultant, with
respect to discussing the acquisition of other business entities,
shall not disclose the identity of any such entity or any information,
whether confidential or not, relating to the Company, without the
prior written consent of an executive officer of the Company, and then
only to extent specifically outlined by the Company.
8. Conflict of Interest. Consultant agrees that he will not, during the term
of this Agreement, without the prior written consent of the Company,
directly or indirectly, enter into competition with the Company in respect
of any business as conducted by either the Company or Enterra Corporation,
or by any of their respective subsidiaries or affiliates, prior to the date
hereof.
9. No Power to Act on Behalf of the Company. Consultant shall have no right,
power or authority to create any obligation, express or implied, or make
any representation on behalf of the Company except as Consultant may be
expressly authorized from time to time by the Company in writing and then
only to the extent of such authorization.
5
<PAGE>
10. Consultant's Covenants. Consultant covenants to the Company as follows:
a. In performing hereunder, Consultant will comply at all times with all
applicable laws and regulations of the United States and any other
jurisdiction in which Consultant may perform Services hereunder.
b. In performing hereunder, Consultant will comply at all times with all
applicable Company policies and procedures and will perform the
Services in a manner consistent with applicable industry standards.
c. Consultant covenants that his execution of this Agreement does not
conflict with any obligations he has under any other oral or written
agreement.
11. Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when hand
delivered, deposited in the U.S. mail in a registered, postage prepaid
envelope, or telefaxed, with confirmation, if to Consultant, to D. Dale
Wood, _________________________________________________________________
______________________________, telefax number ________________, and if to
the Company, to Weatherford Enterra, Inc., 1360 Post Oak Boulevard,
Houston, Texas 77056, Attn.: Suzanne Thomas, telefax number 713/622-0913,
or to such other address or telefax number as either party shall designate
by written notice to the other.
12. Assignment. Neither party may assign his or its rights or obligations
hereunder without obtaining the prior written consent of the other party.
The rights and obligations of the Company hereunder shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Company and permitted assigns of Consultant.
13. Miscellaneous.
a. This Agreement shall be subject to and governed by the laws of the
State of Texas.
b. Failure to insist upon strict compliance with any provision hereof
shall not be deemed a waiver of such provision or any other provision
hereof.
c. This Agreement may not be modified except by an agreement in writing
executed by the parties hereto.
d. The invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of any other provision.
e. This Agreement may be executed in duplicate any of which and all of
which will constitute one and the same document.
14. Entire Agreement. This Agreement and the Stock Option Agreement contain
the entire agreement of the parties hereto with respect to the engagement
of Consultant by the
6
<PAGE>
Company, and all previous written and oral discussions and negotiations
have been merged into this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WEATHERFORD ENTERRA, INC.
By:
-----------------------------------
Name: Philip Burguieres
Title: Chairman, President and
Chief Executive Officer
---------------------------------------
D. Dale Wood
7
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<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 13,163
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<RECEIVABLES> 129,562
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<PP&E> 567,901
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0
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<OTHER-SE> 311,130
<TOTAL-LIABILITY-AND-EQUITY> 474,610
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