<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1995
REGISTRATION NUMBER 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WEATHERFORD INTERNATIONAL INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1389 74-1681642
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of
incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>
1360 POST OAK BOULEVARD, SUITE 1000
HOUSTON, TEXAS 77056
(713) 439-9400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
H. SUZANNE THOMAS
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
WEATHERFORD INTERNATIONAL INCORPORATED
1360 POST OAK BOULEVARD, SUITE 1000
HOUSTON, TEXAS 77056
(713) 439-9400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<S> <C>
CHARLES L. STRAUSS DAVID R. KING
FULBRIGHT & JAWORSKI L.L.P. MORGAN, LEWIS & BOCKIUS
1301 MCKINNEY, SUITE 5100 2000 ONE LOGAN SQUARE
HOUSTON, TEXAS 77010-3095 PHILADELPHIA, PENNSYLVANIA 19103-6993
(713) 651-5151 (215) 963-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon consummation of the merger described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (2) (2) FEE(3)
<S> <C> <C> <C> <C>
Common Stock, $.10 par value.. 24,100,000 Not applicable $595,504,577.16 $205,346.41
</TABLE>
(1) Represents the maximum number of shares of Weatherford's Common Stock
issuable upon consummation of the Merger described herein.
(2) Pursuant to Rule 457(c) and Rule 457(f) under the Securities Act of 1933,
the proposed maximum offering price is calculated as the aggregate market
value of the Enterra Common Stock subject to the Merger, which is based on
the average of the high and low sale prices of Enterra Common Stock as
reported on the New York Stock Exchange on August 24, 1995.
(3) In accordance with Rule 457(b) under the Securities Act of 1933, the
registration fee included with this Registration Statement has been offset
by the $116,200 that was previously paid by the Registrant with the filing
of preliminary proxy materials on Schedule 14A (which contained the Joint
Proxy Statement/Prospectus included herein) filed on August 3, 1995 with the
Commission.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
WEATHERFORD INTERNATIONAL INCORPORATED
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM OF FORM S-4 LOCATION IN THE PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus............................ Cover of Registration Statement; Cross Reference
Sheet; Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page of Prospectus; Available
Information; Table of Contents; Incorporation of
Certain Documents by Reference
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information................................... Summary; Special Considerations; Weatherford
International Incorporated; Enterra Corporation; The
Merger; Market Price of Common Stock; Weatherford
and Enterra Combined Unaudited Pro Forma Financial
Information; Weatherford Selected Financial Data;
Enterra Selected Financial Data
4. Terms of the Transaction............................. Summary; The Merger; Terms of the Merger; Comparative
Rights of Stockholders of Weatherford and Enterra
5. Pro Forma Financial Information...................... Summary; Weatherford and Enterra Combined Unaudited
Pro Forma Financial Information; Weatherford
Selected Financial Data; Enterra Selected Financial
Data
6. Material Contacts with the Company Being Acquired.... Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters....... Not Applicable
8. Interests of Named Experts and Counsel............... Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
10. Information with Respect to S-3
Registrants......................................... Available Information; Summary; Weatherford
International Incorporated; Incorporation of Certain
Documents by Reference
11. Incorporation of Certain Information by Reference.... Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3 Registrants... Not Applicable
13. Incorporation of Certain Information by Reference.... Not Applicable
14. Information with Respect to Registrants Other Than
S-3 or S-2 Registrants.............................. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM OF FORM S-4 LOCATION IN THE PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
15. Information with Respect to S-3 Companies............ Available Information; Summary; Enterra Corporation;
Incorporation of Certain Documents by Reference
<C> <S> <C>
16. Information with Respect to S-2 or S-3 Companies..... Not Applicable
17. Information with Respect to Companies Other Than S-3
or S-2 Companies.................................... Not Applicable
18. Information if Proxies, Consents or Authorizations
are to be Solicited................................. Prospectus Summary; General Information About The
Meetings; The Merger; Management; Proposal to Amend
Weatherford's Restated Certificate of Incorporation;
Proposal to Amend Weatherford's 1991 Stock Option
Plan; Proposal to Amend Weatherford's Restricted
Stock Incentive Plan; Stockholders' Proposals
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer..... Not Applicable
</TABLE>
<PAGE>
Weatherford International Incorporated [LOGO]
1360 Post Oak Boulevard
Suite 1000
Houston, TX 77056-3098
August 31, 1995
Dear Stockholder:
You are cordially invited to attend Weatherford's Special Meeting of
Stockholders to be held at 10:30 a.m., Houston time, on Thursday, October 5,
1995, at The Ritz-Carlton, 1919 Briar Oaks Lane, Houston, Texas.
At the Special Meeting, you will be asked to consider and vote upon the
approval and adoption of (i) an Agreement and Plan of Merger dated as of June
23, 1995, as amended (the "Merger Agreement"), that provides for the business
combination of Enterra Corporation ("Enterra") and Weatherford through a merger
of Enterra with and into Weatherford and (ii) amendments to Weatherford's
Restated Certificate of Incorporation to effect a contemporaneous one-for-two
reverse stock split of Weatherford Common Stock and to change Weatherford's name
to "Weatherford Enterra, Inc." Pursuant to the terms of the Merger Agreement,
each outstanding share of Enterra Common Stock will be converted into the right
to receive 1.69 shares of Weatherford Common Stock, before giving effect to the
reverse stock split (0.845 of a share of Weatherford Common Stock after giving
effect to the reverse stock split). You also will be asked to consider and vote
upon (i) an amendment to Weatherford's 1991 Stock Option Plan to make an
additional 3,000,000 shares of Weatherford Common Stock (before giving effect to
the reverse stock split) available for issuance upon the exercise of options
granted under such plan and (ii) an amendment to Weatherford's Restricted Stock
Incentive Plan to make an additional 250,000 shares of Weatherford Common Stock
(before giving effect to the reverse stock split) available for issuance under
such plan.
The proposed merger is subject to a number of conditions, including
obtaining the approval of the stockholders of Weatherford and the stockholders
of Enterra. A summary of the basic terms and conditions of the merger, the
reverse stock split, the name change and the amendments to the Weatherford
plans, certain financial and other information relating to Weatherford and
Enterra and a copy of the Merger Agreement are set forth in the enclosed Joint
Proxy Statement/Prospectus. Please review and consider the enclosed materials
carefully.
The Weatherford Board of Directors has approved the merger, the Merger
Agreement, the reverse stock split, the name change and the amendments to the
Weatherford plans. THE BOARD OF DIRECTORS AND MANAGEMENT BELIEVE THAT ALL OF THE
PROPOSALS TO BE PRESENTED TO THE STOCKHOLDERS AT THE SPECIAL MEETING ARE IN THE
BEST INTERESTS OF WEATHERFORD AND THE STOCKHOLDERS OF WEATHERFORD AND RECOMMEND
THAT YOU VOTE FOR THEIR APPROVAL AND ADOPTION.
The Board of Directors appreciates and encourages stockholder participation
in Weatherford's affairs. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK
THAT YOU MARK, DATE, SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
If you have multiple stockholder accounts and receive more than one set of these
materials, please be sure to vote each proxy and return it in the respective
postage-paid envelope provided. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED FOR
EXCHANGE BY STOCKHOLDERS OF WEATHERFORD PRIOR TO THE APPROVAL OF THE PROPOSALS
AND THE RECEIPT OF A LETTER OF TRANSMITTAL.
Thank you for your continued interest and cooperation.
Very truly yours,
[LOGO]
PHILIP BURGUIERES
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
WEATHERFORD INTERNATIONAL INCORPORATED
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given that a Special Meeting of Stockholders of Weatherford
International Incorporated ("Weatherford") will be held at 10:30 a.m., Houston
time, on Thursday, October 5, 1995, at The Ritz-Carlton, 1919 Briar Oaks Lane,
Houston, Texas, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger dated as of June 23, 1995, as amended, between
Weatherford and Enterra Corporation ("Enterra"), and the merger of
Enterra with and into Weatherford, pursuant to which each outstanding
share of Enterra common stock, $1.00 par value, will be converted into
the right to receive 1.69 shares of Weatherford's common stock, $.10 par
value ("Weatherford Common Stock"), before giving effect to the reverse
stock split described below (0.845 of a share of Weatherford Common Stock
after giving effect to the reverse stock split).
2. To consider and vote upon a proposal to approve and adopt amendments to
Weatherford's Restated Certificate of Incorporation (i) to effect a
contemporaneous one-for-two reverse stock split of Weatherford Common
Stock and (ii) to change Weatherford's name to "Weatherford Enterra,
Inc."
3. To consider and vote upon a proposal to approve and adopt an amendment
to Weatherford's 1991 Stock Option Plan to make an additional 3,000,000
shares of Weatherford Common Stock (before giving effect to the reverse
stock split) available for issuance upon the exercise of options granted
under such plan.
4. To consider and vote upon a proposal to approve and adopt an amendment
to Weatherford's Restricted Stock Incentive Plan to make an additional
250,000 shares of Weatherford Common Stock (before giving effect to the
reverse stock split) available for issuance under such plan.
5. To consider and take action upon any other matter that may properly come
before the Special Meeting or any adjournment thereof.
Holders of record of Weatherford Common Stock at the close of business on
August 24, 1995 will be entitled to notice of, and to vote at, the Special
Meeting or any adjournment thereof. A list of the holders of record of
Weatherford Common Stock as of August 24, 1995 will be open on and after
September 25, 1995 to the examination of any such stockholder for any purpose
germane to the Special Meeting at Weatherford's offices at 1360 Post Oak
Boulevard, Suite 1000, Houston, Texas, during ordinary business hours.
By order of the Board of Directors,
[LOGO]
H. SUZANNE THOMAS
SECRETARY
August 31, 1995
------------------------
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. EVEN IF
YOU PLAN TO BE PRESENT, YOU ARE URGED TO MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
August 31, 1995
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Enterra Corporation ("Enterra") to be held at 10:00 a.m.,
Houston time, on Thursday, October 5, 1995, at The Ritz-Carlton, 1919 Briar Oaks
Lane, Houston, Texas. Enclosed are a Notice of Special Meeting of Stockholders,
a Joint Proxy Statement/Prospectus and a form of proxy for the Special Meeting.
At the Special Meeting, you will be asked to consider and vote upon the
approval and adoption of an Agreement and Plan of Merger, dated as of June 23,
1995, as amended (the "Merger Agreement"), that provides for the business
combination of Enterra and Weatherford International Incorporated
("Weatherford") through a merger of Enterra with and into Weatherford (the
"Merger"). Pursuant to the terms of the Merger Agreement, each outstanding share
of Enterra common stock will be converted into the right to receive 1.69 shares
of Weatherford common stock, before giving effect to a contemporaneous
one-for-two reverse stock split of Weatherford common stock (0.845 of a share of
Weatherford common stock after giving effect to the reverse stock split).
The business combination of Enterra with Weatherford is an important element
in Enterra's long-standing strategic plan. Weatherford is a diversified
international energy services 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 handling services, renting specialized
oilfield equipment and providing fishing services and related tools, and
manufacturing and selling cementation products and other equipment.
The Merger is subject to a number of conditions, including obtaining the
approval of the stockholders of Enterra and the stockholders of Weatherford.
Details of the Merger, certain financial and other information relating to
Enterra and Weatherford and a copy of the Merger Agreement are set forth in the
accompanying Joint Proxy Statement/Prospectus, which you should read carefully.
You should also consider the additional information regarding Enterra and
Weatherford contained in the other documents also set forth or incorporated by
reference in the Joint Proxy Statement/Prospectus.
THE BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND THE MERGER. THE
BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF ENTERRA
AND THE STOCKHOLDERS OF ENTERRA AND RECOMMENDS THAT YOU VOTE FOR ITS APPROVAL.
All stockholders are invited to attend the Special Meeting in person. The
affirmative vote of the holders of a majority of the shares of Enterra common
stock entitled to vote at the Special Meeting is required for the approval and
adoption of the Merger Agreement and the Merger.
PLEASE DO NOT SEND ANY SHARE CERTIFICATES AT THIS TIME.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE SPECIAL MEETING, YOU ARE
URGED TO PROMPTLY COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
Sincerely,
[LOGO]
D. DALE WOOD
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
ENTERRA CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the
"Special Meeting") of Enterra Corporation ("Enterra") will be held at 10:00
a.m., Houston time, on Thursday, October 5, 1995, at The Ritz-Carlton, 1919
Briar Oaks Lane, Houston, Texas, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of June 23, 1995, as amended (the "Merger
Agreement"), between Weatherford International Incorporated
("Weatherford") and Enterra, as well as the merger of Enterra with and
into Weatherford pursuant thereto (the "Merger"), in which each
outstanding share of Enterra common stock, $1.00 par value, will be
converted into the right to receive 1.69 shares of Weatherford common
stock, $.10 par value, before giving effect to a contemporaneous
one-for-two reverse stock split of Weatherford common stock (0.845 of a
share of Weatherford common stock after giving effect to the reverse
stock split) and all related transactions.
2. To consider and take action upon any other matter that may properly come
before the Special Meeting or any adjournment thereof.
The affirmative vote of the holders of a majority of the shares of Enterra
common stock entitled to vote at the Special Meeting is required for the
approval and adoption of the Merger Agreement and the Merger.
THE BOARD OF DIRECTORS OF ENTERRA HAS APPROVED THE MERGER AGREEMENT AND THE
PROPOSED MERGER AND RECOMMENDS THAT ENTERRA'S STOCKHOLDERS VOTE TO APPROVE AND
ADOPT THE MERGER AGREEMENT AND THE MERGER.
Only stockholders of record of common stock at the close of business on
August 24, 1995 will be entitled to notice of the Special Meeting, and to vote
at the Special Meeting or any adjournment thereof. A list of stockholders of
Enterra of record as of the close of business on August 24, 1995 will be
available for inspection during normal business hours for ten days prior to the
Special Meeting at Enterra's executive office at 13100 Northwest Freeway, Sixth
Floor, Houston, Texas 77040.
By order of the board of directors,
[LOGO]
M. GAY MATHER,
SECRETARY
August 31, 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED SO THAT THE PRESENCE
OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT
TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE SPECIAL MEETING. YOU MAY REVOKE
YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
<TABLE>
<S> <C>
[LOGO]
WEATHERFORD INTERNATIONAL [LOGO]
INCORPORATED ENTERRA CORPORATION
</TABLE>
JOINT PROXY STATEMENT
SPECIAL MEETINGS OF STOCKHOLDERS
------------------------
WEATHERFORD INTERNATIONAL INCORPORATED
PROSPECTUS
AUGUST 31, 1995
This Joint Proxy Statement/Prospectus is being furnished to stockholders of
Weatherford International Incorporated, a Delaware corporation ("Weatherford"),
in connection with the solicitation of proxies by its Board of Directors for use
at the Special Meeting of Stockholders of Weatherford (the "Weatherford Special
Meeting") scheduled to be held on Thursday, October 5, 1995, at 10:30 a.m.,
Houston time, at The Ritz-Carlton, 1919 Briar Oaks Lane, Houston, Texas, or any
adjournment thereof, and to stockholders of Enterra Corporation, a Delaware
corporation ("Enterra"), in connection with the solicitation of proxies by its
Board of Directors for use at the Special Meeting of Stockholders of Enterra
(the "Enterra Special Meeting") scheduled to be held on Thursday, October 5,
1995, at 10:00 a.m., Houston time, at The Ritz-Carlton, 1919 Briar Oaks Lane,
Houston, Texas, or any adjournment thereof.
At the Weatherford Special Meeting and the Enterra Special Meeting, the
holders of common stock, $.10 par value, of Weatherford ("Weatherford Common
Stock"), and the holders of common stock, $1.00 par value, of Enterra ("Enterra
Common Stock"), respectively, will be asked to consider and vote upon a proposal
to approve and adopt the business combination of Enterra and Weatherford through
a merger of Enterra with and into Weatherford (the "Merger"), with Weatherford
being the surviving corporation, pursuant to the Agreement and Plan of Merger,
dated as of June 23, 1995, as amended on August 28, 1995 (the "Merger
Agreement"), between Weatherford and Enterra. Such approvals are a condition to
consummating the Merger. Upon consummation of the Merger, Enterra will cease to
exist as a separate corporation. At the effective time of the Merger, each
issued and outstanding share of Enterra Common Stock will be converted into the
right to receive 1.69 shares of Weatherford Common Stock, before giving effect
to a one-for-two reverse stock split (the "Reverse Stock Split") of Weatherford
Common Stock as of the effective time of the Merger (0.845 of a share of
Weatherford Common Stock after giving effect to the Reverse Stock Split). See
"Terms of the Merger". A copy of the Merger Agreement is attached hereto as
Appendix A. The stockholders of Weatherford also will be asked to approve and
adopt (i) amendments to Weatherford's Restated Certificate of Incorporation to
effect the Reverse Stock Split and to change Weatherford's name to "Weatherford
Enterra, Inc." (the "Name Change"), (ii) an amendment to Weatherford's 1991
Stock Option Plan (the "1991 Option Plan") to make an additional 3,000,000
shares of Weatherford Common Stock (before giving effect to the Reverse Stock
Split) available for issuance upon the exercise of options granted under the
1991 Option Plan and (iii) an amendment to Weatherford's Restricted Stock
Incentive Plan (the "Restricted Plan") to make an additional 250,000 shares of
Weatherford Common Stock (before giving effect to the Reverse Stock Split)
available for issuance under the Restricted Plan. The amendments to the 1991
Option Plan and the Restricted Plan are collectively referred to in this Joint
Proxy Statement/Prospectus as the "Weatherford Plan Amendments".
This Joint Proxy Statement/Prospectus also constitutes the prospectus of
Weatherford pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the issuance of up to 24,100,000 shares of Weatherford
Common Stock in connection with the Merger (after giving effect to the Reverse
Stock Split).
This Joint Proxy Statement/Prospectus and the accompanying proxy are first
being mailed to stockholders of Weatherford and to stockholders of Enterra on or
about August 31, 1995.
------------------------
AN INVESTMENT IN WEATHERFORD COMMON STOCK AFTER THE MERGER
INVOLVES CERTAIN RISKS. SEE "SPECIAL CONSIDERATIONS".
THE SHARES OF WEATHERFORD COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS AUGUST 31, 1995.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY WEATHERFORD OR ENTERRA. THIS JOINT PROXY STATEMENT/
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS OR A
SOLICITATION OF A PROXY IN ANY JURISDICTION WHERE, OR TO ANY PERSON WHOM, IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY HEREOF NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
WEATHERFORD OR ENTERRA SINCE THE DATE HEREOF OR THAT THE INFORMATION IN THIS
JOINT PROXY STATEMENT/PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
AVAILABLE INFORMATION
Weatherford and Enterra are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by Weatherford and Enterra with the
Commission can be inspected at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
the regional offices of the Commission at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, New York, New York 10048. They may also be inspected at the offices of
the New York Stock Exchange, 22 Broad Street, New York, New York 10006. Copies
of such material may be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
Weatherford has filed with the Commission a Registration Statement on Form
S-4 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Joint Proxy Statement/ Prospectus constitutes
the prospectus of Weatherford filed as part of the Registration Statement and
does not contain all the information contained in the Registration Statement,
certain portions of which are omitted as permitted by the rules and regulations
of the Commission. For further information with respect to Weatherford and the
securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, which may be inspected at the Commission's
offices, without charge, or copies of which may be obtained from the Commission
upon payment of prescribed fees. Statements contained in this Joint Proxy
Statement/Prospectus as to the contents of any contract or other document filed
as an exhibit to the Registration Statement are not necessarily complete, and in
each instance reference is hereby made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference. All information herein with
respect to Weatherford has been furnished by Weatherford, and all information
herein with respect to Enterra has been furnished by Enterra.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
AVAILABLE INFORMATION........................... 2
SUMMARY......................................... 4
The Companies................................. 4
The Special Meetings.......................... 4
The Merger.................................... 5
Comparative Rights of Stockholders of
Weatherford and Enterra...................... 10
Proposal to Amend Weatherford's Certificate of
Incorporation................................ 10
Proposal to Amend Weatherford Stock Plans..... 11
Market Price Data............................. 11
Summary Financial Information................. 12
Comparative Per Share Data.................... 15
SPECIAL CONSIDERATIONS.......................... 16
Special Considerations with Respect to
Weatherford.................................. 16
Special Considerations with Respect to
Enterra...................................... 16
Special Considerations with Respect to the
Combined Company............................. 16
WEATHERFORD INTERNATIONAL INCORPORATED.......... 18
General....................................... 18
Recent Developments........................... 18
ENTERRA CORPORATION............................. 18
General....................................... 18
Recent Developments........................... 19
GENERAL INFORMATION ABOUT THE MEETINGS.......... 19
Date, Time and Place of Special Meetings...... 19
Record Date and Outstanding Shares............ 19
Vote Required................................. 20
Voting and Revocation of Proxies.............. 21
Solicitation of Proxies....................... 21
Other Matters................................. 21
THE MERGER...................................... 22
General Description of the Merger............. 22
Background.................................... 22
Joint Reasons for the Merger.................. 27
Weatherford's Reasons for the Merger.......... 28
Recommendation of the Weatherford Board of
Directors.................................... 29
Enterra's Reasons for the Merger.............. 29
Recommendation of the Enterra Board of
Directors.................................... 30
Opinions of Financial Advisors................ 30
Interests of Certain Persons in the Merger.... 40
Certain U.S. Federal Income Tax
Consequences................................. 43
Accounting Treatment.......................... 44
Governmental and Regulatory Approvals......... 44
NYSE Listing.................................. 45
Restrictions on Resales by Affiliates......... 45
No Dissenters' Rights......................... 45
TERMS OF THE MERGER............................. 46
Effective Time of the Merger.................. 46
Manner and Basis of Converting Shares......... 46
Enterra Options............................... 46
Employee Matters.............................. 47
Stockholders Agreement........................ 48
Conditions to the Merger...................... 52
<CAPTION>
PAGE
---------
<S> <C>
Representations and Warranties of Weatherford
and Enterra.................................. 54
Conduct of Business of Weatherford and Enterra
Prior to Merger.............................. 55
Conduct of Business of the Combined Company
Following Merger............................. 56
No Solicitation............................... 57
Payment in the Event of an Alternative
Transaction.................................. 59
Termination or Amendment of Merger
Agreement.................................... 60
Indemnification............................... 60
COMPARATIVE RIGHTS OF STOCKHOLDERS OF
WEATHERFORD AND ENTERRA........................ 62
Special Vote Required for Certain
Combinations................................. 62
Vote Required for Extraordinary Corporate
Transactions................................. 63
Disposition of Assets......................... 63
Removal of Directors.......................... 63
Stockholder Consent in Lieu of Meeting........ 63
Director Qualification and Number............. 64
Power to Call Special Meetings of
Stockholders................................. 64
MARKET PRICE OF COMMON STOCK.................... 65
Market Information............................ 65
Dividend Information.......................... 65
WEATHERFORD AND ENTERRA COMBINED UNAUDITED PRO
FORMA FINANCIAL INFORMATION.................... 66
WEATHERFORD SELECTED FINANCIAL DATA............. 73
ENTERRA SELECTED FINANCIAL DATA................. 74
MANAGEMENT...................................... 75
Directors and Executive Officers.............. 75
Stock Ownership of Certain Beneficial Owners
and Management............................... 77
PROPOSAL TO AMEND WEATHERFORD'S RESTATED
CERTIFICATE OF INCORPORATION................... 82
PROPOSAL TO AMEND WEATHERFORD'S 1991 STOCK
OPTION PLAN.................................... 84
PROPOSAL TO AMEND WEATHERFORD'S RESTRICTED STOCK
INCENTIVE PLAN................................. 87
RELATIONSHIPS WITH INDEPENDENT PUBLIC
ACCOUNTANTS.................................... 90
LEGAL MATTERS................................... 90
EXPERTS......................................... 90
STOCKHOLDERS' PROPOSALS......................... 91
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE...................................... 91
APPENDIX A: AGREEMENT AND PLAN OF MERGER........ A-1
APPENDIX B: OPINION OF MERRILL LYNCH & CO. ..... B-1
APPENDIX C: OPINION OF SIMMONS & COMPANY
INTERNATIONAL, INC. ................ C-1
APPENDIX D: FIRST RESERVE STOCKHOLDERS
AGREEMENT........................... D-1
</TABLE>
3
<PAGE>
SUMMARY
THE FOLLOWING CONTAINS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED
ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS. THIS SUMMARY DOES NOT
CONTAIN A COMPLETE STATEMENT OF ALL MATERIAL INFORMATION RELATING TO THE MERGER,
THE MERGER AGREEMENT, THE REVERSE STOCK SPLIT, THE NAME CHANGE AND THE
WEATHERFORD PLAN AMENDMENTS AND IS SUBJECT AND QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED
ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS,
THE MERGER AGREEMENT, WHICH IS ATTACHED HERETO AND INCORPORATED HEREIN BY
REFERENCE, AND THE OTHER APPENDICES ATTACHED HERETO. CERTAIN CAPITALIZED TERMS
USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS. UNLESS OTHERWISE INDICATED, HISTORICAL INFORMATION FOR
WEATHERFORD INCLUDED IN THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT REFLECT
THE REVERSE STOCK SPLIT.
THE COMPANIES
WEATHERFORD INTERNATIONAL INCORPORATED. 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 handling 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. The principal executive offices of Weatherford are located at 1360 Post
Oak Boulevard, Suite 1000, Houston, Texas 77056, and its telephone number at
that address is (713) 439-9400.
ENTERRA CORPORATION. Enterra is a worldwide provider of specialized
services and products to the oil and gas industry through its oilfield, pipeline
and compression services and equipment businesses. Enterra's oilfield services
and equipment business consists primarily of the rental and sale of equipment
used in oil and gas well drilling, completion, production and workover
activities and the provision of well control assistance and fishing services.
The pipeline services and equipment business consists of the rental and sale of
specialized equipment used in construction or rehabilitation of oil and gas
pipelines. The compression services and equipment business consists of the
rental and sale of gas compressor systems for use in the production and
transportation of natural gas. Enterra regularly reviews potential business
acquisitions in its core businesses and is currently pursuing a substantial
acquisition in its gas compression business. The principal executive offices of
Enterra are located at 13100 Northwest Freeway, Sixth Floor, Houston, Texas
77040, and its telephone number at that address is (713) 462-7300.
As used herein, unless the context otherwise requires, the term
"Weatherford" refers to Weatherford International Incorporated and its
subsidiaries, and the term "Enterra" refers to Enterra Corporation and its
subsidiaries.
THE SPECIAL MEETINGS
TIME, DATE, PLACE AND PURPOSE. The Weatherford Special Meeting will be held
at 10:30 a.m., Houston time, on Thursday, October 5, 1995, at The Ritz-Carlton,
1919 Briar Oaks Lane, Houston, Texas, for the purpose of approving and adopting
the Merger, the Merger Agreement, the Reverse Stock Split, the Name Change and
the Weatherford Plan Amendments, as required under Delaware law, the 1991 Option
Plan, the Restricted Plan and Weatherford's listing agreement with the New York
Stock Exchange ("NYSE"), as applicable. The Enterra Special Meeting will be held
at 10:00 a.m., Houston time, on Thursday, October 5, 1995, at The Ritz-Carlton,
1919 Briar Oaks Lane, Houston, Texas, for the purpose of approving and adopting
the Merger and the Merger Agreement, as required under Delaware law and
Enterra's listing agreement with the NYSE.
RECORD DATE, VOTE REQUIRED AND STOCKHOLDER AGREEMENTS. Only holders of
record of Weatherford Common Stock and holders of record of Enterra Common Stock
at the close of business on August 24, 1995 (the "Record Date") are entitled to
notice of, and to vote at, the Weatherford Special Meeting and the Enterra
Special Meeting, respectively.
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Under Delaware law, approval and adoption of the Merger and the Merger
Agreement require the affirmative vote of the holders of a majority of the
shares of Weatherford Common Stock and the holders of a majority of the shares
of Enterra Common Stock issued and outstanding and entitled to vote thereon.
Pursuant to the rules of the NYSE, approval and adoption of the Merger and the
Merger Agreement require the affirmative vote of the holders of a majority of
the shares of Weatherford Common Stock present or represented by proxy at the
Weatherford Special Meeting, so long as the total number of votes cast
represents a majority of the shares entitled to vote on such matter. Under
Delaware law, under the 1991 Option Plan and under the Restricted Plan, as
applicable, approval and adoption of the Reverse Stock Split, the Name Change
and the Weatherford Plan Amendments each require the affirmative vote of the
holders of a majority of the shares of Weatherford Common Stock present in
person or represented by proxy and entitled to vote thereon at the Weatherford
Special Meeting. None of the Merger, the Merger Agreement, the Reverse Stock
Split and the Name Change will be effected unless all such matters are approved
and adopted by the stockholders of Weatherford and the Merger and the Merger
Agreement are approved and adopted by the stockholders of Enterra. The amendment
to the 1991 Option Plan will not be effected unless the Merger, the Merger
Agreement, the Reverse Stock Split and the Name Change are approved and adopted
by the stockholders of Weatherford and the Merger and the Merger Agreement are
approved and adopted by the stockholders of Enterra. The amendment to the
Restricted Plan will be effected regardless of whether any of the other
proposals are approved and adopted by the stockholders of Weatherford. The
Merger, the Merger Agreement, the Reverse Stock Split and the Name Change will
be effected regardless of whether either or both of the amendments to the 1991
Option Plan and the Restricted Plan are approved and adopted by the stockholders
of Weatherford.
At the close of business on the Record Date, there were 54,354,258 shares of
Weatherford Common Stock outstanding and entitled to vote at the Weatherford
Special Meeting, of which the directors and officers of Weatherford and their
affiliates held 1,684,573 shares, representing approximately 3.1% of the
outstanding shares. Such persons have indicated to Weatherford that they intend
to vote their shares in favor of the approval and adoption of the Merger, the
Merger Agreement, the Reverse Stock Split, the Name Change and the Weatherford
Plan Amendments.
At the close of business on the Record Date, there were 27,822,950 shares of
Enterra Common Stock outstanding and entitled to vote at the Enterra Special
Meeting. First Reserve and the First Reserve Funds (each as hereinafter defined)
have entered into an agreement (the "Stockholders Agreement") with Weatherford
pursuant to which they have agreed to vote the 11,212,349 shares of Enterra
Common Stock over which they have voting control, representing approximately
40.3% of the outstanding shares, in favor of the adoption of the Merger
Agreement unless the Enterra Board of Directors, at the time of the Enterra
Special Meeting, is recommending that the Enterra stockholders vote against the
adoption of the Merger Agreement in view of the pendency of an Enterra Superior
Proposal (as defined in "Terms of the Merger -- No Solicitation"). If, at the
time of the Enterra Special Meeting, the Enterra Board of Directors is
recommending that the Enterra stockholders vote against the adoption of the
Merger Agreement, First Reserve and the First Reserve Funds have agreed with
Enterra that they will vote the foregoing shares against such adoption. See "The
Merger -- Interests of Certain Persons in the Merger". At the close of business
on the Record Date, the directors and officers of Enterra and their affiliates,
excluding the First Reserve Group (as hereinafter defined), held 109,332 shares,
representing approximately 0.4% of the outstanding shares and have indicated to
Enterra that they intend to vote their shares in favor of the approval and
adoption of the Merger and the Merger Agreement.
THE MERGER
TERMS OF THE MERGER. At the Effective Time (as hereinafter defined), the
businesses of Enterra and Weatherford will be combined pursuant to a merger of
Enterra with and into Weatherford, with Weatherford becoming the surviving
corporation (the "Surviving Corporation"). At the Effective Time, Weatherford
will change its name to "Weatherford Enterra, Inc." Pursuant to the Merger, each
5
<PAGE>
outstanding share of Enterra Common Stock will be converted into the right to
receive 1.69 shares of Weatherford Common Stock, before giving effect to the
Reverse Stock Split (0.845 of a share of Weatherford Common Stock after giving
effect to the Reverse Stock Split).
Based upon the number of shares of Weatherford Common Stock and Enterra
Common Stock outstanding as of the Record Date and taking into account the
Reverse Stock Split (not including any Weatherford or Enterra stock option
shares), approximately 50,688,000 shares of Weatherford Common Stock will be
outstanding immediately following the Effective Time, of which approximately
23,510,000 shares, representing approximately 46.4% of the total, will be held
by former holders of Enterra Common Stock.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS. THE WEATHERFORD BOARD OF
DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, WEATHERFORD AND THE HOLDERS OF WEATHERFORD COMMON STOCK AND
RECOMMENDS THAT THE HOLDERS OF WEATHERFORD COMMON STOCK APPROVE AND ADOPT THE
MERGER AND THE MERGER AGREEMENT. See "The Merger -- Background", "-- Joint
Reasons for the Merger", "-- Weatherford's Reasons for the Merger" and "--
Recommendation of the Weatherford Board of Directors".
THE ENTERRA BOARD OF DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, ENTERRA AND THE HOLDERS OF ENTERRA COMMON
STOCK AND RECOMMENDS THAT THE HOLDERS OF ENTERRA COMMON STOCK APPROVE AND ADOPT
THE MERGER AND THE MERGER AGREEMENT. See "The Merger -- Background", "-- Joint
Reasons for the Merger", "-- Enterra's Reasons for the Merger" and
"-- Recommendation of the Enterra Board of Directors".
OPINIONS OF FINANCIAL ADVISORS. The Weatherford Board of Directors has
received a written opinion from Merrill Lynch & Co. ("Merrill Lynch") to the
effect that, as of the date of such opinion, the conversion rate to be used in
the Merger is fair to the holders of Weatherford Common Stock from a financial
point of view, and the Enterra Board of Directors has received a written opinion
from Simmons & Company International, Inc. ("Simmons") to the effect that, as of
the date of such opinion, the consideration to be received by the holders of
Enterra Common Stock in the Merger is fair from a financial point of view to
such holders.
In connection with Merrill Lynch's services as financial advisor to
Weatherford, Weatherford has agreed to pay Merrill Lynch as compensation for its
services a fee in the amount of $2 million upon consummation of the Merger (or,
if the Merger is not consummated, upon the consummation of another business
combination within 18 months following the retention of Merrill Lynch as
Weatherford's financial advisor). Weatherford has paid Merrill Lynch a
noncontingent fee of $100,000 that will be credited against such transaction
fee. Weatherford also has agreed to reimburse Merrill Lynch for certain
reasonable out-of-pocket expenses incurred in connection with the Merger and to
indemnify Merrill Lynch (and its employees and directors) against certain
liabilities and expenses in connection with the Merger, including certain
liabilities under the Federal securities laws.
Enterra has agreed to pay Simmons contingent fees totaling $2 million upon
consummation of the Merger. Enterra has paid Simmons a noncontingent fee of
$200,000 that will be credited against such contingent fees. Weatherford has
agreed to reimburse Enterra for half of the noncontingent fee if the Merger is
not consummated. Enterra also has agreed to reimburse Simmons for certain
expenses incurred in connection with its engagement and to indemnify Simmons and
certain related persons against certain liabilities and expenses relating to or
arising out of its engagement, including certain liabilities under the Federal
securities laws.
The full text of the Merrill Lynch and Simmons opinions are attached to this
Joint Proxy Statement/Prospectus as Appendices B and C, respectively. See "The
Merger -- Opinions of Financial Advisors".
On the date of this Joint Proxy Statement/Prospectus, Merrill Lynch
confirmed to Weatherford in writing that as of such date the conversion rate to
be used in the Merger is fair to the holders of
6
<PAGE>
Weatherford Common Stock from a financial point of view, and Simmons reaffirmed
to Enterra in writing that as of such date the consideration to be received by
the holders of Enterra Common Stock in the Merger is fair from a financial point
of view to such holders.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. Weatherford and Enterra have
each received an opinion of its counsel to the effect that the Merger will be
treated for U.S. Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and that Weatherford and Enterra will each be a party to the
reorganization within the meaning of Section 368(b) of the Code. In addition,
Weatherford has received an opinion of its counsel that no gain or loss will be
recognized by Weatherford or Enterra as a result of the Merger, and Enterra has
received an opinion of its counsel that no gain or loss will be recognized by
stockholders of Enterra as a result of the Merger, except for gain or loss
attributable to cash received by Enterra stockholders in lieu of fractional
shares. See "The Merger -- Certain U.S. Federal Income Tax Consequences".
ACCOUNTING TREATMENT. Weatherford and Enterra have been advised by
Weatherford's independent public accountants that Weatherford is eligible to be
a party to a merger accounted for as a "pooling of interests" and they are not
aware of any matters that prohibit the use of "pooling of interests" accounting
in connection with the Merger. Weatherford and Enterra have been advised by
Enterra's independent public accountants that no conditions exist that would
preclude Weatherford's accounting for the Merger as a "pooling of interests" as
those conditions relate to Enterra. See "The Merger -- Accounting Treatment".
GOVERNMENTAL AND REGULATORY APPROVALS. On June 30, 1995 and July 3, 1995,
Weatherford and Enterra, respectively, filed notification reports under the
Hart-Scott-Rodino Antitrust Improvements Act, as amended (the "HSR Act"), with
the Federal Trade Commission (the "FTC"), and on June 30, 1995, they filed
notification reports with the Antitrust Division of the Department of Justice
(the "Department of Justice"). The required waiting period under the HSR Act
expired on August 2, 1995. See "The Merger -- Governmental and Regulatory
Approvals". Weatherford and Enterra are aware of no other material governmental
or regulatory approvals required for the consummation of the Merger, other than
compliance with applicable securities laws of the various states.
EFFECTIVE TIME OF THE MERGER. The Merger will become effective at the
effective time set forth in the certified copy of the Certificate of Merger
issued by the Secretary of State of the State of Delaware with respect to the
Merger (the "Effective Time"). Assuming all conditions to the Merger contained
in the Merger Agreement are satisfied or waived prior thereto, it is anticipated
that the Effective Time will occur as soon as practicable following the
Weatherford Special Meeting and the Enterra Special Meeting. See "Terms of the
Merger -- Effective Time of the Merger".
EXCHANGE OF ENTERRA STOCK CERTIFICATES. As soon as practicable after the
Effective Time, American Stock Transfer & Trust Company (the "Exchange Agent")
will mail a letter of transmittal and other information to each holder of record
of Enterra Common Stock immediately before the Effective Time for use in
exchanging certificates formerly representing shares of Enterra Common Stock for
certificates representing shares of Weatherford Common Stock and cash in lieu of
any fractional shares. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE
BY STOCKHOLDERS OF ENTERRA PRIOR TO THE APPROVAL OF THE MERGER AND THE RECEIPT
OF A LETTER OF TRANSMITTAL. See "Terms of the Merger -- Manner and Basis of
Converting Shares".
ASSUMPTION OF ENTERRA OPTIONS. Immediately after the Effective Time, each
Enterra Option (as hereinafter defined) that remains unexercised in whole or in
part will be replaced by a substitute option granted under an existing
Weatherford stock option plan or separate stock option agreement. The number of
shares of Weatherford Common Stock purchasable under any replaced Enterra Option
will be equal to the number of shares of Enterra Common Stock subject to such
Enterra Option multiplied by the conversion rate to be used in the Merger (after
giving effect to the Reverse Stock Split), and the per share option price will
be equal to the per share option price of the Enterra Option divided by such
conversion rate. See "Terms of the Merger -- Enterra Options".
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<PAGE>
EMPLOYEE MATTERS. Pursuant to the Merger Agreement, (i) Weatherford agreed
to certain matters with regard to Enterra employees currently covered under
Enterra employee benefit plans, (ii) Weatherford and Enterra agreed to establish
substantially similar special severance pay plans for a limited number of key
employees, (iii) Weatherford and Enterra agreed to the procedure for determining
1995 bonuses to Enterra employees and additional bonuses not to exceed $1
million in the aggregate to Enterra employees, (iv) Weatherford agreed to enter
into change of control agreements with two Enterra officers who will become
Surviving Corporation officers and indemnification agreements with seven Enterra
officers or directors who will become Surviving Corporation officers or
directors, (v) Enterra agreed to negotiate an amendment to each of the eleven
existing severance agreements between Enterra and certain of its senior
officers, (vi) Weatherford agreed to negotiate an amendment to twelve of the
existing change of control agreements between Weatherford and certain of its
employees, (vii) Weatherford agreed to enter into certain arrangements with D.
Dale Wood, Chairman of the Board, President and Chief Executive Officer of
Enterra, and (viii) Weatherford agreed to pay an amount to Philip Burguieres,
Chairman of the Board, President and Chief Executive Officer of Weatherford. See
"The Merger -- Interests of Certain Persons in the Merger" and "Terms of the
Merger -- Employee Matters".
STOCKHOLDERS AGREEMENT. Approximately 40.3% of the outstanding shares of
Enterra Common Stock are owned by seven investment funds (the "First Reserve
Funds") managed by First Reserve Corporation ("First Reserve"). The First
Reserve Funds will own approximately 18.7% of the Weatherford Common Stock to be
outstanding after the Merger. In conjunction with the execution of the Merger
Agreement, Weatherford entered into the Stockholders Agreement relating to all
Weatherford securities that will be beneficially owned by First Reserve, the
First Reserve Funds and their affiliates (the "First Reserve Group"), which
agreement is on substantially the same terms as the stockholders agreement
currently in effect among Enterra, First Reserve and the First Reserve Funds.
The Stockholders Agreement is for a term commencing at the Effective Time and
continuing until August 12, 2004, subject to suspension of certain provisions
set forth therein during periods when the First Reserve Group beneficially owns
less than 10% of the Combined Voting Power (as hereinafter defined). A copy of
the Stockholders Agreement is attached to this Joint Proxy Statement/Prospectus
as Appendix D. See "Terms of the Merger -- Stockholders Agreement".
OTHER CONDITIONS TO THE MERGER. In addition to the approval and adoption of
the Merger and the Merger Agreement by the requisite votes of Weatherford and
Enterra stockholders, the respective obligations of Weatherford and Enterra to
effect the Merger are subject to the satisfaction or waiver, where permissible,
of certain other conditions, including (i) confirmation of the tax opinions and
accountants' advice described above, (ii) the receipt by each party of various
legal opinions, certificates and consents and (iii) the fact that the opinions
of the financial advisors shall not have been withdrawn. There can be no
assurance that all of the conditions set forth in the Merger Agreement will be
satisfied. See "Terms of the Merger -- Conditions to the Merger".
MANAGEMENT AFTER THE MERGER. The Surviving Corporation Board of Directors
will initially consist of five designees chosen by the Weatherford Board of
Directors and five designees chosen by the Enterra Board of Directors. The
officers of the Surviving Corporation are expected to consist of the officers of
Weatherford immediately prior to the Effective Time and M. Timothy Carey and
Steven C. Grant, both of whom are officers of Enterra. D. Dale Wood, Chairman of
the Board, President and Chief Executive Officer of Enterra, will not continue
as an officer or director of the Surviving Corporation, but will enter into a
five-year consulting agreement with Weatherford at the Effective Time. See
"Terms of the Merger -- Conduct of Business of the Combined Company Following
Merger", "Terms of the Merger -- Employee Matters" and "Management -- Directors
and Executive Officers".
NO SOLICITATION. The Merger Agreement provides that each party will not,
and will not permit any of its subsidiaries to, or authorize or permit any of
its or their officers, directors, employees, investment bankers, attorneys or
other advisors, agents or representatives to, directly or indirectly, (a)
solicit, initiate, encourage the submission of, or enter into any agreement with
respect to, any
8
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proposal or offer from any person (other than the other party or any of its
affiliates) for a merger or other business combination, acquisition of a
material amount of its assets or acquisition of more than 30% of its outstanding
voting stock, or (b) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, the making of any
proposal that constitutes, or may reasonably be expected to lead to, any such
transaction. Notwithstanding the foregoing, prior to the vote of the
stockholders for approval and adoption of the Merger Agreement and the Merger,
either party may participate in discussions or negotiations with, or furnish
information to, a third party to the extent that such party's Board of Directors
determines, in good faith after consultation with outside counsel, that failure
to take such actions could reasonably be expected to result in a breach of such
Board's fiduciary obligations. Either party may subsequently terminate the
Merger Agreement if its Board of Directors withdraws or modifies its approval or
recommendation of the Merger Agreement or the Merger due to a superior proposal
to the Merger; provided that such party may so terminate the Merger Agreement
only if its stockholders have not yet voted upon the Merger and if such party
shall have paid the other party $20 million. The party not receiving the
superior proposal also may terminate the Merger Agreement if the other party's
Board of Directors withdraws or modifies its approval or recommendation of the
Merger Agreement or the Merger or approves or recommends a takeover proposal. In
addition, each party is permitted to take and disclose to its stockholders a
position contemplated by Rule 14e-2(a) of the Exchange Act, relating to tender
offers, provided such party does not withdraw or modify its position with
respect to the Merger or take any action having such effect or approve or
recommend a takeover proposal. In addition, pursuant to an agreement entered
into with Weatherford, First Reserve and the First Reserve Funds have agreed not
to directly or indirectly (i) solicit, initiate or encourage the submission of,
or enter into any agreement with respect to, an Enterra takeover proposal or
(ii) participate in any discussion or negotiation regarding, or furnish any
person any information with respect to, the making of any proposal that
constitutes, or may reasonably be expected to lead to, an Enterra takeover
proposal. See "Terms of the Merger -- No Solicitation".
PAYMENT IN THE EVENT OF AN ALTERNATIVE TRANSACTION. Each party to the
Merger Agreement agreed to pay the other party $20 million in immediately
available funds promptly upon the termination of the Merger Agreement if it is
terminated (i) due to the existence of a superior takeover proposal for such
party, (ii) for any reason other than a material breach by the other party and a
takeover proposal for such party shall have been made and the stockholders of
such party shall not have approved the Merger or (iii) for failure of such party
to receive, or the withdrawal of, a favorable opinion from its investment banker
or because of a material adverse change in the business, financial condition or
results of operations of the other party and its subsidiaries, taken as a whole
(except for certain exclusions previously agreed to by Weatherford and Enterra),
or the breach by the other party of any of its representations, warranties,
covenants, agreements or obligations contained in the Merger Agreement, and,
within six months after such termination, such party shall have entered into a
definitive agreement with any person (other than the other party or any of its
affiliates) with respect to a superior takeover proposal. See "Terms of the
Merger -- Payment in the Event of an Alternative Transaction".
TERMINATION OR AMENDMENT OF MERGER AGREEMENT. The Merger Agreement may be
terminated, among other circumstances, (a) by mutual consent of Weatherford and
Enterra; (b) by either party if the Merger is not effected on or before December
31, 1995; or (c) by either party if, since the date of the Merger Agreement,
there has been a material adverse change in the business, financial condition or
results of operations of the other party and its subsidiaries, taken as a whole
(except for certain exclusions previously agreed to by Weatherford and Enterra),
or a material breach by the other party of any representation, warranty,
covenant, agreement or obligation set forth in the Merger Agreement. The Merger
Agreement may be amended or supplemented by an instrument in writing signed on
behalf of each party, provided that after the Merger Agreement has been approved
and adopted by the stockholders of Weatherford and Enterra, it may be amended
only as may be permitted under applicable law. See "Terms of the Merger --
Termination or Amendment of Merger Agreement".
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INDEMNIFICATION. The Merger Agreement provides that the officers and
directors of Enterra will be indemnified against all liabilities and costs in
connection with claims based on or arising out of the fact that such persons
were officers or directors, whether or not pertaining to any matter existing or
occurring at or prior to the Effective Time, as well as those arising out of, or
pertaining to, the Merger Agreement, the Merger or the transactions contemplated
thereby. See "Enterra Corporation -- Recent Developments" and "Terms of the
Merger -- Indemnification".
NO DISSENTERS' RIGHTS. Delaware law does not provide holders of Weatherford
Common Stock or Enterra Common Stock who object to the Merger and who vote
against or abstain from voting in favor of the Merger and the Merger Agreement
with any appraisal rights or the right to receive cash for their shares of
Weatherford Common Stock or Enterra Common Stock, respectively. Neither
Weatherford nor Enterra intends to make available any such rights to its
stockholders.
COMPARATIVE RIGHTS OF STOCKHOLDERS OF WEATHERFORD AND ENTERRA
The rights of holders of Enterra Common Stock are currently governed by
Delaware law, Enterra's Restated Certificate of Incorporation and Enterra's
By-laws, as amended. Upon consummation of the Merger, holders of Enterra Common
Stock will become holders of Weatherford Common Stock, and their rights as
holders of Weatherford Common Stock will still be governed by Delaware law, but
will then be governed by Weatherford's Restated Certificate of Incorporation and
Weatherford's By-laws, as amended. There are various differences between the
rights of Enterra stockholders and the rights of Weatherford stockholders,
including, among others, the required vote for certain business combinations and
other significant matters. Furthermore, Weatherford's Restated Certificate of
Incorporation contains certain provisions that may have the effect of deterring
or making it more difficult for a third party to acquire control of Weatherford.
See "Comparative Rights of Stockholders of Weatherford and Enterra".
PROPOSAL TO AMEND WEATHERFORD'S CERTIFICATE OF INCORPORATION
At the Effective Time, the amendments to Weatherford's Restated Certificate
of Incorporation regarding the Reverse Stock Split and the Name Change will be
effected. Pursuant to the Reverse Stock Split, each two shares of Weatherford
Common Stock held at the Effective Time will be converted into one share of new
Weatherford Common Stock. As soon as practicable after the Effective Time, the
Exchange Agent will mail a letter of transmittal and other information to each
holder of record of Weatherford Common Stock immediately before the Effective
Time for use in exchanging certificates representing shares of Weatherford
Common Stock for certificates representing shares of new Weatherford Common
Stock and cash in lieu of fractional shares. SHARE CERTIFICATES SHOULD NOT BE
SURRENDERED FOR EXCHANGE BY STOCKHOLDERS OF WEATHERFORD PRIOR TO APPROVAL OF THE
REVERSE STOCK SPLIT AND THE RECEIPT OF A LETTER OF TRANSMITTAL. Pursuant to the
Name Change, Weatherford's name will be changed at the Effective Time to
"Weatherford Enterra, Inc." THE WEATHERFORD BOARD OF DIRECTORS BELIEVES THAT THE
REVERSE STOCK SPLIT WOULD BE ADVANTAGEOUS TO THE SURVIVING CORPORATION AND
RECOMMENDS THAT THE HOLDERS OF WEATHERFORD COMMON STOCK APPROVE AND ADOPT THE
REVERSE STOCK SPLIT AND THE NAME CHANGE. See "Proposal to Amend Weatherford's
Restated Certificate of Incorporation".
None of the Merger, the Merger Agreement, the Reverse Stock Split and the
Name Change will be effected unless all such matters are approved and adopted by
the stockholders of Weatherford and the Merger and the Merger Agreement are
approved and adopted by the stockholders of Enterra. The amendment to the 1991
Option Plan will not be effected unless the Merger, the Merger Agreement, the
Reverse Stock Split and the Name Change are approved and adopted by the
stockholders of Weatherford and the Merger and the Merger Agreement are approved
and adopted by the stockholders of Enterra. The amendment to the Restricted Plan
will be effected regardless of whether any of the other proposals are approved
and adopted by the stockholders of Weatherford. The Merger, the Merger
Agreement, the Reverse Stock Split and the Name Change will be effected
regardless of whether either or both of the amendments to the 1991 Option Plan
and the Restricted Plan are approved and adopted by the stockholders of
Weatherford.
10
<PAGE>
PROPOSAL TO AMEND WEATHERFORD STOCK PLANS
At the Effective Time, the Weatherford Plan Amendments will be effected. The
Weatherford Plan Amendments will ensure there are sufficient shares of
Weatherford Common Stock available to Weatherford to satisfy (i) unexercised
Enterra Options that are replaced by substitute options and future option grants
under the 1991 Option Plan and (ii) future grants under the Restricted Plan. THE
WEATHERFORD BOARD OF DIRECTORS BELIEVES THAT THE WEATHERFORD PLAN AMENDMENTS ARE
ESSENTIAL TO THE MERGER AND TO SATISFY FUTURE NEEDS FOR PLAN AWARDS AND
RECOMMENDS THAT THE HOLDERS OF WEATHERFORD COMMON STOCK APPROVE AND ADOPT THE
WEATHERFORD PLAN AMENDMENTS. See "Proposal to Amend Weatherford's 1991 Stock
Option Plan" and "Proposal to Amend Weatherford's Restricted Stock Incentive
Plan".
The amendment to the 1991 Option Plan will not be effected unless the
Merger, the Merger Agreement, the Reverse Stock Split and the Name Change are
approved and adopted by the stockholders of Weatherford and the Merger and the
Merger Agreement are approved and adopted by the stockholders of Enterra. The
amendment to the Restricted Plan will be effected regardless of whether any of
the other proposals are approved and adopted by the stockholders of Weatherford.
The Merger, the Merger Agreement, the Reverse Stock Split and the Name Change
will be effected regardless of whether either or both of the amendments to the
1991 Option Plan and the Restricted Plan are approved and adopted by the
stockholders of Weatherford.
MARKET PRICE DATA
The Weatherford Common Stock and the Enterra Common Stock are traded on the
NYSE under the symbols "WII" and "EN", respectively. Prior to October 19, 1994,
the Weatherford Common Stock was traded on the American Stock Exchange, Inc. The
following table sets forth the range of high and low closing sale prices for the
Weatherford Common Stock and the Enterra Common Stock for the periods indicated,
as reported on the NYSE (or, in the case of Weatherford, on the American Stock
Exchange for periods prior to October 19, 1994).
<TABLE>
<CAPTION>
WEATHERFORD ENTERRA
-------------------- --------------------
HIGH LOW HIGH LOW
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1993
First Quarter..................................... $ 9.50 $ 4.75 $ 22.25 $ 17.00
Second Quarter.................................... 13.75 8.75 29.00 20.25
Third Quarter..................................... 12.88 9.25 26.38 21.00
Fourth Quarter.................................... 13.38 8.50 25.25 17.75
1994
First Quarter..................................... 11.13 8.13 21.88 18.50
Second Quarter.................................... 14.75 8.00 23.75 18.25
Third Quarter..................................... 14.00 11.63 23.88 20.00
Fourth Quarter.................................... 12.75 8.25 23.13 18.25
1995
First Quarter..................................... 10.50 8.50 18.75 15.25
Second Quarter.................................... 12.75 9.75 21.00 16.00
Third Quarter (through August 28, 1995)........... 13.88 11.88 22.63 19.88
</TABLE>
On June 23, 1995, the last trading day prior to the announcement by
Weatherford and Enterra that they had reached an agreement concerning the
Merger, the closing sale prices of Weatherford Common Stock and of Enterra
Common Stock as reported by the NYSE were $11.50 and $20.88 per share,
respectively.
On August 28, 1995, the closing sale prices of Weatherford Common Stock and
of Enterra Common Stock as reported by the NYSE were $12.63 and $21.13 per
share, respectively.
Following the Merger, Weatherford Common Stock will continue to be traded on
the NYSE under the symbol "WII". Following the Merger, Enterra Common Stock will
cease to be traded on the NYSE, and there will be no further market for such
stock.
11
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following historical consolidated financial data of Weatherford and
Enterra have been derived from their respective historical consolidated
financial statements and should be read in conjunction with such consolidated
financial statements and notes thereto, which are incorporated by reference in
this Joint Proxy Statement/Prospectus. See "Incorporation of Certain Documents
by Reference". The unaudited pro forma financial data of Weatherford and Enterra
combined have been derived from the unaudited pro forma financial statements
using the "pooling of interests" method of accounting (after giving effect to
the Reverse Stock Split) and should be read in conjunction with such unaudited
pro forma financial statements and notes thereto, which are included elsewhere
in this Joint Proxy Statement/Prospectus. For a description of the various
periods combined for pro forma purposes and for other information regarding pro
forma data, see "Weatherford and Enterra Combined Unaudited Pro Forma Financial
Information".
WEATHERFORD
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
HISTORICAL CONSOLIDATED STATEMENTS OF INCOME DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------
1995 1994 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 199,087 $ 180,397 $ 372,314 $ 333,083 $ 222,964
Depreciation and amortization................... 21,831 16,712 36,429 28,607 17,880
Operating income................................ 27,699 24,410 45,003 33,330 19,726
Net income...................................... 18,382 16,903 29,460 21,990 12,012
Income per common and common equivalent share... 0.34 0.31 0.54 0.42 0.25
Weighted average common and common equivalent
shares outstanding............................. 54,527 54,320 54,484 49,735 42,374
</TABLE>
HISTORICAL CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
JUNE 30, 1995 1994 1993 1992
------------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Working capital.............................. $ 105,954 $ 89,939 $ 100,739 $ 80,848
Total assets................................. 459,831 453,963 354,798 219,568
Long-term debt (including current portion)... 73,645 71,963 21,151 28,281
Stockholders' equity......................... 304,548 282,200 246,819 139,625
</TABLE>
12
<PAGE>
ENTERRA
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
HISTORICAL CONSOLIDATED STATEMENTS OF INCOME DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------
1995(1) 1994(2) 1994(2) 1993 1992
----------- --------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $ 229,605 $ 92,128 $ 302,243 $ 165,057 $ 150,206
Depreciation and amortization..................... 24,242 12,162 33,104 20,795 17,858
Operating income (loss)........................... (13,409) 5,031 20,455 14,423 15,853
Net income (loss)................................. (7,088) 4,108 12,517 13,185 14,748
Income (loss) per common and common equivalent
share............................................ (0.26) 0.25 0.60 0.81 0.92
Weighted average common and common equivalent
shares outstanding............................... 27,755 16,432 20,832 16,260 16,094
</TABLE>
HISTORICAL CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
JUNE 30, 1995 1994 1993 1992
------------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Working capital.............................. $ 167,088 $ 161,839 $ 111,095 $ 116,678
Total assets................................. 677,892 700,007 280,804 254,922
Long-term debt (including current portion)... 129,785 124,596 -- --
Stockholders' equity......................... 443,457 452,434 227,653 209,833
<FN>
- ------------------------
(1) Operating results for the six months ended June 30, 1995 include an unusual
charge of $28.3 million ($0.52 per share) related to a writedown of assets
and certain restructuring charges. See Note 4 of the Notes to Consolidated
Financial Statements contained in Enterra's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995, which are incorporated by reference in
this Joint Proxy Statement/Prospectus.
(2) Operating results for 1994 include the results of Total Energy Services
Company from August 12, 1994 (the date of its acquisition by Enterra) to
December 31, 1994. See Note 2 of the Notes to Consolidated Financial
Statements contained in Enterra's Annual Report on Form 10-K for the year
ended December 31, 1994, which are incorporated by reference in this Joint
Proxy Statement/Prospectus.
</TABLE>
13
<PAGE>
WEATHERFORD AND ENTERRA COMBINED
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
UNAUDITED PRO FORMA STATEMENTS OF INCOME DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------
1995 1994 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 425,775 $ 269,939 $ 669,657 $ 493,206 $ 368,386
Depreciation and amortization................... 46,073 28,874 69,533 49,402 35,738
Operating income................................ 15,161 29,914 65,704 49,671 35,579
Net income...................................... 11,294 21,011 41,977 35,175 26,760
Income per common and common equivalent share... 0.22 0.51 0.94 0.88 0.73
Weighted average common and common equivalent
shares outstanding............................. 50,716 41,045 44,845 38,607 34,786
</TABLE>
UNAUDITED PRO FORMA BALANCE SHEET DATA:
<TABLE>
<CAPTION>
JUNE 30, 1995
-------------
<S> <C>
Working capital............................................. $ 273,042
Total assets................................................ 1,137,723
Long-term debt (including current portion).................. 203,430
Stockholders' equity........................................ 748,005
</TABLE>
The following unaudited adjusted pro forma financial data of Weatherford and
Enterra combined further give effect to (i) other significant acquisitions made
by Weatherford and Enterra during 1994 and the estimated operational and
financial combination benefits resulting from the Merger and (ii) the items in
clause (i) above plus consummation of the transactions set forth in Enterra's
June 29, 1995 contract to acquire Zapata Energy Industries (as hereinafter
defined) and estimated operational and financial combination benefits resulting
from such transactions. See "Enterra Corporation -- Recent Developments". For
other information regarding the adjusted pro forma data, see "Weatherford and
Enterra Combined Unaudited Pro Forma Financial Information".
UNAUDITED ADJUSTED PRO FORMA STATEMENTS OF INCOME DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995 YEAR ENDED DECEMBER 31, 1994
---------------------------------- ----------------------------------
AS ADJUSTED FURTHER ADJUSTED AS ADJUSTED FURTHER ADJUSTED
EXCLUDING ZAPATA FOR ZAPATA EXCLUDING ZAPATA FOR ZAPATA
ENERGY ENERGY ENERGY ENERGY
INDUSTRIES INDUSTRIES INDUSTRIES INDUSTRIES
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues...................................... $ 425,775 $ 460,698 $ 824,524 $ 903,060
Depreciation and amortization................. 46,073 49,525 81,774 88,203
Operating income.............................. 28,561 35,711 104,780 120,621
Net income.................................... 20,004 21,555 64,952 70,154
Income per common and common equivalent
share........................................ 0.39 0.43 1.28 1.38
Weighted average common and common equivalent
shares outstanding........................... 50,716 50,716 50,679 50,679
</TABLE>
UNAUDITED ADJUSTED PRO FORMA BALANCE SHEET DATA:
<TABLE>
<CAPTION>
JUNE 30, 1995
---------------------------------------------------
AS ADJUSTED EXCLUDING FURTHER ADJUSTED
ZAPATA ENERGY FOR ZAPATA ENERGY
INDUSTRIES INDUSTRIES
----------------------- --------------------------
<S> <C> <C>
Working capital............................................. $ 273,042 $ 309,615
Total assets................................................ 1,137,723 1,272,723
Long-term debt (including current portion).................. 203,430 338,430
Stockholders' equity........................................ 748,005 748,005
</TABLE>
14
<PAGE>
COMPARATIVE PER SHARE DATA
The five columns included in the following table set forth (1) the
historical income per common and common equivalent share and the historical book
value per share data of Weatherford Common Stock; (2) the historical income per
common and common equivalent share and the historical book value per share data
of Weatherford Common Stock restated to give effect to the Reverse Stock Split;
(3) the historical income (loss) per common and common equivalent share and the
historical book value per share data of Enterra Common Stock; (4) the unaudited
pro forma income per common and common equivalent share and the unaudited pro
forma book value per share data of Weatherford Common Stock after giving effect
to the proposed Merger on a "pooling of interests" basis and the Reverse Stock
Split; and (5) the unaudited pro forma income (loss) per common and common
equivalent share and the unaudited pro forma book value per share attributable
to 0.845 of a share of Weatherford Common Stock (after giving effect to the
Reverse Stock Split) that will be received by Enterra stockholders for each
share of Enterra Common Stock (as if Enterra would be the Surviving
Corporation). The information presented in the table should be read in
conjunction with the unaudited pro forma financial statements and the separate
historical consolidated financial statements of Weatherford and Enterra and the
notes thereto contained elsewhere or incorporated by reference in this Joint
Proxy Statement/Prospectus. See "Weatherford and Enterra Combined Unaudited Pro
Forma Financial Information" and "Incorporation of Certain Documents by
Reference".
<TABLE>
<CAPTION>
HISTORICAL UNAUDITED PRO FORMA
--------------------------------- ----------------------
WEATHERFORD ENTERRA COMBINED ENTERRA
---------------------- --------- ----------- ---------
AS REPORTED RESTATED
----------- ---------
<S> <C> <C> <C> <C> <C>
INCOME (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE:
Six months ended June 30,
1995........................................ $ 0.34 $ 0.67 $ (0.26) $ 0.22 $ 0.19
Year ended December 31,
1994........................................ 0.54 1.08 0.60 0.94 0.79
1993........................................ 0.42 0.84 0.81 0.88 0.74
1992........................................ 0.25 0.49 0.92 0.73 0.62
BOOK VALUE PER SHARE:
June 30, 1995................................. 5.61 11.22 15.97 14.78 12.49
December 31, 1994............................. 5.21 10.42 16.31 14.54 12.29
</TABLE>
15
<PAGE>
SPECIAL CONSIDERATIONS
SPECIAL CONSIDERATIONS WITH RESPECT TO WEATHERFORD
NONPAYMENT OF DIVIDENDS. Weatherford has not declared or paid dividends on
the Weatherford Common Stock since December 1982 and does not anticipate paying
dividends on the Weatherford Common Stock at any time in the foreseeable future.
See "Market Price of Common Stock -- Dividend Information".
SPECIAL CONSIDERATIONS WITH RESPECT TO ENTERRA
NONPAYMENT OF DIVIDENDS. Enterra has not declared or paid dividends on the
Enterra Common Stock since 1984 and does not currently plan to declare or pay
any dividends on the Enterra Common Stock. See "Market Price of Common Stock --
Dividend Information".
FIRST RESERVE GROUP. The First Reserve Funds, which are all managed by
First Reserve, will own approximately 18.7% of the Weatherford Common Stock to
be outstanding following the Merger. The shares beneficially owned by the First
Reserve Group will be subject to the provisions of the Stockholders Agreement
which, among other things, restricts the voting and disposition of such shares
and the acquisition of additional Weatherford Common Stock by the First Reserve
Group. The Stockholders Agreement permits certain of the First Reserve Funds to
designate for nomination up to two directors to the Weatherford Board of
Directors (based on the percentage of Weatherford Common Stock beneficially
owned by the First Reserve Group), and immediately following the Merger, two of
the Surviving Corporation's ten directors will be designees of the First Reserve
Funds. The Stockholders Agreement is for a term commencing at the Effective Time
and continuing until August 12, 2004, subject to suspension of certain
provisions set forth therein during periods when the First Reserve Group
beneficially owns less than 10% of the Weatherford Common Stock. The shares of
Weatherford Common Stock owned by the First Reserve Funds will be eligible for
resale in the public market subject to the volume restrictions of Rule 144
promulgated under the Securities Act ("Rule 144"); in addition, the First
Reserve Funds have demand and piggyback registration rights with respect to such
shares. See "Terms of the Merger -- Stockholders Agreement -- Registration
Rights". Future sales of shares by the First Reserve Funds under Rule 144,
through the exercise of registration rights or otherwise, could have an adverse
effect on the market price of the Weatherford Common Stock and could make it
more difficult for Weatherford to raise funds through equity financing in the
future. It is not possible to estimate the number of shares that may be sold
under Rule 144 or pursuant to registration rights since this will depend upon
the market price for the Weatherford Common Stock, the individual circumstances
of the sellers and other factors.
SPECIAL CONSIDERATIONS WITH RESPECT TO THE COMBINED COMPANY
INDUSTRY VOLATILITY. The oil and gas industry in which Weatherford and
Enterra participate historically has experienced significant volatility. Demand
for Weatherford's and Enterra'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 and workover activity can fluctuate
significantly in a short period of time, particularly in the United States and
Canada.
The willingness of oil and gas operators to make capital expenditures for
the exploration and production of oil and natural gas will continue to be
influenced by numerous factors over which Weatherford and Enterra have no
control, including the prevailing and expected market prices for oil and natural
gas. Such prices are impacted by, among other factors, the ability of the
members of the Organization of Petroleum Exporting Countries ("OPEC") to
maintain price stability through voluntary production limits, the level of
production by non-OPEC countries, worldwide demand for oil and gas, general
economic and political conditions, costs of exploration and production,
availability of new leases and concessions, and governmental regulations
regarding, among other things, environmental
16
<PAGE>
protection, taxation, price controls and product allocations. No assurance can
be given as to the level of future oil and gas industry activity or demand for
Weatherford's and Enterra's services and products.
COMPETITION. Weatherford and Enterra provide specialized equipment, tools
and tubular goods ("rental tools") and fishing tools and related services
("fishing tools and services") primarily to oil and gas production companies,
drilling contractors and well servicing companies. Fishing tools and services
are used for recovery or retrieval of foreign objects in oil and gas wells and
for repairs of existing wells. Weatherford and Enterra are among the largest
companies engaged in the rental tools and fishing tools and services businesses.
However, Weatherford and Enterra each encounter substantial competition from
numerous small, single-site operators, larger concerns operating at multiple
locations and various well servicing companies engaged in such businesses. In
addition, many customers own and operate large inventories of the equipment they
might otherwise choose to rent and have the ability to purchase additional
equipment, as opposed to renting.
Weatherford and Enterra expect that the substantial competition currently
encountered by each company in the rental tools and fishing tools and services
businesses will not be reduced or eliminated by the Merger. Furthermore, each of
Weatherford's and Enterra's other businesses also encounter substantial
competition.
POSSIBLE PRODUCT LIABILITY CLAIMS. Certain products manufactured or leased
by Weatherford or Enterra are used in potentially hazardous drilling,
completion, production and workover applications that can cause personal injury
or loss of life as well as damage to property, equipment or the environment and
suspension of operations. Litigation arising from a catastrophic occurrence at a
location where Weatherford's or Enterra's equipment and services are used may in
the future result in Weatherford or Enterra being named as a defendant in
product liability or other lawsuits asserting potentially large claims. Each of
Weatherford and Enterra maintains insurance coverage that its management
believes to be customary in the industry for a company of its size against these
hazards. However, insurance may not provide complete protection against casualty
losses and a successful claim could have a material adverse effect on
Weatherford or Enterra. Further, no assurance can be given that Weatherford or
Enterra will be able to maintain adequate insurance in the future at rates
considered reasonable.
RISKS RELATED TO INTERNATIONAL OPERATIONS. During 1994, approximately 47%
of Weatherford's revenues and approximately 32% of Enterra's revenues were
derived from sales and rentals outside of the United States and Canada based
upon the ultimate destination in which equipment or services were sold, shipped
or provided to the customer. Certain of these operations are subject to special
risks inherent in doing business outside the United States, including risks of
war, civil disturbances and governmental activities that may limit or disrupt
markets, restrict the movement of funds or result in the deprivation of contract
rights or the taking of property without fair compensation. Certain areas,
including the Commonwealth of Independent States, Algeria and Nigeria, have been
subjected to political disruption or social unrest in the past twelve months.
Foreign operations also can be affected by laws and regulations limiting or
prohibiting exports to and operations in particular countries, including Iran,
Iraq and Libya. Government-owned petroleum companies in some of the countries in
which Weatherford and Enterra operate have adopted policies (or are subject to
governmental policies) giving preference to the purchase of goods and services
from companies that are majority-owned by local nationals. As a result of such
policies, Weatherford and Enterra rely on joint ventures, license arrangements
and other business combinations with local nationals in these countries. In
addition, political considerations may disrupt the commercial relationships
between Weatherford or Enterra and government-owned petroleum companies.
Generally, business interruptions resulting from civil or political disruptions
negatively impact near-term results of operations; however, managements of
Weatherford and Enterra believe that 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
Weatherford or Enterra.
17
<PAGE>
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS. Weatherford's and
Enterra's businesses are affected both directly and indirectly by governmental
regulations relating to the oilfield service industry and the oil and gas
exploration and production industry in general, as well as by environmental and
safety regulations that specifically apply to such businesses. It is likely that
the trend of more expansive and stricter environmental laws and regulations will
continue, and that the costs of compliance with such laws and regulations will
continue to increase in the foreseeable future, both for Weatherford and Enterra
and for their customers. There can be no assurance that the cost of compliance
with current environmental and safety regulations or future changes in such laws
and regulations will not have a material adverse effect on Weatherford's and
Enterra's operations.
STOCKHOLDER LITIGATION. On June 28, 1995, a class action complaint was
filed against Enterra and members of its Board of Directors in the Delaware
Court of Chancery in New Castle County. The complaint alleges breach of
fiduciary duty and other matters and seeks damages in an unspecified amount and
injunctive relief to prevent the consummation of the Merger. On July 17, 1995,
an answer to the complaint was filed by the defendants denying the material
allegations. On August 25, 1995, Enterra learned that an additional class action
complaint had been filed in the same court on June 27, 1995 against Enterra,
members of Enterra's Board of Directors and Weatherford, but not yet served upon
Enterra, Weatherford or, to their knowledge, the other defendants. The complaint
sets forth similar allegations as set forth in the other complaint.
WEATHERFORD INTERNATIONAL INCORPORATED
GENERAL
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
handling 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.
RECENT DEVELOPMENTS
In connection with the Merger, Weatherford has entered into negotiations
with certain banks to provide new credit facilities to Weatherford as of the
Effective Time. Such credit facilities are expected to consist of a term loan
and revolving credit facility for approximately $475 million in the aggregate.
Proceeds from such credit facilities are expected to be available (i) to repay
existing indebtedness of Weatherford and Enterra, (ii) to finance the
acquisition of Zapata Energy Industries (if such transaction is consummated),
(iii) to pay the transaction and financing costs associated with the Merger,
such new credit facilities and the acquisition of Zapata Energy Industries (if
such transaction is consummated), (iv) to pay certain consolidation costs
associated with the Merger and (v) for working capital and other general
corporate purposes. The new credit facilities are expected to be unsecured and
to require that Weatherford maintain certain financial ratios, including minimum
tangible net worth, a debt-to-capitalization ratio and an interest coverage
ratio.
On August 25, 1995, Weatherford learned that a class action complaint had
been filed in the Delaware Court of Chancery in New Castle County on June 27,
1995 against Enterra, members of Enterra's Board of Directors and Weatherford,
but not yet served upon Enterra, Weatherford or, to their knowledge, the other
defendants. See "Enterra Corporation -- Recent Developments".
ENTERRA CORPORATION
GENERAL
Enterra is a worldwide provider of specialized services and products to the
oil and gas industry through its oilfield, pipeline and compression services and
equipment businesses. Enterra's oilfield services and equipment business
consists primarily of the rental and sale of equipment used in oil and gas well
drilling, completion, production and workover activities and the provision of
well control
18
<PAGE>
assistance and fishing services. The pipeline services and equipment business
consists of the rental and sale of specialized equipment used in construction or
rehabilitation of oil and gas pipelines. The compression services and equipment
business consists of the rental and sale of gas compressor systems for use in
the production and transportation of natural gas.
RECENT DEVELOPMENTS
On June 28, 1995, a class action complaint was filed against Enterra and
members of its Board of Directors in the Delaware Court of Chancery in New
Castle County. The complaint alleges breach of fiduciary duty and other matters
and seeks damages in an unspecified amount and injunctive relief to prevent the
consummation of the Merger. On July 17, 1995, an answer to the complaint was
filed by the defendants denying the material allegations.
On August 25, 1995, Enterra learned that an additional class action
complaint had been filed in the same court on June 27, 1995 against Enterra,
members of Enterra's Board of Directors and Weatherford, but not yet served upon
Enterra, Weatherford or, to their knowledge, the other defendants. The complaint
sets forth similar allegations as set forth in the other complaint.
On June 29, 1995, Enterra and Zapata Corporation, a Delaware corporation
("Zapata"), entered into a contract providing for Enterra's acquisition of
Zapata's natural gas compression businesses ("Zapata Energy Industries") for
$130 million. The contract is subject to expiration or termination of the
waiting period under the HSR Act and signing of a definitive asset purchase
agreement containing customary and reasonable representations and warranties and
indemnification provisions. A dispute has arisen regarding the transaction.
While Enterra and Zapata are currently engaged in discussions with respect
thereto, Enterra intends to pursue appropriate legal remedies, if necessary, to
complete the transaction. However, there can be no assurance that the Zapata
Energy Industries acquisition will be consummated or that, if consummated, the
final terms will be consistent with the June 29 contract. If any additional
consideration is paid or if any liabilities are assumed, such will result in an
increase in goodwill and the expected amortization over its 40-year life. Zapata
Energy Industries is engaged in the business of renting, fabricating, selling,
installing and servicing natural gas compressor packages used in the oil and gas
industry. Natural gas compression is used in the production, processing and
delivery of natural gas. Zapata Energy Industries is headquartered in Corpus
Christi, Texas and maintains a network of 15 sales and services offices in
Texas, Louisiana, Oklahoma, Arkansas and New Mexico. While Zapata Energy
Industries' operations are primarily domestic, it sells natural gas compressor
packages in several international natural gas producing regions. Its customers
include natural gas companies that are involved in the production, processing
and transmission of natural gas. See Enterra's Current Report on Form 8-K dated
August 28, 1995, which is incorporated by reference in this Joint Proxy
Statement/Prospectus, for additional information, including financial
information, with respect to Zapata Energy Industries.
GENERAL INFORMATION ABOUT THE MEETINGS
DATE, TIME AND PLACE OF SPECIAL MEETINGS
The Weatherford Special Meeting will be held at 10:30 a.m., Houston time, on
Thursday, October 5, 1995, at The Ritz-Carlton, 1919 Briar Oaks Lane, Houston,
Texas. The Enterra Special Meeting will be held at 10:00 a.m., Houston time, on
Thursday, October 5, 1995, at The Ritz-Carlton, 1919 Briar Oaks Lane, Houston,
Texas.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of Weatherford Common Stock and holders of record of
Enterra Common Stock at the close of business on August 24, 1995 are entitled to
notice of the Weatherford Special Meeting and the Enterra Special Meeting,
respectively, and to vote at the Weatherford Special Meeting and the Enterra
Special Meeting, respectively, or any adjournment thereof.
At the close of business on the Record Date, there were 2,572 holders of
record of Weatherford Common Stock with 54,354,258 shares issued and outstanding
and 1,730 holders of record of Enterra
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Common Stock with 27,822,950 shares issued and outstanding. Each share of
Weatherford Common Stock and Enterra Common Stock entitles the holder thereof to
one vote on each matter submitted for stockholder approval.
VOTE REQUIRED
WEATHERFORD. Weatherford's By-laws provide that the presence at the
Weatherford Special Meeting, in person or by proxy, of the holders of a majority
of the issued and outstanding shares of Weatherford Common Stock entitled to
vote thereat will constitute a quorum for the transaction of business. Under
Delaware law, approval and adoption of the Merger and the Merger Agreement
require the affirmative vote of the holders of a majority of the shares of
Weatherford Common Stock issued and outstanding and entitled to vote at the
Weatherford Special Meeting, or 27,177,130 shares. Under Delaware law, the 1991
Option Plan and the Restricted Plan, as applicable, approval and adoption of the
Reverse Stock Split, the Name Change and the Weatherford Plan Amendments each
require the affirmative vote of the holders of a majority of the shares of
Weatherford Common Stock present in person or represented by proxy and entitled
to vote thereon at the Weatherford Special Meeting. At the close of business on
the Record Date, the directors and officers of Weatherford and their affiliates
held 1,684,573 shares of Weatherford Common Stock, representing approximately
3.1% of the outstanding shares. Such persons have indicated to Weatherford that
they intend to vote their shares in favor of the approval and adoption of the
Merger, the Merger Agreement, the Reverse Stock Split, the Name Change and the
Weatherford Plan Amendments. None of the Merger, the Merger Agreement, the
Reverse Stock Split and the Name Change will be effected unless all such matters
are approved and adopted by the stockholders of Weatherford and the Merger and
the Merger Agreement are approved and adopted by the stockholders of Enterra.
The amendment to the 1991 Option Plan will not be effected unless the Merger,
the Merger Agreement, the Reverse Stock Split and the Name Change are approved
and adopted by the stockholders of Weatherford and the Merger and the Merger
Agreement are approved and adopted by the stockholders of Enterra. The amendment
to the Restricted Plan will be effected regardless of whether any of the other
proposals are approved and adopted by the stockholders of Weatherford. The
Merger, the Merger Agreement, the Reverse Stock Split and the Name Change will
be effected regardless of whether either or both of the amendments to the 1991
Option Plan and the Restricted Plan are approved and adopted by the stockholders
of Weatherford.
Pursuant to the rules of the NYSE, the affirmative vote of a majority of the
shares of Weatherford Common Stock present or represented by proxy at the
Weatherford Special Meeting is required to approve and adopt the Merger and the
Merger Agreement, so long as the number of votes cast on each matter represents
a majority of the shares entitled to vote on such matter. NYSE rules require
stockholder approval for the issuance of common stock, or securities exercisable
for common stock, in connection with a transaction if the common stock has or
will have upon issuance voting power equal to or in excess of 20% of the voting
power outstanding before the issuance of such common stock or securities
exercisable for common stock. The number of shares of Weatherford Common Stock
to be issued in the Merger would equal approximately 86.5% of the shares of
Weatherford Common Stock outstanding prior to the Merger.
ENTERRA. Enterra's By-laws provide that the presence at the Enterra Special
Meeting, in person or by proxy, of the holders of a majority of the Enterra
Common Stock issued and outstanding and entitled to vote thereat will constitute
a quorum for the transaction of business. Under Delaware law, approval and
adoption of the Merger and the Merger Agreement require the affirmative vote of
the holders of a majority of the shares of Enterra Common Stock issued and
outstanding on the Record Date, or 13,911,476 shares. First Reserve and the
First Reserve Funds have entered into the Stockholders Agreement with
Weatherford pursuant to which they have agreed to vote the 11,212,349 shares of
Enterra Common Stock over which they have voting control, representing
approximately 40.3% of the outstanding shares, in favor of the adoption of the
Merger Agreement unless the Enterra Board of Directors, at the time of the
Enterra Special Meeting, is recommending that the Enterra stockholders vote
against the adoption of the Merger Agreement in view of the pendency of an
Enterra Superior Proposal. If, at the time of the Enterra Special Meeting, the
Enterra
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Board of Directors is recommending that the Enterra stockholders vote against
the adoption of the Merger Agreement, First Reserve and the First Reserve Funds
have agreed with Enterra that they will vote the foregoing shares against such
adoption. See "The Merger -- Interests of Certain Persons in the Merger". At the
close of business on the Record Date, the directors and officers of Enterra and
their affiliates, excluding the First Reserve Group, held 109,332 shares,
representing approximately 0.4% of the outstanding shares and have indicated to
Enterra that they intend to vote their shares in favor of the approval and
adoption of the Merger and the Merger Agreement.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies that are not revoked will be voted at the
Weatherford Special Meeting and the Enterra Special Meeting, as applicable, in
accordance with the instructions contained therein. If a holder of Weatherford
Common Stock or a holder of Enterra Common Stock executes and returns a proxy
and does not specify otherwise, the shares represented by such proxy will be
voted "for" approval and adoption of the Merger and the Merger Agreement, and in
the case of a holder of Weatherford Common Stock, "for" approval and adoption of
each of the Reverse Stock Split, the Name Change and the Weatherford Plan
Amendments, in accordance with the recommendation of the Weatherford Board of
Directors and the Enterra Board of Directors, respectively. Checking the
abstention box on the proxy card or failing to return the proxy card has the
same effect as voting against the proposals. A stockholder of Weatherford or
stockholder of Enterra who has executed and returned a proxy may revoke it at
any time before it is voted at the respective Special Meeting by executing and
returning a proxy bearing a later date, by filing written notice of such
revocation with the Secretary of Weatherford or Enterra, as appropriate, or by
attending the Special Meeting and voting in person.
Under applicable stock exchange rules, brokers will not be permitted to
submit proxies authorizing a vote on the Merger, the Merger Agreement, the
Reverse Stock Split, the Name Change and the Weatherford Plan Amendments in the
absence of specific instructions from beneficial owners. Broker non-votes will
have the effect of votes against the Merger, the Merger Agreement, the Reverse
Stock Split, the Name Change and the Weatherford Plan Amendments. Under Delaware
law, both abstentions and broker non-votes contained on a returned proxy card
will be considered present for purposes of determining the existence of a quorum
at the Weatherford Special Meeting or the Enterra Special Meeting.
SOLICITATION OF PROXIES
In addition to solicitation by mail, the directors, officers and employees
of each of Weatherford and Enterra may solicit proxies from their respective
stockholders by personal interview, telephone, facsimile or otherwise.
Weatherford and Enterra will each bear the costs of the solicitation of proxies
from their respective stockholders, except that Weatherford and Enterra will
share the cost of printing this Joint Proxy Statement/Prospectus pro rata in
accordance with their respective number of record holders. Arrangements also
will be made with brokerage firms and other custodians, nominees and fiduciaries
who hold the voting securities of record for the forwarding of solicitation
materials to the beneficial owners thereof. Weatherford and Enterra will
reimburse such brokers, custodians, nominees and fiduciaries for the reasonable
out-of-pocket expenses incurred by them in connection therewith. Weatherford and
Enterra each has engaged the services of Beacon Hill Partners, Inc., a proxy
solicitation firm, to distribute proxy solicitation materials to brokers, banks
and other nominees and to assist in the solicitation of proxies from their
respective stockholders for an anticipated fee of $7,000 from Weatherford and
$5,000 from Enterra, plus mailing expenses.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the Weatherford
Board of Directors and the Enterra Board of Directors do not know of any
business to be presented at their respective Special Meetings other than as set
forth in the notices accompanying this Joint Proxy Statement/Prospectus. If any
other matters should properly come before the respective Special Meetings, it is
intended that the shares represented by proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting such proxies.
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THE MERGER
The detailed terms and conditions to the consummation of the Merger are
contained in the Merger Agreement, which is attached as Appendix A to this Joint
Proxy Statement/Prospectus and incorporated herein by reference. The following
discussion sets forth a description of certain material terms and conditions of
the Merger Agreement. THE DESCRIPTION IN THIS JOINT PROXY STATEMENT/PROSPECTUS
OF THE TERMS AND CONDITIONS TO THE CONSUMMATION OF THE MERGER IS QUALIFIED BY,
AND MADE SUBJECT TO, THE MORE COMPLETE INFORMATION SET FORTH IN THE MERGER
AGREEMENT.
GENERAL DESCRIPTION OF THE MERGER
The Merger Agreement provides that, at the Effective Time, the businesses of
Enterra and Weatherford will be combined pursuant to a merger of Enterra with
and into Weatherford, with Weatherford becoming the Surviving Corporation. At
the Effective Time, Weatherford will change its name to "Weatherford Enterra,
Inc." Pursuant to the Merger, each outstanding share of Enterra Common Stock
will be converted into the right to receive 1.69 shares of Weatherford Common
Stock, before giving effect to the Reverse Stock Split (0.845 of a share of
Weatherford Common Stock after giving effect to the Reverse Stock Split). See
"Terms of the Merger -- Manner and Basis of Converting Shares".
Based upon the number of shares of Weatherford Common Stock and Enterra
Common Stock outstanding as of the Record Date and taking into account the
Reverse Stock Split (not including any Weatherford or Enterra stock option
shares), approximately 50,688,000 shares of Weatherford Common Stock will be
outstanding immediately following the Effective Time, of which approximately
23,510,000 shares, representing approximately 46.4% of the total, will be held
by former holders of Enterra Common Stock.
BACKGROUND
WEATHERFORD. 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 handling 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.
Historically, Weatherford was predominantly a tubular running services and
cementation products company with extensive international operations. A new
management team implemented a new business strategy in 1991 which focused on
improving Weatherford's U.S. market position and pursuing opportunities for
expansion into related oilfield service businesses. Accordingly, Weatherford has
undertaken to offer a broader mix of services and products in U.S. and
international markets, to be a leading participant in each of its principal
businesses, to differentiate itself in terms of the quality and technology of
its services and products and to pursue cost efficiencies in both its existing
operations and its newly acquired businesses.
Management has pursued this strategy through a series of acquisitions. Since
November 1991, Weatherford has acquired 20 businesses, including eight in 1994
and two in 1995. In November 1991, Weatherford acquired Petroleum Equipment
Tools Co. ("Petco"), a major participant in the rental tools and fishing tool
services market, thereby adding a new business. In November 1992, Weatherford
expanded its position in cementation products with the acquisition of Gemoco
(formerly, a division of Sequa Engineered Services, Inc.). In April 1993,
Weatherford acquired substantially all of the assets of Homco International,
Inc. and its subsidiaries (collectively, "Homco"), which significantly expanded
Weatherford's rental tools and fishing tool services business. In September
1993, Weatherford acquired the operations of the Premier group of companies,
making Weatherford a leading provider of rental tools in the Asia-Pacific
region. In April 1994, Weatherford acquired the rental tool assets and business
of Odfjell Drilling and Consulting Company A/S, a Norwegian company with
operations in the North Sea and the Asia-Pacific region, making Weatherford the
leading rental tool company in these areas. In July 1994, Weatherford acquired
the assets of Gillette & Whitehead Drilling Services
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Ltd., a provider of rental tools in the Middle East region and the Asia-Pacific
region. In September 1994, Weatherford acquired H&H Oil Tool Co., Inc. ("H &
H"), a California-based company engaged in the rental tools and fishing tool
services business, principally in California and the Rocky Mountains. In
addition, from 1992 through 1995, Weatherford has strengthened its principal
businesses, internationally and domestically, through several smaller
acquisitions.
As a result of these acquisitions, Weatherford is an industry leader in each
of its three principal businesses and has expanded the products and services
offered by Weatherford, improved Weatherford's U.S. market position and realized
significant consolidation cost savings. Weatherford's management believes the
Merger is consistent with the business strategy implemented in 1991.
ENTERRA. Enterra is a worldwide provider of specialized services and
products to the oil and gas industry through its oilfield, pipeline and
compression services and equipment businesses.
Until 1987, Enterra's operations involved two industry segments, products
and oilfield services. The oilfield services operations involved renting
specialized equipment for drilling and servicing onshore and offshore oil and
gas wells, both within the United States and foreign countries, and has been
continued to date as a part of Enterra's existing oilfield services operations.
The products segment involved the manufacture and sale of products for fighting
fires, emergency rescue equipment, specialty chemicals and instrumentation
products.
In 1986, Enterra conducted an evaluation of its overall operations in light
of conditions then existing in the oil and gas industry and its financial
position and operating strengths at that time. As a result of this review, a
broad strategy was developed to sell the products segment described above and to
focus on providing specialized products and services to the oil and gas industry
through the expansion of Enterra's present lines of business, in existing
markets as well as into new geographic territories, and expansion into new
segments of the energy products and services industry through acquisitions and
internal development.
Specifically, the strategic plan that evolved during this period of time
involved four basic elements:
- IMPROVE MARKET POSITION IN ENTERRA'S TRADITIONAL BUSINESSES. Enterra's
goal has been to improve its market position in its traditional businesses
through geographical expansion, better utilization of assets and selective
additions to rental inventories. In addition, Enterra has focused on the
development of innovative products and services in the oilfield services
and equipment segment. Since the beginning of 1988, Enterra has made over
$100 million of capital expenditures in connection with this goal,
including in 1989 the substantial expansion of its fishing services
businesses. The emphasis has been on production-related activities, which
management of Enterra believes tend to be a more stable source of revenue
than drilling-related activities.
- COMPLETE STRATEGIC ACQUISITIONS WITHIN EXISTING LINES OF BUSINESS. In the
late 1970's through early 1980's, there was a substantial growth in the
oil and gas service industry in the United States due to increases in
prices for oil and gas. This trend reversed itself dramatically in 1982
and throughout the mid and later part of the 1980's, and continuing to
date, the oil and gas service industry has been through a process of
consolidation. It has been Enterra's strategy to be a major participant in
this consolidation through strategic acquisitions and mergers within the
scope of its existing businesses. Enterra's goal has been to lower costs
through consolidation cost savings, expand geographic market coverage and
broaden product and service lines, principally in the production sector.
As part of this process, Enterra considered and actively negotiated
potential consolidations with several rental tool and fishing businesses
acquired by Weatherford, including Petco, Homco and H & H. Enterra
regularly reviews potential business acquisitions in its core businesses
and is currently pursuing a substantial acquisition in its gas compression
business. See "Enterra Corporation -- Recent Developments".
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- ACQUIRE ONE OR MORE ADDITIONAL "LEGS". The third element of Enterra's
strategic plan has been to add additional core businesses or "legs" around
its focus of providing specialized services and products to the oil and
gas industry. The 1988 acquisition of Enterra's pipeline services and
equipment segment provided one additional "leg" and the 1994 acquisition
of Enterra's gas compression services and equipment segment provided
another additional "leg".
- MAINTAIN STRONG BALANCE SHEET. Enterra's strategy has been to maintain a
low level of long-term debt as a percentage of total capitalization.
Enterra believes that the merger with Weatherford is consistent with and an
important element in its long-standing strategic plan. See "-- Joint Reasons for
the Merger" and "-- Enterra's Reasons for the Merger".
MERGER NEGOTIATIONS. In late March 1995, Philip Burguieres, Chairman,
President and Chief Executive Officer of Weatherford, telephoned D. Dale Wood,
Chairman, President and Chief Executive Officer of Enterra, to schedule a
meeting with Mr. Wood to discuss a possible business combination of Weatherford
and Enterra. On March 30, 1995, Messrs. Burguieres and Wood met to discuss a
possible business combination of the companies. Although there were discussions
of a preliminary nature in late 1990 between Weatherford and Enterra regarding a
possible business combination, there had been no contacts since that time
between the Chief Executive Officers or other representatives of the companies
to discuss such a combination.
During the next several weeks, Messrs. Burguieres and Wood, together with
William E. Macaulay (Vice Chairman of Enterra and chief executive officer of its
largest stockholder, First Reserve), had additional discussions regarding a
possible business combination and various related issues and concluded that a
merger of the two companies might be beneficial to the stockholders of each
company. On May 1, 1995, Messrs. Burguieres and Wood, together with James R.
Burke, Weatherford's Senior Vice President, Corporate Development and Marketing,
and Steven C. Grant, Enterra's Senior Vice President, Corporate Development, met
with representatives of Simmons to review a possible business combination
previously discussed by Messrs. Burguieres, Wood and Macaulay on a preliminary
basis, which would then be submitted for consideration by each company's Board
of Directors. Enterra and Weatherford asked Simmons to assist management of both
companies in developing a preliminary estimate of possible consolidation cost
savings that might result from a combination of Weatherford and Enterra and to
analyze the recent performance and current market valuations of both companies.
Such information was provided to Messrs. Burguieres and Wood on May 10, 1995, to
the Enterra Board of Directors prior to its May 10, 1995 meeting and to the
Weatherford Board of Directors prior to its May 11, 1995 meeting. Both companies
agreed that if the Board of Directors of each company made a decision to proceed
further with the transaction, then Simmons would be retained by Enterra and
Weatherford would retain a separate financial advisor.
On May 10, 1995, Messrs. Burguieres and Wood preliminarily determined that a
conversion rate of 1.69 shares of Weatherford Common Stock for each share of
Enterra Common Stock, before giving effect to the Reverse Stock Split (0.845 of
a share of Weatherford Common Stock after giving effect to the Reverse Stock
Split), which was based on recent and historical trading prices of the
Weatherford Common Stock and the Enterra Common Stock, would be appropriate,
subject to review and analysis by management and financial advisors for each
company, negotiation of terms by the parties and review, analysis and approval
by the Weatherford Board of Directors and the Enterra Board of Directors.
At a meeting of the Enterra Board of Directors held on May 10, 1995, Mr.
Wood reported on discussions among Messrs. Wood, Macaulay and Burguieres,
including the proposed conversion rate, and that management was evaluating a
potential merger with Weatherford. Prior to the meeting, the directors received
materials prepared by Simmons. Nine of the eleven directors of Enterra at that
time were present in person at the meeting. Representatives of Simmons presented
a report to the Board comparing Enterra and Weatherford, analyzing the recent
performance and current and historical market valuations of both companies,
summarizing the potential consolidation cost savings and the
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potential benefits thereof and describing the potential increase to stockholder
value due to both the value created through the consolidation cost savings and
the potential enhancement of the combined company's EBDIT multiple and
price-to-cash-flow multiple. An estimate of consolidation cost savings was
prepared by managements of both companies with Simmons' assistance, which
indicated that consolidation cost savings of $26.8 million annually could be
achieved, exclusive of certain other potential consolidation cost savings that
were still under review. Simmons reviewed the calculation of potential
consolidation cost savings prepared by managements of the companies and
determined, in view of the exclusion of such potential additional savings, to
assume annual consolidation cost savings of $30 million for purposes of its
analysis. In addition, based upon its extensive experience in advising clients
with respect to mergers and acquisitions involving consolidation of companies in
the oil and gas service industry, Simmons was of the view that the approach
taken to determine, and the assumptions used in respect of, potential
consolidation cost savings and the improved financial performance resulting
therefrom to the combined company, including the assumption of no significant
adverse effect on revenues of the combined company, were reasonable under the
circumstances.
Following these reports, the Enterra Board of Directors met the next day and
considered further a potential merger with Weatherford. The Board unanimously
authorized management to continue discussions with Weatherford and to formally
engage Simmons to assist Enterra in the valuation and financial analyses to be
performed, to assist in negotiation of the Merger and to advise regarding the
fairness from a financial point of view of the proposed Merger to Enterra's
stockholders. In addition, the Board authorized management and Enterra's
financial and legal advisors to proceed with a review of Weatherford's business
and to commence the preparation of appropriate documents. The Board also
appointed a special committee of the Board, consisting of Messrs. Wood, Macaulay
and Robert L. Parker, Sr., to assist management in connection with the Merger
negotiations.
At a special meeting of the Weatherford Board of Directors held on May 11,
1995, Mr. Burguieres reported on discussions among Messrs. Burguieres, Wood and
Macaulay, including the proposed conversion rate, and that management was
evaluating a potential merger with Enterra. Prior to the meeting, the directors
received the materials prepared by Simmons that were distributed to the Enterra
Board. Seven of Weatherford's eight directors were present at the meeting in
person or participated by telephone conference. Representatives of Simmons
attended part of the meeting to present a brief report to the Board comparing
Enterra and Weatherford, analyzing the recent performance and current and
historical market valuations of both companies and summarizing the potential
consolidation cost savings and the potential benefits thereof referred to above.
Representatives of Merrill Lynch also were in attendance and met separately with
the Weatherford Board of Directors after Simmons had completed its presentation.
Following these reports, the directors present unanimously authorized management
to continue discussions with Enterra and to formally engage Merrill Lynch to
assist Weatherford in the valuation and financial analyses to be performed, to
assist in negotiation of the Merger and to advise regarding the fairness from a
financial point of view of the proposed conversion rate to be used in the Merger
to Weatherford's stockholders. In addition, the Board authorized management and
Weatherford's financial and legal advisors to proceed with a review of Enterra's
business and to commence the preparation of appropriate documents.
On May 11, 1995, Weatherford formally engaged Merrill Lynch as its financial
advisor in connection with the Merger. On May 12, 1995, Enterra formally engaged
Simmons as its financial advisor in connection with the Merger. Weatherford and
Enterra executed a mutual confidentiality agreement on May 12, 1995 relating to
the exchange of confidential information by the two companies and to certain
other matters. Members of Weatherford's and Enterra's managements and
representatives of Merrill Lynch and Simmons met on May 16, 1995 for
presentations by each company to the other company and its financial advisor.
Management of Weatherford reported on the status of negotiations with
Enterra at a special meeting of the Weatherford Board of Directors held on May
18, 1995 and at the annual meeting of the Board held on May 19, 1995. Merrill
Lynch made a presentation to the Board concerning Enterra and reviewed the
merger terms being discussed by Weatherford and Enterra. Following this report,
the
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Board authorized management to continue negotiations with Enterra regarding a
merger of the companies. In addition, the Board appointed a special committee of
the Board, consisting of Mr. Burguieres, Thomas N. Amonett and Robert K. Moses,
Jr., to assist management in connection with the Merger negotiations.
During May and June, numerous meetings took place between representatives of
Weatherford, representatives of Merrill Lynch and Weatherford's legal advisors,
on the one hand, and representatives of Enterra, representatives of Simmons and
Enterra's legal advisors, on the other hand, to conduct due diligence and to
negotiate the terms of the Merger Agreement, including whether the proposed
conversion rate was appropriate and whether such rate should be fixed or should
fluctuate based upon the value of the Weatherford Common Stock and the Enterra
Common Stock immediately prior to the Effective Time. Discussions were held
during this period among Messrs. Burguieres, Wood and Macaulay regarding certain
terms of the proposed Merger. In addition, members of the respective special
committees of each company's Board of Directors had numerous discussions during
May and June and reported to members of their respective Board of Directors on a
regular basis. On May 24, 1995, members of the two special committees met in
person to discuss various issues related to the Merger.
At a special meeting of the Weatherford Board of Directors held on June 19,
1995, Weatherford's management and representatives of Merrill Lynch reviewed
with the Board the business and financial background information in respect of
Enterra and the opportunities presented by a merger with Enterra. They also
discussed the status of the negotiations, including whether the proposed
conversion rate was appropriate and whether such rate should be fixed or should
fluctuate. Mr. Burguieres advised the Board that the proposed conversion rate
was supported by a number of different factors, including, but not limited to,
(i) the financial condition and results of operations of Enterra and Weatherford
on a stand-alone and combined basis, both historically and prospectively, (ii)
the historical stock price and trading relationship between the Weatherford
Common Stock and the Enterra Common Stock and (iii) certain long-term strategic
benefits, both operational and financial, of such a merger. Following this
review and lengthy discussion, the Board authorized management to continue
negotiations with Enterra. Merrill Lynch also advised the Weatherford Board of
Directors that in excess of 100 million shares of Weatherford Common Stock would
be outstanding after consummation of the Merger, without giving effect to the
Reverse Stock Split. Merrill Lynch recommended that Weatherford effect the
Reverse Stock Split based upon its judgment that a decrease in the number of
shares of Weatherford Common Stock outstanding and the resulting increase in the
per share market price should enhance the trading characteristics of the
Weatherford Common Stock. See "Proposal to Amend Weatherford's Restated
Certificate of Incorporation".
Negotiations continued among Messrs. Burguieres, Wood, Macaulay and Parker
to finalize various terms of the proposed Merger. Weatherford and Enterra
representatives, representatives of Merrill Lynch and Simmons and legal advisors
of Weatherford and Enterra continued due diligence and the negotiation of the
Merger Agreement, including whether the proposed conversion rate was appropriate
and whether such rate should be fixed or should fluctuate.
On June 23, 1995, the Enterra Board of Directors met to review the final
terms of the proposed Merger as set forth in the Merger Agreement and to receive
a valuation analysis and oral fairness opinion by Simmons. Nine of Enterra's ten
directors at that time participated in the meeting, including two who were not
able to be present in person but participated by telephone conference call.
Prior to the meeting, materials regarding the proposed Merger were distributed
to the directors, including the most recent draft of the Merger Agreement and
the related exhibits and disclosure letters thereto and materials prepared by
management of Enterra and Simmons. At the meeting, Simmons presented its oral
opinion, subsequently confirmed in writing, that, as of the date thereof, the
consideration to be received by the holders of Enterra Common Stock in the
Merger was fair from a financial point of view to such holders. See "-- Opinions
of Financial Advisors -- Enterra". The Enterra Board approved the Merger and the
Merger Agreement, except that Mr. Wood abstained from voting with respect to
compensation matters relating to him and the Enterra directors designated by
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certain of the First Reserve Funds abstained from voting with respect to the
agreements with the First Reserve Funds referred to in "General Information
About the Meeting -- Vote Required -- Enterra".
On June 23, 1995, the Weatherford Board of Directors met to review the
financial terms of the proposed Merger as set forth in the Merger Agreement and
to receive an oral fairness opinion by Merrill Lynch. Seven of Weatherford's
eight directors were present at the meeting, and unanimously approved the Merger
and the Merger Agreement, except that Mr. Burguieres abstained from voting with
respect to matters relating to him. Prior to the meeting, the most recent draft
of the Merger Agreement and the related exhibits and disclosure letters thereto
were distributed to the directors. At the meeting, Merrill Lynch presented its
oral opinion, subsequently confirmed in writing, that, as of the date thereof,
the conversion rate to be used in the Merger was fair to the holders of
Weatherford Common Stock from a financial point of view. See "-- Opinions of
Financial Advisors -- Weatherford".
The Merger Agreement was executed and delivered on behalf of both companies
late on Friday, June 23, 1995, and an announcement thereof was released to the
public before the NYSE opened on Monday, June 26, 1995.
During May and June, Enterra, Weatherford, the First Reserve Funds, which
collectively own approximately 40% of the outstanding shares of Enterra Common
Stock, and First Reserve, which manages the First Reserve Funds, negotiated the
terms of the Stockholders Agreement and the agreements of the First Reserve
Funds and First Reserve to vote the shares of Enterra Common Stock over which
they and their affiliates have voting control in favor of, or against, the
Merger Agreement depending upon the recommendation of the Enterra Board of
Directors. On June 23, 1995, Enterra, Weatherford, the First Reserve Funds and
First Reserve signed such agreements. See "-- Interests of Certain Persons in
the Merger" and "Terms of the Merger -- Stockholders Agreement".
On August 28, 1995, the Merger Agreement and the Stockholders Agreement were
amended, principally to correct typographical errors.
On the date of this Joint Proxy Statement/Prospectus, Merrill Lynch
confirmed to Weatherford in writing that as of such date the conversion rate to
be used in the Merger is fair to the holders of Weatherford Common Stock from a
financial point of view, and Simmons reaffirmed to Enterra in writing that as of
such date the consideration to be received by the holders of Enterra Common
Stock in the Merger is fair from a financial point of view to such holders.
Certain members of management of Weatherford and Enterra have special
interests in connection with the consummation of the Merger that are not
identical to those of unaffiliated Weatherford and Enterra stockholders. See "--
Interests of Certain Persons in the Merger".
JOINT REASONS FOR THE MERGER
Weatherford and Enterra provide products and services to oil and gas
operators for use in oil and gas exploration and development, primarily for the
drilling, production and workover of oil and natural gas wells. Both companies
provide specialized rental and fishing tools in virtually every oil and gas
exploration and production region in the world. In addition, Weatherford
provides tubular running services and manufactures and sells cementation
products and other equipment, and Enterra provides gas compression services and
equipment and pipeline services and equipment and manufactures gas lift systems
and downhole drilling tools. Through a series of recent acquisitions and
expansions, each of Weatherford and Enterra has undertaken a strategy of
offering a broader mix of services and products in domestic and international
markets.
Managements of both Weatherford and Enterra anticipate that the Merger will
result in significant consolidation cost savings, through a rationalization of
the cost and overhead structures of the combined company. Managements of both
companies, with Simmons' assistance, initially estimated these consolidation
cost savings to be at least $26.8 million per year, exclusive of certain other
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potential consolidation cost savings that were still under review. In addition,
managements of Weatherford and Enterra believe that the Merger will provide
opportunities for the combined company to offer additional and complementary
products and services to their existing and prospective customers, and thereby
provide a broader package of products and services to the oil and gas industry.
Managements of both Weatherford and Enterra also believe that by merging in
a stock-for-stock transaction, the combined company will continue to maintain a
strong balance sheet, which both companies believe is and will continue to be
important in this industry. On a pro forma basis, as of June 30, 1995, the
combined company will have outstanding long-term debt of approximately $203.4
million, compared to pro forma combined stockholders' equity of approximately
$748.0 million. Managements of both Weatherford and Enterra also anticipate that
the combined pro forma post-merger market capitalization will exceed $1.0
billion and will make the combined company one of the largest U.S.
publicly-traded energy service companies. They anticipate that the increased
size may lower financing costs as a result of improved financial strength and
that the larger capitalization base could be attractive to a greater number of
institutional investors. Furthermore, based on historical data, managements of
both companies believe that the larger capitalization could lead to the prospect
of enhanced price earnings and cash flow multiples.
Managements of both Weatherford and Enterra recognize that the Merger will
continue each company's respective focus in the oil and gas industry, which will
continue to expose the combined company to the short-term and long-term impacts
of volatile oil and gas prices. See "Special Considerations -- Special
Considerations with Respect to the Combined Company -- Industry Volatility".
However, both managements believe that such risks are reasonable in light of the
potential benefits and do not represent a significant change from the current
risk exposures of the separate companies.
WEATHERFORD'S REASONS FOR THE MERGER
The Weatherford Board of Directors believes that the terms of the Merger are
fair to, and in the best interests of, the stockholders of Weatherford. In the
course of its deliberations with respect to approval of the Merger and the
Merger Agreement, the Weatherford Board of Directors received the advice of
management and Merrill Lynch regarding Enterra's businesses and the advice of
management, legal counsel and Merrill Lynch regarding the terms and provisions
of the Merger Agreement. Substantial consideration was given to the internal
analyses prepared by management, the analyses prepared and presented to the
Board by Merrill Lynch and the opinion of Merrill Lynch. In addition, the Board
considered a number of factors, including:
(i) an analysis of the financial performance, operations, assets, business
condition and business prospects of Weatherford and Enterra, including
Enterra's projected financial performance for the second quarter of 1995
and the remainder of 1995 and Weatherford's projected financial
performance for the remainder of 1995;
(ii) a review of the pro forma internal projections for the combined entity
prepared by Weatherford management and other internal evaluations
prepared by Weatherford management;
(iii) the terms of the Merger Agreement;
(iv) the presentations and the advice of, and materials prepared by, Merrill
Lynch and the opinion of Merrill Lynch, as financial advisor to
Weatherford, that, as of the date of such opinion, the conversion rate
to be used in the Merger was fair to the holders of Weatherford Common
Stock from a financial point of view (see "-- Opinions of Financial
Advisors -- Weatherford");
(v) an analysis of the opportunities for significant consolidation cost
savings anticipated to be recognized as a result of the Merger;
(vi) an analysis of the potential business synergies to be achieved by the
blending of relative strengths of the two companies, particularly in
respect of customer base, geographic areas and operational strengths;
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(vii) an analysis of the increased competitiveness produced by combining
underperforming operations;
(viii) an analysis of the projected accretion in earnings and cash flow with
respect to the combined company resulting from the consolidation cost
savings anticipated by the Merger;
(ix) a review of the sources of Enterra's revenues, with emphasis on revenues
from pipeline services and equipment business and compression services
and equipment business, as they represent new principal or "core"
businesses to Weatherford; and
(x) the belief that the increased size of the combined company should
provide increased market float, expanded analyst coverage and greater
investor interest.
The Weatherford Board of Directors did not attach specific weight to any of the
foregoing factors in reaching its conclusion that the terms of the Merger are
fair to, and in the best interests of, the stockholders of Weatherford. See "--
Opinions of Financial Advisors -- Weatherford" for a discussion of the analysis
performed by Merrill Lynch in connection with rendering its opinion and terms of
Weatherford's agreement to engage, compensate and indemnify Merrill Lynch.
RECOMMENDATION OF THE WEATHERFORD BOARD OF DIRECTORS
For the reasons set forth under "-- Background", "-- Joint Reasons for the
Merger" and "-- Weatherford's Reasons for the Merger", the Weatherford Board of
Directors believes that the terms of the Merger are fair to, and in the best
interests of, Weatherford and the holders of Weatherford Common Stock. The
Weatherford Board of Directors has approved the Merger and the Merger Agreement
and has recommended that the holders of Weatherford Common Stock vote "for"
adoption and approval of the Merger and the Merger Agreement.
In analyzing the Merger and the Merger Agreement, the Weatherford Board of
Directors was assisted and advised by Merrill Lynch, and, at the June 23, 1995
special meeting, the Weatherford Board received an oral opinion, subsequently
confirmed in writing, from Merrill Lynch that, as of the date of such opinion,
the conversion rate to be used in the Merger was fair, from a financial point of
view, to the holders of Weatherford Common Stock. See "-- Opinions of Financial
Advisors -- Weatherford". This opinion was confirmed in writing by Merrill Lynch
as of the date of this Joint Proxy Statement/Prospectus.
ENTERRA'S REASONS FOR THE MERGER
The Enterra Board of Directors believes that the terms of the Merger are
fair to, and in the best interests of, the stockholders of Enterra. In the
course of its deliberations with respect to approval of the Merger and the
Merger Agreement, the Enterra Board of Directors received the advice of
management and Simmons regarding Weatherford's business and the advice of
management, legal counsel and Simmons regarding the terms and provisions of the
Merger Agreement. Substantial consideration was given to the internal analyses
prepared by management, the analyses prepared and presented to the Board by
Simmons and the opinion of Simmons. In addition, the Board considered a number
of other factors, including:
(i) an analysis of the financial performance, operations, assets, business
condition and business prospects of Weatherford and Enterra, including
Enterra's projected financial performance for the second quarter of 1995
and the remainder of 1995 and Weatherford's projected financial
performance for the remainder of 1995;
(ii) a review of pro forma internal projections for the combined entity
prepared by Enterra management and other internal evaluations prepared
by Enterra management;
(iii) the terms of the Merger Agreement;
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(iv) the presentations and the advice of, and materials prepared by, Simmons
and the opinion of Simmons, as financial advisor to Enterra, that, as of
the date of such opinion, the consideration to be received by the
stockholders of Enterra in the Merger was fair from a financial point of
view to such stockholders (see "-- Opinions of Financial Advisors --
Enterra");
(v) an analysis of the opportunities for significant consolidation cost
savings anticipated as a result of the Merger;
(vi) an analysis of the potential business synergies to be achieved by the
blending of relative strengths of the two companies, particularly in
respect of customer base, geographic areas and operational strengths;
(vii) an analysis of the increased competitiveness produced by combining
underperforming operations;
(viii) an analysis of the projected accretion in earnings and cash flow with
respect to the combined company resulting from the consolidation cost
savings anticipated by the Merger;
(ix) a review by the non-management directors of Enterra of the strengths and
weaknesses of Enterra's current senior management and the senior
management of Weatherford; and
(x) the belief that the increased size of the combined company should
provide increased market float, expanded analyst coverage and greater
investor interest.
The Enterra Board of Directors did not attach specific weight to any of the
foregoing factors in reaching its conclusion that the terms of the Merger are
fair to, and in the best interests of, the stockholders of Enterra. See "--
Opinions of Financial Advisors -- Enterra" for a discussion of the analysis
performed by Simmons in connection with rendering its opinion and terms of
Enterra's agreement to engage, compensate and indemnify Simmons.
RECOMMENDATION OF THE ENTERRA BOARD OF DIRECTORS
For the reasons set forth under "-- Background", "-- Joint Reasons for the
Merger" and "-- Enterra's Reasons for the Merger", the Enterra Board of
Directors believes that the terms of the Merger are fair to, and in the best
interests of, Enterra and the holders of Enterra Common Stock. The Board of
Directors has approved the Merger and the Merger Agreement and has recommended
that the holders of Enterra Common Stock vote "for" adoption and approval of the
Merger and the Merger Agreement.
In analyzing the Merger and the Merger Agreement, the Enterra Board of
Directors was assisted and advised by Simmons, and, at the June 23, 1995
meeting, the Enterra Board received an oral opinion, subsequently confirmed in
writing, from Simmons that, as of the date of such opinion, the consideration to
be received by the holders of Enterra Common Stock in the Merger was fair from a
financial point of view to such holders. See "-- Opinions of Financial Advisors
- -- Enterra". This opinion was reaffirmed in writing by Simmons as of the date of
this Joint Proxy Statement/ Prospectus.
OPINIONS OF FINANCIAL ADVISORS
WEATHERFORD
At its meeting on June 23, 1995 to consider and vote on entering into the
Merger Agreement, the Weatherford Board of Directors received the oral opinion
of Merrill Lynch that, as of such date, the conversion rate to be used in the
Merger was fair to the holders of Weatherford Common Stock from a financial
point of view. Such opinion was subsequently confirmed in writing to the
Weatherford Board of Directors as of June 23, 1995 and again confirmed in
writing as of the date of this Joint Proxy Statement/Prospectus. Merrill Lynch's
opinion relates only to the conversion rate and does not constitute a
recommendation to any stockholder of Weatherford as to how such stockholder
should vote at the Weatherford Special Meeting. The full text of Merrill Lynch's
June 23, 1995 written opinion, which summarizes the assumptions made, procedures
followed and matters considered in
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connection with such opinion, is attached as Appendix B to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. STOCKHOLDERS OF
WEATHERFORD AND ENTERRA ARE URGED TO READ THE OPINION IN ITS ENTIRETY,
ESPECIALLY WITH REGARD TO THE ASSUMPTIONS MADE AND MATTERS CONSIDERED BY MERRILL
LYNCH.
In connection with rendering its opinion on June 23, 1995, Merrill Lynch,
among other things: (i) reviewed Enterra's Annual Reports, Forms 10-K and
related financial information for the three fiscal years ended December 31, 1994
and its Form 10-Q and the related unaudited financial information for the
quarterly period ended March 31, 1995; (ii) reviewed Weatherford's Annual
Reports, Forms 10-K and related financial information for the three fiscal years
ended December 31, 1994 and its Form 10-Q and the related unaudited financial
information for the quarterly period ended March 31, 1995; (iii) reviewed
certain information, including financial forecasts, relating to the business,
earnings, cash flow, assets and prospects of Enterra and of Weatherford,
furnished to Merrill Lynch by Enterra and Weatherford, respectively, including
projected results of operations for each company for each of the quarters in
1995; (iv) conducted discussions with members of senior management of Enterra
and Weatherford concerning their respective businesses and prospects; (v)
reviewed the historical market prices and trading activity for the shares of
common stock of each of Enterra and Weatherford and compared them with each
other and with that of certain publicly-traded companies Merrill Lynch deemed to
be reasonably similar to Enterra and Weatherford; (vi) compared the results of
operations of Enterra and Weatherford with each other and with that of certain
companies Merrill Lynch deemed to be reasonably similar to Enterra and
Weatherford; (vii) compared the proposed financial terms of the transactions
contemplated by the Merger Agreement with the financial terms of certain other
mergers and acquisitions Merrill Lynch deemed to be relevant; (viii) considered
the pro forma effect of the Merger on Weatherford's capitalization ratios and
earnings, cash flow and earnings before depreciation, interest and taxes
("EBDIT") per share; (ix) reviewed a draft of the Merger Agreement dated June
23, 1995; and (x) reviewed such other financial studies and analyses and
performed such other investigations and took into account such other matters as
Merrill Lynch deemed necessary.
In connection with orally advising the Weatherford Board of Directors of its
opinion on June 23, 1995, confirming its opinion in writing and preparing its
presentations to the Weatherford Board of Directors on June 23, 1995, Merrill
Lynch performed a variety of financial and comparative analyses, including those
described below. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances.
Consequently, the analysis underlying such an opinion is not readily susceptible
to summary description. In arriving at its opinion, Merrill Lynch did not
attribute any particular weight to any analysis or factors considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. Accordingly, Merrill Lynch believes that its analyses must
be considered as a whole and that considering any portions of such analysis or
such factors without considering all analyses and factors could create an
incomplete or misleading view of the process Merrill Lynch undertook with
respect to rendering its opinion. In its analysis, Merrill Lynch made numerous
assumptions with respect to general business and economic conditions, industry
performance and other matters, many of which are beyond Weatherford's control.
Any estimates contained in these analyses are not necessarily indicative of
actual values or predictive of future results or values, which may be
significantly more or less favorable than as set forth therein. In addition,
analyses relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may trade or be acquired or sold.
The following summary does not purport to be a complete description of the
presentations made, or opinion rendered, to the Weatherford Board of Directors
on June 23, 1995 or of the analyses performed by Merrill Lynch in connection
with the Merger.
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DISCOUNTED CASH FLOW ANALYSIS. Utilizing a discounted cash flow analysis,
Merrill Lynch, utilizing certain data provided by Weatherford and Enterra and
certain other assumptions, estimated the present value of the future unlevered
free cash flows that Weatherford and Enterra could be expected to generate
during the period from January 1, 1995 to December 31, 1999.
With respect to the information provided by Enterra and Weatherford, Merrill
Lynch assumed that such information was reasonably prepared based upon the best
available estimates and judgments of each respective management. In conjunction
with Weatherford, Merrill Lynch utilized the information provided and various
assumptions on rig activity, margins, operating expenses, inflation and capital
expenditures to project financial results for Weatherford and Enterra through
the year 1999. The estimated future unlevered free cash flows were discounted at
after-tax rates of 11.0% to 14.0%, and a terminal multiple of 6.0x was applied
to the estimated EBDIT for each respective company in 1999 and discounted at the
same after-tax rates of 11.0% to 14.0%, which provided a reference value range
for the Enterra Common Stock of $391.8 million to $459.4 million, or $14.14 to
$16.59 per share, and a reference value range for the Weatherford Common Stock
of $487.8 million to $559.3 million, or $8.98 to $10.29 per share. Using the
respective per share values for Enterra and Weatherford, the reference range for
the conversion rate was calculated to be 1.57 to 1.61 shares of Weatherford
Common Stock for each share of Enterra Common Stock (before giving effect to the
Reverse Stock Split).
PURCHASE PRICE ANALYSIS AND STOCK TRADING HISTORY. Merrill Lynch performed
an analysis which indicated that pursuant to the terms of the Merger Agreement,
holders of Enterra Common Stock would own approximately 46.5% of the outstanding
shares of Weatherford Common Stock following the Merger. Merrill Lynch also
examined the history of trading prices and volume for the Weatherford Common
Stock and the Enterra Common Stock and various historical ratios between such
common stocks. Based upon the average closing prices of the Enterra Common Stock
and Weatherford Common Stock for selected periods of time, the reference range
for the conversion rate was calculated to be 1.60 to 2.50 shares of Weatherford
Common Stock for each share of Enterra Common Stock (before giving effect to the
Reverse Stock Split).
CONTRIBUTION ANALYSES. Merrill Lynch analyzed the projected earnings and
cash flow per share (defined as net income plus depreciation, amortization and
provision for deferred taxes divided by shares outstanding) for both Weatherford
and Enterra. Merrill Lynch also adjusted the respective earnings and cash flow
per share to reflect certain accounting differences (including goodwill
amortization and non-recurring expenses) and differences in effective tax rates.
Using the respective projected earnings and cash flow per share contributions of
Weatherford and Enterra, a reference range for the conversion rate was
calculated. Based upon the unadjusted projected earnings per share contributions
of the respective companies, the reference range for the conversion rate was
calculated to be 1.10 to 1.39 shares of Weatherford Common Stock for each share
of Enterra Common Stock (before giving effect to the Reverse Stock Split). Based
upon the adjusted projected earnings per share contributions of the respective
companies, the reference range for the conversion rate was calculated to be 1.47
to 1.59 shares of Weatherford Common Stock for each share of Enterra Common
Stock (before giving effect to the Reverse Stock Split). Based upon the
unadjusted projected cash flow per share contributions of the respective
companies, the reference range for the conversion rate was calculated to be 1.72
to 1.85 shares of Weatherford Common Stock for each share of Enterra Common
Stock (before giving effect to the Reverse Stock Split). Based upon the adjusted
projected cash flow per share contributions of the respective companies, the
reference range for the conversion rate was calculated to be 1.81 to 1.85 shares
of Weatherford Common Stock for each share of Enterra Common Stock (before
giving effect to the Reverse Stock Split).
PRO FORMA MERGER ANALYSIS. Merrill Lynch analyzed certain pro forma effects
that could result from the Merger. This analysis indicated that the pro forma
net income and EBDIT per share (excluding one-time costs associated with the
Merger) of the combined company would be accretive in 1995 and 1996 as compared
to the comparable stand-alone projections for Weatherford. In considering the
pro forma impact, Merrill Lynch assumed the realization of expected annual
pre-tax consolidation
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benefits of $27 million. Merrill Lynch expressed no view on whether these
savings could be obtained. Merrill Lynch also analyzed the effects of the Merger
on the balance sheet of the combined company. The combined company's pro forma
debt-to-debt plus common equity ratio as of March 31, 1995 for the combined
company was 20.9% as compared to 19.4% for Weatherford on a stand-alone basis.
In evaluating the fairness of the conversion rate to be used in the Merger,
Merrill Lynch also considered certain other analyses that are set forth below.
ANALYSES OF SELECTED PUBLICLY-TRADED COMPARABLE COMPANIES. Merrill Lynch
compared selected historical stock, operating and financial ratios for each of
Weatherford and Enterra to the respective corresponding data and ratios of
certain similar publicly-traded companies. With respect to both Weatherford and
Enterra, Merrill Lynch made such comparisons to two categories of companies: (i)
certain large-sized capitalization companies, consisting of Baker Hughes
Incorporated, Dresser Industries, Inc., Halliburton Co., Schlumberger Limited
and Western Atlas, Inc.; and (ii) certain mid-sized capitalization companies,
consisting of BJ Services Company, Camco International, Inc., Smith
International, Inc., Tuboscope Vetco International Corporation and Varco
International, Inc. For purposes of this analysis, data with respect to the
companies were derived from certain publicly available information concerning
estimates of future operating and financial performance of the companies as
prepared by certain equity research analysts.
An analysis of the ratio of adjusted market capitalization (defined as debt
plus market value of common stock plus liquidation value of preferred stock plus
minority interests less cash and marketable securities) to projected EBDIT for
1995 yielded a range of 6.8x to 8.8x with an average of 7.8x for the large-sized
capitalization company group and a range of 5.7x to 8.8x with an average of 7.8x
for the mid-sized capitalization company group, compared to a ratio of adjusted
market capitalization to projected EBDIT in 1995 for Weatherford and Enterra of
7.2x and 7.2x, respectively; and for 1996 yielded a range of 6.3x to 8.6x with
an average of 7.3x for the large-sized capitalization company group and a range
of 5.1x to 7.6x with an average of 6.8x for the mid-sized capitalization company
group, compared to a ratio of adjusted market capitalization to projected EBDIT
in 1996 for Weatherford and Enterra of 6.7x and 6.3x, respectively.
An analysis of the ratio of the market value of common stock to projected
net income for 1995 yielded a range of 19.3x to 27.3x with an average of 23.5x
for the large-sized capitalization company group and a range of 13.0x to 24.9x
with an average of 19.1x for the mid-sized capitalization company group,
compared to a ratio of market value of common stock to projected net income in
1995 for Weatherford and Enterra of 17.6x and 25.7x, respectively; and for 1996
yielded a range of 16.6x to 22.3x with an average of 20.0x for the large-sized
capitalization company group and a range of 9.5x to 17.5x with an average of
14.9x for the mid-sized capitalization company group, compared to a ratio of
market value of common stock to projected net income in 1996 for Weatherford and
Enterra of 18.8x and 21.6x, respectively.
Because of the inherent differences between the operations of Weatherford,
Enterra and the selected comparable companies, Merrill Lynch believed that a
purely quantitative comparable company analysis would not be exclusively
dispositive in the context of the Merger. Merrill Lynch believed that an
appropriate use of a comparable company analysis in this instance would involve
qualitative judgments concerning differences between the financial and operating
characteristics of Weatherford, Enterra and the selected companies, which
judgments are reflected in Merrill Lynch's opinion.
ANALYSES OF SELECTED COMPARABLE ACQUISITION TRANSACTIONS. Merrill Lynch
also reviewed publicly available information on certain acquisition transactions
that involved companies with primarily U.S. operations and consideration in
excess of $50 million in the oilfield service industry, which took place between
November 1989 and May 1995. The acquisitions considered by Merrill Lynch include
(in order from May 1995 to November 1989 and listed by the acquiror/seller); BJ
Services/Western Company; Eagleville Ltd./Fairhaven International;
Tidewater/Halliburton Compression; Enterra/
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Total Energy Services; Dresser Industries/Wheatley TXT; Nabors/Sundowner
Offshore; Dresser Industries/Baroid; Weatherford/Homco International;
Halliburton/Smith Directional Drilling; Baroid Corporation/Sub Sea
International; Baker Hughes/Teleco Oilfield Services; Baker Hughes/Eastman
Christensen; and Cooper Industries/Cameron Iron Works.
Merrill Lynch examined the multiples of the total consideration paid in each
of the transactions to, among other measures, such acquired companies'
respective EBDIT for the latest reported twelve month period, which yielded a
range of 8.0x to 16.1x with an average of 10.5x compared to a ratio of adjusted
market capitalization (which for purposes of this analysis was assumed to be
equivalent to total consideration) to EBDIT for the latest twelve month period
for Weatherford and Enterra of 8.1x and 8.4x, respectively.
Because the reasons for, and circumstances surrounding, each of the
transactions analyzed were so diverse and due to the inherent differences
between the operations of Weatherford, Enterra and the selected companies,
Merrill Lynch believed that a purely quantitative comparable transaction
analysis would not be exclusively dispositive in the context of the proposed
Merger. Merrill Lynch further believed that an appropriate use of a comparable
transaction analysis in this instance would involve qualitative judgments
concerning differences between the characteristics of these transactions and the
Merger that would affect the acquisition value of the acquired companies and
businesses and Enterra, which judgments are reflected in Merrill Lynch's
opinion.
In connection with rendering its opinion, Merrill Lynch relied, without
independent verification, upon the accuracy and completeness of all of the
financial and other information furnished to Merrill Lynch by Enterra and
Weatherford. With respect to forecasted financial information furnished to
Merrill Lynch by Enterra and Weatherford (including estimates of consolidation
benefits from the Merger), Merrill Lynch assumed such information to have been
reasonably prepared and to reflect the best currently available estimates and
judgments of the managements of Weatherford and Enterra as to the expected
future financial performance of Weatherford and Enterra, respectively, and of
the two companies combined. In rendering its opinion, Merrill Lynch did not make
or receive an independent evaluation or appraisal of the assets or liabilities
of Weatherford or Enterra, nor did it independently verify any of the publicly
available information relating to Weatherford or Enterra. The opinion of Merrill
Lynch is necessarily based upon market, economic and other conditions as they
existed on, and could be evaluated as of, the date of such opinion. In rendering
its opinion, Merrill Lynch relied upon Weatherford as to certain accounting
aspects of the Merger and assumed that the Merger will be treated as a tax-free
reorganization within the meaning of Section 368(a) of the Code and that the
Merger and the exchange of shares contemplated thereby will be treated for
financial accounting purposes as a "pooling of interests".
As described above, Merrill Lynch's opinion and presentations to the
Weatherford Board of Directors were one of the many factors taken into
consideration by such Board of Directors in making its determination on June 23,
1995 to approve the Merger and the Merger Agreement.
Merrill Lynch is an internationally recognized investment banking firm that,
as part of its investment banking business, regularly is engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Weatherford selected
Merrill Lynch to act as its financial advisor in connection with the Merger on
the basis of such firm's expertise.
In connection with Merrill Lynch's services as financial advisor to
Weatherford, Weatherford has agreed to pay Merrill Lynch as compensation for its
services a fee in the amount of $2 million upon consummation of the Merger (or,
if the Merger is not consummated, upon the consummation of another business
combination within 18 months following the retention of Merrill Lynch as
Weatherford's financial advisor). Weatherford has paid Merrill Lynch a
noncontingent fee of $100,000 that will be credited against such transaction
fee. Weatherford also has agreed to reimburse Merrill Lynch for
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certain reasonable out-of-pocket expenses incurred in connection with the Merger
and to indemnify Merrill Lynch (and its employees and directors) against certain
liabilities and expenses in connection with the Merger, including certain
liabilities under the Federal securities laws.
Merrill Lynch has performed investment banking services for Weatherford from
time to time. Such services have included, among others, acting as lead-manager
of a common stock offering in April 1993, for which Merrill Lynch received
customary compensation. In addition, Merrill Lynch has from time to time
provided financial advisory services to Weatherford, but has received no
compensation therefor except in connection with the Merger. In the ordinary
course of Merrill Lynch's business, Merrill Lynch may actively trade the
securities of Weatherford and Enterra for its own account and for the accounts
of its customers and, accordingly, may at any time hold a long or short position
in such securities. Merrill Lynch also has performed investment banking services
for First Reserve in connection with an asset divestiture, for which Merrill
Lynch received fees of $1.3 million.
ENTERRA
Enterra retained Simmons to act as its financial advisor in connection with
the Merger and to render a fairness opinion in connection with the Merger.
Simmons rendered an oral opinion to the Enterra Board of Directors at a meeting
on June 23, 1995 that, as of that date, the consideration to be received by the
holders of Enterra Common Stock in the Merger was fair from a financial point of
view to such holders. Such opinion was reaffirmed in writing to the Enterra
Board as of June 23, 1995 and again confirmed in writing as of the date of this
Joint Proxy Statement/Prospectus.
The full text of Simmons' fairness opinion, dated June 23, 1995, which sets
forth the assumptions made, general procedures followed, matters considered and
limits on the review undertaken, is attached as Appendix C to this Joint Proxy
Statement/Prospectus. Simmons' opinion is directed only to the fairness, from a
financial point of view, of the consideration to be received by the holders of
Enterra Common Stock and does not constitute a recommendation to any holder of
Enterra Common Stock as to how such stockholder should vote on the Merger
Agreement. The summary of Simmons' opinion set forth below is qualified in its
entirety by reference to the full text of such opinion attached as Appendix C.
STOCKHOLDERS OF ENTERRA ARE URGED TO READ THE OPINION IN ITS ENTIRETY.
In connection with rendering its opinion on June 23, 1995, Simmons reviewed
and analyzed, among other things, the following: (i) a draft of the Merger
Agreement and related disclosure letters; (ii) financial statements and other
information concerning Enterra, including the Annual Reports on Form 10-K of
Enterra for the years ended December 31, 1992 through 1994 and the Quarterly
Report on Form 10-Q of Enterra for the quarter ended March 31, 1995; (iii)
certain other internal information, primarily financial in nature and including
financial forecasts, concerning the business and operations of Enterra furnished
by Enterra for purposes of Simmons' analysis, including projected results of
operations for each of the quarters in 1995; (iv) certain publicly available
information concerning the trading of Enterra Common Stock; (v) certain publicly
available information concerning Weatherford, including the Annual Reports on
Form 10-K of Weatherford for the years ended December 31, 1992 through 1994 and
the Quarterly Report on Form 10-Q of Weatherford for the quarter ended March 31,
1995; (vi) certain other internal information, primarily financial in nature and
including financial forecasts, concerning the business and operations of
Weatherford furnished by Weatherford for purposes of Simmons' analysis,
including projected results of operations for each of the quarters in 1995;
(vii) certain publicly available information concerning the trading of
Weatherford Common Stock; (viii) certain publicly available information with
respect to certain other companies that Simmons believes to be comparable to
Enterra or Weatherford and the trading markets for certain of such other
companies' securities; and (ix) certain publicly available information
concerning the nature and terms of certain other transactions considered
relevant to the inquiry. Simmons also met with certain officers and employees of
Enterra and Weatherford to discuss the foregoing as well as other matters
believed by Simmons to be relevant.
In arriving at its June 23, 1995 opinion and making its related
presentations, Simmons assumed and relied upon the accuracy and completeness of
all of the financial and other information provided
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by Enterra and Weatherford, or publicly available, including without limitation
information with respect to condition of assets, tax positions, liability
reserves and insurance coverages, and did not attempt independently to verify
any such information. With respect to the financial forecasts and other data
reviewed by Simmons, Simmons assumed, with the consent of the Enterra Board of
Directors, that such forecasts and other data were reasonably prepared and
reflected the best currently available estimates and judgments of the respective
managements of Enterra and Weatherford as to the expected future financial
performance of their respective companies and of the combined company following
the Merger. Simmons also relied upon an estimate of consolidation cost savings
that was prepared by managements of both companies with Simmons' assistance,
which indicated that consolidation cost savings of $26.8 million annually could
be achieved, exclusive of certain other potential consolidation cost savings
that were still under review. Simmons reviewed the calculation of potential
consolidation cost savings prepared by managements of the companies and
determined, in view of the exclusion of such potential additional savings, to
assume annual consolidation cost savings of $30 million for purposes of its
analysis. Simmons did not conduct a physical inspection of any of the assets,
properties or facilities of Enterra, nor did Simmons make or obtain any
independent evaluations or appraisal of any of such assets, properties or
facilities. Simmons assumed that the Merger would be treated as a "pooling of
interests" for accounting purposes and as a tax-free reorganization for Federal
income tax purposes. In addition, although Simmons discussed the prospects of
Enterra and Weatherford with certain representatives of their respective
managements, Simmons was only provided with financial projections for Enterra
through 1999 and for Weatherford through 1995, together with related analyses
for the same periods prepared by managements of both companies with respect to
their respective future performances.
In conducting its analysis and arriving at its June 23, 1995 opinion,
Simmons considered such financial and other factors as it deemed appropriate
under the circumstances including, among others, the following: (i) the
historical and current financial position and results of operations of Enterra
and Weatherford (including an in-depth review of projected second quarter 1995
and full year 1995 results for both companies); (ii) the business prospects of
Enterra and Weatherford presented by managements of both companies; (iii) the
potential personnel and operating expense reductions that could be achieved in
the Merger; and (iv) the historical and current market for Enterra Common Stock,
for Weatherford Common Stock and for the equity securities of certain other
companies believed by Simmons to be comparable to Enterra or Weatherford.
Simmons also took into account its assessment of general economic, market and
financial conditions and its experience in connection with similar transactions
and securities' valuation generally. Simmons' opinion necessarily is based upon
conditions as they existed and could be evaluated on, and on the information
made available at, the date of such opinion.
In connection with a presentation to the Enterra Board on June 23, 1995,
Simmons advised the Enterra Board that, in evaluating the conversion rate to be
used in the Merger, Simmons had performed a variety of financial analyses with
respect to Enterra and Weatherford.
CONVERSION RATE PROFILE. Simmons performed an analysis of the ratio of the
market price of Enterra Common Stock to the market price of Weatherford Common
Stock during the period from November 1, 1993 through June 22, 1995. Simmons
calculated the ratio of the Enterra Common Stock closing price for the last
trading day of each week during that period to the Weatherford Common Stock
closing price for such day. This analysis implied a conversion rate ranging from
a high of 2.28 shares of Weatherford Common Stock for each share of Enterra
Common Stock to a low of 1.54 shares of Weatherford Common Stock for each share
of Enterra Common Stock, with an average during the period of 1.89 shares of
Weatherford Common Stock for each share of Enterra Common Stock (in each case,
before giving effect to the Reverse Stock Split). Simmons also calculated the
average ratio during the past 30, 60 and 90 days, respectively, of the Enterra
Common Stock closing price for each trading day to the Weatherford Common Stock
closing price for such day. This analysis implied a conversion rate of 1.73x,
1.70x and 1.67x based on the last 30, 60 and 90-day periods, respectively.
Simmons also calculated the ratio of the Enterra Common Stock price on June 22,
1995
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($20.00 per share) to the Weatherford Common Stock price on such day ($11.25 per
share). This implied a conversion rate of 1.78 shares of Weatherford Common
Stock for each share of Enterra Common Stock (before giving effect to the
Reverse Stock Split).
RELATIVE CONTRIBUTION ANALYSIS. Simmons analyzed the relative contributions
of Enterra and Weatherford to, among other things, the combined last twelve
months ("LTM") EBDIT, LTM net income, analysts' estimates of projected 1995 net
income and 1996 net income, market capitalization (based on June 22, 1995 share
prices) and market equity value (based on June 22, 1995 share prices) of the two
companies, assuming completion of the Merger (without giving effect to any
transaction adjustments). Simmons calculated contributions by Enterra of
approximately 47% of combined LTM EBDIT; 32% of combined reported LTM net
income; 42% of adjusted combined LTM net income (adjusted to eliminate one-time
items and compensate for different tax rates); 39% of projected 1995 net income,
40% of projected 1996 net income, 50% of market capitalization and 48% of market
equity value. Simmons also calculated the percentage of the combined companies'
equity that would be held by former Enterra stockholders assuming completion of
the Merger as 46% (using the conversion rate to be used in the Merger) and
compared such percentage with the foregoing contribution percentages.
DISCOUNTED CASH FLOW ANALYSIS. Simmons used five-year projections prepared
by Enterra and developed five-year projections (based on one-year projections
prepared by Weatherford) to calculate projected future cash flows for Enterra
and Weatherford, respectively. In developing the five-year projections for
Weatherford, Simmons took into account the similar nature of a major portion of
the businesses of Weatherford and Enterra. Simmons then performed discounted
cash flow analyses based on the unlevered free cash flows generated by Enterra
and Weatherford employing an estimated terminal value derived as a multiple of
seven times EBDIT in such analyses.
Simmons discounted to present value the respective projected future cash
flows and terminal values of Enterra and Weatherford by applying after-tax
discount rates ranging from 12% to 15%. Based on these calculations, Simmons
then derived ranges of present values per share for Enterra Common Stock and
Weatherford Common Stock. Based on the respective per share values for Enterra
Common Stock and Weatherford Common Stock, a conversion rate range of 1.60 to
1.64 shares of Weatherford Common Stock for each share of Enterra Common Stock
(before giving effect to the Reverse Stock Split) was calculated.
PRO FORMA MERGER ANALYSIS. Simmons performed an analysis of the effect of
the Merger on the earnings per share and net cash flow per share of the
Weatherford Common Stock, which would be the surviving stock after the Merger,
for the projected results for the years ending December 31, 1995 and 1996, which
assumed that the Merger was consummated on January 1, 1995. In performing this
analysis, Simmons also assumed that annual consolidation cost savings of $30
million were fully realized as of January 1, 1995. Simmons also excluded
one-time costs associated with the Merger for the purposes of this analysis.
This analysis indicated that the pro forma impact of the Merger was accretive to
the earnings and cash flow per share of Weatherford Common Stock in both 1995
and 1996.
Simmons also analyzed the balance sheet impact of the Merger. At March 31,
1995, the total debt-to-common equity ratio of Enterra and Weatherford combined
(before any one-time costs or other adjustments) was 26.5%. Enterra's
stand-alone debt-to-common equity ratio was 28.1% at March 31, 1995.
CAPITALIZATION OF ASSUMED CONSOLIDATION EXPENSE REDUCTION. Simmons took the
expense reduction of $30 million per year assumed to be achieved as
consolidation cost savings as a result of the Merger and computed an implied
increase in the equity value of the combined company based on an 8.5x EBDIT
multiple applied to the combined pro forma EBDIT including the increase in EBDIT
attributable to the consolidation savings. Simmons then computed that, based on
the conversion rate of 1.69 (before giving effect to the Reverse Stock Split)
and the number of shares of Enterra Common
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Stock and Weatherford Common Stock outstanding, Enterra stockholders would
receive approximately 46% of any change in the equity value of the combined
company that might result from the consolidation.
In evaluating the fairness of the conversion rate to be used in the Merger,
Simmons also considered certain other analyses which are set forth below.
ANALYSIS OF SELECTED PUBLICLY-TRADED COMPARABLE COMPANIES. Simmons reviewed
certain financial information for the 12 months ended March 31, 1995 and stock
market information as of June 22, 1995 for Enterra and Weatherford, and certain
publicly available financial information as of the most recently reported period
and stock market information as of June 22, 1995 for certain similar publicly-
traded oil service companies. For the purposes of this analysis, this group of
similar companies was comprised of Baker Hughes Incorporated, BJ Services
Company, Camco International, Inc., Dresser Industries, Inc., Halliburton Co.,
Smith International, Inc., Tuboscope Vetco International Corporation and Western
Atlas, Inc. (collectively, the "Comparable Companies").
For Enterra and Weatherford and each of the Comparable Companies, Simmons
calculated multiples of market stock price to LTM earnings and cash flow per
share, and estimated earnings and cash flow per share (derived from publicly
available information concerning the estimates of the future operating and
financial performance of Enterra, Weatherford and the Comparable Companies
prepared by industry experts unaffiliated with either Enterra or Weatherford)
for 1995 and 1996, and multiples of adjusted market capitalization to LTM EBDIT.
An analysis of the multiples of market stock price to LTM earnings per share, to
projected 1995 earnings per share and to projected 1996 earnings per share
yielded for Enterra 34.6x, 24.7x and 18.2x, respectively, for Weatherford 18.0x,
17.0x and 13.7x, respectively, with a mean value (excluding the highest value
and the lowest value) of 23.1x, 20.7x and 16.8x, respectively, for the
Comparable Companies. An analysis of the multiples of market stock price to LTM
cash flow per share, to estimated 1995 cash flow per share and to estimated 1996
cash flow per share yielded for Enterra 9.1x, 8.2x and 7.3x, respectively, for
Weatherford 8.2x, 7.8x and 7.0x, respectively, with a mean value (excluding the
highest value and the lowest value) of 9.2x, 8.9x and 8.2x, respectively, for
the Comparable Companies. An analysis of the multiples of adjusted market
capitalization to LTM EBDIT yielded 8.8x for Enterra, 7.8x for Weatherford with
a mean value (excluding the highest value and the lowest value) of 8.7x for the
Comparable Companies.
Because of the inherent differences between the operations of Enterra,
Weatherford and the Comparable Companies, Simmons believed that a purely
quantitative comparable company analysis would not be exclusively dispositive in
the context of the Merger. Simmons further believed that an appropriate use of a
comparable company analysis in this instance would involve qualitative judgments
concerning differences between the financial and operating characteristics of
Weatherford, Enterra and the Comparable Companies, which judgments are reflected
in Simmons' opinion.
ANALYSIS OF SELECTED COMPARABLE ACQUISITION TRANSACTIONS. Simmons reviewed
17 transactions involving the acquisition of all or part of certain oilfield
service companies. Simmons calculated the multiples of acquisition price or
transaction value to LTM revenues and LTM EBDIT and calculated the multiples for
adjusted acquisition price (defined as acquisition price less the value of debt
assumed in the transaction) to LTM net income of such companies.
For these transactions the calculations yielded, excluding values that
Simmons believed were not meaningful, a range of acquisition price to LTM
revenues of 0.8x to 3.9x, with a mean value (excluding the highest value and the
lowest value) of 1.5x, a range of acquisition price to LTM EBDIT of 5.0x to
10.2x, with a mean value (excluding the highest value and the lowest value) of
7.6x and a range of adjusted acquisition price to LTM net income of 6.2x to
25.2x, with a mean value (excluding the highest value and the lowest value) of
19.0x. Simmons then compared the results of these calculations to multiples
calculated using the closing prices of Weatherford Common Stock and Enterra
Common Stock on June 22, 1995, which were $20.00 and $11.25, respectively. The
calculations yielded multiples of adjusted market capitalization (which for the
purposes of this analysis was assumed to be comparable to acquisition price) to
LTM revenues of 1.5x and 1.8x for Enterra and Weatherford, respectively, of
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adjusted market capitalization to LTM EBDIT of 8.8x and 7.8x for Enterra and
Weatherford, respectively, and of market equity value (which for the purposes of
this analysis was assumed to be comparable to adjusted acquisition price) to LTM
net income of 34.6x and 18.0x for Enterra and Weatherford, respectively.
Because the reasons for, and circumstances surrounding, each of the
transactions analyzed were so diverse and due to the inherent differences
between the operations of Enterra, Weatherford and the selected companies,
Simmons believed that a purely quantitative comparable transaction analysis
would not be exclusively dispositive in the context of the Merger. Simmons
further believed that an appropriate use of a comparable transaction analysis in
this instance would involve qualitative judgments concerning differences between
the characteristics of these transactions and the Merger that would affect the
acquisition value of the acquired companies and businesses and Enterra, which
judgments are reflected in Simmons' opinion.
The foregoing summary does not purport to be a complete description of the
analyses performed by Simmons or of its presentations to the Enterra Board of
Directors. The preparation of financial analyses and fairness opinions is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Simmons believes that its analyses (and the summary set
forth above) must be considered as a whole and that selecting portions of such
analyses and of the factors considered by Simmons, without considering all of
such analyses and factors, could create an incomplete view of the processes
underlying the analyses conducted by Simmons and its opinion. Simmons made no
attempt to assign specific weights to particular analyses. Any estimates
contained in Simmons' analyses are not necessarily indicative of actual values,
which may be significantly more or less favorable than as set forth therein.
Estimates of values of companies do not purport to be appraisals or necessarily
to reflect the prices at which companies may actually be sold.
Simmons was not authorized to solicit, nor did Simmons solicit from others,
indications of interest with respect to acquiring Enterra. Simmons expressed no
opinion regarding the value that would be realized upon the sale or liquidation
of Enterra, and Simmons' opinion does not address the relative merits of the
Merger as compared to any alternative business combination transaction that
might be available to Enterra, including the acquisition of Enterra by a third
party.
Simmons is a specialized energy-related investment banking firm engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, private placements of debt and equity and the management and
underwriting of sales of equity and debt to the public. Simmons has previously
rendered investment banking services to Enterra and to Weatherford in connection
with a number of transactions for which Simmons received customary compensation.
In addition, in the ordinary course of business, Simmons may actively trade the
securities of Enterra and Weatherford for its own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities.
Enterra has agreed to pay Simmons contingent fees totaling $2 million upon
consummation of the Merger. Enterra has paid Simmons a noncontingent fee of
$200,000 that will be credited against such contingent fees. Weatherford has
agreed to reimburse Enterra for half of the noncontingent fee if the Merger is
not consummated. Enterra also has agreed to reimburse Simmons for certain
expenses incurred in connection with its engagement and to indemnify Simmons and
certain related persons against certain liabilities and expenses relating to or
arising out of its engagement, including certain liabilities under the Federal
securities laws.
Enterra has retained Simmons in connection with the acquisition of Energy
Industries. In connection with the Energy Industries transaction, Enterra has
agreed to pay Simmons a contingent fee equal to three quarters of one percent of
the "Transaction Value" upon consummation of the acquisition of Energy
Industries. "Transaction Value" is defined as all cash, notes, stock and value
of other securities paid by Enterra for Energy Industries plus any such debt for
borrowed money of Energy Industries that may be assumed by Enterra. Enterra's
June 29, 1995 contract to acquire Energy Industries does not provide for the
assumption by Enterra of any debt of Energy Industries. Enterra also has
retained
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Simmons in connection with the planned divestitures of three of its oilfield
equipment businesses, for which Enterra has agreed to pay Simmons a contingent
fee equal to 1.75% of the Transaction Value upon consummation of each of the
transactions.
During the past five years, Enterra and Weatherford have paid Simmons fees
totaling $30,000 and $1,018,000, respectively, in connection with previously
rendered investment banking services. Simmons also has performed investment
banking services for First Reserve from time to time during the past five years,
for which Simmons has received fees totaling $60,000.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Board of Directors and management of each of
Weatherford and Enterra have certain interests in the Merger separate from their
interests as holders of Weatherford Common Stock and Enterra Common Stock,
respectively.
Pursuant to the Merger Agreement and the Stockholders Agreement, the
Surviving Corporation Board of Directors will include Thomas N. Amonett, Philip
Burguieres, William E. Greehey, John W. Johnson and Robert K. Moses, Jr., who
are currently directors of Weatherford, and John A. Hill, William E. Macaulay,
Robert L. Parker, Sr., R. Rudolph Reinfrank and Roger M. Widmann, who are
currently directors of Enterra. Mr. Burguieres will be Chairman of the Board of
Directors of the Surviving Corporation. If within two years after the Effective
Time a designee for one of the parties shall decline or be unable to serve as a
director of the Surviving Corporation, the remaining designees for such party
may designate for nomination another person to act in such person's stead,
subject to the approval of the other party's designated directors, which
approval shall not be unreasonably withheld. Each committee of the Surviving
Corporation Board of Directors will have at least one Enterra designee during
the two years following the Effective Time. Each Enterra designee to the
Surviving Corporation Board of Directors will be covered by Weatherford's
Non-Employee Director Retirement Plan, which provides that prior service on the
Enterra Board of Directors will count as service for all purposes under such
plan. Weatherford also will enter into indemnification agreements with such
Enterra designees. See "Terms of the Merger -- Conduct of Business of the
Combined Company Following Merger".
Pursuant to the Merger Agreement, Weatherford agreed to enter into, as of
the Effective Time, certain arrangements with D. Dale Wood, Chairman of the
Board, President and Chief Executive Officer of Enterra, who will not continue
as an officer or director of the Surviving Corporation. Pursuant to the Merger
Agreement, Enterra has agreed to negotiate amendments to Mr. Wood's existing
severance agreement with Enterra to provide that, after a Termination upon
Change of Control (as defined in such agreement), he will receive (i) in lieu of
cash, upon the cancellation of all outstanding options to purchase shares of
Enterra Common Stock, that number of shares of Weatherford Common Stock equal in
value to the difference between the aggregate exercise price of such options and
the aggregate market price of such shares of Enterra Common Stock on the
Effective Date and (ii) a gross-up payment if he is subject to excise taxes
under Section 4999 of the Code (which relates to excess parachute payments under
Section 280G of the Code) (the "Wood Severance Agreement Amendments"). In
addition, pursuant to Mr. Wood's existing severance agreement with Enterra,
Weatherford agreed to pay Mr. Wood $915,100 as a severance payment. Weatherford
also agreed to pay Mr. Wood an amount between $1,365,000 and $1,865,000 (as
determined by the Enterra Board of Directors). In addition, Weatherford agreed
to enter into a five-year consulting agreement with Mr. Wood providing for a
consulting fee of $50,000 per year and an option to purchase 84,500 shares of
Weatherford Common Stock (after giving effect to the Reverse Stock Split) at an
exercise price equal to the market price of Weatherford Common Stock on the
Closing Date (after giving effect to the Reverse Stock Split) and vesting 20%
each year over the five-year period and exercisable for ten years. See "Terms of
the Merger -- Employee Matters".
Pursuant to the Merger Agreement, Weatherford also agreed to pay $1.2
million to Philip Burguieres, Chairman of the Board, President and Chief
Executive Officer of Weatherford, as of the Effective Time. See "Terms of the
Merger -- Employee Matters".
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The officers of Weatherford immediately prior to the Effective Time,
together with M. Timothy Carey and Steven C. Grant (who are officers of
Enterra), are expected to be the officers of the Surviving Corporation.
Weatherford has agreed to enter into change of control agreements (which would
not treat the Merger as a change of control), on the form currently used by
Weatherford, with Messrs. Carey and Grant, providing for severance benefits for
periods of two years and one year, respectively. In addition, Weatherford will
enter into indemnification agreements with such persons. See "Terms of the
Merger -- Employee Matters".
From the Effective Time through June 30, 1996, all employees of Enterra,
including officers, will be provided benefits by Weatherford under existing
Enterra benefit plans or comparable Weatherford benefit plans, and, thereafter,
such employees shall be eligible to participate in Weatherford benefit plans and
to receive the same or substantially comparable benefits as similarly situated
Weatherford employees (in each case, to the extent they continue as officers,
directors or employees of the Surviving Corporation). A limited number of key
employees (none of whom have existing severance agreements with Enterra),
including officers, may receive severance pay awards if they are terminated from
employment for certain reasons within one year following the Effective Time.
Certain employees, including the executive officers of Enterra, may be eligible
for bonuses for the fiscal year ending 1995 and for additional bonuses to be
paid to such employees in an aggregate amount not to exceed $1 million. See
"Terms of the Merger -- Employee Matters".
Eleven senior officers of Enterra (including Messrs. Carey and Grant) are
covered by existing severance agreements with Enterra. Pursuant to the Merger
Agreement, Enterra has agreed to negotiate amendments to each such agreement
(except for the agreement with Mr. Wood, which will be amended to include the
Wood Severance Agreement Amendments) to provide that, after a Termination upon
Change of Control (as defined in such agreement), such officer will receive (i)
in lieu of cash, upon the cancellation of all outstanding substitute options to
purchase shares of Weatherford Common Stock, that number of shares of
Weatherford Common Stock equal in value to the difference between the aggregate
exercise price of such substitute options and the aggregate market price of such
shares of Weatherford Common Stock on the date of such termination and (ii) a
gross-up payment if such officer is subject to excise taxes under Section 4999
of the Code (which relates to excess parachute payments under Section 280G of
the Code) (collectively, the "Enterra Severance Agreement Amendments"). Payments
due upon a Termination upon Change of Control (as defined in the severance
agreements) assuming termination in 1995 would be as follows: Mr. Wood, $915,100
(as described above); C. Paul Evans, $427,350; Mr. Carey, $501,550; Mr. Grant,
$356,800; Steven W. Krablin, $335,100; and the remaining six officers as a
group, $2,036,500. In addition, each such individual is entitled to receive
certain other benefits under his severance agreement. Weatherford has
acknowledged that any resignation by six of these officers (including Messrs.
Carey and Grant) from the Effective Time through August 12, 1996 will constitute
a Termination upon Change of Control for purpose of the severance agreement
between such person and the Surviving Corporation. See "Terms of the Merger --
Employee Matters".
Pursuant to the Merger Agreement, Weatherford agreed to negotiate an
amendment to twelve of the existing change of control agreements between
Weatherford and certain of its employees. The Merger constitutes a change of
control for the purposes of such agreements. The amendment would provide that
should the employee voluntarily terminate his or her employment during the
30-day period immediately following the first anniversary of the date of a
change of control, the only termination benefit he or she would receive would be
the benefits related to his or her outstanding stock options, stock appreciation
rights and restricted common stock. The amendment would eliminate all other
benefits under the change of control agreements that otherwise would be payable
upon voluntary termination during such 30-day period. In consideration for such
amendments and the elimination of such benefits, payments by Weatherford would
be as follows: Mr. Burguieres, $630,000; M.E. Eagles, $245,004; James R. Burke,
$182,004; Norman W. Nolen, $155,004; H. Suzanne Thomas, $155,004; and the
remaining seven employees as a group, $383,562. In addition, Weatherford is
party
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to an additional change of control agreement that does not provide the employee
the right to voluntarily terminate his employment during the 30-day period
immediately following the first anniversary of a change of control.
Pursuant to the Merger Agreement, Weatherford has agreed to replace each
Enterra Option that remains unexercised in whole or in part at the Effective
Time with a substitute option to be granted under an existing Weatherford stock
option plan or pursuant to a separate stock option agreement. As of the Record
Date, the current executive officers and directors of Enterra, excluding Mr.
Wood, held Enterra Options to purchase 379,381 shares of Enterra Common Stock.
See "Terms of the Merger -- Enterra Options".
The Merger Agreement provides that, after the Effective Time, Weatherford
and the Surviving Corporation will indemnify the officers and directors of
Enterra and any of its subsidiaries against all costs and expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, based in whole or in part on, or arising in whole or in part out
of, the fact that such person is or was an officer or director, whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, at or after the Effective Time, as
well as all liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to, the Merger Agreement, the Merger or the
transactions contemplated thereby. See "Enterra Corporation -- Recent
Developments" and "Terms of the Merger -- Indemnification".
In conjunction with the execution of the Merger Agreement, Weatherford
entered into the Stockholders Agreement with First Reserve and the First Reserve
Funds, which has substantially the same terms as the stockholders agreement
currently in effect among Enterra, First Reserve and the First Reserve Funds.
Among other things, the Stockholders Agreement, which will become effective at
the Effective Time, entitles the First Reserve Group to designate up to two
directors of the Surviving Corporation (subject to the amount of Weatherford
Voting Securities (as hereinafter defined) held by them). Under the existing
Enterra stockholders agreement, the First Reserve Group is entitled to designate
up to four members of the Enterra Board of Directors. Under the Stockholders
Agreement and the existing Enterra stockholders agreement, the First Reserve
Group is entitled to have at least one of the designees serve on each board
committee. The Stockholders Agreement also grants the First Reserve Group
registration rights that are identical to those included in the Enterra
stockholders agreement. The Stockholders Agreement, like the Enterra
stockholders agreement, requires the First Reserve Group to vote the Weatherford
securities (or Enterra securities, with respect to the Enterra stockholders
agreement) it beneficially owns (i) in accordance with the recommendations of a
majority of the Weatherford Board of Directors (or the Enterra Board of
Directors, as the case may be) or (ii) in the same proportions (for, against and
abstaining) in respect of any matter as the holders of record of Weatherford
voting securities (or Enterra voting securities, as the case may be), other than
those beneficially owned by the First Reserve Group that are entitled to vote on
such matter, vote the Weatherford voting securities (or Enterra voting
securities, as the case may be). See "Terms of the Merger -- Stockholders
Agreement". Under the terms of the existing Enterra stockholders agreement, the
First Reserve Group had the option, in its discretion, of either voting the
Enterra Common Stock over which they had voting control in accordance with the
recommendation of a majority of the Enterra Board of Directors, or in the same
proportion (for, against or abstaining) as voted by all holders of record of
Enterra Common Stock other than the First Reserve Group. First Reserve and the
First Reserve Funds have entered into an agreement with Weatherford pursuant to
which they have agreed to vote the 11,212,349 shares of Enterra Common Stock
over which they have voting control, representing approximately 40.3% of the
outstanding shares as of the Record Date, in favor of the adoption of the Merger
Agreement unless the Enterra Board of Directors, at the time of the Enterra
Special Meeting, is recommending that the Enterra stockholders vote against the
adoption of the Merger Agreement in view of the pendency of an Enterra Superior
Proposal. Thus, in a situation where the Enterra Board of Directors is
recommending that the Enterra stockholders vote for the
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approval and adoption of the Merger and the Merger Agreement, the First Reserve
Group, absent this agreement with Weatherford, would have had the option of
voting its shares in the same proportion as voted by all holders of record of
Enterra Common Stock other than the First Reserve Group. In addition, in a
situation where the stockholders of Enterra are presented with an alternative
proposal to the Merger and the Board of Directors is not recommending that the
stockholders vote against the approval and adoption of the Merger and the Merger
Agreement, the First Reserve Group, absent this agreement with Weatherford,
would have been committed to voting its shares in the same proportion as voted
by all holders of record of Enterra Common Stock other than the First Reserve
Group. The Enterra Board (with Messrs. Macaulay, Widmann and Edelman abstaining
and Mr. Hill not present, each of whom was appointed to the Enterra Board of
Directors by the First Reserve Group pursuant to an agreement with Enterra)
voted to consent to this modification, and the First Reserve Group in turn
agreed with Enterra that if, at the time of the Enterra Special Meeting, the
Enterra Board of Directors is recommending that the Enterra stockholders vote
against the adoption of the Merger Agreement, First Reserve and the First
Reserve Funds will vote the foregoing shares against such adoption. Absent this
agreement with Enterra, the First Reserve Group would have had the option of
voting its shares in the same proportion as voted by all holders in the same
proportion as voted by all holders of record of Enterra Common Stock other than
the First Reserve Group.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. Federal income tax
consequences of the Merger to holders of Enterra Common Stock under the Code,
but does not deal with all tax consequences of the Merger that may be relevant
to particular Enterra stockholders, such as dealers in securities and foreign
persons.
THIS SUMMARY SHOULD NOT BE REGARDED AS A SUBSTITUTE FOR AN INDIVIDUAL
ANALYSIS OF THE TAX CONSEQUENCES OF THE MERGER TO AN ENTERRA STOCKHOLDER. EACH
ENTERRA STOCKHOLDER SHOULD CONSULT A TAX ADVISOR REGARDING THE PARTICULAR TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER'S OWN SITUATION.
Neither Weatherford nor Enterra has requested a ruling from the Internal
Revenue Service (the "Service") in connection with the Merger. Weatherford has
received from its counsel, Fulbright & Jaworski L.L.P., an opinion to the effect
that the Merger will be treated for U.S. Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, that
Weatherford and Enterra will each be a party to the reorganization within the
meaning of Section 368(b) of the Code, and that Weatherford and Enterra will not
recognize any gain or loss as a result of the Merger. It is a condition to the
obligation of Weatherford to consummate the Merger that such opinion shall not
have been withdrawn or modified in any material respect. Enterra has received
from its counsel, Morgan, Lewis & Bockius, an opinion to the effect that the
Merger will be treated for U.S. Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, that Weatherford and Enterra
will each be a party to the reorganization within the meaning of Section 368(b)
of the Code, and that stockholders of Enterra will not recognize any gain or
loss as a result of the Merger, except to the extent they receive cash in lieu
of fractional shares of Weatherford Common Stock. It is a condition to the
obligation of Enterra to consummate the Merger that such opinion shall not have
been withdrawn or modified in any material respect. Such opinions will be
subject to certain assumptions and based on certain representations of
Weatherford and Enterra. Enterra stockholders should be aware that such opinions
will neither be binding upon the Service nor will the Service be precluded from
adopting a contrary position.
Assuming the Merger qualifies as a reorganization under Section 368(a) of
the Code, the following U.S. Federal income tax consequences will occur:
(a) No gain or loss will be recognized by Weatherford or Enterra in
connection with the Merger.
(b) No gain or loss will be recognized by a holder of Enterra Common
Stock who exchanges all of his or her shares of Enterra Common Stock solely
for shares of Weatherford Common Stock in the Merger.
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(c) The aggregate basis of the shares of Weatherford Common Stock to be
received by an Enterra stockholder in the Merger (including any fraction of
a share not actually received) will be the same as the aggregate basis of
the shares of Enterra Common Stock surrendered in exchange therefor.
(d) The holding period of the shares of Weatherford Common Stock to be
received by an Enterra stockholder in the Merger will include the holding
period of the shares of Enterra Common Stock surrendered in exchange
therefor, provided that such shares of Enterra Common Stock are held as
capital assets at the Effective Time.
(e) Cash payments in lieu of a fraction of a share will be treated as if
a fraction of a share of Weatherford Common Stock had been received in the
Merger and then redeemed by Weatherford. Such a redemption should qualify as
a distribution in full payment in exchange for the fraction of a share
rather than as a distribution of a dividend. Accordingly, an Enterra
stockholder receiving cash in lieu of a fraction of a share will recognize
gain or loss upon such payment equal to the difference, if any, between such
stockholder's basis in the fraction of a share (as described in paragraph
(c) above) and the amount of cash received. Such gain or loss will be a
capital gain or loss if the Enterra Common Stock is held as a capital asset
at the Effective Time.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL
INFORMATION ONLY. EACH ENTERRA STOCKHOLDER SHOULD CONSULT A TAX ADVISOR AS TO
THE PARTICULAR CONSEQUENCES OF THE MERGER THAT MAY APPLY TO SUCH STOCKHOLDER,
INCLUDING THE APPLICATION OF THE STATE INHERITANCE AND GIFT TAX LAWS AND OF
STATE, LOCAL AND FOREIGN TAX LAWS.
ACCOUNTING TREATMENT
The Merger will be accounted for using the "pooling of interests" method of
accounting pursuant to Opinion No. 16 of the Accounting Principles Board. The
"pooling of interests" method of accounting assumes that the combining companies
have been merged from inception, and the historical financial statements for
periods prior to consummation of the Merger are restated as though the companies
had been combined from inception. The restated financial statements are adjusted
to conform the accounting policies of the separate companies.
Weatherford and Enterra have been advised by Weatherford's independent
public accountants, Arthur Andersen LLP, that Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and they are not
aware of any matters that prohibit the use of "pooling of interests" accounting
in connection with the Merger. Weatherford and Enterra have been advised by
Enterra's independent certified public accountants, KPMG Peat Marwick LLP, that
no conditions exist that would preclude Weatherford's accounting for the Merger
as a "pooling of interests" as those conditions relate to Enterra.
GOVERNMENTAL AND REGULATORY APPROVALS
Transactions such as the Merger are reviewed by the Department of Justice
and the FTC to determine whether they comply with applicable antitrust laws.
Under the provisions of the HSR Act, the Merger may not be consummated until
such time as the specified waiting period requirements of the HSR Act have been
satisfied. Weatherford and Enterra filed notification reports with the
Department of Justice on June 30, 1995 and with the FTC under the HSR Act on
June 30, 1995 and July 3, 1995, respectively. The required waiting period under
the HSR Act expired on August 2, 1995.
At any time before or after the Effective Time, the Department of Justice,
the FTC or a private person or entity could seek under the antitrust laws, among
other things, to enjoin the Merger or to cause Weatherford to divest itself, in
whole or in part, of Enterra or of other businesses conducted by Weatherford.
There can be no assurance that a challenge to the Merger will not be made or
that, if such a challenge is made, Weatherford and Enterra will prevail.
Weatherford and Enterra are aware of no other material governmental or
regulatory approvals required for consummation of the Merger, other than
compliance with applicable securities laws of the various states.
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NYSE LISTING
As a condition to the closing of the Merger, the shares of Weatherford
Common Stock to be issued upon consummation of the Merger will be approved for
listing on the NYSE, subject to official notice of issuance.
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of Weatherford Common Stock to be received by Enterra
stockholders in connection with the Merger have been registered under the
Securities Act and, except as set forth below, may be traded without
restriction. The shares of Weatherford Common Stock to be issued in the Merger
and received by persons who are deemed to be "affiliates" (as that term is
defined in Rule 144 under the Securities Act) of Enterra prior to the Merger may
be resold by them only in transactions permitted by the resale provisions of
Rule 145 under the Securities Act (or, in the case of such persons who become
affiliates of Weatherford, Rule 144 under the Securities Act) or as otherwise
permitted under the Securities Act. The Merger Agreement provides that Enterra
will use its reasonable efforts to cause its affiliates to execute a written
agreement to the effect that such persons will not sell, transfer or otherwise
dispose of any shares of Weatherford Common Stock issued to such persons
pursuant to the Merger in violation of the Securities Act or the rules and
regulations promulgated thereunder.
Pursuant to the Merger Agreement, Weatherford and Enterra each have agreed
to use reasonable efforts to cause its affiliates to execute written agreements
not to take any action that would cause the Merger not to be treated as a
"pooling of interests" for accounting purposes. Under generally accepted
accounting principles, the sale of Weatherford Common Stock or Enterra Common
Stock by an affiliate of either Weatherford or Enterra within 30 days prior to
the Effective Time or thereafter prior to the publication of financial results
that include at least 30 days of combined operations of Weatherford and Enterra
after the Effective Time could preclude "pooling of interests" accounting
treatment of the Merger.
NO DISSENTERS' RIGHTS
Delaware law does not provide holders of Weatherford Common Stock or holders
of Enterra Common Stock who object to the Merger and who vote against or abstain
from voting in favor of the Merger and the Merger Agreement with any appraisal
rights or the right to receive cash for their shares of Weatherford Common Stock
or Enterra Common Stock, respectively. Neither Weatherford nor Enterra intends
to make available such rights to its stockholders.
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TERMS OF THE MERGER
EFFECTIVE TIME OF THE MERGER
The Merger Agreement provides that the Merger will become effective at the
effective time set forth in the certified copy of the Certificate of Merger
issued by the Secretary of State of the State of Delaware with respect to the
Merger. It is anticipated that, if the Merger Agreement is approved at the
Weatherford Special Meeting and the Enterra Special Meeting and all other
conditions to the Merger have been satisfied or waived, the Effective Time will
occur as soon as practicable thereafter.
MANNER AND BASIS OF CONVERTING SHARES
The Merger Agreement provides that, at the Effective Time, each share of
Enterra Common Stock issued and outstanding, other than shares held in the
treasury of Enterra or held by Weatherford or any direct or indirect
wholly-owned subsidiary of Enterra or of Weatherford (which shares will be
canceled and extinguished at the Effective Time without any conversion thereof
and no payment shall be made with respect thereto), will be converted into the
right to receive 1.69 shares of Weatherford Common Stock, before giving effect
to the Reverse Stock Split (0.845 of a share of Weatherford Common Stock after
giving effect to the Reverse Stock Split).
As soon as practicable following the Effective Time, Weatherford will cause
American Stock Transfer & Trust Company, which will act as Exchange Agent for
the Enterra Common Stock, to mail to each record holder of Enterra Common Stock
immediately prior to the Effective Time, a letter of transmittal and other
information advising such holder of the consummation of the Merger and for use
in exchanging Enterra Common Stock certificates for Weatherford Common Stock
certificates and cash in lieu of fractional shares. Letters of transmittal also
will be available following the Effective Time at the offices of the Exchange
Agent. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE BY STOCKHOLDERS
OF ENTERRA PRIOR TO APPROVAL OF THE MERGER AND THE RECEIPT OF A LETTER OF
TRANSMITTAL.
No fraction of a share of Weatherford Common Stock will be issued in the
Merger. Each stockholder of Enterra otherwise entitled to a fraction of a share
will, upon surrender of Enterra Common Stock certificates held by such holder,
be paid an amount in cash equal to the value of such fraction of a share based
upon the closing price of Weatherford Common Stock on the NYSE on the last
trading day prior to the Effective Time. No interest will be paid on such amount
and all shares of Enterra Common Stock held by a record holder shall be
aggregated for purposes of computing the number of shares of Weatherford Common
Stock to be issued in the Merger.
Until such time as a holder of Enterra Common Stock surrenders his or her
outstanding stock certificate to the Exchange Agent, together with an
appropriately completed and executed letter of transmittal, the shares of
Enterra Common Stock represented thereby will be deemed from and after the
Effective Time, for all corporate purposes other than the payment of earlier
dividends and distributions, to evidence the ownership of the number of full
shares of Weatherford Common Stock into which such shares may be converted.
Unless and until such outstanding certificates are surrendered, no dividends or
other distributions payable to the holders of Weatherford Common Stock, as of
any time on or after the Effective Time, will be paid to the holders of such
outstanding certificates. Upon surrender of the certificates previously
representing Enterra Common Stock, the holder thereof will receive certificates
representing the number of shares of Weatherford Common Stock to which he or she
is entitled, cash in lieu of a fraction of a share and the amount of any
dividends or other distributions, if any, payable to holders of Weatherford
Common Stock on or after the Effective Time with respect to such shares, without
interest thereon.
ENTERRA OPTIONS
Pursuant to the Merger Agreement, at the Effective Time, each option to
purchase shares of Enterra Common Stock outstanding as of the date of the Merger
Agreement ("Enterra Option") that remains unexercised in whole or in part will
be replaced by a substitute option, granted under an existing Weatherford stock
option plan or pursuant to a separate stock option agreement, to purchase that
number of shares of Weatherford Common Stock determined by multiplying the
number of
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shares of Enterra Common Stock subject to such Enterra Option by the conversion
rate to be used in the Merger (after giving effect to the Reverse Stock Split)
and multiplying the exercise price per share of such Enterra Option by a
fraction the numerator of which is one and the denominator of which is such
conversion rate. Each such substitute option will otherwise replicate the terms
and conditions of the Enterra Option it replaces. The shares underlying each
such substitute option will be registered under the Securities Act even if the
proposed amendment to the 1991 Option Plan is not approved by the stockholders
of Weatherford. See "Proposal to Amend Weatherford's 1991 Stock Option Plan".
EMPLOYEE MATTERS
Pursuant to the Merger Agreement, Weatherford agreed, from the Effective
Time through June 30, 1996, to either maintain Enterra's employee benefit plans
or provide substantially comparable benefits to Enterra employees under
Weatherford's employee benefit plans. From and after July 1, 1996, participation
in Weatherford employee benefit plans would be made available to all employees,
including former employees of Enterra, with similar or substantially comparable
benefits being provided to similarly situated employees. All service with
Enterra prior to the Effective Time, and any other service recognized under the
applicable benefit plans of Enterra for vesting and eligibility purposes, will
be credited to such employees to whom participation in Weatherford benefit plans
is made available, and all waiting periods and pre-existing condition
limitations will be waived for employees of Enterra under such plans.
Weatherford also agreed to make non-elective employer contributions, including
fixed or discretionary pension, profit sharing and matching contributions, to
each benefit plan of Enterra that is intended to be a qualified defined
contribution benefit plan under Section 401(a) of the Code for the respective
benefit plans for the first plan year ending on or after the Effective Time in
accordance with the terms of such plans. Weatherford has agreed that the rate of
such non-elective employer contributions shall not be less than the rate of such
non-elective employer contribution that was made to the respective benefit plan
for the last plan year ending prior to the Effective Time. Each Enterra employee
who is a participant in such an Enterra benefit plan immediately prior to the
Effective Time will be entitled to receive an allocation of such non-elective
employer contributions without regard to whether such person continues to be an
employee of the Surviving Corporation at the end of the plan year with respect
to such Enterra benefit plan.
Both Enterra and Weatherford agreed to establish, prior to the Effective
Time, substantially similar special severance pay plans to provide severance pay
awards to a limited number of key employees who are terminated from employment
in connection with the Merger. Each special severance pay plan is intended to
alleviate, in part or in full, financial hardships that may be experienced by
such terminated employees and is intended to constitute a "severance pay plan"
under regulations published by the U.S. Secretary of Labor. Each company's plan
will cover 17 employees, none of whom has an existing change of control or
severance agreement. Such plans will provide, among other things, that a covered
employee will receive a cash payment equal to one year's compensation if he or
she is terminated without cause within one year following the Effective Time.
The Enterra Board of Directors or its Executive Compensation Committee will
declare, prior to the Effective Time, the amount of bonuses payable to Enterra
employees based upon Enterra's achievement of certain financial or other targets
for the fiscal year ending December 31, 1995, which shall be determined in a
manner consistent with bonuses paid for the 1994 fiscal year (provided, however,
that if the audited financial results for the year ending December 31, 1995 are
not known until after the Effective Time, Messrs. Macaulay and Parker, both of
whom are Enterra directors who will continue as directors of the Surviving
Corporation, will make such bonus determinations). The 1995 bonuses will be paid
in February 1996. In addition to the foregoing, Enterra may pay bonuses at or
prior to the Effective Time to Enterra employees in an aggregate amount not to
exceed $1 million, as determined by Enterra's Executive Compensation Committee;
provided, however, that no one employee may receive in excess of the aggregate
of his or her annualized salary and most recent annual bonus.
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Weatherford has agreed to enter into change of control agreements (which
would not treat the Merger as a change of control) with Messrs. Carey and Grant,
officers of Enterra who will become officers of the Surviving Corporation,
providing for severance benefits for two years and one year, respectively, and
indemnification agreements with Messrs. Carey and Grant, and the directors of
Enterra who will become directors of the Surviving Corporation. In addition,
eleven senior officers of Enterra (including Messrs. Carey and Grant) are
covered by existing severance agreements with Enterra. Pursuant to the Merger
Agreement, Enterra has agreed to negotiate amendments to each such agreement
(except for the agreement with Mr. Wood, which will be amended to include the
Wood Severance Agreement Amendments) to include the Enterra Severance Agreement
Amendments. Weatherford has acknowledged that any resignation by six of these
officers (including Messrs. Carey and Grant) from the Effective Time through
August 12, 1996 will constitute a "Termination upon Change in Control" for
purposes of the severance agreement between such person and the Surviving
Corporation. Such status would entitle the respective officer to leave the
employment of the Surviving Corporation for any reason during such period and
receive certain severance payments. See "The Merger -- Interests of Certain
Persons in the Merger".
Pursuant to the Merger Agreement, Weatherford agreed to negotiate an
amendment to twelve of the existing change of control agreements between
Weatherford and certain of its employees. The Merger constitutes a change of
control for the purposes of such agreements. The amendment would provide that
should the employee voluntarily terminate his or her employment during the
30-day period immediately following the first anniversary of the date of a
change of control, the only termination benefit he or she would receive would be
the benefits related to his or her outstanding stock options, stock appreciation
rights and restricted common stock. The amendment would eliminate all other
benefits under the change of control agreement that otherwise would be payable
upon voluntary termination during such 30-day period. In consideration for such
amendments and the elimination of such benefits, Weatherford will pay such
persons an aggregate of approximately $1.7 million in cash at the Effective
Time. In addition, Weatherford is party to an additional change of control
agreement that does not provide the employee the right to voluntarily terminate
his employment during the 30-day period immediately following the first
anniversary of a change of control.
Pursuant to the Merger Agreement, Weatherford agreed to enter into, as of
the Effective Time, certain arrangements with D. Dale Wood, Chairman of the
Board, President and Chief Executive Officer of Enterra, who will not continue
as an officer or director of the Surviving Corporation. Pursuant to the Merger
Agreement, Enterra has agreed to negotiate amendments to Mr. Wood's existing
severance agreement with Enterra to include the Wood Severance Agreement
Amendments. In addition, pursuant to Mr. Wood's existing severance agreement
with Enterra as so amended, Weatherford agreed to pay Mr. Wood $915,100 as a
severance payment. Weatherford also agreed to pay Mr. Wood an amount between
$1,365,000 and $1,865,000 (as determined by the Enterra Board of Directors). In
addition, Weatherford agreed to enter into a five-year consulting agreement with
Mr. Wood providing for a consulting fee of $50,000 per year and an option to
purchase 84,500 shares of Weatherford Common Stock (after giving effect to the
Reverse Stock Split) at an exercise price equal to the market price of
Weatherford Common Stock on the Closing Date (after giving effect to the Reverse
Stock Split) and vesting 20% each year over the five-year period and exercisable
for ten years.
Pursuant to the Merger Agreement, Weatherford also agreed to pay $1.2
million to Philip Burguieres, Chairman of the Board, President and Chief
Executive Officer of Weatherford, as of the Effective Time.
STOCKHOLDERS AGREEMENT
In conjunction with the execution of the Merger Agreement, Weatherford
entered into the Stockholders Agreement with First Reserve and the First Reserve
Funds, which has substantially the same terms as the stockholders agreement
currently in effect among Enterra, First Reserve and the First Reserve Funds,
which agreement by its terms would otherwise survive the Merger. Among other
things, the Stockholders Agreement, which will become effective at the Effective
Time, restricts the
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voting and disposition of Weatherford securities beneficially owned by the First
Reserve Group. The principal terms of the Stockholders Agreement are summarized
below. The following description is qualified by, and made subject to, the more
complete information set forth in the Stockholders Agreement, a copy of which is
attached as Appendix D to this Joint Proxy Statement/Prospectus and is
incorporated herein by reference.
TERM. The term of the Stockholders Agreement (the "Term") will commence at
the Effective Time and continue through the date originally agreed to with
Enterra, which is August 12, 2004. If at any time during the Term the First
Reserve Group beneficially owns "Weatherford Voting Securities" (as hereinafter
defined) representing less than 10% of the "Combined Voting Power" (as
hereinafter defined), then the restrictions on and covenants of the First
Reserve Group relating to (i) the distribution of Weatherford Voting Securities,
(ii) the creation of voting trusts, (iii) the solicitation of proxies, (iv) the
pooling of stock, (v) the giving of notice regarding margin calls and actions
against pledged stock, (vi) voting restrictions and Board and committee nominee
designation rights, (vii) registration rights and (viii) the placing of legends
and stop transfer orders on stock certificates, would be suspended until such
time as the First Reserve Group again beneficially owns Weatherford Voting
Securities representing 10% or more of the Combined Voting Power; provided,
however, that notwithstanding the foregoing, the First Reserve Group may not
dispose of any Weatherford Voting Securities to any one person or group (a) if
such Weatherford Voting Securities represent 5% or more of the Combined Voting
Power or (b) who, upon consummation of such disposition, would have beneficial
ownership of Weatherford Voting Securities representing 10% or more of the
Combined Voting Power. "Combined Voting Power" is defined in the Stockholders
Agreement as the total number of votes at any measurement date that could have
been cast in an election of directors of Weatherford had a meeting of the
stockholders of Weatherford been duly held if all Weatherford Voting Securities
then outstanding and entitled to vote at such meeting were present and voted to
the fullest extent possible. "Weatherford Voting Securities" are defined in the
Stockholders Agreement as any securities of Weatherford entitled to vote
generally in the election of directors or otherwise.
REPRESENTATION ON THE WEATHERFORD BOARD OF DIRECTORS. During the Term, two
of four designated First Reserve Funds will be permitted to designate two
members for nomination to the Weatherford Board of Directors; provided, however,
that (i) at any time that the First Reserve Group ceases to beneficially own at
least 15%, but continues to own at least 10%, of the Combined Voting Power, one
of the designating First Reserve Funds will lose its right to designate a member
for nomination to the Weatherford Board of Directors and will cause its director
designee to resign from the Weatherford Board of Directors and (ii) at any time
that the First Reserve Group ceases to beneficially own at least 10% of the
Combined Voting Power, the remaining designating First Reserve Fund will lose
its right to designate a member for nomination to the Weatherford Board of
Directors and will cause its director designee to resign from the Weatherford
Board of Directors.
For as long as the designating First Reserve Funds are entitled to designate
two members for nomination to the Weatherford Board of Directors, Weatherford
will take all necessary or appropriate action to have at least one of such
designees serve on each committee of the Weatherford Board of Directors and to
have each designee serve in a different class of the Weatherford Board of
Directors.
During the Term, Weatherford and the First Reserve Group will not agree to
increase the number of directors of Weatherford above ten without the approval
of a majority of directors and all of the directors designated by the First
Reserve Group, and the First Reserve Group agrees that neither it nor its
designated directors will take any action to reduce the number of directors
below ten.
VOTING OF SHARES. During the Term, the First Reserve Group has agreed to be
present in person or represented by proxy at all of Weatherford's stockholder
meetings and to vote all Weatherford Voting Securities beneficially owned by the
First Reserve Group for all management nominees for director and, in respect of
any other matter on which holders of Weatherford Voting Securities are
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entitled to vote, to vote either in accordance with the recommendations of a
majority of the Weatherford Board of Directors or in the same proportions (for,
against and abstaining) as voted by all holders of record of Weatherford Voting
Securities other than the First Reserve Group.
ACQUISITION OF WEATHERFORD VOTING SECURITIES BY THE FIRST RESERVE
GROUP. During the Term, the First Reserve Group has agreed not to acquire any
Weatherford Voting Securities if the effect of such acquisition would be to
either increase the First Reserve Group's aggregate beneficial ownership of
Weatherford Voting Securities to 20% or more of the Combined Voting Power or
increase the First Reserve Group's aggregate beneficial ownership of any class
or series of Weatherford Voting Securities to more than 20% unless (i) the
increase in ownership occurred solely as a result of a recapitalization of
Weatherford or other action by Weatherford or its affiliates, if such
recapitalization or other action was approved by a majority of the directors not
designated by the First Reserve Group, or (ii) any other person or group
beneficially owns or acquires more than 20% of the Combined Voting Power in
which case the maximum percentage ownership for the First Reserve Group would be
increased to equal such other group's ownership percentage.
CERTAIN PROHIBITIONS ON THE FIRST RESERVE GROUP. During the Term and except
as otherwise provided, the First Reserve Group has agreed to not (i) deposit any
Weatherford Voting Securities owned by them in a voting trust or enter into any
similar voting arrangement unless all the parties to the trust or arrangement
are First Reserve Group members, (ii) make or in any way become a "participant"
in a "solicitation" of proxies (as such terms are defined in Rule 14a-1 of
Regulation 14A under the Exchange Act) in opposition to the recommendation of a
majority of Weatherford directors not designated by the First Reserve Group, or
submit any proposal for a vote of Weatherford stockholders, (iii) participate in
or become a member of a "13D/G Group" (as that term is defined in the
Stockholders Agreement), other than the First Reserve Group, for the purposes of
holding, acquiring, voting or disposing of Weatherford Voting Securities, or
(iv) make a proposal to Weatherford or a third party or initiate, induce or
encourage any proposal that could reasonably be expected to result in a change
of control of Weatherford or make any public announcement with respect to any
such proposal.
Subject to compliance with the preceding paragraph, if a tender or exchange
offer for Weatherford Voting Securities is made by a person other than a First
Reserve Group member, then any First Reserve Group member would be able to
tender or exchange any Weatherford Voting Securities beneficially owned by it
pursuant to such offer on or after the eleventh day following commencement of
the offer, if such offer shall have been approved, or not opposed, by the
Weatherford Board of Directors. If such offer is opposed by the Weatherford
Board of Directors, then any First Reserve Group member may tender or exchange
shares of Weatherford Voting Securities pursuant to such offer only if (i) no
tender or exchange, or indication of an intention to tender or exchange, of
Weatherford Voting Securities is made by any First Reserve Group member earlier
than 24 hours prior to the expiration of any time after which Weatherford Voting
Securities tendered may be treated less favorably than Weatherford Voting
Securities tendered or exchanged prior thereto, and (ii) a binding agreement is
reached with the bidder or offeror prior to any tender or exchange specifying
that only such number of Weatherford Voting Securities submitted for tender or
exchange shall be accepted by the bidder or offeror as are equal to (A) the
percentage of such Weatherford Voting Securities not beneficially owned by the
First Reserve Group that have been tendered or exchanged, multiplied by (B) the
total number of such Weatherford Voting Securities beneficially owned by such
member of the First Reserve Group.
DISPOSITION OF VOTING SECURITIES BY FIRST RESERVE GROUP. During the Term,
the First Reserve Group has agreed to not dispose of any Weatherford Voting
Securities except (i) in a bona fide pledge of or granting of a security
interest, lien or encumbrance in such Weatherford Voting Securities to a lender
that is not a First Reserve Group member to secure a bona fide loan for money
borrowed made to one or more First Reserve Group members with full recourse to
the borrower or borrowers, or a related foreclosure or disposition by the
lender, (ii) by transfer, assignment, sale or disposition of such Weatherford
Voting Securities to another First Reserve Group member, (iii) by distribution
of Weatherford Voting Securities to any partner of a First Reserve Fund,
provided that any such distributee
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that is a member of the First Reserve Group has signed the Stockholders
Agreement and that the subsequent distributions of such distributee, if assisted
by First Reserve, conform with the distribution restrictions imposed by the
Stockholders Agreement, (iv) pursuant to a public offering registration
statement, (v) in sales in brokers' transactions, effected on the NYSE or any
other securities exchange on which the Weatherford Voting Securities are listed
or in any other public trading market in which the Weatherford Voting Securities
are then being traded, in compliance with the provisions of Rule 144, including
the volume restrictions set forth in such rule (excluding for purposes of this
clause (v) sales pursuant to the provisions of paragraph (k) of Rule 144, which
sales are included under (vi)), (vi) sales pursuant to paragraph (k) of Rule
144, (vii) other negotiated sales of Weatherford Voting Securities or (viii)
pursuant to the provisions of the Stockholders Agreement permitting, in certain
circumstances, sales into tender or exchange offers.
During the Term, the First Reserve Group has further agreed to not (A)
dispose of Weatherford Voting Securities pursuant to clause (iv) above, unless
the First Reserve Group members use their reasonable best efforts to refrain
from disposing of Weatherford Voting Securities representing 3% or more of the
Combined Voting Power to any one person or group, (B) dispose of any Weatherford
Voting Securities pursuant to clauses (iii), (vi) and (vii) above to any one
person or group if such Weatherford Voting Securities represent 5% or more of
the Combined Voting Power or (C) dispose of Weatherford Voting Securities
pursuant to clauses (iii), (vi) and (vii) above to any one person or group who,
upon consummation of such disposition would, directly or indirectly, have
beneficial ownership of or the right to acquire beneficial ownership of
Weatherford Voting Securities representing 10% or more of the Combined Voting
Power.
REGISTRATION RIGHTS. Commencing three months after the Effective Time and
continuing for the rest of the Term, Weatherford has agreed to file, on up to
four occasions, at the written request of the holders of at least 25% of the
"Registrable Securities" (defined as the Weatherford Common Stock issued to the
First Reserve Funds in connection with the Merger and that are owned by a member
of the First Reserve Group) who seek to register at least 25% of the Registrable
Securities then outstanding (or a lesser percent if the anticipated aggregate
offering price, net of underwriting discounts and commissions, would exceed $25
million), a registration statement under the Securities Act registering all
Registrable Securities that the holders of Registrable Securities request to be
registered. Once every 12 month period Weatherford will have the right to defer
such filing for a period of not more than 60 days if, in the good faith judgment
of a majority of Weatherford's directors who were not designated by the First
Reserve Group, it would be materially detrimental to Weatherford for such
registration statement to be filed.
Any holder of Registrable Securities that intends to distribute its
securities pursuant to an underwriting will be permitted to include its
Registrable Securities only if such holder includes its Registrable Securities
in the underwriting and enters into an underwriting agreement in customary form
with the underwriter or underwriters selected by Weatherford and reasonably
acceptable to a majority in interest of the holders requesting registration.
Any holder or holders of Registrable Securities representing at least 10% of
the Registrable Securities then outstanding (or a lesser percent if the
anticipated aggregate offering price, net of discounts and commissions, would
exceed $1 million) may request in writing that Weatherford effect a registration
on Form S-3 not involving an underwriting and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such holder or holders.
Weatherford has also agreed that, if it proposes to file a registration
statement, on its own behalf or on behalf of stockholders exercising demand
registration rights, to register Weatherford Common Stock under the Securities
Act in connection with the public offering of Weatherford Common Stock solely
for cash (subject to certain exceptions), Registrable Securities may (subject to
certain limitations) be included in such registration upon request.
Weatherford will pay all expenses incurred by or on behalf of Weatherford in
connection with the foregoing registrations unless, with respect to the "demand"
registrations, the registration request is
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subsequently withdrawn at the request of the holders of a majority of the
Registrable Securities to be registered and the holders of a majority of the
Registrable Securities do not agree to forfeit one of their registration rights.
In no event will Weatherford be obligated to bear underwriting discounts and
commissions and the fees and expenses of counsel to the selling stockholders.
Weatherford has agreed to indemnify each holder of Registrable Securities,
the affiliates of each holder and their respective directors, officers, general
and limited partners, agents and representatives (and the directors, officers,
affiliates and controlling persons thereof), and each other person, if any, who
controls such holder within the meaning of the Securities Act or the Exchange
Act, against, among other things, certain liabilities arising under the
Securities Act in respect of information concerning Weatherford included in or
omitted from any registration statement or prospectus covered by the
Stockholders Agreement, and the holders of Registrable Securities will similarly
indemnify Weatherford, each of its directors, each of its officers who has
signed the registration statement, each person who controls Weatherford within
the meaning of the Securities Act, any underwriter, any other holder of
Registrable Securities selling securities in such registration statement and any
controlling person of any such underwriter or other holder against, among other
things, liabilities under the Securities Act in respect of written information
supplied by such holder expressly for use in connection with any such
registration statement or prospectus.
Weatherford has agreed that, during the Term, it will not, without the prior
consent of the holders of a majority of the outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of Weatherford
securities that would allow such holder or prospective holder to include such
securities in any of the foregoing registrations unless the agreement provides
that inclusion of such securities would not reduce the amount of the Registrable
Securities included in such registration.
CONDITIONS TO THE MERGER
The Merger Agreement provides that the respective obligations of Weatherford
and Enterra to effect the Merger are subject to the satisfaction or waiver of
the following conditions: (a) that the Merger Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of
Weatherford and the stockholders of Enterra as may be required by law and by any
applicable provisions of their respective charters or bylaws; (b) that no order
shall have been entered and remain in effect in any action or proceeding before
any foreign, federal or state court or governmental agency or other foreign,
federal or state regulatory or administrative agency or commission that would
prevent or make illegal the consummation of the Merger; (c) that the
Registration Statement shall be effective on the Closing Date, and all
post-effective amendments filed shall have been declared effective or shall have
been withdrawn, and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the parties, threatened by the Commission; (d) that
there shall have been obtained any and all material permits, approvals and
consents of securities or blue sky commissions of any jurisdiction, and of any
other governmental body or agency, that reasonably may be deemed necessary so
that the consummation of the Merger and the transactions contemplated thereby
will be in compliance with applicable laws, the failure to comply with which
would have a material adverse effect on the business, financial condition or
results of operations of Enterra and its subsidiaries or Weatherford and its
subsidiaries, taken as a whole; and (e) that all approvals of private persons,
financial institutions or corporations, the granting of which is necessary for
the consummation of the Merger or the transactions contemplated in connection
therewith and the non-receipt of which would have a material adverse effect on
the business, financial condition or results of operations of Enterra and its
subsidiaries or Weatherford and its subsidiaries, taken as a whole, shall have
been obtained.
The Merger Agreement provides that the obligation of Weatherford to effect
the Merger is, at the option of Weatherford, further subject to the satisfaction
or waiver of the following conditions: (a) that the representations and
warranties of Enterra contained in the Merger Agreement regarding
capitalization, authorization and validity of the Merger Agreement, Commission
filings, financial statements
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and the absence of brokers' fees shall be accurate, and the other
representations and warranties of Enterra contained in the Merger Agreement
shall be accurate in all material respects (except to the extent qualified by
materiality, in which case such representations and warranties shall be
accurate), as of the Closing Date as though such representations and warranties
had been made at and as of that time (except where any such representation or
warranty is made as of a date specifically set forth therein), and that all of
the terms, covenants and conditions of the Merger Agreement to be complied with
and performed by Enterra on or before the Closing Date shall have been duly
complied with and performed in all material respects; (b) that no material
adverse change in the business, operations or financial condition of Enterra and
its subsidiaries, taken as a whole (except for certain exclusions previously
agreed to by Weatherford and Enterra), shall have occurred; (c) that Weatherford
shall have been advised in writing as of the date of the Merger Agreement and as
of the Closing Date by Arthur Andersen LLP that Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen LLP is not aware of any matters that prohibit the use of "pooling of
interests" accounting in connection with the Merger, and by KPMG Peat Marwick
LLP that no conditions exist that would preclude Weatherford's accounting for
the Merger as a "pooling of interests" as those conditions relate to Enterra, in
each case in accordance with generally accepted accounting principles and
applicable rules and regulations of the Commission; (d) that Enterra shall have
received, and furnished written copies to Weatherford of, agreements by each
person deemed to be an affiliate of Enterra confirming that such person will not
sell, transfer or otherwise dispose of any shares of Weatherford Common Stock
received pursuant to the Merger in violation of the Securities Act or the rules
and regulations promulgated thereunder, and will comply with the holding period
requirement necessary to permit qualification of the Merger for "pooling of
interests" accounting treatment; (e) that Weatherford shall have received from
Morgan, Lewis & Bockius, counsel to Enterra, an opinion as to certain corporate
matters of Enterra; (f) that Weatherford shall have received a copy of the
"comfort letter" of KPMG Peat Marwick LLP in form and substance reasonably
satisfactory to Weatherford, together with a letter from such firm in form and
substance reasonably satisfactory to Weatherford updating the comfort letter as
of a date within five days prior to the Closing Date and stating that nothing
has come to its attention that would require any change in its comfort letter if
it were required to be dated and delivered on the Closing Date; (g) that the
Weatherford Board of Directors shall have received from Merrill Lynch a written
opinion, dated as of the date of the Merger Agreement, in form and substance
reasonably satisfactory to the Weatherford Board of Directors, to the effect
that the conversion rate to be used in the Merger was fair to the holders of
Weatherford Common Stock from a financial point of view, and such opinion shall
have been confirmed in writing to such Board as of the date of this Joint Proxy
Statement/Prospectus and not subsequently withdrawn; (h) that Weatherford shall
have received from Fulbright & Jaworski L.L.P., counsel to Weatherford, an
opinion dated as of the date of this Joint Proxy Statement/ Prospectus to the
effect that (i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii)
Weatherford and Enterra will each be a party to that reorganization within the
meaning of Section 368(b) of the Code, and (iii) Weatherford and Enterra shall
not recognize any gain or loss as a result of the Merger, and such opinion shall
not have been withdrawn or modified in any material respect; (i) that the
Stockholders Agreement among Enterra, First Reserve and the First Reserve Funds
shall have been in full force and effect, and the stockholders of Enterra named
therein shall not be in breach of any of the material terms thereof, immediately
prior to the Closing Date; and (j) D. Dale Wood shall have entered into
definitive agreements reflecting the terms of his agreements with Weatherford.
The Merger Agreement provides that the obligation of Enterra to effect the
Merger is, at the option of Enterra, further subject to the satisfaction or
waiver of the following conditions: (a) that the representations and warranties
of Weatherford contained in the Merger Agreement regarding capitalization,
authorization and validity of the Merger Agreement, Commission filings,
financial statements and the absence of brokers' fees shall be accurate, and the
other representations and warranties of Weatherford contained in the Merger
Agreement shall be accurate in all material respects (except to the extent
qualified by materiality, in which case such representations and warranties
shall be
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accurate), as of the Closing Date as though such representations and warranties
had been made at and as of that time (except where any such representation or
warranty is made as of a date specifically set forth therein), and that all of
the terms, covenants and conditions of the Merger Agreement to be complied with
and performed by Weatherford on or before the Closing Date shall have been duly
complied with and performed in all material respects; (b) that no material
adverse change in the business, operations or financial condition of Weatherford
and its subsidiaries, taken as a whole, shall have occurred; (c) that Enterra
shall have been advised in writing as of the date of the Merger Agreement and as
of the Closing Date by Arthur Andersen LLP that Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen LLP is not aware of any matters that prohibit the use of "pooling of
interests" accounting in connection with the Merger, and by KPMG Peat Marwick
LLP that no conditions exist that would preclude Weatherford's accounting for
the Merger as a "pooling of interests" as those conditions relate to Enterra, in
each case in accordance with generally accepted accounting principles and
applicable rules and regulations of the Commission; (d) that Weatherford shall
have received, and furnished written copies to Enterra of, agreements by each
person deemed to be an affiliate of Weatherford confirming that such person will
comply with the holding period requirement necessary to permit qualification of
the Merger for "pooling of interests" accounting treatment; (e) that Enterra
shall have received from Fulbright & Jaworski L.L.P., counsel to Weatherford, an
opinion as to certain corporate matters of Weatherford; (f) that Enterra shall
have received a copy of the "comfort letter" of Arthur Andersen LLP, in form and
substance reasonably satisfactory to Enterra, together with a letter from such
firm in form and substance reasonably satisfactory to Enterra updating the
comfort letter as of a date within five days prior to the Closing Date and
stating that nothing has come to its attention that would require any change in
its comfort letter if it were required to be dated and delivered on the Closing
Date; (g) that the Enterra Board of Directors shall have received from Simmons a
written opinion, dated as of the date of the Merger Agreement, in form and
substance reasonably satisfactory to the Enterra Board of Directors, to the
effect that the consideration to be received by the holders of Enterra Common
Stock in the Merger was fair from a financial point of view to such holders, and
such opinion shall have been reaffirmed in writing to such Board as of the date
of this Joint Proxy Statement/Prospectus and not subsequently withdrawn; (h)
that Enterra shall have received from Morgan, Lewis & Bockius, counsel to
Enterra, an opinion dated as of the date of this Joint Proxy
Statement/Prospectus to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; (ii) Weatherford and Enterra will each be a party to that
reorganization within the meaning of Section 368(b) of the Code; and (iii) the
stockholders of Enterra shall not recognize any gain or loss as a result of the
Merger, other than to the extent such stockholders receive cash in lieu of
fractional shares, and such opinion shall not have been withdrawn or modified in
any material respect; (i) that the shares of Weatherford Common Stock to be
issued upon consummation of the Merger shall have been approved for listing on
the NYSE, subject to official notice of issuance; and (j) that the change of
control agreements currently in effect between Weatherford and twelve employees
of Weatherford shall be amended to remove a provision that would otherwise
permit each such officer to voluntarily terminate his or her employment with
Weatherford, for any reason, during a 30-day period immediately following the
first anniversary following a change of control and receive the same benefits to
which such officer would have been entitled if such officer had been terminated.
REPRESENTATIONS AND WARRANTIES OF WEATHERFORD AND ENTERRA
In the Merger Agreement, Weatherford and Enterra have made various
representations and warranties relating to, among other things, their respective
businesses and financial conditions, the accuracy of their various filings with
the Commission and their financial statements contained therein, the status of
various employee benefit plans and environmental matters, the satisfaction of
certain legal requirements for the Merger and the existence of certain
litigation. The representations and warranties of each of the parties to the
Merger Agreement will expire upon consummation of the Merger.
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CONDUCT OF BUSINESS OF WEATHERFORD AND ENTERRA PRIOR TO MERGER
Pursuant to the Merger Agreement, Weatherford agreed that, prior to the
Effective Time, other than as expressly contemplated by the Merger Agreement or
as previously agreed by Enterra, or unless Enterra shall otherwise provide its
prior written consent, (a) the business of Weatherford and its subsidiaries
shall be conducted only in, and Weatherford and its subsidiaries shall not take
any action except in, the ordinary course of business; (b) Weatherford shall
not, and shall not permit any of its subsidiaries to, (i) split, combine or
reclassify any outstanding capital stock of Weatherford, or authorize, declare,
set aside or pay any dividend payable in cash, stock, property or otherwise in
respect of the capital stock of Weatherford, (ii) authorize or pay any
extraordinary bonuses to employees, (iii) grant any stock options or rights to
acquire Weatherford Common Stock or common stock of any of its subsidiaries to
any person or entity, other than options to purchase Weatherford Common Stock
issued pursuant to employee stock option plans in amounts consistent with past
practice, (iv) authorize or issue, sell, pledge, dispose of or encumber any
shares of capital stock of Weatherford or, except to Weatherford or any of its
wholly-owned subsidiaries, any subsidiary of Weatherford, other than pursuant to
existing Weatherford options, (v) sell, pledge, dispose of or encumber any
assets of Weatherford or any of its subsidiaries, other than (A) in the ordinary
course of business, (B) not relating to the borrowing of money, (C) with respect
to purchase money security interests or (D) with respect to encumbered assets
acquired in connection with an acquisition permitted under clause (viii), (vi)
redeem, purchase, acquire or offer to acquire any shares of Weatherford Common
Stock, (vii) enter into, or grant any material change in, employment,
compensation, benefit, severance, consulting or stay-bonus arrangements, (viii)
acquire any corporation, partnership, other business organization or division
thereof for a purchase price in excess of $5 million or acquire corporations,
partnerships, other business organizations or divisions thereof for an aggregate
purchase price in excess of $15 million, (ix) enter into any contract,
agreement, commitment or arrangement other than in the ordinary course of
business, (x) authorize any capital expenditures other than in the ordinary
course of business, and in accordance with a plan previously presented to, and
not rejected by, the Weatherford Board of Directors, (xi) incur any obligation
for borrowed money or purchase money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument, except in the ordinary course of
business, and in no event in excess of the unused credit available from time to
time under existing credit facilities of Weatherford, (xii) amend or propose to
amend the charter or bylaws of Weatherford or any of its subsidiaries in which
Weatherford, either directly or indirectly, has less than a 100% equity interest
or (xiii) take, and Weatherford shall use its reasonable efforts to prevent any
of its affiliates from taking, any action that would prevent, including with the
passage of time, the Merger's qualification for "pooling of interests"
accounting treatment or prevent the Merger from being treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code; (c) Weatherford shall use all reasonable efforts (i) to preserve intact
its business organization and that of its subsidiaries whose stock is pledged
under existing credit facilities, (ii) to maintain in effect any of its material
franchises, authorizations or similar rights and those of its subsidiaries,
(iii) to keep available the services of its current officers and employees and
those of its subsidiaries, (iv) to preserve the goodwill of those having
material business relationships with Weatherford and its subsidiaries, (v) to
maintain and keep its material properties and those of its subsidiaries in as
good a repair and condition as presently exists, except for deterioration due to
ordinary wear and tear and damage due to casualty, and (vi) to maintain in full
force and effect insurance comparable in amount and scope of coverage to that
currently maintained by it and its subsidiaries; and (d) Weatherford shall not,
and shall not permit any of its subsidiaries to, take any action that would, or
that reasonably could be expected to, result in any of its representations and
warranties set forth in the Merger Agreement becoming untrue or any of the
conditions to the Merger not being satisfied, and Weatherford promptly shall
advise Enterra orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a material adverse effect on
the business, financial condition or results of operations of Weatherford and
its subsidiaries, taken as a whole.
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Pursuant to the Merger Agreement, Enterra agreed that, prior to the
Effective Time, other than as expressly contemplated by the Merger Agreement or
as previously agreed by Weatherford, or unless Weatherford shall otherwise
provide its prior written consent, (a) the business of Enterra and its
subsidiaries shall be conducted only in, and Enterra and its subsidiaries shall
not take any action except in, the ordinary course of business; (b) Enterra
shall not, and shall not permit any of its subsidiaries to, (i) split, combine
or reclassify any outstanding capital stock of Enterra, or authorize, declare,
set aside or pay any dividend payable in cash, stock, property or otherwise in
respect of the capital stock of Enterra, (ii) authorize or pay any extraordinary
bonuses to employees, (iii) grant any stock options or rights to acquire Enterra
Common Stock or common stock of any of its subsidiaries to any person or entity,
other than options to purchase Enterra Common Stock issued pursuant to employee
stock option plans in amounts consistent with past practice, (iv) authorize or
issue, sell, pledge, dispose of or encumber any shares of capital stock of
Enterra or, except to Enterra or any of its wholly-owned subsidiaries, any
subsidiary of Enterra, other than pursuant to Enterra Options, (v) sell, pledge,
dispose of or encumber any assets of Enterra or any of its subsidiaries, other
than (A) in the ordinary course of business, (B) not relating to the borrowing
of money, (C) with respect to purchase money security interests or (D) with
respect to encumbered assets acquired in connection with an acquisition
permitted under clause (viii), (vi) redeem, purchase, acquire or offer to
acquire any shares of Enterra Common Stock, (vii) enter into, or grant any
material change in, employment, compensation, benefit, severance, consulting or
stay-bonus arrangements, (viii) acquire any corporation, partnership, other
business organization or division thereof for a purchase price in excess of $5
million or acquire corporations, partnerships, other business organizations or
divisions thereof for an aggregate purchase price in excess of $15 million, (ix)
enter into any contract, agreement, commitment or arrangement other than in the
ordinary course of business, (x) authorize any capital expenditures other than
in the ordinary course of business, and in accordance with a plan previously
presented to, and not rejected by, the Enterra Board of Directors, (xi) incur
any obligation for borrowed money or purchase money indebtedness, whether or not
evidenced by a note, bond, debenture or similar instrument, except in the
ordinary course of business, and in no event in excess of the unused credit
available from time to time under existing credit facilities of Enterra, (xii)
amend or propose to amend the charter or bylaws of Enterra or any of its
subsidiaries in which Enterra, either directly or indirectly, has less than a
100% equity interest or (xiii) take, and Enterra shall use its reasonable
efforts to prevent any of its affiliates from taking, any action that would
prevent, including with the passage of time, the Merger's qualification for
"pooling of interests" accounting treatment or prevent the Merger from being
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code; (c) Enterra shall use all reasonable efforts (i)
to preserve intact its business organization and that of its subsidiaries whose
stock is pledged under existing credit facilities, (ii) to maintain in effect
any of its material franchises, authorizations or similar rights and those of
its subsidiaries, (iii) to keep available the services of its current officers
and employees and those of its subsidiaries, (iv) to preserve the goodwill of
those having material business relationships with Enterra and its subsidiaries,
(v) to maintain and keep its material properties and those of its subsidiaries
in as good a repair and condition as presently exists, except for deterioration
due to ordinary wear and tear and damage due to casualty, and (vi) to maintain
in full force and effect insurance comparable in amount and scope of coverage to
that currently maintained by it and its subsidiaries; and (d) Enterra shall not,
and shall not permit any of its subsidiaries to, take any action that would, or
that reasonably could be expected to, result in any of its representations and
warranties set forth in the Merger Agreement becoming untrue or any of the
conditions to the Merger not being satisfied, and Enterra promptly shall advise
Weatherford orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a material adverse effect on
the business, financial condition or results of operations of Enterra and its
subsidiaries, taken as a whole.
CONDUCT OF BUSINESS OF THE COMBINED COMPANY FOLLOWING MERGER
The Surviving Corporation Board of Directors will initially consist of ten
persons, five designees chosen by the Weatherford Board of Directors and five
designees chosen by the Enterra Board of Directors. The following individuals
have been chosen as designees by the Weatherford Board of
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Directors: Thomas N. Amonett, Philip Burguieres, William E. Greehey, John W.
Johnson and Robert K. Moses, Jr. The following individuals have been chosen as
designees by the Enterra Board of Directors: John A. Hill, William E. Macaulay,
Robert L. Parker, Sr., R. Rudolph Reinfrank and Roger M. Widmann. Mr. Burguieres
will be Chairman of the Board of Directors of the Surviving Corporation. The
Surviving Corporation's Audit Committee will consist of Messrs. Amonett
(Chairman), Hill and Reinfrank, the Compensation and Stock Plans Committee will
consist of Messrs. Greehey (Chairman), Moses and Widmann and the Executive and
Nominating Committee will consist of Messrs. Burguieres, Johnson, Macaulay
(Co-Chairman), Moses (Co-Chairman) and Parker. See "Management -- Directors and
Executive Officers". If within two years after the Effective Time a designee for
one of the parties shall decline or be unable to serve as a director of the
Surviving Corporation, the remaining designees for such party may designate
another person to act in such person's stead, subject to the approval of the
other party's designated directors, which approval shall not be unreasonably
withheld. Each committee of the Surviving Corporation Board of Directors will
have at least one Enterra designee during the two years following the Effective
Time. Each Enterra designee to the Surviving Corporation Board of Directors will
be covered by Weatherford's Non-Employee Director Retirement Plan, which
provides that prior service on the Enterra Board of Directors will count as
service for all purposes under such plan.
The officers of the Surviving Corporation are expected to consist of the
officers of Weatherford immediately prior to the Effective Time and M. Timothy
Carey and Steven C. Grant, both of whom are officers of Enterra. Each director
and officer of the Surviving Corporation will hold office in accordance with the
Certificate of Incorporation and bylaws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified. See
"Management -- Directors and Executive Officers".
NO SOLICITATION
The Merger Agreement provides that Weatherford will not, and will not permit
any of its subsidiaries to, or authorize or permit any of its or their officers,
directors, employees, investment bankers, attorneys or other advisors, agents or
representatives to, directly or indirectly, (a) solicit, initiate or encourage
the submission of, or enter into any agreement with respect to, any proposal or
offer from any person (other than Enterra or any affiliate of Enterra) for a
merger or other business combination, acquisition of a material amount of assets
of Weatherford or acquisition of more than 30% of the outstanding voting stock
of Weatherford (each such transaction being referred to herein as a "Weatherford
Takeover Proposal"), or (b) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, the making
of any proposal that constitutes, or may reasonably be expected to lead to, a
Weatherford Takeover Proposal. Notwithstanding the foregoing, prior to the vote
of the Weatherford stockholders for approval and adoption of the Merger
Agreement and the Merger, Weatherford may participate in discussions or
negotiations with, or furnish information to, a third party to the extent that
the Weatherford Board of Directors determines, in good faith after consultation
with outside counsel, that failure to take such actions could reasonably be
expected to result in a breach of the Board's fiduciary obligations. Any
violation of the restrictions set forth above by any officer, director or
employee of Weatherford or any of its subsidiaries or any investment banker,
attorney or other advisor, agent or representative of Weatherford, whether or
not such person is purporting to act on behalf of Weatherford or otherwise,
would be deemed to be a material breach of the Merger Agreement by Weatherford.
If the Weatherford Board of Directors receives a Weatherford Takeover Proposal
that, in the exercise of its fiduciary obligations (as determined in good faith
after consultation with outside counsel), it determines to be a Weatherford
Superior Proposal (as hereinafter defined), the Weatherford Board of Directors
may withdraw or modify its approval or recommendation of the Merger Agreement or
the Merger and may thereafter terminate the Merger Agreement, in each case after
the fifth business day following Enterra's receipt of written notice advising
Enterra that the Weatherford Board of Directors has received a Weatherford
Takeover Proposal that it has determined to be a Weatherford Superior Proposal;
provided that Weatherford may so terminate the Merger Agreement only if the
stockholders of Weatherford have
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not yet voted upon the Merger and Weatherford shall have paid to Enterra $20
million. A "Weatherford Superior Proposal" shall mean any bona fide Weatherford
Takeover Proposal to merge with or acquire, directly or indirectly, all the
outstanding voting stock or all or substantially all the assets of Weatherford,
and otherwise on terms that the Weatherford Board of Directors determines in its
good faith reasonable judgment (based on the written advice of a financial
advisor of nationally recognized reputation) to be more favorable to
Weatherford's stockholders than the Merger. Notwithstanding the foregoing,
Weatherford may take and disclose to its stockholders a position contemplated by
Rule 14e-2(a) of the Exchange Act with respect to tender offers, provided that
Weatherford does not withdraw or modify its position with respect to the Merger
or take any action having such effect or approve or recommend a Weatherford
Takeover Proposal. Enterra may terminate the Merger Agreement if the Weatherford
Board of Directors or any committee thereof withdraws or modifies, or proposes
to withdraw or modify, in a manner adverse to Enterra the approval or
recommendation of the Weatherford Board of Directors or any such committee of
the Merger Agreement or the Merger or takes any action having such effect, or
approves or recommends, or proposes to approve or recommend, any Weatherford
Takeover Proposal.
The Merger Agreement provides that Enterra will not, and will not permit any
of its subsidiaries to, or authorize or permit any of its or their officers,
directors, employees, investment bankers, attorneys or other advisors, agents or
representatives to, directly or indirectly, (a) solicit, initiate or encourage
the submission of, or enter into any agreement with respect to, any proposal or
offer from any person (other than Weatherford or any affiliate of Weatherford)
for a merger or other business combination, acquisition of a material amount of
assets of Enterra or acquisition of more than 30% of the outstanding voting
stock of Enterra (each such transaction being referred to herein as a "Enterra
Takeover Proposal"), or (b) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, the making
of any proposal that constitutes, or may reasonably be expected to lead to, an
Enterra Takeover Proposal. Notwithstanding the foregoing, prior to the vote of
Enterra stockholders for approval and adoption of the Merger Agreement and the
Merger, Enterra may participate in discussions or negotiations with, or furnish
information to, a third party to the extent that the Enterra Board of Directors
determines, in good faith after consultation with outside counsel, that failure
to take such actions could reasonably be expected to result in a breach of the
Board's fiduciary obligations. Any violation of the restrictions set forth above
by any officer, director or employee of Enterra or any of its subsidiaries or
any investment banker, attorney or other advisor, agent or representative of
Enterra, whether or not such person is purporting to act on behalf of Enterra or
otherwise, would be deemed to be a material breach of the Merger Agreement by
Enterra. If the Enterra Board of Directors receives an Enterra Takeover Proposal
that, in the exercise of its fiduciary obligations (as determined in good faith
after consultation with outside counsel), it determines to be an Enterra
Superior Proposal (as hereinafter defined), the Enterra Board of Directors may
withdraw or modify its approval or recommendation of the Merger Agreement or the
Merger and may thereafter terminate the Merger Agreement, in each case after the
fifth business day following Weatherford's receipt of written notice advising
Weatherford that the Enterra Board of Directors has received an Enterra Takeover
Proposal that it has determined to be an Enterra Superior Proposal; provided
that Enterra may so terminate the Merger Agreement only if the stockholders of
Enterra have not yet voted upon the Merger and Enterra shall have paid to
Weatherford $20 million. An "Enterra Superior Proposal" shall mean any bona fide
Enterra Takeover Proposal to merge with or acquire, directly or indirectly, all
the outstanding voting stock or all or substantially all the assets of Enterra,
and otherwise on terms that the Enterra Board of Directors determines in its
good faith reasonable judgment (based on the written advice of a financial
advisor of nationally recognized reputation) to be more favorable to Enterra's
stockholders than the Merger. Notwithstanding the foregoing, Enterra may take
and disclose to its stockholders a position contemplated by Rule 14e-2(a) of the
Exchange Act with respect to tender offers, provided that Enterra does not
withdraw or modify its position with respect to the Merger or take any action
having such effect or approve or recommend an Enterra Takeover Proposal.
Weatherford may terminate the Merger Agreement if the Enterra Board of Directors
or any committee thereof withdraws or modifies, or proposes to withdraw or
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<PAGE>
modify, in a manner adverse to Weatherford the approval or recommendation of the
Enterra Board of Directors or any such committee of the Merger Agreement or the
Merger or takes any action having such effect, or approves or recommends, or
proposes to approve or recommend, any Enterra Takeover Proposal.
Pursuant to an agreement entered into with Weatherford, First Reserve and
the First Reserve Funds have agreed not to directly or indirectly (i) solicit,
initiate or encourage the submission of, or enter into any agreement with
respect to, an Enterra Takeover Proposal or (ii) participate in any discussion
or negotiation regarding, or furnish any person any information with respect to,
the making of any proposal that constitutes, or may reasonably be expected to
lead to, an Enterra Takeover Proposal.
Pursuant to a confidentiality agreement, dated May 12, 1995, Weatherford and
Enterra each agreed, among other things, that for 18 months from the date of
such agreement, neither party nor any of its respective affiliates would, absent
the prior consent of the other party, (i) purchase, offer or agree to purchase,
or announce an intention to purchase, directly or indirectly, any securities or
assets of the other party; (ii) make, or in any way participate, directly or
indirectly, in any solicitation of proxies to vote or consents, or seek to
advise or influence any person with respect to the voting of any voting
securities of the other party or any subsidiary thereof; (iii) initiate or
support, directly or indirectly, any stockholder proposal with respect to the
other party; (iv) directly or indirectly make any public announcement with
respect to, or submit a proposal for, or offer of (with or without conditions)
any extraordinary transaction involving the other party or its securities or
assets or any subsidiary thereof, or (v) form, join or in any way participate in
a group as defined in Section 13(d)(3) of the Exchange Act in connection with
any of the foregoing.
PAYMENT IN THE EVENT OF AN ALTERNATIVE TRANSACTION
Weatherford agreed to pay Enterra $20 million in immediately available funds
promptly upon the termination of the Merger Agreement if it is terminated (i) by
Enterra or Weatherford due to the existence of a Weatherford Superior Proposal,
(ii) for any reason other than a material breach by Enterra and a Weatherford
Takeover Proposal shall have been made and the stockholders of Weatherford shall
not have approved the Merger or (iii) by Weatherford for failure to receive, or
the withdrawal of, a favorable opinion from Merrill Lynch or because of a
material adverse change in the business, financial condition or results of
operations of Enterra and its subsidiaries, taken as a whole (except for certain
exclusions previously agreed to by Weatherford and Enterra), or the material
breach (or, in some cases, a non-material breach) by Enterra of any of its
representations, warranties, covenants, agreements or obligations contained in
the Merger Agreement, and, within six months after such termination, Weatherford
shall have entered into a definitive agreement with any person (other than
Enterra or any of its affiliates) with respect to a Weatherford Takeover
Proposal that is more favorable to Weatherford's stockholders than the Merger.
Enterra agreed to pay Weatherford $20 million in immediately available funds
promptly upon termination of the Merger Agreement if the Merger Agreement is
terminated (i) by Weatherford or Enterra due to the existence of an Enterra
Superior Proposal, (ii) for any reason other than a material breach by
Weatherford and an Enterra Takeover Proposal shall have been made and the
stockholders of Enterra shall not have approved the Merger or (iii) by Enterra
for failure to receive, or the withdrawal of, a favorable opinion from Simmons
or because of a material adverse change in the business, financial condition or
results of operations of Weatherford and its subsidiaries, taken as a whole, or
the material breach (or, in some cases, a non-material breach) by Weatherford of
any of its representations, warranties, covenants, agreements or obligations
contained in the Merger Agreement, and, within six months after such
termination, Enterra shall have entered into a definitive agreement with any
person (other than Weatherford or any of its affiliates) with respect to an
Enterra Takeover Proposal that is more favorable to Enterra's stockholders than
the Merger.
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<PAGE>
TERMINATION OR AMENDMENT OF MERGER AGREEMENT
The Merger Agreement provides that it may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
Weatherford or the stockholders of Enterra: (a) by mutual consent of Weatherford
and Enterra; (b) by either Weatherford or Enterra if the Merger has not been
effected on or before December 31, 1995; (c) by Weatherford if Merrill Lynch
withdraws its written fairness opinion; (d) by Enterra if Simmons withdraws its
written fairness opinion; (e) by Weatherford if a final, unappealable order
shall have been entered to restrain, enjoin or otherwise prevent, or awarding
substantial damages in connection with, a consummation of the Merger Agreement
or the transactions contemplated in connection therewith, or there is pending by
any governmental body any suit challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated by
the Merger Agreement or seeking to obtain from Enterra or any of its
subsidiaries any damages that are material in relation to Enterra and its
subsidiaries, taken as a whole; (f) by Enterra if a final, unappealable order
shall have been entered to restrain, enjoin or otherwise prevent, or awarding
substantial damages in connection with, a consummation of the Merger Agreement
or the transactions contemplated in connection therewith, or there is pending by
any governmental body any suit challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated by
the Merger Agreement or seeking to obtain from Weatherford or any of its
subsidiaries any damages that are material in relation to Weatherford and its
subsidiaries, taken as a whole; (g) by either Weatherford or Enterra if the
required approval of the stockholders of Enterra or the stockholders of
Weatherford for the adoption and approval of the Merger and the Merger Agreement
is not received at their respective stockholders' meetings; (h) by Weatherford
if (i) since the date of the Merger Agreement, there has been a material adverse
change in the business, financial condition or results of operations of Enterra
and its subsidiaries, taken as a whole (except for certain exclusions previously
agreed to by Weatherford and Enterra), or (ii) there has been a breach by
Enterra of a representation or warranty regarding capitalization, authorization
and validity of the Merger Agreement, Commission filings, financial statements
or the absence of brokers' fees, or there has been a breach by Enterra of any
other representation or warranty contained in the Merger Agreement in any
material respect (except to the extent qualified by materiality, in which case
such representations and warranties shall not have been breached in any respect)
by Enterra or Enterra fails to perform in any material respect any of its
covenants, agreements or obligations contained in the Merger Agreement; or (i)
by Enterra if (i) since the date of the Merger Agreement, there has been a
material adverse change in the business, financial condition or results of
operations of Weatherford and its subsidiaries, taken as a whole, or (ii) there
has been a breach by Weatherford of a representation or warranty regarding
capitalization, authorization and validity of the Merger Agreement, Commission
filings, financial statements or the absence of brokers' fees, or there has been
a breach by Weatherford of any other representation or warranty contained in the
Merger Agreement in any material respect (except to the extent qualified by
materiality, in which case such representations and warranties shall not have
been breached in any respect) or Weatherford fails to perform in any material
respect any of its covenants, agreements or obligations contained in the Merger
Agreement. The Merger Agreement also may be terminated as described under "-- No
Solicitation".
The Merger Agreement provides that it may be amended or supplemented by an
instrument in writing signed on behalf of each party thereto, provided that
after the Merger Agreement has been approved and adopted by the stockholders of
Weatherford and the stockholders of Enterra, it may be amended only as may be
permitted by applicable provisions of Delaware law.
INDEMNIFICATION
The Merger Agreement provides that, after the Effective Time, Weatherford
and the Surviving Corporation will indemnify the officers and directors of
Enterra and any of its subsidiaries against all costs and expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, based in whole or in part on, or
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<PAGE>
arising in whole or in part out of, the fact that such person is or was an
officer or director, whether pertaining to any matter existing or occurring at
or prior to the Effective Time and whether asserted or claimed prior to, at or
after the Effective Time, as well as all liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to, the Merger
Agreement, the Merger or the transactions contemplated thereby. Pursuant to the
Merger Agreement, for six years following the Effective Time the Surviving
Corporation is required to use its best efforts to maintain in effect director
and officer liability insurance for the indemnified officers and directors
comparable to that currently maintained by Enterra; provided, however, that if
the Surviving Corporation is unable to obtain such insurance for an aggregate
premium of $1 million or less, or if such insurance otherwise cannot be obtained
or maintained, then the Surviving Corporation will seek to obtain the best
possible coverage.
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<PAGE>
COMPARATIVE RIGHTS OF STOCKHOLDERS OF WEATHERFORD AND ENTERRA
The rights of holders of Enterra Common Stock are currently governed by
Delaware law, Enterra's Restated Certificate of Incorporation and Enterra's
By-laws, as amended. Upon consummation of the Merger, holders of Enterra Common
Stock will become holders of Weatherford Common Stock, and their rights as
holders of Weatherford Common Stock will still be governed by Delaware law, but
will then be governed by Weatherford's Restated Certificate of Incorporation and
Weatherford's By-laws, as amended. Set forth below are the principal differences
that could materially affect the rights of the holders of Enterra Common Stock.
SPECIAL VOTE REQUIRED FOR CERTAIN COMBINATIONS
Section 203 of the Delaware General Corporation Law (the "DGCL") prohibits a
corporation from engaging in a "business combination" (as hereinafter defined)
with an "interested stockholder" (defined generally to mean a person who,
together with his affiliates, owns, or if the person is an affiliate of the
corporation did own within the last three years, 15% or more of the outstanding
voting stock of the corporation) for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless (i)
prior to the date of the business combination, the board of directors of the
corporation approved the business combination or the transaction in which the
stockholder became an interested stockholder, (ii) as a result of the business
combination, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced or (iii) on
or subsequent to the date of the business combination, the board of directors
and the holders of at least 66 2/3% of the outstanding voting stock not owned by
the interested stockholder approve the business combination. The DGCL defines a
"business combination" generally as: (i) a merger or consolidation with the
interested stockholder or with any other corporation if the merger or
consolidation is caused by the interested stockholder, (ii) a sale or other
disposition to or with an interested stockholder of assets with an aggregate
market value greater than or equal to 10% or more of either the aggregate market
value of all assets of the corporation or the aggregate market value of all of
the outstanding stock of the corporation; (iii) with certain exceptions, any
transaction resulting in the issuance or transfer by the corporation or any
majority-owned subsidiary of any stock of the corporation or such subsidiary to
the interested stockholder; (iv) any transaction involving the corporation or a
majority-owned subsidiary that has the effect of increasing the proportionate
share of the stock of the corporation or any such subsidiary owned by the
interested stockholder; or (v) any receipt by the interested stockholder of the
benefit of any loans or other financial benefits provided by the corporation or
any majority-owned subsidiary.
The DGCL permits a corporation to elect not to be governed by Section 203.
Both Enterra's By-laws and Weatherford's By-laws make such an election. However,
Weatherford's Restated Certificate of Incorporation and By-laws contain
provisions similar to Section 203 that require a higher percentage of
stockholders' vote to approve a Business Combination (as hereinafter defined).
Pursuant to these provisions, an "Interested Stockholder" is defined generally
to mean the owner of more than 20% of the voting power of the outstanding voting
stock and any affiliate of such person. The holders of at least 80% of the
voting power of the then outstanding shares of capital stock of Weatherford
entitled to vote must approve the Business Combination. The term "Business
Combination" is defined generally to include any of the following transactions
in which an Interested Stockholder is involved: (i) a merger or consolidation,
(ii) a sale or other disposition of assets having a fair market value of $1
million or more, (iii) an issuance or transfer of any securities having a fair
market value of $1 million or more, (iv) a plan of liquidation or dissolution or
(v) certain transactions that increase the proportionate share of the
outstanding shares of any class of equity or convertible securities owned by an
Interested Stockholder or any of its affiliates. The special stockholder voting
requirement of the fair price provisions is not applicable to a Business
Combination if either (i) a majority of the Continuing Directors (as hereinafter
defined) approves the Business Combination or (ii) certain minimum price, form
of consideration and procedural requirements are satisfied. Weatherford's
Restated Certificate of Incorporation generally defines "Continuing Director" to
mean a director who either (i) was unaffiliated with the Interested Stockholder
and was a member of the Weatherford
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<PAGE>
Board of Directors prior to the time that the Interested Stockholder became an
Interested Stockholder or (ii) was designated in the appropriate manner as a
Continuing Director by the other Continuing Directors.
VOTE REQUIRED FOR EXTRAORDINARY CORPORATE TRANSACTIONS
Under the DGCL, an amendment to a corporation's certificate of incorporation
requires the affirmative vote of the holders of a majority of the outstanding
stock of the corporation entitled to vote thereon and a majority of the
outstanding stock of each class entitled to vote thereon as a class, unless the
corporation's certificate of incorporation provides for a higher percentage. The
DGCL also provides that the holders of a majority of the outstanding stock of
the corporation entitled to vote thereon may approve an agreement of merger or
consolidation or the dissolution of a corporation.
Enterra's Restated Certificate of Incorporation contains a provision
requiring that any corporate action that is contingent upon approval or other
action by the stockholders (other than the election of directors or corporate
action that has been recommended by a vote of three-quarters of the entire
Enterra Board of Directors), including amendments to Enterra's Restated
Certificate of Incorporation, be authorized only upon receiving at least
three-quarters of the vote that all voting stockholders of Enterra, voting as a
single class, are entitled to cast thereon. If such action is recommended by
three-quarters of the entire Enterra Board of Directors, the minimum vote
required under the DGCL for such actions is required for stockholder approval.
Weatherford's Restated Certificate of Incorporation provides that the
affirmative vote of the holders of at least 80% of the outstanding stock
entitled to vote generally in the election of directors is required for
amendments to Weatherford's Restated Certificate of Incorporation relating to
written consents and special meetings of stockholders, relating to the number,
election, terms, increase in the number, vacancy, removal and limitation on
liability of directors, and relating to certain mergers, consolidations or
dissolutions of Weatherford that involve an Interested Stockholder. See "--
Special Vote Required for Certain Business Combinations".
DISPOSITION OF ASSETS
Under the DGCL, all sales, leases or exchanges of all, or substantially all,
of the assets of a corporation must be authorized by a resolution adopted by the
holders of a majority of the outstanding stock of the corporation entitled to
vote thereon. Enterra's Restated Certificate of Incorporation does not provide
for a different vote requirement if the transaction has been approved by
three-fourths of the Enterra Board of Directors. See "-- Special Vote Required
for Certain Business Combinations" for a description of the higher voting
requirement in connection with asset sales involving Business Combinations with
Interested Stockholders as provided in Weatherford's Restated Certificate of
Incorporation and By-laws.
REMOVAL OF DIRECTORS
The DGCL and Enterra's Restated Certificate of Incorporation provide that,
subject to the rights of the holders of any outstanding shares of Series
Preferred Stock, directors of Enterra may only be removed for cause by the
holders of a majority of the shares then entitled to vote at an election of
directors. Weatherford's Restated Certificate of Incorporation and By-laws
provide that, subject to the rights of the holders of any outstanding shares of
Serial Preferred Stock, no director may be removed from office, except for cause
and upon the affirmative vote of the holders of at least 80% of the outstanding
stock entitled to vote for the election of directors.
STOCKHOLDER CONSENT IN LIEU OF MEETING
Enterra's By-laws provide that any action that may be taken at an annual or
special meeting may be taken without a meeting by written consent of the holders
of the minimum stock otherwise required to take such action at a meeting of
stockholders. Weatherford's Restated Certificate of Incorporation and By-laws
provide that any action required or permitted to be taken by the stockholders
must be taken at a duly called annual or special meeting of the stockholders and
may not be taken by written consent.
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<PAGE>
DIRECTOR QUALIFICATION AND NUMBER
The DGCL provides that the number of directors of a Delaware corporation
shall be fixed by, or in the manner provided in, the by-laws, unless such number
is changed by action of the majority of the directors. Under the DGCL, a
director need not be a stockholder to be qualified unless so required by the
charter or by-laws. Enterra's By-laws require written notice of a stockholder's
intent to nominate a director. As to the number of directors, Enterra's By-laws
provide for the number of directors to be not less than three nor more than
twelve and Weatherford's By-laws provide for the number of directors to be not
less than six nor more than 15. Pursuant to the Stockholders Agreement, the
Weatherford Board of Directors will be set at ten. See "Terms of the Merger --
Stockholders Agreement".
POWER TO CALL SPECIAL MEETINGS OF STOCKHOLDERS
Under the DGCL, special meetings of stockholders may be called by the board
of directors or by such person or persons as may be authorized by the
certificate of incorporation of by the bylaws. Enterra's Restated Certificate
and By-laws provide that special meetings of stockholders may be called by the
chairman, a majority of the board of directors, the president and chief
executive, or at the written request of stockholders owning a majority of the
stock that is issued and outstanding and entitled to vote. Upon such request,
the secretary shall fix the date of the meeting at not less than ten days nor
more than sixty days thereafter. Weatherford's Restated Certificate of
Incorporation and By-laws provide that, unless otherwise prescribed by statute,
special meetings of stockholders of Weatherford may be called only by the
Weatherford Board of Directors pursuant to a resolution approved by a majority
of the entire Weatherford Board of Directors.
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<PAGE>
MARKET PRICE OF COMMON STOCK
MARKET INFORMATION
The Weatherford Common Stock and the Enterra Common Stock are traded on the
NYSE under the symbols "WII" and "EN", respectively. Prior to October 19, 1994,
the Weatherford Common Stock was traded on the American Stock Exchange, Inc. The
following table sets forth the range of high and low closing sale prices for the
Weatherford Common Stock and the Enterra Common Stock for the periods indicated,
as reported on the NYSE (or, in the case of Weatherford, on the American Stock
Exchange for periods prior to October 19, 1994).
<TABLE>
<CAPTION>
WEATHERFORD ENTERRA
-------------------- --------------------
HIGH LOW HIGH LOW
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1993
First Quarter..................................... $ 9.50 $ 4.75 $ 22.25 $ 17.00
Second Quarter.................................... 13.75 8.75 29.00 20.25
Third Quarter..................................... 12.88 9.25 26.38 21.00
Fourth Quarter.................................... 13.38 8.50 25.25 17.75
1994
First Quarter..................................... 11.13 8.13 21.88 18.50
Second Quarter.................................... 14.75 8.00 23.75 18.25
Third Quarter..................................... 14.00 11.63 23.88 20.00
Fourth Quarter.................................... 12.75 8.25 23.13 18.25
1995
First Quarter..................................... 10.50 8.50 18.75 15.25
Second Quarter.................................... 12.75 9.75 21.00 16.00
Third Quarter (through August 28, 1995)........... 13.88 11.88 22.63 19.88
</TABLE>
On June 23, 1995, the last trading day prior to the announcement by
Weatherford and Enterra that they had reached an agreement concerning the
Merger, the closing sale prices of Weatherford Common Stock and of Enterra
Common Stock as reported by the NYSE were $11.50 and $20.88 per share,
respectively.
On August 28, 1995, the closing sale prices of Weatherford Common Stock and
of Enterra Common Stock as reported by the NYSE were $12.63 and $21.13 per
share, respectively.
Following the Merger, Weatherford Common Stock will continue to be traded on
the NYSE under the symbol "WII". Following the Merger, Enterra Common Stock will
cease to be traded on the NYSE, and there will be no further market for such
stock.
DIVIDEND INFORMATION
Weatherford has not declared or paid dividends on the Weatherford Common
Stock since December 1982 and does not anticipate paying dividends on the
Weatherford Common Stock at any time in the foreseeable future. The terms of
Weatherford's credit arrangements with its banks prohibit the payment by
Weatherford of cash dividends on the Weatherford Common Stock.
Enterra has not declared or paid dividends on the Enterra Common Stock since
1984 and does not currently plan to declare or pay any dividends on the Enterra
Common Stock. In addition, Enterra's credit agreement with its primary lenders
contains limitations on the amount of dividends that may be declared.
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<PAGE>
WEATHERFORD AND ENTERRA COMBINED
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial statements are based upon (i) the
historical consolidated financial statements of Weatherford and Enterra, which
are incorporated by reference in this Joint Proxy Statement/Prospectus, and
should be read in conjunction with those consolidated financial statements and
related notes, (ii) the unaudited historical consolidated statement of
operations of the Rental Division of Odfjell Drilling and Consulting Company
("Odfjell Rental") for the period from January 1, 1994 through April 14, 1994,
(iii) the unaudited historical consolidated statement of operations of Total
Energy Services Company ("TOTAL") for the period from January 1, 1994 through
August 11, 1994, (iv) the unaudited historical combined balance sheet of Zapata
Energy Industries as of June 30, 1995 and the audited historical combined
statement of operations of Zapata Energy Industries for the eleven months ended
September 30, 1994, both of which are incorporated by reference in this Joint
Proxy Statement/Prospectus, and (v) the unaudited historical combined statement
of operations of Zapata Energy Industries for the six months ended June 30,
1995.
The Unaudited Adjusted Pro Forma Balance Sheet presents the combined
financial position of Weatherford and Enterra as of June 30, 1995. The Unaudited
Adjusted Pro Forma Balance Sheet further assumes that the transactions set forth
in Enterra's June 29, 1995 contract to acquire Zapata Energy Industries were
consummated as of June 30, 1995.
The Unaudited Pro Forma Statements of Operations give effect to (i) the
proposed Merger and (ii) the Reverse Stock Split by combining the results of
operations of Weatherford and Enterra for the six months ended June 30, 1995 and
1994 and for each of the three years in the period ended December 31, 1994 on a
"pooling of interests" basis as if Weatherford and Enterra had been combined
since inception. The Unaudited Adjusted Pro Forma Statements of Operations
further give effect to (i) the acquisition by Weatherford of Odfjell Rental
under the purchase method of accounting, (ii) the acquisition by Enterra of
TOTAL under the purchase method of accounting, (iii) the consummation of the
transactions set forth in Enterra's June 29, 1995 contract to acquire Zapata
Energy Industries under the purchase method of accounting and (iv) certain
estimated operational and financial combination benefits of $26,800,000 per year
and $8,668,000 per year resulting from the Merger and the consummation of the
transactions set forth in Enterra's June 29, 1995 contract to acquire Zapata
Energy Industries, respectively. The Unaudited Adjusted Pro Forma Statements of
Operations were prepared assuming that the transactions itemized above were
consummated as of January 1, 1994. No provision has been reflected in the
unaudited pro forma financial statements for direct cash costs related to the
Merger, which are expected to be approximately $28,300,000.
The Unaudited Pro Forma Financial Statements have been prepared based upon
assumptions deemed appropriate by Weatherford and Enterra and may not be
indicative of actual results.
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<PAGE>
WEATHERFORD AND ENTERRA COMBINED
UNAUDITED ADJUSTED PRO FORMA BALANCE SHEET
JUNE 30, 1995
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
---------------- -----------
WEATHERFORD ZAPATA PRO FORMA
AND ENTERRA ENERGY -----------------------------
COMBINED INDUSTRIES ADJUSTMENTS(2) ADJUSTED
---------------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 20,131 $ 2,202 $ -- $ 22,333
Receivables, net................................. 238,078 10,198 -- 248,276
Inventories, net................................. 155,009 24,173 -- 179,182
Deferred tax assets and other.................... 32,371 -- -- 32,371
---------------- ----------- -------------- -------------
Total current assets........................... 445,589 36,573 -- 482,162
---------------- ----------- -------------- -------------
Property, plant and equipment...................... 1,108,813 67,307 (7,810) 1,168,310
Less -- Accumulated depreciation................. 653,396 7,810 (7,810) 653,396
---------------- ----------- -------------- -------------
455,417 59,497 -- 514,914
---------------- ----------- -------------- -------------
Goodwill, net...................................... 214,823 18,523 18,915 252,261
---------------- ----------- -------------- -------------
Other assets....................................... 21,894 1,492 -- 23,386
---------------- ----------- -------------- -------------
Total assets....................................... $ 1,137,723 $ 116,085 $ 18,915 $ 1,272,723
---------------- ----------- -------------- -------------
---------------- ----------- -------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term
debt............................................ $ 17,568 $ 27,228 $ (27,228) $ 17,568
Accounts payable................................. 48,303 3,558 (3,558) 48,303
Accrued liabilities.............................. 106,676 4,743 (4,743) 106,676
---------------- ----------- -------------- -------------
Total current liabilities...................... 172,547 35,529 (35,529) 172,547
---------------- ----------- -------------- -------------
Long-term debt..................................... 185,986 763 135,000 320,986
(763)
---------------- ----------- -------------- -------------
Deferred tax and other long-term liabilities....... 31,185 54,493 (54,493) 31,185
---------------- ----------- -------------- -------------
Stockholders' equity:
Common stock..................................... 5,067(1) 3 (3) 5,067
Paid-in capital.................................. 594,817(1) 20,787 (20,787) 594,817
Retained earnings................................ 152,095 4,510 (4,510) 152,095
Cumulative translation adjustment................ (3,143) -- -- (3,143)
Treasury stock................................... (831) -- -- (831)
---------------- ----------- -------------- -------------
Total stockholders' equity..................... 748,005 25,300 (25,300) 748,005
---------------- ----------- -------------- -------------
Total liabilities and stockholders' equity......... $ 1,137,723 $ 116,085 $ 18,915 1,272,723
---------------- ----------- -------------- -------------
---------------- ----------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma financial
statements.
67
<PAGE>
WEATHERFORD AND ENTERRA COMBINED
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS(3)
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994 AND
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1995 1994 1994 1993 1992
--------- --------- --------- --------- ---------
Revenues............................... $ 425,775 $ 269,939 $ 669,657 $ 493,206 $ 368,386
<S> <C> <C> <C> <C> <C>
--------- --------- --------- --------- ---------
Costs and expenses:
Cost of sales and services........... 265,680 161,969 412,336 297,792 216,288
Selling, general and administrative
expenses............................ 76,327 53,863 126,612 98,845 83,796
Depreciation and amortization........ 46,073 28,874 69,533 49,402 35,738
Research and development............. 1,771 1,384 3,421 2,565 2,603
Equity in earnings of unconsolidated
affiliates.......................... (899) (771) (1,169) (2,716) (3,167)
Foreign currency (gain) loss, net.... (969) (2,027) (2,205) 713 104
Other (income) expense, net.......... (5,650) (3,267) (7,075) (7,066) (2,555)
Acquisition-related costs............ -- -- 2,500 4,000 --
Unusual charges...................... 28,281 -- -- -- --
--------- --------- --------- --------- ---------
Total costs and expenses........... 410,614 240,025 603,953 443,535 332,807
--------- --------- --------- --------- ---------
Operating income....................... 15,161 29,914 65,704 49,671 35,579
Interest expense..................... 8,255 2,269 8,847 4,027 3,026
Interest income...................... (772) (1,090) (1,959) (3,243) (4,141)
--------- --------- --------- --------- ---------
Income before taxes.................... 7,678 28,735 58,816 48,887 36,694
Income tax (benefit) provision,
net................................. (3,305) 7,790 16,958 13,635 10,292
--------- --------- --------- --------- ---------
Net income before minority interests... 10,983 20,945 41,858 35,252 26,402
Minority interests..................... 311 66 119 (77) 358
--------- --------- --------- --------- ---------
Net income............................. 11,294 21,011 41,977 35,175 26,760
Preferred dividends.................... -- -- -- 1,153 1,538
--------- --------- --------- --------- ---------
Net income to common shareholders...... $ 11,294 $ 21,011 $ 41,977 $ 34,022 $ 25,222
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average common and common
equivalent shares outstanding......... 50,716 41,045 44,845 38,607 34,786
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income per common and common equivalent
share(4).............................. $ 0.22 $ 0.51 $ 0.94 $ 0.88 $ 0.73
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma financial
statements.
68
<PAGE>
WEATHERFORD AND ENTERRA COMBINED
UNAUDITED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL PRO FORMA
------------------------------------- ---------- ------------------------
FURTHER
ZAPATA ADJUSTED
WEATHERFORD ZAPATA ENERGY FOR ZAPATA
AND ENTERRA ENERGY INDUSTRIES ENERGY
COMBINED ADJUSTMENTS ADJUSTED INDUSTRIES ADJUSTMENTS INDUSTRIES
----------- ------------ -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues.......................................... $425,775 $ -- $425,775 $ 34,923 $ -- $ 460,698
----------- ------------ -------- ---------- ----------- ----------
Costs and expenses:
Cost of sales and services...................... 265,680 (9,554)(5) 256,126 25,289 (2,374)(6) 279,041
Selling, general and administrative expenses.... 76,327 (3,846)(5) 72,481 3,840 (1,960)(6) 74,361
Depreciation and amortization................... 46,073 -- 46,073 2,916 536(7) 49,525
Research and development........................ 1,771 -- 1,771 -- -- 1,771
Equity in earnings of unconsolidated
affiliates..................................... (899) -- (899) -- -- (899)
Foreign currency (gain) loss, net............... (969) -- (969) -- -- (969)
Other (income) expense, net..................... (5,650) -- (5,650) (474) -- (6,124)
Unusual charges................................. 28,281 -- 28,281 -- -- 28,281
----------- ------------ -------- ---------- ----------- ----------
Total costs and expenses...................... 410,614 (13,400) 397,214 31,571 (3,798) 424,987
----------- ------------ -------- ---------- ----------- ----------
Operating income.................................. 15,161 13,400 28,561 3,352 3,798 35,711
Interest expense................................ 8,255 -- 8,255 1,650 2,974(8) 12,879
Interest income................................. (772) -- (772) (156) -- (928)
----------- ------------ -------- ---------- ----------- ----------
Income before taxes............................... 7,678 13,400 21,078 1,858 824 23,760
Income tax (benefit) provision, net............. (3,305) 4,690(5) 1,385 820 311(8) 2,516
----------- ------------ -------- ---------- ----------- ----------
Net income before minority interests.............. 10,983 8,710 19,693 1,038 513 21,244
Minority interests................................ 311 -- 311 -- -- 311
----------- ------------ -------- ---------- ----------- ----------
Net income........................................ $ 11,294 $ 8,710 $ 20,004 $ 1,038 $ 513 $ 21,555
----------- ------------ -------- ---------- ----------- ----------
----------- ------------ -------- ---------- ----------- ----------
Weighted average common and common equivalent
shares outstanding............................... 50,716 50,716 50,716
----------- -------- ----------
----------- -------- ----------
Income per common and common equivalent
share(4)......................................... $ 0.22 $ 0.39 $ 0.43
----------- -------- ----------
----------- -------- ----------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma financial
statements.
69
<PAGE>
WEATHERFORD AND ENTERRA COMBINED
UNAUDITED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL PRO FORMA
----------- -------------------------- --------------------------------
WEATHERFORD
AND ENTERRA ODFJELL
COMBINED RENTAL TOTAL ADJUSTMENTS ADJUSTED
----------- ------------- ----------- ------------------ -----------
JANUARY 1
YEAR ENDED JANUARY 1 TO TO AUGUST YEAR ENDED
DECEMBER 31 APRIL 14 11 DECEMBER 31
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues.............................. $ 669,657 $ 8,477 $ 146,390 $ -- $ 824,524
----------- ------------- ----------- ---------- -----------
Costs and expenses:
Cost of sales and services.......... 412,336 2,482 100,089 (19,108)(5) 495,799
Selling, general and administrative
expenses........................... 126,612 1,488 27,763 (7,692)(5) 146,261
(1,910)(10)
Depreciation and amortization....... 69,533 1,301 7,833 (7)(11) 81,774
3,114(12)
Research and development............ 3,421 -- -- -- 3,421
Equity in earnings of unconsolidated
affiliates......................... (1,169) -- -- -- (1,169)
Foreign currency (gain), net........ (2,205) -- -- -- (2,205)
Other (income) expense, net......... (7,075) (79) 517 -- (6,637)
Acquisition-related costs........... 2,500 -- -- -- 2,500
----------- ------------- ----------- ---------- -----------
Total costs and expenses.......... 603,953 5,192 136,202 (25,603) 719,744
----------- ------------- ----------- ---------- -----------
Operating income...................... 65,704 3,285 10,188 25,603 104,780
Interest expense.................... 8,847 -- 2,841 684(13) 12,295
(77)(14)
Interest income..................... (1,959) -- (303) -- (2,262)
----------- ------------- ----------- ---------- -----------
Income before taxes................... 58,816 3,285 7,650 24,996 94,747
Income taxes........................ 16,958 -- 2,586 9,380(5) 30,037
782(15)
331(16)
----------- ------------- ----------- ---------- -----------
Net income before minority
interests............................ 41,858 3,285 5,064 14,503 64,710
Minority interests.................... 119 -- 123 -- 242
----------- ------------- ----------- ---------- -----------
Net income............................ $ 41,977 $ 3,285 $ 5,187 $ 14,503 $ 64,952
----------- ------------- ----------- ---------- -----------
----------- ------------- ----------- ---------- -----------
Weighted average common and common
equivalent shares outstanding........ 44,845 5,834(17) 50,679
----------- ---------- -----------
----------- ---------- -----------
Income per common and common
equivalent share(4).................. $ 0.94 $ 1.28
----------- -----------
----------- -----------
<CAPTION>
HISTORICAL PRO FORMA
-------------------- ---------------------------------
FURTHER ADJUSTED
ZAPATA ENERGY FOR ZAPATA
ZAPATA ENERGY INDUSTRIES ENERGY
INDUSTRIES ADJUSTMENTS INDUSTRIES
-------------------- -------------- ----------------
ELEVEN MONTHS ENDED YEAR ENDED
SEPTEMBER 30 DECEMBER 31
-------------------- ----------------
<S> <C> <C> <C>
Revenues.............................. $ 72,522 $ 6,014(9) $ 903,060
-------- -------------- ----------------
Costs and expenses:
Cost of sales and services.......... 52,768 5,080(9) 548,899
(4,748)(6)
Selling, general and administrative
expenses........................... 6,917 390(9) 149,648
(3,920)(6)
Depreciation and amortization....... 4,867 490(9) 88,203
1,072(7)
Research and development............ -- -- 3,421
Equity in earnings of unconsolidated
affiliates......................... -- -- (1,169)
Foreign currency (gain), net........ -- -- (2,205)
Other (income) expense, net......... -- (221) (9) (6,858)
Acquisition-related costs........... -- -- 2,500
-------- -------------- ----------------
Total costs and expenses.......... 64,552 (1,857) 782,439
-------- -------------- ----------------
Operating income...................... 7,970 7,871 120,621
Interest expense.................... 3,124 4,058(8) 19,477
Interest income..................... -- -- (2,262)
-------- -------------- ----------------
Income before taxes................... 4,846 3,813 103,406
Income taxes........................ 2,049 1,408(8) 33,494
-------- -------------- ----------------
Net income before minority
interests............................ 2,797 2,405 69,912
Minority interests.................... -- -- 242
-------- -------------- ----------------
Net income............................ $ 2,797 $ 2,405 $ 70,154
-------- -------------- ----------------
-------- -------------- ----------------
Weighted average common and common
equivalent shares outstanding........ 50,679
----------------
----------------
Income per common and common
equivalent share(4).................. $ 1.38
----------------
----------------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma financial
statements.
70
<PAGE>
WEATHERFORD AND ENTERRA COMBINED
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. The Unaudited Adjusted Pro Forma Balance Sheet as of June 30, 1995 reflects
(i) the Reverse Stock Split and (ii) the issuance of 23,470,000 shares of
Weatherford Common Stock in exchange for all 27,775,000 shares of Enterra
Common Stock outstanding at June 30, 1995, based upon the conversion rate of
0.845 of a share (which also reflects the Reverse Stock Split) of
Weatherford Common Stock for each share of Enterra Common Stock. The
difference between the par value of Enterra Common Stock surrendered and the
par value of Weatherford Common Stock issued upon consummation of the Merger
is reflected as an increase in paid-in capital.
2. To record borrowings used to finance the transactions set forth in Enterra's
June 29, 1995 contract to acquire the assets of Zapata Energy Industries and
to reflect the allocation of the related purchase price and to eliminate all
liabilities and equity of Zapata Energy Industries, including $52,842,000 of
intercompany payables, not being acquired by Enterra.
3. There are no significant adjustments required to the historical financial
data of Weatherford or Enterra to conform the accounting policies of the two
companies. 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
$2,917,000 and $2,586,000 for the six-month periods ended June 30, 1995 and
1994, respectively, and $4,900,000, $4,934,000 and $4,784,000 for the years
ended December 31, 1994, 1993 and 1992, respectively, have been reclassified
from revenues to other (income) expense, net. In addition, with respect to
Weatherford, depreciation and amortization charges of $21,831,000 and
$16,712,000 for the six-month periods ended June 30, 1995 and 1994,
respectively, and $36,429,000, $28,607,000 and $17,880,000 for the years
ended December 31, 1994, 1993 and 1992, respectively, have been reclassified
from cost of sales and services, selling, general and administrative
expenses and other (income) expense, net, to depreciation and amortization.
4. The pro forma 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 (after giving effect to the
Reverse Stock Split) and Enterra for each period presented based upon the
conversion rate of 0.845 of a share (which reflects the Reverse Stock Split)
of Weatherford Common Stock for each share of Enterra Common Stock. Fully
diluted earnings per share are equal to primary earnings per share in all
periods presented.
5. To record certain estimated consolidation cost savings and operational
efficiencies, and the related tax effect, associated with the Merger,
primarily resulting from the combination of certain service locations and
the elimination of duplicate corporate functions.
6. To record certain estimated consolidation cost savings and operational
efficiencies, and the related tax effect, associated with the transactions
set forth in Enterra's June 29, 1995 contract to acquire Zapata Energy
Industries, primarily resulting from the combination of certain locations
and the elimination of duplicate corporate functions.
7. To record additional depreciation expense and amortization of goodwill
resulting from the allocation of the purchase price of Zapata Energy
Industries.
8. To record additional interest expense on debt to be incurred in connection
with the transactions set forth in Enterra's June 29, 1995 contract to
acquire Zapata Energy Industries.
9. To record the results of operations for Zapata Energy Industries for the
month of October 1993, a period prior to its purchase by Zapata.
10. To record the cost savings associated with the elimination of salaries,
benefits and related costs of the TOTAL corporate staff and other
administrative personnel.
11. To adjust depreciation expense and record amortization of goodwill resulting
from the allocation of the purchase price of Odfjell Rental by Weatherford.
71
<PAGE>
12. To record additional depreciation expense and amortization of goodwill
resulting from the allocation of the purchase price of TOTAL by Enterra.
13. To record interest expense on debt incurred by Weatherford in connection
with its acquisition of Odfjell Rental.
14. To record interest cost savings associated with the lower effective interest
rate on debt incurred by Enterra in connection with its acquisition of
TOTAL, which debt replaced TOTAL's existing debt.
15. To record income tax expense on Odfjell Rental operations and the effect of
the Odfjell Rental adjustments discussed in Notes 11 and 13 above.
16. To record income tax expense on the TOTAL operations and the effect of the
TOTAL adjustments discussed in Notes 10, 12 and 14 above.
17. To adjust weighted average shares outstanding as if the 11,300,000 shares of
Enterra Common Stock issued on August 12, 1994 in connection with the
acquisition of TOTAL had been issued on January 1, 1994 and to reflect the
conversion rate (after the Reverse Stock Split) of 0.845 of a share of
Weatherford Common Stock for each share of Enterra Common Stock to be issued
in the Merger.
72
<PAGE>
WEATHERFORD SELECTED FINANCIAL DATA
The Selected Financial Data should be read in conjunction with Weatherford's
Consolidated Financial Statements and the notes thereto, which are incorporated
by reference in this Joint Proxy Statement/ Prospectus. See "Incorporation of
Certain Documents by Reference".
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991(1) 1990
----------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND EMPLOYEES)
OPERATING RESULTS:
Revenues:
International....................... $ 102,625 $ 86,495 $ 186,445 $ 157,562 $ 140,239 $ 130,483 $ 116,455
United States....................... 96,462 93,902 185,869 175,521 82,725 94,606 101,268
----------- --------- --------- --------- --------- --------- ---------
Total............................. $ 199,087 $ 180,397 $ 372,314 $ 333,083 $ 222,964 $ 225,089 $ 217,723
----------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- ---------
Depreciation and amortization(2)...... $ 21,831 $ 16,712 $ 36,429 $ 28,607 $ 17,880 $ 20,781 $ 22,008
----------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- ---------
Operating income:
International....................... $ 18,152 $ 13,926 $ 28,157 $ 27,106 $ 24,481 $ 15,296 $ 9,325
United States....................... 11,423 9,907 17,243 9,857 (3,616) (6,904) 5,748
Corporate........................... (1,876) 577 (397) (3,633) (1,139) (7,721) (720)
----------- --------- --------- --------- --------- --------- ---------
Total............................. $ 27,699 $ 24,410 $ 45,003 $ 33,330 $ 19,726 $ 671 $ 14,353
----------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary
gain................................. $ 18,382 $ 16,903 $ 29,460 $ 21,990 $ 12,012 $ (7,983) $ 10,152
Extraordinary gain from debt
settlement........................... -- -- -- -- -- -- 2,826
----------- --------- --------- --------- --------- --------- ---------
Net income (loss)..................... $ 18,382 $ 16,903 $ 29,460 $ 21,990 $ 12,012 $ (7,983) $ 12,978
----------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- ---------
DATA PER COMMON SHARE:
Income (loss) before extraordinary
gain................................. $ 0.34 $ 0.31 $ 0.54 $ 0.42 $ 0.25 $ (0.23) $ 0.22
Extraordinary gain from debt
settlement........................... -- -- -- -- -- -- 0.08
----------- --------- --------- --------- --------- --------- ---------
Net income (loss)..................... $ 0.34 $ 0.31 $ 0.54 $ 0.42 $ 0.25 $ (0.23) $ 0.30
----------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- ---------
OTHER DATA:
Capital expenditures, excluding
acquisitions......................... $ 24,786 $ 16,094 $ 50,607 $ 23,875 $ 13,196 $ 24,726 $ 20,668
Number of employees................... 3,156 2,963 3,158 3,030 2,252 2,247 1,749
Weighted average shares outstanding... 54,527 54,320 54,484 49,735 42,374 41,889 39,306
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990
------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
-------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PERCENTAGES)
BALANCE SHEET DATA:
Working capital.................. $ 105,954 $ 89,939 $ 100,739 $ 80,848 $ 77,351 $ 87,375
Total assets..................... 459,831 453,963 354,798 219,568 224,597 226,549
Long-term debt (including current
portion)........................ 73,645 71,963 21,151 28,281 31,340 34,743
Stockholders' equity............. 304,548 282,200 246,819 139,625 136,115 144,635
Total debt-to-total
capitalization.................. 19 % 20% 8% 17% 19% 19%
<FN>
- ------------------------------
(1) Operating results for 1991 include nonrecurring operating expenses of
$4,544,000, $8,503,000 and $5,753,000 in the international, United States
and corporate segments, respectively, and an additional tax accrual of
$2,000,000 for a total of $20,800,000 of nonrecurring expenses, or $0.50
per common share.
(2) Does not include amortization of deferred loan costs, which are included in
interest expense, totaling $755,000 and $681,000 for the six months ended
June 30, 1995 and 1994, respectively, and $1,505,000 and $1,047,000 for the
years ended December 31, 1994 and 1993, respectively.
</TABLE>
73
<PAGE>
ENTERRA SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
Enterra's Consolidated Financial Statements and related notes thereto, which are
incorporated by reference in this Joint Proxy Statement/Prospectus. See
"Incorporation of Certain Documents by Reference".
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------------------------
1995(1) 1994(2) 1994(2) 1993 1992 1991 1990
----------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
OPERATING DATA
Revenues................................... $ 229,605 $ 92,128 $ 302,243 $ 165,057 $ 150,206 $ 171,143 $ 141,447
Operating income (loss).................... (13,409) 5,031 20,455 14,423 15,853 30,373 18,581
Income (loss) before income taxes and
minority interests........................ (16,795) 5,992 18,654 18,045 18,507 34,295 23,277
Net income (loss).......................... (7,088) 4,108 12,517 13,185 14,748 22,217 18,221
Net income (loss) per share................ (0.26) 0.25 0.60 0.81 0.92 1.40 1.21
OTHER DATA
Capital expenditures, excluding
acquisitions.............................. $ 27,615 $ 17,540 $ 63,411 $ 39,882 $ 25,063 $ 25,910 $ 14,772
Weighted average common shares
outstanding............................... 27,755 16,432 20,832 16,260 16,094 15,916 15,056
Cash dividends per common share............ -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990
------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
-------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital.................. $ 167,088 $ 161,839 $ 111,095 $ 116,678 $ 120,528 $ 102,581
Property, plant and equipment,
net............................. 235,012 247,143 118,917 98,275 84,290 71,808
Total assets..................... 677,892 700,007 280,804 254,922 246,105 213,867
Long-term debt................... 128,643 123,045 -- -- -- --
Stockholders' equity............. 443,457 452,434 227,653 209,833 197,887 172,053
<FN>
- ------------------------------
(1) Operating results for the six months ended June 30, 1995 include an unusual
charge of $28.3 million ($0.52 per share) related to a writedown of assets
and certain restructuring charges. See Note 4 of the Notes to Consolidated
Financial Statements contained in Enterra's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995, which are incorporated by reference in
this Joint Proxy Statement/Prospectus.
(2) Operating results for 1994 include the results of Total Energy Services
Company from August 12, 1994 (the date of its acquisition by Enterra) to
December 31, 1994. See Note 2 of the Notes to Enterra's Consolidated
Financial Statements, contained in Enterra's Annual Report on Form 10-K for
the year ended December 31, 1994, which are incorporated by reference in
this Joint Proxy Statement/Prospectus.
</TABLE>
74
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to the persons that are
expected to serve as directors (including the year of the annual meeting of the
stockholders of the Surviving Corporation at which such director's current term
expires) and executive officers of the Surviving Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH WEATHERFORD OR ENTERRA POSITION WITH SURVIVING CORPORATION
- -------------------------- --- --------------------------------------- ---------------------------------------
<S> <C> <C> <C>
Thomas N. Amonett......... 51 Director of Weatherford Director (term expires 1998)
Philip Burguieres......... 51 Chairman of the Board, President and Chairman of the Board, President and
Chief Executive Officer of Weatherford Chief Executive Officer (term expires
1996)
William E. Greehey........ 59 Director of Weatherford Director (term expires 1996)
John A. Hill.............. 53 Director of Enterra Director (term expires 1997)
John W. Johnson........... 50 Director of Weatherford Director (term expires 1997)
William E. Macaulay....... 49 Director of Enterra Director (term expires 1997)
Robert K. Moses, Jr....... 55 Director of Weatherford Director (term expires 1998)
Robert L. Parker, Sr...... 71 Director of Enterra Director (term expires 1998)
R. Rudolph Reinfrank...... 40 Director of Enterra Director (term expires 1998)
Roger M. Widmann.......... 55 Director of Enterra Director (term expires 1996)
James R. Burke............ 57 Senior Vice President; President -- Senior Vice President
Products Division of Weatherford
M. Timothy Carey.......... 51 President of Enterra's Oilfield Senior Vice President
Services and Equipment Group
M. E. Eagles.............. 55 Senior Vice President; President -- Senior Vice President
Services Division of Weatherford
Steven C. Grant........... 53 Senior Vice President -- Corporate Vice President
Development of Enterra
Jon Nicholson............. 52 Director of Human Resources of Vice President
Weatherford
Norman W. Nolen........... 52 Senior Vice President, Chief Financial Senior Vice President, Chief Financial
Officer and Treasurer of Weatherford Officer and Treasurer
H. Suzanne Thomas......... 41 Senior Vice President, Secretary and Senior Vice President, Secretary and
General Counsel of Weatherford General Counsel
</TABLE>
Mr. Amonett was first elected to the Weatherford Board of Directors in May
1974. Mr. Amonett has served as President of Reunion Resources Company
(previously called Buttes Gas and Oil Company), a Houston, Texas-based company
primarily engaged in oil and gas exploration, development and production and
wine grape vineyard development, since July 1992. Previously he was Of Counsel
with Fulbright & Jaworski L.L.P., Attorneys at Law, Houston, Texas, from
September 1986 to July 1992. Prior thereto, he was President and a director of
Houston Oil Fields Company, an oil and gas exploration and production company,
from November 1982 to September 1986. He served as Chairman of the Board of
Weatherford from May 1986 to May 1989. He also has served as a director of
PetroCorp, Inc., a Houston, Texas-based company engaged in the exploration and
production of oil and natural gas, since November 1993 and as a director of
Team, Inc., a Houston, Texas-based company engaged in environmental services,
since October 1994.
Mr. Burguieres was elected President and Chief Executive Officer of
Weatherford effective April 3, 1991, a director effective April 23, 1991, and
Chairman of the Board effective December 10, 1992. From January 1990 to November
1990, he was Chairman of the Board, President and Chief Executive Officer of
Panhandle Eastern Corporation, a company that operates interstate natural gas
75
<PAGE>
transmission systems. From January 1987 to November 1989, he was Chairman of the
Board, from January 1986 to November 1989, Chief Executive Officer, and from
April 1981 to November 1989, President and Chief Operating Officer, of Cameron
Iron Works, Inc., a Houston, Texas-based company engaged in the manufacture of
oilfield equipment. Mr. Burguieres is also a director of McDermott
International, Inc. and Texas Commerce Bancshares.
Mr. Greehey was first elected to the Weatherford Board of Directors in May
1984. Mr. Greehey is Chairman of the Board and Chief Executive Officer of Valero
Energy Corporation, a San Antonio, Texas-based company that refines, trades and
markets oil and gas and manages natural gas transmission operations. He also has
been a director of Santa Fe Energy Resources, Inc., a Houston, Texas-based
company engaged in oil and gas exploration and production, since March 1991.
Mr. Hill was appointed to the Enterra Board of Directors in August 1994. He
served as a director of TOTAL from June 1993 until its acquisition by Enterra.
Mr. Hill has been Chairman of the Board of First Reserve since 1983. Mr. Hill is
a trustee of the Putnam Funds and is a director of Snyder Oil Corporation,
Maverick Tube Corporation and PetroCorp, Inc., the last two being companies in
which certain of the First Reserve Funds have a substantial equity interest.
Mr. Johnson was appointed to the Weatherford Board of Directors in November
1991. Mr. Johnson is President and a director of Permian Mud Service, Inc., a
Houston, Texas-based company that manufactures and sells oilfield production
chemicals. He was a director of Petco from March 1971 to November 1991, when
Petco was acquired by merger with Weatherford. He has also served as Chairman of
the Board of Southwest Bank of Texas, N.A., a Houston, Texas-based banking
organization, since October 1982.
Mr. Macaulay was appointed a director and Vice Chairman of Enterra in August
1994. He served as a director of TOTAL from June 1993 until its acquisition by
Enterra. Mr. Macaulay has been President and Chief Executive Officer of First
Reserve since 1983. Mr. Macaulay is a director of Maverick Tube Corporation and
Hugoton Energy Corporation, each being a company in which certain of the First
Reserve Funds have a substantial equity interest.
Mr. Moses was first elected to the Weatherford Board of Directors in May
1978. Mr. Moses is a private investor, principally in the oil and gas
exploration and oilfield services business, in Houston, Texas. He served as
Chairman of the Board of Weatherford from May 1989 to December 1992.
Mr. Parker has served as Chairman of Parker Drilling Company, which provides
contract drilling services worldwide to the oil and natural gas industry, since
1977. From 1977 to December 1991, he also served as Chief Executive Officer of
that company. He was first elected a director of Enterra in 1980. Mr. Parker is
also a director of Bank of Oklahoma Finance Corporation, Tulsa, N.A., MAPCO,
INC. and Clayton Williams Energy, Inc.
Mr. Reinfrank has been Managing Director of the Davis Companies and a
Managing General Partner of Davis Reinfrank Company, private investment firms,
since May 1993. From January 1988 through June 1993, Mr. Reinfrank was Executive
Vice President of Shamrock Holdings, Inc. From January 1990 through December
1992, Mr. Reinfrank also served as Managing Director of Trefoil Investors, Inc.
and Shamrock Capital Advisors, Inc. Mr. Reinfrank was appointed a director of
Enterra in September 1992. He previously served as a director of Enterra from
1987 through 1991. Mr. Reinfrank is also a director of Parker Drilling Company.
Mr. Widmann was appointed a director of Enterra in August 1994. He served as
a director of TOTAL from September 1993 until its acquisition by Enterra. Mr.
Widmann has held various positions with Chemical Bank since 1986 and is
currently Senior Managing Director of Corporate Finance for Chemical Securities
Inc. Mr. Widmann is a director of Lydall, Inc. and a member of the Board of
Advisors of various First Reserve funds.
Mr. Burke was elected Senior Vice President, Corporate Development and
Marketing of Weatherford effective December 12, 1991 and became President and
General Manager of the Weatherford
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Products Division effective March 1, 1994. From December 1989 to December 1991,
he was an independent management consultant. From June 1983 to December 1989, he
was Vice President of Corporate Development, and from 1976 to 1983, he was
General Manager of a manufacturing operation, of Cameron Iron Works, Inc.
Mr. Carey has been President of Enterra's oilfield services and equipment
group since February 1992. From March 1991 to February 1992 he served as
President and Chief Operating Officer of CRC-Evans. From April 1987 through
February 1991, he served as Executive Vice President of that company and its
predecessor.
Mr. Eagles, who joined Weatherford on March 1, 1993 as Executive Vice
President and President and General Manager of the Weatherford Rental and
Fishing Tool Division, became Senior Vice President of Weatherford and President
and General Manager of the Weatherford Services Division effective March 1,
1994. From June 1992 until March 1993, Mr. Eagles served as Senior Vice
President of McDermott Inc., a marine engineering construction company, and
President of McDermott Energy Services Inc., and, from November 1990 until June
1992, he served as Vice President of Marketing of McDermott Inc. Prior thereto,
Mr. Eagles was employed by Cameron Iron Works, Inc. for over 30 years and served
as Vice President of Sales and Marketing from October 1981 until November 1990.
Mr. Grant joined Enterra as its Senior Vice President -- Finance and Chief
Financial Officer in January 1988 and became Senior Vice President -- Corporate
Development in March 1991.
Mr. Nicholson joined Weatherford as its Director of Human Resources in
February 1993. From March 1992 until January 1993, he was a human resources
consultant. From July 1990 until March 1992, Mr. Nicholson served as President
of Atlas Bradford Corporation, an oilfield services company, and from December
1988 until June 1990, he served as Vice President of Human Resources of Baroid
Corporation, an oil services company.
Mr. Nolen was elected Senior Vice President, Chief Financial Officer and
Treasurer of Weatherford effective April 29, 1991. From March 1990 to April
1991, he was Vice President and Chief Financial Officer of Petro Source
Corporation, an oil gathering and marketing company. From October 1980 to
February 1990, he was Corporate Treasurer of Cameron Iron Works, Inc.
Ms. Thomas, who joined Weatherford in January 1982 as Counsel, was elected
Secretary in March 1986, Vice President and General Counsel in July 1987 and
Senior Vice President in December 1989. Ms. Thomas assumed responsibilities for
Human Resources, effective January 1, 1992. Prior to joining Weatherford, Ms.
Thomas was an attorney with the law firm of Baker & Botts from September 1978 to
December 1981.
The Surviving Corporation's Audit Committee will consist of Messrs. Amonett
(Chairman), Hill and Reinfrank, the Compensation and Stock Plans Committee will
consist of Messrs. Greehey (Chairman), Moses and Widmann and the Executive and
Nominating Committee will consist of Messrs. Macaulay (Co-Chairman), Moses
(Co-Chairman), Burguieres, Johnson and Parker.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
WEATHERFORD. The following table sets forth certain information with
respect to Weatherford Common Stock beneficially owned as of the Record Date
(except as otherwise noted) by (i) persons who are known to Weatherford to be
the beneficial owners of 5% or more of Weatherford Common Stock, (ii) each of
the five highest paid executive officers of Weatherford during 1995, (iii) each
director of Weatherford, and (iv) all Weatherford officers and directors as a
group, including pro forma information for such persons assuming that the Merger
had been consummated at such date. For purposes of this Joint Proxy
Statement/Prospectus, beneficial ownership is defined in accordance with the
rules of the Commission to mean generally the power to vote or dispose of
shares, regardless of any
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<PAGE>
economic interest therein. The persons listed have sole voting power and sole
dispositive power with respect to all shares set forth in the table unless
otherwise specified in the footnotes to the table. The table does not reflect
the Reverse Stock Split.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OWNED
DIRECTLY OR PERCENT OF FOLLOWING THE
NAME AND ADDRESS INDIRECTLY(1)(2) CLASS MERGER
- ------------------------------------------------------------ -------------- ------------ ------------------
<S> <C> <C> <C>
FMR Corp. and Edward C. Johnson 3d (3) ..................... 5,237,133 9.6% 9.95%(4)
82 Devonshire Street
Boston, MA 02109
Jurika & Voyles, Inc. (5) .................................. 3,703,706 6.8% 3.7%
1999 Harrison Street, Suite 700
Oakland, CA 94612
Thomas N. Amonett (6) ...................................... 24,151 * *
Thomas C. Brown (6) ........................................ 22,576 * *
Philip Burguieres (7) ...................................... 436,528 * *
J. Kelly Elliott ........................................... 6,660 * *
William E. Greehey (6) ..................................... 40,176 * *
John W. Johnson (6)(8) ..................................... 161,343 * *
Robert K. Moses, Jr. (6)(9) ................................ 897,741 1.7% *
W. Randolph Smith (6)(10) .................................. 113,330 * *
James R. Burke (11) ........................................ 70,421 * *
M.E. Eagles (12) ........................................... 51,793 * *
Norman W. Nolen (13) ....................................... 68,911 * *
H. Suzanne Thomas (14) ..................................... 106,775 * *
All directors and executive officers as a group (12 in
number) ................................................... 2,000,406 3.7% 2.0%
<FN>
- ------------------------
* Denotes ownership of less than one percent.
(1) Information with respect to beneficial ownership is based upon information
furnished by each stockholder or contained in filings made with the
Commission.
(2) Includes shares held under Weatherford's Employee Stock Purchase Plan in
the accounts of participants, as to which shares such participants have
sole voting power and no dispositive power prior to withdrawal of such
shares from such plan. Shares may be withdrawn from such plan by a
participant on March 31 of each year upon written notice by such
participant. Also includes shares held under Weatherford's 401(k) Savings
Plan in the accounts of participants, as to which shares such participants
have sole voting and dispositive power. Also includes shares subject to
acquisition within 60 days of the Record Date by such person or group.
(3) Based upon information contained in Amendment No. 4 to a joint Schedule 13G
dated February 13, 1995, filed with the Commission by Edward C. Johnson 3d
and FMR Corp., on behalf of itself and its subsidiaries, Fidelity
Management & Research Company (beneficial owner of 3,617,800 shares of
Weatherford Common Stock), Fidelity American Special Situations Trust
(beneficial owner of 46,000 shares of Weatherford Common Stock), Fidelity
Management Trust Company (beneficial owner of 1,619,333 shares of
Weatherford Common Stock) and Fidelity International Limited (beneficial
owner of 46,000 shares of Weatherford Common Stock). FMR Corp. and Mr.
Johnson each has sole dispositive power with respect to 5,237,133 shares.
FMR Corp. has sole voting power with respect to 1,603,733 shares, and Mr.
Johnson has sole voting power with respect to none of the shares.
(4) This percentage also reflects the shares of Weatherford Common Stock to be
received in the Merger by the indicated stockholder as a result of the
conversion of Enterra Common Stock currently held by such stockholder.
</TABLE>
78
<PAGE>
<TABLE>
<S> <C>
(5) Based upon information contained in a Schedule 13G dated February 27, 1995,
filed with the Commission. Jurika & Voyles, Inc. has shared dispositive
power with respect to 3,703,706 shares and shared voting power with respect
to 3,553,606 shares.
(6) Includes 5,000 shares subject to acquisition by the director within 60 days
of the Record Date pursuant to Weatherford's Non-Employee Director Stock
Option Plan.
(7) Includes (a) 2,000 shares held by Mr. Burguieres' wife, with respect to
which he has no voting or dispositive power, (b) 1,000 shares held by Mr.
Burguieres as custodian for his minor child, with respect to which he has
sole voting and dispositive power, and (c) 1,000 shares held by Mr.
Burguieres' adult child, with respect to which he has no voting or
dispositive power; Mr. Burguieres disclaims beneficial ownership of all
such shares. Also includes (a) 60,500 shares granted to Mr. Burguieres
pursuant to the Restricted Plan with respect to which he has sole voting
power and no dispositive power, and (b) 180,000 shares subject to
acquisition by Mr. Burguieres within 60 days pursuant to the 1991 Option
Plan.
(8) Does not include 2,305,755 shares owned by Permian Mud Service, Inc.
("Permian") as of the Record Date. Mr. Johnson is a director, officer and
substantial beneficial shareholder of Permian and therefore may be deemed
to be a beneficial owner of the shares of the Common Stock held by Permian;
Mr. Johnson disclaims beneficial ownership of all such shares. Includes (a)
12,000 shares held by Mr. Johnson as a trustee of various trusts for his
children, with respect to which he has sole voting and dispositive power,
and (b) 240 shares held as custodian for Mr. Johnson's children, with
respect to which he has sole voting and dispositive power; Mr. Johnson
disclaims beneficial ownership of all such shares.
(9) Includes (a) 1,250 shares held by Mr. Moses' adult son supported by him,
with respect to which Mr. Moses has no voting or dispositive power, and (b)
an aggregate of 90,000 shares held in various trusts for Mr. Moses'
children, his brother and his sister, of which Mr. Moses is the trustee,
with respect to which Mr. Moses has sole voting and dispositive power; Mr.
Moses disclaims beneficial ownership of all such shares. Does not include
(a) an aggregate of 105,000 shares held in various trusts for Mr. Moses'
children, of which shares Mr. Smith, a director of Weatherford, has shared
voting and dispositive power as a co-trustee, and (b) 3,703 shares in trust
for Mr. Moses' adult son, of which shares Mr. Moses' ex-wife is trustee and
with respect to which Mr. Moses has no voting or dispositive power; since
Mr. Moses is not a trustee of such trusts and has no voting or dispositive
power, he disclaims beneficial ownership of all such shares.
(10) Includes 105,000 shares held by Mr. Smith as co-trustee of various trusts
for the children of Mr. Moses, a director of Weatherford, with respect to
which Mr. Smith has shared voting and dispositive power; since Mr. Smith
has no relationship to the beneficiaries of the trusts by blood or
marriage, he disclaims beneficial ownership of all such shares.
(11) Includes (a) 17,326 shares granted to Mr. Burke pursuant to the Restricted
Plan with respect to which he has sole voting power and no dispositive
power, and (b) 25,000 shares subject to acquisition by Mr. Burke within 60
days pursuant to the 1991 Option Plan.
(12) Includes (a) 20,850 shares granted to Mr. Eagles pursuant to the Restricted
Plan with respect to which he has sole voting power and no dispositive
power, and (b) 16,666 shares subject to acquisition by Mr. Eagles within 60
days pursuant to the 1991 Option Plan.
(13) Includes (a) 13,326 shares granted to Mr. Nolen pursuant to the Restricted
Plan with respect to which he has sole voting power and no dispositive
power, and (b) 31,833 shares subject to acquisition by Mr. Nolen within 60
days pursuant to Weatherford's 1987 Stock Option Plan (the "1987 Option
Plan") and 1991 Option Plan.
(14) Includes (a) 13,326 shares granted to Ms. Thomas pursuant to the Restricted
Plan with respect to which she has sole voting power and no dispositive
power, and (b) 32,333 shares subject to acquisition by Ms. Thomas within 60
days pursuant to the 1987 Option Plan and 1991 Option Plan.
</TABLE>
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<PAGE>
ENTERRA. The following table sets forth certain information with respect to
Enterra Common Stock beneficially owned as of the Record Date (except as
otherwise noted) by (i) persons who are known to Enterra to be the beneficial
owners of 5% or more of Enterra Common Stock, (ii) each of the five highest paid
executive officers of Enterra, (iii) each director of Enterra, and (iv) all
Enterra officers and directors as a group, including pro forma information for
such persons assuming that the Merger had been consummated at such date. The
persons listed have sole voting power and sole dispositive power with respect to
all shares set forth in the table unless otherwise specified in the footnotes to
the table.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OWNED
DIRECTLY OR PERCENT OF FOLLOWING THE
NAME AND ADDRESS INDIRECTLY(1)(2) CLASS MERGER(3)
- -------------------------------------------------- -------------- ------------ -------------------
<S> <C> <C> <C>
First Reserve Corporation (4) .................... 11,212,349 40.3% 18.7%
475 Steamboat Road
Greenwich, CT 06830
FMR Corp. (5) .................................... 2,872,300 10.3% 9.95%(6)
82 Devonshire Street
Boston, MA 02109
James M. Ballengee (7) ........................... 43,332 * *
M. Timothy Carey (8) ............................. 35,235 * *
Lee Daniel ....................................... 37,950 * *
Thomas J. Edelman ................................ 10,000 * *
C. Paul Evans .................................... 21,632 * *
Steven C. Grant .................................. 16,069 * *
John A. Hill (9) ................................. 11,212,349 40.3% 18.7%
Steven W. Krablin ................................ 19,657 * *
William E. Macaulay (9) .......................... 11,212,349 40.3% 18.7%
Robert L. Parker, Sr. ............................ 65,934 * *
R. Rudolph Reinfrank ............................. 15,000 * *
Roger M. Widmann ................................. 10,000 * *
D. Dale Wood ..................................... 179,866 * *
All directors and officers as a group (14 persons)
(10) ............................................ 11,673,936 41.5% 19.4%
<FN>
- ------------------------
* Denotes ownership of less than one percent.
(1) On the Record Date there were 27,822,950 shares of Enterra Common Stock
outstanding. Shares not outstanding but beneficially owned by a given
person are deemed outstanding for purposes of computing the percentage of
Enterra Common Stock owned by such person, but not for purposes of
computing the percentage owned by any other person.
(2) This column includes shares subject to options granted pursuant to the
Enterra Corporation Stock Option Plan for Non-Employee Directors (the
"Non-Employee Directors Plan") and the Enterra Corporation Stock Option
Plan (the "Stock Option Plan") which are exercisable within 60 days of the
Record Date. Under the Non-Employee Directors Plan, Messrs. Edelman and
Widmann each hold unexercised options to purchase 10,000 of such shares,
Messrs. Ballengee, Daniel and Parker each hold unexercised options to
purchase 17,500 of such shares, and Mr. Reinfrank holds unexercised options
to purchase 15,000 of such shares. Under the Stock Option Plan, Mr. Carey
holds exercisable options to purchase 25,000 of such shares, Mr. Evans
</TABLE>
80
<PAGE>
<TABLE>
<S> <C>
holds exercisable options to purchase 16,667 of such shares, Mr. Grant
holds exercisable options to purchase 13,532 of such shares, Mr. Krablin
holds exercisable options to purchase 16,682 of such shares and Mr. Wood
holds exercisable options to purchase 178,533 of such shares.
(3) Represents the indicated stockholder's percentage ownership Weatherford
Common Stock to be outstanding following the Merger.
(4) As reflected in Amendment No. 1 to Schedule 13D filed with the Commission
on June 30, 1995. Represents shares owned by the following First Reserve
Funds: American Gas & Oil Investors, Limited Partnership -- 1,993,529; AmGO
II, Limited Partnership -- 1,233,907; AmGO III, Limited Partnership --
597,408; First Reserve Secured Energy Assets Fund, Limited Partnership --
2,323,562; First Reserve Fund V, Limited Partnership -- 3,355,254; First
Reserve Fund V-2, Limited Partnership -- 838,427; and First Reserve Fund
VI, Limited Partnership -- 870,262. First Reserve is the general partner of
each of such First Reserve Funds. First Reserve, in its role as managing
general partner of the First Reserve Funds and acting on behalf of the
First Reserve Funds, has the power to cause each First Reserve Fund to
dispose of or vote shares of Enterra Common Stock held by it. The principal
beneficial owners of the common stock of First Reserve are its executive
officers, including Messrs. Macaulay and Hill.
(5) As reflected in Amendment No. 4 to Schedule 13G filed with the Commission
on February 13, 1995. These shares are beneficially owned as of December
31, 1994 by FMR Corp., a parent holding company of various investment
adviser companies. Of these, Fidelity Management and Research Company, a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of 2,572,900
shares of Enterra Common Stock outstanding as a result of acting as
investment adviser to several investment companies registered under Section
8 of the Investment Company Act of 1940.
(6) Also includes shares of Weatherford Common Stock held by the indicated
stockholder prior to the Merger.
(7) This figure also includes 242 shares that are owned of record by Mr.
Ballengee's wife, of which beneficial ownership is disclaimed.
(8) Includes five shares that are owned of record by Mr. Carey's son, of which
beneficial ownership is disclaimed.
(9) This figure equals all shares beneficially owned by First Reserve of which
Mr. Hill is Chairman and Mr. Macaulay is President and Chief Executive
Officer. Both Messrs. Hill and Macaulay disclaim beneficial ownership as to
all such shares.
(10) Includes an aggregate of 337,914 shares subject to stock options under the
Stock Option Plan and the Non-Employee Directors Plan, 14,495 shares held
by participants in the 401(k) Plan and 6,912 shares held by participants in
the Enterra Compression Company and Affiliated Companies Retirement and
Savings Plan.
</TABLE>
81
<PAGE>
PROPOSAL TO AMEND WEATHERFORD'S RESTATED CERTIFICATE OF INCORPORATION
On August 28, 1995, the Weatherford Board of Directors approved and adopted
the amendment of Weatherford's Restated Certificate of Incorporation to effect
the Reverse Stock Split and the Name Change. At the Weatherford Special Meeting,
Weatherford's stockholders are being asked to approve and adopt such amendment.
REASONS FOR THE REVERSE STOCK SPLIT. Upon consummation of the Merger
without giving effect to the Reverse Stock Split, there would be 101.4 million
shares of Weatherford Common Stock outstanding. The Board of Directors believes,
based on the advice of Merrill Lynch, that the existing per share market price
of the Weatherford Common Stock may impair the acceptability of the Weatherford
Common Stock to certain institutional investors and other members of the
investing public, and that the Weatherford Common Stock would be more attractive
to such investors if the per share market price were higher. Theoretically, the
number of shares outstanding should not, by itself, affect the marketability of
the Weatherford Common Stock, the type of investor who acquires it or
Weatherford's reputation in the financial community. In practice, this is not
necessarily the case.
The Weatherford Board of Directors believes that the decrease in the number
of shares of Weatherford Common Stock outstanding as a consequence of the
Reverse Stock Split and the resulting anticipated increased per share market
price should encourage greater interest in the Weatherford Common Stock by the
financial community and the investing public and possibly promote greater
liquidity for Weatherford's stockholders. Weatherford's earnings per share will
increase proportionately as a result of the Reverse Stock Split.
EFFECTS OF REVERSE STOCK SPLIT. If the Reverse Stock Split is approved by
the stockholders of Weatherford, the result would be that each two shares of
Weatherford Common Stock held at the Effective Time will be converted into one
share of new Weatherford Common Stock.
Weatherford currently has 80 million shares of Weatherford Common Stock
authorized. The Reverse Stock Split will not affect such number of authorized
shares.
Each of Weatherford's employee and director stock-based benefit plans
provides that adjustments will be made in the number, class and per share price
of shares of Weatherford Common Stock issuable under such plan in the event of a
capital readjustment or other increase or reduction in the number of shares of
Weatherford Common Stock outstanding that is effected without receipt of
compensation by Weatherford.
TAX EFFECT OF REVERSE STOCK SPLIT. No gain or loss will be recognized by a
holder of Weatherford Common Stock who receives only shares of new Weatherford
Common Stock as a result of the Reverse Stock Split. A cash payment received by
a holder of Weatherford Common Stock in lieu of a fraction of a share of new
Weatherford Common Stock will be treated as if a fraction of a share of new
Weatherford Common Stock had been received by such holder as a result of the
Reverse Stock Split and then redeemed by Weatherford. Accordingly, such holder
may be treated for U.S. Federal income tax purposes as having received a
distribution with respect to the stock owned by such holder taxable as a
dividend under Section 301 of the Code to the extent of Weatherford's current or
accumulated earnings and profits. The receipt of the cash payment will not be
treated as a sale or exchange of the fraction of a share of new Weatherford
Common Stock unless the holder's interest in Weatherford Common Stock is
completely terminated by such transaction or unless (i) the ratio of the voting
stock owned by the holder (including stock attributed to the holder under
Section 302(c) of the Code) immediately after the Reverse Stock Split to all the
voting stock of Weatherford is less than 80% of the same ratio for the voting
stock owned by the holder immediately before the Reverse Stock Split and (ii)
the holder owns less than 50% of the voting stock of Weatherford. If the
holder's interest in Weatherford is not completely terminated or the tests
described in (i) and (ii) of the preceding sentence are not satisfied, the
transaction will still be treated for U.S. Federal income tax purposes as a sale
or exchange rather than a dividend if it is "not essentially equivalent to a
dividend"; for example, where a holder's interest in Weatherford is minimal (an
interest of less than 1% should satisfy this requirement), the holder exercises
no control over Weatherford and the holder's interest in Weatherford Common
Stock is actually reduced as a result of the Reverse Stock Split. In determining
whether
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<PAGE>
a holder's interest in Weatherford Common Stock has been reduced or completely
terminated, the holder is deemed, under the constructive ownership rules of
Section 302(c) of the Code, to own any shares in Weatherford Common Stock owned
by certain related persons and entities. If the receipt of the cash payment is
treated as a distribution taxable as a dividend, then the holder's tax basis in
the redeemed fraction of a share of new Weatherford Common Stock will be
transferred to any remaining Weatherford Common Stock held by such holder. If
the holder does not retain any Weatherford Common Stock, then he or she may lose
such basis entirely.
If a receipt of cash in lieu of a fraction of a share of new Weatherford
Common Stock qualifies as a sale or exchange for U.S. Federal income tax
purposes, the redeemed holder will recognize taxable gain or loss equal to the
difference between the amount of cash received by such holder from Weatherford
and the holder's tax basis in such fraction of a share. Such gain or loss will
be capital gain or loss, provided that the holder has held such stock as a
capital asset.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL
INFORMATION ONLY. EACH WEATHERFORD STOCKHOLDER SHOULD CONSULT A TAX ADVISOR AS
TO THE PARTICULAR CONSEQUENCES OF THE REVERSE STOCK SPLIT THAT MAY APPLY TO SUCH
STOCKHOLDER, INCLUDING THE APPLICATION OF THE STATE INHERITANCE AND GIFT TAX
LAWS AND OF STATE, LOCAL AND FOREIGN TAX LAWS.
EXCHANGE OF CERTIFICATES. As soon as practicable following the Effective
Time, Weatherford will cause American Stock Transfer & Trust Company, which will
act as Exchange Agent, to mail to each record holder of Weatherford Common Stock
immediately prior to the Effective Time, a letter of transmittal and other
information advising such holder of the effectiveness of the Reverse Stock Split
and for use in exchanging old Weatherford Common Stock certificates for
certificates representing shares of new Weatherford Common Stock and cash in
lieu of a fraction of a share. Letters of transmittal also will be available
following the Effective Time at the offices of the Exchange Agent. SHARE
CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE BY STOCKHOLDERS OF
WEATHERFORD PRIOR TO APPROVAL OF THE REVERSE STOCK SPLIT AND THE RECEIPT OF A
LETTER OF TRANSMITTAL.
No certificate for a fraction of a share of Weatherford Common Stock will be
issued in the Reverse Stock Split. Each stockholder of Weatherford otherwise
entitled to a fraction of a share will, upon surrender of Weatherford Common
Stock certificates held by such holder, be paid an amount in cash equal to the
value of such fraction of a share based upon the closing price of Weatherford
Common Stock on the NYSE on the last trading day prior to the Effective Time. No
interest will be paid on such amount and all shares of Weatherford Common Stock
held by a record holder will be aggregated for purposes of computing the number
of shares of new Weatherford Common Stock subject to the Reverse Stock Split.
REASONS FOR THE NAME CHANGE. Weatherford and Enterra have agreed that
Weatherford's name would be changed to "Weatherford Enterra, Inc." at the
Effective Time. Managements of both companies believe that the Surviving
Corporation would benefit from the immediate name recognition of both companies
in the markets in which they do business.
VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL. The Weatherford Board of
Directors has approved and adopted the proposed amendments to Weatherford's
Restated Certificate of Incorporation. However, the proposed amendment will not
be implemented unless the holders of a majority of the shares of Weatherford
Common Stock present in person or represented by proxy and entitled to vote at
the Weatherford Special Meeting vote "for" the approval and adoption of the
amendments to Weatherford's Restated Certificate of Incorporation. None of the
Merger, the Merger Agreement, the Reverse Stock Split and the Name Change will
be effected unless all such matters are approved and adopted by the stockholders
of Weatherford and the Merger and the Merger Agreement are approved and adopted
by the stockholders of Enterra. The amendment to the 1991 Option Plan will not
be effected unless the Merger, the Merger Agreement, the Reverse Stock Split and
the Name Change are approved and adopted by the stockholders of Weatherford and
the Merger and the Merger Agreement are approved and adopted by the stockholders
of Enterra. The amendment to the Restricted Plan will
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<PAGE>
be effected regardless of whether any of the other proposals are approved and
adopted by the stockholders of Weatherford. The Merger, the Merger Agreement,
the Reverse Stock Split and the Name Change will be effected regardless of
whether either or both of the amendments to the 1991 Option Plan and the
Restricted Plan are approved and adopted by the stockholders of Weatherford.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE PROPOSED AMENDMENTS TO WEATHERFORD'S RESTATED CERTIFICATE OF
INCORPORATION.
PROPOSAL TO AMEND WEATHERFORD'S 1991 STOCK OPTION PLAN
On August 28, 1995, the Weatherford Board of Directors approved and adopted
the amendment of the 1991 Option Plan that will make an additional 3,000,000
shares of Weatherford Common Stock (before giving effect to the Reverse Stock
Split) available for issuance upon the exercise of options granted under the
1991 Option Plan. Weatherford's stockholders are being asked to approve and
adopt such amendment.
As of the Record Date, approximately 2,575,000 shares of Weatherford Common
Stock (before giving effect to the Reverse Stock Split) would have been required
to satisfy unexercised Enterra Options. The purpose of this amendment is to
provide sufficient available shares to satisfy unexercised Enterra Options that
are replaced by substitute options, and to provide additional shares for future
option grants, under the 1991 Option Plan. The shares underlying each such
substitute option will be registered under the Securities Act even if the
proposed amendment to the 1991 Option Plan is not approved by the stockholders
of Weatherford. See "Terms of the Merger -- Enterra Options".
The 1991 Option Plan has been approved previously by the stockholders of
Weatherford. The following summary of the major provisions of the 1991 Option
Plan, including the amendment thereto approved by the Weatherford Board of
Directors and proposed herein, is necessarily incomplete and is, therefore,
qualified in its entirety by reference to the detailed provisions of the 1991
Option Plan.
ADMINISTRATION. The 1991 Option Plan is administered by the Compensation
and Stock Plans Committee of the Weatherford Board of Directors (the
"Committee"). The Committee has the authority to determine which eligible
employees of Weatherford shall receive options under the 1991 Option Plan, the
times at which the options are to be granted, whether such options shall
constitute incentive stock options ("Incentive Options"), as described in
Section 421A of the Code, or options not intended to qualify as Incentive
Options ("Nonqualified Options"), the number of shares covered by the option in
each case, the duration of the options, when the options may be exercised and
other terms and conditions applicable to each option granted under the 1991
Option Plan.
SHARES SUBJECT TO OPTION. As of the Record Date, a total of 970,128 shares
were subject to options granted under the 1991 Option Plan and 627,789 shares
were available for future option grants under the 1991 Option Plan. Weatherford
Common Stock issued upon the exercise of options granted under the 1991 Option
Plan may consist of authorized but unissued shares or shares reacquired by
Weatherford and held as treasury stock. If an option under the 1991 Option Plan
expires or terminates before it has been exercised in full, the shares of
Weatherford Common Stock allocable to the unexercised portion of such option may
again be subject to the granting of options under the 1991 Option Plan. The
number of shares available for the granting of options and subject to issuance
upon the exercise of any outstanding options, and option prices, as herein
described, are to be adjusted in the event of any subdivision or consolidation
of shares or other capital readjustment, payment of a stock dividend, merger,
consolidation or similar transaction affecting the Weatherford Common Stock.
ELIGIBILITY. Subject to selection by the Committee, any executive officer
or other key employee (including an officer who may be a member of the
Weatherford Board of Directors) of Weatherford, or of any subsidiary
corporation, is eligible to be granted one or more Incentive Options under the
1991 Option Plan. Subject to selection by the Committee, any executive officer
or other key employee (including an officer who may be a member of the
Weatherford Board of Directors) of Weatherford or any parent or subsidiary
corporation, and any other person who provides services to Weatherford and
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such related corporations, is eligible to be granted one or more Nonqualified
Options. As of the Record Date, approximately 100 employees and officers of
Weatherford and its subsidiary and affiliated corporations were eligible to
participate in the 1991 Option Plan.
OPTION PRICE. The exercise price of each option must be equal to or greater
than 100% of the fair market value of the Weatherford Common Stock on the date
such option is granted. In the case of an Incentive Option granted under the
1991 Option Plan to an employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of Weatherford, the option
price per share may not be less than 110% of the fair market value of a share of
Weatherford Common Stock on the date the option is granted. A holder of an
option granted under the 1991 Option Plan may exercise his or her option by
paying the option exercise price (i) in cash, (ii) subject to certain
conditions, in whole or in part by delivery of shares of Weatherford Common
Stock previously acquired by such holder or (iii) subject to the provisions of
Rule 16b-3 promulgated under the Exchange Act, by delivery of irrevocable
instructions to a broker to promptly deliver to Weatherford the option exercise
price, either from loan proceeds or sale of shares proceeds.
DURATION OF OPTIONS. Options may be made exercisable during any specified
period of time from the date such option is granted, but in no event shall the
exercise period of an option exceed ten years. In the case of any employee of
Weatherford who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of Weatherford, the option period for any
Incentive Option may not exceed five years.
MAXIMUM GRANT. The maximum aggregate number of shares for which any one
individual may be granted an option under the 1991 Option Plan during any
12-month period is 200,000 shares.
MAXIMUM VALUE OF STOCK SUBJECT TO INCENTIVE OPTIONS. To the extent the
aggregate fair market value of Incentive Options measured as of the date of
grant exceeds $100,000 in the year in which the options are first exercisable,
the excess may not be considered Incentive Options.
TRANSFERABILITY. Options granted under the 1991 Option Plan will be
transferable only by will or under the laws of descent and distribution.
EXERCISE OF OPTIONS. Options shall become exercisable from time to time, in
whole or in part, beginning one year after the date of grant. Except as provided
otherwise herein, an option is exercisable by the optionee only while the
individual continues the employment relationship or other affiliation with
Weatherford. If an optionee retires under the then established rules of
Weatherford, if he or she terminates employment by reason of disability, or if
his or her employment terminates by reason of a change of control (as described
below), his or her then outstanding vested options shall be exercisable for a
period ending on the earlier of the expiration date of the options and three
months following his or her termination. In the event of the death of an
optionee before the date of expiration of such option, such option will
terminate on the earlier of such date of expiration and one year following the
date of death. If an optionee's employment is terminated for reasons other than
retirement, disability, change of control or death, and provided such
termination did not occur because of his or her dishonesty or competition, his
or her then outstanding vested options shall be exercisable for a period ending
on the earlier of the expiration date of such options and 30 days following his
or her termination.
CHANGE OF CONTROL. The 1991 Option Plan provides that if there is a
fundamental corporate change, an optionee has the right to (i) surrender all
outstanding options, whether or not then exercisable, for a cash payment equal
to the amount by which the option price for shares covered by the option is
exceeded by the then fair market value of such shares, or, if applicable, the
price for such shares offered to stockholders of Weatherford in connection with
any such fundamental corporate change, unless to do so would cause a transaction
otherwise eligible for "pooling of interests" accounting treatment under
Accounting Principles Board Opinion No. 16 to be ineligible for such treatment,
in which the case the optionee would receive shares of Weatherford Common Stock
equal in value to the cash payment he or she would have received, or (ii)
exercise all outstanding options, which would automatically vest, for a period
ending on the earlier of the expiration date of the options and
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three months after the date of his or her termination of employment. The 1991
Option Plan includes as a fundamental corporate change (i) a change of control,
defined as a third person becoming the beneficial owner of 20% or more of the
voting securities of Weatherford, without the consent of the Weatherford Board
of Directors, or a situation where, as a result of a contested election for
directors, the persons who were directors of Weatherford before the election
cease to constitute a majority of the Weatherford Board of Directors; (ii) any
merger or consolidation of Weatherford in which Weatherford is not the surviving
corporation; (iii) the dissolution of Weatherford; or (iv) the sale of all or
substantially all of Weatherford's assets to any other person or entity. The
acceleration of vesting or the use of Weatherford funds for payment of cash to
option holders upon the occurrence of a fundamental corporate change may be seen
as an anti-takeover provision and may have the effect of discouraging such
fundamental corporate changes.
AMENDMENTS. The Weatherford Board of Directors has the power to modify,
revise or terminate the 1991 Option Plan. However, unless it shall have obtained
the approval of the stockholders of Weatherford, the Weatherford Board of
Directors may not (i) materially increase the benefits accruing to persons
holding options granted under the 1991 Option Plan; (ii) change the aggregate
number of shares of Weatherford Common Stock issuable upon the exercise of
options granted under the 1991 Option Plan; (iii) reduce the per share exercise
price of any option to an amount less than the fair market value per share at
the time the option is granted; or (iv) change the class of employees eligible
to receive options. The Weatherford Board of Directors also will have the power
to make such changes in the 1991 Option Plan or in any outstanding Incentive
Option granted under the 1991 Option Plan to qualify as an incentive stock
option or other stock option that will receive preferential Federal income tax
treatment.
NEW PLAN BENEFITS. The benefits received by or amounts allocable to
optionees under the 1991 Option Plan as a result of the proposed amendment to
increase the number of shares available under the 1991 Option Plan are not
determinable.
VALUATION. The fair market value of the Weatherford Common Stock was $12.75
per share on August 28, 1995.
EFFECTIVE DATE AND DURATION. The 1991 Option Plan became effective as of
March 19, 1991, and no option will be granted under this plan after March 18,
2001.
TAX CONSEQUENCES. The grant of Incentive Options under the 1991 Option Plan
will not result in income tax consequences to either Weatherford or the
optionee. Persons exercising Incentive Options granted under the 1991 Option
Plan generally will not realize ordinary income in the year in which the
Incentive Option is exercised, although the exercise will result in an
adjustment for calculating the alternative minimum taxable income and may
require the payment of an alternative minimum tax. Such persons generally are
expected to realize income in the year in which the shares purchased are sold or
disposed of, in an amount equal to the excess of the amount received from the
sale of such shares over the exercise price paid for such shares. For Federal
income tax purposes, dispositions are divided into two categories: qualifying
and disqualifying. A qualifying disposition occurs if the sale or other
disposition is made after the optionee has held the shares for more than two
years after the option grant date and more than one year after transfer of the
shares to the optionee. If a qualifying disposition is made, the gain will be
taxed to the optionee as capital gain. If either of these holding periods is not
satisfied, then a qualifying disposition will result. If a disqualifying
disposition occurs, the gain will be taxed to the optionee as ordinary income.
If the optionee makes a disqualifying disposition of the purchased shares, then
Weatherford will be entitled to a tax deduction in the taxable year in which
such disposition occurs in an amount equal to the income realized by the
optionee in the taxable year in which he or she realizes the income. In no other
instance will Weatherford be allowed a deduction with respect to the optionee's
disposition of the purchased shares.
The grant of Nonqualified Options under the 1991 Option Plan will not result
in income tax consequences to either Weatherford or the optionee. An optionee
generally will realize ordinary income in the year in which a Nonqualified
Option is exercised in an amount equal to the excess of the
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fair market value of the purchased shares on the exercise date over the exercise
price. Weatherford ordinarily will be entitled to a tax deduction in an amount
equal to the amount of income realized by the optionee with respect to the
exercised option in the taxable year in which the optionee realizes the income.
PARACHUTE PAYMENTS. In situations where options are exercised following a
fundamental corporate change, income recognized by optionees upon exercise of
options may constitute "parachute payments" under certain provisions of the
Code. In general, a "parachute payment" is any payment made in the nature of
compensation to a "disqualified individual" that is contingent on a change in
the ownership or effective control of a corporation, but only if the aggregate
present value of all such payments to the "disqualified individual" equals or
exceeds three times such person's "base amount". In general, a "disqualified
individual" would include a participant in a Weatherford stock-based plan who is
a substantial shareholder, a corporate officer or a highly compensated employee
of Weatherford. In general, an individual's "base amount" is his or her average
annual income in the nature of compensation in the five years preceding the
change of control. An "excess parachute payment" is any "parachute payment" in
excess of the "base amount" that is not shown by the recipient to be reasonable
compensation for personal service actually rendered or to be rendered. To the
extent income recognized by a participant upon exercise of options, the vesting
of unrestricted ownership of shares of Weatherford Common Stock or other
issuances under such stock-based plans constitutes an "excess parachute
payment", no deduction would be allowed to Weatherford and a nondeductible 20%
excise tax would be imposed on the recipient of such "excess parachute payment".
In determining the amount of "parachute payment" with respect to any
"disqualified individual", amounts (if any) payable to such individual under all
plans (other than plans qualified under Section 401(a), 403(a) or 408(k) of the
Code) maintained by Weatherford, or pursuant to any applicable severance pay
agreements that are determined to be contingent upon a change of ownership or
effective control, would be aggregated. Regulations indicate that the
determination of what portions of such payment constitute reasonable
compensation and the determination of which payments to such individual were
contingent upon the change of ownership or effective control of Weatherford must
be made on the basis of all relevant facts and circumstances. Accordingly,
Weatherford is unable to predict what payments made under a Weatherford plan, if
any, would constitute "excess parachute payments" if a fundamental corporate
change of Weatherford were to occur.
VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL. The Weatherford Board of
Directors has approved and adopted the proposed amendment to the 1991 Option
Plan. However, the proposed amendment will not be implemented unless the holders
of a majority of the shares of Weatherford Common Stock present in person or
represented by proxy and entitled to vote at the Weatherford Special Meeting
vote "for" the approval and adoption of the amendment to the 1991 Option Plan.
The amendment to the 1991 Option Plan will not be effected unless the Merger,
the Merger Agreement, the Reverse Stock Split and the Name Change are approved
and adopted by the stockholders of Weatherford and the Merger and the Merger
Agreement are approved and adopted by the stockholders of Enterra. The amendment
to the Restricted Plan will be effected regardless of whether any of the other
proposals are approved and adopted by the stockholders of Weatherford. The
Merger, the Merger Agreement, the Reverse Stock Split and the Name Change will
be effected regardless of whether either or both of the amendments to the 1991
Option Plan and the Restricted Plan are approved and adopted by the stockholders
of Weatherford.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE PROPOSED AMENDMENT TO THE 1991 STOCK OPTION PLAN.
PROPOSAL TO AMEND WEATHERFORD'S RESTRICTED STOCK INCENTIVE PLAN
On August 28, 1995, the Weatherford Board of Directors approved and adopted
the amendment of the Restricted Plan that will make an additional 250,000 shares
of Weatherford Common Stock
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(before giving effect to the Reverse Stock Split) available for issuance under
the Restricted Plan. At the Weatherford Special Meeting, Weatherford's
stockholders are being asked to approve and adopt such amendment.
The purpose of this amendment is to provide sufficient available shares for
future grants under the Restricted Plan.
The Restricted Plan has been approved previously by the stockholders of
Weatherford. The following summary of the major provisions of the Restricted
Plan, including the amendment thereto approved by the Weatherford Board of
Directors and proposed herein, is necessarily incomplete and is, therefore,
qualified in its entirety by reference to the detailed provisions of the
Restricted Plan.
ADMINISTRATION. The Restricted Plan is administered by the Committee. The
Committee has the authority to determine which key employees of Weatherford are
eligible to receive shares of Weatherford Common Stock pursuant to the
Restricted Plan and the terms and conditions of any share grants.
SHARES SUBJECT TO GRANT. As of the Record Date, a total of 70,875 shares
were available for future grants under the Restricted Plan. Weatherford Common
Stock issued under the Restricted Plan may consist of authorized but unissued
shares or shares reacquired by Weatherford and held as treasury stock. If shares
granted under the Restricted Plan are forfeited, such shares may again be
subject to grant under the Restricted Plan. The number of shares available for
grant under the Restricted Plan is to be adjusted in the event of any
subdivision or consolidation of shares or other capital readjustment, merger,
consolidation or similar transaction affecting the Weatherford Common Stock.
ELIGIBILITY. Subject to selection by the Committee, any executive officer
or other key employee (including an officer who may be a member of the
Weatherford Board of Directors) of Weatherford, or of any parent or subsidiary
corporation, is eligible to be granted shares of Weatherford Common Stock under
the Restricted Plan. Eligibility for participation in the Restricted Plan is
currently limited to executive officers of Weatherford (as of the Record Date,
five persons).
OPERATION OF THE RESTRICTED PLAN. The Committee will from time to time
select eligible employees to participate in the Restricted Plan. The Committee
will determine the number of shares that will be contingently granted to a
participant at the beginning of a performance period, the restrictions on the
participant's ownership of those shares and the conditions upon which the
ownership restrictions or conditions will terminate (such as the participant's
continued employment or meeting long-term or short-term performance goals). The
participant will be awarded at the beginning of a performance period the number
and types of shares designated by the Committee, subject to the ownership
restrictions and conditions imposed by the Committee. The terms and provisions
of each share grant will be set forth in a share grant agreement between
Weatherford and the participant.
A participant will own the shares of Weatherford Common Stock from the date
of the share grant, subject to restrictions on ownership and conditions imposed
by the Committee. The Committee will determine (1) the conditions upon which
unrestricted ownership of the shares will vest in the participant; (2) any
long-term or short-term performance goals applicable to such shares; (3) whether
a stock certificate representing part or all of the shares will be issued to the
participant at the commencement of the performance period or at any time prior
to the end of such period (in which case the stock certificate will contain a
legend restricting the sale, exchange, transfer, assignment, pledge or other
disposition of the shares); (4) whether the participant will have the right to
vote the shares during the performance period; (5) whether the participant will
have the right to receive any dividends paid on such shares during the
performance period or whether such dividends will be accrued and paid to the
participant only when the restrictions on his or her ownership of the shares are
removed, either at the end of the performance period or at some other time
designated by the Committee; and (6) any other matters relevant to the share
grant. All shares granted pursuant to the Restricted Plan will be subject to
restrictions on ownership when granted, and a participant will not be able to
sell, exchange, transfer, assign, pledge or otherwise dispose of such shares
until the restrictions on ownership are removed by the Committee in accordance
with the terms of the share grant.
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The restrictions on the participant's ownership of any Restricted Shares
will be removed at times specified by the Committee. The participant generally
must be employed by Weatherford at the specified times for the restrictions to
be removed, although the Committee can provide otherwise. The Committee can
provide that the restrictions will be removed with respect to a certain portion
of the shares at designated times (such as annually) during the performance
period or on all such shares at the end of the performance period. In the event
the participant's employment relationship ends prior to the ownership
restrictions on the Restricted Shares being removed, the participant will, upon
the request of the Committee, for no consideration, forfeit all Restricted
Shares that remain subject to such restrictions and surrender to Weatherford all
stock certificates representing such shares, if any have been issued.
The Committee has the ability to remove the restrictions on part or all of
the shares granted to a participant in the event of his or her death or total
and permanent disability prior to the removal of ownership restrictions. The
removal of such restrictions normally would be based on the length of service
the participant has in a performance period, the participant's performance and
such other matters as the Committee deems appropriate. The Committee has the
ability to remove the restrictions on part or all of the shares granted to a
participant who takes early retirement at the convenience of Weatherford during
a performance period prior to the removal of the ownership restrictions. The
removal of such restrictions normally would be based on the length of service
the participant has in a performance period, the participant's performance and
such other matters as the Committee deems appropriate.
CHANGE OF CONTROL. If a change of control should occur with respect to
Weatherford, all restrictions remaining on any shares granted to a participant
will automatically terminate and unrestricted ownership of such shares will then
vest in the participant. The Restricted Plan defines a change of control as a
third person becoming the beneficial owner of 20% or more of the voting
securities of Weatherford, without the consent of the Weatherford Board of
Directors, or a situation where, as a result of a contested election for
directors, the persons who were directors of Weatherford before the election
cease to constitute a majority of the Weatherford Board of Directors. The
acceleration of termination of ownership restrictions on the shares upon the
occurrence of a change of control may be seen as an anti-takeover provision and
may have the effect of discouraging such change of control.
AMENDMENTS. The Weatherford Board of Directors has the power to modify,
revise or terminate the Restricted Plan. However, unless it shall have obtained
the approval of the stockholders of Weatherford, the Weatherford Board of
Directors may not materially increase the aggregate number of shares of
Weatherford Common Stock that can be granted under the Restricted Plan,
materially increase the benefits accruing to the participants or materially
modify the eligibility requirements.
NEW PLAN BENEFITS. The benefits received by or amounts allocable to
participants under the Restricted Plan as a result of the proposed amendment to
increase the number of shares available under the Restricted Plan are not
determinable.
VALUATION. The fair market value of the Weatherford Common Stock was $12.75
per share on August 28, 1995.
EFFECTIVE DATE AND DURATION. The Restricted Plan became effective as of
March 18, 1987. The duration of the Restricted Plan is perpetual.
TAX CONSEQUENCES. The Restricted Plan is not qualified under Section 401(a)
of the Code. An eligible employee probably will realize compensation income for
Federal tax purposes on the shares of Weatherford Common Stock granted to him or
her when the restrictions on ownership of the shares lapse or are removed. The
amount of the income will be the fair market value of such shares on the day the
restrictions lapse or are removed. Weatherford ordinarily will be entitled to a
deduction equivalent to the amount of income realized by the eligible employee.
PARACHUTE PAYMENTS. In situations where the ownership restrictions are
terminated following a change of control, income recognized by participants may
constitute "parachute payments" under certain provisions of the Code. See
"Proposal to Amend Weatherford's 1991 Stock Option Plan -- Parachute Payments".
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VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL. The Weatherford Board of
Directors has approved and adopted the proposed amendment to the Restricted
Plan. However, the proposed amendment will not be implemented unless the holders
of a majority of the shares of Weatherford Common Stock present in person or
represented by proxy and entitled to vote at the Weatherford Special Meeting
vote "for" the approval and adoption of the amendment to the Restricted Plan.
The amendment to the Restricted Plan will be effected regardless of whether any
of the other proposals described in this Joint Proxy Statement/Prospectus are
approved and adopted by the stockholders of Weatherford. The Merger, the Merger
Agreement, the Reverse Stock Split and the Name Change will be effected
regardless of whether either or both of the amendments to the 1991 Option Plan
and the Restricted Plan are approved and adopted by the stockholders of
Weatherford.
THE WEATHERFORD BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE PROPOSED AMENDMENT TO THE RESTRICTED PLAN.
RELATIONSHIPS WITH INDEPENDENT PUBLIC ACCOUNTANTS
It is expected that representatives of Arthur Andersen LLP will be present
at the Weatherford Special Meeting, and that representatives of KPMG Peat
Marwick LLP will be present at the Enterra Special Meeting, to respond to
appropriate questions of stockholders and to make a statement if they so desire.
LEGAL MATTERS
The validity of the shares of Weatherford Common Stock to be issued in
connection with the Merger will be passed upon by Fulbright & Jaworski L.L.P.,
1301 McKinney, Suite 5100, Houston, Texas 77010. Certain tax consequences of the
Merger will be passed upon for Weatherford by Fulbright & Jaworski L.L.P. and
for Enterra by Morgan, Lewis & Bockius, 2000 One Logan Square, Philadelphia,
Pennsylvania 19103.
EXPERTS
The consolidated financial statements and schedules of Weatherford at
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994, incorporated by reference in this Joint Proxy
Statement/Prospectus have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference in this Joint Proxy Statement/Prospectus in reliance
upon the authority of said firm as experts in accounting and auditing in giving
said reports.
The consolidated financial statements and schedules of Enterra at December
31, 1994 and 1993, and for each of the three years in the period ended December
31, 1994, incorporated by reference in this Joint Proxy Statement/Prospectus
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference in this Joint Proxy Statement/Prospectus in reliance
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of TOTAL at December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993,
incorporated by reference in this Joint Proxy Statement/Prospectus, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
with respect thereto, and are incorporated by reference in this Joint Proxy
Statement/ Prospectus in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The combined financial statements of Zapata Energy Industries at September
30, 1994, and for the eleven months then ended, incorporated by reference in
this Joint Proxy Statement/Prospectus have been audited by Coopers & Lybrand
L.L.P., independent accountants, as indicated in their report with respect
thereto, and are incorporated by reference in this Joint Proxy
Statement/Prospectus in reliance upon the authority of said firm as experts in
accounting and auditing.
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STOCKHOLDERS' PROPOSALS
Any proposals of holders of Weatherford Common Stock intended to be
presented at the Annual Meeting of Stockholders of Weatherford to be held in
1996 must be received by Weatherford, addressed to the Secretary at P.O. Box
27608, Houston, Texas 77227, no later than December 8, 1995, to be considered
for inclusion in the proxy statement and form of proxy relating to that meeting.
If the Merger is not consummated, any proposals of stockholders of Enterra
intended to be presented at the Annual Meeting of Stockholders of Enterra to be
held in 1996 must be received by Enterra, addressed to the Secretary at 13100
Northwest Freeway, Sixth Floor, Houston, Texas 77040, no later than December 31,
1995, to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission are
incorporated by reference herein:
(a) Weatherford's (i) Annual Report on Form 10-K for the year ended December
31, 1994, (ii) Quarterly Report on Form 10-Q for the quarter ended March
31, 1995, (iii) Current Report on Form 8-K dated July 6, 1995 and (iv)
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995;
(b) Enterra's (i) Registration Statement on Form S-4 (Registration No.
33-80174), with respect to the consolidated historical financial
statements of Total Energy Services Company contained therein, (ii)
Annual Report on Form 10-K for the year ended December 31, 1994, (iii)
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, (iv)
Current Report on Form 8-K dated July 6, 1995, (v) Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 and (vi) Current Report on
Form 8-K dated August 28, 1995, with respect to the combined historical
financial statements of Zapata Energy Industries; and
(c) Weatherford's Registration Statement on Form 8-A registering under the
Exchange Act the Weatherford Common Stock.
All documents filed by Weatherford or Enterra with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Joint Proxy Statement/Prospectus and before the date of the Weatherford Special
Meeting or the Enterra Special Meeting, respectively, shall be deemed to be
incorporated by reference in this Joint Proxy Statement/Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in this Joint Proxy Statement/Prospectus or in a document incorporated or deemed
to be incorporated by reference in this Joint Proxy Statement/Prospectus shall
be deemed to be modified or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained in this Joint
Proxy Statement/Prospectus or in any other subsequently filed document that also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this Joint
Proxy Statement/Prospectus.
Weatherford and Enterra undertake to provide without charge to each person
to whom a copy of this Joint Proxy Statement/Prospectus has been delivered, upon
the written or oral request of any such person, a copy of any or all of the
documents incorporated by reference herein, other than the exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this Joint Proxy Statement/Prospectus incorporates. Written
or oral requests for such copies should be directed (i) for Weatherford, to
Weatherford International Incorporated, 1360 Post Oak Boulevard, Suite 1000,
Houston, Texas 77056, Attention: Investor Relations, telephone number (713)
439-9400, and (ii) for Enterra, to Enterra Corporation, 13100 Northwest Freeway,
Sixth Floor, Houston, Texas 77040, Attention: E. Joanne January, telephone
number (713) 462-7300.
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APPENDIX A: AGREEMENT AND PLAN OF MERGER
A-1
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
Between
Weatherford International Incorporated
and
Enterra Corporation
June 23, 1995
(As amended August 28, 1995)
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . 2
1.4 EFFECTS OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . . 2
1.5 CERTIFICATE OF INCORPORATION; BYLAWS . . . . . . . . . . . . . . . 2
1.6 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . 2
1.7 CONVERSION OF SECURITIES; EXCHANGE; FRACTIONAL SHARES. . . . . . . 2
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. . . . . . . . . . . 5
(a) ORGANIZATION AND COMPLIANCE WITH LAW. . . . . . . . . . . . . 5
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . 6
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT . . . . . . . . . . . 7
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH WEATHERFORD IS A PARTY . . . . . . . . . 7
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . 8
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. . . . . . . . . . . . . . . . . . 9
(g) CERTAIN FEES. . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . 10
(j) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) NO SEVERANCE PAYMENTS . . . . . . . . . . . . . . . . . . . . 14
(m) VOTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 14
(n) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(o) TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . . . . 14
(p) WEATHERFORD ACTIONS . . . . . . . . . . . . . . . . . . . . . 14
2.3 REPRESENTATIONS AND WARRANTIES OF ENTERRA. . . . . . . . . . . . . 14
(a) ORGANIZATION AND COMPLIANCE WITH LAW. . . . . . . . . . . . . 14
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . 15
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT . . . . . . . . . . . 15
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH ENTERRA IS A PARTY . . . . . . . . . . . 16
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . 16
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. . . . . . . . . . . . . . . . . . 18
(g) CERTAIN FEES. . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . 19
(j) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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(k) ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . 21
(l) NO SEVERANCE PAYMENTS . . . . . . . . . . . . . . . . . . . . 22
(m) VOTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 22
(n) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(o) TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . . . . 22
(p) ENTERRA ACTIONS . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . 23
3.1 CONDUCT OF BUSINESS BY WEATHERFORD PENDING THE MERGER. . . . . . . 23
3.2 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 25
3.3 AFFILIATES' AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 25
3.4 RESERVATION OF WEATHERFORD COMMON STOCK. . . . . . . . . . . . . . 25
3.5 STOCK EXCHANGE LISTING . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
COVENANTS OF ENTERRA PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . 25
4.1 CONDUCT OF BUSINESS BY ENTERRA PENDING THE MERGER. . . . . . . . . 25
4.2 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 27
4.3 AFFILIATES' AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT . . . . . 28
5.2 COMFORT LETTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3 MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . 28
5.4 REASONABLE EFFORTS; CONSENTS, APPROVALS AND WAIVERS. . . . . . . . 29
5.5 ANTITRUST MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . . . . 30
5.7 AGREEMENT TO DEFEND. . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.9 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.10 POST-EFFECTIVE TIME MAILING. . . . . . . . . . . . . . . . . . . . 32
5.11 STOCKHOLDERS' AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 32
5.12 ENTERRA STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . 32
5.13 ENTERRA EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . 33
5.14 UPDATE OF DISCLOSURE LETTERS . . . . . . . . . . . . . . . . . . . 34
5.15 WEATHERFORD SPECIAL SEVERANCE PAY PLAN . . . . . . . . . . . . . . 34
5.16 CHANGE OF CONTROL AGREEMENTS . . . . . . . . . . . . . . . . . . . 34
5.17 INDEMNIFICATION AGREEMENTS . . . . . . . . . . . . . . . . . . . . 34
5.18 ENTERRA EMPLOYEE BONUSES.. . . . . . . . . . . . . . . . . . . . . 35
5.19 ENTERRA SEVERANCE AGREEMENTS.. . . . . . . . . . . . . . . . . . . 35
5.20 ENTERRA CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER. . . . . . 36
5.21 WEATHERFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER. . . . 36
5.22 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . 36
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ARTICLE VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER . . . 37
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. . . . . . . . 38
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENTERRA. . . . . . . . . . 40
ARTICLE VII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS . . . . . . . . . . . . . . . . . . 42
7.1 NO SOLICITATION BY WEATHERFORD . . . . . . . . . . . . . . . . . . 42
7.2 NO SOLICITATION BY ENTERRA . . . . . . . . . . . . . . . . . . . . 43
7.3 FEE AND EXPENSE REIMBURSEMENTS . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 47
8.3 WAIVER AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . 48
8.4 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.5 PUBLIC STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 48
8.6 BINDING EFFECT; ASSIGNMENT . . . . . . . . . . . . . . . . . . . . 48
8.7 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.8 GOVERNING LAW; JURISDICTION. . . . . . . . . . . . . . . . . . . . 49
8.9 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.11 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.12 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. . . . . . . . . . . . 50
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of the 23rd day of June, 1995
(the "Agreement"), is between Weatherford International Incorporated, a Delaware
corporation ("Weatherford"), and Enterra Corporation, a Delaware corporation
("Enterra").
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Weatherford and Enterra have
approved the merger of Enterra with and into Weatherford (the "Merger"), whereby
each issued and outstanding share of common stock, par value $1.00 per share, of
Enterra ("Enterra Common Stock") not owned directly or indirectly by Enterra or
Weatherford will be converted into the right to receive common stock, par value
$.10 per share, of Weatherford ("Weatherford Common Stock"), as provided herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Merger is intended to be treated as a "pooling of interests"
for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.3)
Enterra will be merged with and into Weatherford. As a result of the Merger,
the separate corporate existence of Enterra shall cease and Weatherford shall
continue as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation") and shall succeed to and assume all of the rights and
obligations of Enterra in accordance with the DGCL. The corporate name of the
Surviving Corporation shall be "Weatherford Enterra, Inc.".
1.2 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article VI or at such other time and place and on such other date as Weatherford
and Enterra shall agree; PROVIDED, that the closing
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conditions set forth in Article VI shall have been satisfied or waived at or
prior to such time. The date on which the Closing occurs is herein referred to
as the "Closing Date".
1.3 CONSUMMATION OF THE MERGER. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware a certificate of merger in such
form as required by, and executed in accordance with, the relevant provisions of
the DGCL. The "Effective Time" of the Merger as that term is used in this
Agreement shall mean the effective time set forth in the certified copy of the
certificate of merger issued by the Secretary of State of the State of Delaware
with respect to the Merger.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the applicable provisions of the DGCL.
1.5 CERTIFICATE OF INCORPORATION; BYLAWS. The Restated Certificate of
Incorporation and bylaws of Weatherford, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and bylaws of the
Surviving Corporation and thereafter shall continue to be its Certificate of
Incorporation and bylaws until amended as provided therein and under the DGCL.
1.6 DIRECTORS AND OFFICERS.
(a) The Board of Directors of the Surviving Corporation shall consist
of ten persons. Exhibit 1.6(a) sets forth the initial directors of the
Surviving Corporation, along with the term of office for, and the committee
or committees of the Board of Directors, if any, on, which each such
director shall serve.
(b) Exhibit 1.6(b) sets forth the initial officers of the Surviving
Corporation, each of whom shall hold office until his or her successor is
duly elected or appointed and qualified.
1.7 CONVERSION OF SECURITIES; EXCHANGE; FRACTIONAL SHARES. Subject to the
terms and conditions of this Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of Weatherford, Enterra or their
stockholders:
(a) Each share of Enterra Common Stock issued and outstanding
immediately prior to the Effective Time (the "Shares"), other than any
Shares to be canceled pursuant to Section 1.7(b), shall be converted,
subject to the provisions of this Section 1.7, into the right to receive
0.845 of a share (which number reflects a 1 for 2 reverse stock split to be
effected at the Closing) of Weatherford Common Stock (the "Conversion
Rate"); PROVIDED, HOWEVER, that no fractional shares of Weatherford Common
Stock shall be issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.7(f) hereof.
(b) Each share of Enterra Common Stock held in the treasury of
Enterra and each Share owned by Weatherford or any direct or indirect
wholly-owned subsidiary of Enterra or of Weatherford immediately prior to
the
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Effective Time shall be canceled and extinguished at the Effective Time
without any conversion thereof and no payment shall be made with respect
thereto.
(c) As soon as practicable after the Effective Time, each holder of
an outstanding certificate that prior thereto represented Shares shall be
entitled, upon surrender thereof to the transfer agent for the Weatherford
Common Stock, to receive in exchange therefor a certificate or certificates
representing the number of whole shares of Weatherford Common Stock into
which the Shares so surrendered shall have been converted as aforesaid, of
such denominations and registered in such names as such holder may request.
Each holder of Shares who would otherwise be entitled to a fraction of a
share of Weatherford Common Stock shall, upon surrender of the certificates
representing Shares held by such holder to Weatherford's transfer agent, be
paid an amount in cash in accordance with the provisions of Section 1.7(f).
Until so surrendered, each outstanding certificate that, prior to the
Effective Time, represented Shares shall be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of
earlier dividends and distributions, to evidence the ownership of the
number of full shares of Weatherford Common Stock into which such Shares
shall have been converted pursuant to this Section 1.7. Unless and until
any such outstanding certificates shall be surrendered, no dividends or
other distributions payable to the holders of Weatherford Common Stock, as
of any time on or after the Effective Time, shall be paid to the holders of
such outstanding certificates that prior to the Effective Time represented
Shares; PROVIDED, HOWEVER, that, upon surrender and exchange of such
outstanding certificates, there shall be paid to the record holders of the
certificates issued and exchanged therefor the amount, without interest
thereon, of dividends and other distributions, if any, that theretofore
were declared and became payable since the Effective Time with respect to
the number of full shares of Weatherford Common Stock issued to such
holders.
(d) All shares of Weatherford Common Stock into which the Shares
shall have been converted pursuant to this Section 1.7 shall be issued in
full satisfaction of all rights pertaining to such converted Shares.
(e) If any certificate for shares of Weatherford Common Stock is to
be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall have paid to Weatherford or its transfer agent any transfer
or other taxes required by reason of the issuance of a certificate for
shares of Weatherford Common Stock in any name other than that of the
registered holder of the certificate surrendered, or established to the
satisfaction of Weatherford or its transfer agent that such tax has been
paid or is not payable.
(f) No fraction of a share of Weatherford Common Stock shall be
issued, but in lieu thereof each holder of Shares who would otherwise be
entitled to a fraction of a share of Weatherford Common Stock shall, upon
surrender of
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the Shares held by such holder to Weatherford's transfer agent, be paid an
amount in cash equal to the value of such fraction of a share based upon
the closing price of Weatherford Common Stock on the New York Stock
Exchange on the last trading day prior to the Effective Time. No interest
shall be paid on such amount. All Shares held by a record holder other
than nominee holders shall be aggregated for purposes of computing the
number of shares of Weatherford Common Stock to be issued pursuant to this
Section 1.7.
(g) None of Weatherford, Enterra, the Surviving Corporation or
Weatherford's transfer agent shall be liable to a holder of the Shares for
any amount properly paid to a public official pursuant to applicable
property, escheat or similar law.
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate to
effectuate the Merger as promptly as possible. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Weatherford and Enterra, such corporations shall direct their
respective officers and directors to take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings ascribed to them below:
(a) "Environmental Laws" shall mean all United States or foreign
federal, state, local or municipal laws, rules, regulations, statutes,
ordinances or orders of any governmental entity relating to (i) the control
of any potential pollutant or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (iii) exposure to hazardous, toxic
or other substances alleged to be harmful. The term "Environmental Laws"
shall include, but not be limited to, the Clean Air Act, 42 U.S.C. Section
7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq. and the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et seq.
(b) "Environmental Permit" shall mean any permit, license, approval,
registration, identification number or other authorization with respect to
any business or other operations conducted by Weatherford or any
Weatherford Subsidiary (as defined in Section 2.2(a)) or Enterra or any
Enterra Subsidiary (as defined in Section 2.3(a)), as the case may be,
required under any applicable Environmental Law.
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(c) "Hazardous Materials" shall mean any (i) petroleum or petroleum
products, (ii) hazardous substance as defined pursuant to Section 101(14)
of CERCLA or (iii) any other chemical, substance or waste that is regulated
under any Environmental Law.
(d) "Material Adverse Change" with respect to any party shall mean a
material adverse change in the business, financial condition or results of
operations of such party and its subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that in no event shall the term "Material Adverse Change" be
deemed to include (i) changes in national or international economic
conditions or industry conditions generally, (ii) changes, or possible
changes, in foreign, federal, state or local statutes and regulations
applicable to Weatherford or Enterra, as the case may be, or (iii) the loss
of employees, customers or suppliers by such party as a direct or indirect
consequence of any announcement relating to the Merger.
(e) "Material Adverse Effect" on any party shall mean any material
adverse effect on the business, financial condition or results of
operations of such party and its subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that in no event shall the term "Material Adverse Effect" be
deemed to include (i) changes in national or international economic
conditions or industry conditions generally, (ii) changes, or possible
changes, in foreign, federal, state or local statutes and regulations
applicable to Weatherford or Enterra, as the case may be, or (iii) the loss
of employees, customers or suppliers by such party as a direct or indirect
consequence of any announcement relating to the Merger.
(f) "Permitted Liens" shall mean: (i) liens for taxes not due and
payable or which are being contested in good faith, (ii) mechanics',
warehousemen's and other statutory liens incurred in the ordinary course of
business and (iii) defects and irregularities in title and encumbrances
that are not substantial in character or amount and do not materially
impair the use of the property or asset in question.
2.2 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. Weatherford hereby
represents and warrants to Enterra that, except as expressly contemplated by
this Agreement or as set forth in the disclosure letter delivered by Weatherford
to Enterra on the date hereof (the "Weatherford Disclosure Letter"):
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Weatherford and each of
its corporate subsidiaries (the "Weatherford Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has all requisite
corporate power and authority and all necessary governmental authorizations
to own, lease and operate all of its properties and assets and to carry on
its business as now being conducted, except where the failure to do so
would not, either individually or in the aggregate, have a Material Adverse
Effect. Weatherford and each of the Weatherford Subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction in which the property
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owned, leased or operated by it or the nature of the business conducted by
it makes such qualification necessary, except in such jurisdictions where
the failure to do so does not and would not, either individually or in the
aggregate, have a Material Adverse Effect. Weatherford and each of the
Weatherford Subsidiaries is in compliance with all applicable laws,
judgments, orders, rules and regulations, domestic and foreign, except
where failure to be in such compliance would not, either individually or in
the aggregate, have a Material Adverse Effect. Weatherford has heretofore
delivered to Enterra true and complete copies of Weatherford's Restated
Certificate of Incorporation and bylaws, as in existence on the date
hereof.
(b) CAPITALIZATION.
(i) The authorized capital stock of Weatherford consists of
80,000,000 shares of Weatherford Common Stock, par value $.10 per
share, and 1,000,000 shares of preferred stock, par value $1.00 per
share. As of June 21, 1995, there were issued and outstanding
54,276,632 shares of Weatherford Common Stock (including shares deemed
to be outstanding pending the exchange of shares of common stock of
Petroleum Equipment Tools Co. and H&H Oil Tool Co., Inc.) and no
shares of preferred stock, and 111,043 shares of Weatherford Common
Stock were held as treasury shares, of which 82,783 shares were
reserved for issuance pursuant to various stock option agreements. As
of June 21, 1995, there were reserved for issuance 2,299,414 shares of
Weatherford Common Stock pursuant to stock option, employee stock
purchase, 401(k) savings, stock incentive and restricted stock plans
(collectively, the "Weatherford Options"). All issued shares of
Weatherford Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive rights.
Weatherford is not a party to, and, excluding agreements among various
funds held or managed by institutional investors, has no knowledge of,
any voting agreement, voting trust or similar agreement or arrangement
relating to any class or series of its capital stock, or any agreement
or arrangement providing for registration rights with respect to any
capital stock or other securities of Weatherford. All shares of
Weatherford Common Stock to be issued pursuant to the Merger, when
issued in accordance with this Agreement, will be validly issued,
fully paid and nonassessable and will not violate the preemptive
rights of any person. All outstanding shares of capital stock of the
Weatherford Subsidiaries are owned by Weatherford, free and clear of
all liens, charges, encumbrances, adverse claims and options of any
nature; provided, however, that Weatherford's ownership of shares of
capital stock of certain foreign Weatherford Subsidiaries may be
subject to Permitted Liens.
(ii) Other than as set forth in this Section 2.2(b) and as
contemplated by Section 3.1(b)(iii), there are not now, and at the
Effective Time there will not be, any (A) shares of capital stock or
other equity securities of Weatherford outstanding (other than
Weatherford Common
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Stock issued pursuant to Weatherford Options as described herein) or
(B) outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any class of capital
stock of Weatherford, or contracts, understandings or arrangements to which
Weatherford is a party, or by which it is or may be bound, to issue
additional shares of its capital stock or options, warrants, scrip or
rights to subscribe for, or securities or rights convertible into or
exchangeable for, any additional shares of its capital stock.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. Weatherford has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery by
Weatherford of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action (subject only, with respect to the Merger, to adoption and
approval of this Agreement by the stockholders of Weatherford as provided
in Section 5.3(b)). This Agreement has been duly executed and delivered by
Weatherford and is the valid and binding obligation of Weatherford,
enforceable against Weatherford in accordance with its terms, except as
such enforceability may be limited or affected by (i) bankruptcy,
insolvency, reorganization, moratorium, liquidation, arrangement,
fraudulent transfer, fraudulent conveyance and other similar laws
(including, without limitation, court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or providing
for the relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities
laws.
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS TO
WHICH WEATHERFORD IS A PARTY. Neither the execution and delivery of this
Agreement nor the performance by Weatherford of its obligations hereunder,
nor the consummation of the transactions contemplated hereby by
Weatherford, will (i) conflict with Weatherford's Restated Certificate of
Incorporation or bylaws; (ii) assuming satisfaction of the requirements set
forth in clause (iii) below, violate any provision of law applicable to
Weatherford; (iii) except for (A) requirements of Federal and state
securities law, (B) requirements arising out of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (C) requirements of
filings in such foreign jurisdictions as may be applicable and (D) the
filing of a certificate of merger in accordance with the DGCL, require any
consent or approval of, or filing with or notice to, any public body or
authority, domestic or foreign, under any provision of law applicable to
Weatherford; or (iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default)
under, or permit the termination of any provision of, or result in the
creation or imposition of any
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lien upon any properties, assets or business of Weatherford under, any
note, bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Weatherford is a party
or by which Weatherford or its assets or properties is bound or encumbered,
except those that have already been given, obtained or filed and except in
any of the cases enumerated in clauses (ii) through (iv), those that, in
the aggregate, would not have a Material Adverse Effect.
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. Since January 1, 1992,
Weatherford and each of the Weatherford Subsidiaries have filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that they have been
required to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All reports, registration statements and other filings (including,
without limitation, all notes, exhibits and schedules thereto and documents
incorporated by reference therein) filed by Weatherford with the Commission
since January 1, 1992 through the date of this Agreement, together with any
amendments thereto, are sometimes collectively referred to as the
"Weatherford Commission Filings". Weatherford has heretofore delivered to
Enterra copies of the Weatherford Commission Filings. As of the
effectiveness dates declared by the Commission, in the case of registration
statements, as of the mailing dates, in the case of proxy statements, or as
of the filing dates with the Commission, in the case of all other
Weatherford Commission Filings, the Weatherford Commission Filings
complied, and the Proxy Statement (as defined in Section 5.1) and the
Registration Statement (as defined in Section 5.1) (except with respect to
information concerning Enterra and the Enterra Subsidiaries furnished by or
on behalf of Enterra to Weatherford specifically for use therein) will
comply, in all material respects with the Securities Act, the Exchange Act
and the rules and regulations of the Commission promulgated thereunder, as
applicable, and did not or will not, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
All material contracts of Weatherford and the Weatherford Subsidiaries
have been included in the Weatherford Commission Filings, except for those
contracts not required to be filed pursuant to the rules and regulations of
the Commission.
Each of the audited consolidated financial statements (including,
without limitation, any related notes or schedules) included or
incorporated by reference in the Weatherford Commission Filings was, and
each of the audited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement and the Registration
Statement (except for those financial statements of Enterra and the Enterra
Subsidiaries furnished by or on behalf of
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<PAGE>
Enterra to Weatherford specifically for use therein) will be, prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or
schedules thereto), and fairly presents, or will fairly present, as the
case may be, in all material respects, the consolidated financial position
of Weatherford and the Weatherford Subsidiaries as of the dates thereof and
the statements of income, cash flows and stockholders' equity for the
periods then ended in accordance with generally accepted accounting
principles. Each of the unaudited interim financial statements included or
incorporated by reference in the Weatherford Commission Filings was, and
each of the unaudited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement and the Registration
Statement (except for those financial statements of Enterra and the Enterra
Subsidiaries furnished by or on behalf of Enterra to Weatherford
specifically for use therein) will be, prepared in a manner consistent with
the audited consolidated financial statements and generally accepted
accounting principles. As of the date hereof, Weatherford has no material
liabilities, absolute or contingent, not reflected in the Weatherford
Commission Filings, except (i) liabilities not required under generally
accepted accounting principles to be reflected on such financial statements
or the notes thereto and (ii) liabilities incurred in the ordinary course
of business since the date of such financial statements consistent with
past operations and not relating to the borrowing of money.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN
CHANGES AND EVENTS. Since April 1, 1995, except as disclosed in the
Weatherford Commission Filings filed with the Commission since that date,
Weatherford and the Weatherford Subsidiaries have conducted their business
only in the ordinary and usual course, and there has not been (i) any
Material Adverse Change in Weatherford or any condition, event or
development that reasonably may be expected to result in any Material
Adverse Change; (ii) any change by Weatherford in its accounting methods,
principles or practices; (iii) any revaluation by Weatherford or any of the
Weatherford Subsidiaries of any of its or their assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business; (iv) any
entry by Weatherford or any of the Weatherford Subsidiaries into any
commitment or transaction material to Weatherford and the Weatherford
Subsidiaries, taken as a whole, other than in the ordinary course of
business; (v) any declaration, setting aside or payment of any dividends or
distributions in respect of the Weatherford Common Stock, or any
redemption, purchase or other acquisition of any of its securities or any
securities of any of the Weatherford Subsidiaries; (vi) any damage,
destruction or loss (whether or not covered by insurance) materially
adversely affecting the properties or business of Weatherford and the
Weatherford Subsidiaries, taken as a whole; (vii) any increase in
indebtedness for borrowed money; (viii) any granting of a security interest
or lien on any property or assets of Weatherford and the Weatherford
Subsidiaries, other than Permitted Liens; or (ix) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation,
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<PAGE>
the granting of stock options, stock appreciation rights, performance
awards or restricted stock awards), stock purchase or other employee
benefit plan or any other increase in the compensation payable or to become
payable to any officers or key employees of Weatherford or any of the
Weatherford Subsidiaries.
(g) CERTAIN FEES. Neither Weatherford nor any of its officers,
directors or employees, on behalf of Weatherford or any of the Weatherford
Subsidiaries or its or their respective Boards of Directors (or any
committee thereof), has employed any financial advisor, broker or finder or
incurred any liability for any financial advisory, brokerage or finders'
fees or commissions in connection with the transactions contemplated
hereby.
(h) LITIGATION. Except as disclosed in the Weatherford Commission
Filings, there are no claims, actions, suits, investigations or proceedings
pending or, to the knowledge of Weatherford, threatened against or
affecting Weatherford or any of the Weatherford Subsidiaries or any of
their respective properties at law or in equity, or any of their respective
employee benefit plans or fiduciaries of such plans, or before or by any
federal, state, municipal or other governmental agency or authority, or
before any arbitration board or panel, wherever located, that, individually
or in the aggregate, if adversely determined would have a Material Adverse
Effect, or that involve the risk of criminal liability.
(i) EMPLOYEE BENEFIT PLANS. The Weatherford Disclosure Letter sets
forth a complete and accurate list of:
(i) each "employee welfare benefit plan" (as such term is
defined in Section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) (the "Weatherford Welfare Plans");
(ii) each "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) (the "Weatherford Pension Plans");
and
(iii) all other employee benefit agreements or arrangements,
including, without limitation, deferred compensation plans, incentive
plans, bonus plans or arrangements, stock option plans, stock purchase
plans, golden parachute agreements, severance pay plans, dependent
care plans, cafeteria plans, employee assistance programs, scholarship
programs, employment contracts and other similar plans, agreements and
arrangements (collectively, with the Weatherford Welfare Plans and the
Weatherford Pension Plans, the "Weatherford Benefit Plans"),
that are currently in effect or were maintained within three years of the
Closing Date, or have been approved before this date but are not yet
effective, for the benefit of directors, officers, employees or former
employees (or their beneficiaries) of Weatherford, any of the Weatherford
Subsidiaries incorporated in the United States (the "Weatherford U.S.
Subsidiaries") or any member of a controlled group or affiliated service
group (as defined in Section 414(b), (c), (m) or (o) of the Code) that is
incorporated or domiciled in the United States of
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<PAGE>
which Weatherford or any of the Weatherford U.S. Subsidiaries is a member
(collectively, the "Weatherford Group"). Weatherford and the Weatherford
U.S. Subsidiaries will provide to Enterra, as to each Weatherford Benefit
Plan, as applicable, access to a complete and accurate copy of (i) such
plan, agreement or arrangement; (ii) the trust, group annuity contract or
other document that provides the funding for such plan; (iii) the most
recent annual Form 5500, 990 and 1041 reports; (iv) the most recent
actuarial report or valuation statement; (v) the most current summary plan
description, handbook or other booklet that describes any Weatherford
Benefit Plan, and any summary of material modifications prepared after each
such summary plan description; (vi) the most recent Internal Revenue
Service ("IRS") determination letter and all rulings or determinations
requested from the IRS subsequent to the date of such determination letter;
and (vii) all other pending correspondence from the IRS or the Department
of Labor received by any member of the Weatherford Group that relates to
such plan.
Each Weatherford Welfare Plan and Weatherford Pension Plan (i) is in
compliance with ERISA, including, without limitation, all reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA, except
where the failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect; (ii) is in compliance with
the Code, except where the failure to be in compliance would not, either
individually or in the aggregate, have a Material Adverse Effect; (iii) has
had the appropriate Form 5500 timely filed for any Weatherford Pension
Plan, if applicable, for each year of its existence and for any Weatherford
Welfare Plan for each year of its existence after 1987, except where the
failure to cause such timely filing would not, either individually or in
the aggregate, have a Material Adverse Effect; (iv) has not engaged in any
transaction described in Section 406 or 407 of ERISA or Section 4975 of the
Code unless it 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; (v) has no issue pending (other than the payment of benefits in the
normal course or the qualification of the plan pursuant to an application
pending before the IRS) nor any issue resolved adversely to the Weatherford
Group that, in either case, may subject the Weatherford Group to the
payment of a penalty, interest, tax or other amount, which, either
individually or in the aggregate, would have a Material Adverse Effect; and
(vi) can be unilaterally terminated or amended on no more than 90 days
notice. No notice has been received by the Weatherford Group of an
increase or proposed increase in any premium relative to any Weatherford
Benefit Plan, and no amendment to any Weatherford Benefit Plan within the
last twelve months has increased the rate of employer contributions
thereunder that, either individually or in the aggregate, would have a
Material Adverse Effect.
Each Weatherford Benefit 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
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<PAGE>
to the Closing. No Weatherford Benefit Plan will cause the Weatherford
Group to have liability for severance pay as a result of this Agreement.
The Weatherford Group does not provide employee post-retirement medical or
health coverage or contribute to or maintain any employee welfare benefit
plan that provides for health benefit coverage following termination of
employment except as required by Section 4980B(f) of the Code or other
applicable statute, nor has the Weatherford Group made any representations,
agreements, covenants or commitments to provide that coverage.
Except for each Weatherford Pension Plan that is an ERISA top-hat
plan, each Weatherford Pension Plan has been submitted to and approved as
qualifying under Section 401(a) of the Code by the IRS or the applicable
remedial amendment period relating to such plan will not have ended prior
to the Closing. To the knowledge of Weatherford, no facts have occurred
that, if known by the IRS, could cause disqualification of any Weatherford
Pension Plan. Each Weatherford Pension Plan to which Section 412 of the
Code is applicable fully complies with the funding requirements of that
Section and there is no accumulated funding deficiency as defined in
Section 302(a)(2) of ERISA (whether or not waived) in any such plan. The
Weatherford Group has paid all premiums (including, without limitation,
interest, charges and penalties for late payment) due the Pension Benefit
Guaranty Corporation (the "PBGC") with respect to each Weatherford Pension
Plan for which premiums are required. No Weatherford Pension Plan has been
terminated under circumstances that would result in liability to the PBGC
or the Weatherford Group. There has been no "reportable event" (as defined
in Section 4043(b) of ERISA and the regulations under that Section) with
respect to any Weatherford Pension Plan subject to Title IV of ERISA. With
respect to each Weatherford Pension Plan subject to Title IV of ERISA, the
Weatherford Group has not (i) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of ERISA,
(ii) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA or (iii) ceased making contributions on
or before the Closing Date to any such plan subject to Section 4064(a) of
ERISA to which the Weatherford Group made contributions at any time during
the six years prior to the Closing Date. Neither the Weatherford Group nor
any member thereof has made a complete or partial withdrawal from a
multiemployer plan (as defined in Section 3(37) of ERISA) so as to incur
withdrawal liability as defined in Section 4201 of ERISA.
Weatherford's subsidiaries incorporated outside of the United States
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.
(j) TAXES. All returns and reports, including, without limitation,
information and withholding returns and reports ("Tax Returns") of or
relating to any foreign, federal, state or local tax, assessment or other
governmental
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<PAGE>
charge ("Taxes" or a "Tax") that are required to be filed on or before the
Closing Date by or with respect to Weatherford or any of the Weatherford
Subsidiaries have been or will be duly and timely filed, and all Taxes,
including, without limitation, interest and penalties, due and payable
pursuant to such Tax Returns have been paid or adequately provided for in
reserves established by Weatherford, except where the failure to file, pay
or provide for would not, either individually or in the aggregate, have a
Material Adverse Effect. All Tax Returns of or with respect to Weatherford
or any of the Weatherford Subsidiaries have been audited by the applicable
governmental authority, or the applicable statute of limitations has
expired, for all periods up to and including, without limitation, the tax
year ended December 31, 1987. There is no material claim against
Weatherford or any of the Weatherford Subsidiaries with respect to any
Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Weatherford or any of the Weatherford Subsidiaries that has not been
adequately provided for in reserves established by Weatherford. The total
amounts set up as liabilities for current and deferred Taxes in the
consolidated financial statements included in the Weatherford Commission
Filings have been prepared in accordance with generally accepted accounting
principles and are sufficient to cover the payment of all material Taxes,
including, without limitation, any penalties or interest thereon and
whether or not assessed or disputed, that are, or are hereafter finally
determined to be, or to have been, due with respect to the operations of
Weatherford and the Weatherford Subsidiaries through the periods covered
thereby.
(k) ENVIRONMENTAL.
(i) There are no facts, conditions or circumstances known to
Weatherford that could cause Weatherford or any Weatherford Subsidiary
to incur any loss, liability, damage, cost or expense, either
individually or in the aggregate, in excess of Weatherford's charges,
accruals and reserves for environmental matters reflected on
Weatherford's consolidated balance sheet contained in the most recent
Weatherford Commission Filing, for (A) violations of Environmental
Laws, (B) failure to obtain an Environmental Permit, (C) a requirement
to install environmental or pollution control equipment, (D) removal,
response or remedial costs related to Hazardous Materials or
(E) personal injury, property damage or natural resources damage
resulting from exposure to or releases of Hazardous Materials, except
in each case where such loss, liability, damage, cost or expense would
not have a Material Adverse Effect.
(ii) The business and any other operations conducted by
Weatherford or any Weatherford Subsidiary are in compliance with all
applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under
applicable Environmental Laws, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect.
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<PAGE>
(l) NO SEVERANCE PAYMENTS. None of Weatherford or the Weatherford
Subsidiaries will owe a severance payment or similar obligation to any of
their respective employees, officers or directors as a result of the Merger
or the transactions contemplated by this Agreement, nor will any of such
persons be entitled to an increase in severance payments or other benefits
as a result of the Merger or the transactions contemplated by this
Agreement in the event of the subsequent termination of their employment.
(m) VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of the outstanding shares of Weatherford Common Stock is the only
vote of the holders of any class or series of the capital stock of
Weatherford necessary to approve this Agreement and the Merger.
(n) INSURANCE. The Weatherford Disclosure Letter sets forth all
policies of insurance currently in effect relating to the business or
operations of Weatherford and the Weatherford Subsidiaries.
(o) TITLE TO PROPERTY. Except as set forth in the Weatherford
Commission Filings, Weatherford and each of the Weatherford Subsidiaries
have good and indefeasible title to all of their real properties purported
to be owned in fee and good title to all their other material assets, free
and clear of all mortgages, liens, charges and encumbrances other than
Permitted Liens.
(p) WEATHERFORD ACTIONS. As of the date hereof, the Board of
Directors of Weatherford (at a meeting duly called and held) has resolved
to recommend approval and adoption of this Agreement and the Merger by the
stockholders of Weatherford. Merrill Lynch & Co. has delivered to the
Board of Directors of Weatherford its opinion that the Conversion Rate is
fair to the holders of Weatherford Common Stock from a financial point of
view.
2.3 REPRESENTATIONS AND WARRANTIES OF ENTERRA. Enterra hereby represents
and warrants to Weatherford that, except as expressly contemplated by this
Agreement or as set forth in the disclosure letter delivered by Enterra to
Weatherford on the date hereof (the "Enterra Disclosure Letter"):
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Enterra and each of its
corporate subsidiaries (the "Enterra Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has all requisite corporate power
and authority and all necessary governmental authorizations to own, lease
and operate all of its properties and assets and to carry on its business
as now being conducted, except where the failure to do so would not, either
individually or in the aggregate, have a Material Adverse Effect. Enterra
and each of the Enterra Subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to do so does not and would not, either
individually or in the aggregate, have a Material
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<PAGE>
Adverse Effect. Enterra and each of the Enterra Subsidiaries is in
compliance with all applicable laws, judgments, orders, rules and
regulations, domestic and foreign, except where failure to be in such
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect. Enterra has heretofore delivered to Weatherford
true and complete copies of Enterra's Restated Certificate of Incorporation
and bylaws, as in existence on the date hereof.
(b) CAPITALIZATION.
(i) The authorized capital stock of Enterra consists of
40,000,000 shares of Enterra Common Stock, par value $1.00 per share,
and 10,000,000 shares of series preferred stock, par value $1.00 per
share. As of June 21, 1995, there were issued and outstanding
27,774,950 shares of Enterra Common Stock and no shares of series
preferred stock, and no shares of Enterra Common Stock were held as
treasury shares. As of June 21, 1995, there were reserved for
issuance 2,587,071 shares of Enterra Common Stock pursuant to stock
option plans (collectively, the "Enterra Options"). All issued shares
of Enterra Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive rights.
Enterra is not a party to, and, excluding agreements among various
funds held or managed by institutional investors, has no knowledge of,
any voting agreement, voting trust or similar agreement or arrangement
relating to any class or series of its capital stock, or any agreement
or arrangement providing for registration rights with respect to any
capital stock or other securities of Enterra. All outstanding shares
of capital stock of the Enterra Subsidiaries are owned by Enterra,
free and clear of all liens, charges, encumbrances, adverse claims and
options of any nature; provided, however, that Enterra's ownership of
shares of capital stock of certain foreign Enterra Subsidiaries may be
subject to Permitted Liens.
(ii) Other than as set forth in this Section 2.3(b) and as
contemplated by Section 4.1(b)(iii), there are not now, and at the
Effective Time there will not be, any (A) shares of capital stock or
other equity securities of Enterra outstanding (other than Enterra
Common Stock issued pursuant to Enterra Options as described herein)
or (B) outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of
any class of capital stock of Enterra, or contracts, understandings or
arrangements to which Enterra is a party, or by which it is or may be
bound, to issue additional shares of its capital stock or options,
warrants, scrip or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of its
capital stock.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. Enterra has all
requisite corporate power and authority to enter into this Agreement and to
perform its
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obligations hereunder. The execution and delivery by Enterra of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action (subject
only, with respect to the Merger, to adoption and approval of this
Agreement by its stockholders as provided for in Section 5.3(a)). This
Agreement has been duly executed and delivered by Enterra and is the valid
and binding obligation of Enterra, enforceable against Enterra in
accordance with its terms, except as such enforceability may be limited or
affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and
other similar laws (including, without limitation, court decisions) now or
hereafter in effect and affecting the rights and remedies of creditors
generally or providing for the relief of debtors, (ii) the refusal of a
particular court to grant equitable remedies, including, without
limitation, specific performance and injunctive relief, and (iii) general
principles of equity (regardless of whether such remedies are sought in a
proceeding in equity or at law).
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS TO
WHICH ENTERRA IS A PARTY. Neither the execution and delivery of this
Agreement nor the performance by Enterra of its obligations hereunder, nor
the consummation of the transactions contemplated hereby by Enterra, will
(i) conflict with Enterra's Restated Certificate of Incorporation or
bylaws; (ii) assuming satisfaction of the requirements set forth in
clause (iii) below, violate any provision of law applicable to Enterra;
(iii) except for (A) requirements of Federal and state securities law,
(B) requirements arising out of the HSR Act, (C) requirements of filings in
such foreign jurisdictions as may be applicable and (D) the filing of a
certificate of merger in accordance with the DGCL, require any consent or
approval of, or filing with or notice to, any public body or authority,
domestic or foreign, under any provision of law applicable to Enterra; or
(iv) require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or imposition of
any lien upon any properties, assets or business of Enterra under, any
note, bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Enterra is a party or
by which Enterra or any of its assets or properties is bound or encumbered,
except those that have already been given, obtained or filed and except in
any of the cases enumerated in clauses (ii) through (iv), those that, in
the aggregate, would not have a Material Adverse Effect.
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. Since January 1, 1992,
Enterra and each of the Enterra Subsidiaries have filed all reports,
registration statements and other filings, together with any amendments
required to be made with respect thereto, that they have been required to
file with the Commission under the Securities Act and the Exchange Act.
All reports, registration statements and other filings (including, without
limitation, all notes, exhibits and
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schedules thereto and documents incorporated by reference therein) filed by
Enterra with the Commission since January 1, 1992 through the date of this
Agreement, together with any amendments thereto, are sometimes collectively
referred to as the "Enterra Commission Filings". Enterra has heretofore
delivered to Weatherford copies of the Enterra Commission Filings. As of
the effectiveness dates declared by the Commission, in the case of
registration statements, as of the mailing dates, in the case of proxy
statements, or as of the filing dates with the Commission, in the case of
all other Enterra Commission Filings, the Enterra Commission Filings
complied, and the Proxy Statement (except with respect to information
concerning Weatherford and the Weatherford Subsidiaries furnished by or on
behalf of Weatherford to Enterra specifically for use therein) will comply,
in all material respects with the Securities Act, the Exchange Act and the
rules and regulations of the Commission promulgated thereunder, as
applicable, and did not or will not, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
All material contracts of Enterra and the Enterra Subsidiaries have
been included in the Enterra Commission Filings, except for those contracts
not required to be filed pursuant to the rules and regulations of the
Commission.
Each of the audited consolidated financial statements (including,
without limitation, any related notes or schedules) included or
incorporated by reference in the Enterra Commission Filings was, and each
of the audited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement (except for those
financial statements of Weatherford and the Weatherford Subsidiaries
furnished by or on behalf of Weatherford to Enterra specifically for use
therein) will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be noted therein or
in the notes or schedules thereto), and fairly presents or will fairly
present, as the case may be, in all material respects, the consolidated
financial position of Enterra and the Enterra Subsidiaries as of the dates
thereof and the statements of income, cash flows and stockholders' equity
for the periods then ended in accordance with generally accepted accounting
principles. Each of the unaudited interim financial statements included or
incorporated by reference in the Enterra Commission Filings was, and each
of the unaudited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement (except for those
financial statements of Weatherford and the Weatherford Subsidiaries
furnished by or on behalf of Weatherford to Enterra specifically for use
therein) will be, prepared in a manner consistent with the audited
consolidated financial statements and generally accepted accounting
principles. As of the date hereof, Enterra has no material liabilities,
absolute or contingent, not reflected in the Enterra Commission Filings,
except (i) liabilities not required under generally accepted accounting
principles to be reflected on such financial statements or the notes
thereto and (ii) liabilities incurred in the ordinary course of business
since the date of such financial
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statements consistent with past operations and not relating to the
borrowing of money.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN
CHANGES AND EVENTS. Since April 1, 1995, except as disclosed in the
Enterra Commission Filings filed with the Commission since that date,
Enterra and the Enterra Subsidiaries have conducted their business only in
the ordinary and usual course, and there has not been (i) any Material
Adverse Change in Enterra or any condition, event or development that
reasonably may be expected to result in any Material Adverse Change;
(ii) any change by Enterra in its accounting methods, principles or
practices; (iii) any revaluation by Enterra or any of the Enterra
Subsidiaries of any of its or their assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (iv) any entry by
Enterra or any of the Enterra Subsidiaries into any commitment or
transaction material to Enterra and the Enterra Subsidiaries, taken as a
whole, other than in the ordinary course of business; (v) any declaration,
setting aside or payment of any dividends or distributions in respect of
the Enterra Common Stock, or any redemption, purchase or other acquisition
of any of its securities or any securities of any of the Enterra
Subsidiaries; (vi) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or business of
Enterra and the Enterra Subsidiaries, taken as a whole; (vii) any increase
in indebtedness for borrowed money; (viii) any granting of a security
interest or lien on any property or assets of Enterra and the Enterra
Subsidiaries, other than Permitted Liens; or (ix) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the compensation payable or
to become payable to any officers or key employees of Enterra or any of the
Enterra Subsidiaries.
(g) CERTAIN FEES. Neither Enterra nor any of its officers, directors
or employees, on behalf of Enterra or any of the Enterra Subsidiaries or
its or their respective Boards of Directors (or any committee thereof), has
employed any financial advisor, broker or finder or incurred any liability
for any financial advisory, brokerage or finders' fees or commissions in
connection with the transactions contemplated hereby.
(h) LITIGATION. Except as disclosed in the Enterra Commission
Filings, there are no claims, actions, suits, investigations or proceedings
pending or, to the knowledge of Enterra, threatened against or affecting
Enterra or any of the Enterra Subsidiaries or any of their respective
properties at law or in equity, or any of their respective employee benefit
plans or fiduciaries of such plans, or before or by any federal, state,
municipal or other governmental agency or authority, or before any
arbitration board or panel, wherever located, that, individually or in the
aggregate, if adversely determined would have a Material Adverse Effect, or
that involve the risk of criminal liability.
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(i) EMPLOYEE BENEFIT PLANS. The Enterra Disclosure Letter sets forth
a complete and accurate list of:
(i) each "employee welfare benefit plan" (as such term is
defined in Section 3(1) of ERISA) (the "Enterra Welfare Plans");
(ii) each "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) (the "Enterra Pension Plans"); and
(iii) all other employee benefit agreements or arrangements,
including, without limitation, deferred compensation plans, incentive
plans, bonus plans or arrangements, stock option plans, stock purchase
plans, golden parachute agreements, severance pay plans, dependent
care plans, cafeteria plans, employee assistance programs, scholarship
programs, employment contracts and other similar plans, agreements and
arrangements (collectively, with the Enterra Welfare Plans and the
Enterra Pension Plans, the "Enterra Benefit Plans"),
that are currently in effect or were maintained within three years of the
Closing Date, or have been approved before this date but are not yet
effective, for the benefit of directors, officers, employees or former
employees (or their beneficiaries) of Enterra, any of the Enterra
Subsidiaries incorporated in the United States (the "Enterra U.S.
Subsidiaries") or any member of a controlled group or affiliated service
group (as defined in Sections 414(b),(c),(m) and (o) of the Code) that is
incorporated or domiciled in the United States of which Enterra or any of
the Enterra U.S. Subsidiaries is a member (collectively, the "Enterra
Group"). Enterra and the Enterra U.S. Subsidiaries will provide to
Weatherford, as to each Enterra Benefit Plan, as applicable, access to a
complete and accurate copy of (i) such plan, agreement or arrangement;
(ii) the trust, group annuity contract or other document that provides the
funding for such plan; (iii) the most recent annual Form 5500, 990 and 1041
reports; (iv) the most recent actuarial report or valuation statement;
(v) the most current summary plan description, handbook or other booklet
that describes any Enterra Benefit Plan, and any summary of material
modifications prepared after each such summary plan description; (vi) the
most recent IRS determination letter and all rulings or determinations
requested from the IRS subsequent to the date of such determination letter;
and (vii) all other pending correspondence from the IRS or the Department
of Labor received by any member of the Enterra Group that relates to such
plan.
Each Enterra Welfare Plan and Enterra Pension Plan (i) is in
compliance with ERISA, including, without limitation, all reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA, except
where the failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect; (ii) is in compliance with
the Code, except where the failure to be in compliance would not, either
individually or in the aggregate, have a Material Adverse Effect; (iii) has
had the appropriate Form 5500 timely filed for any Enterra Pension Plan, if
applicable, for each year of its existence
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and for any Enterra Welfare Plan for each year of its existence after 1987,
except where the failure to cause such timely filing would not, either
individually or in the aggregate, have a Material Adverse Effect; (iv) has
not engaged in any transaction described in Section 406 or 407 of ERISA or
Section 4975 of the Code unless it 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; (v) has no issue pending (other than the payment of
benefits in the normal course or the qualification of the plan pursuant to
an application pending before the IRS) nor any issue resolved adversely to
the Enterra Group that, in either case, may subject the Enterra Group to
the payment of a penalty, interest, tax or other amount, which, either
individually or in the aggregate, would have a Material Adverse Effect; and
(vi) can be unilaterally terminated or amended on no more than 90 days
notice. No notice has been received by the Enterra Group of an increase or
proposed increase in any premium relative to any Enterra Benefit Plan, and
no amendment to any Enterra Benefit Plan within the last twelve months has
increased the rate of employer contributions thereunder that, either
individually or in the aggregate, would have a Material Adverse Effect.
Each Enterra Benefit 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. No Enterra Benefit Plan will cause the Enterra Group
to have liability for severance pay as a result of this Agreement. The
Enterra Group does not provide employee post-retirement medical or health
coverage or contribute to or maintain any employee welfare benefit plan
that provides for health benefit coverage following termination of
employment except as required by Section 4980B(f) of the Code or other
applicable statute, nor has the Enterra Group made any representations,
agreements, covenants or commitments to provide that coverage.
Except for each Enterra Pension Plan that is an ERISA top-hat plan,
each Enterra Pension Plan has been submitted to and approved as qualifying
under Section 401(a) of the Code by the IRS or the applicable remedial
amendment period relating to such plan will not have ended prior to the
Closing. To the knowledge of Enterra, no facts have occurred that, if
known by the IRS, could cause disqualification of any Enterra Pension Plan.
Each Enterra Pension Plan to which Section 412 of the Code is applicable
fully complies with the funding requirements of that Section and there is
no accumulated funding deficiency as defined in Section 302(a)(2) of ERISA
(whether or not waived) in any such plan. The Enterra Group has paid all
premiums (including, without limitation, interest, charges and penalties
for late payment) due the PBGC with respect to each Enterra Pension Plan
for which premiums are required. No Enterra Pension Plan has been
terminated under circumstances that would result in liability to the PBGC
or the Enterra Group. There has been no "reportable event" (as defined in
Section 4043(b) of ERISA and the regulations under that Section) with
respect to any Enterra Pension Plan subject to Title IV of ERISA.
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With respect to each Enterra Pension Plan subject to Title IV of ERISA, the
Enterra Group has not (i) ceased operations at a facility so as to become
subject to the provisions of Section 4062(e) of ERISA, (ii) withdrawn as a
substantial employer so as to become subject to the provisions of
Section 4063 of ERISA or (iii) ceased making contributions on or before the
Closing Date to any such plan subject to Section 4064(a) of ERISA to which
the Enterra Group made contributions at any time during the six years prior
to the Closing Date. Neither the Enterra Group nor any member thereof has
made a complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as defined
in Section 4201 of ERISA.
Enterra's subsidiaries incorporated outside of the United States 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.
(j) TAXES. All Tax Returns of or relating to any Taxes that are
required to be filed on or before the Closing Date by or with respect to
Enterra or any of the Enterra Subsidiaries have been or will be duly and
timely filed, and all Taxes, including, without limitation, interest and
penalties, due and payable pursuant to such Tax Returns have been paid or
adequately provided for in reserves established by Enterra, except where
the failure to file, pay or provide for would not, either individually or
in the aggregate, have a Material Adverse Effect. All Tax Returns of or
with respect to Enterra or any of the Enterra Subsidiaries have been
audited by the applicable governmental authority, or the applicable statute
of limitations has expired, for all periods up to and including, without
limitation, the tax year ended December 31, 1987. There is no material
claim against Enterra or any of the Enterra Subsidiaries with respect to
any Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Enterra or any of the Enterra Subsidiaries that has not been adequately
provided for in reserves established by Enterra. The total amounts set up
as liabilities for current and deferred Taxes in the consolidated financial
statements included in the Enterra Commission Filings have been prepared in
accordance with generally accepted accounting principles and are sufficient
to cover the payment of all material Taxes, including, without limitation,
any penalties or interest thereon and whether or not assessed or disputed,
that are, or are hereafter finally determined to be, or to have been, due
with respect to the operations of Enterra and the Enterra Subsidiaries
through the periods covered thereby.
(k) ENVIRONMENTAL.
(i) There are no facts, conditions or circumstances known to
Enterra that could cause Enterra or any Enterra Subsidiary to incur
any loss, liability, damage, cost or expense, either individually or
in the aggregate, in excess of Enterra's charges, accruals and
reserves for
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environmental matters reflected on Enterra's consolidated balance
sheet contained in the most recent Enterra Commission Filing, for
(A) violations of Environmental Laws, (B) failure to obtain an
Environmental Permit, (C) a requirement to install environmental or
pollution control equipment, (D) removal, response or remedial costs
related to Hazardous Materials or (E) personal injury, property damage
or natural resources damage resulting from exposure to or releases of
Hazardous Materials, except in each case where such loss, liability,
damage, cost or expense would not have a Material Adverse Effect.
(ii) The business and any other operations conducted by Enterra
or any Enterra Subsidiary are in compliance with all applicable
limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations established under applicable
Environmental Laws, except where the failure to be in compliance would
not, either individually or in the aggregate, have a Material Adverse
Effect.
(l) NO SEVERANCE PAYMENTS. None of Enterra or the Enterra
Subsidiaries will owe a severance payment or similar obligation to any of
their respective employees, officers or directors as a result of the Merger
or the transactions contemplated by this Agreement, nor will any of such
persons be entitled to an increase in severance payments or other benefits
as a result of the Merger or the transactions contemplated by this
Agreement in the event of the subsequent termination of their employment.
(m) VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of the outstanding shares of Enterra Common Stock is the only vote
of the holders of any class or series of the capital stock of Enterra
necessary to approve this Agreement and the Merger.
(n) INSURANCE. The Enterra Disclosure Letter sets forth all policies
of insurance currently in effect relating to the business or operations of
Enterra and the Enterra Subsidiaries.
(o) TITLE TO PROPERTY. Except as set forth in the Enterra Commission
Filings, Enterra and each of the Enterra Subsidiaries have good and
indefeasible title to all of their real properties purported to be owned in
fee and good title to all their other material assets, free and clear of
all mortgages, liens, charges and encumbrances other than Permitted Liens.
(p) ENTERRA ACTIONS. As of the date hereof, the Board of Directors
of Enterra (at a meeting duly called and held) has resolved to recommend
approval and adoption of this Agreement and the Merger by the stockholders
of Enterra. Simmons & Company International, Inc. has delivered to the
Board of Directors of Enterra its opinion that the consideration to be
received by the holders of Enterra Common Stock in the Merger is fair from
a financial point of view to such holders.
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ARTICLE III
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME
3.1 CONDUCT OF BUSINESS BY WEATHERFORD PENDING THE MERGER. Weatherford
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless Enterra shall otherwise provide its prior consent in writing (which
consent shall not be unreasonably withheld) or as otherwise expressly
contemplated by this Agreement or as set forth in the Weatherford Disclosure
Letter:
(a) The business of Weatherford and the Weatherford Subsidiaries
shall be conducted only in, and Weatherford and the Weatherford
Subsidiaries shall not take any action except in, the ordinary course of
business;
(b) Weatherford shall not, and shall not permit any of the
Weatherford Subsidiaries to:
(i) split, combine or reclassify any outstanding capital stock
of Weatherford, or authorize, declare, set aside or pay any dividend
payable in cash, stock, property or otherwise in respect of the
capital stock of Weatherford;
(ii) authorize or pay any extraordinary bonuses to employees;
(iii) grant any stock options or rights to acquire Weatherford
Common Stock or common stock of any of the Weatherford Subsidiaries to
any person or entity, other than options to purchase Weatherford
Common Stock issued pursuant to employee stock option plans in amounts
consistent with past practice;
(iv) authorize or issue, sell, pledge, dispose of or encumber
any shares of capital stock of Weatherford or, except to Weatherford
or a wholly-owned Weatherford Subsidiary, any of the Weatherford
Subsidiaries, other than pursuant to Weatherford Options;
(v) sell, pledge, dispose of or encumber any assets of
Weatherford or any of the Weatherford Subsidiaries, other than (A) in
the ordinary course of business, (B) not relating to the borrowing of
money, (C) with respect to purchase money security interests or (D)
with respect to encumbered assets acquired in connection with an
acquisition permitted under Section 3.1(b)(viii);
(vi) redeem, purchase, acquire or offer to acquire any shares
of Weatherford Common Stock;
(vii) enter into, or grant any material change in, employment,
compensation, benefit, severance, consulting or stay-bonus
arrangements;
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(viii) acquire any corporation, partnership, other business
organization or division thereof for a purchase price in excess of
$5,000,000 or acquire corporations, partnerships, other business
organizations or divisions thereof for an aggregate purchase price in
excess of $15,000,000;
(ix) enter into any contract, agreement, commitment or
arrangement other than in the ordinary course of business;
(x) authorize any capital expenditures other than in the
ordinary course of business, and in accordance with a plan previously
presented to, and not rejected by, the Weatherford Board of Directors;
(xi) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business, and in
no event in excess of the unused credit available from time to time
under existing credit facilities of Weatherford;
(xii) amend or propose to amend the charter or bylaws of
Weatherford or any of the Weatherford Subsidiaries in which
Weatherford, either directly or indirectly, has less than a 100%
equity interest; or
(xiii) take, and Weatherford shall use its reasonable efforts to
prevent any affiliate of Weatherford from taking, any action that
would prevent, including with the passage of time, the Merger's
qualification for "pooling of interests" accounting treatment or
prevent the Merger from being treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code;
(c) Weatherford shall use all reasonable efforts (i) to preserve
intact the business organization of Weatherford and each of the Weatherford
Subsidiaries whose stock is pledged under existing credit facilities,
(ii) to maintain in effect any material franchises, authorizations or
similar rights of Weatherford and each of the Weatherford Subsidiaries,
(iii) to keep available the services of the current officers and key
employees of Weatherford and each of the Weatherford Subsidiaries, (iv) to
preserve its goodwill with those having material business relationships
with Weatherford and the Weatherford Subsidiaries, (v) to maintain and keep
the material properties of Weatherford and each of the Weatherford
Subsidiaries in as good a repair and condition as presently exists, except
for deterioration due to ordinary wear and tear and damage due to casualty,
and (vi) to maintain in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained by Weatherford
and the Weatherford Subsidiaries; and
(d) Weatherford shall not, and shall not permit any of the
Weatherford Subsidiaries to, take any action that would, or that reasonably
could be expected
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<PAGE>
to, result in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set forth
in Article VI not being satisfied. Weatherford promptly shall advise
Enterra orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a Material Adverse
Effect on Weatherford.
3.2 ACCESS TO INFORMATION. From the date hereof to the Effective Time,
Weatherford shall, and shall cause the Weatherford Subsidiaries and its and
their officers, directors, employees and representatives to, afford the
representatives of Enterra complete access during normal business hours to its
officers, employees, representatives, properties, books and records, and shall
furnish Enterra all financial, operating and other data and information as
Enterra, through its representatives, reasonably may request; PROVIDED, HOWEVER,
that notwithstanding the foregoing provisions of this Section 3.2 or any other
provision of this Agreement, Weatherford shall not be required to provide to
Enterra any information that is the subject of a confidentiality agreement and
that relates primarily to a party other than Weatherford, a Weatherford
Subsidiary or a former subsidiary of Weatherford.
3.3 AFFILIATES' AGREEMENTS. Weatherford will use its reasonable efforts
to cause each stockholder who, in the opinion of counsel to Weatherford, is an
"affiliate" of Weatherford to enter into an agreement substantially in the form
of Exhibit 3.3.
3.4 RESERVATION OF WEATHERFORD COMMON STOCK. Weatherford shall reserve
for issuance, out of its authorized but unissued capital stock, such number of
shares of Weatherford Common Stock as may be issuable upon consummation of the
Merger.
3.5 STOCK EXCHANGE LISTING. Weatherford shall use all reasonable efforts
to cause the shares of Weatherford Common Stock to be issued upon consummation
of the Merger to be approved for listing on the New York Stock Exchange, subject
to official notice of issuance, prior to the Closing Date.
ARTICLE IV
COVENANTS OF ENTERRA PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY ENTERRA PENDING THE MERGER. Enterra covenants
and agrees that, from the date of this Agreement until the Effective Time,
unless Weatherford shall otherwise provide its prior consent in writing (which
consent shall not be unreasonably withheld) or as otherwise expressly
contemplated by this Agreement or as set forth in the Enterra Disclosure Letter:
(a) The business of Enterra and the Enterra Subsidiaries shall be
conducted only in, and Enterra and the Enterra Subsidiaries shall not take
any action except in, the ordinary course of business;
(b) Enterra shall not, and shall not permit any of the Enterra
Subsidiaries to:
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(i) split, combine or reclassify any outstanding capital stock
of Enterra, or authorize, declare, set aside or pay any dividend
payable in cash, stock, property or otherwise in respect of the
capital stock of Enterra;
(ii) authorize or pay any extraordinary bonuses to employees;
(iii) grant any stock options or rights to acquire Enterra
Common Stock or common stock of any of the Enterra Subsidiaries to any
person or entity, other than options to purchase Enterra Common Stock
issued pursuant to employee stock option plans in amounts consistent
with past practice;
(iv) authorize or issue, sell, pledge, dispose of or encumber
any shares of capital stock of Enterra or, except to Enterra or a
wholly-owned Enterra Subsidiary, any of the Enterra Subsidiaries,
other than pursuant to Enterra Options;
(v) sell, pledge, dispose of or encumber any assets of Enterra
or any of the Enterra Subsidiaries, other than (A) in the ordinary
course of business, (B) not relating to the borrowing of money,
(C) with respect to purchase money security interests or (D) with
respect to encumbered assets acquired in connection with an
acquisition permitted under Section 4.1(b)(viii);
(vi) redeem, purchase, acquire or offer to acquire any shares
of Enterra Common Stock;
(vii) enter into, or grant any material change in, employment,
compensation, benefit, severance, consulting or stay-bonus
arrangements;
(viii) acquire any corporation, partnership, other business
organization or division thereof for a purchase price in excess of
$5,000,000 or corporations, partnerships, other business organizations
or divisions thereof for an aggregate purchase price in excess of
$15,000,000;
(ix) enter into any contract, agreement, commitment or
arrangement other than in the ordinary course of business;
(x) authorize any capital expenditures other than in the
ordinary course of business, and in accordance with a plan previously
presented to, and not rejected by, the Enterra Board of Directors;
(xi) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business, and in
no event in excess of the unused credit available from time to time
under existing credit facilities of Enterra;
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<PAGE>
(xii) amend or propose to amend the charter or bylaws of Enterra
or any of the Enterra Subsidiaries in which Enterra, either directly
or indirectly, has less than a 100% equity interest; or
(xiii) take, and Enterra shall use its reasonable efforts to
prevent any affiliate of Enterra from taking, any action that would
prevent, including with the passage of time, the Merger's
qualification for "pooling of interests" accounting treatment or
prevent the Merger from being treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code;
(c) Enterra shall use its reasonable efforts (i) to preserve intact
the business organization of Enterra and each of the Enterra Subsidiaries
whose stock is pledged under existing credit facilities, (ii) to maintain
in effect any material franchises, authorizations or similar rights of
Enterra and each of the Enterra Subsidiaries, (iii) to keep available the
services of the current officers and key employees of Enterra and each of
the Enterra Subsidiaries, (iv) to preserve its goodwill with those having
material business relationships with Enterra and the Enterra Subsidiaries,
(v) to maintain and keep the material properties of Enterra and each of the
Enterra Subsidiaries in as good a repair and condition as presently exists,
except for deterioration due to ordinary wear and tear and damage due to
casualty, and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained by
Enterra and each of the Enterra Subsidiaries; and
(d) Enterra shall not, and shall not permit any of the Enterra
Subsidiaries to, take any action that would, or that reasonably could be
expected to, result in any of the representations and warranties set forth
in this Agreement becoming untrue or any of the conditions to the Merger
set forth in Article VI not being satisfied. Enterra promptly shall advise
Weatherford orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a Material Adverse
Effect on Enterra.
4.2 ACCESS TO INFORMATION. From the date hereof to the Effective Time,
Enterra shall, and shall cause the Enterra Subsidiaries and its and their
officers, directors, employees and representatives to, afford the
representatives of Weatherford complete access during normal business hours to
its officers, employees, representatives, properties, books and records, and
shall furnish Weatherford all financial, operating and other data and
information as Weatherford, through its representatives, reasonably may request;
PROVIDED, HOWEVER, that notwithstanding the foregoing provisions of this
Section 4.2 or any other provision of this Agreement, Enterra shall not be
required to provide to Weatherford any information that is the subject of a
confidentiality agreement and that relates primarily to a party other than
Enterra, an Enterra Subsidiary or a former subsidiary of Enterra.
4.3 AFFILIATES' AGREEMENTS. Enterra will use its reasonable efforts to
cause each stockholder who, in the opinion of counsel to Enterra, is an
"affiliate" of Enterra to enter into an agreement substantially in the form of
Exhibit 4.3.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly
as practicable after the execution of this Agreement, Weatherford and Enterra
shall prepare and file with the Commission preliminary proxy materials that
shall constitute the joint proxy statement (the "Proxy Statement") of
Weatherford and Enterra and the registration statement with respect to the
Weatherford Common Stock to be issued in connection with the Merger (the
"Registration Statement"). As promptly as practicable after comments are
received from the Commission on the preliminary proxy materials, Weatherford and
Enterra shall file with the Commission a combined joint proxy statement and
registration statement on Form S-4 (or on such other form as shall be
appropriate) relating to the approval and adoption of the Merger and this
Agreement by the stockholders of Weatherford and the stockholders of Enterra and
the issuance by Weatherford of Weatherford Common Stock in connection with the
Merger and shall use their reasonable efforts to cause the Registration
Statement to become effective as soon as practicable. Subject to the terms and
conditions set forth in Section 7.2, the Proxy Statement shall contain a
statement that the Board of Directors of Enterra recommended that the
stockholders of Enterra approve and adopt the Merger and this Agreement.
Subject to the terms and conditions set forth in Section 7.1, the Proxy
Statement shall contain a statement that the Board of Directors of Weatherford
recommended that the stockholders of Weatherford approve and adopt the Merger
and this Agreement.
5.2 COMFORT LETTERS.
(a) Enterra shall use its reasonable efforts to cause to be delivered
to Weatherford a letter of KPMG Peat Marwick LLP dated as of a date within
five business days before the date on which the Registration Statement
shall become effective and addressed to Weatherford, in form and substance
reasonably satisfactory to Weatherford and customary in scope and substance
for "comfort" letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
(b) Weatherford shall use its reasonable efforts to cause to be
delivered to Enterra a letter of Arthur Andersen LLP dated as of a date
within five business days before the date on which the Registration
Statement shall become effective and addressed to Enterra, in form and
substance reasonably satisfactory to Enterra and customary in scope and
substance for "comfort" letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to
the Registration Statement and Proxy Statement.
5.3 MEETINGS OF STOCKHOLDERS.
(a) Enterra shall promptly take all action reasonably necessary in
accordance with the DGCL and its Restated Certificate of Incorporation and
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bylaws to convene a meeting of its stockholders to consider and vote upon
the adoption and approval of the Merger and this Agreement. Subject to the
terms and conditions set forth in Section 7.2, the Board of Directors of
Enterra (i) shall recommend at such meeting that the stockholders of
Enterra vote to adopt and approve the Merger and this Agreement, (ii) shall
use its reasonable efforts to solicit from stockholders of Enterra proxies
in favor of such adoption and approval and (iii) shall take all other
action reasonably necessary to secure a vote of its stockholders in favor
of the adoption and approval of the Merger and this Agreement.
(b) Weatherford shall promptly take all action reasonably necessary
in accordance with the DGCL and its Restated Certificate of Incorporation
and bylaws to convene a meeting of its stockholders to consider and vote
upon the adoption and approval of the Merger and this Agreement. Subject
to the terms and conditions set forth in Section 7.1, the Board of
Directors of Weatherford (i) shall recommend at such meeting that the
stockholders of Weatherford vote to adopt and approve the Merger and this
Agreement, (ii) shall use its reasonable efforts to solicit from
stockholders of Weatherford proxies in favor of such adoption and approval
and (iii) shall take all other action reasonably necessary to secure a vote
of its stockholders in favor of the adoption and approval of the Merger and
this Agreement.
(c) Weatherford and Enterra shall coordinate and cooperate with
respect to the timing of such meetings and shall endeavor to hold such
meetings on the same day and as soon as practicable after the date hereof.
5.4 REASONABLE EFFORTS; CONSENTS, APPROVALS AND WAIVERS. Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other party in
doing, all things necessary, proper or advisable (a) to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including, without limitation,
(i) the obtaining of all necessary consents, approvals or waivers required in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Merger (provided that no such consent, approval or
waiver shall require such party to take any action that would impair the value
that such party reasonably attributes to the Merger) and (ii) the execution and
delivery of any additional instruments (including, without limitation, any
required supplemental indentures) necessary to consummate the transactions
contemplated by this Agreement; and (b) to defend any non-regulatory lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby,
including, without limitation, seeking to have any stay or temporary restraining
order entered by any court or other governmental entity vacated or reversed.
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5.5 ANTITRUST MATTERS. The obligations of each of the parties to this
Agreement shall include the following:
(a) each of the parties hereto shall file a premerger notification
and report form pursuant to the HSR Act with respect to the Merger as
promptly as reasonably possible following execution and delivery of this
Agreement. Each of the parties agrees to use best efforts to promptly
respond to any request for additional information pursuant to
Section (e)(1) of the HSR Act; and
(b) each party hereto will furnish to the other copies of all
correspondence, filings or communications between that party, or any of its
representatives, on the one hand, and any governmental agency or authority,
on the other hand, with respect to pre-notification obligations under any
antitrust law with respect to this Agreement or the Merger; PROVIDED,
HOWEVER, that with respect to any documents that the party reasonably
believes should not be disclosed to the other party, the party shall
instead furnish those documents to counsel for the other party pursuant to
a mutually satisfactory confidentiality agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS. Enterra shall give prompt notice to
Weatherford, and Weatherford shall give prompt notice to Enterra, orally and in
writing, of (a) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the date
hereof to the Effective Time, (b) any material failure of Enterra or
Weatherford, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and (c) any fact or event that would
make it necessary to amend the Registration Statement or the Proxy Statement to
render the statements therein not misleading or to comply with applicable law.
5.7 AGREEMENT TO DEFEND. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use their reasonable efforts to defend against and
respond thereto; PROVIDED, HOWEVER, that this Section 5.7 shall not apply to any
governmental investigation contemplated under Section 5.5(a).
5.8 EXPENSES. Subject to the terms and conditions set forth in
Section 7.3, and except as otherwise agreed to in writing by the parties, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
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5.9 INDEMNIFICATION.
(a) After the Effective Time Weatherford and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
defend, indemnify and hold harmless each person who is now, or has been at
any time prior to the date hereof or who becomes prior to the Effective
Time, an officer or director of Enterra or any of the Enterra Subsidiaries
(each, an "Indemnified Party" and, collectively, the "Indemnified Parties")
against (i) all costs or expenses (including, without limitation,
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, based in whole or in part on, or arising
in whole or in part out of, the fact that such person is or was an officer
or director, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at
or after, the Effective Time (collectively, the "Indemnified Liabilities");
and (ii) all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to, this Agreement, the
Merger or the transactions contemplated hereby. After the Effective Time,
Weatherford and the Surviving Corporation will be entitled to participate
in and, to the extent that it may wish, to assume the defense of any
action, with counsel reasonably satisfactory to the Indemnified Party;
PROVIDED, HOWEVER, if any Indemnified Party believes that, by reason of an
actual or potential conflict of interest, it is advisable for such
Indemnified Party to be represented by separate counsel, or if Weatherford
or the Surviving Corporation shall fail after the Effective Time to assume
responsibility for such defense, such Indemnified Party may retain counsel
reasonably satisfactory to Weatherford and the Surviving Corporation who
will represent such Indemnified Party, and Weatherford and the Surviving
Corporation shall pay all reasonable fees and disbursements of such counsel
promptly as statements therefor are received to the fullest extent
permitted by applicable law upon receipt of any undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Party, Weatherford and the
Surviving Corporation will cooperate with each other and use their
reasonable efforts to assist each other in the vigorous defense of any such
matter; PROVIDED, HOWEVER, that neither Weatherford nor the Surviving
Corporation shall be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify
Weatherford or the Surviving Corporation, as applicable (but the failure to
be so notified by an Indemnified Party shall not relieve an indemnifying
party from any liability that it may have under this Section 5.9 except to
the extent such failure materially prejudices such indemnifying party).
The indemnifying parties shall be required to pay for only one law firm (in
addition to any required local counsel) selected by the Indemnified Parties
as a group in accordance with the foregoing provisions with respect to each
such matter unless there is, under applicable standards of professional
conduct, a conflict in any significant issue between the positions of any
two or more Indemnified Parties. This Section 5.9 is intended
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to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her representatives.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall use its best efforts to maintain in effect director and
officer liability insurance for the benefit of the Indemnified Parties in
comparable amounts, with comparable deductibles or retained amounts and
with comparable coverages and exclusions as currently maintained by
Enterra; PROVIDED, HOWEVER, that if the Surviving Corporation is unable to
obtain insurance for such period for an aggregate premium of $1,000,000 or
less or if such insurance otherwise cannot be obtained or maintained by the
Surviving Corporation, then the Surviving Corporation's obligation pursuant
hereto shall only be to seek to be obtained the best possible coverage
under the circumstances subject to the foregoing limitation on premiums.
(c) All rights and obligations under this Section 5.9 shall be in
addition to any rights an Indemnified Party may have under the Restated
Certificate of Incorporation or bylaws of Enterra as in effect on the date
hereof, or pursuant to any other agreement, arrangement or document in
effect prior to the Effective Time. The provisions of this Section 5.9 are
intended to benefit, and may be enforced by, all Indemnified Parties, and
their respective heirs and representatives. This Section 5.9 shall be
binding upon all successors and assigns of Enterra, Weatherford and the
Surviving Corporation.
(d) If the Surviving Corporation is sold to a third party, such third
party shall expressly assume the Surviving Corporation's indemnification
obligation under this Section 5.9.
5.10 POST-EFFECTIVE TIME MAILING. As soon as practicable following the
Effective Time, the Surviving Corporation will cause to be mailed to each holder
of certificates that represented Enterra Common Stock prior to the Effective
Time, at such holder's address as it appears on Enterra's stock transfer
records, a letter of transmittal and other information advising such holder of
the consummation of the Merger and to enable such holder to effect the exchange
of stock certificates as contemplated by Article I of this Agreement.
5.11 STOCKHOLDERS' AGREEMENT. Weatherford will enter into a Stockholders'
Agreement, and an amendment thereto, with First Reserve Corporation and the
various First Reserve Funds (as defined therein), in the forms attached hereto
as Exhibits 5.11(a) and 5.11(b), respectively.
5.12 ENTERRA STOCK OPTIONS. At the Effective Time, each Enterra Option
that remains as of such date unexercised in whole or in part shall be replaced
by a substitute option, granted under an existing Weatherford stock option plan,
to purchase that number of shares of Weatherford Common Stock determined by
multiplying the number of shares of Enterra Common Stock subject to such Enterra
Option by the Conversion Rate and multiplying the exercise price per share of
such Enterra Option by a fraction the numerator of which is one and the
denominator of which is the Conversion Rate.
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Each such substitute option shall otherwise replicate the terms and conditions
of the Enterra Option it replaces. Weatherford shall take all corporate action
necessary (a) to reserve for issuance a sufficient number of shares of
Weatherford Common Stock for delivery upon exercise of such Enterra Options,
(b) to ensure that all shares of Weatherford Common Stock subject to such
Enterra Options are issued pursuant to a plan that complies with the exemption
provided by Rule 16b-3 promulgated under the Exchange Act and (c) to ensure that
shares of Weatherford Common Stock issued pursuant to the exercise of such
Enterra Options are registered under the Securities Act, listed on the New York
Stock Exchange and may be freely transferred by the holders thereof.
5.13 ENTERRA EMPLOYEE BENEFITS.
(a) For the period beginning at the Effective Time and ending on
June 30, 1996, Weatherford will either (i) cause to remain in effect all
Enterra Benefit Plans, as in effect at the Effective Time, or (ii) provide
benefits to employees of Enterra and the Enterra Subsidiaries under the
Weatherford Benefit Plans that are substantially comparable to the benefits
provided to such employees under the Enterra Benefit Plans, as in effect at
the Effective Time. From and after July 1, 1996, Weatherford agrees that
participation in the Weatherford Benefit Plans, as then in effect, shall be
made available to all Weatherford employees, including employees who were
employees of Enterra, and that such plans will provide the same or
substantially comparable benefits to all similarly situated employees.
(b) If participation in any Weatherford Benefit Plan is made
available to employees of Enterra or any Enterra Subsidiary, all service
with Enterra and the Enterra Subsidiaries prior to the Effective Time and
any other service recognized under the applicable Enterra Benefit Plans for
vesting and eligibility purposes shall be credited to such employees and
all waiting periods and pre-existing condition limitations shall be waived
under such Weatherford Benefit Plan.
(c) Prior to the Effective Time, Enterra shall have established the
Enterra Special Severance Pay Plan, in the form attached hereto as
Exhibit 5.13.
(d) Weatherford agrees that it shall make non-elective employer
contributions, including fixed or discretionary pension, profit sharing and
matching contributions, to each Enterra Benefit Plan that is intended to be
a qualified defined contribution plan under Section 401(a) of the Code for
the respective Enterra Benefit Plan's first plan year ending on or after
the Effective Time in accordance with the terms of such plan. Weatherford
agrees that the rate of each such non-elective employer contribution in
each case shall not be less than the rate of such non-elective employer
contribution that was made to the respective Enterra Benefit Plan for the
last plan year ending prior to the Effective Time. An employee of Enterra
or an Enterra Subsidiary who is employed, and who is a participant in an
Enterra Benefit Plan that is subject to this Section 5.13(d), on the day
before the Effective Time (an "Eligible Enterra
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Employee") shall be entitled to receive an allocation of such non-elective
employer contributions without regard to whether such employee continues to
be an employee of Enterra or an Enterra Subsidiary or any successor thereto
on the last day of the respective Enterra Benefit Plan's plan year (or
other period) for which such contributions are to be made. Weatherford
agrees to make any amendment to the applicable Enterra Benefit Plans as may
be necessary to effectuate the terms of this Section 5.13(d).
5.14 UPDATE OF DISCLOSURE LETTERS.
(a) Weatherford shall promptly disclose to Enterra in writing (i) any
information set forth in the Weatherford Disclosure Letter with respect to
subsections (b), (c), (e) and (g) of Section 2.2 that no longer is accurate
and with respect to all other subsections of Section 2.2 that no longer is
accurate in any material respect and (ii) any information of the nature of
that set forth in the Weatherford Disclosure Letter that arises between the
date hereof and the Closing and that would have been required to be
included in the Weatherford Disclosure Letter if such information had
existed and been known or available on the date hereof. Neither any such
new disclosure, nor the determination of Enterra to proceed with the Merger
in spite of any such new disclosure, shall relieve Weatherford from any
liability for any prior misrepresentation or breach of warranty.
(b) Enterra shall promptly disclose to Weatherford in writing (i) any
information set forth in the Enterra Disclosure Letter with respect to
subsections (b), (c), (e) and (g) of Section 2.3 that no longer is accurate
and with respect to all other subsections of Section 2.3 that no longer is
accurate in any material respect and (ii) any information of the nature of
that set forth in the Enterra Disclosure Letter that arises between the
date hereof and the Closing and that would have been required to be
included in the Enterra Disclosure Letter if such information had existed
and been known or available on the date hereof. Neither any such new
disclosure, nor the determination of Weatherford to proceed with the Merger
in spite of any such new disclosure, shall relieve Enterra from any
liability for any prior misrepresentation or breach of warranty.
5.15 WEATHERFORD SPECIAL SEVERANCE PAY PLAN. Prior to the Effective Time,
Weatherford shall have established the Weatherford Special Severance Pay Plan,
in the form attached hereto as Exhibit 5.15.
5.16 CHANGE OF CONTROL AGREEMENTS. Weatherford shall, as of the Effective
Time, have entered into change of control agreements, substantially in the form
of Exhibit 5.16(a), with the persons and for the respective severance benefits
set forth on Exhibit 5.16(b).
5.17 INDEMNIFICATION AGREEMENTS. Weatherford shall, as of the Effective
Time, have entered into indemnification agreements, substantially in the form of
Weatherford's existing indemnification agreements with the persons set forth on
Exhibit 5.17.
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5.18 ENTERRA EMPLOYEE BONUSES.
(a) The Enterra Board of Directors or the Executive Compensation
Committee of the Enterra Board of Directors (the "Enterra Committee") shall
determine, prior to the Closing Date, the final amount of bonuses to be
paid to the Enterra employees listed on Exhibit 5.18 for the fiscal year
ended December 31, 1993, such amount not to exceed the amount that
previously has been accrued for such bonuses. Such bonuses shall be paid
only after collection of at least $10,000,000 of the disputed outstanding
receivables from Kuwait Oil Company. If such bonuses are not paid prior to
the Closing Date, (i) the determination of the Enterra Board of Directors
or the Enterra Committee, as the case may be, will be binding upon
Weatherford, (ii) any Enterra employee terminated after such date shall
receive the entire amount of the bonus determined by the Enterra Board of
Directors or the Enterra Committee, as the case may be, and (iii) payment
of such bonuses shall be administered by Messrs. William E. Macaulay and
Robert L. Parker, Sr., who will be directors of the Surviving Corporation.
(b) The Enterra Board of Directors or the Enterra Committee shall
declare, prior to the Closing Date, the amount of bonuses to Enterra
employees, based upon Enterra's achievement of certain financial and other
targets for Enterra for the fiscal year ending December 31, 1995,
determined by the Enterra Board of Directors or the Enterra Committee, as
the case may be, in a manner consistent with the Enterra and Total Energy
Services Company bonus plans under which bonuses were paid for the fiscal
year ended December 31, 1994. The final amount of bonuses shall be
determined by the Enterra Board of Directors or the Enterra Committee, as
the case may be, if audited financial results for the year ending
December 31, 1995 are known prior to the Closing Date, or by Messrs.
Macaulay and Parker, if such results are not known until after the Closing
Date. Bonuses will be paid not earlier than February 1, 1996 and not later
than February 28, 1996. Any Enterra employee terminated after the Closing
Date shall receive the entire amount of the bonus.
(c) In addition to the 1995 bonuses referenced in Section 5.18(b),
Enterra may pay bonuses to Enterra employees in an amount not to exceed
$1,000,000 in the aggregate. The recipients and amounts of such bonuses
shall be determined in the sole discretion of the Enterra Committee;
PROVIDED, HOWEVER, that the total amount paid to any one employee shall not
exceed the aggregate of the current annualized salary and most recent
annual bonus of such employee.
5.19 ENTERRA SEVERANCE AGREEMENTS.
(a) Each of the Enterra severance agreements with the individuals set
forth on Exhibit 5.19(a)(i) shall be amended, pursuant to the form attached
hereto as Exhibit 5.19(a)(ii), and each of the Enterra severance agreements
with the individuals set forth on Exhibit 5.19(a)(iii) shall be amended,
pursuant to the form attached hereto as Exhibit 5.19(a)(iv).
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(b) The parties agree that, as a result of the Merger, any
resignation by any of M. Timothy Carey, Steven C. Grant, Edward C. Grimes,
Steven W. Krablin, J. Joseph Percle and Michael L. Stansberry at any time
from the Effective Time through August 12, 1996 shall constitute a
"Termination upon Change of Control" (as such term is defined in the
severance agreement between such person and Enterra). Further, it is
agreed that, for purposes of Section 3(a)(ii) of the severance agreement
between Enterra and each such individual, if the bonus for the 1993 fiscal
year is required to be taken into account, the final amount of the 1993
bonus determined by the Enterra Board of Directors or the Enterra Committee
pursuant to Section 5.18(a) shall be counted, notwithstanding whether the
disputed receivables from Kuwait Oil Company have been collected. It is
further agreed that the manner in which the obligation to provide extended
medical and dental benefits under Section 4(b) of each such individual's
severance agreement with Enterra shall be to pay to such individual during
the full period for which such benefits are required to be extended a
monthly amount equal to the difference between the applicable COBRA
continuation premium for such benefits and the premium, if any, charged to
the individual for such benefits immediately prior to the Change in Control
(as defined in such severance agreement) and such individual shall pay the
full premium to the plan.
5.20 ENTERRA CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
(a) Weatherford shall, as of the Effective Time, have entered into
definitive arrangements with D. Dale Wood reflecting the principal terms
set forth in Exhibit 5.20.
(b) If the implementation of the principal terms set forth in Exhibit
5.20 shall make the Merger ineligible for pooling-of-interests accounting
treatment under Accounting Principles Bulletin No. 16, Enterra agrees to
use its best efforts to negotiate a package that would provide Mr. Wood in
the aggregate with a substantially similar economic benefit.
5.21 WEATHERFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
Weatherford shall, as of the Effective Time, pay Philip Burguieres a fee in the
amount set forth in Exhibit 5.21. If Mr. Burguieres' fee set forth in Exhibit
5.21 shall make the Merger ineligible for pooling-of-interests accounting
treatment under Accounting Principles Bulletin No. 16, Weatherford agrees to use
its best efforts to negotiate an alternative package with Mr. Burguieres.
5.22 BOARD OF DIRECTORS.
(a) The Board of Directors of Weatherford will take action prior to
the Effective Time to cause the number of directors comprising the full
Board of Directors of the Surviving Corporation at the Effective Time to be
increased to ten persons, and the five persons listed on Exhibit 5.22 as
the Enterra designees to the Board of Directors of the Surviving
Corporation shall be elected to the Board of Directors of the Surviving
Corporation by the Weatherford Board of
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Directors effective at the Effective Time, such increase in number and such
election to be subject to the Closing. The Weatherford Board of Directors
will also take action prior to the Effective Time to cause the committees
of the Board of Directors of the Surviving Corporation at the Effective
Time to be the committees listed on Exhibit 1.6(a) hereto, having the
membership noted on such Exhibit, such action to be subject to the Closing.
If prior to the Effective Time, any Enterra designee for director set forth
on Exhibit 5.22, or if during the two years after the Effective Time, any
Enterra designated director shall decline or be unable to serve as a
director of the Surviving Corporation, the other Enterra designees or the
remaining Enterra designated directors, as the case may be, shall designate
another person to serve in such person's stead, subject to the approval of
a majority of the Weatherford designated directors at that time, which
approval shall not be unreasonably withheld. Weatherford agrees that,
during the two year period after the Effective Time, it shall cause at
least one Enterra designee listed on Exhibit 5.22 (or his successor chosen
pursuant to this Section 5.22(a)) to be a member of each of the Executive
and Nominating Committee, Audit Committee and Compensation and Stock Plans
Committee of the Board of Directors of the Surviving Corporation.
Weatherford shall take all appropriate action for two years after the
Effective Time to assist in the nomination for election as directors of the
Enterra designees listed on Exhibit 5.22 (or any successor chosen pursuant
to this Section 5.22(a)).
(b) Each person designated by Enterra to serve on the Board of
Directors of the Surviving Corporation, and any person subsequently
appointed to the Board of Directors of the Surviving Corporation by such
designees pursuant to Section 5.22(a), shall be covered by the Weatherford
International Incorporated Non-Employee Director Retirement Plan and the
prior service of any such person on the Enterra Board of Directors shall
count as service on the Board of Directors of the Surviving Corporation for
all purposes under such plan.
(c) If prior to the Effective Time, any Weatherford designee for
director set forth on Exhibit 5.22, or if during the two years after the
Effective Time, any Weatherford designated director shall decline or be
unable to serve as a director of the Surviving Corporation, the other
Weatherford designees or the remaining Weatherford designated directors, as
the case may be, shall designate another person to serve in such person's
stead, subject to the approval of a majority of the Enterra designated
directors at that time, which approval shall not be unreasonably withheld.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Closing Date of the following
conditions:
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(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of Weatherford and the
stockholders of Enterra as may be required by law and by any applicable
provisions of their respective certificates of incorporation or bylaws;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(c) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal the
consummation of the Merger;
(d) The Registration Statement shall be effective on the Closing
Date, and all post-effective amendments filed shall have been declared
effective or shall have been withdrawn; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the parties,
threatened by the Commission;
(e) There shall have been obtained any and all material permits,
approvals and consents of securities or blue sky commissions of any
jurisdiction, and of any other governmental body or agency, that reasonably
may be deemed necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a Material Adverse Effect
on Enterra or Weatherford; and
(f) All approvals of private persons, financial institutions or
corporations, (i) the granting of which is necessary for the consummation
of the Merger or the transactions contemplated in connection therewith and
(ii) the non-receipt of which would have a Material Adverse Effect on
Enterra or Weatherford, shall have been obtained.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. The obligation
of Weatherford to effect the Merger is, at the option of Weatherford, also
subject to the fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Enterra contained in
subsections (b), (c), (e) and (g) of Section 2.3 shall be accurate, and the
representations and warranties of Enterra contained in all other
subsections of Section 2.3 shall be accurate in all material respects
(except to the extent qualified by materiality, in which case such
representations and warranties shall be accurate), as of the Closing Date
as though such representations and warranties had been made at and as of
that time (except where any such representation or warranty is made as of a
date specifically set forth therein); all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Enterra
on or before the Closing Date shall have been duly
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complied with and performed in all material respects; and a certificate of
Enterra to the foregoing effect dated the Closing Date and signed by the
chief executive officer of Enterra shall have been delivered to
Weatherford;
(b) Since the date of this Agreement, no Material Adverse Change of
Enterra shall have occurred, and Weatherford shall have received a
certificate of Enterra signed by the chief executive officer of Enterra
dated the Closing Date to such effect;
(c) Weatherford shall have been advised in writing as of the date of
this Agreement and as of the Closing Date (i) by Arthur Andersen LLP that,
in accordance with generally accepted accounting principles and applicable
rules and regulations of the Commission, Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen LLP is not aware of any matters that prohibit the use of "pooling
of interests" accounting in connection with the Merger and (ii) by KPMG
Peat Marwick LLP that, in accordance with generally accepted accounting
principles and applicable rules and regulations of the Commission, no
conditions exist that would preclude Weatherford's accounting for the
Merger with Enterra as a "pooling of interests" as those conditions relate
to Enterra;
(d) Enterra shall have received, and furnished written copies to
Weatherford of, the Enterra affiliates' agreements pursuant to Section 4.3;
(e) Weatherford shall have received from Morgan, Lewis & Bockius,
counsel to Enterra, an opinion dated the Effective Time covering the
matters set forth in Exhibit 6.2(e);
(f) Weatherford shall have received a copy of the "comfort letter" of
KPMG Peat Marwick LLP pursuant to Section 5.2(a) and on or prior to the
Closing Date an additional letter from KPMG Peat Marwick LLP dated as of
the Closing Date, in form and substance reasonably satisfactory to
Weatherford, stating that nothing has come to their attention, as of a date
no earlier than five days prior to the Closing Date, which would require
any change in their letter delivered pursuant to Section 5.2(a) if it were
required to be dated and delivered on the Closing Date;
(g) The Board of Directors of Weatherford shall have received from
Merrill Lynch & Co. a written opinion, dated as of the date of this
Agreement, in form and substance reasonably satisfactory to the Board of
Directors of Weatherford, to the effect that the Conversion Rate is fair to
the holders of Weatherford Common Stock from a financial point of view,
which opinion shall have been confirmed in writing to such Board as of the
date the Proxy Statement is first mailed to the stockholders of Weatherford
and not subsequently withdrawn;
(h) Weatherford shall have received from Fulbright & Jaworski L.L.P.,
counsel to Weatherford, a written opinion dated as of the date that the
Proxy
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Statement is first mailed to stockholders of Weatherford to the effect that
(i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii)
Weatherford and Enterra will each be a party to that reorganization within
the meaning of Section 368(b) of the Code and (iii) Weatherford and Enterra
shall not recognize any gain or loss as a result of the Merger, and such
opinion shall not have been withdrawn or modified in any material respect;
(i) The Stockholders' Agreement among Enterra, First Reserve
Corporation and the various First Reserve Funds shall have been in full
force and effect, and the stockholders of Enterra named therein shall not
be in breach of any of the material terms thereof, immediately prior to the
Closing; and
(j) D. Dale Wood shall have entered into definitive arrangements
reflecting the principal terms set forth in Exhibit 5.20.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENTERRA. The obligation of
Enterra to effect the Merger is, at the option of Enterra, also subject to the
fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) The representations and warranties of Weatherford contained in
subsections (b), (c), (e) and (g) of Section 2.2 shall be accurate, and the
representations and warranties of Weatherford contained in all other
subsections of Section 2.2 shall be accurate in all material respects
(except to the extent qualified by materiality, in which case such
representations and warranties shall be accurate), as of the Closing Date
as though such representations and warranties had been made at and as of
that time (except where any such representation or warranty is made as of a
date specifically set forth therein); all of the terms, covenants and
conditions of this Agreement to be complied with and performed by
Weatherford on or before the Closing Date shall have been duly complied
with and performed in all material respects; and a certificate of
Weatherford to the foregoing effect dated the Closing Date and signed by
the chief executive officer of Weatherford shall have been delivered to
Enterra;
(b) Since the date of this Agreement, no Material Adverse Change of
Weatherford shall have occurred, and Enterra shall have received a
certificate of Weatherford signed by the chief executive officer of
Weatherford dated the Closing Date to such effect;
(c) Enterra shall have been advised in writing as of the date of this
Agreement and as of the Closing Date (i) by Arthur Andersen LLP that, in
accordance with generally accepted accounting principles and applicable
rules and regulations of the Commission, Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen LLP is not aware of any matters that prohibit the use of "pooling
of interests" accounting in connection with the Merger and (ii) by KPMG
Peat Marwick LLP that, in accordance with generally accepted accounting
principles and applicable rules and regulations of the Commission, no
conditions exist that would preclude
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Weatherford's accounting for the Merger with Enterra as a "pooling of
interests" as those conditions relate to Enterra;
(d) Weatherford shall have received, and furnished written copies to
Enterra of, the Weatherford affiliates' agreements pursuant to Section 3.3;
(e) Enterra shall have received from Fulbright & Jaworski L.L.P.,
counsel to Weatherford, an opinion dated the Effective Time covering the
matters set forth in Exhibit 6.3(e);
(f) Enterra shall have received a copy of the "comfort letter" of
Arthur Andersen LLP pursuant to Section 5.2(b) and on or prior to the
Closing Date an additional letter from Arthur Andersen LLP dated as of the
Closing Date, in form and substance reasonably satisfactory to Enterra,
stating that nothing has come to their attention, as of a date no earlier
than five days prior to the Closing Date, which would require any change in
their letter delivered pursuant to Section 5.2(b) if it were required to be
dated and delivered on the Closing Date;
(g) The Board of Directors of Enterra shall have received from
Simmons & Company International, Inc. a written opinion, dated as of the
date of this Agreement, in form and substance reasonably satisfactory to
the Board of Directors of Enterra, to the effect that the consideration to
be received by the holders of Enterra Common Stock in the Merger is fair
from a financial point of view to such holders, which opinion shall have
been confirmed in writing to such Board as of the date the Proxy Statement
is first mailed to the stockholders of Enterra and not subsequently
withdrawn;
(h) Enterra shall have received from Morgan, Lewis & Bockius, counsel
to Enterra, a written opinion dated as of the date that the Proxy Statement
is first mailed to stockholders of Enterra to the effect that (i) the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, (ii) Weatherford and
Enterra will each be a party to that reorganization within the meaning of
Section 368(b) of the Code and (iii) the stockholders of Enterra shall not
recognize any gain or loss as a result of the Merger, other than to the
extent such stockholders receive cash in lieu of fractional shares, and
such opinion shall not have been withdrawn or modified in any material
respect;
(i) The shares of Weatherford Common Stock to be issued upon
consummation of the Merger shall have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance; and
(j) Each of the Weatherford Change of Control Agreements set forth on
Exhibit 6.3(j)(i) shall be amended, pursuant to the form attached hereto as
Exhibit 6.3(j)(ii).
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ARTICLE VII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
7.1 NO SOLICITATION BY WEATHERFORD.
(a) Weatherford shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director,
employee, investment banker, attorney or other advisor, agent or
representative of Weatherford or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any
Weatherford Takeover Proposal (as hereinafter defined), (ii) enter into any
agreement with respect to any Weatherford Takeover Proposal, or
(iii) participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Weatherford
Takeover Proposal; PROVIDED, HOWEVER, that prior to the vote of
stockholders of Weatherford for approval and adoption of this Agreement and
the Merger, Weatherford may take any actions described in the foregoing
clause (iii) to the extent that the Board of Directors of Weatherford
determines, in good faith after consultation with outside counsel, that
failure to take such actions could reasonably be expected to result in a
breach of the Board's fiduciary obligations. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any officer, director or employee of
Weatherford or any of the Weatherford Subsidiaries or any investment
banker, attorney or other advisor, agent or representative of Weatherford,
whether or not such person is purporting to act on behalf of Weatherford or
otherwise, shall be deemed to be a material breach of this Agreement by
Weatherford. For purposes of this Agreement, a "Weatherford Takeover
Proposal" means (i) any proposal or offer, other than a proposal or offer
by Enterra or any of its affiliates, for a merger or other business
combination involving Weatherford, (ii) any proposal or offer, other than a
proposal or offer by Enterra or any of its affiliates, to acquire from
Weatherford or any of its affiliates in any manner, directly or indirectly,
more than 30% of the voting stock of Weatherford or any Weatherford
Subsidiary or a material amount of the assets of Weatherford and the
Weatherford Subsidiaries, taken as a whole, or (iii) any proposal or offer,
other than a proposal or offer by Enterra or any of its affiliates, to
acquire from the stockholders of Weatherford by tender offer, exchange
offer or otherwise more than 30% of the outstanding voting stock of
Weatherford.
(b) Neither the Board of Directors of Weatherford nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Enterra the approval or recommendation by the Board of
Directors of Weatherford or any such committee of this Agreement or the
Merger or take any action having such effect or (ii) approve or recommend,
or propose to approve or recommend, any Weatherford Takeover Proposal.
Notwithstanding the foregoing, if the Board of Directors of Weatherford
receives a Weatherford Takeover Proposal that, in the exercise of its
fiduciary obligations (as determined in good faith after consultation with
outside counsel), it
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determines to be a Weatherford Superior Proposal (as hereinafter defined),
the Board of Directors of Weatherford may withdraw or modify its approval
or recommendation of this Agreement or the Merger and may (subject to the
following sentence) terminate this Agreement, in each case at any time
after the fifth business day following Enterra's receipt of written notice
(a "Weatherford Notice of Superior Proposal") advising Enterra that the
Board of Directors of Weatherford has received a Weatherford Takeover
Proposal that it has determined to be a Weatherford Superior Proposal,
specifying the principal terms and conditions of such Weatherford Superior
Proposal and identifying the person making such Weatherford Superior
Proposal. Weatherford may terminate this Agreement pursuant to the
preceding sentence only if the stockholders of Weatherford shall not yet
have voted upon the Merger and Weatherford shall have paid to Enterra the
Termination Fee (as defined in Section 7.3(a)). Nothing contained herein
shall prohibit Weatherford from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) of the Exchange Act provided that
Weatherford does not withdraw or modify its position with respect to the
Merger or take any action having such effect or approve or recommend a
Weatherford Takeover Proposal. For purposes of this Agreement, a
"Weatherford Superior Proposal" means any bona fide Weatherford Takeover
Proposal to merge with or acquire, directly or indirectly, all of the
voting stock then outstanding or all or substantially all of the assets of
Weatherford, and otherwise on terms that the Board of Directors of
Weatherford determines in its good faith reasonable judgment (based on the
written advice of a financial advisor of nationally recognized reputation)
to be more favorable to Weatherford's stockholders than the Merger.
(c) If the Board of Directors of Weatherford or any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Enterra the approval or recommendation by the Board of Directors
of Weatherford or any such committee of this Agreement or the Merger or
take any action having such effect or (ii) approve or recommend, or propose
to approve or recommend, any Weatherford Takeover Proposal, Enterra may
terminate this Agreement.
(d) In addition to the obligations of Weatherford set forth in
Section 7.1(b), Weatherford shall promptly advise Enterra orally and in
writing of any negotiations or discussions, entered into in reliance on the
proviso to the first sentence of Section 7.1(a).
7.2 NO SOLICITATION BY ENTERRA.
(a) Enterra shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director, employee,
investment banker, attorney or other advisor, agent or representative of
Enterra or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Enterra Takeover Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to any
Enterra Takeover Proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any
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person any information with respect to, the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Enterra Takeover
Proposal; PROVIDED, HOWEVER, that prior to the vote of stockholders of
Enterra for approval and adoption of this Agreement and the Merger, Enterra
may take any actions described in the foregoing clause (iii) to the extent
that the Board of Directors of Enterra determines, in good faith after
consultation with outside counsel, that failure to take such actions could
reasonably be expected to result in a breach of the Board's fiduciary
obligations. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
officer, director or employee of Enterra or any of the Enterra Subsidiaries
or any investment banker, attorney or other advisor, agent or
representative of Enterra, whether or not such person is purporting to act
on behalf of Enterra or otherwise, shall be deemed to be a material breach
of this Agreement by Enterra. For purposes of this Agreement, an "Enterra
Takeover Proposal" means (i) any proposal or offer, other than a proposal
or offer by Weatherford or any of its affiliates, for a merger or other
business combination involving Enterra, (ii) any proposal or offer, other
than a proposal or offer by Weatherford or any of its affiliates, to
acquire from Enterra or any of its affiliates in any manner, directly or
indirectly, more than 30% of the voting stock of Enterra or any Enterra
Subsidiary or a material amount of the assets of Enterra and the Enterra
Subsidiaries, taken as a whole, or (iii) any proposal or offer, other than
a proposal or offer by Weatherford or any of its affiliates, to acquire
from the stockholders of Enterra by tender offer, exchange offer or
otherwise more than 30% of the outstanding voting stock of Enterra.
(b) Neither the Board of Directors of Enterra nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Weatherford the approval or recommendation by the Board
of Directors of Enterra or any such committee of this Agreement or the
Merger or take any action having such effect or (ii) approve or recommend,
or propose to approve or recommend, any Enterra Takeover Proposal.
Notwithstanding the foregoing, if the Board of Directors of Enterra
receives an Enterra Takeover Proposal that, in the exercise of its
fiduciary obligations (as determined in good faith after consultation with
outside counsel), it determines to be an Enterra Superior Proposal (as
hereinafter defined), the Board of Directors of Enterra may withdraw or
modify its approval or recommendation of this Agreement or the Merger and
may (subject to the following sentence) terminate this Agreement, in each
case at any time after the fifth business day following Weatherford's
receipt of written notice (an "Enterra Notice of Superior Proposal")
advising Weatherford that the Board of Directors of Enterra has received an
Enterra Takeover Proposal that it has determined to be an Enterra Superior
Proposal, specifying the principal terms and conditions of such Enterra
Superior Proposal and identifying the person making such Enterra Superior
Proposal. Enterra may terminate this Agreement pursuant to the preceding
sentence only if the stockholders of Enterra shall not yet have voted upon
the Merger and Enterra shall have paid to Weatherford the Termination Fee.
Nothing contained herein shall prohibit Enterra from taking and disclosing
to its stockholders a position contemplated by Rule 14e-2(a) of the
Exchange Act
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provided that Enterra does not withdraw or modify its position with respect
to the Merger or take any action having such effect or approve or recommend
an Enterra Takeover Proposal. For purposes of this Agreement, an "Enterra
Superior Proposal" means any bona fide Enterra Takeover Proposal to merge
with or acquire, directly or indirectly, all of the voting stock then
outstanding or all or substantially all of the assets of Enterra, and
otherwise on terms that the Board of Directors of Enterra determines in its
good faith reasonable judgment (based on the written advice of a financial
advisor of nationally recognized reputation) to be more favorable to
Enterra's stockholders than the Merger.
(c) If the Board of Directors of Enterra or any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Weatherford the approval or recommendation by the Board of
Directors of Enterra or any such committee of this Agreement or the Merger
or take any action having such effect or (ii) approve or recommend, or
propose to approve or recommend, any Enterra Takeover Proposal, Weatherford
may terminate this Agreement.
(d) In addition to the obligations of Enterra set forth in
Section 7.2(b), Enterra shall promptly advise Weatherford orally and in
writing of any negotiations or discussions, entered into in reliance on the
proviso to the first sentence of Section 7.2(a).
7.3 FEE AND EXPENSE REIMBURSEMENTS.
(a) Weatherford agrees to pay Enterra a fee in immediately available
funds of $20,000,000 (the "Termination Fee") promptly upon the termination
of this Agreement if this Agreement is terminated by Enterra or Weatherford
pursuant to Section 8.1(j). Further, Weatherford agrees to pay Enterra
the Termination Fee if:
(i) this Agreement is terminated for any reason other than a
material breach by Enterra and, after the date hereof and before such
termination, a Weatherford Takeover Proposal shall have been made and
the stockholders of Weatherford shall not have approved the Merger; or
(ii) Weatherford shall have terminated this Agreement pursuant
to Section 8.1(c) or Section 8.1(h) and, within six months after such
termination, Weatherford shall have entered into a definitive
agreement with any person (other than Enterra or any of its
affiliates) with respect to a Weatherford Takeover Proposal than is
more favorable to Weatherford's stockholders that the Merger.
The Termination Fee shall be payable promptly upon termination of this
Agreement if any of the events described in Section 7.3(a)(i) shall have
occurred prior to termination. The Termination Fee payable pursuant to
Section 7.3(a)(ii) shall be payable promptly upon the first occurrence of
the event following termination of this Agreement.
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(b) Enterra agrees to pay Weatherford the Termination Fee promptly
upon the termination of this Agreement if this Agreement is terminated by
Enterra or Weatherford pursuant to Section 8.1(k). Further, Enterra agrees
to pay Weatherford the Termination Fee if:
(i) this Agreement is terminated for any reason other than a
material breach by Weatherford and, after the date hereof and before
such termination, an Enterra Takeover Proposal shall have been made
and the stockholders of Enterra shall not have approved the Merger; or
(ii) Enterra shall have terminated this Agreement pursuant to
Section 8.1(d) or Section 8.1(i) and, within six months after such
termination, Enterra shall have entered into a definitive agreement
with any person (other than Weatherford or any of its affiliates) with
respect to an Enterra Takeover Proposal that is more favorable to
Enterra's stockholders than the Merger.
The Termination Fee shall be payable promptly upon termination of this
Agreement if any of the events described in Section 7.3(b)(i) shall have
occurred prior to termination. The Termination Fee payable pursuant to
Section 7.3(b)(ii) shall be payable promptly upon the first occurrence of
the event following termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of
Weatherford or the stockholders of Enterra:
(a) by mutual consent of Weatherford and Enterra;
(b) by either Weatherford or Enterra if the Merger has not been
effected on or before December 31, 1995;
(c) by Weatherford if the condition set forth in Section 6.2(g) is
not satisfied;
(d) by Enterra if the condition set forth in Section 6.3(g) is not
satisfied;
(e) by Weatherford if a final, unappealable order shall have been
entered to restrain, enjoin or otherwise prevent, or awarding substantial
damages in connection with, a consummation of this Agreement or the
transactions contemplated in connection herewith, or there is pending by
any governmental body any suit challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by
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this Agreement or seeking to obtain from Enterra or any of the Enterra
Subsidiaries any damages that are material in relation to Enterra and the
Enterra Subsidiaries, taken as a whole;
(f) by Enterra if a final, unappealable order shall have been entered
to restrain, enjoin or otherwise prevent, or awarding substantial damages
in connection with, a consummation of this Agreement or the transactions
contemplated in connection herewith, or there is pending by any
governmental body any suit challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from Weatherford or any
of the Weatherford Subsidiaries any damages that are material in relation
to Weatherford and the Weatherford Subsidiaries, taken as a whole;
(g) by either Weatherford or Enterra if the required approval of the
stockholders of Enterra or the stockholders of Weatherford for the adoption
and approval of the Merger and this Agreement is not received at their
respective stockholders' meetings;
(h) by Weatherford if (i) since the date of this Agreement there has
been a Material Adverse Change in Enterra or (ii) there has been a breach
of any representation or warranty set forth in subsection (b), (c), (e) or
(g) of Section 2.3, or there has been a breach of any other subsection of
Section 2.3 in any material respect (except to the extent qualified by
materiality, in which case such representations and warranties shall not
have been breached in any respect), by Enterra or Enterra fails to perform
in any material respect any of its covenants, agreements or obligations
under this Agreement;
(i) by Enterra if (i) since the date of this Agreement there has been
a Material Adverse Change in Weatherford or (ii) there has been a breach of
any representation or warranty set forth in subsection (b), (c), (e) or (g)
of Section 2.2, or there has been a breach of any other subsection of
Section 2.2 in any material respect (except to the extent qualified by
materiality, in which case such representations and warranties shall not
have been breached in any respect), by Weatherford or Weatherford fails to
perform in any material respect any of its covenants, agreements or
obligations under this Agreement;
(j) by Weatherford or Enterra to the extent permitted under
Section 7.1; or
(k) by Weatherford or Enterra to the extent permitted under
Section 7.2.
8.2 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 8.1, Weatherford and Enterra shall have no
obligation or liability to each other except that (i) the provisions of
Sections 5.8 and 7.3, this Article VIII and the obligations set forth in the
Confidentiality Agreement dated May 12, 1995, between Weatherford and Enterra
(the "Confidentiality Agreement") shall survive any such
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termination, and (ii) in the case of termination pursuant to Section 8.1(h) or
8.1(i) only, nothing herein and no termination pursuant to such sections will
relieve any party from liability for any breach of this Agreement.
8.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any
time, except by an instrument in writing signed on behalf of each party hereto;
PROVIDED that after this Agreement has been approved and adopted by the
stockholders of Weatherford and the stockholders of Enterra, this Agreement may
be amended only as may be permitted by applicable provisions of the DGCL. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
it from seeking redress for breach of this Agreement other than with respect to
the condition so waived.
8.4 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. None of the representations, warranties, covenants or agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for the terms of Article I,
Sections 5.4, 5.7, 5.8, 5.9, 5.10, 5.12, 5.13, 5.18, 5.19(b) and 5.22, this
Article VIII and the agreements of the "affiliates" of Enterra and Weatherford
delivered pursuant to Section 6.2(d) and Section 6.3(d), respectively.
8.5 PUBLIC STATEMENTS. Enterra and Weatherford agree to consult with each
other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or applicable stock exchange
policy.
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the benefit
of and will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement shall not be
assignable by the parties hereto.
8.7 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
in person or by courier, (b) sent by facsimile transmission, answer back
requested, or (c) mailed, certified first class mail, postage prepaid, return
receipt requested, to the parties hereto at the following addresses:
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if to Enterra: Enterra Corporation
13100 Northwest Freeway, Sixth Floor
Houston, Texas 77040
Attention: D. Dale Wood, Chairman of the
Board, President and Chief Executive
Officer
Fax: (713) 462-7816
with a required copy to: Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, Pennsylvania 19103-6993
Attention: David R. King
Fax: (215) 963-5299
if to Weatherford: Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Attention: Philip Burguieres, Chairman of
the Board, President and Chief Executive
Officer
Fax: (713) 439-1152
with a required copy to: Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Charles L. Strauss
Fax: (713) 651-5246
or to such other address or facsimile number as any party shall have furnished
to the other by notice given in accordance with this Section 8.7. Such notices
shall be effective, (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by facsimile transmission, when
the answer back is received, or (iii) if mailed, upon the earlier of five days
after deposit in the mail and the date of delivery as shown by the return
receipt therefor.
8.8 GOVERNING LAW; JURISDICTION. THIS AGREEMENT, THE SUBJECT MATTER
HEREOF AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITATION, VALIDITY, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF DELAWARE. EACH PARTY HERETO IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF
DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND
ANY OTHER COURT OF THE STATE OF DELAWARE AND THE UNITED STATES WITH JURISDICTION
TO HEAR APPEALS FROM ANY SUCH COURT, FOR THE PURPOSES OF ANY SUIT, ACTION OR
OTHER PROCEEDING OF ANY TYPE WHATSOEVER ARISING OUT OF THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
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BROUGHT BY ANY PARTY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT SUCH PARTY IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT, OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT. EACH PARTY HERETO
FURTHER AGREES NOT TO BRING OR PURSUE ANY SUCH SUIT, ACTION OF OTHER PROCEEDING
IN ANY OTHER COURTS OR JURISDICTION.
8.9 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
8.11 HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.
8.12 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement, the
exhibits attached hereto, the Weatherford Disclosure Letter (and Schedule 2.2(n)
thereto), the Enterra Disclosure Letter (and the exhibits attached thereto) and
the Confidentiality Agreement constitute the entire agreement and supersedes all
other prior agreements and understandings, both oral and written, among the
parties or any of them, with respect to the subject matter hereof and neither
this nor any documents delivered in connection with this Agreement confers upon
any person not a party hereto any rights or remedies hereunder except as
provided in Sections 5.9, 5.12, 5.13, 5.18 and 5.19(b).
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
WEATHERFORD INTERNATIONAL INCORPORATED
By: /s/ Philip Burguieres
-------------------------------------------
Philip Burguieres
Chairman of the Board, President and
Chief Executive Officer
ENTERRA CORPORATION
By: /s/ D. Dale Wood
-------------------------------------------
D. Dale Wood
Chairman of the Board, President and
Chief Executive Officer
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APPENDIX B: OPINION OF MERRILL LYNCH & CO.
B-1
<PAGE>
APPENDIX B
Investment Banking Group
One Houston Center
1221 McKinney
Suite 2700
Houston, Texas 77010
713 759 2500
FAX 713 759 2580
[Merrill Lynch Logo]
June 23, 1995
Board of Directors
Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, TX 77056
Attention: Philip J. Burguieres
Chairman, President and
Chief Executive Officer
Gentlemen:
Weatherford International Incorporated (the "Company") and Enterra
Corporation (the "Subject Company") propose to enter into an agreement (the
"Agreement") pursuant to which the Subject Company will be merged with the
Company in a transaction (the "Merger") in which each share of the Subject
Company's common stock, par value $1.00 per share (the "Shares"), will be
converted into the right to receive 1.69 shares (the "Exchange Ratio") of the
common stock, par value $.10 per share, of the Company (the "Company Shares").
The Merger is expected to be considered by the stockholders of the Subject
Company and the Company at special stockholders' meetings and consummated on or
shortly after the date of such meetings.
You have asked us whether, in our opinion, the proposed Exchange Ratio is
fair to the holders of the Company Shares from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Subject Company's Annual Reports, Forms 10-K and
related financial information for the three fiscal years ended
December 31, 1994 and the Subject Company's Form 10-Q and the
related unaudited financial information for the quarterly period
ended March 31, 1995;
(2) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the three fiscal years ended December 31,
1994 and the Company's Form 10-Q and the related unaudited financial
information for the quarterly period ended March 31, 1995;
(3) Reviewed certain information, including financial forecasts
(including consolidation benefits from the Merger), relating to the
business, earnings, cash flow, assets and prospects of the Subject
Company and the Company, furnished to us by the Subject Company and
the Company, respectively;
(4) Conducted discussions with members of senior management of the
Subject Company and the Company concerning their respective
businesses and prospects;
<PAGE>
[Merrill Lynch Logo]
(5) Reviewed the historical market prices and trading activity for the
Shares and the Company Shares and compared them with each other and
with that of certain publicly traded companies which we deemed to be
reasonably similar to the Subject Company and the Company,
respectively;
(6) Compared the results of operations of the Subject Company and the
Company with each other and with that of certain companies which we
deemed to be reasonably similar to the Subject Company and the
Company, respectively;
(7) Compared the proposed financial terms of the transactions
contemplated by the Agreement with the financial terms of certain
other mergers and acquisitions which we deemed to be relevant;
(8) Considered the pro forma effect of the Merger on the Company's
capitalization ratios and earnings, cash flow and earnings before
depreciation, interest and taxes ("EBDIT") per share;
(9) Reviewed a draft of the Agreement dated June 23, 1995; and
(10) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters
as we deemed necessary.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Subject
Company and the Company, and we have not independently verified such information
or undertaken an independent appraisal of the assets of the Subject Company or
the Company. With respect to the financial forecasts furnished by the Subject
Company and the Company (including estimates of consolidation benefits from the
Merger), we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Subject Company's or the
Company's management as to the expected future financial performance of the
Subject Company or the Company, as the case may be.
We have, in the past, provided financial advisory and financing services to
the Subject Company and have received fees for the rendering of such services.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed Exchange Ratio is fair to the holders of the Company Shares from a
financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Schuyler M. Tilney
-----------------------------
Schuyler M. Tilney
Managing Director
Investment Banking Group
<PAGE>
APPENDIX C: OPINION OF SIMMONS & COMPANY INTERNATIONAL, INC.
C-1
<PAGE>
APPENDIX C
[SIMMONS & COMPANY
INTERNATIONAL LETTERHEAD]
- --------------------------------------------------------------------------------
June 23, 1995
Board of Directors
Enterra Corporation
13100 Northwest Freeway
Sixth Floor
Houston, Texas 77040
Members of the Board:
You have requested the opinion of Simmons & Company International ("Simmons") as
investment bankers as to the fairness, from a financial point of view, to the
holders of shares of common stock, par value $1.00 per share (the "Company
Common Stock"), of Enterra Corporation (the "Company") of the consideration to
be received by such stockholders in the proposed merger of the Company with
Weatherford International Incorporated ("Weatherford"), pursuant to the
Agreement and Plan of Merger (the "Agreement"), to be executed by Weatherford
and the Company (the "Proposed Merger").
As more specifically set forth in the Agreement, in the Proposed Merger each
issued and outstanding share of the Company Common Stock will be converted into
1.69 (the "Conversion Number") shares of common stock, par value $0.10 per
share, of Weatherford (the "Weatherford Common Stock"). Cash will be exchanged
in lieu of fractional shares of the Weatherford Common Stock.
Simmons, as a specialized energy-related investment banking firm, is
continuously engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, private placements of debt and equity,
and the management and underwriting of sales of equity and debt to the public.
Simmons has previously rendered investment banking services to the Company and
Weatherford in connection with a number of transactions for which Simmons
received customary compensation. In addition, in the ordinary course of
business, Simmons may actively trade the securities of the Company and
Weatherford for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
In connection with rendering its opinion, Simmons has reviewed and analyzed,
among other things, the following: (i) a draft of the proposed Agreement and
related disclosure letters furnished to Simmons by the Company; (ii) financial
statements and other information concerning the Company, including the Annual
Reports on Form 10-K of the Company for the years ended December 31, 1992
through 1994 and the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1995; (iii) certain other internal information,
primarily financial in nature and including financial forecasts, concerning the
business and operations of the Company furnished by the Company for purposes of
Simmons' analysis; (iv) certain publicly available information concerning the
<PAGE>
Board of Directors
Enterra Corporation
June 23, 1995
Page 2
trading of the Company Common Stock; (v) certain publicly available information
concerning Weatherford, including the Annual Reports on Form 10-K of Weatherford
for the years ended December 31, 1992 through 1994 and the Quarterly Report on
Form 10-Q of Weatherford for the quarter ended March 31, 1995; (vi) certain
other internal information, primarily financial in nature and including
financial forecasts, concerning the business and operations of Weatherford
furnished by Weatherford for purposes of Simmons' analysis; (vii) certain
publicly available information concerning the trading of Weatherford Common
Stock; (viii) certain publicly available information with respect to certain
other companies that Simmons believes to be comparable to the Company or
Weatherford and the trading markets for certain of such other companies'
securities; and (ix) certain publicly available information concerning the
nature and terms of certain other transactions considered relevant to the
inquiry. Simmons has also met with certain officers and employees of the
Company and Weatherford to discuss the foregoing as well as other matters
believed relevant to the inquiry.
In arriving at its opinion, Simmons has assumed and relied upon the accuracy and
completeness of all of the financial and other information provided by the
Company and Weatherford, or publicly available, including, without limitation,
information with respect to asset conditions, tax positions, liability reserves
and insurance coverages, and has not attempted independently to verify any such
information. With respect to the financial forecasts and other data reviewed by
Simmons, Simmons has assumed, with your consent, that such forecasts and other
data, including without limitation the information provided by the managements
of the Company and Weatherford in respect of projected cost savings and
operating efficiencies resulting from the Proposed Merger, have been reasonably
prepared and reflect the best currently available estimates and judgments of the
respective managements of the Company and Weatherford as to the expected future
financial performance of their respective companies and of the companies
combined in the Proposed Merger. Simmons has not conducted a physical
inspection of any of the assets, properties or facilities of the Company, nor
has Simmons made or obtained any independent evaluations or appraisals of any of
such assets, properties or facilities. Simmons has assumed that the merger
would be treated as a "pooling of interests" for accounting purposes and as a
tax-free reorganization for federal income tax purposes. In addition, although
Simmons has discussed the prospects of the Company and Weatherford with certain
representatives of their respective managements, Simmons has been provided with
only limited financial projections and other similar analyses prepared by the
Company's management with respect to the Company's future performance and by
Weatherford's management with respect to Weatherford's future performance.
In conducting its analysis and arriving at its opinion as expressed herein,
Simmons has considered such financial and other factors as it deemed appropriate
under the circumstances including, among others, the following: (i) the
historical and current financial position and results of operations of the
Company and Weatherford;
<PAGE>
Board of Directors
Enterra Corporation
June 23, 1995
Page 3
(ii) the business prospects of the Company and Weatherford; (iii) the potential
personnel and operating expense reductions that could be achieved in the
Proposed Merger; and (iv) the historical and current market for the Company
Common Stock, for Weatherford Common Stock and for the equity securities of
certain other companies believed to be comparable to the Company or Weatherford.
Simmons has also taken into account its assessment of general economic, market
and financial conditions and its experience in connection with similar
transactions and securities' valuation generally. Simmons' opinion necessarily
is based upon conditions as they exist and can be evaluated on, and on the
information made available at, the date hereof.
Simmons is acting as financial advisor to the Company in this transaction and
will receive a customary fee for its services. Simmons was not authorized to
solicit, nor did Simmons solicit from others, indications of interest with
respect to acquiring the Company. Simmons' opinion does not address the
relative merits of the Proposed Merger as compared to any alternative business
combination transaction that might be available to the Company, including the
acquisition of the Company by a third party. Simmons is not expressing any
opinion regarding the value that would be realized upon the sale or liquidation
of the Company.
Based upon and subject to the foregoing, Simmons is of the opinion, as
investment bankers, that the consideration to be received by the holders of the
Company Common Stock in the Proposed Merger is fair from a financial point of
view to such holders.
Sincerely,
SIMMONS & COMPANY INTERNATIONAL
/s/ Ben A. Guill
Ben A. Guill
Managing Director
<PAGE>
APPENDIX D: FIRST RESERVE STOCKHOLDERS AGREEMENT
D-1
<PAGE>
APPENDIX D
(Amended as of August 28, 1995)
AGREEMENT
This Agreement, dated as of June 23, 1995 (this "Agreement"), among
WEATHERFORD INTERNATIONAL INCORPORATED, a Delaware corporation ("Weatherford"),
and AMERICAN GAS & OIL INVESTORS, LIMITED PARTNERSHIP, a New York limited
partnership, AMGO II, LIMITED PARTNERSHIP, a New York limited partnership, AMGO
III, LIMITED PARTNERSHIP, a New York limited partnership, FIRST RESERVE SECURED
ENERGY ASSETS FUND, LIMITED PARTNERSHIP, a Delaware limited partnership, FIRST
RESERVE FUND V, LIMITED PARTNERSHIP, a Delaware limited partnership, FIRST
RESERVE FUND V-2, LIMITED PARTNERSHIP, a Delaware limited partnership, and
FIRST RESERVE FUND VI, LIMITED PARTNERSHIP, a Delaware limited partnership
(each a "First Reserve Fund" and together the "First Reserve Funds"), and
First Reserve Corporation, a Delaware corporation ("FRC"). (The First Reserve
Funds and FRC, and all other persons or entities now or hereafter directly or
indirectly controlling, controlled by or under common control with any of the
First Reserve Funds or FRC, are referred to collectively as the "FRC Group.")
WITNESSETH:
WHEREAS, the First Reserve Funds currently own in the aggregate
approximately 11,212,349 shares of common stock, par value $1.00 per share
("Enterra Common Stock"), of Enterra Corporation, a Delaware corporation
("Enterra");
WHEREAS, the shares of Enterra Common Stock owned by the First Reserve
Funds currently are subject to the terms and conditions of that certain
Agreement dated as of May 2, 1994 among Enterra, the First Reserve Funds and FRC
(the "Enterra Standstill Agreement");
WHEREAS, pursuant to an agreement and plan of merger (the "Merger
Agreement") dated June 23, 1995 between Enterra and Weatherford, each share of
outstanding Enterra Common Stock shall, at the Effective Time (as defined in the
Merger Agreement), be converted, pursuant to a merger (the "Merger") of Enterra
with and into Weatherford, into 0.845 of a share (which number reflects a one
for two reverse stock split to be effected at the closing) of common stock, par
value $.10 per share, of Weatherford ("Weatherford Common Stock");
WHEREAS, pursuant to the terms of the Merger, the First Reserve Funds
will own, as of the Effective Time, in the aggregate 9,474,431 shares (which
number reflects a one for two
<PAGE>
reverse stock split to be effected at the closing) of Weatherford Common Stock;
WHEREAS, Weatherford and the FRC Group are entering into this
Agreement to establish certain arrangements with respect to the relationships
between them after the Effective Time, which arrangements are substantially
similar to the arrangements provided for in the Enterra Standstill Agreement;
and
WHEREAS, Weatherford and the FRC Group believe that these arrangements
will be in the best interests of Weatherford and all of its shareholders from
and after the Effective Time.
NOW, THEREFORE, intending to be legally bound as of the Effective
Time, the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
1.1. "Weatherford Voting Securities" shall mean collectively
Weatherford Common Stock, Weatherford preferred stock, par value $1.00 per
share, if entitled to vote generally for the election of directors or otherwise,
any other class or series of Weatherford securities that is entitled to vote
generally for the election of directors or otherwise, and any other securities,
warrants or options or rights of any nature (whether or not issued by
Weatherford) that are convertible into, exchangeable for, or exercisable for the
purchase of, or otherwise give the holder thereof any rights in respect of
Weatherford Common Stock, Weatherford preferred stock that is entitled to vote
generally for the election of directors or otherwise, or any other class or
series of Weatherford securities that is entitled to vote generally for the
election of directors or otherwise.
1.2. "Termination Date" shall mean August 12, 2004.
1.3. The "Combined Voting Power" at any measurement date shall mean
the total number of votes which could have been cast in an election of directors
of Weatherford had a meeting of the stockholders of Weatherford been duly held
based upon a record date as of the measurement date if all Weatherford Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.4. "13D/G Group" shall mean two or more persons acting together for
the purpose of acquiring, holding, voting or disposing of Weatherford Voting
Securities, which persons would be required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
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<PAGE>
thereunder to file a statement on Schedule 13D or 13G with the Securities and
Exchange Commission (the "SEC") as a "person" within the meaning of Section
13(d)(3) of the Exchange Act if such persons beneficially owned sufficient
securities to require such a filing under the Exchange Act.
1.5. The concept of "beneficial ownership" and the terms "person" and
"group" shall have the meanings defined or adopted from time to time pursuant to
Regulation 13D-G adopted by the SEC under the Exchange Act.
Section 2. REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. Weatherford
represents and warrants that:
(a) Weatherford is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
corporate power to own its properties and to conduct its business as now
conducted.
(b) As of June 21, 1995, the authorized capital stock of
Weatherford consists of (i) 80,000,000 shares of Weatherford Common Stock, of
which 54,276,632 shares were validly issued and outstanding, fully paid and
nonassessable and (ii) 1,000,000 shares of preferred stock, par value $1.00 per
share, of which no shares were issued and outstanding.
(c) Weatherford has full legal right, power and authority to
enter into this Agreement and perform its obligations hereunder. This Agreement
has been duly authorized, executed and delivered by Weatherford and constitutes
a legal, valid and binding agreement of Weatherford enforceable against
Weatherford in accordance with the terms hereof.
(d) Neither the execution and delivery of this Agreement nor the
performance of its obligations hereunder will conflict with or result in a
breach of or constitute a default under any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality or of its corporate charter or bylaws or of any agreement or
instrument to which it is a party or subject or by which its property is bound
or affected.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE FRC GROUP. Each of
the First Reserve Funds and FRC, jointly and severally, represents and warrants
to Weatherford as follows:
(a) Each First Reserve Fund is a validly existing partnership
under the laws of the jurisdiction of its organization, FRC is a validly
existing corporation under the laws of the jurisdiction of its incorporation,
and each First Reserve Fund and FRC has the full legal right, power and
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<PAGE>
authority to enter into this Agreement and perform their respective obligations
hereunder.
(b) This Agreement has been duly authorized, executed and
delivered by each First Reserve Fund and by FRC, and this Agreement constitutes
the legal, valid and binding agreement of the FRC Group, enforceable against the
members of the FRC Group in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of their obligations hereunder will conflict with or result in a
breach of or constitute a default under any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality or of any agreement or instrument to which any First Reserve
Fund or FRC is bound or affected, or of the partnership agreements of any of the
First Reserve Funds, or of the charter and bylaws of FRC.
(d) As of the date of this Agreement and as of the Effective
Time, (i) each First Reserve Fund owns and will own of record the shares of
Enterra Common Stock set forth opposite its respective name on the signature
page of this Agreement, (ii) there are and will be no beneficial owners of such
shares of Enterra Common Stock other than the First Reserve Funds and FRC, (iii)
such shares of Enterra Common Stock represent and will represent all of the
shares of Enterra Common Stock owned of record or beneficially by the First
Reserve Funds and FRC, and (iv) such shares of Enterra Common Stock are and will
be owned of record and beneficially by the First Reserve Funds and FRC, free and
clear of all pledges, liens, claims, security interests and other charges or
defects in title of any nature whatsoever. No shares of Weatherford Common
Stock are currently, and as of the Effective Time no shares of Weatherford
Common Stock will be, beneficially owned by any member of the FRC Group, except
for those shares of Weatherford Common Stock issuable in the Merger upon
conversion of such shares of Enterra Common Stock.
Section 4. COVENANTS WITH RESPECT TO WEATHERFORD VOTING SECURITIES
AND OTHER MATTERS. Prior to the Termination Date and subject to the further
provisions hereof:
4.1. ACQUISITION OF WEATHERFORD VOTING SECURITIES. No member of the
FRC Group shall, directly or indirectly, acquire, offer to acquire, agree to
acquire, become the beneficial owner of or obtain any rights in respect of any
Weatherford Voting Securities, by purchase or otherwise, or take any action in
furtherance thereof, if the effect of such acquisition, agreement or other
action would be (either immediately or upon consummation of any such
acquisition, agreement or other action, or expiration of any period of time
provided in any such acquisition, agreement or other action) (i) to increase the
aggregate beneficial ownership of Weatherford Voting Securities by the FRC Group
to
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<PAGE>
such number of Weatherford Voting Securities that represents or possesses 20% or
more of the Combined Voting Power of Weatherford Voting Securities, or (ii) to
increase the aggregate beneficial ownership of any class or series of
Weatherford Voting Securities by the FRC Group to greater than 20% of such class
or series. Notwithstanding the foregoing maximum percentage limitation, (A) no
member of the FRC Group shall be obligated to dispose of any Weatherford Voting
Securities beneficially owned in violation of such maximum percentage
limitations if, and solely to the extent that, the aggregate beneficial
ownership of the FRC Group is or will be increased solely as a result of a
recapitalization of Weatherford, a repurchase of any Weatherford Voting
Securities by Weatherford or any of its subsidiaries, or any other action taken
by Weatherford or its affiliates (except the FRC Group), if such
recapitalization, repurchase or other action was approved by a majority of the
directors then in office who were not designated by the FRC Group, and (B) if
any other person or group beneficially owns or acquires beneficial ownership of
Weatherford Voting Securities representing greater than 20% of the Combined
Voting Power, the applicable maximum percentage shall be increased to such
greater percentage. For purposes of calculating the maximum percentage
limitations, all Weatherford Voting Securities that are the subject of an
agreement, arrangement or understanding pursuant to which the FRC Group or any
member thereof has the right to obtain beneficial ownership of such securities
in the future shall also be deemed to be beneficially owned by the FRC Group or
the applicable member thereof.
4.2. DISTRIBUTION OF WEATHERFORD VOTING SECURITIES. Each member of
the FRC Group covenants that it shall not, directly or indirectly, sell,
transfer any beneficial interest in, pledge, hypothecate or otherwise dispose of
any Weatherford Voting Security, except by conversion, exchange or exercise of
such Weatherford Voting Securities pursuant to their terms in a manner not
otherwise in violation of Section 4.1 hereof, in response to certain tender or
exchange offers as permitted by Section 4.6(b) hereof, or pursuant to:
(i) a bona fide pledge of or the granting of a security interest
or any other lien or encumbrance in such Weatherford Voting Securities
to a lender that is not a member of the FRC Group to secure a bona
fide loan for money borrowed made to one or more members of the FRC
Group with full recourse to the borrower or borrowers, the foreclosure
of such pledge or security interest or any other lien or encumbrance
that may be placed involuntarily upon any Weatherford Voting
Securities, or the subsequent sale or other disposition of such
Weatherford Voting Securities by such lender or its agent;
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<PAGE>
(ii) a transfer, assignment, sale or disposition of such
Weatherford Voting Securities within the FRC Group to a member of the
FRC Group that has signed this Agreement;
(iii) a distribution of Weatherford Voting Securities to any
partner of a First Reserve Fund; provided that any distributee that is
a member of the FRC Group has signed this Agreement; and provided,
further that any arrangements coordinated or initiated by FRC to
assist limited partners in the sale of Weatherford Voting Securities
distributed to them must comply with the provisions of this Section
4.2;
(iv) sale in a public offering registered under the Act pursuant
to the registration rights provided in Section 6 hereof;
(v) sales in broker's transactions, effected on the New York
Stock Exchange or any other securities exchange on which the
Weatherford Voting Securities are listed or in any other public
trading market in which the Weatherford Voting Securities are then
being traded, in compliance with the provisions of Rule 144 under the
Act, ("Rule 144"), including the volume restrictions set forth in such
rule (excluding for purposes of this clause (v) sales pursuant to the
provisions of paragraph (k) of Rule 144, which sales are included
under (vi) below);
(vi) sales pursuant to paragraph (k) of Rule 144;
(vii) other negotiated sales of Weatherford Voting Securities;
or
(viii) as provided in Section 4.6(b).
Notwithstanding the previous sentence, (A) in effecting any sale, transfer of
any beneficial interest in or other disposition of Weatherford Voting Securities
pursuant to clause (iv) above, the members of the FRC Group selling,
transferring or disposing such Weatherford Voting Securities shall use their
reasonable best efforts to refrain from selling, transferring or disposing of
such number of Weatherford Voting Securities as represent 3% or more of the
Combined Voting Power to any one person or group, (B) no single sale, transfer
of beneficial interest in or other disposition of any Weatherford Voting
Securities may be made by any member of the FRC Group, and no related group of
such sales, transfers or dispositions shall be made by the FRC Group, pursuant
to clauses (iii), (vi) and (vii) above if such number of Weatherford Voting
Securities as represent 5% or more of the
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<PAGE>
Combined Voting Power are being sold, transferred or disposed of to any one
person or group; and (C) no sale, transfer of any beneficial interest in or
other disposition of Weatherford Voting Securities shall be made pursuant to
clauses (iii), (vi) and (vii) above to any one person or group who, upon
consummation of such sale, transfer or disposition of Weatherford Voting
Securities would, directly or indirectly, have beneficial ownership of or the
right to acquire beneficial ownership of such number of Weatherford Voting
Securities as represent 10% or more of the Combined Voting Power.
4.3. VOTING TRUSTS. No member of the FRC Group shall deposit any
Weatherford Voting Securities in a voting trust or subject any Weatherford
Voting Securities to any arrangement or agreement with respect to the voting of
such securities unless all the parties to such voting trust, arrangement or
agreement are members of the FRC Group who have executed this Agreement.
4.4. PROXY SOLICITATIONS, ETC. No members of the FRC Group shall
solicit proxies, assist any other person in the solicitation of proxies, become
a "participant" in a "solicitation," or assist any "participant" in a
"solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Exchange Act) in opposition to the recommendation of a majority of the
directors of Weatherford then in office who were not designated by the FRC
Group, or recommend or request that any other person take any such actions, or
submit any proposal for the vote of stockholders of Weatherford.
4.5. STOCK POOLING. No member of the FRC Group shall join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any other person, for the purpose of acquiring, holding, voting or
disposing of any Weatherford Voting Securities, or otherwise become a member of
a 13D/G Group other than the FRC Group itself.
4.6. TAKEOVER OFFERS.
(a) Each member of the FRC Group covenants and agrees not to (i)
publicly suggest or announce its willingness or desire to engage in a
transaction or group of transactions or have another person engage in a
transaction or group of transactions that would result in a change of control of
Weatherford, (ii) present to Weatherford or to any third party any proposal that
can reasonably be expected to result in a change of control of Weatherford, or
(iii) initiate, induce or attempt to induce or give encouragement to any other
person to initiate any proposal that can reasonably be expected to result in a
change of control of Weatherford.
(b) Subject to compliance with Section 4.6(a) above, on and
after the eleventh business day after commencement
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<PAGE>
of a tender or exchange offer made by a person who is not a member of the FRC
Group for outstanding Weatherford Voting Securities (a "Qualifying Offer"), any
member of the FRC Group may tender or exchange any Weatherford Voting Securities
beneficially owned by it pursuant to such Qualifying Offer if the Qualifying
Offer shall have been approved, or not opposed, by the board of directors of
Weatherford. If a Qualifying Offer is opposed by the board of directors of
Weatherford, then, from and after the eleventh business day after commencement
of such Qualifying Offer, any member of the FRC Group may tender or exchange
shares of Weatherford Voting Securities pursuant to such Qualifying Offer only
if (i) no tender or exchange of, or indication of an intention to tender or
exchange, Weatherford Voting Securities is made by any member of the FRC Group
earlier than 24 hours prior to the expiration of any time after which
Weatherford Voting Securities tendered may be treated less favorably than
Weatherford Voting Securities tendered or exchanged prior thereto, and (ii) a
binding agreement is reached with the bidder or offeror prior to any tender or
exchange specifying that only such number of Weatherford Voting Securities
submitted for tender or exchange shall be accepted by the bidder or offeror as
are equal to (A) the percentage of such Weatherford Voting Securities not
beneficially owned by the FRC Group that have been tendered or exchanged,
multiplied by (B) the total number of such Weatherford Voting Securities
beneficially owned by the member of the FRC Group.
4.7. PLEDGE OF COVERED SECURITIES. Each member of the FRC Group
shall promptly give notice to Weatherford of any margin call, demand for
additional security or collateral, or threat to enforce any pledge or security
interest in or with respect to any Weatherford Voting Security owned of record
or beneficially by it.
Section 5. VOTING OF WEATHERFORD VOTING SECURITIES AND OTHER RELATED
MATTERS.
(a) Each member of the FRC Group that is a holder of record of
Weatherford Voting Securities shall be present, and each member of the FRC Group
that is a beneficial owner of Weatherford Voting Securities shall cause the
holder of record to be present, in person or by proxy, at all meetings of
stockholders of Weatherford so that all Weatherford Voting Securities owned of
record or beneficially by the FRC Group may be counted for the purpose of
determining the presence of a quorum at such meetings.
(b) Upon the Effective Time, the number of directors of
Weatherford shall be established as 10 directors, and two individuals designated
by the FRC Group shall be elected as directors of Weatherford, subject to the
provisions of this Agreement. The parties hereto agree that the number of
directors
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<PAGE>
of Weatherford may not be increased above 10 without the approval of a (i) a
majority of the directors and (ii) all of the directors designated by the FRC
Group. From and after the Effective Time, the FRC Group and the directors
designated by the FRC Group shall take no action to reduce the number of
directors of Weatherford below 10 directors.
(c) For purposes of this Agreement, directors "designated by the
FRC Group" shall include directors designated by the FRC Group as set forth in
Section 5.22 of the Merger Agreement or designated by certain members of the FRC
Group as anticipated by this Section 5, and any other directors of Weatherford
affiliated or associated with any member of the FRC Group.
(d) From and after the Effective Time, as long as the FRC Group
beneficially owns at least 15% of the Combined Voting Power of all Weatherford
Voting Securities, two of (i) First Reserve Secured Energy Assets Fund, Limited
Partnership, (ii) First Reserve Fund V, Limited Partnership, (iii) First Reserve
Fund V-2, Limited Partnership and (iv) First Reserve Fund VI, Limited
Partnership (the "Designating First Reserve Funds") as shall be selected by FRC
shall have the right to designate one director of Weatherford, for a total of
two directors of Weatherford (it being understood that the FRC Group shall not
have more than two designees on the board of directors of Weatherford at any
time); provided, however, that:
(i) At any time when the FRC Group beneficially owns less than
15% but at least 10% of the Combined Voting Power of all Weatherford
Voting Securities, one of the Designating First Reserve Funds, to be
selected by FRC, shall lose its right to designate a director of
Weatherford, and such Designating First Reserve Fund shall cause its
designee on the board of directors of Weatherford to resign forthwith
such that only one designee of the FRC Group remains on the board of
directors of Weatherford; and
(ii) At any time when the FRC Group beneficially owns less than
10% of the Combined Voting Power of all Weatherford Voting Securities,
none of the FRC Group shall have the right to designate any directors
of Weatherford, and the Designating First Reserve Fund whose designee
remains on Weatherford's board of directors shall cause its designee
to resign forthwith such that no designee of the FRC Group remains on
the board of directors of Weatherford, it being understood that at any
time that the FRC Group beneficially owns less than 10% of the
Combined Voting Power of Weatherford Voting Securities no member of
the FRC
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Group shall seek representation on the board of directors of
Weatherford.
(e) Weatherford shall take all necessary or appropriate action
to (i) assist in the nomination for election as directors of those persons
designated by the Designating First Reserve Funds as are entitled to election to
the board of directors of Weatherford pursuant to the provisions of this Section
5, (ii) have at least one of the designees of the FRC Group serve on each
committee of the board of directors of Weatherford as long as the Designating
First Reserve Funds have designated at least two directors pursuant to the
provisions of this Section 5 and (iii) where two designees of the FRC Group are
serving as directors of Weatherford, have each such designee serve in different
classes of directors. The Designating First Reserve Funds shall cause their
designees on the board of directors of Weatherford to take all necessary or
appropriate action to assist in the nomination for election as directors of such
other nominees as may be selected by a majority of the directors of Weatherford
then in office who were not designated by the Designating First Reserve Funds,
and the FRC Group shall vote all Weatherford Voting Securities owned of record
by any member of the FRC Group, and shall cause all Weatherford Voting
Securities owned beneficially by any member of the FRC Group to be voted, for
the election of such other nominees as well as for the election of all nominees
of the Designating First Reserve Funds designated by them pursuant to this
Section 5.
(f) At any time that one of the Designating First Reserve Funds
does not have a representative serving as a director of Weatherford, an
individual designated by such Designating First Reserve Fund shall have the
right to attend all meetings of the board of directors in a nonvoting observer
capacity, to receive notice of such meetings and to receive the information
provided by Weatherford to its board of directors; provided, however, that
Weatherford may require as a condition precedent to any of such person's rights
under this section that such person agree to hold in confidence and trust and to
act in a fiduciary manner with respect to all information received in connection
with board meetings or otherwise; and, provided further, that Weatherford
reserves the right not to provide information to such person, and to exclude
such person from any meeting or portion thereof, if delivery of such information
or attendance at such meeting would adversely affect the attorney-client
privilege between Weatherford and its counsel. The observer right provided in
this Section 5(f) may be exercised (i) only if (and then only so long as) the
Designating First Reserve Fund has been advised in writing by counsel to such
fund that exercise of this right is reasonably necessary for such Designating
First Reserve Fund to qualify through its investment in Weatherford as a
"venture capital operating company" as such term is defined in applicable U.S.
Department of Labor
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regulations. Notwithstanding the above, the FRC Group agrees to use its
reasonable best efforts to cause the Designating First Reserve Funds to qualify
as a "venture capital operating company" under these regulations without
exercise of its rights under this Section.
(g) Except as set forth in Section 5(e) above in respect of the
election of directors of Weatherford, each member of the FRC Group shall vote
all Weatherford Voting Securities owned of record by any member of the FRC
Group, and shall cause all Weatherford Voting Securities owned beneficially by
any member of the FRC Group to be voted, at the sole election of such members of
the FRC Group, either (i) in accordance with the recommendations of a majority
of the board of directors, or (ii) in the same proportions for, against and
abstaining in respect of any matter as the holders of record of Weatherford
Voting Securities other than those beneficially owned by the FRC Group that are
entitled to vote on such matter vote their Weatherford Voting Securities.
6. REGISTRATION RIGHTS. Weatherford covenants and agrees as follows:
6.1. DEFINITIONS. For purposes of this Section 6:
(a) The term "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Act.
(b) The term "Registrable Securities" means (i) the Weatherford
Common Stock issuable to the First Reserve Funds as of the Effective Time in
connection with the Merger, and (ii) any Weatherford Common Stock issued as (or
issuable upon the conversion, exchange or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to such Weatherford Common Stock; provided, however, that Weatherford Common
Stock sold, transferred or disposed of in accordance with Section 4.2 of the
Agreement to a person to whom registration rights may not be assigned pursuant
to Section 6.13 of the Agreement shall no longer thereafter be considered
Registrable Securities.
(c) The term "Holder" means any member of the FRC Group that (i)
has signed this Agreement and (ii) owns of record Registrable Securities.
(d) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantially all
the required information regarding Weatherford by reference to other documents
filed by Weatherford with the SEC.
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6.2. REQUEST FOR REGISTRATION.
(a) If, at any time commencing three months after the Effective
Time of the Merger, Weatherford shall receive a written request from the Holders
of at least 25% of the Registrable Securities then outstanding that Weatherford
file a registration statement under the Act covering the registration of at
least 25% of the Registrable Securities then outstanding (or a lesser percent if
the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $25,000,000), then Weatherford shall, within 10 days
after the receipt thereof, give written notice of such request to all Holders,
and shall, subject to the limitations of Section 6.2(b), effect as soon as
practicable, and in any event within 45 days after the receipt of such request,
the registration under the Act of all Registrable Securities which the Holders
request to be registered within 15 days after the mailing of such notice by
Weatherford in accordance with Section 10.3. It is understood that all
calculations in this Agreement in respect of a specified percentage of
Registrable Securities then outstanding are to be made only in respect of the
total number of such Registrable Securities, as defined in Section 6.1(b) above,
then outstanding, and not in respect of the total number of shares of
Weatherford Common Stock then outstanding.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise Weatherford
as a part of their request made pursuant to this Section 6.2 and Weatherford
shall include such information in the written notice referred to in subsection
6.2(a). In such event, the right of any Holder to include Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute Registrable Securities through such underwriting
shall (together with Weatherford as provided in subsection 6.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Weatherford and reasonably acceptable to a
majority in interest of the Initiating Holders. Weatherford at its sole
discretion may offer a right to participate in any registration statement filed
pursuant to this Section 6.2 to other stockholders of Weatherford Common Stock,
and may itself participate in any registration statement filed pursuant to this
Section 6.2 hereof. However, notwithstanding any other provision of this
Section 6.2, if the offering is an underwritten offering and the lead managing
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares of Weatherford Common Stock to be
underwritten, then the total number of shares of Common Stock to be
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underwritten shall be reduced, with such reduction coming first from selling
stockholders who are not Holders, and then from Weatherford. If further
reduction is required, Weatherford shall so advise all Holders of Registrable
Securities that would have otherwise been underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities sought to be registered by each Holder.
(c) Weatherford is obligated to effect only four such
registrations pursuant to this Section 6.2.
(d) Notwithstanding the foregoing, if Weatherford shall furnish
to Holders requesting a registration statement pursuant to this Section 6.2, a
certificate signed by the President of Weatherford stating that in the good
faith judgment of a majority of the directors of Weatherford then in office who
were not designated by the FRC Group, it would be materially detrimental to
Weatherford for such registration statement to be filed, Weatherford shall have
the right to defer such filing for a period of not more than 60 days after
receipt of the request of the Initiating Holders; provided, however, that
Weatherford may not utilize this right more than once in any 12-month period.
6.3. PIGGYBACK REGISTRATION. If (but without any obligation to do
so) Weatherford proposes to register any of its Common Stock under the Act in
connection with the public offering of such Common Stock by Weatherford solely
for cash (other than a registration relating solely to the sale of securities to
participants in a dividend reinvestment plan, stock plan or employee benefit
plan; a registration relating solely to the issuance of securities in connection
with an acquisition; or a registration on any form which does not permit
inclusion of selling stockholders), or Weatherford proposes to register any of
its securities on behalf of a holder exercising demand registration rights
similar to those set forth in Section 6.2 above, Weatherford shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within 15 days after mailing of such notice
by Weatherford in accordance with Section 10.3, Weatherford shall, subject to
the provisions of Section 6.8, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
6.4. OBLIGATIONS OF WEATHERFORD. Whenever required under this
Section 6 to effect the registration of any Registrable Securities, Weatherford
shall, as expeditiously as reasonably possible:
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(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 90 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that Weatherford shall not be required to qualify to do business or to
file a general consent to service of process in any such states of
jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the underwriters of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section, each Holder acknowledges that there may occasionally be times when
Weatherford must suspend the use of the prospectus forming a part of the
registration statement until such time as an amendment to the registration
statement has been filed by Weatherford and declared effective by the SEC, or
until such time as Weatherford has filed an appropriate report with the
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SEC pursuant to the Exchange Act. Each Holder hereby covenants that it will not
sell any shares of Common Stock pursuant to said prospectus during the period
commencing at the time at which Weatherford gives the Holder notice of the
suspension of the use of said prospectus and ending at the time Weatherford
gives the Holder notice that it may thereafter effect sales pursuant to said
prospectus. Weatherford shall only be able to suspend the use of said
prospectus for periods aggregating no more than 30 days in respect of any
registration.
6.5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of Weatherford to take any action pursuant to this Section 6 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to Weatherford such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities and as may be required from time to time to keep such registration
current.
6.6. EXPENSES OF DEMAND REGISTRATION. All expenses incurred by or on
behalf of Weatherford in connection with registrations, filings or
qualifications pursuant to Section 6.2, including, without limitation, all
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for Weatherford, shall be borne by
Weatherford; provided, however, that Weatherford shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 6.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
participating Holders shall reimburse Weatherford promptly for all such
reasonable expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 6.2. In no event shall Weatherford be obligated to bear underwriting
discounts and commissions and the fees and expenses of counsel to the selling
Holders.
6.7. EXPENSES OF PIGGYBACK REGISTRATION. Weatherford shall bear and
pay all expenses incurred by or on behalf of Weatherford in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 6.3 for each Holder, including, without
limitation, all registration, filing, and qualification fees, printing and
accounting fees and fees and disbursements of counsel for Weatherford relating
or allocable thereto, but excluding underwriting discounts and commissions
relating to Registrable Securities and the fees and disbursements of counsel for
the selling Holders.
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6.8. UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by Weatherford, Weatherford
shall not be required under Section 6.3 to include any of the Holders'
Registrable Securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between Weatherford and the underwriters selected by
it. If the total amount of securities, including Registrable Securities,
requested by Holders and other stockholders to be included in such offering
exceeds the amount of securities sold other than by Weatherford that the
underwriters reasonably believe compatible with the success of the offering,
then Weatherford shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering. To achieve any
necessary reduction in the securities to be sold, the securities to be excluded
from the offering shall first be selected (in each case, pro rata among such
class of holders according to the total amount of securities proposed to be
included in the registration statement or in such other proportions as shall
mutually be agreed to by such class of holders) in the following order: (i)
first, securities being included on behalf of holders other than members of the
FRC Group shall be excluded, except as provided in (iii) below; (ii) next, if
additional securities must be excluded, Registrable Securities included pursuant
to Section 6.3 shall be excluded; (iii) thereafter, if additional securities
must be excluded, securities included on behalf of a holder exercising demand
registration rights similar to those set forth in Section 6.2 shall be excluded,
and (iv) finally, if additional securities must be excluded, securities offered
by Weatherford shall be excluded.
6.9. DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 6.
6.10. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 6:
(a) To the extent permitted by law, Weatherford will indemnify
and hold harmless each Holder and the affiliates of such Holder, and their
respective directors, officers, general and limited partners, agents and
representatives (and the directors, officers, affiliates and controlling persons
thereof), and each other person, if any, who controls such Holder within the
meaning of the Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
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based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus (but only if such is not corrected in the final
prospectus) contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading (but
only if such is not corrected in the final prospectus), or (iii) any violation
or alleged violation by Weatherford in connection with the registration of
Registrable Securities under the Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law; and Weatherford will pay to each such Holder, affiliate or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this Section 6.10(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of Weatherford (which consent shall not be
unreasonably withheld), nor shall Weatherford be liable in any such case for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by any such Holder or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless Weatherford, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls Weatherford within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 6.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
6.10(b) shall not apply to amounts paid in settlement of any such loss,
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claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this Section 6.10(b)
exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 6.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 6.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 6.10. The indemnified party
shall have the right, but not the obligation, to participate in the defense of
any action referred to above through counsel of its own choosing and shall have
the right, but not the obligation, to assert any and all separate defenses,
cross claims or counterclaims which it may have, and the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of such counsel has been specifically authorized in advance by the
indemnifying party, (ii) there is a conflict of interest that prevents counsel
for the indemnifying party from adequately representing the interests of the
indemnified party, (iii) the indemnifying party does not employ counsel that is
reasonably satisfactory to the indemnified party, or (iv) the indemnifying party
fails to assume the defense or does not reasonably contest such action in good
faith, in which case, if the indemnified party notifies the indemnifying party
that it elects to employ separate counsel, the indemnifying party shall not have
the right to assume the defense of such action on behalf of the indemnified
party and the reasonable fees and expenses of such separate counsel shall be
borne by the indemnifying party; provided, however, that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for all indemnified parties.
(d) The obligations of Weatherford and the Holders under this
Section 6.10 shall survive the completion of
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any offering of Registrable Securities in a registration statement under this
Section 6.
6.11. REPORTS UNDER THE EXCHANGE ACT. With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
Weatherford to the public without registration or pursuant to a registration on
Form S-3, Weatherford agrees to:
(a) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required under the Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written
statement by Weatherford as to its compliance with the reporting requirements of
Rule 144, or as to whether it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of Weatherford and such other reports and documents so filed by
Weatherford, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
6.12. FORM S-3 REGISTRATION. In case Weatherford shall receive from
any Holder or Holders of at least 10% of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price,
net of discounts and commissions, would exceed $1,000,000) a written request or
requests that Weatherford effect a registration on Form S-3 not involving an
underwriting and any related qualification or compliance with respect to all or
a part of the Registrable Securities owned by such Holder or Holders,
Weatherford will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from Weatherford; provided,
however, that
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Weatherford shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 6.12: (1) if Form S-3 is
not available for such offering by the Holders; (2) if the Holders, together
with the holders of any other securities of Weatherford entitled to include
securities in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
discounts or commissions) of less than $1,000,000; (3) if Weatherford shall
furnish to the Holders a certificate signed by the President of Weatherford
stating that in the good faith judgment of a majority of the directors of
Weatherford then in office who were not designated by the FRC Group, it would be
materially detrimental to Weatherford for such Form S-3 Registration to be
effected at such time, in which event Weatherford shall have the right to defer
the filing of the Form S-3 registration statement for a period of not more than
60 days after receipt of the request of the Holder or Holders under this Section
6.12; provided, however, that Weatherford shall not utilize this right more than
once in any 12-month period; (4) if Weatherford has, within the 12-month period
preceding the date of such request, already effected a registration on Form S-3
for the Holders pursuant to this Section 6.12; or (5) in any particular
jurisdiction in which Weatherford would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, Weatherford shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred by or on behalf of
Weatherford in connection with the registrations requested pursuant to Section
6.12, including (without limitation) all registration, filing, qualification,
printer's and accounting fees and the fees and disbursements of counsel for
Weatherford, shall be borne by Weatherford, except that any discounts or
commissions associated with Registrable Securities and the fees and
disbursements of counsel for the selling Holder or Holders shall be borne by the
Holder or Holders participating in the Form S-3 Registration. Registrations
effected pursuant to this Section 6.12 shall not be counted as demands for
registration or registrations effected pursuant to Sections 6.2.
6.13. NO ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
Weatherford to register Registrable Securities pursuant to this Section 6 may
only be assigned by a Holder to a transferee or assignee of any Registrable
Securities if (i) such transferee or assignee is a member of the FRC Group that
has executed this Agreement, and (ii) immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
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6.14. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, Weatherford shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable Securities
(or, prior to the Effective Time of the Merger, without the prior written
consent of FRC), enter into any agreement with any holder or prospective holder
of any securities of Weatherford which would allow such holder or prospective
holder to include such securities in any registration filed under Sections 6.2
or 6.3 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of its securities will not reduce the amount of
the Registrable Securities of the Holders which is included.
6.15. WAIVER PROCEDURES. The observance by Weatherford of any
provision of this Section 6 may be waived (either generally or in a particular
instance and either retroactively or prospectively) with the written consent of
the holders of a majority of the Registrable Securities then outstanding, and
any waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities.
6.16. "MARKET STAND-OFF" AGREEMENT. Any Holder of Registrable
Securities, if requested by an underwriter of any registered public offering of
Weatherford securities being sold in a firm commitment underwriting, agrees not
to sell or otherwise transfer or dispose of any Common Stock (or other
Weatherford Voting Securities) held by such Holder other than shares of
Registrable Securities included in the registration, during a period of up to 90
days following the effective date of the registration statement, provided that
all other persons selling securities in such underwritten public offering and
all officers and directors of Weatherford shall enter into similar agreements.
Such agreement shall be in writing in the form reasonably satisfactory to
Weatherford and such underwriter. Weatherford may impose stop-transfer
instructions with respect to the securities subject to the foregoing restriction
until the end of the required stand-off period.
Section 7. TERM OF AGREEMENT; CERTAIN PROVISIONS REGARDING
TERMINATION.
(a) Except as otherwise provided in (b) below, the respective
covenants and agreements of the FRC Group and Weatherford contained in this
Agreement will continue in full force and effect until the Termination Date, and
all of the representations and warranties set forth herein shall be continuing
representations and warranties. Upon the Termination Date, all of the
obligations of Weatherford and the FRC Group hereunder shall terminate, except
solely the obligations of the
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<PAGE>
parties pursuant to Section 6.10 in respect of registrations completed prior to
the Termination Date.
(b) If the FRC Group shall, at any time, sell or otherwise
dispose of Weatherford Voting Securities in compliance with the terms and
provisions of this Agreement so that the FRC Group beneficially owns in the
aggregate shares representing less than 10% of the Combined Voting Power, all
covenants, agreements, obligations and rights of the FRC Group and Weatherford
contained in Sections 4.2 (except that no single sale, transfer of any
beneficial interest in or other disposition of Weatherford Voting Securities,
and no related group of such sales, transfers or dispositions, shall be made by
the FRC Group if such sales, transfers or dispositions (i) involve such number
of Weatherford Voting Securities as represent 5% or more of the Combined Voting
Power, or (ii) are to or with any one person or related group of persons who,
upon consummation of such sale, transfer or disposition have beneficial
ownership of such number of Weatherford Voting Securities as represent 10% or
more of the Combined Voting Power), 4.3, 4.4, 4.5, 4.7, 5, 6 and 8 hereof shall
cease until such time as the FRC Group shall again purchase or otherwise acquire
beneficial ownership of Weatherford Voting Securities representing 10% or more
of the Combined Voting Power. From and after such times as the FRC Group
beneficially owns in the aggregate Weatherford Voting Securities representing
10% or more of the Combined Voting Power, all restrictions upon and covenants of
the FRC Group and Weatherford set forth in this Agreement shall again be
applicable until the Termination Date. All percentages in this Section shall be
calculated in accordance with the provisions of Section 4.1.
Section 8. LEGEND AND STOP TRANSFER ORDER. To assist in effectuating
the provisions of this Agreement, the FRC Group hereby consents (i) to the
placement, in connection with the Merger or otherwise within 10 business days
after any Weatherford Voting Securities become subject to the provisions of this
Agreement, of the following legend on all certificates representing ownership of
Weatherford Voting Securities owned of record by any member of the FRC Group or
by any person where a member of the FRC Group is the beneficial owner thereof,
until such shares are sold, transferred or disposed in a manner permitted hereby
to a person who is not then a member of the FRC Group:
The shares represented by this certificate are subject to
the provisions of an Agreement among Weatherford
Corporation, First Reserve Corporation and certain limited
partnerships under control of or common control with First
Reserve Corporation, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except in
accordance
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<PAGE>
therewith. Copies of said Agreement are on file at the office of
the Corporate Secretary of Weatherford Corporation.
; and (ii) to the entry of stop transfer orders with the transfer agent or
agents of Weatherford Voting Securities against the transfer of Weatherford
Voting Securities except in compliance with the requirements of this Agreement,
or if Weatherford acts as its own transfer agent with respect to any Weatherford
Voting Securities, to the refusal by Weatherford to transfer any such securities
except in compliance with the requirements of this Agreement. Weatherford
agrees to remove promptly all legends and stop transfer orders with respect to
the transfer of Weatherford Voting Securities being made to a person who is not
then a member of the FRC Group in compliance with the provisions of this
Agreement.
Section 9. REMEDIES.
(a) The FRC Group acknowledges and agrees that (i) the
provisions of this Agreement are reasonable and necessary to protect the proper
and legitimate interests of the parties hereto, and (ii) Weatherford and the FRC
Group would be irreparably damaged in the event any of the provisions of this
Agreement were not performed by the other parties hereto in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the non-breaching party shall be entitled to preliminary and permanent
injunctive relief to prevent breaches of the provisions of this Agreement,
without the necessity of proving actual damages or of posting any bond, and to
enforce specifically the terms and provisions hereof and thereof in any court of
the United States or any state thereof having jurisdiction, which rights shall
be cumulative and in addition to any other remedy to which such non-breaching
party may be entitled hereunder or at law or equity.
(b) In addition to any other remedy Weatherford may have under
this Agreement or in law or equity, if the FRC Group shall acquire or transfer
any Weatherford Voting Securities in violation of this Agreement, such
Weatherford Voting Securities which are in excess of the number permitted to be
owned or controlled by the FRC Group or which have been transferred by the FRC
Group in violation of the provisions of this Agreement may not be voted by the
owner thereof or any proxy therefor.
10. GENERAL PROVISIONS.
10.1. CONSENT TO JURISDICTION; SERVICE OF PROCESS. THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.
EACH OF THE
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<PAGE>
PARTIES IRREVOCABLY AND UNCONDITIONALLY (A) AGREES THAT ANY SUIT, ACTION OR
OTHER LEGAL PROCEEDING (COLLECTIVELY, "SUIT") ARISING OUT OF THIS AGREEMENT
SHALL BE BROUGHT AND ADJUDICATED IN THE UNITED STATES DISTRICT COURT FOR
DELAWARE, OR, IF SUCH COURT WILL NOT ACCEPT JURISDICTION, IN ANY COURT OF
COMPETENT CIVIL JURISDICTION SITTING IN NEW CASTLE COUNTY, DELAWARE, (B) SUBMITS
TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSES OF ANY SUCH SUIT AND (C)
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ANY CLAIM THAT IT IS NOT SUBJECT TO THE JURISDICTION OF THE ABOVE
COURTS, THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
SUCH SUIT IS IMPROPER. EACH OF THE PARTIES ALSO IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE SERVICE OF ANY PROCESS, PLEADINGS, NOTICES OR OTHER PAPERS IN A
MANNER PERMITTED BY THE NOTICE PROVISIONS OF SECTION 10.3 HEREOF.
10.2. JOINT AND SEVERAL OBLIGATIONS. All of the obligations of
the FRC Group hereunder shall be joint and several. Each member of the FRC
Group that shall become or have the right to become the beneficial owner, within
the meaning and scope of Section 4.1 hereof, of Weatherford Voting Securities
shall, within 10 days of becoming such owner or holder, execute and deliver to
Weatherford a joinder agreement, agreeing to be legally bound by this Agreement
to the same extent as if named as a member of the FRC Group herein.
10.3. NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be in writing and shall be decreed to be validly given, made
or served when delivered personally or deposited in the U.S. mail, postage
prepaid, for delivery by express, registered or certified mail, or delivered to
a recognized overnight courier service, addressed as follows:
If to Weatherford:
Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Attn: Chairman, President and
Chief Executive Officer
With a required copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss, Esq.
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<PAGE>
If to any member of the First Reserve Group:
First Reserve Corporation
475 Steamboat Road
Greenwich, Connecticut 06830
Attn: President and Chief Executive Officer
With a required copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Attn: Robert L. Friedman, Esq.
or to such other address as may be specified on a notice given pursuant to this
Section 10.3.
10.4. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and shall in no
way be affected, impaired or invalidated. The parties agree that they will use
their best efforts at all times to support and defend this Agreement.
10.5. AMENDMENTS. This Agreement may be amended only by an
agreement in writing signed by each of the parties hereto; provided, however,
that any amendment executed by Weatherford must prior thereto be approved by a
majority of the directors of Weatherford then in office who were not designated
by the FRC Group.
10.6. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
10.7. COUNTERPARTS. This Agreement shall become binding when one
or more counterparts hereof, individually or taken together, bears the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against the party
whose signature appears thereon, or on whose behalf such counterpart is
executed, but all of which taken together shall be one and the same statement.
10.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto intending to be legally bound
have duly executed this Agreement, all as of the day and year first above
written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ Philip Burguieres
----------------------
Philip Burguieres
Chairman, President and
Chief Executive Officer
FIRST RESERVE CORPORATION
By: /s/ William E. Macaulay
------------------------
William E. Macaulay
President and Chief
Executive Officer
NUMBER OF SHARES OF FIRST RESERVE FUNDS:
ENTERRA COMMON STOCK
HELD ON THE DATE HEREOF:
1,993,529 AMERICAN GAS & OIL INVESTORS,
LIMITED PARTNERSHIP
1,233,907 AMGO II, LIMITED PARTNERSHIP
597,408 AMGO III, LIMITED PARTNERSHIP
2,323,562 FIRST RESERVE SECURED ENERGY ASSETS
FUND, LIMITED PARTNERSHIP
3,355,254 FIRST RESERVE FUND V, LIMITED
PARTNERSHIP
838,427 FIRST RESERVE FUND V-2, LIMITED
PARTNERSHIP
870,262 FIRST RESERVE FUND VI, LIMITED
PARTNERSHIP
By: FIRST RESERVE CORPORATION,
Managing General Partner
of each of the First Reserve
Funds
By: /s/ William E. Macaulay
------------------------
William E. Macaulay
President and
Chief Executive Officer
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Weatherford's Restated Certificate of Incorporation contains a provision
that eliminates the personal monetary liability of a director to Weatherford and
its stockholders for breach of his fiduciary duty of care as a director to the
extent currently allowed under the Delaware General Corporation Law (the
"DGCL"). If a director were to breach the duty of care in performing his duties
as a director, neither Weatherford nor its stockholders could recover monetary
damages from the director, and the only course of action available to
Weatherford's stockholders would be equitable remedies, such as an action to
enjoin or rescind a transaction involving a breach of the fiduciary duty of
care. To the extent certain claims against directors are limited to equitable
remedies, this provision of Weatherford's Restated Certificate of Incorporation
may reduce the likelihood of derivative litigation and may discourage
stockholders or management from initiating litigation against directors for
breach of their duty of care. Additionally, equitable remedies may not be
effective in many situations. If a stockholder's only remedy is to enjoin the
completion of the Board of Directors' action, this remedy would be ineffective
if the stockholder does not become aware of a transaction or event until after
it has been completed. In such a situation, it is possible that the stockholders
and Weatherford would have no effective remedy against the directors. The
directors do not have liability for monetary damages for grossly negligent
business decisions (in violation of their duty of care), including decisions
made in connection with attempts to acquire Weatherford. Liability for monetary
damages remains for (i) any breach of the duty of loyalty to Weatherford or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) payment of an
improper dividend or improper repurchase of Weatherford's stock under Section
174 of the DGCL or (iv) any transaction from which the director derived an
improper personal benefit. Weatherford's Restated Certificate of Incorporation
further provides that in the event the DGCL is amended to allow the further
elimination or limitation of the liability of directors, then the liability of
Weatherford's directors shall be limited to the fullest extent permitted by the
amended DGCL. The DGCL permits a corporation to indemnify certain persons,
including officers and directors, who are (or are threatened to be made) parties
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of their being officers or directors of
the corporation. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by an indemnified officer or director, provided he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests and, in the case of criminal proceedings, provided he had no
reasonable cause to believe that his conduct was unlawful. The By-laws of
Weatherford provide indemnification to the fullest extent allowed pursuant to
the foregoing provisions of the DGCL.
The DGCL further permits a corporation to indemnify certain persons,
including officers and directors, who are (or are threatened to be made) parties
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of their being officers
or directors of the corporation. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by the indemnified officer or
director, provided he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the corporation's best interests. However, no such
person will be indemnified as to matters for which he is found to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless, and only to the extent that, indemnification is ordered by a court. The
By-laws of Weatherford provide indemnification to the fullest extent allowed
pursuant to the foregoing provisions of the DGCL.
Weatherford also has entered into an indemnification agreement with each of
its directors and certain of its officers. Each such indemnification agreement
provides for indemnification to the fullest extent permitted by the DGCL and for
the advancement of expenses, including attorneys' fees and
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other costs, expenses and obligations, paid or incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal) any threatened, pending or completed action, suit or proceeding related
to the fact that such director or officer was serving for or at the request of
Weatherford. To the extent that the Board of Directors or the stockholders of
Weatherford may in the future wish to limit or repeal the ability of Weatherford
to indemnify or advance expenses to officers and directors, such repeal or
limitation may not be effective as to officers and directors who are parties to
an indemnification agreement, since their rights to full protection are
contractually assured by the indemnification agreement.
Delaware corporations also are authorized to obtain insurance to protect
officers and directors from certain liabilities, including liabilities against
which the corporation cannot indemnify its directors and officers. Weatherford
currently has in effect a directors' and officers' liability insurance policy
providing aggregate coverage in the amount of $10,000,000.
All of the foregoing indemnification provisions include statements that such
provisions are not to be deemed exclusive of any other right to indemnity to
which a director or officer may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
ITEM 21. EXHIBITS
The following exhibits are filed herewith unless otherwise indicated:
<TABLE>
<S> <C>
2.1 Agreement and Plan of Merger dated as of June 23, 1995, as amended as of
August 28, 1994, between Weatherford and Enterra Corporation.
4.1 Restated Certificate of Incorporation of Weatherford, as amended through
September 24, 1993 (incorporated by reference to Exhibit 3.1 to
Weatherford's Form 10-K Annual Report for the year ended December 31, 1993
(File No. 1-7867)).
4.2 Bylaws of Weatherford, as amended through March 17, 1994 (incorporated by
reference to Exhibit 3.1 to Weatherford's Current Report on Form 8-K dated
April 28, 1994 (File No. 1-7867)).
4.3 Amended and Restated Revolving and Term Credit Agreement dated as of April
15, 1994, among Weatherford International Incorporated, Weatherford U.S.,
Inc., Weatherford/Lamb, Inc., Credit Lyonnais New York Branch, as
Administrative Agent, Texas Commerce Bank National Association, as
Syndication and Collateral Agent, Arab Banking Corporation (B.S.C.), as
Co-Agent, and the financial institutions listed on the signature pages
thereto (incorporated by reference to Exhibit 4.1 to Weatherford's Current
Report on Form 8-K dated April 28, 1994 (File No. 1-7867)).
4.4 Consent and First Amendment to Credit Agreement, effective as of April 15,
1994, among Weatherford International Incorporated, Weatherford U.S., Inc.,
Weatherford/Lamb, Inc., Credit Lyonnais New York Branch, as Administrative
Agent, Texas Commerce Bank National Association, as Syndication and
Collateral Agent, Arab Banking Corporation (B.S.C.), as Co-Agent, and the
financial institutions listed on the signature pages thereto.
4.5 Consent and Second Amendment to Amended and Restated Revolving and Term
Loan Agreement dated effective as of December 31, 1994, among Weatherford
International Incorporated, Weatherford U.S., Inc., Weatherford/Lamb, Inc.,
Credit Lyonnais New York Branch, as Administrative Agent, Texas Commerce
Bank National Association, as Syndication and Collateral Agent, Arab
Banking Corporation (B.S.C.), as Co-Agent, and the financial institutions
listed on the signature pages thereto.
4.6 Agreement dated as of June 23, 1995, as amended as of August 28, 1995,
among Weatherford and American Gas & Oil Investors, Limited Partnership,
AmGO II,
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
Limited Partnership, AmGO III, Limited Partnership, First Reserve Secured
Energy Assets Fund, Limited Partnership, First Reserve Fund V, Limited
Partnership, First Reserve Fund V-2, Limited Partnership, and First Reserve
Fund VI, Limited Partnership (collectively, the "First Reserve Funds"), and
First Reserve Corporation.
4.7 Letter Agreement dated June 23, 1995, among Weatherford International
Incorporated, the First Reserve Funds and First Reserve Corporation
(incorporated by reference to Exhibit 99.2 to Weatherford's Current Report
on Form 8-K dated July 6, 1995 (File No. 1-7867)).
5 Opinion of Fulbright & Jaworski L.L.P., regarding legality of securities.
8 Opinion of Fulbright & Jaworski L.L.P., regarding certain tax matters.
*10.1 Second Amendment to Change of Control Agreement with Philip Burguieres,
James R. Burke, M.E. Eagles, Norman W. Nolen, Suzanne Thomas, James D.
Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker.
*10.2 First Amendment to Change of Control Agreement with Philip D. Gardner,
Robert A. Seekely and Frederick T. Tilton.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Coopers & Lybrand L.L.P.
23.5 Consent of Fulbright & Jaworski L.L.P. (contained in Exhibit 5 and Exhibit
8).
24 Powers of Attorney (included on page II-5 hereof).
99.1 Proxy Card for Weatherford International Incorporated.
99.2 Proxy Card for Enterra Corporation.
<FN>
- ------------------------
*Compensatory plan.
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
The undersigned registrant hereby undertakes that:
(1) Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form; and
(2) Every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act, and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on August 28, 1995.
WEATHERFORD INTERNATIONAL INCORPORATED
By _______/s/_PHILIP BURGUIERES_______
Philip Burguieres
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Philip Burguieres and H. Suzanne Thomas, and each
of them, either one of whom may act without joinder of the other, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or the substitute or substitutes
of any or all of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
<C> <S> <C>
Chairman of the Board, President and
/s/PHILIP BURGUIERES Chief Executive Officer (Principal August 28, 1995
Philip Burguieres Executive Officer)
Senior Vice President, Chief
/s/NORMAN W. NOLEN Financial Officer and Treasurer
Norman W. Nolen (Principal Financial and Accounting August 28, 1995
Officer)
/s/THOMAS N. AMONETT
Thomas N. Amonett Director August 28, 1995
/s/THOMAS C. BROWN
Thomas C. Brown Director August 28, 1995
/s/J. KELLY ELLIOTT
J. Kelly Elliott Director August 28, 1995
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
/s/WILLIAM E. GREEHEY
William E. Greehey Director August 28, 1995
<C> <S> <C>
/s/JOHN W. JOHNSON
John W. Johnson Director August 28, 1995
/s/ROBERT K. MOSES, JR.
Robert K. Moses, Jr. Director August 28, 1995
/s/W. RANDOLPH SMITH
W. Randolph Smith Director August 28, 1995
</TABLE>
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
Between
Weatherford International Incorporated
and
Enterra Corporation
June 23, 1995
(As amended August 28, 1995)
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . 2
1.4 EFFECTS OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . . 2
1.5 CERTIFICATE OF INCORPORATION; BYLAWS . . . . . . . . . . . . . . . 2
1.6 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . 2
1.7 CONVERSION OF SECURITIES; EXCHANGE; FRACTIONAL SHARES. . . . . . . 2
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. . . . . . . . . . . 5
(a) ORGANIZATION AND COMPLIANCE WITH LAW. . . . . . . . . . . . . 5
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . 6
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT . . . . . . . . . . . 7
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH WEATHERFORD IS A PARTY . . . . . . . . . 7
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . 8
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. . . . . . . . . . . . . . . . . . 9
(g) CERTAIN FEES. . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . 10
(j) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) NO SEVERANCE PAYMENTS . . . . . . . . . . . . . . . . . . . . 14
(m) VOTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 14
(n) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(o) TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . . . . 14
(p) WEATHERFORD ACTIONS . . . . . . . . . . . . . . . . . . . . . 14
2.3 REPRESENTATIONS AND WARRANTIES OF ENTERRA. . . . . . . . . . . . . 14
(a) ORGANIZATION AND COMPLIANCE WITH LAW. . . . . . . . . . . . . 14
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . 15
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT . . . . . . . . . . . 15
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH ENTERRA IS A PARTY . . . . . . . . . . . 16
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . 16
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. . . . . . . . . . . . . . . . . . 18
(g) CERTAIN FEES. . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . 19
(j) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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(k) ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . 21
(l) NO SEVERANCE PAYMENTS . . . . . . . . . . . . . . . . . . . . 22
(m) VOTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 22
(n) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(o) TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . . . . 22
(p) ENTERRA ACTIONS . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . 23
3.1 CONDUCT OF BUSINESS BY WEATHERFORD PENDING THE MERGER. . . . . . . 23
3.2 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 25
3.3 AFFILIATES' AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 25
3.4 RESERVATION OF WEATHERFORD COMMON STOCK. . . . . . . . . . . . . . 25
3.5 STOCK EXCHANGE LISTING . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
COVENANTS OF ENTERRA PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . 25
4.1 CONDUCT OF BUSINESS BY ENTERRA PENDING THE MERGER. . . . . . . . . 25
4.2 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 27
4.3 AFFILIATES' AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT . . . . . 28
5.2 COMFORT LETTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3 MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . 28
5.4 REASONABLE EFFORTS; CONSENTS, APPROVALS AND WAIVERS. . . . . . . . 29
5.5 ANTITRUST MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . . . . 30
5.7 AGREEMENT TO DEFEND. . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.9 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.10 POST-EFFECTIVE TIME MAILING. . . . . . . . . . . . . . . . . . . . 32
5.11 STOCKHOLDERS' AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 32
5.12 ENTERRA STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . 32
5.13 ENTERRA EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . 33
5.14 UPDATE OF DISCLOSURE LETTERS . . . . . . . . . . . . . . . . . . . 34
5.15 WEATHERFORD SPECIAL SEVERANCE PAY PLAN . . . . . . . . . . . . . . 34
5.16 CHANGE OF CONTROL AGREEMENTS . . . . . . . . . . . . . . . . . . . 34
5.17 INDEMNIFICATION AGREEMENTS . . . . . . . . . . . . . . . . . . . . 34
5.18 ENTERRA EMPLOYEE BONUSES.. . . . . . . . . . . . . . . . . . . . . 35
5.19 ENTERRA SEVERANCE AGREEMENTS.. . . . . . . . . . . . . . . . . . . 35
5.20 ENTERRA CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER. . . . . . 36
5.21 WEATHERFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER. . . . 36
5.22 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . 36
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ARTICLE VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER . . . 37
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. . . . . . . . 38
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENTERRA. . . . . . . . . . 40
ARTICLE VII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS . . . . . . . . . . . . . . . . . . 42
7.1 NO SOLICITATION BY WEATHERFORD . . . . . . . . . . . . . . . . . . 42
7.2 NO SOLICITATION BY ENTERRA . . . . . . . . . . . . . . . . . . . . 43
7.3 FEE AND EXPENSE REIMBURSEMENTS . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 47
8.3 WAIVER AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . 48
8.4 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.5 PUBLIC STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 48
8.6 BINDING EFFECT; ASSIGNMENT . . . . . . . . . . . . . . . . . . . . 48
8.7 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.8 GOVERNING LAW; JURISDICTION. . . . . . . . . . . . . . . . . . . . 49
8.9 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.11 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.12 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. . . . . . . . . . . . 50
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of the 23rd day of June, 1995
(the "Agreement"), is between Weatherford International Incorporated, a Delaware
corporation ("Weatherford"), and Enterra Corporation, a Delaware corporation
("Enterra").
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Weatherford and Enterra have
approved the merger of Enterra with and into Weatherford (the "Merger"), whereby
each issued and outstanding share of common stock, par value $1.00 per share, of
Enterra ("Enterra Common Stock") not owned directly or indirectly by Enterra or
Weatherford will be converted into the right to receive common stock, par value
$.10 per share, of Weatherford ("Weatherford Common Stock"), as provided herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Merger is intended to be treated as a "pooling of interests"
for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.3)
Enterra will be merged with and into Weatherford. As a result of the Merger,
the separate corporate existence of Enterra shall cease and Weatherford shall
continue as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation") and shall succeed to and assume all of the rights and
obligations of Enterra in accordance with the DGCL. The corporate name of the
Surviving Corporation shall be "Weatherford Enterra, Inc.".
1.2 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article VI or at such other time and place and on such other date as Weatherford
and Enterra shall agree; PROVIDED, that the closing
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conditions set forth in Article VI shall have been satisfied or waived at or
prior to such time. The date on which the Closing occurs is herein referred to
as the "Closing Date".
1.3 CONSUMMATION OF THE MERGER. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware a certificate of merger in such
form as required by, and executed in accordance with, the relevant provisions of
the DGCL. The "Effective Time" of the Merger as that term is used in this
Agreement shall mean the effective time set forth in the certified copy of the
certificate of merger issued by the Secretary of State of the State of Delaware
with respect to the Merger.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the applicable provisions of the DGCL.
1.5 CERTIFICATE OF INCORPORATION; BYLAWS. The Restated Certificate of
Incorporation and bylaws of Weatherford, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and bylaws of the
Surviving Corporation and thereafter shall continue to be its Certificate of
Incorporation and bylaws until amended as provided therein and under the DGCL.
1.6 DIRECTORS AND OFFICERS.
(a) The Board of Directors of the Surviving Corporation shall consist
of ten persons. Exhibit 1.6(a) sets forth the initial directors of the
Surviving Corporation, along with the term of office for, and the committee
or committees of the Board of Directors, if any, on, which each such
director shall serve.
(b) Exhibit 1.6(b) sets forth the initial officers of the Surviving
Corporation, each of whom shall hold office until his or her successor is
duly elected or appointed and qualified.
1.7 CONVERSION OF SECURITIES; EXCHANGE; FRACTIONAL SHARES. Subject to the
terms and conditions of this Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of Weatherford, Enterra or their
stockholders:
(a) Each share of Enterra Common Stock issued and outstanding
immediately prior to the Effective Time (the "Shares"), other than any
Shares to be canceled pursuant to Section 1.7(b), shall be converted,
subject to the provisions of this Section 1.7, into the right to receive
0.845 of a share (which number reflects a 1 for 2 reverse stock split to be
effected at the Closing) of Weatherford Common Stock (the "Conversion
Rate"); PROVIDED, HOWEVER, that no fractional shares of Weatherford Common
Stock shall be issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.7(f) hereof.
(b) Each share of Enterra Common Stock held in the treasury of
Enterra and each Share owned by Weatherford or any direct or indirect
wholly-owned subsidiary of Enterra or of Weatherford immediately prior to
the
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Effective Time shall be canceled and extinguished at the Effective Time
without any conversion thereof and no payment shall be made with respect
thereto.
(c) As soon as practicable after the Effective Time, each holder of
an outstanding certificate that prior thereto represented Shares shall be
entitled, upon surrender thereof to the transfer agent for the Weatherford
Common Stock, to receive in exchange therefor a certificate or certificates
representing the number of whole shares of Weatherford Common Stock into
which the Shares so surrendered shall have been converted as aforesaid, of
such denominations and registered in such names as such holder may request.
Each holder of Shares who would otherwise be entitled to a fraction of a
share of Weatherford Common Stock shall, upon surrender of the certificates
representing Shares held by such holder to Weatherford's transfer agent, be
paid an amount in cash in accordance with the provisions of Section 1.7(f).
Until so surrendered, each outstanding certificate that, prior to the
Effective Time, represented Shares shall be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of
earlier dividends and distributions, to evidence the ownership of the
number of full shares of Weatherford Common Stock into which such Shares
shall have been converted pursuant to this Section 1.7. Unless and until
any such outstanding certificates shall be surrendered, no dividends or
other distributions payable to the holders of Weatherford Common Stock, as
of any time on or after the Effective Time, shall be paid to the holders of
such outstanding certificates that prior to the Effective Time represented
Shares; PROVIDED, HOWEVER, that, upon surrender and exchange of such
outstanding certificates, there shall be paid to the record holders of the
certificates issued and exchanged therefor the amount, without interest
thereon, of dividends and other distributions, if any, that theretofore
were declared and became payable since the Effective Time with respect to
the number of full shares of Weatherford Common Stock issued to such
holders.
(d) All shares of Weatherford Common Stock into which the Shares
shall have been converted pursuant to this Section 1.7 shall be issued in
full satisfaction of all rights pertaining to such converted Shares.
(e) If any certificate for shares of Weatherford Common Stock is to
be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall have paid to Weatherford or its transfer agent any transfer
or other taxes required by reason of the issuance of a certificate for
shares of Weatherford Common Stock in any name other than that of the
registered holder of the certificate surrendered, or established to the
satisfaction of Weatherford or its transfer agent that such tax has been
paid or is not payable.
(f) No fraction of a share of Weatherford Common Stock shall be
issued, but in lieu thereof each holder of Shares who would otherwise be
entitled to a fraction of a share of Weatherford Common Stock shall, upon
surrender of
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the Shares held by such holder to Weatherford's transfer agent, be paid an
amount in cash equal to the value of such fraction of a share based upon
the closing price of Weatherford Common Stock on the New York Stock
Exchange on the last trading day prior to the Effective Time. No interest
shall be paid on such amount. All Shares held by a record holder other
than nominee holders shall be aggregated for purposes of computing the
number of shares of Weatherford Common Stock to be issued pursuant to this
Section 1.7.
(g) None of Weatherford, Enterra, the Surviving Corporation or
Weatherford's transfer agent shall be liable to a holder of the Shares for
any amount properly paid to a public official pursuant to applicable
property, escheat or similar law.
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate to
effectuate the Merger as promptly as possible. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Weatherford and Enterra, such corporations shall direct their
respective officers and directors to take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings ascribed to them below:
(a) "Environmental Laws" shall mean all United States or foreign
federal, state, local or municipal laws, rules, regulations, statutes,
ordinances or orders of any governmental entity relating to (i) the control
of any potential pollutant or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (iii) exposure to hazardous, toxic
or other substances alleged to be harmful. The term "Environmental Laws"
shall include, but not be limited to, the Clean Air Act, 42 U.S.C. Section
7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq. and the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et seq.
(b) "Environmental Permit" shall mean any permit, license, approval,
registration, identification number or other authorization with respect to
any business or other operations conducted by Weatherford or any
Weatherford Subsidiary (as defined in Section 2.2(a)) or Enterra or any
Enterra Subsidiary (as defined in Section 2.3(a)), as the case may be,
required under any applicable Environmental Law.
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(c) "Hazardous Materials" shall mean any (i) petroleum or petroleum
products, (ii) hazardous substance as defined pursuant to Section 101(14)
of CERCLA or (iii) any other chemical, substance or waste that is regulated
under any Environmental Law.
(d) "Material Adverse Change" with respect to any party shall mean a
material adverse change in the business, financial condition or results of
operations of such party and its subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that in no event shall the term "Material Adverse Change" be
deemed to include (i) changes in national or international economic
conditions or industry conditions generally, (ii) changes, or possible
changes, in foreign, federal, state or local statutes and regulations
applicable to Weatherford or Enterra, as the case may be, or (iii) the loss
of employees, customers or suppliers by such party as a direct or indirect
consequence of any announcement relating to the Merger.
(e) "Material Adverse Effect" on any party shall mean any material
adverse effect on the business, financial condition or results of
operations of such party and its subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that in no event shall the term "Material Adverse Effect" be
deemed to include (i) changes in national or international economic
conditions or industry conditions generally, (ii) changes, or possible
changes, in foreign, federal, state or local statutes and regulations
applicable to Weatherford or Enterra, as the case may be, or (iii) the loss
of employees, customers or suppliers by such party as a direct or indirect
consequence of any announcement relating to the Merger.
(f) "Permitted Liens" shall mean: (i) liens for taxes not due and
payable or which are being contested in good faith, (ii) mechanics',
warehousemen's and other statutory liens incurred in the ordinary course of
business and (iii) defects and irregularities in title and encumbrances
that are not substantial in character or amount and do not materially
impair the use of the property or asset in question.
2.2 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. Weatherford hereby
represents and warrants to Enterra that, except as expressly contemplated by
this Agreement or as set forth in the disclosure letter delivered by Weatherford
to Enterra on the date hereof (the "Weatherford Disclosure Letter"):
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Weatherford and each of
its corporate subsidiaries (the "Weatherford Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has all requisite
corporate power and authority and all necessary governmental authorizations
to own, lease and operate all of its properties and assets and to carry on
its business as now being conducted, except where the failure to do so
would not, either individually or in the aggregate, have a Material Adverse
Effect. Weatherford and each of the Weatherford Subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction in which the property
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owned, leased or operated by it or the nature of the business conducted by
it makes such qualification necessary, except in such jurisdictions where
the failure to do so does not and would not, either individually or in the
aggregate, have a Material Adverse Effect. Weatherford and each of the
Weatherford Subsidiaries is in compliance with all applicable laws,
judgments, orders, rules and regulations, domestic and foreign, except
where failure to be in such compliance would not, either individually or in
the aggregate, have a Material Adverse Effect. Weatherford has heretofore
delivered to Enterra true and complete copies of Weatherford's Restated
Certificate of Incorporation and bylaws, as in existence on the date
hereof.
(b) CAPITALIZATION.
(i) The authorized capital stock of Weatherford consists of
80,000,000 shares of Weatherford Common Stock, par value $.10 per
share, and 1,000,000 shares of preferred stock, par value $1.00 per
share. As of June 21, 1995, there were issued and outstanding
54,276,632 shares of Weatherford Common Stock (including shares deemed
to be outstanding pending the exchange of shares of common stock of
Petroleum Equipment Tools Co. and H&H Oil Tool Co., Inc.) and no
shares of preferred stock, and 111,043 shares of Weatherford Common
Stock were held as treasury shares, of which 82,783 shares were
reserved for issuance pursuant to various stock option agreements. As
of June 21, 1995, there were reserved for issuance 2,299,414 shares of
Weatherford Common Stock pursuant to stock option, employee stock
purchase, 401(k) savings, stock incentive and restricted stock plans
(collectively, the "Weatherford Options"). All issued shares of
Weatherford Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive rights.
Weatherford is not a party to, and, excluding agreements among various
funds held or managed by institutional investors, has no knowledge of,
any voting agreement, voting trust or similar agreement or arrangement
relating to any class or series of its capital stock, or any agreement
or arrangement providing for registration rights with respect to any
capital stock or other securities of Weatherford. All shares of
Weatherford Common Stock to be issued pursuant to the Merger, when
issued in accordance with this Agreement, will be validly issued,
fully paid and nonassessable and will not violate the preemptive
rights of any person. All outstanding shares of capital stock of the
Weatherford Subsidiaries are owned by Weatherford, free and clear of
all liens, charges, encumbrances, adverse claims and options of any
nature; provided, however, that Weatherford's ownership of shares of
capital stock of certain foreign Weatherford Subsidiaries may be
subject to Permitted Liens.
(ii) Other than as set forth in this Section 2.2(b) and as
contemplated by Section 3.1(b)(iii), there are not now, and at the
Effective Time there will not be, any (A) shares of capital stock or
other equity securities of Weatherford outstanding (other than
Weatherford Common
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Stock issued pursuant to Weatherford Options as described herein) or
(B) outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any class of capital
stock of Weatherford, or contracts, understandings or arrangements to which
Weatherford is a party, or by which it is or may be bound, to issue
additional shares of its capital stock or options, warrants, scrip or
rights to subscribe for, or securities or rights convertible into or
exchangeable for, any additional shares of its capital stock.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. Weatherford has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery by
Weatherford of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action (subject only, with respect to the Merger, to adoption and
approval of this Agreement by the stockholders of Weatherford as provided
in Section 5.3(b)). This Agreement has been duly executed and delivered by
Weatherford and is the valid and binding obligation of Weatherford,
enforceable against Weatherford in accordance with its terms, except as
such enforceability may be limited or affected by (i) bankruptcy,
insolvency, reorganization, moratorium, liquidation, arrangement,
fraudulent transfer, fraudulent conveyance and other similar laws
(including, without limitation, court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or providing
for the relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities
laws.
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS TO
WHICH WEATHERFORD IS A PARTY. Neither the execution and delivery of this
Agreement nor the performance by Weatherford of its obligations hereunder,
nor the consummation of the transactions contemplated hereby by
Weatherford, will (i) conflict with Weatherford's Restated Certificate of
Incorporation or bylaws; (ii) assuming satisfaction of the requirements set
forth in clause (iii) below, violate any provision of law applicable to
Weatherford; (iii) except for (A) requirements of Federal and state
securities law, (B) requirements arising out of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (C) requirements of
filings in such foreign jurisdictions as may be applicable and (D) the
filing of a certificate of merger in accordance with the DGCL, require any
consent or approval of, or filing with or notice to, any public body or
authority, domestic or foreign, under any provision of law applicable to
Weatherford; or (iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default)
under, or permit the termination of any provision of, or result in the
creation or imposition of any
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lien upon any properties, assets or business of Weatherford under, any
note, bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Weatherford is a party
or by which Weatherford or its assets or properties is bound or encumbered,
except those that have already been given, obtained or filed and except in
any of the cases enumerated in clauses (ii) through (iv), those that, in
the aggregate, would not have a Material Adverse Effect.
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. Since January 1, 1992,
Weatherford and each of the Weatherford Subsidiaries have filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that they have been
required to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All reports, registration statements and other filings (including,
without limitation, all notes, exhibits and schedules thereto and documents
incorporated by reference therein) filed by Weatherford with the Commission
since January 1, 1992 through the date of this Agreement, together with any
amendments thereto, are sometimes collectively referred to as the
"Weatherford Commission Filings". Weatherford has heretofore delivered to
Enterra copies of the Weatherford Commission Filings. As of the
effectiveness dates declared by the Commission, in the case of registration
statements, as of the mailing dates, in the case of proxy statements, or as
of the filing dates with the Commission, in the case of all other
Weatherford Commission Filings, the Weatherford Commission Filings
complied, and the Proxy Statement (as defined in Section 5.1) and the
Registration Statement (as defined in Section 5.1) (except with respect to
information concerning Enterra and the Enterra Subsidiaries furnished by or
on behalf of Enterra to Weatherford specifically for use therein) will
comply, in all material respects with the Securities Act, the Exchange Act
and the rules and regulations of the Commission promulgated thereunder, as
applicable, and did not or will not, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
All material contracts of Weatherford and the Weatherford Subsidiaries
have been included in the Weatherford Commission Filings, except for those
contracts not required to be filed pursuant to the rules and regulations of
the Commission.
Each of the audited consolidated financial statements (including,
without limitation, any related notes or schedules) included or
incorporated by reference in the Weatherford Commission Filings was, and
each of the audited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement and the Registration
Statement (except for those financial statements of Enterra and the Enterra
Subsidiaries furnished by or on behalf of
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<PAGE>
Enterra to Weatherford specifically for use therein) will be, prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or
schedules thereto), and fairly presents, or will fairly present, as the
case may be, in all material respects, the consolidated financial position
of Weatherford and the Weatherford Subsidiaries as of the dates thereof and
the statements of income, cash flows and stockholders' equity for the
periods then ended in accordance with generally accepted accounting
principles. Each of the unaudited interim financial statements included or
incorporated by reference in the Weatherford Commission Filings was, and
each of the unaudited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement and the Registration
Statement (except for those financial statements of Enterra and the Enterra
Subsidiaries furnished by or on behalf of Enterra to Weatherford
specifically for use therein) will be, prepared in a manner consistent with
the audited consolidated financial statements and generally accepted
accounting principles. As of the date hereof, Weatherford has no material
liabilities, absolute or contingent, not reflected in the Weatherford
Commission Filings, except (i) liabilities not required under generally
accepted accounting principles to be reflected on such financial statements
or the notes thereto and (ii) liabilities incurred in the ordinary course
of business since the date of such financial statements consistent with
past operations and not relating to the borrowing of money.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN
CHANGES AND EVENTS. Since April 1, 1995, except as disclosed in the
Weatherford Commission Filings filed with the Commission since that date,
Weatherford and the Weatherford Subsidiaries have conducted their business
only in the ordinary and usual course, and there has not been (i) any
Material Adverse Change in Weatherford or any condition, event or
development that reasonably may be expected to result in any Material
Adverse Change; (ii) any change by Weatherford in its accounting methods,
principles or practices; (iii) any revaluation by Weatherford or any of the
Weatherford Subsidiaries of any of its or their assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business; (iv) any
entry by Weatherford or any of the Weatherford Subsidiaries into any
commitment or transaction material to Weatherford and the Weatherford
Subsidiaries, taken as a whole, other than in the ordinary course of
business; (v) any declaration, setting aside or payment of any dividends or
distributions in respect of the Weatherford Common Stock, or any
redemption, purchase or other acquisition of any of its securities or any
securities of any of the Weatherford Subsidiaries; (vi) any damage,
destruction or loss (whether or not covered by insurance) materially
adversely affecting the properties or business of Weatherford and the
Weatherford Subsidiaries, taken as a whole; (vii) any increase in
indebtedness for borrowed money; (viii) any granting of a security interest
or lien on any property or assets of Weatherford and the Weatherford
Subsidiaries, other than Permitted Liens; or (ix) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation,
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<PAGE>
the granting of stock options, stock appreciation rights, performance
awards or restricted stock awards), stock purchase or other employee
benefit plan or any other increase in the compensation payable or to become
payable to any officers or key employees of Weatherford or any of the
Weatherford Subsidiaries.
(g) CERTAIN FEES. Neither Weatherford nor any of its officers,
directors or employees, on behalf of Weatherford or any of the Weatherford
Subsidiaries or its or their respective Boards of Directors (or any
committee thereof), has employed any financial advisor, broker or finder or
incurred any liability for any financial advisory, brokerage or finders'
fees or commissions in connection with the transactions contemplated
hereby.
(h) LITIGATION. Except as disclosed in the Weatherford Commission
Filings, there are no claims, actions, suits, investigations or proceedings
pending or, to the knowledge of Weatherford, threatened against or
affecting Weatherford or any of the Weatherford Subsidiaries or any of
their respective properties at law or in equity, or any of their respective
employee benefit plans or fiduciaries of such plans, or before or by any
federal, state, municipal or other governmental agency or authority, or
before any arbitration board or panel, wherever located, that, individually
or in the aggregate, if adversely determined would have a Material Adverse
Effect, or that involve the risk of criminal liability.
(i) EMPLOYEE BENEFIT PLANS. The Weatherford Disclosure Letter sets
forth a complete and accurate list of:
(i) each "employee welfare benefit plan" (as such term is
defined in Section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) (the "Weatherford Welfare Plans");
(ii) each "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) (the "Weatherford Pension Plans");
and
(iii) all other employee benefit agreements or arrangements,
including, without limitation, deferred compensation plans, incentive
plans, bonus plans or arrangements, stock option plans, stock purchase
plans, golden parachute agreements, severance pay plans, dependent
care plans, cafeteria plans, employee assistance programs, scholarship
programs, employment contracts and other similar plans, agreements and
arrangements (collectively, with the Weatherford Welfare Plans and the
Weatherford Pension Plans, the "Weatherford Benefit Plans"),
that are currently in effect or were maintained within three years of the
Closing Date, or have been approved before this date but are not yet
effective, for the benefit of directors, officers, employees or former
employees (or their beneficiaries) of Weatherford, any of the Weatherford
Subsidiaries incorporated in the United States (the "Weatherford U.S.
Subsidiaries") or any member of a controlled group or affiliated service
group (as defined in Section 414(b), (c), (m) or (o) of the Code) that is
incorporated or domiciled in the United States of
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<PAGE>
which Weatherford or any of the Weatherford U.S. Subsidiaries is a member
(collectively, the "Weatherford Group"). Weatherford and the Weatherford
U.S. Subsidiaries will provide to Enterra, as to each Weatherford Benefit
Plan, as applicable, access to a complete and accurate copy of (i) such
plan, agreement or arrangement; (ii) the trust, group annuity contract or
other document that provides the funding for such plan; (iii) the most
recent annual Form 5500, 990 and 1041 reports; (iv) the most recent
actuarial report or valuation statement; (v) the most current summary plan
description, handbook or other booklet that describes any Weatherford
Benefit Plan, and any summary of material modifications prepared after each
such summary plan description; (vi) the most recent Internal Revenue
Service ("IRS") determination letter and all rulings or determinations
requested from the IRS subsequent to the date of such determination letter;
and (vii) all other pending correspondence from the IRS or the Department
of Labor received by any member of the Weatherford Group that relates to
such plan.
Each Weatherford Welfare Plan and Weatherford Pension Plan (i) is in
compliance with ERISA, including, without limitation, all reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA, except
where the failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect; (ii) is in compliance with
the Code, except where the failure to be in compliance would not, either
individually or in the aggregate, have a Material Adverse Effect; (iii) has
had the appropriate Form 5500 timely filed for any Weatherford Pension
Plan, if applicable, for each year of its existence and for any Weatherford
Welfare Plan for each year of its existence after 1987, except where the
failure to cause such timely filing would not, either individually or in
the aggregate, have a Material Adverse Effect; (iv) has not engaged in any
transaction described in Section 406 or 407 of ERISA or Section 4975 of the
Code unless it 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; (v) has no issue pending (other than the payment of benefits in the
normal course or the qualification of the plan pursuant to an application
pending before the IRS) nor any issue resolved adversely to the Weatherford
Group that, in either case, may subject the Weatherford Group to the
payment of a penalty, interest, tax or other amount, which, either
individually or in the aggregate, would have a Material Adverse Effect; and
(vi) can be unilaterally terminated or amended on no more than 90 days
notice. No notice has been received by the Weatherford Group of an
increase or proposed increase in any premium relative to any Weatherford
Benefit Plan, and no amendment to any Weatherford Benefit Plan within the
last twelve months has increased the rate of employer contributions
thereunder that, either individually or in the aggregate, would have a
Material Adverse Effect.
Each Weatherford Benefit 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
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<PAGE>
to the Closing. No Weatherford Benefit Plan will cause the Weatherford
Group to have liability for severance pay as a result of this Agreement.
The Weatherford Group does not provide employee post-retirement medical or
health coverage or contribute to or maintain any employee welfare benefit
plan that provides for health benefit coverage following termination of
employment except as required by Section 4980B(f) of the Code or other
applicable statute, nor has the Weatherford Group made any representations,
agreements, covenants or commitments to provide that coverage.
Except for each Weatherford Pension Plan that is an ERISA top-hat
plan, each Weatherford Pension Plan has been submitted to and approved as
qualifying under Section 401(a) of the Code by the IRS or the applicable
remedial amendment period relating to such plan will not have ended prior
to the Closing. To the knowledge of Weatherford, no facts have occurred
that, if known by the IRS, could cause disqualification of any Weatherford
Pension Plan. Each Weatherford Pension Plan to which Section 412 of the
Code is applicable fully complies with the funding requirements of that
Section and there is no accumulated funding deficiency as defined in
Section 302(a)(2) of ERISA (whether or not waived) in any such plan. The
Weatherford Group has paid all premiums (including, without limitation,
interest, charges and penalties for late payment) due the Pension Benefit
Guaranty Corporation (the "PBGC") with respect to each Weatherford Pension
Plan for which premiums are required. No Weatherford Pension Plan has been
terminated under circumstances that would result in liability to the PBGC
or the Weatherford Group. There has been no "reportable event" (as defined
in Section 4043(b) of ERISA and the regulations under that Section) with
respect to any Weatherford Pension Plan subject to Title IV of ERISA. With
respect to each Weatherford Pension Plan subject to Title IV of ERISA, the
Weatherford Group has not (i) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of ERISA,
(ii) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA or (iii) ceased making contributions on
or before the Closing Date to any such plan subject to Section 4064(a) of
ERISA to which the Weatherford Group made contributions at any time during
the six years prior to the Closing Date. Neither the Weatherford Group nor
any member thereof has made a complete or partial withdrawal from a
multiemployer plan (as defined in Section 3(37) of ERISA) so as to incur
withdrawal liability as defined in Section 4201 of ERISA.
Weatherford's subsidiaries incorporated outside of the United States
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.
(j) TAXES. All returns and reports, including, without limitation,
information and withholding returns and reports ("Tax Returns") of or
relating to any foreign, federal, state or local tax, assessment or other
governmental
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<PAGE>
charge ("Taxes" or a "Tax") that are required to be filed on or before the
Closing Date by or with respect to Weatherford or any of the Weatherford
Subsidiaries have been or will be duly and timely filed, and all Taxes,
including, without limitation, interest and penalties, due and payable
pursuant to such Tax Returns have been paid or adequately provided for in
reserves established by Weatherford, except where the failure to file, pay
or provide for would not, either individually or in the aggregate, have a
Material Adverse Effect. All Tax Returns of or with respect to Weatherford
or any of the Weatherford Subsidiaries have been audited by the applicable
governmental authority, or the applicable statute of limitations has
expired, for all periods up to and including, without limitation, the tax
year ended December 31, 1987. There is no material claim against
Weatherford or any of the Weatherford Subsidiaries with respect to any
Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Weatherford or any of the Weatherford Subsidiaries that has not been
adequately provided for in reserves established by Weatherford. The total
amounts set up as liabilities for current and deferred Taxes in the
consolidated financial statements included in the Weatherford Commission
Filings have been prepared in accordance with generally accepted accounting
principles and are sufficient to cover the payment of all material Taxes,
including, without limitation, any penalties or interest thereon and
whether or not assessed or disputed, that are, or are hereafter finally
determined to be, or to have been, due with respect to the operations of
Weatherford and the Weatherford Subsidiaries through the periods covered
thereby.
(k) ENVIRONMENTAL.
(i) There are no facts, conditions or circumstances known to
Weatherford that could cause Weatherford or any Weatherford Subsidiary
to incur any loss, liability, damage, cost or expense, either
individually or in the aggregate, in excess of Weatherford's charges,
accruals and reserves for environmental matters reflected on
Weatherford's consolidated balance sheet contained in the most recent
Weatherford Commission Filing, for (A) violations of Environmental
Laws, (B) failure to obtain an Environmental Permit, (C) a requirement
to install environmental or pollution control equipment, (D) removal,
response or remedial costs related to Hazardous Materials or
(E) personal injury, property damage or natural resources damage
resulting from exposure to or releases of Hazardous Materials, except
in each case where such loss, liability, damage, cost or expense would
not have a Material Adverse Effect.
(ii) The business and any other operations conducted by
Weatherford or any Weatherford Subsidiary are in compliance with all
applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under
applicable Environmental Laws, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect.
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<PAGE>
(l) NO SEVERANCE PAYMENTS. None of Weatherford or the Weatherford
Subsidiaries will owe a severance payment or similar obligation to any of
their respective employees, officers or directors as a result of the Merger
or the transactions contemplated by this Agreement, nor will any of such
persons be entitled to an increase in severance payments or other benefits
as a result of the Merger or the transactions contemplated by this
Agreement in the event of the subsequent termination of their employment.
(m) VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of the outstanding shares of Weatherford Common Stock is the only
vote of the holders of any class or series of the capital stock of
Weatherford necessary to approve this Agreement and the Merger.
(n) INSURANCE. The Weatherford Disclosure Letter sets forth all
policies of insurance currently in effect relating to the business or
operations of Weatherford and the Weatherford Subsidiaries.
(o) TITLE TO PROPERTY. Except as set forth in the Weatherford
Commission Filings, Weatherford and each of the Weatherford Subsidiaries
have good and indefeasible title to all of their real properties purported
to be owned in fee and good title to all their other material assets, free
and clear of all mortgages, liens, charges and encumbrances other than
Permitted Liens.
(p) WEATHERFORD ACTIONS. As of the date hereof, the Board of
Directors of Weatherford (at a meeting duly called and held) has resolved
to recommend approval and adoption of this Agreement and the Merger by the
stockholders of Weatherford. Merrill Lynch & Co. has delivered to the
Board of Directors of Weatherford its opinion that the Conversion Rate is
fair to the holders of Weatherford Common Stock from a financial point of
view.
2.3 REPRESENTATIONS AND WARRANTIES OF ENTERRA. Enterra hereby represents
and warrants to Weatherford that, except as expressly contemplated by this
Agreement or as set forth in the disclosure letter delivered by Enterra to
Weatherford on the date hereof (the "Enterra Disclosure Letter"):
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Enterra and each of its
corporate subsidiaries (the "Enterra Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has all requisite corporate power
and authority and all necessary governmental authorizations to own, lease
and operate all of its properties and assets and to carry on its business
as now being conducted, except where the failure to do so would not, either
individually or in the aggregate, have a Material Adverse Effect. Enterra
and each of the Enterra Subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to do so does not and would not, either
individually or in the aggregate, have a Material
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<PAGE>
Adverse Effect. Enterra and each of the Enterra Subsidiaries is in
compliance with all applicable laws, judgments, orders, rules and
regulations, domestic and foreign, except where failure to be in such
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect. Enterra has heretofore delivered to Weatherford
true and complete copies of Enterra's Restated Certificate of Incorporation
and bylaws, as in existence on the date hereof.
(b) CAPITALIZATION.
(i) The authorized capital stock of Enterra consists of
40,000,000 shares of Enterra Common Stock, par value $1.00 per share,
and 10,000,000 shares of series preferred stock, par value $1.00 per
share. As of June 21, 1995, there were issued and outstanding
27,774,950 shares of Enterra Common Stock and no shares of series
preferred stock, and no shares of Enterra Common Stock were held as
treasury shares. As of June 21, 1995, there were reserved for
issuance 2,587,071 shares of Enterra Common Stock pursuant to stock
option plans (collectively, the "Enterra Options"). All issued shares
of Enterra Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive rights.
Enterra is not a party to, and, excluding agreements among various
funds held or managed by institutional investors, has no knowledge of,
any voting agreement, voting trust or similar agreement or arrangement
relating to any class or series of its capital stock, or any agreement
or arrangement providing for registration rights with respect to any
capital stock or other securities of Enterra. All outstanding shares
of capital stock of the Enterra Subsidiaries are owned by Enterra,
free and clear of all liens, charges, encumbrances, adverse claims and
options of any nature; provided, however, that Enterra's ownership of
shares of capital stock of certain foreign Enterra Subsidiaries may be
subject to Permitted Liens.
(ii) Other than as set forth in this Section 2.3(b) and as
contemplated by Section 4.1(b)(iii), there are not now, and at the
Effective Time there will not be, any (A) shares of capital stock or
other equity securities of Enterra outstanding (other than Enterra
Common Stock issued pursuant to Enterra Options as described herein)
or (B) outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of
any class of capital stock of Enterra, or contracts, understandings or
arrangements to which Enterra is a party, or by which it is or may be
bound, to issue additional shares of its capital stock or options,
warrants, scrip or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of its
capital stock.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. Enterra has all
requisite corporate power and authority to enter into this Agreement and to
perform its
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obligations hereunder. The execution and delivery by Enterra of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action (subject
only, with respect to the Merger, to adoption and approval of this
Agreement by its stockholders as provided for in Section 5.3(a)). This
Agreement has been duly executed and delivered by Enterra and is the valid
and binding obligation of Enterra, enforceable against Enterra in
accordance with its terms, except as such enforceability may be limited or
affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and
other similar laws (including, without limitation, court decisions) now or
hereafter in effect and affecting the rights and remedies of creditors
generally or providing for the relief of debtors, (ii) the refusal of a
particular court to grant equitable remedies, including, without
limitation, specific performance and injunctive relief, and (iii) general
principles of equity (regardless of whether such remedies are sought in a
proceeding in equity or at law).
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS TO
WHICH ENTERRA IS A PARTY. Neither the execution and delivery of this
Agreement nor the performance by Enterra of its obligations hereunder, nor
the consummation of the transactions contemplated hereby by Enterra, will
(i) conflict with Enterra's Restated Certificate of Incorporation or
bylaws; (ii) assuming satisfaction of the requirements set forth in
clause (iii) below, violate any provision of law applicable to Enterra;
(iii) except for (A) requirements of Federal and state securities law,
(B) requirements arising out of the HSR Act, (C) requirements of filings in
such foreign jurisdictions as may be applicable and (D) the filing of a
certificate of merger in accordance with the DGCL, require any consent or
approval of, or filing with or notice to, any public body or authority,
domestic or foreign, under any provision of law applicable to Enterra; or
(iv) require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or imposition of
any lien upon any properties, assets or business of Enterra under, any
note, bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Enterra is a party or
by which Enterra or any of its assets or properties is bound or encumbered,
except those that have already been given, obtained or filed and except in
any of the cases enumerated in clauses (ii) through (iv), those that, in
the aggregate, would not have a Material Adverse Effect.
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. Since January 1, 1992,
Enterra and each of the Enterra Subsidiaries have filed all reports,
registration statements and other filings, together with any amendments
required to be made with respect thereto, that they have been required to
file with the Commission under the Securities Act and the Exchange Act.
All reports, registration statements and other filings (including, without
limitation, all notes, exhibits and
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schedules thereto and documents incorporated by reference therein) filed by
Enterra with the Commission since January 1, 1992 through the date of this
Agreement, together with any amendments thereto, are sometimes collectively
referred to as the "Enterra Commission Filings". Enterra has heretofore
delivered to Weatherford copies of the Enterra Commission Filings. As of
the effectiveness dates declared by the Commission, in the case of
registration statements, as of the mailing dates, in the case of proxy
statements, or as of the filing dates with the Commission, in the case of
all other Enterra Commission Filings, the Enterra Commission Filings
complied, and the Proxy Statement (except with respect to information
concerning Weatherford and the Weatherford Subsidiaries furnished by or on
behalf of Weatherford to Enterra specifically for use therein) will comply,
in all material respects with the Securities Act, the Exchange Act and the
rules and regulations of the Commission promulgated thereunder, as
applicable, and did not or will not, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
All material contracts of Enterra and the Enterra Subsidiaries have
been included in the Enterra Commission Filings, except for those contracts
not required to be filed pursuant to the rules and regulations of the
Commission.
Each of the audited consolidated financial statements (including,
without limitation, any related notes or schedules) included or
incorporated by reference in the Enterra Commission Filings was, and each
of the audited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement (except for those
financial statements of Weatherford and the Weatherford Subsidiaries
furnished by or on behalf of Weatherford to Enterra specifically for use
therein) will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be noted therein or
in the notes or schedules thereto), and fairly presents or will fairly
present, as the case may be, in all material respects, the consolidated
financial position of Enterra and the Enterra Subsidiaries as of the dates
thereof and the statements of income, cash flows and stockholders' equity
for the periods then ended in accordance with generally accepted accounting
principles. Each of the unaudited interim financial statements included or
incorporated by reference in the Enterra Commission Filings was, and each
of the unaudited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement (except for those
financial statements of Weatherford and the Weatherford Subsidiaries
furnished by or on behalf of Weatherford to Enterra specifically for use
therein) will be, prepared in a manner consistent with the audited
consolidated financial statements and generally accepted accounting
principles. As of the date hereof, Enterra has no material liabilities,
absolute or contingent, not reflected in the Enterra Commission Filings,
except (i) liabilities not required under generally accepted accounting
principles to be reflected on such financial statements or the notes
thereto and (ii) liabilities incurred in the ordinary course of business
since the date of such financial
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statements consistent with past operations and not relating to the
borrowing of money.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN
CHANGES AND EVENTS. Since April 1, 1995, except as disclosed in the
Enterra Commission Filings filed with the Commission since that date,
Enterra and the Enterra Subsidiaries have conducted their business only in
the ordinary and usual course, and there has not been (i) any Material
Adverse Change in Enterra or any condition, event or development that
reasonably may be expected to result in any Material Adverse Change;
(ii) any change by Enterra in its accounting methods, principles or
practices; (iii) any revaluation by Enterra or any of the Enterra
Subsidiaries of any of its or their assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (iv) any entry by
Enterra or any of the Enterra Subsidiaries into any commitment or
transaction material to Enterra and the Enterra Subsidiaries, taken as a
whole, other than in the ordinary course of business; (v) any declaration,
setting aside or payment of any dividends or distributions in respect of
the Enterra Common Stock, or any redemption, purchase or other acquisition
of any of its securities or any securities of any of the Enterra
Subsidiaries; (vi) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or business of
Enterra and the Enterra Subsidiaries, taken as a whole; (vii) any increase
in indebtedness for borrowed money; (viii) any granting of a security
interest or lien on any property or assets of Enterra and the Enterra
Subsidiaries, other than Permitted Liens; or (ix) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the compensation payable or
to become payable to any officers or key employees of Enterra or any of the
Enterra Subsidiaries.
(g) CERTAIN FEES. Neither Enterra nor any of its officers, directors
or employees, on behalf of Enterra or any of the Enterra Subsidiaries or
its or their respective Boards of Directors (or any committee thereof), has
employed any financial advisor, broker or finder or incurred any liability
for any financial advisory, brokerage or finders' fees or commissions in
connection with the transactions contemplated hereby.
(h) LITIGATION. Except as disclosed in the Enterra Commission
Filings, there are no claims, actions, suits, investigations or proceedings
pending or, to the knowledge of Enterra, threatened against or affecting
Enterra or any of the Enterra Subsidiaries or any of their respective
properties at law or in equity, or any of their respective employee benefit
plans or fiduciaries of such plans, or before or by any federal, state,
municipal or other governmental agency or authority, or before any
arbitration board or panel, wherever located, that, individually or in the
aggregate, if adversely determined would have a Material Adverse Effect, or
that involve the risk of criminal liability.
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(i) EMPLOYEE BENEFIT PLANS. The Enterra Disclosure Letter sets forth
a complete and accurate list of:
(i) each "employee welfare benefit plan" (as such term is
defined in Section 3(1) of ERISA) (the "Enterra Welfare Plans");
(ii) each "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) (the "Enterra Pension Plans"); and
(iii) all other employee benefit agreements or arrangements,
including, without limitation, deferred compensation plans, incentive
plans, bonus plans or arrangements, stock option plans, stock purchase
plans, golden parachute agreements, severance pay plans, dependent
care plans, cafeteria plans, employee assistance programs, scholarship
programs, employment contracts and other similar plans, agreements and
arrangements (collectively, with the Enterra Welfare Plans and the
Enterra Pension Plans, the "Enterra Benefit Plans"),
that are currently in effect or were maintained within three years of the
Closing Date, or have been approved before this date but are not yet
effective, for the benefit of directors, officers, employees or former
employees (or their beneficiaries) of Enterra, any of the Enterra
Subsidiaries incorporated in the United States (the "Enterra U.S.
Subsidiaries") or any member of a controlled group or affiliated service
group (as defined in Sections 414(b),(c),(m) and (o) of the Code) that is
incorporated or domiciled in the United States of which Enterra or any of
the Enterra U.S. Subsidiaries is a member (collectively, the "Enterra
Group"). Enterra and the Enterra U.S. Subsidiaries will provide to
Weatherford, as to each Enterra Benefit Plan, as applicable, access to a
complete and accurate copy of (i) such plan, agreement or arrangement;
(ii) the trust, group annuity contract or other document that provides the
funding for such plan; (iii) the most recent annual Form 5500, 990 and 1041
reports; (iv) the most recent actuarial report or valuation statement;
(v) the most current summary plan description, handbook or other booklet
that describes any Enterra Benefit Plan, and any summary of material
modifications prepared after each such summary plan description; (vi) the
most recent IRS determination letter and all rulings or determinations
requested from the IRS subsequent to the date of such determination letter;
and (vii) all other pending correspondence from the IRS or the Department
of Labor received by any member of the Enterra Group that relates to such
plan.
Each Enterra Welfare Plan and Enterra Pension Plan (i) is in
compliance with ERISA, including, without limitation, all reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA, except
where the failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect; (ii) is in compliance with
the Code, except where the failure to be in compliance would not, either
individually or in the aggregate, have a Material Adverse Effect; (iii) has
had the appropriate Form 5500 timely filed for any Enterra Pension Plan, if
applicable, for each year of its existence
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and for any Enterra Welfare Plan for each year of its existence after 1987,
except where the failure to cause such timely filing would not, either
individually or in the aggregate, have a Material Adverse Effect; (iv) has
not engaged in any transaction described in Section 406 or 407 of ERISA or
Section 4975 of the Code unless it 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; (v) has no issue pending (other than the payment of
benefits in the normal course or the qualification of the plan pursuant to
an application pending before the IRS) nor any issue resolved adversely to
the Enterra Group that, in either case, may subject the Enterra Group to
the payment of a penalty, interest, tax or other amount, which, either
individually or in the aggregate, would have a Material Adverse Effect; and
(vi) can be unilaterally terminated or amended on no more than 90 days
notice. No notice has been received by the Enterra Group of an increase or
proposed increase in any premium relative to any Enterra Benefit Plan, and
no amendment to any Enterra Benefit Plan within the last twelve months has
increased the rate of employer contributions thereunder that, either
individually or in the aggregate, would have a Material Adverse Effect.
Each Enterra Benefit 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. No Enterra Benefit Plan will cause the Enterra Group
to have liability for severance pay as a result of this Agreement. The
Enterra Group does not provide employee post-retirement medical or health
coverage or contribute to or maintain any employee welfare benefit plan
that provides for health benefit coverage following termination of
employment except as required by Section 4980B(f) of the Code or other
applicable statute, nor has the Enterra Group made any representations,
agreements, covenants or commitments to provide that coverage.
Except for each Enterra Pension Plan that is an ERISA top-hat plan,
each Enterra Pension Plan has been submitted to and approved as qualifying
under Section 401(a) of the Code by the IRS or the applicable remedial
amendment period relating to such plan will not have ended prior to the
Closing. To the knowledge of Enterra, no facts have occurred that, if
known by the IRS, could cause disqualification of any Enterra Pension Plan.
Each Enterra Pension Plan to which Section 412 of the Code is applicable
fully complies with the funding requirements of that Section and there is
no accumulated funding deficiency as defined in Section 302(a)(2) of ERISA
(whether or not waived) in any such plan. The Enterra Group has paid all
premiums (including, without limitation, interest, charges and penalties
for late payment) due the PBGC with respect to each Enterra Pension Plan
for which premiums are required. No Enterra Pension Plan has been
terminated under circumstances that would result in liability to the PBGC
or the Enterra Group. There has been no "reportable event" (as defined in
Section 4043(b) of ERISA and the regulations under that Section) with
respect to any Enterra Pension Plan subject to Title IV of ERISA.
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With respect to each Enterra Pension Plan subject to Title IV of ERISA, the
Enterra Group has not (i) ceased operations at a facility so as to become
subject to the provisions of Section 4062(e) of ERISA, (ii) withdrawn as a
substantial employer so as to become subject to the provisions of
Section 4063 of ERISA or (iii) ceased making contributions on or before the
Closing Date to any such plan subject to Section 4064(a) of ERISA to which
the Enterra Group made contributions at any time during the six years prior
to the Closing Date. Neither the Enterra Group nor any member thereof has
made a complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as defined
in Section 4201 of ERISA.
Enterra's subsidiaries incorporated outside of the United States 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.
(j) TAXES. All Tax Returns of or relating to any Taxes that are
required to be filed on or before the Closing Date by or with respect to
Enterra or any of the Enterra Subsidiaries have been or will be duly and
timely filed, and all Taxes, including, without limitation, interest and
penalties, due and payable pursuant to such Tax Returns have been paid or
adequately provided for in reserves established by Enterra, except where
the failure to file, pay or provide for would not, either individually or
in the aggregate, have a Material Adverse Effect. All Tax Returns of or
with respect to Enterra or any of the Enterra Subsidiaries have been
audited by the applicable governmental authority, or the applicable statute
of limitations has expired, for all periods up to and including, without
limitation, the tax year ended December 31, 1987. There is no material
claim against Enterra or any of the Enterra Subsidiaries with respect to
any Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Enterra or any of the Enterra Subsidiaries that has not been adequately
provided for in reserves established by Enterra. The total amounts set up
as liabilities for current and deferred Taxes in the consolidated financial
statements included in the Enterra Commission Filings have been prepared in
accordance with generally accepted accounting principles and are sufficient
to cover the payment of all material Taxes, including, without limitation,
any penalties or interest thereon and whether or not assessed or disputed,
that are, or are hereafter finally determined to be, or to have been, due
with respect to the operations of Enterra and the Enterra Subsidiaries
through the periods covered thereby.
(k) ENVIRONMENTAL.
(i) There are no facts, conditions or circumstances known to
Enterra that could cause Enterra or any Enterra Subsidiary to incur
any loss, liability, damage, cost or expense, either individually or
in the aggregate, in excess of Enterra's charges, accruals and
reserves for
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environmental matters reflected on Enterra's consolidated balance
sheet contained in the most recent Enterra Commission Filing, for
(A) violations of Environmental Laws, (B) failure to obtain an
Environmental Permit, (C) a requirement to install environmental or
pollution control equipment, (D) removal, response or remedial costs
related to Hazardous Materials or (E) personal injury, property damage
or natural resources damage resulting from exposure to or releases of
Hazardous Materials, except in each case where such loss, liability,
damage, cost or expense would not have a Material Adverse Effect.
(ii) The business and any other operations conducted by Enterra
or any Enterra Subsidiary are in compliance with all applicable
limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations established under applicable
Environmental Laws, except where the failure to be in compliance would
not, either individually or in the aggregate, have a Material Adverse
Effect.
(l) NO SEVERANCE PAYMENTS. None of Enterra or the Enterra
Subsidiaries will owe a severance payment or similar obligation to any of
their respective employees, officers or directors as a result of the Merger
or the transactions contemplated by this Agreement, nor will any of such
persons be entitled to an increase in severance payments or other benefits
as a result of the Merger or the transactions contemplated by this
Agreement in the event of the subsequent termination of their employment.
(m) VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of the outstanding shares of Enterra Common Stock is the only vote
of the holders of any class or series of the capital stock of Enterra
necessary to approve this Agreement and the Merger.
(n) INSURANCE. The Enterra Disclosure Letter sets forth all policies
of insurance currently in effect relating to the business or operations of
Enterra and the Enterra Subsidiaries.
(o) TITLE TO PROPERTY. Except as set forth in the Enterra Commission
Filings, Enterra and each of the Enterra Subsidiaries have good and
indefeasible title to all of their real properties purported to be owned in
fee and good title to all their other material assets, free and clear of
all mortgages, liens, charges and encumbrances other than Permitted Liens.
(p) ENTERRA ACTIONS. As of the date hereof, the Board of Directors
of Enterra (at a meeting duly called and held) has resolved to recommend
approval and adoption of this Agreement and the Merger by the stockholders
of Enterra. Simmons & Company International, Inc. has delivered to the
Board of Directors of Enterra its opinion that the consideration to be
received by the holders of Enterra Common Stock in the Merger is fair from
a financial point of view to such holders.
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ARTICLE III
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME
3.1 CONDUCT OF BUSINESS BY WEATHERFORD PENDING THE MERGER. Weatherford
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless Enterra shall otherwise provide its prior consent in writing (which
consent shall not be unreasonably withheld) or as otherwise expressly
contemplated by this Agreement or as set forth in the Weatherford Disclosure
Letter:
(a) The business of Weatherford and the Weatherford Subsidiaries
shall be conducted only in, and Weatherford and the Weatherford
Subsidiaries shall not take any action except in, the ordinary course of
business;
(b) Weatherford shall not, and shall not permit any of the
Weatherford Subsidiaries to:
(i) split, combine or reclassify any outstanding capital stock
of Weatherford, or authorize, declare, set aside or pay any dividend
payable in cash, stock, property or otherwise in respect of the
capital stock of Weatherford;
(ii) authorize or pay any extraordinary bonuses to employees;
(iii) grant any stock options or rights to acquire Weatherford
Common Stock or common stock of any of the Weatherford Subsidiaries to
any person or entity, other than options to purchase Weatherford
Common Stock issued pursuant to employee stock option plans in amounts
consistent with past practice;
(iv) authorize or issue, sell, pledge, dispose of or encumber
any shares of capital stock of Weatherford or, except to Weatherford
or a wholly-owned Weatherford Subsidiary, any of the Weatherford
Subsidiaries, other than pursuant to Weatherford Options;
(v) sell, pledge, dispose of or encumber any assets of
Weatherford or any of the Weatherford Subsidiaries, other than (A) in
the ordinary course of business, (B) not relating to the borrowing of
money, (C) with respect to purchase money security interests or (D)
with respect to encumbered assets acquired in connection with an
acquisition permitted under Section 3.1(b)(viii);
(vi) redeem, purchase, acquire or offer to acquire any shares
of Weatherford Common Stock;
(vii) enter into, or grant any material change in, employment,
compensation, benefit, severance, consulting or stay-bonus
arrangements;
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(viii) acquire any corporation, partnership, other business
organization or division thereof for a purchase price in excess of
$5,000,000 or acquire corporations, partnerships, other business
organizations or divisions thereof for an aggregate purchase price in
excess of $15,000,000;
(ix) enter into any contract, agreement, commitment or
arrangement other than in the ordinary course of business;
(x) authorize any capital expenditures other than in the
ordinary course of business, and in accordance with a plan previously
presented to, and not rejected by, the Weatherford Board of Directors;
(xi) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business, and in
no event in excess of the unused credit available from time to time
under existing credit facilities of Weatherford;
(xii) amend or propose to amend the charter or bylaws of
Weatherford or any of the Weatherford Subsidiaries in which
Weatherford, either directly or indirectly, has less than a 100%
equity interest; or
(xiii) take, and Weatherford shall use its reasonable efforts to
prevent any affiliate of Weatherford from taking, any action that
would prevent, including with the passage of time, the Merger's
qualification for "pooling of interests" accounting treatment or
prevent the Merger from being treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code;
(c) Weatherford shall use all reasonable efforts (i) to preserve
intact the business organization of Weatherford and each of the Weatherford
Subsidiaries whose stock is pledged under existing credit facilities,
(ii) to maintain in effect any material franchises, authorizations or
similar rights of Weatherford and each of the Weatherford Subsidiaries,
(iii) to keep available the services of the current officers and key
employees of Weatherford and each of the Weatherford Subsidiaries, (iv) to
preserve its goodwill with those having material business relationships
with Weatherford and the Weatherford Subsidiaries, (v) to maintain and keep
the material properties of Weatherford and each of the Weatherford
Subsidiaries in as good a repair and condition as presently exists, except
for deterioration due to ordinary wear and tear and damage due to casualty,
and (vi) to maintain in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained by Weatherford
and the Weatherford Subsidiaries; and
(d) Weatherford shall not, and shall not permit any of the
Weatherford Subsidiaries to, take any action that would, or that reasonably
could be expected
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<PAGE>
to, result in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set forth
in Article VI not being satisfied. Weatherford promptly shall advise
Enterra orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a Material Adverse
Effect on Weatherford.
3.2 ACCESS TO INFORMATION. From the date hereof to the Effective Time,
Weatherford shall, and shall cause the Weatherford Subsidiaries and its and
their officers, directors, employees and representatives to, afford the
representatives of Enterra complete access during normal business hours to its
officers, employees, representatives, properties, books and records, and shall
furnish Enterra all financial, operating and other data and information as
Enterra, through its representatives, reasonably may request; PROVIDED, HOWEVER,
that notwithstanding the foregoing provisions of this Section 3.2 or any other
provision of this Agreement, Weatherford shall not be required to provide to
Enterra any information that is the subject of a confidentiality agreement and
that relates primarily to a party other than Weatherford, a Weatherford
Subsidiary or a former subsidiary of Weatherford.
3.3 AFFILIATES' AGREEMENTS. Weatherford will use its reasonable efforts
to cause each stockholder who, in the opinion of counsel to Weatherford, is an
"affiliate" of Weatherford to enter into an agreement substantially in the form
of Exhibit 3.3.
3.4 RESERVATION OF WEATHERFORD COMMON STOCK. Weatherford shall reserve
for issuance, out of its authorized but unissued capital stock, such number of
shares of Weatherford Common Stock as may be issuable upon consummation of the
Merger.
3.5 STOCK EXCHANGE LISTING. Weatherford shall use all reasonable efforts
to cause the shares of Weatherford Common Stock to be issued upon consummation
of the Merger to be approved for listing on the New York Stock Exchange, subject
to official notice of issuance, prior to the Closing Date.
ARTICLE IV
COVENANTS OF ENTERRA PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY ENTERRA PENDING THE MERGER. Enterra covenants
and agrees that, from the date of this Agreement until the Effective Time,
unless Weatherford shall otherwise provide its prior consent in writing (which
consent shall not be unreasonably withheld) or as otherwise expressly
contemplated by this Agreement or as set forth in the Enterra Disclosure Letter:
(a) The business of Enterra and the Enterra Subsidiaries shall be
conducted only in, and Enterra and the Enterra Subsidiaries shall not take
any action except in, the ordinary course of business;
(b) Enterra shall not, and shall not permit any of the Enterra
Subsidiaries to:
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(i) split, combine or reclassify any outstanding capital stock
of Enterra, or authorize, declare, set aside or pay any dividend
payable in cash, stock, property or otherwise in respect of the
capital stock of Enterra;
(ii) authorize or pay any extraordinary bonuses to employees;
(iii) grant any stock options or rights to acquire Enterra
Common Stock or common stock of any of the Enterra Subsidiaries to any
person or entity, other than options to purchase Enterra Common Stock
issued pursuant to employee stock option plans in amounts consistent
with past practice;
(iv) authorize or issue, sell, pledge, dispose of or encumber
any shares of capital stock of Enterra or, except to Enterra or a
wholly-owned Enterra Subsidiary, any of the Enterra Subsidiaries,
other than pursuant to Enterra Options;
(v) sell, pledge, dispose of or encumber any assets of Enterra
or any of the Enterra Subsidiaries, other than (A) in the ordinary
course of business, (B) not relating to the borrowing of money,
(C) with respect to purchase money security interests or (D) with
respect to encumbered assets acquired in connection with an
acquisition permitted under Section 4.1(b)(viii);
(vi) redeem, purchase, acquire or offer to acquire any shares
of Enterra Common Stock;
(vii) enter into, or grant any material change in, employment,
compensation, benefit, severance, consulting or stay-bonus
arrangements;
(viii) acquire any corporation, partnership, other business
organization or division thereof for a purchase price in excess of
$5,000,000 or corporations, partnerships, other business organizations
or divisions thereof for an aggregate purchase price in excess of
$15,000,000;
(ix) enter into any contract, agreement, commitment or
arrangement other than in the ordinary course of business;
(x) authorize any capital expenditures other than in the
ordinary course of business, and in accordance with a plan previously
presented to, and not rejected by, the Enterra Board of Directors;
(xi) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business, and in
no event in excess of the unused credit available from time to time
under existing credit facilities of Enterra;
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<PAGE>
(xii) amend or propose to amend the charter or bylaws of Enterra
or any of the Enterra Subsidiaries in which Enterra, either directly
or indirectly, has less than a 100% equity interest; or
(xiii) take, and Enterra shall use its reasonable efforts to
prevent any affiliate of Enterra from taking, any action that would
prevent, including with the passage of time, the Merger's
qualification for "pooling of interests" accounting treatment or
prevent the Merger from being treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code;
(c) Enterra shall use its reasonable efforts (i) to preserve intact
the business organization of Enterra and each of the Enterra Subsidiaries
whose stock is pledged under existing credit facilities, (ii) to maintain
in effect any material franchises, authorizations or similar rights of
Enterra and each of the Enterra Subsidiaries, (iii) to keep available the
services of the current officers and key employees of Enterra and each of
the Enterra Subsidiaries, (iv) to preserve its goodwill with those having
material business relationships with Enterra and the Enterra Subsidiaries,
(v) to maintain and keep the material properties of Enterra and each of the
Enterra Subsidiaries in as good a repair and condition as presently exists,
except for deterioration due to ordinary wear and tear and damage due to
casualty, and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained by
Enterra and each of the Enterra Subsidiaries; and
(d) Enterra shall not, and shall not permit any of the Enterra
Subsidiaries to, take any action that would, or that reasonably could be
expected to, result in any of the representations and warranties set forth
in this Agreement becoming untrue or any of the conditions to the Merger
set forth in Article VI not being satisfied. Enterra promptly shall advise
Weatherford orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a Material Adverse
Effect on Enterra.
4.2 ACCESS TO INFORMATION. From the date hereof to the Effective Time,
Enterra shall, and shall cause the Enterra Subsidiaries and its and their
officers, directors, employees and representatives to, afford the
representatives of Weatherford complete access during normal business hours to
its officers, employees, representatives, properties, books and records, and
shall furnish Weatherford all financial, operating and other data and
information as Weatherford, through its representatives, reasonably may request;
PROVIDED, HOWEVER, that notwithstanding the foregoing provisions of this
Section 4.2 or any other provision of this Agreement, Enterra shall not be
required to provide to Weatherford any information that is the subject of a
confidentiality agreement and that relates primarily to a party other than
Enterra, an Enterra Subsidiary or a former subsidiary of Enterra.
4.3 AFFILIATES' AGREEMENTS. Enterra will use its reasonable efforts to
cause each stockholder who, in the opinion of counsel to Enterra, is an
"affiliate" of Enterra to enter into an agreement substantially in the form of
Exhibit 4.3.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly
as practicable after the execution of this Agreement, Weatherford and Enterra
shall prepare and file with the Commission preliminary proxy materials that
shall constitute the joint proxy statement (the "Proxy Statement") of
Weatherford and Enterra and the registration statement with respect to the
Weatherford Common Stock to be issued in connection with the Merger (the
"Registration Statement"). As promptly as practicable after comments are
received from the Commission on the preliminary proxy materials, Weatherford and
Enterra shall file with the Commission a combined joint proxy statement and
registration statement on Form S-4 (or on such other form as shall be
appropriate) relating to the approval and adoption of the Merger and this
Agreement by the stockholders of Weatherford and the stockholders of Enterra and
the issuance by Weatherford of Weatherford Common Stock in connection with the
Merger and shall use their reasonable efforts to cause the Registration
Statement to become effective as soon as practicable. Subject to the terms and
conditions set forth in Section 7.2, the Proxy Statement shall contain a
statement that the Board of Directors of Enterra recommended that the
stockholders of Enterra approve and adopt the Merger and this Agreement.
Subject to the terms and conditions set forth in Section 7.1, the Proxy
Statement shall contain a statement that the Board of Directors of Weatherford
recommended that the stockholders of Weatherford approve and adopt the Merger
and this Agreement.
5.2 COMFORT LETTERS.
(a) Enterra shall use its reasonable efforts to cause to be delivered
to Weatherford a letter of KPMG Peat Marwick LLP dated as of a date within
five business days before the date on which the Registration Statement
shall become effective and addressed to Weatherford, in form and substance
reasonably satisfactory to Weatherford and customary in scope and substance
for "comfort" letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
(b) Weatherford shall use its reasonable efforts to cause to be
delivered to Enterra a letter of Arthur Andersen LLP dated as of a date
within five business days before the date on which the Registration
Statement shall become effective and addressed to Enterra, in form and
substance reasonably satisfactory to Enterra and customary in scope and
substance for "comfort" letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to
the Registration Statement and Proxy Statement.
5.3 MEETINGS OF STOCKHOLDERS.
(a) Enterra shall promptly take all action reasonably necessary in
accordance with the DGCL and its Restated Certificate of Incorporation and
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bylaws to convene a meeting of its stockholders to consider and vote upon
the adoption and approval of the Merger and this Agreement. Subject to the
terms and conditions set forth in Section 7.2, the Board of Directors of
Enterra (i) shall recommend at such meeting that the stockholders of
Enterra vote to adopt and approve the Merger and this Agreement, (ii) shall
use its reasonable efforts to solicit from stockholders of Enterra proxies
in favor of such adoption and approval and (iii) shall take all other
action reasonably necessary to secure a vote of its stockholders in favor
of the adoption and approval of the Merger and this Agreement.
(b) Weatherford shall promptly take all action reasonably necessary
in accordance with the DGCL and its Restated Certificate of Incorporation
and bylaws to convene a meeting of its stockholders to consider and vote
upon the adoption and approval of the Merger and this Agreement. Subject
to the terms and conditions set forth in Section 7.1, the Board of
Directors of Weatherford (i) shall recommend at such meeting that the
stockholders of Weatherford vote to adopt and approve the Merger and this
Agreement, (ii) shall use its reasonable efforts to solicit from
stockholders of Weatherford proxies in favor of such adoption and approval
and (iii) shall take all other action reasonably necessary to secure a vote
of its stockholders in favor of the adoption and approval of the Merger and
this Agreement.
(c) Weatherford and Enterra shall coordinate and cooperate with
respect to the timing of such meetings and shall endeavor to hold such
meetings on the same day and as soon as practicable after the date hereof.
5.4 REASONABLE EFFORTS; CONSENTS, APPROVALS AND WAIVERS. Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other party in
doing, all things necessary, proper or advisable (a) to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including, without limitation,
(i) the obtaining of all necessary consents, approvals or waivers required in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Merger (provided that no such consent, approval or
waiver shall require such party to take any action that would impair the value
that such party reasonably attributes to the Merger) and (ii) the execution and
delivery of any additional instruments (including, without limitation, any
required supplemental indentures) necessary to consummate the transactions
contemplated by this Agreement; and (b) to defend any non-regulatory lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby,
including, without limitation, seeking to have any stay or temporary restraining
order entered by any court or other governmental entity vacated or reversed.
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5.5 ANTITRUST MATTERS. The obligations of each of the parties to this
Agreement shall include the following:
(a) each of the parties hereto shall file a premerger notification
and report form pursuant to the HSR Act with respect to the Merger as
promptly as reasonably possible following execution and delivery of this
Agreement. Each of the parties agrees to use best efforts to promptly
respond to any request for additional information pursuant to
Section (e)(1) of the HSR Act; and
(b) each party hereto will furnish to the other copies of all
correspondence, filings or communications between that party, or any of its
representatives, on the one hand, and any governmental agency or authority,
on the other hand, with respect to pre-notification obligations under any
antitrust law with respect to this Agreement or the Merger; PROVIDED,
HOWEVER, that with respect to any documents that the party reasonably
believes should not be disclosed to the other party, the party shall
instead furnish those documents to counsel for the other party pursuant to
a mutually satisfactory confidentiality agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS. Enterra shall give prompt notice to
Weatherford, and Weatherford shall give prompt notice to Enterra, orally and in
writing, of (a) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the date
hereof to the Effective Time, (b) any material failure of Enterra or
Weatherford, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and (c) any fact or event that would
make it necessary to amend the Registration Statement or the Proxy Statement to
render the statements therein not misleading or to comply with applicable law.
5.7 AGREEMENT TO DEFEND. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use their reasonable efforts to defend against and
respond thereto; PROVIDED, HOWEVER, that this Section 5.7 shall not apply to any
governmental investigation contemplated under Section 5.5(a).
5.8 EXPENSES. Subject to the terms and conditions set forth in
Section 7.3, and except as otherwise agreed to in writing by the parties, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
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5.9 INDEMNIFICATION.
(a) After the Effective Time Weatherford and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
defend, indemnify and hold harmless each person who is now, or has been at
any time prior to the date hereof or who becomes prior to the Effective
Time, an officer or director of Enterra or any of the Enterra Subsidiaries
(each, an "Indemnified Party" and, collectively, the "Indemnified Parties")
against (i) all costs or expenses (including, without limitation,
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, based in whole or in part on, or arising
in whole or in part out of, the fact that such person is or was an officer
or director, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at
or after, the Effective Time (collectively, the "Indemnified Liabilities");
and (ii) all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to, this Agreement, the
Merger or the transactions contemplated hereby. After the Effective Time,
Weatherford and the Surviving Corporation will be entitled to participate
in and, to the extent that it may wish, to assume the defense of any
action, with counsel reasonably satisfactory to the Indemnified Party;
PROVIDED, HOWEVER, if any Indemnified Party believes that, by reason of an
actual or potential conflict of interest, it is advisable for such
Indemnified Party to be represented by separate counsel, or if Weatherford
or the Surviving Corporation shall fail after the Effective Time to assume
responsibility for such defense, such Indemnified Party may retain counsel
reasonably satisfactory to Weatherford and the Surviving Corporation who
will represent such Indemnified Party, and Weatherford and the Surviving
Corporation shall pay all reasonable fees and disbursements of such counsel
promptly as statements therefor are received to the fullest extent
permitted by applicable law upon receipt of any undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Party, Weatherford and the
Surviving Corporation will cooperate with each other and use their
reasonable efforts to assist each other in the vigorous defense of any such
matter; PROVIDED, HOWEVER, that neither Weatherford nor the Surviving
Corporation shall be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify
Weatherford or the Surviving Corporation, as applicable (but the failure to
be so notified by an Indemnified Party shall not relieve an indemnifying
party from any liability that it may have under this Section 5.9 except to
the extent such failure materially prejudices such indemnifying party).
The indemnifying parties shall be required to pay for only one law firm (in
addition to any required local counsel) selected by the Indemnified Parties
as a group in accordance with the foregoing provisions with respect to each
such matter unless there is, under applicable standards of professional
conduct, a conflict in any significant issue between the positions of any
two or more Indemnified Parties. This Section 5.9 is intended
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to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her representatives.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall use its best efforts to maintain in effect director and
officer liability insurance for the benefit of the Indemnified Parties in
comparable amounts, with comparable deductibles or retained amounts and
with comparable coverages and exclusions as currently maintained by
Enterra; PROVIDED, HOWEVER, that if the Surviving Corporation is unable to
obtain insurance for such period for an aggregate premium of $1,000,000 or
less or if such insurance otherwise cannot be obtained or maintained by the
Surviving Corporation, then the Surviving Corporation's obligation pursuant
hereto shall only be to seek to be obtained the best possible coverage
under the circumstances subject to the foregoing limitation on premiums.
(c) All rights and obligations under this Section 5.9 shall be in
addition to any rights an Indemnified Party may have under the Restated
Certificate of Incorporation or bylaws of Enterra as in effect on the date
hereof, or pursuant to any other agreement, arrangement or document in
effect prior to the Effective Time. The provisions of this Section 5.9 are
intended to benefit, and may be enforced by, all Indemnified Parties, and
their respective heirs and representatives. This Section 5.9 shall be
binding upon all successors and assigns of Enterra, Weatherford and the
Surviving Corporation.
(d) If the Surviving Corporation is sold to a third party, such third
party shall expressly assume the Surviving Corporation's indemnification
obligation under this Section 5.9.
5.10 POST-EFFECTIVE TIME MAILING. As soon as practicable following the
Effective Time, the Surviving Corporation will cause to be mailed to each holder
of certificates that represented Enterra Common Stock prior to the Effective
Time, at such holder's address as it appears on Enterra's stock transfer
records, a letter of transmittal and other information advising such holder of
the consummation of the Merger and to enable such holder to effect the exchange
of stock certificates as contemplated by Article I of this Agreement.
5.11 STOCKHOLDERS' AGREEMENT. Weatherford will enter into a Stockholders'
Agreement, and an amendment thereto, with First Reserve Corporation and the
various First Reserve Funds (as defined therein), in the forms attached hereto
as Exhibits 5.11(a) and 5.11(b), respectively.
5.12 ENTERRA STOCK OPTIONS. At the Effective Time, each Enterra Option
that remains as of such date unexercised in whole or in part shall be replaced
by a substitute option, granted under an existing Weatherford stock option plan,
to purchase that number of shares of Weatherford Common Stock determined by
multiplying the number of shares of Enterra Common Stock subject to such Enterra
Option by the Conversion Rate and multiplying the exercise price per share of
such Enterra Option by a fraction the numerator of which is one and the
denominator of which is the Conversion Rate.
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Each such substitute option shall otherwise replicate the terms and conditions
of the Enterra Option it replaces. Weatherford shall take all corporate action
necessary (a) to reserve for issuance a sufficient number of shares of
Weatherford Common Stock for delivery upon exercise of such Enterra Options,
(b) to ensure that all shares of Weatherford Common Stock subject to such
Enterra Options are issued pursuant to a plan that complies with the exemption
provided by Rule 16b-3 promulgated under the Exchange Act and (c) to ensure that
shares of Weatherford Common Stock issued pursuant to the exercise of such
Enterra Options are registered under the Securities Act, listed on the New York
Stock Exchange and may be freely transferred by the holders thereof.
5.13 ENTERRA EMPLOYEE BENEFITS.
(a) For the period beginning at the Effective Time and ending on
June 30, 1996, Weatherford will either (i) cause to remain in effect all
Enterra Benefit Plans, as in effect at the Effective Time, or (ii) provide
benefits to employees of Enterra and the Enterra Subsidiaries under the
Weatherford Benefit Plans that are substantially comparable to the benefits
provided to such employees under the Enterra Benefit Plans, as in effect at
the Effective Time. From and after July 1, 1996, Weatherford agrees that
participation in the Weatherford Benefit Plans, as then in effect, shall be
made available to all Weatherford employees, including employees who were
employees of Enterra, and that such plans will provide the same or
substantially comparable benefits to all similarly situated employees.
(b) If participation in any Weatherford Benefit Plan is made
available to employees of Enterra or any Enterra Subsidiary, all service
with Enterra and the Enterra Subsidiaries prior to the Effective Time and
any other service recognized under the applicable Enterra Benefit Plans for
vesting and eligibility purposes shall be credited to such employees and
all waiting periods and pre-existing condition limitations shall be waived
under such Weatherford Benefit Plan.
(c) Prior to the Effective Time, Enterra shall have established the
Enterra Special Severance Pay Plan, in the form attached hereto as
Exhibit 5.13.
(d) Weatherford agrees that it shall make non-elective employer
contributions, including fixed or discretionary pension, profit sharing and
matching contributions, to each Enterra Benefit Plan that is intended to be
a qualified defined contribution plan under Section 401(a) of the Code for
the respective Enterra Benefit Plan's first plan year ending on or after
the Effective Time in accordance with the terms of such plan. Weatherford
agrees that the rate of each such non-elective employer contribution in
each case shall not be less than the rate of such non-elective employer
contribution that was made to the respective Enterra Benefit Plan for the
last plan year ending prior to the Effective Time. An employee of Enterra
or an Enterra Subsidiary who is employed, and who is a participant in an
Enterra Benefit Plan that is subject to this Section 5.13(d), on the day
before the Effective Time (an "Eligible Enterra
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Employee") shall be entitled to receive an allocation of such non-elective
employer contributions without regard to whether such employee continues to
be an employee of Enterra or an Enterra Subsidiary or any successor thereto
on the last day of the respective Enterra Benefit Plan's plan year (or
other period) for which such contributions are to be made. Weatherford
agrees to make any amendment to the applicable Enterra Benefit Plans as may
be necessary to effectuate the terms of this Section 5.13(d).
5.14 UPDATE OF DISCLOSURE LETTERS.
(a) Weatherford shall promptly disclose to Enterra in writing (i) any
information set forth in the Weatherford Disclosure Letter with respect to
subsections (b), (c), (e) and (g) of Section 2.2 that no longer is accurate
and with respect to all other subsections of Section 2.2 that no longer is
accurate in any material respect and (ii) any information of the nature of
that set forth in the Weatherford Disclosure Letter that arises between the
date hereof and the Closing and that would have been required to be
included in the Weatherford Disclosure Letter if such information had
existed and been known or available on the date hereof. Neither any such
new disclosure, nor the determination of Enterra to proceed with the Merger
in spite of any such new disclosure, shall relieve Weatherford from any
liability for any prior misrepresentation or breach of warranty.
(b) Enterra shall promptly disclose to Weatherford in writing (i) any
information set forth in the Enterra Disclosure Letter with respect to
subsections (b), (c), (e) and (g) of Section 2.3 that no longer is accurate
and with respect to all other subsections of Section 2.3 that no longer is
accurate in any material respect and (ii) any information of the nature of
that set forth in the Enterra Disclosure Letter that arises between the
date hereof and the Closing and that would have been required to be
included in the Enterra Disclosure Letter if such information had existed
and been known or available on the date hereof. Neither any such new
disclosure, nor the determination of Weatherford to proceed with the Merger
in spite of any such new disclosure, shall relieve Enterra from any
liability for any prior misrepresentation or breach of warranty.
5.15 WEATHERFORD SPECIAL SEVERANCE PAY PLAN. Prior to the Effective Time,
Weatherford shall have established the Weatherford Special Severance Pay Plan,
in the form attached hereto as Exhibit 5.15.
5.16 CHANGE OF CONTROL AGREEMENTS. Weatherford shall, as of the Effective
Time, have entered into change of control agreements, substantially in the form
of Exhibit 5.16(a), with the persons and for the respective severance benefits
set forth on Exhibit 5.16(b).
5.17 INDEMNIFICATION AGREEMENTS. Weatherford shall, as of the Effective
Time, have entered into indemnification agreements, substantially in the form of
Weatherford's existing indemnification agreements with the persons set forth on
Exhibit 5.17.
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5.18 ENTERRA EMPLOYEE BONUSES.
(a) The Enterra Board of Directors or the Executive Compensation
Committee of the Enterra Board of Directors (the "Enterra Committee") shall
determine, prior to the Closing Date, the final amount of bonuses to be
paid to the Enterra employees listed on Exhibit 5.18 for the fiscal year
ended December 31, 1993, such amount not to exceed the amount that
previously has been accrued for such bonuses. Such bonuses shall be paid
only after collection of at least $10,000,000 of the disputed outstanding
receivables from Kuwait Oil Company. If such bonuses are not paid prior to
the Closing Date, (i) the determination of the Enterra Board of Directors
or the Enterra Committee, as the case may be, will be binding upon
Weatherford, (ii) any Enterra employee terminated after such date shall
receive the entire amount of the bonus determined by the Enterra Board of
Directors or the Enterra Committee, as the case may be, and (iii) payment
of such bonuses shall be administered by Messrs. William E. Macaulay and
Robert L. Parker, Sr., who will be directors of the Surviving Corporation.
(b) The Enterra Board of Directors or the Enterra Committee shall
declare, prior to the Closing Date, the amount of bonuses to Enterra
employees, based upon Enterra's achievement of certain financial and other
targets for Enterra for the fiscal year ending December 31, 1995,
determined by the Enterra Board of Directors or the Enterra Committee, as
the case may be, in a manner consistent with the Enterra and Total Energy
Services Company bonus plans under which bonuses were paid for the fiscal
year ended December 31, 1994. The final amount of bonuses shall be
determined by the Enterra Board of Directors or the Enterra Committee, as
the case may be, if audited financial results for the year ending
December 31, 1995 are known prior to the Closing Date, or by Messrs.
Macaulay and Parker, if such results are not known until after the Closing
Date. Bonuses will be paid not earlier than February 1, 1996 and not later
than February 28, 1996. Any Enterra employee terminated after the Closing
Date shall receive the entire amount of the bonus.
(c) In addition to the 1995 bonuses referenced in Section 5.18(b),
Enterra may pay bonuses to Enterra employees in an amount not to exceed
$1,000,000 in the aggregate. The recipients and amounts of such bonuses
shall be determined in the sole discretion of the Enterra Committee;
PROVIDED, HOWEVER, that the total amount paid to any one employee shall not
exceed the aggregate of the current annualized salary and most recent
annual bonus of such employee.
5.19 ENTERRA SEVERANCE AGREEMENTS.
(a) Each of the Enterra severance agreements with the individuals set
forth on Exhibit 5.19(a)(i) shall be amended, pursuant to the form attached
hereto as Exhibit 5.19(a)(ii), and each of the Enterra severance agreements
with the individuals set forth on Exhibit 5.19(a)(iii) shall be amended,
pursuant to the form attached hereto as Exhibit 5.19(a)(iv).
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(b) The parties agree that, as a result of the Merger, any
resignation by any of M. Timothy Carey, Steven C. Grant, Edward C. Grimes,
Steven W. Krablin, J. Joseph Percle and Michael L. Stansberry at any time
from the Effective Time through August 12, 1996 shall constitute a
"Termination upon Change of Control" (as such term is defined in the
severance agreement between such person and Enterra). Further, it is
agreed that, for purposes of Section 3(a)(ii) of the severance agreement
between Enterra and each such individual, if the bonus for the 1993 fiscal
year is required to be taken into account, the final amount of the 1993
bonus determined by the Enterra Board of Directors or the Enterra Committee
pursuant to Section 5.18(a) shall be counted, notwithstanding whether the
disputed receivables from Kuwait Oil Company have been collected. It is
further agreed that the manner in which the obligation to provide extended
medical and dental benefits under Section 4(b) of each such individual's
severance agreement with Enterra shall be to pay to such individual during
the full period for which such benefits are required to be extended a
monthly amount equal to the difference between the applicable COBRA
continuation premium for such benefits and the premium, if any, charged to
the individual for such benefits immediately prior to the Change in Control
(as defined in such severance agreement) and such individual shall pay the
full premium to the plan.
5.20 ENTERRA CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
(a) Weatherford shall, as of the Effective Time, have entered into
definitive arrangements with D. Dale Wood reflecting the principal terms
set forth in Exhibit 5.20.
(b) If the implementation of the principal terms set forth in Exhibit
5.20 shall make the Merger ineligible for pooling-of-interests accounting
treatment under Accounting Principles Bulletin No. 16, Enterra agrees to
use its best efforts to negotiate a package that would provide Mr. Wood in
the aggregate with a substantially similar economic benefit.
5.21 WEATHERFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
Weatherford shall, as of the Effective Time, pay Philip Burguieres a fee in the
amount set forth in Exhibit 5.21. If Mr. Burguieres' fee set forth in Exhibit
5.21 shall make the Merger ineligible for pooling-of-interests accounting
treatment under Accounting Principles Bulletin No. 16, Weatherford agrees to use
its best efforts to negotiate an alternative package with Mr. Burguieres.
5.22 BOARD OF DIRECTORS.
(a) The Board of Directors of Weatherford will take action prior to
the Effective Time to cause the number of directors comprising the full
Board of Directors of the Surviving Corporation at the Effective Time to be
increased to ten persons, and the five persons listed on Exhibit 5.22 as
the Enterra designees to the Board of Directors of the Surviving
Corporation shall be elected to the Board of Directors of the Surviving
Corporation by the Weatherford Board of
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Directors effective at the Effective Time, such increase in number and such
election to be subject to the Closing. The Weatherford Board of Directors
will also take action prior to the Effective Time to cause the committees
of the Board of Directors of the Surviving Corporation at the Effective
Time to be the committees listed on Exhibit 1.6(a) hereto, having the
membership noted on such Exhibit, such action to be subject to the Closing.
If prior to the Effective Time, any Enterra designee for director set forth
on Exhibit 5.22, or if during the two years after the Effective Time, any
Enterra designated director shall decline or be unable to serve as a
director of the Surviving Corporation, the other Enterra designees or the
remaining Enterra designated directors, as the case may be, shall designate
another person to serve in such person's stead, subject to the approval of
a majority of the Weatherford designated directors at that time, which
approval shall not be unreasonably withheld. Weatherford agrees that,
during the two year period after the Effective Time, it shall cause at
least one Enterra designee listed on Exhibit 5.22 (or his successor chosen
pursuant to this Section 5.22(a)) to be a member of each of the Executive
and Nominating Committee, Audit Committee and Compensation and Stock Plans
Committee of the Board of Directors of the Surviving Corporation.
Weatherford shall take all appropriate action for two years after the
Effective Time to assist in the nomination for election as directors of the
Enterra designees listed on Exhibit 5.22 (or any successor chosen pursuant
to this Section 5.22(a)).
(b) Each person designated by Enterra to serve on the Board of
Directors of the Surviving Corporation, and any person subsequently
appointed to the Board of Directors of the Surviving Corporation by such
designees pursuant to Section 5.22(a), shall be covered by the Weatherford
International Incorporated Non-Employee Director Retirement Plan and the
prior service of any such person on the Enterra Board of Directors shall
count as service on the Board of Directors of the Surviving Corporation for
all purposes under such plan.
(c) If prior to the Effective Time, any Weatherford designee for
director set forth on Exhibit 5.22, or if during the two years after the
Effective Time, any Weatherford designated director shall decline or be
unable to serve as a director of the Surviving Corporation, the other
Weatherford designees or the remaining Weatherford designated directors, as
the case may be, shall designate another person to serve in such person's
stead, subject to the approval of a majority of the Enterra designated
directors at that time, which approval shall not be unreasonably withheld.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Closing Date of the following
conditions:
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(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of Weatherford and the
stockholders of Enterra as may be required by law and by any applicable
provisions of their respective certificates of incorporation or bylaws;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(c) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal the
consummation of the Merger;
(d) The Registration Statement shall be effective on the Closing
Date, and all post-effective amendments filed shall have been declared
effective or shall have been withdrawn; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the parties,
threatened by the Commission;
(e) There shall have been obtained any and all material permits,
approvals and consents of securities or blue sky commissions of any
jurisdiction, and of any other governmental body or agency, that reasonably
may be deemed necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a Material Adverse Effect
on Enterra or Weatherford; and
(f) All approvals of private persons, financial institutions or
corporations, (i) the granting of which is necessary for the consummation
of the Merger or the transactions contemplated in connection therewith and
(ii) the non-receipt of which would have a Material Adverse Effect on
Enterra or Weatherford, shall have been obtained.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. The obligation
of Weatherford to effect the Merger is, at the option of Weatherford, also
subject to the fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Enterra contained in
subsections (b), (c), (e) and (g) of Section 2.3 shall be accurate, and the
representations and warranties of Enterra contained in all other
subsections of Section 2.3 shall be accurate in all material respects
(except to the extent qualified by materiality, in which case such
representations and warranties shall be accurate), as of the Closing Date
as though such representations and warranties had been made at and as of
that time (except where any such representation or warranty is made as of a
date specifically set forth therein); all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Enterra
on or before the Closing Date shall have been duly
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complied with and performed in all material respects; and a certificate of
Enterra to the foregoing effect dated the Closing Date and signed by the
chief executive officer of Enterra shall have been delivered to
Weatherford;
(b) Since the date of this Agreement, no Material Adverse Change of
Enterra shall have occurred, and Weatherford shall have received a
certificate of Enterra signed by the chief executive officer of Enterra
dated the Closing Date to such effect;
(c) Weatherford shall have been advised in writing as of the date of
this Agreement and as of the Closing Date (i) by Arthur Andersen LLP that,
in accordance with generally accepted accounting principles and applicable
rules and regulations of the Commission, Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen LLP is not aware of any matters that prohibit the use of "pooling
of interests" accounting in connection with the Merger and (ii) by KPMG
Peat Marwick LLP that, in accordance with generally accepted accounting
principles and applicable rules and regulations of the Commission, no
conditions exist that would preclude Weatherford's accounting for the
Merger with Enterra as a "pooling of interests" as those conditions relate
to Enterra;
(d) Enterra shall have received, and furnished written copies to
Weatherford of, the Enterra affiliates' agreements pursuant to Section 4.3;
(e) Weatherford shall have received from Morgan, Lewis & Bockius,
counsel to Enterra, an opinion dated the Effective Time covering the
matters set forth in Exhibit 6.2(e);
(f) Weatherford shall have received a copy of the "comfort letter" of
KPMG Peat Marwick LLP pursuant to Section 5.2(a) and on or prior to the
Closing Date an additional letter from KPMG Peat Marwick LLP dated as of
the Closing Date, in form and substance reasonably satisfactory to
Weatherford, stating that nothing has come to their attention, as of a date
no earlier than five days prior to the Closing Date, which would require
any change in their letter delivered pursuant to Section 5.2(a) if it were
required to be dated and delivered on the Closing Date;
(g) The Board of Directors of Weatherford shall have received from
Merrill Lynch & Co. a written opinion, dated as of the date of this
Agreement, in form and substance reasonably satisfactory to the Board of
Directors of Weatherford, to the effect that the Conversion Rate is fair to
the holders of Weatherford Common Stock from a financial point of view,
which opinion shall have been confirmed in writing to such Board as of the
date the Proxy Statement is first mailed to the stockholders of Weatherford
and not subsequently withdrawn;
(h) Weatherford shall have received from Fulbright & Jaworski L.L.P.,
counsel to Weatherford, a written opinion dated as of the date that the
Proxy
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Statement is first mailed to stockholders of Weatherford to the effect that
(i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii)
Weatherford and Enterra will each be a party to that reorganization within
the meaning of Section 368(b) of the Code and (iii) Weatherford and Enterra
shall not recognize any gain or loss as a result of the Merger, and such
opinion shall not have been withdrawn or modified in any material respect;
(i) The Stockholders' Agreement among Enterra, First Reserve
Corporation and the various First Reserve Funds shall have been in full
force and effect, and the stockholders of Enterra named therein shall not
be in breach of any of the material terms thereof, immediately prior to the
Closing; and
(j) D. Dale Wood shall have entered into definitive arrangements
reflecting the principal terms set forth in Exhibit 5.20.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENTERRA. The obligation of
Enterra to effect the Merger is, at the option of Enterra, also subject to the
fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) The representations and warranties of Weatherford contained in
subsections (b), (c), (e) and (g) of Section 2.2 shall be accurate, and the
representations and warranties of Weatherford contained in all other
subsections of Section 2.2 shall be accurate in all material respects
(except to the extent qualified by materiality, in which case such
representations and warranties shall be accurate), as of the Closing Date
as though such representations and warranties had been made at and as of
that time (except where any such representation or warranty is made as of a
date specifically set forth therein); all of the terms, covenants and
conditions of this Agreement to be complied with and performed by
Weatherford on or before the Closing Date shall have been duly complied
with and performed in all material respects; and a certificate of
Weatherford to the foregoing effect dated the Closing Date and signed by
the chief executive officer of Weatherford shall have been delivered to
Enterra;
(b) Since the date of this Agreement, no Material Adverse Change of
Weatherford shall have occurred, and Enterra shall have received a
certificate of Weatherford signed by the chief executive officer of
Weatherford dated the Closing Date to such effect;
(c) Enterra shall have been advised in writing as of the date of this
Agreement and as of the Closing Date (i) by Arthur Andersen LLP that, in
accordance with generally accepted accounting principles and applicable
rules and regulations of the Commission, Weatherford is eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen LLP is not aware of any matters that prohibit the use of "pooling
of interests" accounting in connection with the Merger and (ii) by KPMG
Peat Marwick LLP that, in accordance with generally accepted accounting
principles and applicable rules and regulations of the Commission, no
conditions exist that would preclude
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Weatherford's accounting for the Merger with Enterra as a "pooling of
interests" as those conditions relate to Enterra;
(d) Weatherford shall have received, and furnished written copies to
Enterra of, the Weatherford affiliates' agreements pursuant to Section 3.3;
(e) Enterra shall have received from Fulbright & Jaworski L.L.P.,
counsel to Weatherford, an opinion dated the Effective Time covering the
matters set forth in Exhibit 6.3(e);
(f) Enterra shall have received a copy of the "comfort letter" of
Arthur Andersen LLP pursuant to Section 5.2(b) and on or prior to the
Closing Date an additional letter from Arthur Andersen LLP dated as of the
Closing Date, in form and substance reasonably satisfactory to Enterra,
stating that nothing has come to their attention, as of a date no earlier
than five days prior to the Closing Date, which would require any change in
their letter delivered pursuant to Section 5.2(b) if it were required to be
dated and delivered on the Closing Date;
(g) The Board of Directors of Enterra shall have received from
Simmons & Company International, Inc. a written opinion, dated as of the
date of this Agreement, in form and substance reasonably satisfactory to
the Board of Directors of Enterra, to the effect that the consideration to
be received by the holders of Enterra Common Stock in the Merger is fair
from a financial point of view to such holders, which opinion shall have
been confirmed in writing to such Board as of the date the Proxy Statement
is first mailed to the stockholders of Enterra and not subsequently
withdrawn;
(h) Enterra shall have received from Morgan, Lewis & Bockius, counsel
to Enterra, a written opinion dated as of the date that the Proxy Statement
is first mailed to stockholders of Enterra to the effect that (i) the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, (ii) Weatherford and
Enterra will each be a party to that reorganization within the meaning of
Section 368(b) of the Code and (iii) the stockholders of Enterra shall not
recognize any gain or loss as a result of the Merger, other than to the
extent such stockholders receive cash in lieu of fractional shares, and
such opinion shall not have been withdrawn or modified in any material
respect;
(i) The shares of Weatherford Common Stock to be issued upon
consummation of the Merger shall have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance; and
(j) Each of the Weatherford Change of Control Agreements set forth on
Exhibit 6.3(j)(i) shall be amended, pursuant to the form attached hereto as
Exhibit 6.3(j)(ii).
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ARTICLE VII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
7.1 NO SOLICITATION BY WEATHERFORD.
(a) Weatherford shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director,
employee, investment banker, attorney or other advisor, agent or
representative of Weatherford or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any
Weatherford Takeover Proposal (as hereinafter defined), (ii) enter into any
agreement with respect to any Weatherford Takeover Proposal, or
(iii) participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Weatherford
Takeover Proposal; PROVIDED, HOWEVER, that prior to the vote of
stockholders of Weatherford for approval and adoption of this Agreement and
the Merger, Weatherford may take any actions described in the foregoing
clause (iii) to the extent that the Board of Directors of Weatherford
determines, in good faith after consultation with outside counsel, that
failure to take such actions could reasonably be expected to result in a
breach of the Board's fiduciary obligations. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any officer, director or employee of
Weatherford or any of the Weatherford Subsidiaries or any investment
banker, attorney or other advisor, agent or representative of Weatherford,
whether or not such person is purporting to act on behalf of Weatherford or
otherwise, shall be deemed to be a material breach of this Agreement by
Weatherford. For purposes of this Agreement, a "Weatherford Takeover
Proposal" means (i) any proposal or offer, other than a proposal or offer
by Enterra or any of its affiliates, for a merger or other business
combination involving Weatherford, (ii) any proposal or offer, other than a
proposal or offer by Enterra or any of its affiliates, to acquire from
Weatherford or any of its affiliates in any manner, directly or indirectly,
more than 30% of the voting stock of Weatherford or any Weatherford
Subsidiary or a material amount of the assets of Weatherford and the
Weatherford Subsidiaries, taken as a whole, or (iii) any proposal or offer,
other than a proposal or offer by Enterra or any of its affiliates, to
acquire from the stockholders of Weatherford by tender offer, exchange
offer or otherwise more than 30% of the outstanding voting stock of
Weatherford.
(b) Neither the Board of Directors of Weatherford nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Enterra the approval or recommendation by the Board of
Directors of Weatherford or any such committee of this Agreement or the
Merger or take any action having such effect or (ii) approve or recommend,
or propose to approve or recommend, any Weatherford Takeover Proposal.
Notwithstanding the foregoing, if the Board of Directors of Weatherford
receives a Weatherford Takeover Proposal that, in the exercise of its
fiduciary obligations (as determined in good faith after consultation with
outside counsel), it
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determines to be a Weatherford Superior Proposal (as hereinafter defined),
the Board of Directors of Weatherford may withdraw or modify its approval
or recommendation of this Agreement or the Merger and may (subject to the
following sentence) terminate this Agreement, in each case at any time
after the fifth business day following Enterra's receipt of written notice
(a "Weatherford Notice of Superior Proposal") advising Enterra that the
Board of Directors of Weatherford has received a Weatherford Takeover
Proposal that it has determined to be a Weatherford Superior Proposal,
specifying the principal terms and conditions of such Weatherford Superior
Proposal and identifying the person making such Weatherford Superior
Proposal. Weatherford may terminate this Agreement pursuant to the
preceding sentence only if the stockholders of Weatherford shall not yet
have voted upon the Merger and Weatherford shall have paid to Enterra the
Termination Fee (as defined in Section 7.3(a)). Nothing contained herein
shall prohibit Weatherford from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) of the Exchange Act provided that
Weatherford does not withdraw or modify its position with respect to the
Merger or take any action having such effect or approve or recommend a
Weatherford Takeover Proposal. For purposes of this Agreement, a
"Weatherford Superior Proposal" means any bona fide Weatherford Takeover
Proposal to merge with or acquire, directly or indirectly, all of the
voting stock then outstanding or all or substantially all of the assets of
Weatherford, and otherwise on terms that the Board of Directors of
Weatherford determines in its good faith reasonable judgment (based on the
written advice of a financial advisor of nationally recognized reputation)
to be more favorable to Weatherford's stockholders than the Merger.
(c) If the Board of Directors of Weatherford or any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Enterra the approval or recommendation by the Board of Directors
of Weatherford or any such committee of this Agreement or the Merger or
take any action having such effect or (ii) approve or recommend, or propose
to approve or recommend, any Weatherford Takeover Proposal, Enterra may
terminate this Agreement.
(d) In addition to the obligations of Weatherford set forth in
Section 7.1(b), Weatherford shall promptly advise Enterra orally and in
writing of any negotiations or discussions, entered into in reliance on the
proviso to the first sentence of Section 7.1(a).
7.2 NO SOLICITATION BY ENTERRA.
(a) Enterra shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director, employee,
investment banker, attorney or other advisor, agent or representative of
Enterra or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Enterra Takeover Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to any
Enterra Takeover Proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any
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person any information with respect to, the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Enterra Takeover
Proposal; PROVIDED, HOWEVER, that prior to the vote of stockholders of
Enterra for approval and adoption of this Agreement and the Merger, Enterra
may take any actions described in the foregoing clause (iii) to the extent
that the Board of Directors of Enterra determines, in good faith after
consultation with outside counsel, that failure to take such actions could
reasonably be expected to result in a breach of the Board's fiduciary
obligations. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
officer, director or employee of Enterra or any of the Enterra Subsidiaries
or any investment banker, attorney or other advisor, agent or
representative of Enterra, whether or not such person is purporting to act
on behalf of Enterra or otherwise, shall be deemed to be a material breach
of this Agreement by Enterra. For purposes of this Agreement, an "Enterra
Takeover Proposal" means (i) any proposal or offer, other than a proposal
or offer by Weatherford or any of its affiliates, for a merger or other
business combination involving Enterra, (ii) any proposal or offer, other
than a proposal or offer by Weatherford or any of its affiliates, to
acquire from Enterra or any of its affiliates in any manner, directly or
indirectly, more than 30% of the voting stock of Enterra or any Enterra
Subsidiary or a material amount of the assets of Enterra and the Enterra
Subsidiaries, taken as a whole, or (iii) any proposal or offer, other than
a proposal or offer by Weatherford or any of its affiliates, to acquire
from the stockholders of Enterra by tender offer, exchange offer or
otherwise more than 30% of the outstanding voting stock of Enterra.
(b) Neither the Board of Directors of Enterra nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Weatherford the approval or recommendation by the Board
of Directors of Enterra or any such committee of this Agreement or the
Merger or take any action having such effect or (ii) approve or recommend,
or propose to approve or recommend, any Enterra Takeover Proposal.
Notwithstanding the foregoing, if the Board of Directors of Enterra
receives an Enterra Takeover Proposal that, in the exercise of its
fiduciary obligations (as determined in good faith after consultation with
outside counsel), it determines to be an Enterra Superior Proposal (as
hereinafter defined), the Board of Directors of Enterra may withdraw or
modify its approval or recommendation of this Agreement or the Merger and
may (subject to the following sentence) terminate this Agreement, in each
case at any time after the fifth business day following Weatherford's
receipt of written notice (an "Enterra Notice of Superior Proposal")
advising Weatherford that the Board of Directors of Enterra has received an
Enterra Takeover Proposal that it has determined to be an Enterra Superior
Proposal, specifying the principal terms and conditions of such Enterra
Superior Proposal and identifying the person making such Enterra Superior
Proposal. Enterra may terminate this Agreement pursuant to the preceding
sentence only if the stockholders of Enterra shall not yet have voted upon
the Merger and Enterra shall have paid to Weatherford the Termination Fee.
Nothing contained herein shall prohibit Enterra from taking and disclosing
to its stockholders a position contemplated by Rule 14e-2(a) of the
Exchange Act
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provided that Enterra does not withdraw or modify its position with respect
to the Merger or take any action having such effect or approve or recommend
an Enterra Takeover Proposal. For purposes of this Agreement, an "Enterra
Superior Proposal" means any bona fide Enterra Takeover Proposal to merge
with or acquire, directly or indirectly, all of the voting stock then
outstanding or all or substantially all of the assets of Enterra, and
otherwise on terms that the Board of Directors of Enterra determines in its
good faith reasonable judgment (based on the written advice of a financial
advisor of nationally recognized reputation) to be more favorable to
Enterra's stockholders than the Merger.
(c) If the Board of Directors of Enterra or any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Weatherford the approval or recommendation by the Board of
Directors of Enterra or any such committee of this Agreement or the Merger
or take any action having such effect or (ii) approve or recommend, or
propose to approve or recommend, any Enterra Takeover Proposal, Weatherford
may terminate this Agreement.
(d) In addition to the obligations of Enterra set forth in
Section 7.2(b), Enterra shall promptly advise Weatherford orally and in
writing of any negotiations or discussions, entered into in reliance on the
proviso to the first sentence of Section 7.2(a).
7.3 FEE AND EXPENSE REIMBURSEMENTS.
(a) Weatherford agrees to pay Enterra a fee in immediately available
funds of $20,000,000 (the "Termination Fee") promptly upon the termination
of this Agreement if this Agreement is terminated by Enterra or Weatherford
pursuant to Section 8.1(j). Further, Weatherford agrees to pay Enterra
the Termination Fee if:
(i) this Agreement is terminated for any reason other than a
material breach by Enterra and, after the date hereof and before such
termination, a Weatherford Takeover Proposal shall have been made and
the stockholders of Weatherford shall not have approved the Merger; or
(ii) Weatherford shall have terminated this Agreement pursuant
to Section 8.1(c) or Section 8.1(h) and, within six months after such
termination, Weatherford shall have entered into a definitive
agreement with any person (other than Enterra or any of its
affiliates) with respect to a Weatherford Takeover Proposal than is
more favorable to Weatherford's stockholders that the Merger.
The Termination Fee shall be payable promptly upon termination of this
Agreement if any of the events described in Section 7.3(a)(i) shall have
occurred prior to termination. The Termination Fee payable pursuant to
Section 7.3(a)(ii) shall be payable promptly upon the first occurrence of
the event following termination of this Agreement.
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(b) Enterra agrees to pay Weatherford the Termination Fee promptly
upon the termination of this Agreement if this Agreement is terminated by
Enterra or Weatherford pursuant to Section 8.1(k). Further, Enterra agrees
to pay Weatherford the Termination Fee if:
(i) this Agreement is terminated for any reason other than a
material breach by Weatherford and, after the date hereof and before
such termination, an Enterra Takeover Proposal shall have been made
and the stockholders of Enterra shall not have approved the Merger; or
(ii) Enterra shall have terminated this Agreement pursuant to
Section 8.1(d) or Section 8.1(i) and, within six months after such
termination, Enterra shall have entered into a definitive agreement
with any person (other than Weatherford or any of its affiliates) with
respect to an Enterra Takeover Proposal that is more favorable to
Enterra's stockholders than the Merger.
The Termination Fee shall be payable promptly upon termination of this
Agreement if any of the events described in Section 7.3(b)(i) shall have
occurred prior to termination. The Termination Fee payable pursuant to
Section 7.3(b)(ii) shall be payable promptly upon the first occurrence of
the event following termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of
Weatherford or the stockholders of Enterra:
(a) by mutual consent of Weatherford and Enterra;
(b) by either Weatherford or Enterra if the Merger has not been
effected on or before December 31, 1995;
(c) by Weatherford if the condition set forth in Section 6.2(g) is
not satisfied;
(d) by Enterra if the condition set forth in Section 6.3(g) is not
satisfied;
(e) by Weatherford if a final, unappealable order shall have been
entered to restrain, enjoin or otherwise prevent, or awarding substantial
damages in connection with, a consummation of this Agreement or the
transactions contemplated in connection herewith, or there is pending by
any governmental body any suit challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by
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this Agreement or seeking to obtain from Enterra or any of the Enterra
Subsidiaries any damages that are material in relation to Enterra and the
Enterra Subsidiaries, taken as a whole;
(f) by Enterra if a final, unappealable order shall have been entered
to restrain, enjoin or otherwise prevent, or awarding substantial damages
in connection with, a consummation of this Agreement or the transactions
contemplated in connection herewith, or there is pending by any
governmental body any suit challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from Weatherford or any
of the Weatherford Subsidiaries any damages that are material in relation
to Weatherford and the Weatherford Subsidiaries, taken as a whole;
(g) by either Weatherford or Enterra if the required approval of the
stockholders of Enterra or the stockholders of Weatherford for the adoption
and approval of the Merger and this Agreement is not received at their
respective stockholders' meetings;
(h) by Weatherford if (i) since the date of this Agreement there has
been a Material Adverse Change in Enterra or (ii) there has been a breach
of any representation or warranty set forth in subsection (b), (c), (e) or
(g) of Section 2.3, or there has been a breach of any other subsection of
Section 2.3 in any material respect (except to the extent qualified by
materiality, in which case such representations and warranties shall not
have been breached in any respect), by Enterra or Enterra fails to perform
in any material respect any of its covenants, agreements or obligations
under this Agreement;
(i) by Enterra if (i) since the date of this Agreement there has been
a Material Adverse Change in Weatherford or (ii) there has been a breach of
any representation or warranty set forth in subsection (b), (c), (e) or (g)
of Section 2.2, or there has been a breach of any other subsection of
Section 2.2 in any material respect (except to the extent qualified by
materiality, in which case such representations and warranties shall not
have been breached in any respect), by Weatherford or Weatherford fails to
perform in any material respect any of its covenants, agreements or
obligations under this Agreement;
(j) by Weatherford or Enterra to the extent permitted under
Section 7.1; or
(k) by Weatherford or Enterra to the extent permitted under
Section 7.2.
8.2 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 8.1, Weatherford and Enterra shall have no
obligation or liability to each other except that (i) the provisions of
Sections 5.8 and 7.3, this Article VIII and the obligations set forth in the
Confidentiality Agreement dated May 12, 1995, between Weatherford and Enterra
(the "Confidentiality Agreement") shall survive any such
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termination, and (ii) in the case of termination pursuant to Section 8.1(h) or
8.1(i) only, nothing herein and no termination pursuant to such sections will
relieve any party from liability for any breach of this Agreement.
8.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any
time, except by an instrument in writing signed on behalf of each party hereto;
PROVIDED that after this Agreement has been approved and adopted by the
stockholders of Weatherford and the stockholders of Enterra, this Agreement may
be amended only as may be permitted by applicable provisions of the DGCL. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
it from seeking redress for breach of this Agreement other than with respect to
the condition so waived.
8.4 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. None of the representations, warranties, covenants or agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for the terms of Article I,
Sections 5.4, 5.7, 5.8, 5.9, 5.10, 5.12, 5.13, 5.18, 5.19(b) and 5.22, this
Article VIII and the agreements of the "affiliates" of Enterra and Weatherford
delivered pursuant to Section 6.2(d) and Section 6.3(d), respectively.
8.5 PUBLIC STATEMENTS. Enterra and Weatherford agree to consult with each
other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or applicable stock exchange
policy.
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the benefit
of and will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement shall not be
assignable by the parties hereto.
8.7 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
in person or by courier, (b) sent by facsimile transmission, answer back
requested, or (c) mailed, certified first class mail, postage prepaid, return
receipt requested, to the parties hereto at the following addresses:
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if to Enterra: Enterra Corporation
13100 Northwest Freeway, Sixth Floor
Houston, Texas 77040
Attention: D. Dale Wood, Chairman of the
Board, President and Chief Executive
Officer
Fax: (713) 462-7816
with a required copy to: Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, Pennsylvania 19103-6993
Attention: David R. King
Fax: (215) 963-5299
if to Weatherford: Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Attention: Philip Burguieres, Chairman of
the Board, President and Chief Executive
Officer
Fax: (713) 439-1152
with a required copy to: Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Charles L. Strauss
Fax: (713) 651-5246
or to such other address or facsimile number as any party shall have furnished
to the other by notice given in accordance with this Section 8.7. Such notices
shall be effective, (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by facsimile transmission, when
the answer back is received, or (iii) if mailed, upon the earlier of five days
after deposit in the mail and the date of delivery as shown by the return
receipt therefor.
8.8 GOVERNING LAW; JURISDICTION. THIS AGREEMENT, THE SUBJECT MATTER
HEREOF AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITATION, VALIDITY, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF DELAWARE. EACH PARTY HERETO IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF
DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND
ANY OTHER COURT OF THE STATE OF DELAWARE AND THE UNITED STATES WITH JURISDICTION
TO HEAR APPEALS FROM ANY SUCH COURT, FOR THE PURPOSES OF ANY SUIT, ACTION OR
OTHER PROCEEDING OF ANY TYPE WHATSOEVER ARISING OUT OF THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
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BROUGHT BY ANY PARTY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT SUCH PARTY IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT, OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT. EACH PARTY HERETO
FURTHER AGREES NOT TO BRING OR PURSUE ANY SUCH SUIT, ACTION OF OTHER PROCEEDING
IN ANY OTHER COURTS OR JURISDICTION.
8.9 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
8.11 HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.
8.12 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement, the
exhibits attached hereto, the Weatherford Disclosure Letter (and Schedule 2.2(n)
thereto), the Enterra Disclosure Letter (and the exhibits attached thereto) and
the Confidentiality Agreement constitute the entire agreement and supersedes all
other prior agreements and understandings, both oral and written, among the
parties or any of them, with respect to the subject matter hereof and neither
this nor any documents delivered in connection with this Agreement confers upon
any person not a party hereto any rights or remedies hereunder except as
provided in Sections 5.9, 5.12, 5.13, 5.18 and 5.19(b).
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
WEATHERFORD INTERNATIONAL INCORPORATED
By: /s/ Philip Burguieres
-------------------------------------------
Philip Burguieres
Chairman of the Board, President and
Chief Executive Officer
ENTERRA CORPORATION
By: /s/ D. Dale Wood
-------------------------------------------
D. Dale Wood
Chairman of the Board, President and
Chief Executive Officer
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CONSENT AND FIRST AMENDMENT
TO CREDIT AGREEMENT
CONSENT AND FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"),
executed and delivered on or about December 2, 1994, but effective as of April
15, 1994, made by and among Credit Lyonnais New York Branch, individually and as
Administrative Agent (the "Administrative Agent"), Texas Commerce Bank National
Association, a national banking association and its successors and assigns, as
Collateral Agent (the "Collateral Agent"), Arab Banking Corporation (B.S.C.),
individually and as a Co-Agent (together with the Collateral Agent and the
Administrative Agent, being hereinafter collectively referred to as the
"Agents"), and the banks and other financial institutions listed on the
signature pages hereto (together with the Agents hereinafter collectively
referred to as the "Banks"), Weatherford International Incorporated, a
corporation organized under the laws of the State of Delaware ("WII"),
Weatherford U.S., Inc., a corporation organized under the laws of the State of
Delaware ("WUSI"), and Weatherford/Lamb, Inc., a corporation organized under the
laws of the State of Delaware ("Weatherford/Lamb").
PRELIMINARY STATEMENTS:
(1) The parties hereto are parties to that certain Amended and
Restated Revolving and Term Credit Agreement dated as of April 15, 1994 among
the Agents, the Banks, WII, WUSI and Weatherford/Lamb (WUSI and Weatherford/Lamb
being hereinafter collectively referred to as the "Borrowers") (as hereinafter
amended or otherwise modified from time to time, the "Credit Agreement").
(2) WII and the Borrowers have requested that the Banks agree to
certain modifications to the Credit Agreement pursuant to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein and for other good and valuable consideration, the
adequacy, receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. DEFINED TERMS AND RELATED MATTERS.
(a) The capitalized terms used herein which are defined in the Credit
Agreement and not otherwise defined herein shall have the meanings
specified therein.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Amendment shall refer to this Amendment as a whole
and not to any particular provision of this Amendment.
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<PAGE>
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is
hereby amended as follows:
(a) Clause (ii) of Section 6 of the Credit Agreement is hereby
amended in its entirety to read as follows:
(ii) the proceeds of the Term Loans shall be used by WUSI to
renew, extend and restructure the term loan facility made
available to WUSI under the Existing Facility, to finance (by
means of intercompany loans made ultimately to the Odfjell Buyers
evidenced by the Odfjell Acquisition Subsidiary Notes) the
Odfjell Acquisition, to pay transaction costs associated with the
Odfjell Acquisition and to fully repay the amount outstanding as
of the Closing Date under the revolving credit facility under the
Existing Facility.
(b) Section 9.18 of the Credit Agreement is hereby amended in its
entirety to read as follows:
9.18. ACQUISITION SUBSIDIARY NOTES. WII will,
and will cause WUSI, WLI and each Acquisition Subsidiary to,
maintain in full force and effect all Acquisition Subsidiary
Notes and will not, except as contemplated by the First
Amendment, without the prior written consent of the Banks,
modify or amend any Acquisition Subsidiary Note. WII will,
and will cause WUSI, WLI and each Acquisition Subsidiary to,
perform or cause to be performed all of the terms,
covenants, agreements and conditions on its part to be
performed under each Acquisition Subsidiary Note to which it
is a party. WII will, and will cause WUSI, WLI and each
Acquisition Subsidiary to, timely and diligently pursue the
enforcement of each covenant or obligation of each other
party to each Acquisition Subsidiary Note. As soon as
possible after the Closing Date, WLI will propose revised
principal amounts for each Odfjell Acquisition Note, such
amounts to reflect the fair market value of the Odfjell
Acquisition Assets purchased by each Odfjell Buyer. Upon
the prior written consent of the Agents, the Odfjell
Acquisition Subsidiary Notes shall be amended and restated
to reflect such revised amounts.
(c) Section 10.3 of the Credit Agreement is hereby amended by
amending Subsection (1) thereof in its entirety to read as follows:
(1) (A) unsecured Debt of the Acquisition Subsidiaries to
WUSI and WLI represented by the Acquisition Subsidiary Notes
and
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<PAGE>
(B) unsecured Debt of WLI to WUSI evidenced by that certain Promissory
Note dated as of April 15, 1994, executed by WLI and payable to WUSI
in the original, stated principal amount of $55,200,000;
(d) Section 10.3 of the Credit Agreement is hereby further amended by
including after subsection (o) thereof the following new subsection (p):
(p) unsecured Debt of WII or any Borrower of the type
described in subsection (d)(iii) of the definition of
"Debt."
(e) Section 10.3 of the Credit Agreement is hereby further amended by
amending the final paragraph thereof to read as follows:
Notwithstanding the foregoing, no Debt permitted
under subclauses (b) through (p) shall be incurred, created
or assumed unless prior to such incurrence, creation or
assumption and after giving pro forma effect thereto, no
Default or Event of Default has or will have occurred and be
continuing.
(f) The first sentence of Section 10.5 of the Credit Agreement is
hereby amended in its entirety to read as follows:
Except as contemplated by the First Amendment, WII will not, and
will not permit any Subsidiary to, sell or otherwise dispose of
any shares of stock or Debt of any Subsidiary, or permit any
Subsidiary to issue or dispose of its stock (other than
directors' qualifying shares), except as provided by
Section 10.6.
(g) Exhibit "A" to the Credit Agreement is hereby amended by amending
the definition of "Odfjell Acquisition Subsidiary Notes" in its entirety to
read as follows:
"ODFJELL ACQUISITION SUBSIDIARY NOTES" shall mean
the promissory notes executed by the Odfjell Buyers and
payable to WLI to evidence the purchase price of the Odfjell
Acquisition Assets, each in the form of the promissory note
attached as EXHIBIT K hereto, or other form reasonably
acceptable to the Agents and, upon prior written consent of
the Agents, any renewals, extensions, modifications or
rearrangements thereof.
(h) Exhibit "A" to the Credit Agreement is hereby further amended by
including therein in proper alphabetical order the following new
definition:
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<PAGE>
"ASSIGNMENT OF ODFJELL ACQUISITION SUBSIDIARY
NOTES" shall mean that certain Assignment of Odfjell
Acquisition Subsidiary Notes dated as of April 15, 1994
executed by WLI in favor of the Collateral Agent, and, upon
prior written consent of the Agents, any renewals,
extensions, modifications or rearrangements thereof.
(i) Exhibit "A" to the Credit Agreement is hereby further amended by
including therein in proper alphabetical order the following new
definition:
"FIRST AMENDMENT" shall mean that certain Consent and First
Amendment to Credit Agreement dated as of April 15, 1994,
executed by and among WII, the Borrowers, the Agents and the
Banks."
(j) Exhibit "A" to the Credit Agreement is hereby further amended by
including therein in proper alphabetical order the following new
definition:
"G & W ACQUISITION" shall mean the purchase on or about June 1,
1994 by Weatherford Inc. and Weatherford Oil Tool Middle East
Ltd. of the assets of Gillette & Whitehead Drilling Services Ltd.
for a purchase price of approximately $8,700,000.00.
(k) Exhibit "A" to the Credit Agreement is hereby further amended by
amending the definition of "Security Agreements" in its entirety to read as
follows:
"SECURITY AGREEMENTS" shall mean, collectively, the WUSI Security
Agreement, the WLI Security Agreement and the Assignment of
Odfjell Acquisition Subsidiary Notes.
(l) Exhibit "A" to the Credit Agreement is hereby further amended so
that clause (ii) of the proviso contained in the definition of
"Consolidated Capital Expenditures" is amended to read in its entirety as
follows:
(ii) any capital expenditures of WWII and its Subsidiaries
incurred (A) in connection with the G & W Acquisition or (B)
prior to the Closing Date in connection with the Prior
Acquisitions or
(m) Exhibit "K" to the Credit Agreement is hereby replaced by
Exhibit "K" attached hereto.
SECTION 3. CERTAIN CONSENTS OF THE AGENTS AND THE BANKS.
Notwithstanding prohibitions contained in Sections 10.5 and 10.6 and the second
sentence of Section 9.8 of the Credit Agreement, each of the Agents and the
Banks, by its execution and delivery of this
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<PAGE>
Amendment, provides its written consent to the transactions that are described
in SCHEDULE 1 to this Amendment; PROVIDED, THAT, no Default or Event of Default
which may arise from any such transaction due to a violation of any other
provision of the Credit Agreement is hereby waived.
SECTION 4. REPRESENTATIONS AND WARRANTIES. WII and each Borrower
represent and warrant as follows:
(a) This Amendment is, and all other documents and instruments
executed in connection herewith will be, legal, valid and binding
obligations of WII and each Subsidiary which is a party thereto enforceable
in accordance with their respective terms, except as enforceability may be
(i) limited by applicable Debtor Laws and (ii) subject to the general
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding is equity or at law).
(b) No authorization, approval or other action by, and no notice to
or filing with, any governmental authority which has not been received is
required for (i) the execution, delivery or performance of this Amendment
by WII and the Borrowers; or (ii) the exercise by the Agents and the Banks
of the rights or the remedies provided for in the Credit Agreement, as
amended hereby.
(c) WII and each Subsidiary (a) are corporations duly organized,
validly existing, and in good standing under the laws of their respective
jurisdiction of incorporation; (b) have the corporate power to own their
respective properties and to carry on their respective businesses as now
conducted; and (c) are duly qualified as foreign corporations to do
business and are in good standing in every jurisdiction where such
qualification is necessary and where failure to be so qualified would have
a Material Adverse Effect.
(d) Neither the execution and delivery of this Amendment and all
other documents and instruments executed in connection herewith nor the
consummation of the transactions contemplated hereby or thereby nor
fulfillment of and compliance with the respective terms, conditions and
provisions hereof and thereof will conflict with or result in a breach of
any of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation or
imposition of any Lien on any of the property of WII or any Subsidiary
pursuant to (a) the charter or bylaws applicable to WII or any such
Subsidiary; (b) any Law or any regulation of any administrative or
governmental instrumentality; (c) any order, writ, injunction or decree of
any court; or (d) the terms, conditions or provisions of any Material
Contract to which WII or any such Subsidiary is a party or by which it is
bound or to which it is subject.
(e) WII and each Subsidiary have the power and authority to make,
execute, deliver and carry out this Amendment and all other documents and
instruments executed in connection to which they are a party and the
transactions contemplated herein and
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<PAGE>
therein and to perform their respective obligations hereunder and thereunder and
all such action has been duly authorized by all necessary proceedings on their
part. Such Loan Documents to which they are a party have been duly and validly
executed and delivered by WII and each Subsidiary.
(f) Neither this Amendment nor any other document, certificate or
statement furnished to any Agent or any Bank by or on behalf of WII or any
Subsidiary in connection with this Amendment contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained herein and therein not misleading.
SECTION 5. RATIFICATION. The Credit Agreement, as hereby amended, is
in all respects ratified and confirmed, and all of the rights and powers created
thereby or thereunder shall be and remain in full force and effect. The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
the Agents or the Banks under the Credit Agreement, the Notes and the Loan
Documents, as each may be amended or modified from time to time, nor constitute
a waiver of any other provision of the Credit Agreement, as amended by this
Amendment or the Notes and the Loan Documents, as each may be amended or
modified from time to time. This Amendment is a "Loan Document."
SECTION 6. FURTHER ASSURANCES. WII and the Borrowers agree to do,
execute, acknowledge and deliver all and every further acts and instruments as
the Administrative Agent may request for the better assuring and confirming unto
the Administrative Agent all and singular the rights granted or intended to be
granted hereby or hereunder.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Amendment or made in writing by
or on behalf of WII and the Borrowers in connection herewith, shall survive the
execution and delivery of this Agreement and shall continue until 365 or 366
days, as the case may be, after the repayment of the Notes. Any investigation
by any Agent or any Bank shall not diminish in any respect whatsoever its right
to rely on such representations and warranties.
SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES
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<PAGE>
HEREUNDER, IN RESPECT OF ANY PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 10. FINAL AGREEMENT. THIS AMENDMENT AND ALL OTHER LOAN
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT) EXECUTED BY ANY OF THE PARTIES
PRIOR TO OR SUBSTANTIALLY CONCURRENTLY HEREWITH TOGETHER CONSTITUTES A WRITTEN
AGREEMENT WHICH 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 AGREEMENTS BETWEEN THE
PARTIES. THIS PROVISION IS INTENDED TO COMPLY WITH SECTION 26.02 OF THE TEXAS
BUSINESS AND COMMERCE CODE.
WEATHERFORD INTERNATIONAL
INCORPORATED
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
WEATHERFORD/LAMB, INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
WEATHERFORD U.S., INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
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<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
as a Bank and as Administrative Agent
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Bank and as Syndication
and Collateral Agent
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
ARAB BANKING CORPORATION (B.S.C.),
as a Bank and as a Co-Agent
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
BANK OF SCOTLAND
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
CORESTATES BANK, N.A.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
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<PAGE>
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
WELLS FARGO BANK
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
UNION BANK
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
DEN NORSKE BANK AS
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
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<PAGE>
BANQUE PARIBAS
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
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<PAGE>
SCHEDULE 1
The transactions that have occurred are as follows:
1. On June 16, 1994, Klepo-Stabylia S.A., a subsidiary directly owned by
Weatherford International Incorporated ("Weatherford"), changed its name to
Weatherford France, S.A. ("W/France") without giving prior written notice
to the Agents.
2. On July 15, 1994, Weatherford Oil Tool GmbH, a Borrowing Subsidiary, sold
the assets of its French branch to Rig Services SARL, an Immaterial
Subsidiary ("Rig Services"), for approximately U.S. $380,000. The
transaction was effective January 1, 1994 for accounting purposes.
3. On July 20, 1994, Rig Services was merged into W/France. The transaction
was effective May 1, 1994 for accounting purposes.
4. On July 8, 1994, Weatherford/Lamb, Inc., a Borrower and a subsidiary owned
directly by Weatherford ("W/Lamb"), transferred its stock ownership of Bit
& Tool A-1 Srl, a Borrowing Subsidiary ("A-1 Italy"), to Weatherford
Mediterranea S.p.A. ("WEMESPA"), by virtue of not subscribing to A-1
Italy's 1993 losses and allowing WEMESPA to do so.
Pending transactions include the following:
5. The merger of Weatherford Marine, Inc., a Material Subsidiary, into
Weatherford U.S., Inc., a Borrower, Material Subsidiary and subsidiary
directly owned by Weatherford ("WUSI"). This merger will occur when the
termination of the Seastrom joint venture with a third party is finalized,
which will occur as soon as possible.
6. The merger of Bit & Tool A-1 Srl. into WEMESPA. This merger will occur
after January 1, 1995 and will result in all Italian operations being in
WEMESPA.
7. The sale by W/France of its elastomer division business to WUSI and
Weatherford Oil Tool Nederland B.V., a Borrowing Subsidiary ("W/Holland")
for approximately $1,300,000 ($260,000 and $1,040,000). This will be
finalized as soon as possible and will be effective October 1, 1994.
8. The merger of A-1 Bit & Tool Co. B.V., an Immaterial Subsidiary ("A-1
Holland"), into W/Holland.
9. In addition, there is planned a merger of Weatherford Norge AS, an
Immaterial Subsidiary ("W/Norge"), into Weatherford Eurasia AS, an
Immaterial Subsidiary. While consent is not required for an Immaterial
Subsidiary to merge into an Immaterial Subsidiary, W/Norge is an obligor
under an Odfjell Acquisition Subsidiary Note.
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<PAGE>
CONSENT AND SECOND AMENDMENT TO AMENDED AND RESTATED
REVOLVING AND TERM LOAN AGREEMENT
This CONSENT AND SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING
AND TERM LOAN AGREEMENT (this "Amendment") dated effective as of December 31,
1994 by and among Weatherford International Incorporated, a corporation
organized under the laws of Delaware ("WII"), Weatherford U.S., Inc., a
corporation organized under the laws of Delaware ("WUSI"), and Weatherford/
Lamb, Inc., a corporation organized under the laws of Delaware ("WLI")
(collectively, the "Borrowers" and individually a "Borrower"), the financial
institutions listed on the signature pages hereof (collectively, the "Banks" and
individually, a "Bank"), Credit Lyonnais New York Branch ("CL") in its capacity
as administrative agent (the "Administrative Agent") for the Banks hereunder,
Texas Commerce Bank National Association ("TCB") in its capacity as syndication
and collateral agent (the "Collateral Agent") for the Banks hereunder, and Arab
Banking Corporation (B.S.C.) ("ABC") in its capacity as a co-agent (the
"Co-Agent") for the Banks hereunder, (together with the Administrative Agent and
the Collateral Agent, being hereinafter collectively referred to as the "Agents"
and each individually in its capacity as an agent, an "Agent").
PRELIMINARY STATEMENTS:
(1) WII, the Borrowers, the Agents and the Banks have entered into an
Amended and Restated Revolving and Term Loan Agreement dated as of April 15,
1994 (as the same may be hereafter amended from time to time, the "Loan
Agreement"; the terms defined therein being used herein as therein defined
unless otherwise defined herein).
(2) Pursuant to the terms and conditions hereof, WII, the Borrowers,
the Agents and the Banks have agreed to amend the Loan Agreement to revise the
definition of "Consolidated Capital Expenditures".
SECTION 1. AMENDMENT TO LOAN AGREEMENT. Schedule 1 to the Loan
Agreement is, effective as of the date hereof, hereby amended by amending the
definition of "Consolidated Capital Expenditures" in its entirety to read as
follows:
"CONSOLIDATED CAPITAL EXPENDITURES" Shall mean for any
period, as to WII and all of its Subsidiaries, all capital
expenditures made during such period, as determined in
accordance with GAAP (including, in any event, all
acquisitions and all Investments of the type described in
Sections 10.4(c) and 10.4(l)); PROVIDED, HOWEVER, (i) that
for purposes of calculating compliance with Sections 10.1(d)
and 10.1(e) hereof, "Consolidated Capital
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<PAGE>
Expenditures" shall not include (A) the Acquisitions or (B) any
capital expenditures of WII and its Subsidiaries incurred prior to the
Closing Date in connection with the Prior Acquisitions or (C) any
Investment or acquisition made on or after the Closing Date of the
type described by Section 10.4(l) or Section 10.6(e) (as the case may
be) but in excess of the amount of Investment or acquisition permitted
by Section 10.4(l) or Section 10.6(e) (as the case may be), to which
the Majority Banks shall give their prior written consent (by way of
illustration of subsection (i)(C) of this definition, the full amount
of a $15,000,000 Investment of the type described by Section 10.4(l),
to which the Majority Banks have given their prior written consent,
would be completely excluded for the purposes of calculating
compliance with Section 10.1(d) or 10.1(e) hereof); and (ii) that for
purposes of calculating compliance with Section 10.1(d) hereof,
"Consolidated Capital Expenditures" shall include only those
non-discretionary capital expenditures incurred (A) to permit
compliance with Law and (B) in connection with necessary repairs,
renewals and replacements to Property.
SECTION 2. CERTAIN CONSENTS OF THE AGENTS AND THE BANKS.
Notwithstanding the prohibitions contained in Sections 10.5 and 10.6 and the
second sentence of Section 9.8 of the Loan Agreement, each of the Agents and the
Banks, by its execution and delivery of this Amendment, provides its written
consent to the transactions that are described below; PROVIDED, THAT, no Default
or Event of Default which may arise from any such transaction due to a violation
of any other provision of the Loan Agreement is hereby waived:
(a) The merger of W/Management, Inc., an Immaterial Subsidiary, into
WUSI.
(b) The merger of European Material Inspection (EMI) B.V., an
Immaterial Subsidiary, into Weatherford Oil Tool Nederland B.V., a Borrowing
Subsidiary.
(c) The transfer by Weatherford Eurasia B.V., a Material Subsidiary,
of the capital stock of EMI-Elettro Magnetica Ispezioni Italia S.r.l., an
Immaterial Subsidiary ("EMI-Italy"), to Weatherford Mediterranea S.p.A., a
Borrowing Subsidiary ("WEMESPA").
(d) The merger of EMI-Italy into WEMESPA.
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when, and only when the Administrative Agent shall have
received counterparts of this Amendment executed by the parties hereto.
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<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF WII AND THE BORROWERS. WII
and the Borrowers hereby represent and warrant as follows:
(a) The representations and warranties contained in the Loan Documents are
true and accurate in all material respects on and as of the date hereof as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date).
(b) No Default or Event of Default has occurred and is continuing as of the
date hereof, after giving effect hereto.
SECTION 5. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) Upon the
effectiveness hereof, on and after the date hereof each reference in the Loan
Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Loan Agreement, and each reference in the other Loan
Documents to "the Loan Agreement", "thereunder", "thereof" or words of
like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement as amended hereby. This Amendment is a "Loan Document."
(b) Except as specifically amended above, the Loan Agreement and the Notes,
and all other Loan Documents, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Security Documents and the
Collateral described therein do and shall continue to secure the payment of
all obligations of the Borrowers under the Loan Agreement, the Notes and the
other Loan Documents, in each case as amended hereby.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power
or remedy of the Agents or the Banks under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
SECTION 6. COSTS AND EXPENSES. WII and the Borrowers agree to pay the costs
and expenses incurred in connection herewith pursuant to Section 13.3 of the
Loan Agreement.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and
the same agreement.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9. FINAL AGREEMENT. THE LOAN DOCUMENTS, THIS WRITTEN AMENDMENT AND
THE OTHER WRITTEN AGREEMENTS ENTERED INTO
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<PAGE>
IN CONNECTION THEREWITH REPRESENT 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 Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: ________________________________
Name: ______________________________
Title: _____________________________
WEATHERFORD U.S., INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
WEATHERFORD/LAMB, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
CREDIT LYONNAIS NEW YORK BRANCH,
as a Bank and as Administrative Agent
By: ________________________________
Name: ______________________________
Title: _____________________________
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<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Bank and as
Syndication and Collateral Agent
By: ________________________________
Name: ______________________________
Title: _____________________________
ARAB BANKING CORPORATION (B.S.C.),
as a Bank and as a Co-Agent
By: ________________________________
Name: ______________________________
Title: _____________________________
BANK OF SCOTLAND
By: ________________________________
Name: ______________________________
Title: _____________________________
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<PAGE>
CORESTATES BANK, N.A.
By: ________________________________
Name: ______________________________
Title: _____________________________
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: ________________________________
Name: ______________________________
Title: _____________________________
WELLS FARGO BANK
By: ________________________________
Name: ______________________________
Title: _____________________________
UNION BANK
By: ________________________________
Name: ______________________________
Title: _____________________________
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<PAGE>
DEN NORSKE BANK AS
By: ________________________________
Name: ______________________________
Title: _____________________________
By: ________________________________
Name: ______________________________
Title: _____________________________
BANQUE PARIBAS
By: ________________________________
Name: ______________________________
Title: _____________________________
By: ________________________________
Name: ______________________________
Title: _____________________________
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<PAGE>
(Amended as of August 28, 1995)
AGREEMENT
This Agreement, dated as of June 23, 1995 (this "Agreement"), among
WEATHERFORD INTERNATIONAL INCORPORATED, a Delaware corporation ("Weatherford"),
and AMERICAN GAS & OIL INVESTORS, LIMITED PARTNERSHIP, a New York limited
partnership, AMGO II, LIMITED PARTNERSHIP, a New York limited partnership, AMGO
III, LIMITED PARTNERSHIP, a New York limited partnership, FIRST RESERVE SECURED
ENERGY ASSETS FUND, LIMITED PARTNERSHIP, a Delaware limited partnership, FIRST
RESERVE FUND V, LIMITED PARTNERSHIP, a Delaware limited partnership, FIRST
RESERVE FUND V-2, LIMITED PARTNERSHIP, a Delaware limited partnership, and
FIRST RESERVE FUND VI, LIMITED PARTNERSHIP, a Delaware limited partnership
(each a "First Reserve Fund" and together the "First Reserve Funds"), and
First Reserve Corporation, a Delaware corporation ("FRC"). (The First Reserve
Funds and FRC, and all other persons or entities now or hereafter directly or
indirectly controlling, controlled by or under common control with any of the
First Reserve Funds or FRC, are referred to collectively as the "FRC Group.")
WITNESSETH:
WHEREAS, the First Reserve Funds currently own in the aggregate
approximately 11,212,349 shares of common stock, par value $1.00 per share
("Enterra Common Stock"), of Enterra Corporation, a Delaware corporation
("Enterra");
WHEREAS, the shares of Enterra Common Stock owned by the First Reserve
Funds currently are subject to the terms and conditions of that certain
Agreement dated as of May 2, 1994 among Enterra, the First Reserve Funds and FRC
(the "Enterra Standstill Agreement");
WHEREAS, pursuant to an agreement and plan of merger (the "Merger
Agreement") dated June 23, 1995 between Enterra and Weatherford, each share of
outstanding Enterra Common Stock shall, at the Effective Time (as defined in the
Merger Agreement), be converted, pursuant to a merger (the "Merger") of Enterra
with and into Weatherford, into 0.845 of a share (which number reflects a one
for two reverse stock split to be effected at the closing) of common stock, par
value $.10 per share, of Weatherford ("Weatherford Common Stock");
WHEREAS, pursuant to the terms of the Merger, the First Reserve Funds
will own, as of the Effective Time, in the aggregate 9,474,431 shares (which
number reflects a one for two
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reverse stock split to be effected at the closing) of Weatherford Common Stock;
WHEREAS, Weatherford and the FRC Group are entering into this
Agreement to establish certain arrangements with respect to the relationships
between them after the Effective Time, which arrangements are substantially
similar to the arrangements provided for in the Enterra Standstill Agreement;
and
WHEREAS, Weatherford and the FRC Group believe that these arrangements
will be in the best interests of Weatherford and all of its shareholders from
and after the Effective Time.
NOW, THEREFORE, intending to be legally bound as of the Effective
Time, the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
1.1. "Weatherford Voting Securities" shall mean collectively
Weatherford Common Stock, Weatherford preferred stock, par value $1.00 per
share, if entitled to vote generally for the election of directors or otherwise,
any other class or series of Weatherford securities that is entitled to vote
generally for the election of directors or otherwise, and any other securities,
warrants or options or rights of any nature (whether or not issued by
Weatherford) that are convertible into, exchangeable for, or exercisable for the
purchase of, or otherwise give the holder thereof any rights in respect of
Weatherford Common Stock, Weatherford preferred stock that is entitled to vote
generally for the election of directors or otherwise, or any other class or
series of Weatherford securities that is entitled to vote generally for the
election of directors or otherwise.
1.2. "Termination Date" shall mean August 12, 2004.
1.3. The "Combined Voting Power" at any measurement date shall mean
the total number of votes which could have been cast in an election of directors
of Weatherford had a meeting of the stockholders of Weatherford been duly held
based upon a record date as of the measurement date if all Weatherford Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.4. "13D/G Group" shall mean two or more persons acting together for
the purpose of acquiring, holding, voting or disposing of Weatherford Voting
Securities, which persons would be required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
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thereunder to file a statement on Schedule 13D or 13G with the Securities and
Exchange Commission (the "SEC") as a "person" within the meaning of Section
13(d)(3) of the Exchange Act if such persons beneficially owned sufficient
securities to require such a filing under the Exchange Act.
1.5. The concept of "beneficial ownership" and the terms "person" and
"group" shall have the meanings defined or adopted from time to time pursuant to
Regulation 13D-G adopted by the SEC under the Exchange Act.
Section 2. REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. Weatherford
represents and warrants that:
(a) Weatherford is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
corporate power to own its properties and to conduct its business as now
conducted.
(b) As of June 21, 1995, the authorized capital stock of
Weatherford consists of (i) 80,000,000 shares of Weatherford Common Stock, of
which 54,276,632 shares were validly issued and outstanding, fully paid and
nonassessable and (ii) 1,000,000 shares of preferred stock, par value $1.00 per
share, of which no shares were issued and outstanding.
(c) Weatherford has full legal right, power and authority to
enter into this Agreement and perform its obligations hereunder. This Agreement
has been duly authorized, executed and delivered by Weatherford and constitutes
a legal, valid and binding agreement of Weatherford enforceable against
Weatherford in accordance with the terms hereof.
(d) Neither the execution and delivery of this Agreement nor the
performance of its obligations hereunder will conflict with or result in a
breach of or constitute a default under any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality or of its corporate charter or bylaws or of any agreement or
instrument to which it is a party or subject or by which its property is bound
or affected.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE FRC GROUP. Each of
the First Reserve Funds and FRC, jointly and severally, represents and warrants
to Weatherford as follows:
(a) Each First Reserve Fund is a validly existing partnership
under the laws of the jurisdiction of its organization, FRC is a validly
existing corporation under the laws of the jurisdiction of its incorporation,
and each First Reserve Fund and FRC has the full legal right, power and
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authority to enter into this Agreement and perform their respective obligations
hereunder.
(b) This Agreement has been duly authorized, executed and
delivered by each First Reserve Fund and by FRC, and this Agreement constitutes
the legal, valid and binding agreement of the FRC Group, enforceable against the
members of the FRC Group in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of their obligations hereunder will conflict with or result in a
breach of or constitute a default under any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality or of any agreement or instrument to which any First Reserve
Fund or FRC is bound or affected, or of the partnership agreements of any of the
First Reserve Funds, or of the charter and bylaws of FRC.
(d) As of the date of this Agreement and as of the Effective
Time, (i) each First Reserve Fund owns and will own of record the shares of
Enterra Common Stock set forth opposite its respective name on the signature
page of this Agreement, (ii) there are and will be no beneficial owners of such
shares of Enterra Common Stock other than the First Reserve Funds and FRC, (iii)
such shares of Enterra Common Stock represent and will represent all of the
shares of Enterra Common Stock owned of record or beneficially by the First
Reserve Funds and FRC, and (iv) such shares of Enterra Common Stock are and will
be owned of record and beneficially by the First Reserve Funds and FRC, free and
clear of all pledges, liens, claims, security interests and other charges or
defects in title of any nature whatsoever. No shares of Weatherford Common
Stock are currently, and as of the Effective Time no shares of Weatherford
Common Stock will be, beneficially owned by any member of the FRC Group, except
for those shares of Weatherford Common Stock issuable in the Merger upon
conversion of such shares of Enterra Common Stock.
Section 4. COVENANTS WITH RESPECT TO WEATHERFORD VOTING SECURITIES
AND OTHER MATTERS. Prior to the Termination Date and subject to the further
provisions hereof:
4.1. ACQUISITION OF WEATHERFORD VOTING SECURITIES. No member of the
FRC Group shall, directly or indirectly, acquire, offer to acquire, agree to
acquire, become the beneficial owner of or obtain any rights in respect of any
Weatherford Voting Securities, by purchase or otherwise, or take any action in
furtherance thereof, if the effect of such acquisition, agreement or other
action would be (either immediately or upon consummation of any such
acquisition, agreement or other action, or expiration of any period of time
provided in any such acquisition, agreement or other action) (i) to increase the
aggregate beneficial ownership of Weatherford Voting Securities by the FRC Group
to
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such number of Weatherford Voting Securities that represents or possesses 20% or
more of the Combined Voting Power of Weatherford Voting Securities, or (ii) to
increase the aggregate beneficial ownership of any class or series of
Weatherford Voting Securities by the FRC Group to greater than 20% of such class
or series. Notwithstanding the foregoing maximum percentage limitation, (A) no
member of the FRC Group shall be obligated to dispose of any Weatherford Voting
Securities beneficially owned in violation of such maximum percentage
limitations if, and solely to the extent that, the aggregate beneficial
ownership of the FRC Group is or will be increased solely as a result of a
recapitalization of Weatherford, a repurchase of any Weatherford Voting
Securities by Weatherford or any of its subsidiaries, or any other action taken
by Weatherford or its affiliates (except the FRC Group), if such
recapitalization, repurchase or other action was approved by a majority of the
directors then in office who were not designated by the FRC Group, and (B) if
any other person or group beneficially owns or acquires beneficial ownership of
Weatherford Voting Securities representing greater than 20% of the Combined
Voting Power, the applicable maximum percentage shall be increased to such
greater percentage. For purposes of calculating the maximum percentage
limitations, all Weatherford Voting Securities that are the subject of an
agreement, arrangement or understanding pursuant to which the FRC Group or any
member thereof has the right to obtain beneficial ownership of such securities
in the future shall also be deemed to be beneficially owned by the FRC Group or
the applicable member thereof.
4.2. DISTRIBUTION OF WEATHERFORD VOTING SECURITIES. Each member of
the FRC Group covenants that it shall not, directly or indirectly, sell,
transfer any beneficial interest in, pledge, hypothecate or otherwise dispose of
any Weatherford Voting Security, except by conversion, exchange or exercise of
such Weatherford Voting Securities pursuant to their terms in a manner not
otherwise in violation of Section 4.1 hereof, in response to certain tender or
exchange offers as permitted by Section 4.6(b) hereof, or pursuant to:
(i) a bona fide pledge of or the granting of a security interest
or any other lien or encumbrance in such Weatherford Voting Securities
to a lender that is not a member of the FRC Group to secure a bona
fide loan for money borrowed made to one or more members of the FRC
Group with full recourse to the borrower or borrowers, the foreclosure
of such pledge or security interest or any other lien or encumbrance
that may be placed involuntarily upon any Weatherford Voting
Securities, or the subsequent sale or other disposition of such
Weatherford Voting Securities by such lender or its agent;
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(ii) a transfer, assignment, sale or disposition of such
Weatherford Voting Securities within the FRC Group to a member of the
FRC Group that has signed this Agreement;
(iii) a distribution of Weatherford Voting Securities to any
partner of a First Reserve Fund; provided that any distributee that is
a member of the FRC Group has signed this Agreement; and provided,
further that any arrangements coordinated or initiated by FRC to
assist limited partners in the sale of Weatherford Voting Securities
distributed to them must comply with the provisions of this Section
4.2;
(iv) sale in a public offering registered under the Act pursuant
to the registration rights provided in Section 6 hereof;
(v) sales in broker's transactions, effected on the New York
Stock Exchange or any other securities exchange on which the
Weatherford Voting Securities are listed or in any other public
trading market in which the Weatherford Voting Securities are then
being traded, in compliance with the provisions of Rule 144 under the
Act, ("Rule 144"), including the volume restrictions set forth in such
rule (excluding for purposes of this clause (v) sales pursuant to the
provisions of paragraph (k) of Rule 144, which sales are included
under (vi) below);
(vi) sales pursuant to paragraph (k) of Rule 144;
(vii) other negotiated sales of Weatherford Voting Securities;
or
(viii) as provided in Section 4.6(b).
Notwithstanding the previous sentence, (A) in effecting any sale, transfer of
any beneficial interest in or other disposition of Weatherford Voting Securities
pursuant to clause (iv) above, the members of the FRC Group selling,
transferring or disposing such Weatherford Voting Securities shall use their
reasonable best efforts to refrain from selling, transferring or disposing of
such number of Weatherford Voting Securities as represent 3% or more of the
Combined Voting Power to any one person or group, (B) no single sale, transfer
of beneficial interest in or other disposition of any Weatherford Voting
Securities may be made by any member of the FRC Group, and no related group of
such sales, transfers or dispositions shall be made by the FRC Group, pursuant
to clauses (iii), (vi) and (vii) above if such number of Weatherford Voting
Securities as represent 5% or more of the
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Combined Voting Power are being sold, transferred or disposed of to any one
person or group; and (C) no sale, transfer of any beneficial interest in or
other disposition of Weatherford Voting Securities shall be made pursuant to
clauses (iii), (vi) and (vii) above to any one person or group who, upon
consummation of such sale, transfer or disposition of Weatherford Voting
Securities would, directly or indirectly, have beneficial ownership of or the
right to acquire beneficial ownership of such number of Weatherford Voting
Securities as represent 10% or more of the Combined Voting Power.
4.3. VOTING TRUSTS. No member of the FRC Group shall deposit any
Weatherford Voting Securities in a voting trust or subject any Weatherford
Voting Securities to any arrangement or agreement with respect to the voting of
such securities unless all the parties to such voting trust, arrangement or
agreement are members of the FRC Group who have executed this Agreement.
4.4. PROXY SOLICITATIONS, ETC. No members of the FRC Group shall
solicit proxies, assist any other person in the solicitation of proxies, become
a "participant" in a "solicitation," or assist any "participant" in a
"solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Exchange Act) in opposition to the recommendation of a majority of the
directors of Weatherford then in office who were not designated by the FRC
Group, or recommend or request that any other person take any such actions, or
submit any proposal for the vote of stockholders of Weatherford.
4.5. STOCK POOLING. No member of the FRC Group shall join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any other person, for the purpose of acquiring, holding, voting or
disposing of any Weatherford Voting Securities, or otherwise become a member of
a 13D/G Group other than the FRC Group itself.
4.6. TAKEOVER OFFERS.
(a) Each member of the FRC Group covenants and agrees not to (i)
publicly suggest or announce its willingness or desire to engage in a
transaction or group of transactions or have another person engage in a
transaction or group of transactions that would result in a change of control of
Weatherford, (ii) present to Weatherford or to any third party any proposal that
can reasonably be expected to result in a change of control of Weatherford, or
(iii) initiate, induce or attempt to induce or give encouragement to any other
person to initiate any proposal that can reasonably be expected to result in a
change of control of Weatherford.
(b) Subject to compliance with Section 4.6(a) above, on and
after the eleventh business day after commencement
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of a tender or exchange offer made by a person who is not a member of the FRC
Group for outstanding Weatherford Voting Securities (a "Qualifying Offer"), any
member of the FRC Group may tender or exchange any Weatherford Voting Securities
beneficially owned by it pursuant to such Qualifying Offer if the Qualifying
Offer shall have been approved, or not opposed, by the board of directors of
Weatherford. If a Qualifying Offer is opposed by the board of directors of
Weatherford, then, from and after the eleventh business day after commencement
of such Qualifying Offer, any member of the FRC Group may tender or exchange
shares of Weatherford Voting Securities pursuant to such Qualifying Offer only
if (i) no tender or exchange of, or indication of an intention to tender or
exchange, Weatherford Voting Securities is made by any member of the FRC Group
earlier than 24 hours prior to the expiration of any time after which
Weatherford Voting Securities tendered may be treated less favorably than
Weatherford Voting Securities tendered or exchanged prior thereto, and (ii) a
binding agreement is reached with the bidder or offeror prior to any tender or
exchange specifying that only such number of Weatherford Voting Securities
submitted for tender or exchange shall be accepted by the bidder or offeror as
are equal to (A) the percentage of such Weatherford Voting Securities not
beneficially owned by the FRC Group that have been tendered or exchanged,
multiplied by (B) the total number of such Weatherford Voting Securities
beneficially owned by the member of the FRC Group.
4.7. PLEDGE OF COVERED SECURITIES. Each member of the FRC Group
shall promptly give notice to Weatherford of any margin call, demand for
additional security or collateral, or threat to enforce any pledge or security
interest in or with respect to any Weatherford Voting Security owned of record
or beneficially by it.
Section 5. VOTING OF WEATHERFORD VOTING SECURITIES AND OTHER RELATED
MATTERS.
(a) Each member of the FRC Group that is a holder of record of
Weatherford Voting Securities shall be present, and each member of the FRC Group
that is a beneficial owner of Weatherford Voting Securities shall cause the
holder of record to be present, in person or by proxy, at all meetings of
stockholders of Weatherford so that all Weatherford Voting Securities owned of
record or beneficially by the FRC Group may be counted for the purpose of
determining the presence of a quorum at such meetings.
(b) Upon the Effective Time, the number of directors of
Weatherford shall be established as 10 directors, and two individuals designated
by the FRC Group shall be elected as directors of Weatherford, subject to the
provisions of this Agreement. The parties hereto agree that the number of
directors
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of Weatherford may not be increased above 10 without the approval of a (i) a
majority of the directors and (ii) all of the directors designated by the FRC
Group. From and after the Effective Time, the FRC Group and the directors
designated by the FRC Group shall take no action to reduce the number of
directors of Weatherford below 10 directors.
(c) For purposes of this Agreement, directors "designated by the
FRC Group" shall include directors designated by the FRC Group as set forth in
Section 5.22 of the Merger Agreement or designated by certain members of the FRC
Group as anticipated by this Section 5, and any other directors of Weatherford
affiliated or associated with any member of the FRC Group.
(d) From and after the Effective Time, as long as the FRC Group
beneficially owns at least 15% of the Combined Voting Power of all Weatherford
Voting Securities, two of (i) First Reserve Secured Energy Assets Fund, Limited
Partnership, (ii) First Reserve Fund V, Limited Partnership, (iii) First Reserve
Fund V-2, Limited Partnership and (iv) First Reserve Fund VI, Limited
Partnership (the "Designating First Reserve Funds") as shall be selected by FRC
shall have the right to designate one director of Weatherford, for a total of
two directors of Weatherford (it being understood that the FRC Group shall not
have more than two designees on the board of directors of Weatherford at any
time); provided, however, that:
(i) At any time when the FRC Group beneficially owns less than
15% but at least 10% of the Combined Voting Power of all Weatherford
Voting Securities, one of the Designating First Reserve Funds, to be
selected by FRC, shall lose its right to designate a director of
Weatherford, and such Designating First Reserve Fund shall cause its
designee on the board of directors of Weatherford to resign forthwith
such that only one designee of the FRC Group remains on the board of
directors of Weatherford; and
(ii) At any time when the FRC Group beneficially owns less than
10% of the Combined Voting Power of all Weatherford Voting Securities,
none of the FRC Group shall have the right to designate any directors
of Weatherford, and the Designating First Reserve Fund whose designee
remains on Weatherford's board of directors shall cause its designee
to resign forthwith such that no designee of the FRC Group remains on
the board of directors of Weatherford, it being understood that at any
time that the FRC Group beneficially owns less than 10% of the
Combined Voting Power of Weatherford Voting Securities no member of
the FRC
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Group shall seek representation on the board of directors of
Weatherford.
(e) Weatherford shall take all necessary or appropriate action
to (i) assist in the nomination for election as directors of those persons
designated by the Designating First Reserve Funds as are entitled to election to
the board of directors of Weatherford pursuant to the provisions of this Section
5, (ii) have at least one of the designees of the FRC Group serve on each
committee of the board of directors of Weatherford as long as the Designating
First Reserve Funds have designated at least two directors pursuant to the
provisions of this Section 5 and (iii) where two designees of the FRC Group are
serving as directors of Weatherford, have each such designee serve in different
classes of directors. The Designating First Reserve Funds shall cause their
designees on the board of directors of Weatherford to take all necessary or
appropriate action to assist in the nomination for election as directors of such
other nominees as may be selected by a majority of the directors of Weatherford
then in office who were not designated by the Designating First Reserve Funds,
and the FRC Group shall vote all Weatherford Voting Securities owned of record
by any member of the FRC Group, and shall cause all Weatherford Voting
Securities owned beneficially by any member of the FRC Group to be voted, for
the election of such other nominees as well as for the election of all nominees
of the Designating First Reserve Funds designated by them pursuant to this
Section 5.
(f) At any time that one of the Designating First Reserve Funds
does not have a representative serving as a director of Weatherford, an
individual designated by such Designating First Reserve Fund shall have the
right to attend all meetings of the board of directors in a nonvoting observer
capacity, to receive notice of such meetings and to receive the information
provided by Weatherford to its board of directors; provided, however, that
Weatherford may require as a condition precedent to any of such person's rights
under this section that such person agree to hold in confidence and trust and to
act in a fiduciary manner with respect to all information received in connection
with board meetings or otherwise; and, provided further, that Weatherford
reserves the right not to provide information to such person, and to exclude
such person from any meeting or portion thereof, if delivery of such information
or attendance at such meeting would adversely affect the attorney-client
privilege between Weatherford and its counsel. The observer right provided in
this Section 5(f) may be exercised (i) only if (and then only so long as) the
Designating First Reserve Fund has been advised in writing by counsel to such
fund that exercise of this right is reasonably necessary for such Designating
First Reserve Fund to qualify through its investment in Weatherford as a
"venture capital operating company" as such term is defined in applicable U.S.
Department of Labor
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regulations. Notwithstanding the above, the FRC Group agrees to use its
reasonable best efforts to cause the Designating First Reserve Funds to qualify
as a "venture capital operating company" under these regulations without
exercise of its rights under this Section.
(g) Except as set forth in Section 5(e) above in respect of the
election of directors of Weatherford, each member of the FRC Group shall vote
all Weatherford Voting Securities owned of record by any member of the FRC
Group, and shall cause all Weatherford Voting Securities owned beneficially by
any member of the FRC Group to be voted, at the sole election of such members of
the FRC Group, either (i) in accordance with the recommendations of a majority
of the board of directors, or (ii) in the same proportions for, against and
abstaining in respect of any matter as the holders of record of Weatherford
Voting Securities other than those beneficially owned by the FRC Group that are
entitled to vote on such matter vote their Weatherford Voting Securities.
6. REGISTRATION RIGHTS. Weatherford covenants and agrees as follows:
6.1. DEFINITIONS. For purposes of this Section 6:
(a) The term "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Act.
(b) The term "Registrable Securities" means (i) the Weatherford
Common Stock issuable to the First Reserve Funds as of the Effective Time in
connection with the Merger, and (ii) any Weatherford Common Stock issued as (or
issuable upon the conversion, exchange or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to such Weatherford Common Stock; provided, however, that Weatherford Common
Stock sold, transferred or disposed of in accordance with Section 4.2 of the
Agreement to a person to whom registration rights may not be assigned pursuant
to Section 6.13 of the Agreement shall no longer thereafter be considered
Registrable Securities.
(c) The term "Holder" means any member of the FRC Group that (i)
has signed this Agreement and (ii) owns of record Registrable Securities.
(d) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantially all
the required information regarding Weatherford by reference to other documents
filed by Weatherford with the SEC.
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6.2. REQUEST FOR REGISTRATION.
(a) If, at any time commencing three months after the Effective
Time of the Merger, Weatherford shall receive a written request from the Holders
of at least 25% of the Registrable Securities then outstanding that Weatherford
file a registration statement under the Act covering the registration of at
least 25% of the Registrable Securities then outstanding (or a lesser percent if
the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $25,000,000), then Weatherford shall, within 10 days
after the receipt thereof, give written notice of such request to all Holders,
and shall, subject to the limitations of Section 6.2(b), effect as soon as
practicable, and in any event within 45 days after the receipt of such request,
the registration under the Act of all Registrable Securities which the Holders
request to be registered within 15 days after the mailing of such notice by
Weatherford in accordance with Section 10.3. It is understood that all
calculations in this Agreement in respect of a specified percentage of
Registrable Securities then outstanding are to be made only in respect of the
total number of such Registrable Securities, as defined in Section 6.1(b) above,
then outstanding, and not in respect of the total number of shares of
Weatherford Common Stock then outstanding.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise Weatherford
as a part of their request made pursuant to this Section 6.2 and Weatherford
shall include such information in the written notice referred to in subsection
6.2(a). In such event, the right of any Holder to include Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute Registrable Securities through such underwriting
shall (together with Weatherford as provided in subsection 6.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Weatherford and reasonably acceptable to a
majority in interest of the Initiating Holders. Weatherford at its sole
discretion may offer a right to participate in any registration statement filed
pursuant to this Section 6.2 to other stockholders of Weatherford Common Stock,
and may itself participate in any registration statement filed pursuant to this
Section 6.2 hereof. However, notwithstanding any other provision of this
Section 6.2, if the offering is an underwritten offering and the lead managing
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares of Weatherford Common Stock to be
underwritten, then the total number of shares of Common Stock to be
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underwritten shall be reduced, with such reduction coming first from selling
stockholders who are not Holders, and then from Weatherford. If further
reduction is required, Weatherford shall so advise all Holders of Registrable
Securities that would have otherwise been underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities sought to be registered by each Holder.
(c) Weatherford is obligated to effect only four such
registrations pursuant to this Section 6.2.
(d) Notwithstanding the foregoing, if Weatherford shall furnish
to Holders requesting a registration statement pursuant to this Section 6.2, a
certificate signed by the President of Weatherford stating that in the good
faith judgment of a majority of the directors of Weatherford then in office who
were not designated by the FRC Group, it would be materially detrimental to
Weatherford for such registration statement to be filed, Weatherford shall have
the right to defer such filing for a period of not more than 60 days after
receipt of the request of the Initiating Holders; provided, however, that
Weatherford may not utilize this right more than once in any 12-month period.
6.3. PIGGYBACK REGISTRATION. If (but without any obligation to do
so) Weatherford proposes to register any of its Common Stock under the Act in
connection with the public offering of such Common Stock by Weatherford solely
for cash (other than a registration relating solely to the sale of securities to
participants in a dividend reinvestment plan, stock plan or employee benefit
plan; a registration relating solely to the issuance of securities in connection
with an acquisition; or a registration on any form which does not permit
inclusion of selling stockholders), or Weatherford proposes to register any of
its securities on behalf of a holder exercising demand registration rights
similar to those set forth in Section 6.2 above, Weatherford shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within 15 days after mailing of such notice
by Weatherford in accordance with Section 10.3, Weatherford shall, subject to
the provisions of Section 6.8, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
6.4. OBLIGATIONS OF WEATHERFORD. Whenever required under this
Section 6 to effect the registration of any Registrable Securities, Weatherford
shall, as expeditiously as reasonably possible:
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(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 90 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that Weatherford shall not be required to qualify to do business or to
file a general consent to service of process in any such states of
jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the underwriters of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section, each Holder acknowledges that there may occasionally be times when
Weatherford must suspend the use of the prospectus forming a part of the
registration statement until such time as an amendment to the registration
statement has been filed by Weatherford and declared effective by the SEC, or
until such time as Weatherford has filed an appropriate report with the
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SEC pursuant to the Exchange Act. Each Holder hereby covenants that it will not
sell any shares of Common Stock pursuant to said prospectus during the period
commencing at the time at which Weatherford gives the Holder notice of the
suspension of the use of said prospectus and ending at the time Weatherford
gives the Holder notice that it may thereafter effect sales pursuant to said
prospectus. Weatherford shall only be able to suspend the use of said
prospectus for periods aggregating no more than 30 days in respect of any
registration.
6.5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of Weatherford to take any action pursuant to this Section 6 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to Weatherford such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities and as may be required from time to time to keep such registration
current.
6.6. EXPENSES OF DEMAND REGISTRATION. All expenses incurred by or on
behalf of Weatherford in connection with registrations, filings or
qualifications pursuant to Section 6.2, including, without limitation, all
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for Weatherford, shall be borne by
Weatherford; provided, however, that Weatherford shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 6.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
participating Holders shall reimburse Weatherford promptly for all such
reasonable expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 6.2. In no event shall Weatherford be obligated to bear underwriting
discounts and commissions and the fees and expenses of counsel to the selling
Holders.
6.7. EXPENSES OF PIGGYBACK REGISTRATION. Weatherford shall bear and
pay all expenses incurred by or on behalf of Weatherford in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 6.3 for each Holder, including, without
limitation, all registration, filing, and qualification fees, printing and
accounting fees and fees and disbursements of counsel for Weatherford relating
or allocable thereto, but excluding underwriting discounts and commissions
relating to Registrable Securities and the fees and disbursements of counsel for
the selling Holders.
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6.8. UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by Weatherford, Weatherford
shall not be required under Section 6.3 to include any of the Holders'
Registrable Securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between Weatherford and the underwriters selected by
it. If the total amount of securities, including Registrable Securities,
requested by Holders and other stockholders to be included in such offering
exceeds the amount of securities sold other than by Weatherford that the
underwriters reasonably believe compatible with the success of the offering,
then Weatherford shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering. To achieve any
necessary reduction in the securities to be sold, the securities to be excluded
from the offering shall first be selected (in each case, pro rata among such
class of holders according to the total amount of securities proposed to be
included in the registration statement or in such other proportions as shall
mutually be agreed to by such class of holders) in the following order: (i)
first, securities being included on behalf of holders other than members of the
FRC Group shall be excluded, except as provided in (iii) below; (ii) next, if
additional securities must be excluded, Registrable Securities included pursuant
to Section 6.3 shall be excluded; (iii) thereafter, if additional securities
must be excluded, securities included on behalf of a holder exercising demand
registration rights similar to those set forth in Section 6.2 shall be excluded,
and (iv) finally, if additional securities must be excluded, securities offered
by Weatherford shall be excluded.
6.9. DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 6.
6.10. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 6:
(a) To the extent permitted by law, Weatherford will indemnify
and hold harmless each Holder and the affiliates of such Holder, and their
respective directors, officers, general and limited partners, agents and
representatives (and the directors, officers, affiliates and controlling persons
thereof), and each other person, if any, who controls such Holder within the
meaning of the Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
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based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus (but only if such is not corrected in the final
prospectus) contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading (but
only if such is not corrected in the final prospectus), or (iii) any violation
or alleged violation by Weatherford in connection with the registration of
Registrable Securities under the Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law; and Weatherford will pay to each such Holder, affiliate or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this Section 6.10(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of Weatherford (which consent shall not be
unreasonably withheld), nor shall Weatherford be liable in any such case for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by any such Holder or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless Weatherford, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls Weatherford within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 6.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
6.10(b) shall not apply to amounts paid in settlement of any such loss,
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claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this Section 6.10(b)
exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 6.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 6.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 6.10. The indemnified party
shall have the right, but not the obligation, to participate in the defense of
any action referred to above through counsel of its own choosing and shall have
the right, but not the obligation, to assert any and all separate defenses,
cross claims or counterclaims which it may have, and the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of such counsel has been specifically authorized in advance by the
indemnifying party, (ii) there is a conflict of interest that prevents counsel
for the indemnifying party from adequately representing the interests of the
indemnified party, (iii) the indemnifying party does not employ counsel that is
reasonably satisfactory to the indemnified party, or (iv) the indemnifying party
fails to assume the defense or does not reasonably contest such action in good
faith, in which case, if the indemnified party notifies the indemnifying party
that it elects to employ separate counsel, the indemnifying party shall not have
the right to assume the defense of such action on behalf of the indemnified
party and the reasonable fees and expenses of such separate counsel shall be
borne by the indemnifying party; provided, however, that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for all indemnified parties.
(d) The obligations of Weatherford and the Holders under this
Section 6.10 shall survive the completion of
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any offering of Registrable Securities in a registration statement under this
Section 6.
6.11. REPORTS UNDER THE EXCHANGE ACT. With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
Weatherford to the public without registration or pursuant to a registration on
Form S-3, Weatherford agrees to:
(a) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required under the Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written
statement by Weatherford as to its compliance with the reporting requirements of
Rule 144, or as to whether it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of Weatherford and such other reports and documents so filed by
Weatherford, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
6.12. FORM S-3 REGISTRATION. In case Weatherford shall receive from
any Holder or Holders of at least 10% of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price,
net of discounts and commissions, would exceed $1,000,000) a written request or
requests that Weatherford effect a registration on Form S-3 not involving an
underwriting and any related qualification or compliance with respect to all or
a part of the Registrable Securities owned by such Holder or Holders,
Weatherford will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from Weatherford; provided,
however, that
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Weatherford shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 6.12: (1) if Form S-3 is
not available for such offering by the Holders; (2) if the Holders, together
with the holders of any other securities of Weatherford entitled to include
securities in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
discounts or commissions) of less than $1,000,000; (3) if Weatherford shall
furnish to the Holders a certificate signed by the President of Weatherford
stating that in the good faith judgment of a majority of the directors of
Weatherford then in office who were not designated by the FRC Group, it would be
materially detrimental to Weatherford for such Form S-3 Registration to be
effected at such time, in which event Weatherford shall have the right to defer
the filing of the Form S-3 registration statement for a period of not more than
60 days after receipt of the request of the Holder or Holders under this Section
6.12; provided, however, that Weatherford shall not utilize this right more than
once in any 12-month period; (4) if Weatherford has, within the 12-month period
preceding the date of such request, already effected a registration on Form S-3
for the Holders pursuant to this Section 6.12; or (5) in any particular
jurisdiction in which Weatherford would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, Weatherford shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred by or on behalf of
Weatherford in connection with the registrations requested pursuant to Section
6.12, including (without limitation) all registration, filing, qualification,
printer's and accounting fees and the fees and disbursements of counsel for
Weatherford, shall be borne by Weatherford, except that any discounts or
commissions associated with Registrable Securities and the fees and
disbursements of counsel for the selling Holder or Holders shall be borne by the
Holder or Holders participating in the Form S-3 Registration. Registrations
effected pursuant to this Section 6.12 shall not be counted as demands for
registration or registrations effected pursuant to Sections 6.2.
6.13. NO ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
Weatherford to register Registrable Securities pursuant to this Section 6 may
only be assigned by a Holder to a transferee or assignee of any Registrable
Securities if (i) such transferee or assignee is a member of the FRC Group that
has executed this Agreement, and (ii) immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
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6.14. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, Weatherford shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable Securities
(or, prior to the Effective Time of the Merger, without the prior written
consent of FRC), enter into any agreement with any holder or prospective holder
of any securities of Weatherford which would allow such holder or prospective
holder to include such securities in any registration filed under Sections 6.2
or 6.3 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of its securities will not reduce the amount of
the Registrable Securities of the Holders which is included.
6.15. WAIVER PROCEDURES. The observance by Weatherford of any
provision of this Section 6 may be waived (either generally or in a particular
instance and either retroactively or prospectively) with the written consent of
the holders of a majority of the Registrable Securities then outstanding, and
any waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities.
6.16. "MARKET STAND-OFF" AGREEMENT. Any Holder of Registrable
Securities, if requested by an underwriter of any registered public offering of
Weatherford securities being sold in a firm commitment underwriting, agrees not
to sell or otherwise transfer or dispose of any Common Stock (or other
Weatherford Voting Securities) held by such Holder other than shares of
Registrable Securities included in the registration, during a period of up to 90
days following the effective date of the registration statement, provided that
all other persons selling securities in such underwritten public offering and
all officers and directors of Weatherford shall enter into similar agreements.
Such agreement shall be in writing in the form reasonably satisfactory to
Weatherford and such underwriter. Weatherford may impose stop-transfer
instructions with respect to the securities subject to the foregoing restriction
until the end of the required stand-off period.
Section 7. TERM OF AGREEMENT; CERTAIN PROVISIONS REGARDING
TERMINATION.
(a) Except as otherwise provided in (b) below, the respective
covenants and agreements of the FRC Group and Weatherford contained in this
Agreement will continue in full force and effect until the Termination Date, and
all of the representations and warranties set forth herein shall be continuing
representations and warranties. Upon the Termination Date, all of the
obligations of Weatherford and the FRC Group hereunder shall terminate, except
solely the obligations of the
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parties pursuant to Section 6.10 in respect of registrations completed prior to
the Termination Date.
(b) If the FRC Group shall, at any time, sell or otherwise
dispose of Weatherford Voting Securities in compliance with the terms and
provisions of this Agreement so that the FRC Group beneficially owns in the
aggregate shares representing less than 10% of the Combined Voting Power, all
covenants, agreements, obligations and rights of the FRC Group and Weatherford
contained in Sections 4.2 (except that no single sale, transfer of any
beneficial interest in or other disposition of Weatherford Voting Securities,
and no related group of such sales, transfers or dispositions, shall be made by
the FRC Group if such sales, transfers or dispositions (i) involve such number
of Weatherford Voting Securities as represent 5% or more of the Combined Voting
Power, or (ii) are to or with any one person or related group of persons who,
upon consummation of such sale, transfer or disposition have beneficial
ownership of such number of Weatherford Voting Securities as represent 10% or
more of the Combined Voting Power), 4.3, 4.4, 4.5, 4.7, 5, 6 and 8 hereof shall
cease until such time as the FRC Group shall again purchase or otherwise acquire
beneficial ownership of Weatherford Voting Securities representing 10% or more
of the Combined Voting Power. From and after such times as the FRC Group
beneficially owns in the aggregate Weatherford Voting Securities representing
10% or more of the Combined Voting Power, all restrictions upon and covenants of
the FRC Group and Weatherford set forth in this Agreement shall again be
applicable until the Termination Date. All percentages in this Section shall be
calculated in accordance with the provisions of Section 4.1.
Section 8. LEGEND AND STOP TRANSFER ORDER. To assist in effectuating
the provisions of this Agreement, the FRC Group hereby consents (i) to the
placement, in connection with the Merger or otherwise within 10 business days
after any Weatherford Voting Securities become subject to the provisions of this
Agreement, of the following legend on all certificates representing ownership of
Weatherford Voting Securities owned of record by any member of the FRC Group or
by any person where a member of the FRC Group is the beneficial owner thereof,
until such shares are sold, transferred or disposed in a manner permitted hereby
to a person who is not then a member of the FRC Group:
The shares represented by this certificate are subject to
the provisions of an Agreement among Weatherford
Corporation, First Reserve Corporation and certain limited
partnerships under control of or common control with First
Reserve Corporation, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except in
accordance
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therewith. Copies of said Agreement are on file at the office of
the Corporate Secretary of Weatherford Corporation.
; and (ii) to the entry of stop transfer orders with the transfer agent or
agents of Weatherford Voting Securities against the transfer of Weatherford
Voting Securities except in compliance with the requirements of this Agreement,
or if Weatherford acts as its own transfer agent with respect to any Weatherford
Voting Securities, to the refusal by Weatherford to transfer any such securities
except in compliance with the requirements of this Agreement. Weatherford
agrees to remove promptly all legends and stop transfer orders with respect to
the transfer of Weatherford Voting Securities being made to a person who is not
then a member of the FRC Group in compliance with the provisions of this
Agreement.
Section 9. REMEDIES.
(a) The FRC Group acknowledges and agrees that (i) the
provisions of this Agreement are reasonable and necessary to protect the proper
and legitimate interests of the parties hereto, and (ii) Weatherford and the FRC
Group would be irreparably damaged in the event any of the provisions of this
Agreement were not performed by the other parties hereto in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the non-breaching party shall be entitled to preliminary and permanent
injunctive relief to prevent breaches of the provisions of this Agreement,
without the necessity of proving actual damages or of posting any bond, and to
enforce specifically the terms and provisions hereof and thereof in any court of
the United States or any state thereof having jurisdiction, which rights shall
be cumulative and in addition to any other remedy to which such non-breaching
party may be entitled hereunder or at law or equity.
(b) In addition to any other remedy Weatherford may have under
this Agreement or in law or equity, if the FRC Group shall acquire or transfer
any Weatherford Voting Securities in violation of this Agreement, such
Weatherford Voting Securities which are in excess of the number permitted to be
owned or controlled by the FRC Group or which have been transferred by the FRC
Group in violation of the provisions of this Agreement may not be voted by the
owner thereof or any proxy therefor.
10. GENERAL PROVISIONS.
10.1. CONSENT TO JURISDICTION; SERVICE OF PROCESS. THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.
EACH OF THE
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PARTIES IRREVOCABLY AND UNCONDITIONALLY (A) AGREES THAT ANY SUIT, ACTION OR
OTHER LEGAL PROCEEDING (COLLECTIVELY, "SUIT") ARISING OUT OF THIS AGREEMENT
SHALL BE BROUGHT AND ADJUDICATED IN THE UNITED STATES DISTRICT COURT FOR
DELAWARE, OR, IF SUCH COURT WILL NOT ACCEPT JURISDICTION, IN ANY COURT OF
COMPETENT CIVIL JURISDICTION SITTING IN NEW CASTLE COUNTY, DELAWARE, (B) SUBMITS
TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSES OF ANY SUCH SUIT AND (C)
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ANY CLAIM THAT IT IS NOT SUBJECT TO THE JURISDICTION OF THE ABOVE
COURTS, THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
SUCH SUIT IS IMPROPER. EACH OF THE PARTIES ALSO IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE SERVICE OF ANY PROCESS, PLEADINGS, NOTICES OR OTHER PAPERS IN A
MANNER PERMITTED BY THE NOTICE PROVISIONS OF SECTION 10.3 HEREOF.
10.2. JOINT AND SEVERAL OBLIGATIONS. All of the obligations of
the FRC Group hereunder shall be joint and several. Each member of the FRC
Group that shall become or have the right to become the beneficial owner, within
the meaning and scope of Section 4.1 hereof, of Weatherford Voting Securities
shall, within 10 days of becoming such owner or holder, execute and deliver to
Weatherford a joinder agreement, agreeing to be legally bound by this Agreement
to the same extent as if named as a member of the FRC Group herein.
10.3. NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be in writing and shall be decreed to be validly given, made
or served when delivered personally or deposited in the U.S. mail, postage
prepaid, for delivery by express, registered or certified mail, or delivered to
a recognized overnight courier service, addressed as follows:
If to Weatherford:
Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Attn: Chairman, President and
Chief Executive Officer
With a required copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss, Esq.
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If to any member of the First Reserve Group:
First Reserve Corporation
475 Steamboat Road
Greenwich, Connecticut 06830
Attn: President and Chief Executive Officer
With a required copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Attn: Robert L. Friedman, Esq.
or to such other address as may be specified on a notice given pursuant to this
Section 10.3.
10.4. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and shall in no
way be affected, impaired or invalidated. The parties agree that they will use
their best efforts at all times to support and defend this Agreement.
10.5. AMENDMENTS. This Agreement may be amended only by an
agreement in writing signed by each of the parties hereto; provided, however,
that any amendment executed by Weatherford must prior thereto be approved by a
majority of the directors of Weatherford then in office who were not designated
by the FRC Group.
10.6. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
10.7. COUNTERPARTS. This Agreement shall become binding when one
or more counterparts hereof, individually or taken together, bears the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against the party
whose signature appears thereon, or on whose behalf such counterpart is
executed, but all of which taken together shall be one and the same statement.
10.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto intending to be legally bound
have duly executed this Agreement, all as of the day and year first above
written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ Philip Burguieres
----------------------
Philip Burguieres
Chairman, President and
Chief Executive Officer
FIRST RESERVE CORPORATION
By: /s/ William E. Macaulay
------------------------
William E. Macaulay
President and Chief
Executive Officer
NUMBER OF SHARES OF FIRST RESERVE FUNDS:
ENTERRA COMMON STOCK
HELD ON THE DATE HEREOF:
1,993,529 AMERICAN GAS & OIL INVESTORS,
LIMITED PARTNERSHIP
1,233,907 AMGO II, LIMITED PARTNERSHIP
597,408 AMGO III, LIMITED PARTNERSHIP
2,323,562 FIRST RESERVE SECURED ENERGY ASSETS
FUND, LIMITED PARTNERSHIP
3,355,254 FIRST RESERVE FUND V, LIMITED
PARTNERSHIP
838,427 FIRST RESERVE FUND V-2, LIMITED
PARTNERSHIP
870,262 FIRST RESERVE FUND VI, LIMITED
PARTNERSHIP
By: FIRST RESERVE CORPORATION,
Managing General Partner
of each of the First Reserve
Funds
By: /s/ William E. Macaulay
------------------------
William E. Macaulay
President and
Chief Executive Officer
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[Letterhead of Fulbright & Jaworski L.L.P.]
August 28, 1995
Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Ladies and Gentlemen:
We have acted as counsel for Weatherford International Incorporated, a
Delaware corporation (the "Company"), in connection with the registration
under the Securities Act of 1933, as amended (the "Act"), of 24,100,000
shares (the "Shares") of the Company's common stock, $.10 par value, to be
issued upon the terms and subject to the conditions set forth in the Joint
Proxy Statement/Prospectus contained in the Registration Statement on Form
S-4 (the "Registration Statement") relating thereto to be filed with the
Securities and Exchange Commission by the Company on August 29, 1995. The
Shares are to be issued in connection with the merger (the "Merger") of
Enterra Corporation, a Delaware corporation ("Enterra"), with and into the
Company, pursuant to an Agreement and Plan of Merger dated June 23, 1995, as
amended (the "Merger Agreement"), between Enterra and the Company.
In connection therewith, we have examined originals or copies certified or
otherwise identified to our satisfaction of the Registration Statement, the
Merger Agreement, the Restated Certificate of Incorporation of the Company,
the By-laws of the Company, the corporate proceedings with respect to the
Merger and the proposed issuance of the Shares and such other documents and
instruments as we have deemed necessary or appropriate for the expression of
the opinions contained herein.
We have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to us as originals, the
conformity to original documents of all records, certificates and other
instruments submitted to us as copies, the authenticity and completeness of
the originals of those records, certificates and other instruments submitted
to us as copies and the correctness of all statements of fact contained in
all records, certificates and other instruments that we have examined.
Based on the foregoing, and having regard for such legal considerations as
we have deemed relevant, we are of the opinion that the Shares proposed to be
issued by the Company in connection with the Merger have been duly authorized
for issuance and, when issued in accordance with the terms of the Merger
Agreement, will be validly issued, fully paid and nonassessable.
<PAGE>
Weatherford International Incorporated
August 28, 1995
Page 2
The foregoing opinion is limited to the federal laws of the United States
of America, the laws of the State of Texas and the General Corporation Law of
the State of Delaware, and we are expressing no opinion as to the effect of
the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of the Company and is not
to be used, circulated, copied, quoted or referred to without our prior
written consent. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to our firm under
the caption "Legal Matters" in the Joint Proxy Statement/Prospectus contained
in the Registration Statement.
Very truly yours,
Fulbright & Jaworski L.L.P.
<PAGE>
[Letterhead of Fulbright & Jaworski L.L.P.]
August 28, 1995
Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Ladies and Gentlemen:
We have acted as counsel for Weatherford International Incorporated, a
Delaware corporation (the "Company"), in connection with the registration
under the Securities Act of 1933, as amended, of 24,100,000 shares (the
"Shares") of the Company's common stock, $.10 par value, to be issued upon
the terms and subject to the conditions set forth in the Joint Proxy
Statement/Prospectus (the "Joint Proxy Statement/Prospectus") contained in
the Registration Statement on Form S-4 (the "Registration Statement")
relating thereto to be filed with the Securities and Exchange Commission by
the Company on August 29, 1995. The Shares are to be issued in connection
with the merger (the "Merger") of Enterra Corporation, a Delaware corporation
("Enterra"), with and into the Company. In this connection, we have assisted
in the preparation of the description of the United States federal income tax
consequences of the Merger to the Company, Enterra and the stockholders of
Enterra contained in the Joint Proxy Statement/Prospectus under the caption
entitled "Certain U.S. Federal Income Tax Consequences" (the "Tax Summary").
In connection with this opinion, we have reviewed the Joint Proxy
Statement/Prospectus and we have assumed that all facts described therein are
true, accurate and complete. Based upon the assumptions set forth herein,
such legal considerations as we deem relevant and other qualifications
contained in this letter, it is our opinion that the discussion and the legal
conclusions set forth in the Tax Summary are accurate and complete in all
material respects and address all material United States federal income tax
considerations with respect to the matters set forth therein.
The opinion expressed herein is based upon the Internal Revenue Code of
1986, as amended, Treasury regulations (including proposed regulations),
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service ("IRS") will not take a contrary
view, and no ruling from the IRS has been or will be sought. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conclusions set forth herein. Any
such changes or interpretations may or may not be retroactive and could
affect the tax consequences to the Company, Enterra and the stockholders of
Enterra.
<PAGE>
Weatherford International Incorporated
August 28, 1995
Page 2
Our opinion is limited to the specific conclusions with respect to the
United States federal income tax consequences set forth in the Tax Summary,
and no other opinions are expressed or implied. Specifically, no opinions
are expressed as to state, local or foreign tax consequences or United States
federal estate or gift tax consequences.
This opinion is rendered solely for the benefit of the Company and is not
to be used, circulated, copied, quoted or referred to without our prior
written consent. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and the reference to our firm in the
Tax Summary.
Very truly yours,
Fulbright & Jaworski L.L.P.
<PAGE>
EXHIBIT 10.1
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and Philip Burguieres (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$630,000 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Philip Burguieres
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and James R. Burke (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$182,004 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ James R. Burke
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and M. E. Eagles (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$245,004 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ M. E. Eagles
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and Norman W. Nolen (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$155,004 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Norman W. Nolen
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and Suzanne Thomas (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$155,004 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ Philip Burguieres
--------------------------------
Name: Philip Burguieres
--------------------------------
/s/ H. Suzanne Thomas
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and James D. Green (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$67,200 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ James D. Green
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and Gay S. Mayeux
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$53,004 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Gay S. Mayeux
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and Jon Nicholson (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of December 9, 1993, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$57,504 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Jon Nicholson
---------------------------------------
Executive
- 2 -
<PAGE>
SECOND AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This Second Amendment by and between Weatherford International
Incorporated, a Delaware corporation ("Weatherford"), and Weldon W. Walker (the
"Executive"), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of June 1, 1994, as amended by that certain First
Amendment to Change of Control Agreement (collectively, the "Agreement"),
establishing various matters related to the Executive's compensation and
benefits in the event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$60,480 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
- 1 -
<PAGE>
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Weldon W. Walker
---------------------------------------
Executive
- 2 -
<PAGE>
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This First Amendment by and between Weatherford International Incorporated,
a Delaware corporation ("Weatherford"), and Philip D. Gardner (the "Executive),
dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of February 13, 1995 (the "Agreement"), establishing
various matters related to the Executive's compensation and benefits in the
event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$42,570 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
- 1 -
<PAGE>
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Philip D. Gardner
---------------------------------------
Executive
- 2 -
<PAGE>
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This First Amendment by and between Weatherford International Incorporated,
a Delaware corporation ("Weatherford"), and Robert A. Seekely (the "Executive),
dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of February 13, 1995 (the "Agreement"), establishing
various matters related to the Executive's compensation and benefits in the
event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$50,004 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
- 1 -
<PAGE>
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Robert A. Seekely
---------------------------------------
Executive
' - 2 -
<PAGE>
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT
This First Amendment by and between Weatherford International Incorporated,
a Delaware corporation ("Weatherford"), and Frederick T. Tilton (the
"Executive), dated as of August 28, 1995.
RECITALS:
--------
A. Weatherford and the Executive have entered into that certain Change of
Control Agreement dated as of February 13, 1995 (the "Agreement"), establishing
various matters related to the Executive's compensation and benefits in the
event of a Change of Control (as defined in the Agreement).
B. The parties have agreed to amend certain provisions of the Agreement,
but only upon consummation of the merger (the "Merger") of Weatherford and
Enterra Corporation, a Delaware corporation ("Enterra"), and payment to the
Executive of certain amounts.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. At the closing (the "Closing") of the transactions contemplated
by the Agreement and Plan of Merger dated as of June 23, 1995, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28,
1995, between Weatherford and Enterra, Weatherford shall pay the Executive
$52,800 (the "Payment").
2. Effective at the Closing, Subsection 5(c) shall be amended by
deleting the last sentence of the last paragraph.
3. Effective at the Closing, Subsection 6(d) shall be amended by
adding the following proviso to the end of the second sentence:
"; PROVIDED, HOWEVER, that if the Executive voluntarily
terminates employment for any reason during the 30-day period
immediately following the first anniversary to the Effective
Date, the Executive also shall be entitled to the benefits set
forth in Section 6(a)(iv) of this Agreement."
4. The Executive hereby acknowledges that the Payment constitutes
good, valuable and adequate consideration for the amendments to the
Agreement made hereby.
- 1 -
<PAGE>
5. The remainder of the Agreement shall remain in full force and
effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the day and year first above written.
WEATHERFORD INTERNATIONAL
INCORPORATED
By: /s/ H. Suzanne Thomas
--------------------------------
Name: H. Suzanne Thomas
--------------------------------
/s/ Frederick T. Tilton
---------------------------------------
Executive
- 2 -
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on
Form S-4 of our reports dated March 10, 1995, included in
Weatherford International Incorporated's Form 10-K for the year
ended December 31, 1994 and to all references to our firm
included in this registration statement.
Arthur Andersen LLP
Houston, Texas
August 28, 1995
<PAGE>
EXHIBIT 23.2
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Houston, Texas
August 28, 1995
<PAGE>
EXHIBIT 23.3
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 15, 1994 with respect to the consolidated
financial statements of Total Energy Services Company included in the
Registration Statement (Form S-4 No. 33-80714) of Enterra Corporation which is
incorporated by reference in the Registration Statement on Form S-4 of
Weatherford International Incorporated and the related Joint Proxy
Statement/Prospectus of Weatherford International Incorporated and Enterra
Corporation.
Ernst & Young LLP
Houston, Texas
August 28, 1995
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Weatherford International Incorporated on Form S-4 of our report dated
December 16, 1994, except as to Note 12 as to which the date is August 24, 1995,
on our audit of the combined financial statements of Zapata Energy Industries as
of and for the eleven months ended September 30, 1994, which report is included
in this Form 8-K.
Coopers & Lybrand L.L.P.
Houston, Texas
August 28, 1995
<PAGE>
PROXY
WEATHERFORD INTERNATIONAL INCORPORATED
SPECIAL MEETING OF STOCKHOLDERS -- OCTOBER 5, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock of Weatherford International
Incorporated ("Weatherford") hereby appoints Philip Burguieres and H.
Suzanne Thomas, or either of them, his or her proxies with full power of
substitution, to vote at the Special Meeting of Stockholders of
Weatherford to be held on Thursday, October 5, 1995, at 10:30 a.m.,
Houston time, at The Ritz-Carlton, 1919 Briar Oaks Lane, Houston, Texas,
and at any adjournment thereof, the number of votes that the undersigned
would be entitled to cast if personally present, on all matters coming
before the meeting.
<TABLE>
<S> <C>
(1) Proposal to approve and adopt the Agreement and Plan of Merger dated as of June 23, 1995, as amended,
between Weatherford and Enterra Corporation ("Enterra"), and the merger of Enterra with and into
Weatherford, pursuant to which each outstanding share of Enterra common stock, $1.00 par value, will be
converted into the right to receive 1.69 shares of Weatherford common stock, $.10 par value
("Weatherford Common Stock"), before giving effect to the reverse stock split described below (0.845 of
a share of Weatherford Common Stock after giving effect to the reverse stock split).
FOR / / AGAINST / / ABSTAIN / /
(2) Proposal to approve and adopt amendments to Weatherford's Restated Certificate of Incorporation (i) to
effect a contemporaneous one-for-two reverse stock split of Weatherford Common Stock and (ii) to change
Weatherford's name to "Weatherford Enterra, Inc."
FOR / / AGAINST / / ABSTAIN / /
</TABLE>
PLEASE MARK, DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
<TABLE>
<S> <C>
(3) Proposal to amend Weatherford's 1991 Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
(4) Proposal to amend Weatherford's Restricted Stock Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
(5) TO CONSIDER AND TAKE ACTION UPON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
</TABLE>
All as more particularly described in the Joint Proxy Statement/Prospectus
dated August 31, 1995 relating to such meeting, receipt of which is hereby
acknowledged.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no directions are made, this proxy
will be voted for Proposals 1, 2, 3 and 4.
----------------------------------
----------------------------------
Signature of Stockholder(s)
Please sign your name exactly as
it appears hereon. Joint owners
must each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as it appears
hereon.
Date:
----------------------------------
, 1995
<PAGE>
P R O X Y ENTERRA CORPORATION
13100 NORTHWEST FREEWAY, SIXTH FLOOR
HOUSTON, TEXAS 77040
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS -- OCTOBER 5, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ENTERRA CORPORATION. The undersigned hereby appoints Steven C. Grant and
Steven W. Krablin, or either of them, with full power of substitution,
the proxy or proxies of the undersigned to attend the Special Meeting of
Stockholders of Enterra Corporation to be held on Thursday, October 5,
1995, or any adjournment thereof, to vote the shares of stock that the
undersigned would be entitled to vote if personally present as indicated
below and to represent and vote such shares of the undersigned on any
other matters properly brought before the Special Meeting, all as set
forth in the August 31, 1995 Joint Proxy Statement/Prospectus and any
supplements thereto.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
DESCRIBED BELOW.
1. Approval and adoption of the Agreement and Plan of Merger, dated as
of June 23, 1995, as amended, between Weatherford International
Incorporated and Enterra Corporation, the merger to be effected
pursuant thereto and all related transactions.
FOR / / AGAINST / / ABSTAIN / /
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
The shares of stock of the undersigned will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, SUCH SHARES
WILL BE VOTED "FOR" PROPOSAL 1. IF ANY OTHER MATTERS SHOULD PROPERLY COME BEFORE
THE SPECIAL MEETING, SUCH SHARES WILL BE VOTED WITH RESPECT TO SUCH MATTERS IN
ACCORDANCE WITH THE JUDGMENT OF THE PERSONS VOTING SUCH PROXIES. The undersigned
hereby acknowledges receipt of the Notice of the Special Meeting of Stockholders
and the related Joint Proxy Statement/Prospectus.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the President or other authorized officer. If a
partnership, please sign in the partnership name by an authorized person.
PLEASE MARK, DATE AND SIGN THIS PROXY CARD AND PROMPTLY RETURN IT USING THE
ENCLOSED ENVELOPE.
DATED ______________________, 1995
__________________________________
SIGNATURE
__________________________________
Signature if held jointly
