AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 1996
REGISTRATION NUMBER 333-. . . . . . . . .
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WEATHERFORD ENTERRA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1389 74-1681642
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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 ENTERRA, INC.
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:
CHARLES L. STRAUSS
FULBRIGHT & JAWORSKI L.L.P.
1301 MCKINNEY, SUITE 5100
HOUSTON, TEXAS 77010-3095
(713) 651-5151
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon consummation of the Transaction 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par value 750,000 $35.31 $26,482,500 $9,131.90
====================================================================================================
</TABLE>
(1) Represents the number of shares of Weatherford Common Stock issuable upon
consummation of the Transaction described herein.
(2) Pursuant to Rule 457(c) under the Securities Act of 1933, the proposed
maximum offering price is calculated as the aggregate market value of the
Weatherford Common Stock offered in the Transaction, which is based on the
average of the high and low sale prices of Weatherford Common Stock as
reported on the New York Stock Exchange on April 18, 1996.
------------------------
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.
================================================================================
WEATHERFORD ENTERRA, INC.
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM OF FORM S-4 LOCATION IN THE PROSPECTUS
------------------------------------- -----------------------------------------------------
<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; Incorporation of Certain Documents by
Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other
Information.......................... Summary; Risk Factors; Weatherford Enterra, Inc.;
Nodeco; The Transaction; Unaudited Pro Forma
Financial Information; Weatherford Selected Financial
Data; Nodeco Selected Financial Data
4. Terms of the Transaction............. The Transaction; Terms of the Transaction;
Comparative Rights of the Stockholders of Weatherford
and Nodeco AS
5. Pro Forma Financial Information...... Unaudited Pro Forma Financial Information;
Weatherford Selected Financial Data; Nodeco 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; Incorporation of Certain
Documents by Reference; Weatherford Enterra, Inc.
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
15. Information with Respect to S-3
Companies............................ Not Applicable
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...... Currency Translation; Exchange Rate Data; Nodeco;
Nodeco Selected Financial Data; Nodeco Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Nodeco Consolidated Financial
Statements
18. Information if Proxies, Consents or
Authorizations are to be Solicited... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be
Solicited or in an Exchange Offer.... Outside Front Cover Page of Prospectus; The
Transaction
</TABLE>
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION DATED APRIL 19, 1996
WEATHERFORD ENTERRA, INC.
This Prospectus constitutes the prospectus of Weatherford Enterra, Inc.
("Weatherford') pursuant to the United States Securities Act of 1933, as amended
(the "Securities Act'), with respect to the issuance of 750,000 shares of the
common stock, $.10 par value, of Weatherford ("Weatherford Common Stock") in
connection with the purchase (the "Transaction") by Weatherford of all of the
assets of Nodeco AS, a Norwegian joint stock company ("Nodeco AS"), and Aarbakke
AS, a Norwegian joint stock company and a wholly-owned subsidiary of Nodeco AS
("Aarbakke", and together with Nodeco AS, the "Sellers"), pursuant to the
Purchase and Sale Agreement dated March 28, 1996 (the "Purchase and Sale
Agreement"), among Weatherford, Nodeco AS and Aarbakke.
Pursuant to the Purchase and Sale Agreement, the closing of the Transaction
is subject to certain conditions, including (i) the approval of the Transaction
by the requisite vote of the shareholders of each Seller as may be required
under Norwegian law or such Seller's governing documents, (ii) the approval of
Norwegian regulatory authorities, unless Weatherford, in its sole discretion,
waives such requirement, (iii) the declaration of the effectiveness of the
registration statement of which this Prospectus forms a part by the United
States Securities and Exchange Commission and the lack of any stop orders
suspending the effectiveness of such registration statement, (iv) the delivery
to Weatherford of guarantees executed by certain shareholders of Nodeco AS and
(v) the delivery to Weatherford by the Sellers of certain bills of sale, deeds,
assignments and other documents regarding the assets to be sold in the
Transaction.
------------------------
AN INVESTMENT IN WEATHERFORD COMMON STOCK AFTER THE TRANSACTION
INVOLVES CERTAIN RISKS. SEE "RISK FACTORS".
------------------------
THE SHARES OF WEATHERFORD COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
TRANSACTION 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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUESTED
TO SEND US A PROXY.
THE DATE OF THIS PROSPECTUS IS ................ .., 1996.
******************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR *
* SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR *
* QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. *
* *
******************************************************************************
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY WEATHERFORD OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED BY
THIS PROSPECTUS 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 SINCE
THE DATE HEREOF OR THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
Weatherford is subject to the informational requirements of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the United States Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by Weatherford 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 also may be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005. 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 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission are
incorporated by reference herein:
(a) Weatherford's Annual Report on Form 10-K for the year ended
December 31, 1995.
(b) Weatherford's Current Report on Form 8-K dated December 29, 1995,
as amended by Weatherford's Current Report on Form 8-K/A dated February 27,
1996.
(c) Weatherford's Registration Statement on Form 8-A registering
under the Exchange Act the Weatherford Common Stock.
All documents filed by Weatherford with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and before the termination of the offering made hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
in a document incorporated by reference in this Prospectus shall be deemed
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this 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 Prospectus.
2
Weatherford undertakes to provide without charge to each person to whom a
copy of this 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 Prospectus
incorporates. Written or oral requests for such copies should be directed to
Weatherford Enterra, Inc., 1360 Post Oak Boulevard, Suite 1000, Houston, Texas
77056, Attention: Investor Relations, telephone number (713) 439-9400.
CURRENCY TRANSLATION
Nodeco reports its financial results in Norwegian kroner ("NOK"). Any
amounts with regard to Nodeco that are stated herein in United States dollars
are so stated solely for convenience at rates discussed in "Unaudited Pro Forma
Financial Information". Such amounts should not be construed as representations
that the NOK amounts actually represent such United States dollar amounts or
could be converted into United States dollars at this rate. On April 12, 1996,
the exchange rate based on the noon buying rate in New York City for cable
transfers of NOK expressed in United States dollars, as certified for customs
purposes by the Federal Reserve Bank of New York, was $0.1540 per one NOK. See
"Exchange Rate Data" for additional information regarding rates of exchange
between NOK and the United States dollar.
------------------------
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.......................... 2
CURRENCY TRANSLATION................. 3
SUMMARY.............................. 4
THE COMPANIES.................... 4
THE TRANSACTION.................. 4
COMPARATIVE RIGHTS OF THE
STOCKHOLDERS OF WEATHERFORD AND
NODECO AS...................... 6
SUMMARY FINANCIAL INFORMATION.... 6
COMPARATIVE PER SHARE DATA....... 8
RISK FACTORS......................... 9
EXCHANGE RATE DATA................... 10
WEATHERFORD ENTERRA, INC............. 10
NODECO............................... 11
THE TRANSACTION...................... 12
GENERAL DESCRIPTION OF THE
TRANSACTION.................... 12
GOVERNMENTAL AND REGULATORY
APPROVALS...................... 12
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES TO NON-UNITED
STATES HOLDERS................. 13
ACCOUNTING TREATMENT............. 14
TERMS OF THE TRANSACTION............. 15
EFFECTIVE DATE OF THE
TRANSACTION.................... 15
ADJUSTMENTS TO CONSIDERATION..... 15
CONDITIONS TO CLOSING OF THE
TRANSACTION.................... 16
REPRESENTATIONS AND WARRANTIES OF
WEATHERFORD AND THE SELLERS.... 16
CONDUCT OF SELLERS' BUSINESS
PRIOR TO THE TRANSACTION....... 16
TERMINATION OR AMENDMENT OF
PURCHASE AND SALE AGREEMENT.... 17
INDEMNIFICATION.................. 17
NON-COMPETITION AGREEMENT........ 18
COMPARATIVE RIGHTS OF THE
STOCKHOLDERS OF WEATHERFORD AND
NODECO AS.......................... 18
SPECIAL VOTE REQUIRED FOR CERTAIN
COMBINATIONS................... 18
VOTE REQUIRED FOR EXTRAORDINARY
CORPORATE TRANSACTIONS......... 19
ELECTION AND APPOINTMENT OF
DIRECTORS...................... 19
INDEMNIFICATION OF BOARD
MEMBERS........................ 20
REMOVAL OF DIRECTORS............. 20
PREEMPTIVE RIGHTS................ 20
CALLING OF STOCKHOLDER
MEETINGS....................... 20
STOCKHOLDER MEETING QUORUM....... 20
DIRECTOR QUALIFICATION AND
NUMBER......................... 20
UNAUDITED PRO FORMA FINANCIAL
INFORMATION........................ 21
WEATHERFORD SELECTED FINANCIAL DATA.. 25
NODECO SELECTED FINANCIAL DATA....... 26
NODECO MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.............. 27
BUSINESS DESCRIPTION............. 27
RESULTS OF OPERATIONS............ 27
LIQUIDITY AND CAPITAL
RESOURCES...................... 28
CURRENCY FLUCTUATIONS............ 29
LEGAL MATTERS........................ 29
EXPERTS.............................. 29
INDEX TO NODECO CONSOLIDATED
FINANCIAL STATEMENTS............... F-1
APPENDIX A: PURCHASE AND SALE
AGREEMENT.......................... A-1
3
SUMMARY
THE FOLLOWING CONTAINS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN A COMPLETE STATEMENT
OF ALL MATERIAL INFORMATION RELATING TO THE TRANSACTION AND THE PURCHASE AND
SALE AGREEMENT 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 PROSPECTUS AND THE PURCHASE AND SALE
AGREEMENT, WHICH IS ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE.
CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS
PROSPECTUS.
THE COMPANIES
WEATHERFORD ENTERRA, INC. Weatherford is a diversified international energy
service and manufacturing company that provides a variety of services and
equipment to the exploration, production and transmission sectors of the oil and
gas industry. Weatherford's principal business segments include (i) the oilfield
services segment, which consists of renting specialized oilfield equipment,
providing fishing, well control assistance and other downhole services and
related tools, and providing tubular running services and related tools; (ii)
the energy products and services segment, which consists of manufacturing,
selling and servicing a variety of products, including cementation products,
power equipment, fishing and milling tools and heavy wall drill pipe, gas lift
valves, production and service packers and related equipment, electrical and
instrumentation control systems and pedestal-mounted marine cranes; (iii) the
gas compression segment, which consists of manufacturing, packaging, selling,
renting and servicing reciprocating natural gas compressors; and (iv) the
pipeline services segment, which consists of manufacturing, selling and renting
specialized pipeline equipment and services. Weatherford operates in virtually
every oil and gas exploration and production region in the world, with more than
330 locations in 47 countries, including the United States. 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.
NODECO. Nodeco designs, manufactures, sells and rents oil and gas well
completion products primarily consisting of liner hanger equipment and related
services, as well as packers used in completions with electric submersible
pumps. Nodeco's primary markets for these products are the Norwegian and United
Kingdom sectors of the North Sea. Nodeco also provides products and services for
reservoir and wellbore monitoring and manufactures precision mechanical
components for customers that are primarily affiliated with the oil industry.
The principal executive offices of Nodeco are located at Haland Aust, P.O. Box
10, N-4341 Bryne, Norway, and its telephone number at that address is
47-51-48-24-24.
As used herein, the term "Subsidiaries" refers to Nodeco Limited and
Aarbakke Eiendom AS, 100% of the shares of which are owned by Nodeco AS, and
Subsurface Technology AS, 51% of the shares of which are owned by Nodeco AS. As
used herein, unless the context otherwise requires, "Nodeco" refers to Nodeco
AS, Aarbakke and the Subsidiaries. As used herein, unless the context otherwise
requires, "Weatherford" refers to Weatherford Enterra, Inc. and its
subsidiaries.
THE TRANSACTION
TERMS OF THE TRANSACTION. The Sellers have agreed to sell to Weatherford,
on the Effective Date (as hereinafter defined), all of the assets, contractual
rights and business of the Sellers at the Effective Date, including, but not
limited to, cash and cash equivalents, contracts, equipment, rental equipment,
goodwill, motor vehicles, real property, shares of the Subsidiaries owned by
Nodeco AS, inventory, intangible property, excess pension plan amounts, accounts
receivable, prepayments and existing legal claims (collectively, the "Assets").
As consideration for the sale of the Assets by the Sellers to Weatherford,
Weatherford will assume all liabilities of the Sellers (other than Net Debt (as
hereinafter defined) in excess of NOK 32 million at December 31, 1995), pay to
the Sellers the cash amount of NOK 117,649,250 (as adjusted as described below
under "Terms of the Transaction -- Adjustments to Consideration") and issue to
Nodeco AS 750,000 shares of Weatherford Common Stock.
4
GOVERNMENTAL AND REGULATORY APPROVAL. On April 2, 1996, Weatherford filed
an application with the Norwegian Ministry of Industry and Energy (the
"Ministry") for approval of the Transaction under the Norwegian Acquisition of
Business Act of 1994. The required 30-day waiting period will expire on May 2,
1996, unless the Ministry requests further information. See "The Transaction --
Governmental and Regulatory Approvals". Weatherford and the Sellers are aware of
no other material governmental or regulatory approvals required for consummation
of the Transaction.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. Certain non-United States
holders of Weatherford Common Stock may be subject to federal income or estate
tax consequences due to their ownership and disposition of Weatherford Common
Stock. See "The Transaction -- Certain U.S. Federal Income Tax Consequences to
Non-United States Holders".
ACCOUNTING TREATMENT. The Transaction will be accounted for using the
purchase method of accounting. Consequently, the results of operations of Nodeco
will be included with those of Weatherford from the Effective Date.
EFFECTIVE DATE OF THE TRANSACTION. The Purchase and Sale Agreement provides
that the Transaction will become effective on such date as the Sellers and
Weatherford may agree or upon the latest to occur of the following events: (i)
the fifth business day after Weatherford has notified the Sellers in writing
that the Commission has declared the Registration Statement effective under the
Securities Act, provided that no stop order is in effect on such day; (ii) the
first business day after any such stop order has been removed; (iii) the fifth
Norwegian business day after Weatherford has notified the Sellers in writing of
Ministry Approval (as hereinafter defined), unless Ministry Approval has been
waived by Weatherford, in its sole discretion; and (iv) the approval of the
shareholders of each Seller of the Transaction.
ADJUSTMENTS TO CONSIDERATION. The cash portion of the Purchase Price will
be adjusted to account for movements in the price of Weatherford Common Stock on
the New York Stock Exchange (the "NYSE") and the exchange rate between United
States dollars and Norwegian kroner from the date of the Purchase and Sale
Agreement to the Effective Date, subject to certain limitations. Under certain
circumstances, the Sellers shall be entitled to interest on the purchase price
for the Assets. Weatherford is permitted under certain circumstances to reduce
the purchase price for the Assets for any representations and warranties made by
the Sellers in the Purchase and Sale Agreement that are untrue, inaccurate,
misleading or breached. See "Terms of the Transaction -- Adjustments to
Consideration".
CONDITIONS TO CLOSING OF THE TRANSACTION. Pursuant to the Purchase and Sale
Agreement, the closing of the Transaction is subject to certain conditions,
including (i) the approval of the Transaction by the requisite vote of the
shareholders of each Seller as may be required under Norwegian law or such
Seller's governing documents, (ii) Ministry Approval, unless Weatherford, in its
sole discretion, waives such requirement, (iii) the declaration of the
effectiveness of the Registration Statement by the Commission and the lack of
any stop orders suspending the effectiveness of the Registration Statement, (iv)
the delivery to Weatherford of guarantees executed by certain shareholders of
Nodeco AS and (v) the delivery to Weatherford by the Sellers of certain bills of
sale, deeds, assignments and other documents regarding the Assets.
TERMINATION OR AMENDMENT OF PURCHASE AND SALE AGREEMENT. The Purchase and
Sale Agreement may be amended or supplemented only by an instrument in writing
signed on behalf of Weatherford and each Seller. The Sellers have the right to
terminate the Purchase and Sale Agreement if, prior to May 27, 1996, either (i)
the Commission has not declared the Registration Statement effective and all
stop orders have not been removed or (ii) Weatherford has not obtained Ministry
Approval, unless, in its sole discretion, Weatherford has waived such
requirement. If the Sellers do not exercise such right within five business days
following May 27, 1996, and an event referred to in either clause (i) or clause
(ii) above has not occurred prior to July 26, 1996, Weatherford or either Seller
may terminate the Purchase and Sale Agreement within five business days
following such date.
5
INDEMNIFICATION. The Purchase and Sale Agreement provides for
indemnification by the Sellers to Weatherford and the Subsidiaries against
Losses (as hereinafter defined) related to untrue, inaccurate, misleading or
breached representations or warranties made by the Sellers in the Purchase and
Sale Agreement and related to tax claims not included in the Nodeco Accounts (as
hereinafter defined). The Purchase and Sale Agreement provides for
indemnification by Weatherford to the Sellers against Losses related to (i)
untrue, inaccurate, misleading or breached representations or warranties made by
Weatherford in the Purchase and Sale Agreement, (ii) material inaccuracies or
omissions in the Registration Statement, (iii) failure by Weatherford to comply
with the Securities Act or other laws in the distribution of the Consideration
Shares (as hereinafter defined), (iv) failure by Weatherford to properly perform
the contracts being transferred to Weatherford as part of the Transaction, (v)
failure by Weatherford to satisfy the liabilities being assumed by it as part of
the Transaction and (vi) tax claims made against Nodeco before the Effective
Date. See "Terms of the Transaction -- Indemnification".
NON-COMPETITION AGREEMENT. In the Purchase and Sale Agreement, the Sellers
have agreed that, for a period of two years following the Effective Date,
neither the Sellers nor any affiliate of the Sellers will compete, directly or
indirectly, with Weatherford or any affiliate of Weatherford in designing,
manufacturing, selling, renting or running liner hangers, packers and gas lift
valves and systems. The Sellers also have agreed on behalf of the Sellers and
their affiliates not to solicit for employment any employee of Weatherford or
any affiliate of Weatherford, including any employee of either Seller or any
Subsidiary who becomes an employee of Weatherford or any affiliate of
Weatherford.
COMPARATIVE RIGHTS OF THE STOCKHOLDERS OF WEATHERFORD AND NODECO AS
Upon consummation of the Transaction, Nodeco AS will be a holder of shares
of Weatherford Common Stock. To the extent the shares of Weatherford Common
Stock held by Nodeco AS are distributed to the shareholders of Nodeco AS, in
connection with a liquidation of Nodeco AS or otherwise, holders of shares of
Nodeco AS will become holders of shares of Weatherford Common Stock. The shares
of Nodeco AS are governed by Norwegian law and the Articles of Association of
Nodeco AS. The rights of holders of Weatherford Common Stock are governed by the
law of the State of Delaware, Weatherford's Restated Certificate of
Incorporation and Weatherford's Bylaws. There are various differences between
the rights of shareholders of Nodeco AS and the rights of Weatherford
stockholders, including, among other things, 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 Nodeco AS".
SUMMARY FINANCIAL INFORMATION
The following historical consolidated financial data of Weatherford and
Nodeco 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 included elsewhere or incorporated by
reference in this Prospectus. See "Incorporation of Certain Documents by
Reference" and "Nodeco Consolidated Financial Statements". The unaudited pro
forma financial data have been derived from the unaudited pro forma financial
statements using the purchase method of accounting and should be read in
conjunction with such unaudited pro forma financial statements and notes
thereto, which are included elsewhere in this Prospectus. For other information
regarding pro forma financial data, see "Unaudited Pro Forma Financial
Information".
6
WEATHERFORD
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
OPERATING RESULTS:
YEAR ENDED DECEMBER 31,
----------------------------------------
1995(1) 1994(2) 1993(3)
------------ ------------ ------------
Revenues............................. $ 858,907 $ 676,749 $ 500,491
Acquisition-related costs and other
unusual charges.................... 88,182 2,500 4,000
Operating income..................... 182 65,704 49,671
Depreciation and amortization........ 95,957 71,037 50,449
Net income (loss).................... (10,558) 41,997 35,175
Net income (loss) per share.......... (0.21) 0.94 0.88
BALANCE SHEET DATA:
DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
Working capital...................... $ 267,380 $ 251,778 $ 221,834
Total assets......................... 1,258,860 1,153,970 635,602
Total debt........................... 329,266 196,672 21,253
Stockholders' equity................. 730,843 734,634 474,742
- ------------
(1) Includes acquisition-related costs and other unusual charges of $88,182,000,
or $1.17 per common share.
(2) Includes acquisition-related costs of $2,500,000, or $0.06 per common
share.
(3) Includes acquisition-related costs of $4,000,000, or $0.10 per common
share.
NODECO(1)
(AMOUNTS IN THOUSANDS OF NOK)
OPERATING RESULTS:
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Revenues............................. 173,950 134,583 122,512
Operating profit..................... 27,396 16,236 7,111
Depreciation......................... 10,385 9,246 9,563
Extraordinary gain (loss), net....... 1,370 -- (4,818)
Net income (loss)(2)................. 15,598 7,918 (4,067)
BALANCE SHEET DATA:
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Working capital...................... 25,786 15,304 17,254
Total assets......................... 123,942 115,000 110,518
Long-term debt, including current
portion.............................. 28,278 45,788 51,664
Shareholders' equity(3).............. 44,908 29,020 26,414
- ------------
(1) The Nodeco Consolidated Financial Statements included elsewhere in this
Prospectus have been prepared in accordance with accounting principles
generally accepted in Norway ("Norwegian GAAP"), which vary in certain
significant respects from accounting principles generally accepted in the
United States ("US GAAP"). Principal differences between Norwegian GAAP and
US GAAP and a reconciliation of such differences are described in Notes 10
and 11 to Nodeco Consolidated Financial Statements.
(2) Net income in accordance with US GAAP was NOK 17,557,000 and NOK 7,547,000
for the years ended December 31, 1995 and 1994, respectively. See Note 11
to Nodeco Consolidated Financial Statements.
(3) Shareholders' equity in accordance with US GAAP was NOK 62,186,000 and NOK
49,277,000 at December 31, 1995 and 1994, respectively. See Note 11 to
Nodeco Consolidated Financial Statements.
7
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995:
<TABLE>
<CAPTION>
WEATHERFORD NODECO AS FURTHER
AS ADJUSTED NODECO(1) ADJUSTMENTS ADJUSTED
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues............................. $ 920,456 $ 27,554 $ -- $ 948,010
Operating income..................... 122,003 4,751 (1,483) 125,271
Net income........................... 71,727 2,781 (1,784) 72,724
Net income per share................. 1.41 1.41
BALANCE SHEET DATA AS OF DECEMBER 31, 1995:
<CAPTION>
NODECO AS FURTHER
WEATHERFORD NODECO(1) ADJUSTMENTS ADJUSTED
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Working capital...................... $ 267,380 $ 4,079 $ -- $ 271,459
Total assets......................... 1,258,860 22,746 31,312 1,312,918
Total debt........................... 329,266 4,897 14,212 348,375
Stockholders' equity................. 730,843 9,838 17,100 757,781
</TABLE>
- ------------
(1) Prepared in accordance with Norwegian GAAP together with adjustments
necessary to conform to US GAAP.
COMPARATIVE PER SHARE DATA
The four columns included in the following table set forth (i) the
historical loss per common and common equivalent share and the historical book
value per share data of Weatherford Common Stock; (ii) the historical income per
common and common equivalent share and the historical book value per share data
of Nodeco AS common shares; (iii) the unaudited pro forma income per common and
common equivalent share and the unaudited pro forma book value per share of
Weatherford Common Stock; and (iv) the equivalent unaudited pro forma income per
common and common equivalent share and the unaudited pro forma book value per
common share of Nodeco AS. 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 Nodeco
and the notes thereto included elsewhere or incorporated by reference in this
Prospectus. See "Incorporation of Certain Documents by Reference", "Unaudited
Pro Forma Financial Information" and "Nodeco Consolidated Financial Statements".
<TABLE>
<CAPTION>
PRO FORMA
PER PRO FORMA
HISTORICAL SHARE OF EQUIVALENT
--------------------- WEATHERFORD PER NODECO
WEATHERFORD NODECO COMMON STOCK COMMON SHARE
----------- ------ ------------ ------------
<S> <C> <C> <C> <C>
Income (loss) per common and common
equivalent share for the year ended
December 31, 1995.................. $ (0.21) $ 3.95 $ 1.41 $ 1.67
Book value per share as of December
31, 1995........................... 14.35 11.24 14.66 17.39
</TABLE>
As of March 27, 1996, the last trading day prior to the announcement by
Weatherford and Nodeco AS that they had reached an agreement concerning the
Transaction, the closing sale price of Weatherford Common Stock as reported by
the NYSE was $35.63 per share.
8
RISK FACTORS
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.
INDUSTRY VOLATILITY. The oil and gas industry in which Weatherford and
Nodeco participate historically has experienced significant volatility. Demand
for Weatherford's and Nodeco'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 Nodeco 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 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 Nodeco's
services and products.
COMPETITION. Weatherford encounters substantial competition from
numerous small, single-site operators, larger concerns operating at multiple
locations and various well servicing companies. In addition, Nodeco encounters
substantial competition from several large companies that operate in the
Norwegian and United Kingdom sectors of the North Sea. Weatherford expects
that the substantial competition currently encountered by it and Nodeco will
not be reduced or eliminated if the Transaction is consummated.
POSSIBLE PRODUCT LIABILITY CLAIMS. Certain products manufactured or
leased by Weatherford or Nodeco 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 Nodeco's
equipment and services are used may in the future result in Weatherford or
Nodeco being named as a defendant in product liability or other lawsuits
asserting potentially large claims. Each of Weatherford and Nodeco 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 Nodeco. Further,
no assurance can be given that Weatherford or Nodeco will be able to maintain
adequate insurance in the future at rates considered reasonable.
RISKS RELATED TO INTERNATIONAL OPERATIONS. During 1995, approximately
53% of Weatherford'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
Algeria, Nigeria, Angola and parts of the Middle East have been subjected to
political disruption or social unrest in the past twelve months. International
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 operates 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 relies on joint ventures, license arrangements and other
business combinations with local nationals in these countries. In addition,
political considerations may
9
disrupt the commercial relationships between Weatherford and government-owned
petroleum companies. Generally, business interruptions resulting from civil or
political disruptions negatively impact near-term results of operations;
however, management of Weatherford believes 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. Weatherford expects that the risks encountered by
it in its international operations also would apply to Nodeco if the
Transaction is consummated.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS. Weatherford's and
Nodeco'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, for
Weatherford, Nodeco and 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 Nodeco's operations.
EXCHANGE RATE DATA
The following table sets forth, for the periods indicated, certain
exchange rates based on the high and low noon buying rates in New York City
for cable transfers in foreign currencies as certified for customs purposes by
the Federal Reserve Bank of New York. The rates quoted are the number of
United States dollars per one NOK. The average exchange rate is based on the
average of the exchange rates on the last day of each month during such
periods. On April 12, 1996, the exchange rate based on the noon buying rate in
New York City for cable transfers of NOK expressed in United States dollars,
as certified for customs purposes by the Federal Reserve Bank of New York, was
$0.1540 per one NOK.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Exchange rate at end of period....... $ 0.1582 $ 0.1478 $ 0.1328 $ 0.1439 $ 0.1671
Average exchange rate during
period............................. 0.1584 0.1426 0.1402 0.1599 0.1540
High exchange rate during period..... 0.1635 0.1613 0.1667 0.1815 0.1766
Low exchange rate during period...... 0.1468 0.1321 0.1328 0.1439 0.1399
</TABLE>
WEATHERFORD ENTERRA, INC.
Weatherford is a diversified international energy service and
manufacturing company that provides a variety of services and equipment to the
exploration, production and transmission sectors of the oil and gas industry.
Weatherford's principal business segments include (i) the oilfield services
segment, which consists of renting specialized oilfield equipment, providing
fishing, well control assistance and other downhole services and related
tools, and providing tubular running services and related tools; (ii) the
energy products and services segment, which consists of manufacturing, selling
and servicing a variety of products, including cementation products, power
equipment, fishing and milling tools and heavy wall drill pipe, gas lift
valves, production and service packers and related equipment, electrical and
instrumentation control systems and pedestal-mounted marine cranes; (iii) the
gas compression segment, which consists of manufacturing, packaging, selling,
renting and servicing reciprocating natural gas compressors; and (iv) the
pipeline services segment, which consists of manufacturing, selling and
renting specialized pipeline equipment and services. Weatherford operates in
virtually every oil and gas exploration and production region in the world,
with more than 330 locations in 47 countries, including the United States.
10
NODECO
Nodeco designs, manufactures, sells and rents oil and gas well completion
products primarily consisting of liner hanger equipment and related services,
as well as packers used in completions with electric submersible pumps.
Nodeco's primary markets for these products are the Norwegian and United
Kingdom sectors of the North Sea. Nodeco also provides products and services
for reservoir and wellbore monitoring and manufactures precision mechanical
components for customers that are primarily affiliated with the oil industry.
Liner hanger equipment is used in the drilling and completion of oil and
gas wells. While primarily used for the production casing string in deep,
deviated or horizontal wells, liner hangers also may be used for intermediate
casing sections of a well. Nodeco provides a broad range of liner hanger
equipment in diameters ranging from 4 1/2 inches to 18 5/8 inches. A variety
of accessories and configurations also are available including rotating and
non-rotating liner hangers, single and dual wiper plug systems, liner top
packers and installation and clean-out tools. Equipment is designed by Nodeco
to meet North Sea standards for the industry. In most situations, Nodeco
supplies a complete liner hanger package to the customer including Nodeco
liner hanger equipment and running tools, as well as cementing equipment
purchased from third parties, all of which are assembled and tested before
shipping to the customer. Nodeco employees also act as advisors at the
drilling rig when the equipment is installed. Two special products that Nodeco
markets as part of its liner hanger system are the Floating Junk Bonnet and
the Top-Drive Cementing Head. The Floating Junk Bonnet is a Nodeco innovation
(patents pending) that keeps debris from entering the liner hanger equipment
when it is being installed. The tool helps prevent sticking in the wellbore
and improves the setting performance of the liner hanger. The Top-Drive
Cementing Head is an attachment that allows the liner to be rotated by the Top
Drive System during cementing, thereby improving the cementation of the liner.
Electric submersible pump installations commonly are used in producing
wells in the United Kingdom sector of the North Sea as well as in numerous
other oil fields worldwide. Most of these completions use a packer to improve
the completion and the efficiency of the pump. Pump packers are
hydraulically-set, multiple-string tools that provide for production tubing
string, power cable, gas venting, gas or chemical injection and wireline
instrument access. The pump packers are retrievable to allow for frequent
workovers associated with electric submersible pumps. In 1990, Nodeco worked
jointly with BP Exploration to develop a proprietary resettable pump packer
that could be set, released and then reset to reduce workover costs. The
patented tool design allows near surface repairs to the power cable system
without requiring the pump packer to be retrieved to the surface, thereby
significantly reducing rig time and workover cost. Nodeco's patented "RR"
Resettable Pump Packer presently is manufactured in four main sizes ranging
from 7 inches to 13 3/8 inches, with up to five string capacity. Typically,
the pump packers are manufactured with 13% chrome materials, and a variety of
design modifications are available. Additional sizes are designed as customers
request them. Pump packers generate additional service revenues each time they
are retrieved from the well and require redressing and repair. As an addition
to the pump packer line, Nodeco recently developed a retrievable sump packer
that can be run in tandem with the pump packer.
Nodeco has a working relationship with a German manufacturer that has a
proprietary manufacturing process to produce a screen system to be used across
producing intervals. This special screen system allows the operator to
eliminate gravel packing as part of the completion process. The resulting well
completion produces with less differential pressure and has improved flow
characteristics.
Aarbakke, a wholly-owned subsidiary of Nodeco AS, is a manufacturing unit
that also provides precision machining services to third parties in Norway and
other countries. These services generally consist of manufacturing small and
large mechanical components. Approximately half of Aarbakke's production
capacity is used for third-party manufacturing, of which 80% relates to oil
industry activities.
Subsurface Technology AS, a 51% owned subsidiary of Nodeco AS
("SubTech"), provides consulting services related to production and reservoir
monitoring activities, as well as design, fabrication and installation of
systems for such activities. Systems designed and fabricated by SubTech for
customers have included downhole pressure and temperature monitoring equipment
and the associated surface data
11
acquisition equipment. Consulting studies performed by SubTech for customers
have evaluated the feasibility of various temperature and pressure monitoring
systems, reservoir subsidence monitoring, selective well stimulation
procedures and other concepts related to fluid measurement and other
production applications. SubTech's customers include many of the active
operators in the Norwegian sector of the North Sea, as well as other foreign
entities.
Historically, Nodeco has focused its marketing efforts on the North Sea
market, and Nodeco only recently has increased its international sales
efforts. Nodeco actively provides liner hanger equipment and services in all
sectors of the North Sea as well as certain other parts of the world. Until
recently, substantially all of Nodeco's pump packer sales have been to
operators in the United Kingdom sector of the North Sea, since no electric
submersible pump completions had been made in the Norwegian sector. Nodeco has
made recent sales of pump packers to certain Norwegian producers. Most of
Nodeco's machining services and reservoir monitoring consulting services are
provided to Norwegian customers. Nodeco's revenues derived from non-North Sea
markets originate primarily from other European countries, North and West
Africa and the Asia-Pacific region.
THE TRANSACTION
The detailed terms and conditions to the consummation of the Transaction
are contained in the Purchase and Sale Agreement, which is attached as
Appendix A to this Prospectus and is incorporated herein by reference. The
following discussion sets forth a description of certain material terms and
conditions of the Purchase and Sale Agreement. THE DESCRIPTION IN THIS
PROSPECTUS OF THE TERMS AND CONDITIONS TO THE CONSUMMATION OF THE TRANSACTION
IS QUALIFIED BY, AND MADE SUBJECT TO, THE MORE COMPLETE INFORMATION SET FORTH
IN THE PURCHASE AND SALE AGREEMENT.
GENERAL DESCRIPTION OF THE TRANSACTION
The Sellers have agreed to sell to Weatherford on the Effective Date the
Assets, consisting of all of the assets, contractual rights and business of
the Sellers at the Effective Date, including, but not limited to, cash and
cash equivalents, the benefits of the Sellers' outstanding contractual
obligations, equipment, rental equipment, goodwill, motor vehicles, real
property, shares of the Subsidiaries owned by Nodeco AS, inventory, intangible
property, all amounts allocated to the Sellers' collective pension plan as of
the Effective Date in excess of the liability under such plan as of the
Effective Date, accounts receivable, prepayments and existing legal claims. As
consideration for the sale of the Assets by the Sellers to Weatherford,
Weatherford will assume all liabilities of the Sellers (other than Net Debt in
excess of NOK 32 million), pay to the Sellers the cash amount of NOK
117,649,250 (as adjusted as described below under "Terms of the
Transaction -- Adjustments to Consideration") and issue to Nodeco AS 750,000
shares (the "Consideration Shares") of Weatherford Common Stock. The term "Net
Debt" is defined in the Purchase and Sale Agreement to mean the sum of
Nodeco's bank overdrafts, other short-term interest bearing liabilities,
mortgage and other long-term debt and subordinated loans less any cash and
cash equivalents as listed in the audited financial statements of Nodeco AS,
Aarbakke, each Subsidiary and Nodeco AS on a consolidated basis, in each case
at December 31, 1995 (collectively, the "Nodeco Accounts"). Weatherford has
agreed to offer each employee of the Sellers a similar position on similar
terms as that held at the Effective Date. In addition, Weatherford has agreed
to use its best efforts to list the Consideration Shares on the NYSE.
GOVERNMENTAL AND REGULATORY APPROVALS
The Transaction is subject to (i) the receipt of approval from the
Norwegian Ministry of Industry and Energy (the "Ministry") under the Norwegian
Acquisition of Business Act of 1994 ("NABA") without conditions that
materially alter the economic value to Weatherford of the Transaction or (ii)
the expiration of the applicable 30-day waiting period without a request by
the Ministry for further information (either (i) or (ii) referred to as
"Ministry Approval"), unless Weatherford, in its sole discretion, waives the
requirement of Ministry Approval. Transactions such as the Transaction are
reviewed by the Ministry to determine if the acquisition may have material
adverse effects, including employment effects, on a
12
company, its line of business or society as a whole. Weatherford filed an
application for Ministry approval on April 2, 1996. The required waiting
period under NABA will expire on May 2, 1996, unless the Ministry requests
further information.
Weatherford shall be entitled to terminate the Purchase and Sale
Agreement if Ministry Approval is not obtained, unless Weatherford, in its
sole discretion, waives the requirement of Ministry Approval. There can be no
assurance that the Ministry will not require further information in connection
with the Transaction or that the Ministry will approve the Transaction without
conditions that materially alter the economic value of the Transaction to
Weatherford.
Weatherford and the Sellers are aware of no other material governmental
or regulatory approvals required for consummation of the Transaction.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of
Weatherford Common Stock by non-United States holders. The following
discussion does not purport to be a complete analysis of all of the potential
tax considerations relating thereto. This discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
United States Internal Revenue Service ("IRS") rulings and judicial decisions
now in effect, all of which are subject to change (possibly with retroactive
effect) or different interpretations. This discussion does not purport to deal
with all aspects of federal income and estate taxation that may be relevant to
a particular non-United States holder's decision to own Weatherford Common
Stock. Neither Weatherford nor Nodeco has requested an opinion of legal
counsel or an IRS ruling regarding the federal income or estate tax
consequences of the ownership or disposition of Weatherford Common Stock by
non-United States holders. PROSPECTIVE NON-UNITED STATES HOLDERS OF
WEATHERFORD COMMON STOCK ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL AND NON-UNITED STATES TAX
CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF WEATHERFORD
COMMON STOCK.
As used herein, "non-United States holder" means a corporation,
individual or partnership that is, as to the United States, a foreign
corporation, a non-resident alien individual or a foreign partnership, or any
estate or trust that is not subject to United States taxation on income from
sources outside the United States and that is not effectively connected with
the conduct of a trade or business within the United States.
Dividends paid to a non-United States holder of Weatherford Common Stock
will be subject to withholding of United States federal income tax at a 30%
rate or such lower rate as may be specified by an applicable income tax
treaty. The United States federal income tax withholding rate on dividends
paid to a non-United States holder is limited to 15% under Article 8 of the
Norway-United States Income Tax Treaty (the "Treaty") provided the non-United
States holder (i) is a resident of Norway, within the meaning of the Treaty,
and (ii) does not have a permanent establishment in the United States with
respect to which the dividends are effectively connected. Under currently
effective Treasury Regulations, dividends paid to an address in a foreign
country are presumed to be paid to a resident of the country in determining
the applicability of a treaty for those purposes. Proposed Treasury
Regulations, if finally adopted, would require a non-United States holder to
file certain forms to obtain the benefit of any applicable tax treaty
providing for a lower rate of withholding tax on dividends. Those forms would
contain the holder's name and address and, subject to a de minimis exception,
an official statement by the competent authority in the foreign country (as
designated in the applicable tax treaty) attesting to the holder's status as a
resident thereof. However, except as may be otherwise provided in an
applicable income tax treaty, a non-United States holder will be taxed at
ordinary federal income tax rates (on a net income basis) on dividends that
are effectively connected with the conduct of a trade or business of the
non-United States holder within the United States and will not be subject to
the withholding tax described above. Certain certification requirements must
be complied with to claim an exemption from withholding on effectively
connected dividends. If the non-United States holder is a foreign corporation,
it also may be subject to a United States
13
branch profits tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty on effectively connected dividends. A non-United
States holder that is eligible for a reduced rate of United States withholding
tax pursuant to an income tax treaty may apply for a refund of any excess
amounts withheld by filing an appropriate claim for refund with the IRS.
Weatherford has not declared or paid dividends on Weatherford Common Stock
since December 1982 and does not anticipate paying dividends on Weatherford
Common Stock at any time in the foreseeable future.
Non-United States holders generally will not be subject to United States
federal income tax in respect of gain recognized on a disposition of
Weatherford Common Stock unless (i) the gain is effectively connected with a
trade or business conducted by the non-United States holder within the United
States (in which case the branch profits tax described in the preceding
paragraph also may apply if the holder is a foreign corporation), (ii) in the
case of a non-United States holder who is a non-resident alien individual and
holds Weatherford Common Stock as a capital asset, the holder is present in
the United States for 183 or more days in the taxable year of the disposition
and certain other conditions are met, (iii) the non-United States holder is
subject to tax pursuant to the provisions of the United States federal tax law
applicable to certain United States expatriates or (iv) Weatherford is or has
been a "United States real property holding corporation" for federal income
tax purposes and, if Weatherford Common Stock is considered "regularly traded"
during the year of the disposition of Weatherford Common Stock, the non-United
States holder held directly or indirectly at any time during the five-year
period ending on the date of disposition more than five percent of the
outstanding Weatherford Common Stock. Generally, this last rule for stock in
United States real property holding corporations takes precedence over relief
provided by tax treaties. However, non-United States holders who would be
subject to United States federal income tax with respect to gain recognized on
a sale or other disposition of Weatherford Common Stock should consult
applicable treaties, which may provide different rules.
Weatherford Common Stock that is owned or treated as being owned at the
time of death by a non-United States holder who is a non-resident alien
individual will be included in the holder's gross estate for United States
federal estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
Generally, dividends paid to non-United States holders outside the United
States that are subject to the 30% or treaty-reduced rate of withholding tax
will be exempt from the 31% backup withholding tax. As a general matter,
information reporting and backup withholding will not apply to a payment by or
through a foreign office of a foreign broker of the proceeds of a sale of
Weatherford Common Stock effected outside the United States. However,
information reporting requirements (but not backup withholding) will apply to
a payment by or through a foreign office of a broker of the proceeds of a sale
of Weatherford Common Stock effected outside the United States where that
broker (i) is a United States person, (ii) is a foreign person that derives
50% or more of its gross income for certain periods from the conduct of a
trade or business in the United States or (iii) is a "controlled foreign
corporation" as defined in the Code (generally, a foreign corporation
controlled by United States shareholders), unless the broker has documentary
evidence in its records that the holder is a non-United States holder and
certain conditions are met or the holder otherwise establishes an exemption.
Payment by a United States office of a broker of the proceeds of a sale of
Weatherford Common Stock is subject to both backup withholding and information
reporting unless the holder certifies to the payor in the manner required as
to its non-United States status under penalties of perjury or otherwise
establishes an exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate United States federal income tax. Rather, any amounts withheld under
the backup withholding rules will be allowed as a refund or credit against the
holder's United States federal income tax liability, if any, provided the
required information or appropriate claim for refund is filed with the IRS.
ACCOUNTING TREATMENT
The Transaction will be accounted for using the purchase method of
accounting. Consequently, the results of operations of Nodeco will be included
with those of Weatherford from the Effective Date.
14
TERMS OF THE TRANSACTION
EFFECTIVE DATE OF THE TRANSACTION
The Purchase and Sale Agreement provides that the Transaction will become
effective (the "Effective Date") on such date as the Sellers and Weatherford
may agree or upon the latest to occur of the following events: (i) the fifth
business day after Weatherford has notified the Sellers in writing that the
Commission has declared the Registration Statement effective under the
Securities Act, provided that no stop order is in effect on such day; (ii) the
first business day after any such stop order has been removed; (iii) the fifth
Norwegian business day after Weatherford has notified the Sellers in writing
of Ministry Approval, unless Ministry Approval has been waived by Weatherford,
in its sole discretion; and (iv) the approval of the Transaction by the
shareholders of each Seller.
ADJUSTMENTS TO CONSIDERATION
Subject to the adjustments described below, the purchase price (the
"Purchase Price") for the Assets shall consist of cash consideration of NOK
117,649,250 and the issuance to Nodeco AS of 750,000 shares of Weatherford
Common Stock. The cash portion of the Purchase Price will be adjusted to
account for movements in the price of Weatherford Common Stock on the NYSE and
the exchange rate between United States dollars and Norwegian kroner from the
date of the Purchase and Sale Agreement to the Effective Date, subject to
certain limitations. The adjustment to the cash consideration shall be made
according to the following formula:
NOK 142,350,750 - (Average Stock Price x 750,000 x Exchange Rate)
If the adjustment referred to above is a positive number, the cash
consideration will be increased by an amount equal to such positive number. If
the adjustment referred to above is a negative number, the cash consideration
will be reduced by an amount equal to such negative number. The term "Average
Stock Price" is defined as the average Weatherford Common Stock closing price
on the NYSE as reported by The Wall Street Journal for the ten business days
ending on the last business day prior to the Effective Date; provided, that
(i) if the average Weatherford Common Stock closing price for the ten business
days ending on the last business day prior to the Effective Date is greater
than $35 per share, then the "Average Stock Price" shall be exactly $35 per
share, (ii) if the average Weatherford Common Stock closing price for the ten
business days ending on the last business day prior to the Effective Date is
less than $25 per share, then the "Average Stock Price" shall be exactly $25
per share, and (iii) if the average Weatherford Common Stock closing price for
the ten business days ending on the last business day prior to the Effective
Date is less than $20 per share, then Weatherford shall have the option to
terminate the Purchase and Sale Agreement or pay an amount of additional cash
consideration equal to the product of (A) the amount by which $20 exceeds the
average Weatherford Common Stock closing price for the ten business days
ending on the last business day prior to the Effective Date and (B) 750,000
and (C) the Exchange Rate. The term "Exchange Rate" is defined as the average
NOK/United States dollar exchange rate as reported by Dagens Naeringsliv for the
ten business days ending on the last business day prior to the Effective Date;
provided, that (i) if the average NOK/United States dollar exchange rate for
the ten business days ending on the last business day prior to the Effective
Date is greater than NOK 6.4532 per United States dollar, then the "Exchange
Rate" shall be exactly 6.4532, and (ii) if the average NOK/United States
dollar exchange rate for the ten business days ending on the last business day
prior to the Effective Date is less than NOK 6.2002 per United States dollar,
then the "Exchange Rate" shall be exactly 6.2002.
The Sellers shall be entitled to interest on the Purchase Price at the
rate of five percent per annum for the period beginning on the sixth business
day after the Commission has declared the Registration Statement effective and
ending on the earlier to occur of (i) the last business day prior to the
Effective Date and (ii) May 27, 1996. If the Effective Date has not taken
place before May 27, 1996 and the Sellers do not exercise their option to
terminate the Purchase and Sale Agreement described under "-- Termination or
Amendment of Purchase and Sale Agreement", the Sellers shall be entitled to
interest on the Purchase Price at the rate of ten percent per annum for the
period beginning on May 28, 1996 and ending on the last business day prior to
the Effective Date.
15
If any representations and warranties provided by the Sellers to
Weatherford in the Purchase and Sale Agreement (including that the Sellers
have, to the best of their knowledge, provided all information relating to the
Sellers and the Subsidiaries and their respective affairs that would be
material to Weatherford for the valuation of the Assets and the business of
the Sellers) are untrue, inaccurate, misleading or breached, Weatherford shall
be entitled to reduce the cash portion of the Purchase Price by an amount (the
"Deficiency Amount") equal to the value at the Effective Date of the specific
Assets (or portions thereof) or specific assumed liabilities (or portions
thereof) that resulted in the representations and warranties being untrue,
inaccurate, misleading or breached; provided, that if the Deficiency Amount is
greater than NOK 44,000,000, Weatherford and the Sellers shall use their
reasonable best efforts to reach an agreement with respect to the Transaction
on mutually acceptable terms, or, after failure to reach such an agreement
within ten business days, any party shall be permitted to terminate the
Purchase and Sale Agreement. If any representations and warranties provided by
the Sellers to Weatherford in the Purchase and Sale Agreement are discovered
after the Effective Date to have been untrue, inaccurate, misleading or
breached at the Effective Date, the Sellers shall reimburse to Weatherford the
Deficiency Amount plus interest on such amount at the rate of eight percent
per annum from the Effective Date to the date of reimbursement.
CONDITIONS TO CLOSING OF THE TRANSACTION
Pursuant to the Purchase and Sale Agreement, the closing of the
Transaction is subject to certain conditions, including (i) the approval of
the Transaction by the requisite vote of the shareholders of each Seller as
may be required under Norwegian law or such Seller's governing documents, (ii)
Ministry Approval, unless Weatherford, in its sole discretion, waives such
requirement, (iii) the declaration of the effectiveness of the Registration
Statement by the Commission and the lack of any stop orders suspending the
effectiveness of the Registration Statement, (iv) the delivery of guarantees
in favor of Weatherford executed by certain shareholders of Nodeco AS and (v)
the delivery to Weatherford by the Sellers of certain bills of sale, deeds,
assignments and other documents regarding the Assets.
REPRESENTATIONS AND WARRANTIES OF WEATHERFORD AND THE SELLERS
In the Purchase and Sale Agreement, the Sellers have made various
representations and warranties relating to, among other things, their
businesses, properties and financial conditions, the accuracy of their
financial statements, the ownership of their assets, their compliance with
certain laws (including environmental) and permitting requirements, the status
of their contracts and the existence or absence of certain litigation. In the
Purchase and Sale Agreement, Weatherford has made various representations and
warranties relating to, among other things, its business and financial
condition, the accuracy of its recent filings with the Commission and its
financial statements contained therein, its compliance with certain laws and
permitting requirements and the existence or absence of certain litigation.
CONDUCT OF SELLERS' BUSINESS PRIOR TO THE TRANSACTION
Pursuant to the Purchase and Sale Agreement, the Sellers have agreed
that, from the date of the Purchase and Sale Agreement to the Effective Date,
they and the Subsidiaries will (i) conduct the business of the Sellers and the
Subsidiaries in the ordinary and usual course, consistent with past practices;
(ii) not issue shares of stock, or grant any options, warrants or other rights
to purchase such stock; (iii) not declare or pay any dividends; (iv) not
redeem any stock; (v) not amend the governing documents of either Seller or
any Subsidiary; (vi) not sell, pledge or dispose of any assets of either
Seller or any Subsidiary other than in the ordinary and usual course of
business, consistent with past practice; (vii) not grant any director, officer
or employee any increase in compensation or any severance or termination pay
in excess of what is consistent with prior business practice, except as
required by law; (viii) not establish any new, or increase any existing,
pension plans, profit sharing plans or employee benefits; (ix) not acquire any
corporation, partnership or other business organization; (x) not incur any
indebtedness other than in the usual and ordinary course of business
consistent with past practice; (xi) not grant any guarantee or financial
support of any kind to third parties other than in the usual and ordinary
course of business consistent with past practice; (xii) not enter into any
material contracts or engage in any transaction which, even though in the
ordinary and usual course of business, is not consistent with the prior
business practice of the Sellers or the
16
Subsidiaries; (xiii) not make any change in the accounting principles and
practices of the Sellers or the Subsidiaries; (xiv) not adopt or file a plan
of complete or partial liquidation, dissolution, merger or other
reorganization; (xv) not do anything that may cause the Sellers' warranties
contained in the Purchase and Sale Agreement to become incorrect; (xvi) make
all reasonable efforts to preserve intact all licenses and permits of the
Sellers and the Subsidiaries and maintain the business relationships of the
Sellers and the Subsidiaries; (xvii) pay any taxes (including social security
premiums) or other amounts owed and file any tax returns or other similar
filings required by applicable law; (xviii) use their best efforts to call and
hold meetings of the shareholders of the Sellers to approve the Transaction,
such meetings to be held as promptly as practicable following the declaration
by the Commission of the effectiveness of the Registration Statement; and
(xix) give full access to Weatherford at all reasonable times to the premises
and records of the Sellers and the Subsidiaries and furnish information
regarding the business of the Sellers and the Subsidiaries as requested by
Weatherford.
TERMINATION OR AMENDMENT OF PURCHASE AND SALE AGREEMENT
The Purchase and Sale Agreement may be amended or supplemented only by an
instrument in writing signed on behalf of Weatherford and each Seller. The
Sellers have the right to terminate the Purchase and Sale Agreement if, prior
to May 27, 1996, either (i) the Commission has not declared the Registration
Statement effective and all stop orders have not been removed or (ii)
Weatherford has not obtained Ministry Approval, unless, in its sole
discretion, Weatherford has waived such requirement. The Sellers may only
exercise such right of termination within five business days following May 27,
1996. If such right is not exercised, and an event referred to in either
clause (i) or clause (ii) above has not occurred prior to July 26, 1996,
Weatherford or either Seller may terminate the Purchase and Sale Agreement
within five business days following such date.
INDEMNIFICATION
The Purchase and Sale Agreement provides that the Sellers shall indemnify
and hold harmless Weatherford and the Subsidiaries for one year following the
Effective Date against all losses, claims, damages, liabilities, costs and
other expenses ("Losses") it or any Subsidiary may reasonably incur or become
subject to in connection with third party claims against Weatherford or any
Subsidiary related to events that occurred prior to the Effective Date, to the
extent such claim has not resulted in a reduction of the cash portion of the
Purchase Price by, or a reimbursement by the Sellers to Weatherford of, a
Deficiency Amount and to the extent such Losses arise out of, are based upon
or are in connection with any untrue, inaccurate, misleading or breached
representation or warranty made by the Sellers in the Purchase and Sale
Agreement. In addition, the Sellers shall indemnify and hold harmless
Weatherford and the Subsidiaries for a period of three years after the
Effective Date against all Losses they may reasonably incur or become subject
to, insofar as such Losses arise out of, are based upon or are in connection
with a claim by any taxing authority for any taxes allocated or attributable
to any period ending on or before December 31, 1995 that has not been included
in the Nodeco Accounts. The Sellers shall only be responsible for tax Losses
in excess of NOK 1,000,000 and for all other Losses in excess of NOK
4,000,000. The Sellers' maximum liability for all such Losses shall not exceed
NOK 75,000,000. Pursuant to the Purchase and Sale Agreement, certain
shareholders of Nodeco AS will guarantee the Sellers' indemnification
obligations.
The Purchase and Sale Agreement provides that Weatherford shall indemnify
and hold harmless the Sellers against all Losses they may reasonably incur or
become subject to under the Securities Act, the Exchange Act or otherwise,
insofar as such Losses arise out of, are based upon or are in connection with
(i) any untrue, inaccurate misleading or breached representation or warranty
made by Weatherford in the Purchase and Sale Agreement, (ii) any untrue
statement or omission of a material fact (or alleged untrue statement or
omission) contained in the Registration Statement or any prospectus included
therein, (iii) the failure of Weatherford to comply with the Securities Act or
any other law, rule or regulation with respect to the distribution of the
Consideration Shares, (iv) the non-performance or the defective or negligent
performance after the Effective Date by Weatherford of any contracts
transferred to Weatherford as part of the Transaction, to the extent such
non-performance or defective or negligent performance is not caused by
17
the Sellers' breach of any of their representations or warranties contained in
the Purchase and Sale Agreement, (v) the failure by Weatherford to satisfy any
of the liabilities assumed by it under the Purchase and Sale Agreement, or
(vi) a claim by any taxing authority for any taxes allocated or attributable
to any period ending before the Effective Date.
NON-COMPETITION AGREEMENT
In the Purchase and Sale Agreement, the Sellers have agreed that, for a
period of two years following the Effective Date, neither the Sellers nor any
affiliate of the Sellers will compete, directly or indirectly, with
Weatherford or any affiliate of Weatherford in designing, manufacturing,
selling, renting or running liner hangers, packers and gas lift valves and
systems. The Sellers also have agreed on behalf of the Sellers and their
affiliates not to solicit for employment any employee of Weatherford or any
affiliate of Weatherford, including any employee of either Seller or any
Subsidiary who becomes an employee of Weatherford or any affiliate of
Weatherford.
COMPARATIVE RIGHTS OF THE STOCKHOLDERS
OF WEATHERFORD AND NODECO AS
Upon consummation of the Transaction, Nodeco AS will be a holder of
shares of Weatherford Common Stock. To the extent the shares of Weatherford
Common Stock held by Nodeco AS are distributed to the shareholders of Nodeco
AS, in connection with a liquidation of Nodeco AS or otherwise, holders of
shares of Nodeco AS will become holders of shares of Weatherford Common Stock.
The shares of Nodeco AS are governed by Norwegian law and the Articles of
Association of Nodeco AS. The rights of holders of Weatherford Common Stock
are governed by the law of the State of Delaware, Weatherford's Restated
Certificate of Incorporation and Weatherford's Bylaws. Set forth below are the
principal differences between the shares of Nodeco AS and Weatherford 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. Weatherford's Bylaws make such an election. However, Weatherford's
Restated Certificate of Incorporation and Bylaws contain provisions similar to
Section 203 that require a higher percentage of stockholders' vote to approve
a
18
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 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.
Neither the Articles of Association of Nodeco AS nor Norwegian law
contains any provisions similar to that contained in Weatherford's Restated
Certificate of Incorporation regarding a special vote for certain business
combinations with "interested" stockholders.
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.
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". Norwegian law
provides that certain extraordinary corporate transactions, such as an
amendment to the articles of association, an increase in the share capital of
the company, a merger, a voluntary liquidation or a sale of all of the assets
of a company in preparation of a liquidation, require the affirmative vote of
two-thirds of the shares entitled to vote at any meeting of the shareholders
held for such purpose.
ELECTION AND APPOINTMENT OF DIRECTORS
Under the DGCL, directors of a corporation shall be elected by the
stockholders of the corporation by a plurality of the votes of the shares
entitled to vote on the election of directors. In addition, Weatherford's
Bylaws permit the Board of Directors to fill any vacancy occurring in the
Board of Directors caused by death, resignation, retirement, disqualification
or removal from office of any director, or otherwise, or if any new
directorship is created by an increase in the authorized number of directors.
Norwegian law provides that the directors of a company shall be elected by the
stockholders of the company by a majority of the votes of the shares entitled
to vote at such meeting and that the board of directors of a company cannot
fill a vacancy on the board of directors.
19
INDEMNIFICATION OF BOARD MEMBERS
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 DGCL. Weatherford also has entered into
an indemnification agreement with each of its directors. Neither Norwegian law
nor the Articles of Association of Nodeco AS contain any provisions concerning
indemnification by Nodeco AS of members of its board of directors.
REMOVAL OF DIRECTORS
Weatherford's Restated Certificate of Incorporation and Bylaws provide
that, subject to the rights of the holders of any outstanding shares of serial
preferred stock of Weatherford, 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. Norwegian
law provides that directors of a Norwegian company can be removed by a
majority vote of the shares entitled to vote at any meeting of the
shareholders for such purpose.
PREEMPTIVE RIGHTS
Under Norwegian law, shareholders of a Norwegian company have preemptive
rights with respect to the issuance of additional share capital of the
company. The board of directors of a Norwegian company may propose, and the
shareholders may accept, voiding the preemptive rights with respect to any
given share issuance. Weatherford's Restated Certificate of Incorporation
specifically denies preemptive rights to the stockholders of Weatherford.
CALLING OF STOCKHOLDERS MEETINGS
Weatherford's Bylaws provide that special meetings of the stockholders of
Weatherford may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors, and only
by written notice given to the stockholders of Weatherford not less than 30
nor more than 60 days before such meeting. Norwegian law provides that
shareholder meetings may be called by the board of directors and can be
requested by a 10% shareholder, with notice to be delivered at least one week
prior to such meeting.
STOCKHOLDERS MEETING QUORUM
Weatherford's Bylaws provide that a vote of stockholders may be taken
only at a meeting at which a quorum of stockholders representing a majority of
the stock issued and outstanding and entitled to vote thereat is present.
Norwegian law contains no quorum requirement for a shareholder meeting of a
Norwegian company.
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 bylaws, unless such
number is changed by action of the majority of the directors. Weatherford's
Bylaws provide for the number of directors to be not less than six nor more
than 15. The Weatherford Board of Directors currently is set at ten directors.
The Articles of Association of Nodeco AS provide for the number of directors
to be not less than three nor more than seven as determined at a meeting of
the shareholders of Nodeco AS. The board of directors of Nodeco AS currently
is set at five directors.
20
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial statements are based upon (i) the
historical consolidated financial statements of Weatherford and Nodeco, which
are incorporated by reference or included elsewhere in this Prospectus, and
(ii) the unaudited historical combined statement of operations of the natural
gas compression businesses of Zapata Corporation ("Energy Industries") for the
period from January 1, 1995 through December 15, 1995, the date upon which
Weatherford acquired Energy Industries in a purchase business combination. The
historical consolidated financial statements of Nodeco prepared in accordance
with Norwegian GAAP together with adjustments necessary to conform with US
GAAP were utilized in preparing the Unaudited Pro Forma Financial Information
which, with respect to the Unaudited Pro Forma Balance Sheet, reflects the
December 31, 1995 exchange rate of NOK 6.3211 per United States dollar and,
with respect to the Unaudited Pro Forma Statement of Income, reflects the 1995
average exchange rate of NOK 6.3131 per United States dollar. The unaudited
pro forma financial statements were prepared assuming that the Transaction was
consummated with 750,000 shares of Weatherford Common Stock valued at $36.25
per share, cash consideration of $13,962,000 (or NOK 90,603,500), an exchange
rate of NOK 6.4893 per United States dollar and estimated transaction costs of
$250,000.
The Unaudited Pro Forma Balance Sheet was prepared assuming that the
Transaction was consummated as of December 31, 1995. The Unaudited Pro Forma
Statement of Income gives effect to (i) the proposed Transaction under the
purchase method of accounting, (ii) the acquisition by Weatherford of Energy
Industries under the purchase method of accounting and (iii) certain estimated
operational and financial combination benefits of $48,400,000 per year
resulting from Weatherford's October 5, 1995 merger with Enterra Corporation
(the "Enterra Merger") and $10,000,000 per year resulting from the December
15, 1995 acquisition of Energy Industries. The Unaudited Pro Forma Statement
of Income was prepared assuming that the transactions set forth above were
consummated as of January 1, 1995. The unaudited pro forma financial
statements have been prepared based upon assumptions deemed appropriate by
Weatherford and may not be indicative of actual results.
21
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------- -----------------------------
WEATHERFORD NODECO ADJUSTMENTS(1) ADJUSTED
----------- --------- -------------- ------------
ASSETS
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents....... $ 32,800 $ 1,053 $-- $ 33,853
Receivables, net................ 231,125 6,295 -- 237,420
Inventories, net................ 165,383 5,625 -- 171,008
Deferred tax assets and other... 34,054 -- -- 34,054
----------- --------- -------------- ------------
Total current assets....... 463,362 12,973 -- 476,335
----------- --------- -------------- ------------
Property, plant and equipment, net... 514,545 8,301 4,000 526,846
----------- --------- -------------- ------------
Goodwill, net........................ 259,450 1,194 27,312 287,956
----------- --------- -------------- ------------
Other assets......................... 21,503 278 -- 21,781
----------- --------- -------------- ------------
Total assets......................... $ 1,258,860 $ 22,746 $ 31,312 $ 1,312,918
=========== ========= ============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current
portion of
long-term debt................ $ 36,976 $ 1,150 $-- $ 38,126
Accounts payable................ 52,157 3,556 -- 55,713
Accrued liabilities............. 106,849 4,188 -- 111,037
----------- --------- -------------- ------------
Total current
liabilities................ 195,982 8,894 -- 204,876
----------- --------- -------------- ------------
Long-term debt....................... 292,290 3,747 14,212 310,249
----------- --------- -------------- ------------
Deferred tax and other long-term
liabilities........................ 39,745 267 -- 40,012
----------- --------- -------------- ------------
Stockholders' equity:
Common stock.................... 5,099 1,000 (1,000) 5,174
75
Paid-in capital................. 602,231 -- 26,863 629,094
Retained earnings............... 130,243 8,838 (8,838) 130,243
Cumulative translation
adjustment.................... (5,869) -- -- (5,869)
Treasury stock.................. (861) -- -- (861)
----------- --------- -------------- ------------
Total stockholders'
equity..................... 730,843 9,838 17,100 757,781
----------- --------- -------------- ------------
Total liabilities and stockholders'
equity............................. $1,258,860 $ 22,746 $ 31,312 $ 1,312,918
=========== ========== ============= ============
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
financial statements.
22
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ENERGY
ENERGY ENTERRA INDUSTRIES
WEATHERFORD INDUSTRIES ADJUSTMENTS ADJUSTMENTS
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues............................. $ 858,907 $ 61,549 $ -- $--
----------- ---------- ----------- -----------
Costs and expenses:
Cost of sales and services......... 625,346 52,834 (33,880)(2) (7,000)(4)
Selling, general and administrative
expenses........................ 137,959 4,991 (14,520)(2) (3,000)(4)
Other (income) expense, net........ 7,238 (518) -- 721(5)
Acquisition-related costs and other
unusual charges................. 88,182 -- (59,900)(3) --
----------- ---------- ----------- -----------
Total costs and expenses...... 858,725 57,307 (108,300) (9,279)
----------- ---------- ----------- -----------
Operating income..................... 182 4,242 108,300 9,279
Interest expense................... 17,217 3,072 -- 6,028(6)
Interest income.................... (2,081) (370) -- --
----------- ---------- ----------- -----------
Income (loss) before income taxes and
minority interests................. (14,954) 1,540 108,300 3,251
Income tax provision (benefit)..... (4,616) 924 16,940(2) 753(7)
12,189(3)
----------- ---------- ----------- -----------
Income (loss) before minority
interests.......................... (10,338) 616 79,171 2,498
Minority interests................... (220) -- -- --
----------- ---------- ----------- -----------
Net income (loss).................... $ (10,558) $ 616 $ 79,171 $ 2,498
=========== ========= =========== ==========
Weighted average common and common
equivalent shares outstanding...... 50,989
===========
Income (loss) per common and common
equivalent share................... $ (0.21)
===========
<CAPTION>
NODECO AS FURTHER
AS ADJUSTED NODECO ADJUSTMENTS ADJUSTED
----------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues............................. $ 920,456 $27,554 $ -- $948,010
----------- ------- ----------- ----------
Costs and expenses:
Cost of sales and services......... 637,300 18,442 800(8) 656,542
Selling, general and administrative
expenses........................ 125,430 4,384 -- 129,814
Other (income) expense, net........ 7,441 (23) 683(8) 8,101
Acquisition-related costs and other
unusual charges................. 28,282 -- -- 28,282
----------- ------- ----------- ----------
Total costs and expenses...... 798,453 22,803 1,483 822,739
----------- ------- ----------- ----------
Operating income..................... 122,003 4,751 (1,483) 125,271
Interest expense................... 26,317 793 995(9) 28,105
Interest income.................... (2,451) (221) -- (2,672)
----------- ------- ----------- ----------
Income (loss) before income taxes and
minority interests................. 98,137 4,179 (2,478) 99,838
Income tax provision (benefit)..... 26,190 1,250 (694)(10) 26,746
Income (loss) before minority ----------- ------- ----------- ----------
interests.......................... 71,947 2,929 (1,784) 73,092
Minority interests................... (220) (148) -- (368)
----------- ------- ----------- ----------
Net income (loss).................... $ 71,727 $ 2,781 $(1,784) $ 72,724
========== ======= ========== ===========
Weighted average common and common
equivalent shares outstanding...... 50,989 750(1) 51,739
========== ========== ===========
Income (loss) per common and common
equivalent share................... $ 1.41 $ 1.41
========== ===========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
financial statements.
23
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. To record the issuance of 750,000 shares of Weatherford Common Stock
(valued at $36.25 per share) and borrowings used to finance the Transaction
and to reflect the allocation of the related purchase price.
2. To record certain estimated consolidation cost savings and
operational efficiencies, and the related tax effect, associated with the
Enterra Merger, primarily resulting from the combination of certain service
locations and the elimination of duplicate corporate functions.
3. To exclude nonrecurring expenses of $59,900,000 incurred by
Weatherford in conjunction with the Enterra Merger and the related tax effect
of $12,189,000. These nonrecurring expenses primarily represent transaction
costs, severance and termination agreement costs, facility closure costs and
the reduction in recorded value of certain assets that had diminished value in
the operations of the combined company.
4. To record certain estimated consolidation cost savings and
operational efficiencies associated with the acquisition of Energy Industries
on December 15, 1995, primarily resulting from the combination of certain
locations and the elimination of duplicate corporate functions.
5. To record the amortization of additional goodwill resulting from the
allocation of the purchase price of Energy Industries.
6. To record additional interest expense on the debt incurred by
Weatherford on its acquisition of Energy Industries.
7. To record income tax expense on the Energy Industries operations and
the effect of the Energy Industries adjustments discussed in Notes 4, 5 and 6
above.
8. To record additional depreciation and the amortization of additional
goodwill resulting from the allocation of the purchase price of the
Transaction.
9. To record additional interest expense on the debt to be incurred by
Weatherford to consummate the Transaction.
10. To record the income tax effect of the Nodeco adjustments discussed
in Notes 8 and 9 above.
24
WEATHERFORD SELECTED FINANCIAL DATA
The Weatherford 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 Prospectus. See "Incorporation of
Certain Documents by Reference".
<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1995(1) 1994(2) 1993(3) 1992 1991(4)
------------ ------------ ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Revenues............................. $ 858,907 $ 676,749 $ 500,491 $ 374,203 $ 397,480
Acquisition-related costs and other
unusual charges.................... 88,182 2,500 4,000 -- 20,044
Operating income..................... 182 65,704 49,671 35,579 31,044
Depreciation and amortization........ 95,957 71,037 50,449 35,738 35,720
Net income (loss).................... (10,558) 41,997 35,175 26,760 14,234
Net income (loss) per share.......... $ (0.21) $ 0.94 $ 0.88 $ 0.73 $ 0.37
PERCENTAGE OF REVENUES:
Selling, general and administrative
expenses........................... 16.1% 17.1% 18.3% 22.6% 22.5%
Gross profit......................... 27.2% 27.9% 29.5% 33.2% 35.6%
Operating income..................... 0.0% 9.7% 9.9% 9.5% 7.8%
Net income (loss).................... (1.2)% 6.2% 7.0% 7.2% 3.6%
BALANCE SHEET DATA:
Working capital...................... $ 267,380 $ 251,778 $ 211,834 $ 197,526 $ 197,879
Total assets......................... 1,258,860 1,153,970 635,602 474,490 470,702
Total debt........................... 329,266 196,672 21,253 28,685 31,572
Stockholders' equity................. $ 730,843 $ 734,634 $ 474,742 $ 349,458 $ 334,002
Total debt-to-total capitalization... 31% 21% 4% 8% 9%
OTHER DATA:
Capital expenditures, excluding
acquisitions....................... $ 110,625 $ 114,018 $ 63,757 $ 38,259 $ 50,636
Weighted average shares
outstanding........................ 50,989 44,845 38,607 34,786 34,394
</TABLE>
- ------------
(1) Includes acquisition-related costs and other unusual charges of
$88,182,000, or $1.17 per common share.
(2) Includes acquisition-related costs of $2,500,000, or $0.06 per common
share.
(3) Includes acquisition-related costs of $4,000,000, or $0.10 per common
share.
(4) Includes acquisition-related costs and other unusual charges of
$20,044,000, or $0.58 per common share.
25
NODECO SELECTED FINANCIAL DATA
The Nodeco Selected Financial Data should be read in conjunction with
Nodeco's Consolidated Financial Statements and the notes thereto, which are
included elsewhere in this Prospectus. The Nodeco Consolidated Financial
Statements have been prepared in accordance with accounting principles
generally accepted in Norway ("Norwegian GAAP"), which vary in certain
significant respects from accounting principles generally accepted in the
United States ("US GAAP"). Principal differences between Norwegian GAAP and US
GAAP and a reconciliation of such differences are described in Notes 10 and 11
to Nodeco Consolidated Financial Statements. See "Nodeco Consolidated
Financial Statements".
<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992(1) 1991(1)
--------- --------- --------- --------- ---------
(IN THOUSANDS OF NOK EXCEPT PER SHARE AMOUNTS,
PERCENTAGES AND EXCHANGE RATES)
OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Revenues............................. 173,950 134,583 122,512 104,263 57,612
Operating profit..................... 27,396 16,236 7,111 8,126 3,943
Depreciation......................... 10,385 9,246 9,563 7,446 3,705
Extraordinary gain (loss), net....... 1,370 -- (4,818) -- --
Net income (loss)(2)................. 15,598 7,918 (4,067) 2,335 1,927
PERCENTAGE OF REVENUES:
Other operating costs................ 17.7% 20.7% 19.8% 23.3% 17.3%
Operating profit..................... 15.7% 12.1% 5.8% 7.8% 6.8%
Net income (loss).................... 9.0% 5.9% (3.3)% 2.2% 3.3%
BALANCE SHEET DATA:
Working capital...................... 25,786 15,304 17,254 21,448 23,917
Total assets......................... 123,942 115,000 110,518 105,257 57,244
Long-term debt, including current
portion............................ 28,278 45,788 51,664 48,272 12,024
Shareholders' equity(3).............. 44,908 29,020 26,414 29,801 28,638
Dividends declared per common
share.............................. -- 8.00 -- -- --
EXCHANGE RATE DATA (US$ PER NOK):
End of period........................ $ 0.1582 $ 0.1478 $ 0.1328 $ 0.1439 $ 0.1671
Average during period................ 0.1584 0.1426 0.1402 0.1599 0.1540
High during period................... 0.1635 0.1613 0.1667 0.1815 0.1766
Low during period.................... 0.1468 0.1321 0.1328 0.1439 0.1399
</TABLE>
- ------------
(1) The amounts for 1992 include the activity of Aarbakke AS, acquired in
1992, for the entire year. The amounts for 1991 do not include any
activity related to Aarbakke AS.
(2) Net income in accordance with US GAAP was NOK 17,557,000 and NOK 7,547,000
for the years ended December 31, 1995 and 1994, respectively.
(3) Shareholders' equity in accordance with US GAAP was NOK 62,186,000 and NOK
49,277,000 at December 31, 1995 and 1994, respectively.
26
NODECO MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS DESCRIPTION
Nodeco designs, manufactures, sells and rents oil and gas well completion
products primarily consisting of liner hanger equipment and related services, as
well as packers used in completions with electric submersible pumps.
Historically, Nodeco has focused its marketing efforts on the North Sea market,
and Nodeco only recently has increased its international sales efforts. Nodeco
actively provides liner hanger equipment and services in all sectors of the
North Sea as well as certain other parts of the world. Until recently,
substantially all of Nodeco's pump packer sales have been to operators in the
United Kingdom sector of the North Sea, since no electric submersible pump
completions had been made in the Norwegian sector. Nodeco has made sales of pump
packers to certain Norwegian producers.
Aarbakke, a wholly-owned subsidiary of Nodeco AS, is a manufacturing unit
that also provides precision machining services to third parties in Norway and
other countries. Approximately half of Aarbakke's production capacity is used
for third-party manufacturing, of which 80% relates to oil industry activities.
SubTech, a 51% owned subsidiary of Nodeco AS, provides consulting services
related to production and reservoir monitoring activities, as well as design,
fabrication and installation of systems for such activities, primarily for
customers in Norway.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS OF NOK EXCEPT
EXCHANGE RATES)
Product revenues..................... 118,646 87,005 83,624
Rental revenues...................... 30,488 24,018 20,067
Service revenues and other charges... 24,816 23,560 18,821
--------- --------- ---------
Total revenues.................. 173,950 134,583 122,512
========= ========= =========
PRODUCT REVENUES. Product revenues increased 36% to NOK 118.6 million in
1995 compared with NOK 87.0 million in 1994. The increase was primarily
attributable to increased volume of liner hanger sales in North and West Africa
(relatively new markets for Nodeco), increased pump packer sales in the United
Kingdom due to customer acceptance of the Resettable Pump Packer and increased
sales to third parties in contract manufacturing. Product revenues increased 4%
to NOK 87.0 million in 1994 compared with NOK 83.6 million in 1993, primarily as
a result of increased drilling activity in both the Norwegian and United Kingdom
sectors of the North Sea and increased sales of downhole temperature and
pressure gauges, which increase was partially offset by declines in liner hanger
sales in markets outside of the North Sea.
RENTAL REVENUES. Rental revenues increased 27% to NOK 30.5 million in 1995
compared with NOK 24.0 million in 1994, reflecting increased liner hanger
equipment rental activity in the North Sea. Rental revenues increased 20% to NOK
24.0 million in 1994 compared with NOK 20.1 million in 1993, primarily as a
result of increased rental activity of liner hanger and pump packer equipment.
SERVICE REVENUES AND OTHER CHARGES. Service revenues and other charges
increased 5% to NOK 24.8 million in 1995 compared with NOK 23.6 million in 1994,
primarily due to increased North Sea drilling activity. Service revenues and
other charges increased 25% to NOK 23.6 million in 1994 compared with NOK 18.8
million in 1993, primarily as a result of increased repair services related to
temperature and pressure gauges.
OPERATING COSTS. The costs attributable to raw materials, payments to
subcontractors and payroll increased approximately 30% in 1995 compared with
1994, primarily due to an increase in operating revenues, overall higher levels
of drilling activity in the North Sea and the need for additional employees to
27
meet increased demand. Operating costs changed relatively little in 1994
compared with 1993. Though Nodeco achieved cost savings in 1994 due to the
negotiation of more favorable purchase agreements, the costs associated with
slightly higher levels of drilling activity in the North Sea and the need for
additional employees generally offset such savings.
EXTRAORDINARY GAIN (LOSS). In 1995, Nodeco recognized a gain of NOK 2.3
million as a result of the sale of Bryne Petropark AS, a subsidiary which owns
real estate including the workshop and offices currently used by Nodeco AS. Such
gain was partially offset by an extraordinary loss of NOK 0.9 million,
representing costs incurred related to the termination of operations of Nodecore
AS, a subsidiary engaged in the coring business.
In 1993, Nodeco recognized an extraordinary loss of NOK 5.8 million related
to the termination of the operations of a subsidiary, Pressure Test Laboratories
AS, and the termination of robotic systems operations, which was partially
offset by a NOK 1.0 million gain on the forgiveness of a subsidiary's debt
related to a bank loan.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, Nodeco had working capital of NOK 25.8 million and a
current ratio of 1.46 to 1.0. Working capital increased 68% in 1995 compared
with 1994 due to increases in accounts receivable and inventory as a direct
result of the increased demand for Nodeco's products and services.
Nodeco had an aggregate of NOK 28.3 million in outstanding debt as of
December 31, 1995. Nodeco's outstanding debt is comprised of (i) secured
borrowings totaling NOK 28.1 million that bear interest at rates ranging from 6%
to 12% per annum and have maturity dates from 1996 through 2014 and (ii) one
subordinated loan of NOK 0.2 million that bears interest at 10% per annum and
matures in 1997. In addition, Nodeco had NOK 10.2 million in bank overdrafts
outstanding at December 31, 1995 that bear interest at rates ranging from 7.5%
to 9.25%. Such overdrafts were used to finance working capital requirements.
Sources of liquidity to finance commitments, working capital requirements and
future capital expenditures include cash of NOK 6.6 million and unused overdraft
facilities of approximately NOK 7.7 million as of December 31, 1995. Management
of Nodeco believes that the combination of working capital, the unused portion
of existing credit facilities and cash flows from operations provide Nodeco with
sufficient capital resources and liquidity to manage its day-to-day operations
and future investment in fixed assets at current levels of activity.
Net cash flows from operating activities decreased 58% to NOK 10.0 million
in 1995 compared with NOK 23.8 million in 1994, primarily due to increased
investment in working capital arising from an increase in product and rental
activities. Net cash flows from operating activities improved from a net outflow
of NOK 3.0 million in 1993 to a net inflow of NOK 23.8 million in 1994,
primarily reflecting improved net income of Nodeco and changes in working
capital.
Cash flows from investing activities generally are comprised of investment
in, and disposal of, fixed assets. Investment in fixed assets increased 99% to
NOK 20.6 million in 1995 compared with NOK 10.4 million in 1994, primarily due
to the purchase of new manufacturing equipment and additions to one of Nodeco's
plants. The increase reflects Nodeco's need for additional capacity to
accommodate the growth in sales volume over the last several years. The disposal
of fixed assets in 1995 of NOK 25.2 million was primarily related to the sale of
Bryne Petropark AS. Investment in fixed assets of NOK 10.4 million in 1994 was
relatively unchanged compared with NOK 10.5 million in 1993.
Net cash flows from financing activities in 1995 were affected by a
reduction of debt totaling NOK 31.3 million primarily as a result of the sale of
Bryne Petropark AS, partially offset by new borrowings totaling NOK 14.8 million
to finance working capital needs and investments in fixed assets. Net cash flows
from financing activities in 1994 were the result of a repayment of debt related
to payment of periodic installments of existing obligations. Nodeco also
declared an NOK 8 per share dividend in 1994. New debt in 1993 of NOK 18.5
million primarily consisted of drawdowns on Nodeco's overdraft facility to
finance working capital needs and investments in fixed assets.
28
CURRENCY FLUCTUATIONS
Nodeco conducts a portion of its business in currencies other than NOK,
including the United Kingdom pound sterling and the United States dollar.
Although most of the revenues of Nodeco's foreign operations are denominated in
the local currency, the effects of foreign currency fluctuations are largely
mitigated because expenses of such foreign operations also generally are
denominated in the same currency.
Nodeco occasionally enters into forward exchange contracts only as a hedge
against certain existing economic exposures and not for speculative trading
purposes. These contracts reduce exposure to currency movements affecting
existing assets and liabilities denominated in foreign currencies, with such
exposure resulting primarily from trade receivables and payables and
intercompany and external long-term loans. The future value of these contracts
and the related currency positions are subject to offsetting market risk
resulting from foreign currency exchange rate volatility. Settlement of forward
exchange rate contracts resulted in net cash outflows of approximately NOK
350,000 during 1993 and net cash inflows of approximately NOK 500,000 and NOK
250,000 during 1995 and 1994, respectively.
LEGAL MATTERS
The validity of the shares of Weatherford Common Stock to be issued in
connection with the Transaction will be passed upon by Fulbright & Jaworski
L.L.P., 1301 McKinney, Suite 5100, Houston, Texas 77010.
EXPERTS
The consolidated financial statements of Weatherford as of December 31,
1995 and 1994, and for each of the three years in the period ended December 31,
1995, incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference in this Prospectus in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
The consolidated financial statements of Nodeco AS as of December 31, 1995
and 1994 and for the years then ended included in this Prospectus have been so
included in reliance on the report of Price Waterhouse a.s., independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
29
INDEX TO NODECO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Report of Independent Accountants.... F-2
Consolidated Balance Sheet as of
December 31, 1995 and 1994......... F-3
Consolidated Income Statement for the
years ended December 31, 1995, 1994
and 1993 (1993 unaudited).......... F-4
Consolidated Statement of Cash Flows
for the years ended December 31,
1995, 1994 and 1993 (1993
unaudited)......................... F-5
Consolidated Statement of Changes in
Shareholders' Equity for the years
ended December 31, 1995, 1994 and
1993 (1993 unaudited).............. F-6
Notes to Consolidated Financial
Statements (1993 unaudited)........ F-7
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Nodeco AS:
We have audited the accompanying consolidated balance sheet of Nodeco AS
and its subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of income, of cash flows and of changes in shareholders'
equity for the years then ended, all expressed in Norwegian Kroner. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements audited by us present
fairly, in all material respects, the financial position of Nodeco AS and its
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in Norway.
Accounting principles generally accepted in Norway vary in certain
important respects from accounting principles generally accepted in the United
States. The application of the latter would have affected the determination of
consolidated shareholders' equity expressed in Norwegian Kroner as of December
31, 1995 and 1994 and the determination of consolidated net income, also
expressed in Norwegian Kroner, for the years then ended to the extent summarized
in Note 11 to the consolidated financial statements.
PRICE WATERHOUSE A.S.
JAN EGIL HAGA
STATE AUTHORIZED PUBLIC ACCOUNTANT
Oslo, Norway
March 15, 1996, except as to
Notes 10 and 11 which are as
of April 12, 1996
F-2
NODECO AS
CONSOLIDATED BALANCE SHEET
DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS OF NOK)
ASSETS
Current assets:
Cash and bank deposits.......... 6,657 7,422
Accounts receivable............. 32,090 20,322
Other current receivables....... 7,700 5,703
Raw materials................... 3,914 2,687
Finished inventory.............. 31,645 22,329
--------- ---------
Total current assets....... 82,006 58,463
--------- ---------
Long-term assets:
Deferred tax assets............. 109 --
Rental equipment................ 14,424 12,975
Machinery, fixtures, vehicles,
etc............................ 17,968 13,672
Buildings....................... 8,712 26,381
Land............................ 674 3,173
Other long-term assets.......... 49 336
--------- ---------
Total long-term assets..... 41,936 56,537
--------- ---------
Total assets............... 123,942 115,000
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft.................. 10,226 6,189
Current portion of long-term
debt........................... 7,269 5,241
Accounts payable................ 12,254 12,490
Taxes withheld, holiday pay,
etc............................ 13,275 7,478
Income taxes payable............ 9,062 4,020
Dividends payable............... -- 4,938
Accrued expenses and other
current liabilities............ 4,134 2,803
--------- ---------
Total current
liabilities............. 56,220 43,159
--------- ---------
Long-term liabilities:
Deferred tax liability.......... 113 99
Secured loans................... 20,809 40,147
Subordinated loan............... 200 400
Other long-term liabilities..... -- 643
--------- ---------
Total long-term
liabilities............. 21,122 41,289
--------- ---------
Minority interest.................... 1,692 1,532
--------- ---------
Shareholders' equity:
Share capital, 632,265 and
617,265 shares authorized,
issued and outstanding, NOK 10
par value each................. 6,323 6,173
Other equity.................... 38,585 22,847
--------- ---------
Total shareholders'
equity.................. 44,908 29,020
--------- ---------
Total liabilities and
shareholders' equity.... 123,942 115,000
========= =========
The accompanying notes are an integral part of these financial statements.
F-3
NODECO AS
CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
--------- --------- -----------
(UNAUDITED)
(IN THOUSANDS OF NOK)
Operating revenues:
Sales revenues.................. 118,646 87,005 83,624
Rental and service revenues..... 55,304 47,578 38,888
--------- --------- -----------
Total operating revenues... 173,950 134,583 122,512
--------- --------- -----------
Operating costs:
Cost of raw materials and
subcontractors................ 45,826 35,232 37,333
Payroll......................... 59,468 46,112 44,189
Other operating costs........... 30,875 27,757 24,316
Depreciation.................... 10,385 9,246 9,563
--------- --------- -----------
Total operating costs...... 146,554 118,347 115,401
--------- --------- -----------
Operating profit..................... 27,396 16,236 7,111
Financial income (expenses):
Financial income................ 1,399 1,046 1,135
Financial expenses.............. (4,631) (4,796) (8,043)
--------- --------- -----------
Income before extraordinary items.... 24,164 12,486 203
--------- --------- -----------
Extraordinary gain (loss):
Gain (loss) on disposal of
subsidiaries.................. 1,370 -- (5,818)
Forgiveness of debt............. -- -- 1,000
--------- --------- -----------
Extraordinary gain (loss),
net..................... 1,370 -- (4,818)
--------- --------- -----------
Income (loss) before income taxes.... 25,534 12,486 (4,615)
Provision (benefit) for income
taxes.............................. 9,001 3,978 (147)
--------- --------- -----------
Income (loss) before minority
interest........................... 16,533 8,508 (4,468)
Minority interest in consolidated
subsidiaries....................... 935 590 (401)
--------- --------- -----------
Net income (loss).................... 15,598 7,918 (4,067)
========= ========= ==========
The accompanying notes are an integral part of these financial statements.
F-4
NODECO AS
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS OF NOK)
Cash flows from operating activities:
Net income (loss)............... 15,598 7,918 (4,067)
Adjustments to reconcile to net
cash flows from operating
activities:
Gain on disposal of fixed
assets..................... (1,069) (173) (128)
Ordinary depreciation......... 10,642 9,378 9,563
Write-downs of fixed assets... -- -- 1,085
Forgiveness of debt........... -- -- (1,000)
Exchange gain on long-term
debt....................... (465) (634) (343)
Other items, net.............. 624 312 (1,220)
Change in inventories,
receivables and payables... (22,548) 2,886 (4,472)
Changes in accruals........... 7,233 4,149 (2,447)
---------- ---------- ----------
Net cash flows from
operating activities.... 10,015 23,836 (3,029)
---------- ---------- ----------
Cash flows from investing activities:
Investment in fixed assets...... (20,608) (10,359) (10,463)
Disposal of fixed assets........ 25,158 1,211 1,379
Change in other long-term
assets........................ -- (53) --
---------- ---------- ----------
Net cash flows from
investing activities.... 4,550 (9,201) (9,084)
---------- ---------- ----------
Cash flows from financing activities:
New long- and short-term debt... 14,817 4,379 18,536
Reduction of debt............... (31,272) (12,786) (6,776)
Dividends....................... -- (4,938) --
Paid in equity capital.......... 1,125 250 1,900
---------- ---------- ----------
Net cash flows from
financing activities.... (15,330) (13,095) 13,660
---------- ---------- ----------
Net change in cash for the year...... (765) 1,540 1,547
Cash balance at beginning of the
year............................... 7,422 5,882 4,335
---------- ---------- ----------
Cash balance at end of the year...... 6,657 7,422 5,882
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
NODECO AS
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(1993 UNAUDITED)
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
(IN THOUSANDS OF NOK EXCEPT SHARE AMOUNTS)
SHARE CAPITAL
------------------ OTHER
SHARES AMOUNT EQUITY TOTAL
--------- ------ --------- ---------
Balance at December 31, 1992......... 612,265 6,123 23,678 29,801
Net loss........................ -- -- (4,067) (4,067)
Change in minority interest..... -- -- 557 557
Translation adjustments......... -- -- 123 123
--------- ------ --------- ---------
Balance at December 31, 1993......... 612,265 6,123 20,291 26,414
Net income...................... -- -- 7,918 7,918
Dividends....................... -- -- (4,938) (4,938)
Share issue..................... 5,000 50 200 250
Translation adjustments......... -- -- (624) (624)
--------- ------ --------- ---------
Balance at December 31, 1994......... 617,265 6,173 22,847 29,020
Net income...................... -- -- 15,598 15,598
Share issue..................... 15,000 150 975 1,125
Translation adjustments......... -- -- (835) (835)
--------- ------ --------- ---------
Balance at December 31, 1995......... 632,265 6,323 38,585 44,908
========= ====== ========= =========
The accompanying notes are an integral part of these financial statements.
F-6
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED)
NOTE 1 ACCOUNTING POLICIES
GENERAL
The consolidated financial statements of Nodeco AS, a Norwegian
corporation, and its subsidiaries (the "Company" or "Nodeco AS") have been
prepared according to generally accepted accounting principles in Norway
(Norwegian GAAP) and are presented in Norwegian kroner (NOK).
Norwegian GAAP differs in certain significant respects from accounting
principles generally accepted in the United States (US GAAP). The significant
differences and the approximate related effects on the consolidated financial
statements as of December 31, 1995 and for the year then ended are set forth in
Note 11. The consolidated financial statements also include certain
reclassifications and disclosures in order to conform more closely to the form
and content required by the Securities and Exchange Commission of the United
States.
PRINCIPLES OF CONSOLIDATION
SUBSIDIARIES
The consolidated financial statements include Nodeco AS and each subsidiary
in which the Company owns or controls, either directly or indirectly, more than
50% of the equity capital. Intercompany transactions and balances have been
eliminated.
Businesses acquired generally are consolidated in accordance with the
purchase method. The purchase price for a subsidiary is allocated to
identifiable assets and liabilities based upon their estimated fair market
value, with any remaining amounts capitalized as goodwill.
Results of subsidiaries acquired or sold during the year are included in
the consolidated income statement from the date of acquisition or up to the date
of sale, respectively.
A business combination, accomplished solely by the exchange of equity,
which represents a uniting of ownership with another enterprise rather than an
acquisition, is accounted for in accordance with merger accounting. The recorded
assets and liabilities of the other enterprise are carried forward to the
combined accounts at their recorded amounts. The acquisition of Aarbakke AS
during 1992 was accounted for in accordance with this method.
TRANSLATION OF FOREIGN SUBSIDIARIES' FINANCIAL STATEMENTS
The functional currency of each foreign subsidiary is the local currency.
Revenues, expenses, gains and losses of foreign subsidiaries are translated into
Norwegian kroner using the average exchange rate for the period. Assets and
liabilities of foreign subsidiaries are translated into Norwegian kroner at the
exchange rate in effect at the balance sheet date. Translation differences
caused by fluctuations in exchange rates are charged or credited to
shareholders' equity.
REVENUE RECOGNITION PRINCIPLES
Revenue from sale of finished goods is recognized upon delivery. Revenue
from rental of equipment is recognized over the rental period. Service
revenues are recognized as the service is provided.
Provision is made for estimated bad debts. The allowance for bad debts is
NOK 155,000 at December 31, 1995 and 1994.
OTHER PRINCIPLES
INVENTORIES
Inventories are recorded at full cost under the first in first out (FIFO)
method. Provision is made for obsolete and slow moving inventory.
F-7
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
CURRENT ASSETS AND CURRENT LIABILITIES
Assets and liabilities which relate to the production cycle and accounts
receivable collectible within one year of the balance sheet date are classified
as current.
FIXED ASSETS
Fixed assets are stated at cost less accumulated depreciation. Depreciation
is provided principally by the straight line method over the estimated useful
lives of the various classes of assets. The following depreciation rates are
used:
Machinery, fixtures and vehicles..... 12-30%
Rental equipment..................... 20%
Buildings............................ 3-5%
FOREIGN CURRENCY TRANSACTIONS
Current assets and liabilities denominated in foreign currencies are
remeasured using the exchange rate as of each balance sheet date. Unrealized
gains and losses on current assets and liabilities are recognized.
Non-current liabilities denominated in foreign currencies are remeasured
using the higher of the exchange rate on the transaction date or on the balance
sheet date.
Net unrealized foreign currency transaction losses are included in
financial expense. Net unrealized foreign currency transaction gains on
non-current assets and non-current liabilities are not recognized.
Foreign currency gains and losses on forward exchange contracts that are of
a hedge nature are recognized as a component of the transaction being hedged.
LEASES
Leases of equipment are accounted for as operating leases, irrespective of
the terms of the leases. Rentals under these leases are expensed over the lease
term.
PENSIONS
Nodeco AS and its Norwegian subsidiaries sponsor pension plans for
substantially all of their employees. In accordance with Norwegian law, such
plans are funded through contributions to insurance companies that assume all
the liabilities for benefit payments. Employees earn benefits in accordance with
a defined benefits formula and the companies are charged yearly premiums for the
liabilities assumed by the insurance companies. The annual premiums to fund the
plans are expensed.
Employees of the Company's subsidiaries operating outside of Norway
participate in pension plans which are considered to be defined contribution
plans. Contributions to these plans are expensed.
CONTINGENCIES
An estimated loss from a contingency is charged to income if it is probable
that an asset has been impaired or a liability has been incurred at the date of
the financial statements and the amount of the loss can be reasonably estimated.
Disclosure is made for loss contingencies not meeting both those conditions if
there is a reasonable possibility that a material loss may be incurred.
No accruals are made for contingent gains.
INCOME TAXES
Deferred taxes are computed in accordance with the liability method, which
bases the estimated amount of future taxes to be refunded or payable on the
temporary differences between financial and tax bases of assets and liabilities
and on the prevailing tax laws as of the balance sheet date. The impact of any
F-8
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
tax rate or rule changes on deferred tax liabilities is recognized in the year
such changes are legally enacted. Deferred tax assets are only recognized to the
extent the Company has deferred tax liabilities.
EXTRAORDINARY ITEMS
Extraordinary items reflect transactions which are irregular and related to
transactions or decisions outside the normal course of business, unusual in
nature and not expected to occur often or regularly.
NOTE 2 MINORITY INTERESTS
An analysis of changes in the minority interest in consolidated
subsidiaries is as follows (in thousands of NOK):
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Balance at beginning of year......... 1,532 942 --
Dividend paid and other changes in
minority interest.................. (98) -- 1,391
Minority interest in the profit
(loss) for the year................ 935 590 (401)
Disposal of subsidiary............... (677) -- (48)
--------- --------- ---------
Balance at end of the year........... 1,692 1,532 942
========= ========= =========
NOTE 3 RESTRICTED BANK DEPOSITS
Included in cash and bank deposits are deposits restricted for payment of
employee withholding taxes aggregating NOK 1,354,000 and NOK 1,381,000 at
December 31, 1995 and 1994, respectively.
NOTE 4 OVERDRAFT FACILITY
Total overdraft facility amounts to NOK 17,920,000 and NOK 17,764,600 at
December 31, 1995 and 1994, respectively.
NOTE 5 INCOME TAXES
Income tax expense (benefit) consists of (in thousands of NOK):
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Current tax expense.................. 9,096 3,879 795
Deferred tax expense (benefit)....... (95) 99 (942)
--------- --------- ---------
Income tax expense (benefit)......... 9,001 3,978 (147)
========= ========= =========
Overseas taxation included above..... 2,026 1,235 795
========= ========= =========
Deferred tax expense (benefit) consists of changes in temporary differences
related to (in thousands of NOK):
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Inventories.......................... (924) (543) (1,038)
Fixed assets......................... (537) (289) (768)
Other items.......................... (294) 449 (888)
Limitation on deferred tax asset..... 1,660 482 1,752
--------- --------- ---------
Deferred tax expense (benefit)....... (95) 99 (942)
========= ========= =========
F-9
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
The deferred tax liability (asset) consists of temporary differences
related to (in thousands of NOK):
DECEMBER 31,
--------------------
1995 1994
--------- ---------
Inventories.......................... (2,432) (1,508)
Fixed assets......................... (824) (287)
Other items.......................... (633) (339)
Limitation on deferred tax asset..... 3,893 2,233
--------- ---------
Net deferred tax liability........... 4 99
========= =========
The tax expense (benefit) for the year differs from the amounts computed
when applying the Norwegian statutory tax rate of 28% to income before taxes as
a result of the following (all amounts in thousands of NOK):
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Income (loss) before taxes........... 25,534 12,486 (4,615)
Statutory tax rate................... 28% 28% 28%
--------- --------- ---------
Estimated income tax provision
(benefit).......................... 7,150 3,496 (1,292)
Higher tax rates in foreign
jurisdictions and permanent
differences........................ 191 -- (607)
Limitation on deferred tax asset..... 1,660 482 1,752
--------- --------- ---------
Income tax expense (benefit)......... 9,001 3,978 (147)
========= ========= ==========
NOTE 6 FIXED ASSETS
An analysis of changes in fixed assets is as follows (amounts in
thousands of NOK):
<TABLE>
<CAPTION>
MACHINERY,
FIXTURES RENTAL
AND VEHICLES EQUIPMENT BUILDINGS LAND TOTAL
------------ --------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1995:
<S> <C> <C> <C> <C> <C>
Cost at January 1, 1995.............. 33,588 28,219 28,766 3,173 93,746
Translation difference............. (90) (470) -- -- (560)
Additions.......................... 8,746 8,791 3,071 -- 20,608
Disposals.......................... (186) (3,491) (21,907) (2,499) (28,083)
------------ --------- --------- --------- ---------
Cost at December 31, 1995............ 42,058 33,049 9,930 674 85,711
------------ --------- --------- --------- ---------
Depreciation at January 1, 1995...... 19,916 15,244 2,385 -- 37,545
Charge for year.................... 4,223 5,351 784 -- 10,358
Disposals.......................... (49) (1,970) (1,951) -- (3,970)
<PAGE>
------------ --------- --------- --------- ---------
Depreciation at December 31, 1995.... 24,090 18,625 1,218 -- 43,933
------------ --------- --------- --------- ---------
Net book value at December 31,
1995................................. 17,968 14,424 8,712 674 41,778
=========== ========= ========= ========= =========
</TABLE>
F-10
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
MACHINERY,
FIXTURES RENTAL
AND VEHICLES EQUIPMENT BUILDINGS LAND TOTAL
------------ --------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1994:
<S> <C> <C> <C> <C> <C>
Cost at January 1, 1994.............. 28,591 24,351 28,598 2,972 84,512
Additions.......................... 5,232 4,758 168 201 10,359
Disposals.......................... (235) (890) -- -- (1,125)
------------ --------- --------- --------- ---------
Cost at December 31, 1994............ 33,588 28,219 28,766 3,173 93,746
------------ --------- --------- --------- ---------
Depreciation at January 1, 1994...... 15,912 11,242 1,392 -- 28,546
Charge for year.................... 4,048 4,043 993 -- 9,084
Disposals.......................... (44) (41) -- -- (85)
------------ --------- --------- --------- ---------
Depreciation at December 31, 1994.... 19,916 15,244 2,385 -- 37,545
------------ --------- --------- --------- ---------
Net book value at December 31,
1994............................... 13,672 12,975 26,381 3,173 56,201
=========== ========= ========= ========= =========
</TABLE>
A summary of investment in and disposal of fixed assets for each of the
five years in the period ended December 31, 1995 is as follows (in thousands of
NOK):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
INVESTMENT IN FIXED ASSETS:
<S> <C> <C> <C> <C> <C>
Machinery, fixtures and vehicles..... 8,746 5,232 3,295 11,644 2,554
Rental equipment..................... 8,791 4,758 6,989 5,893 5,968
Development cost..................... -- -- -- -- 611
Buildings............................ 3,071 168 167 28,431 313
Land................................. -- 201 12 3,540 --
--------- --------- --------- --------- ---------
20,608 10,359 10,463 49,508 9,446
========= ========= ========= ========= =========
DISPOSAL OF FIXED ASSETS:
Machinery, fixtures and vehicles..... 136 228 133 433 46
Rental equipment..................... 262 983 1,246 1,076 --
Buildings............................ 22,260 -- -- 2,359 41
Land................................. 2,500 -- -- 1,141 --
--------- --------- --------- --------- ---------
25,158 1,211 1,379 5,009 87
========= ========= ========= ========= =========
</TABLE>
F-11
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
NOTE 7 DEBT
The Company's secured loans bear interest at 6% to 12% and are payable in
installments through 2014.
The Company's subordinated loan bears interest at 10% and matures in 1997.
The unused portion of the Company's secured overdraft facility was NOK
7,694,000 at December 31, 1995.
The book value of assets pledged as security for debt are as follows (in
thousands of NOK):
1995 1994
--------- ---------
Accounts receivable.................. 29,888 19,096
Other short-term receivables......... 4,402 5,490
Inventories.......................... 35,452 23,923
Machinery, fixtures, vehicles and
rental equipment..................... 32,097 25,113
Buildings............................ 8,073 26,380
Land................................. 472 2,972
--------- ---------
Total........................... 110,384 102,974
========= =========
NOTE 8 LEASE COMMITMENTS
Future minimum lease payments under noncancelable operating leases for
equipment and premises as of December 31, 1995 are as follows (in thousands of
NOK):
1996................................. 6,068
1997................................. 3,423
1998................................. 2,760
1999................................. 2,760
2000................................. 2,760
Thereafter........................... 2,765
---------
20,536
=========
NOTE 9 EXTRAORDINARY GAIN (LOSS)
In 1995 Nodeco AS ceased operations of its drilling services, performed by
its subsidiary Nodecore AS. Costs incurred relating to the termination of
operations were NOK 935,000 and are classified as extraordinary.
In 1995 Nodeco AS recognized a gain of NOK 2,305,000 on the sale of a
subsidiary which owns real estate. The gain is classified as extraordinary.
In 1993 a subsidiary of Nodeco AS was granted a forgiveness of debt related
to a bank loan. The gain on this transaction is classified as extraordinary.
In 1993 Nodeco AS terminated the operations related to a subsidiary,
Pressure Test Laboratories AS, and the operations related to robotic systems.
The results of these operations for 1993 and losses on disposal are classified
as extraordinary.
F-12
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
NOTE 10 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
FOLLOWED BY THE COMPANY AND U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
The accompanying consolidated financial statements have been prepared in
accordance with Norwegian GAAP, which differs in certain respects from US GAAP.
These differences are reflected in the reconciliation provided in Note 11 and
principally relate to the following items:
BUSINESS COMBINATIONS
As described in Note 1, under Norwegian GAAP, the acquisition of Aarbakke
AS in 1992 was accounted for as a merger. Merger accounting is similar to the
pooling-of-interests method of accounting for acquisitions under US GAAP. The
requirements for merger accounting are, however, less restrictive than those for
pooling-of-interests. Under US GAAP, the acquisition of Aarbakke AS is accounted
for using the purchase method of accounting and the assets and liabilities of
Aarbakke AS are recorded at their fair value as of the date of the acquisition.
Also, under US GAAP the results of operations of Aarbakke AS are only included
in the consolidated financial statements of the Company from the date of the
acquisition. Goodwill recognized in accordance with US GAAP arising on the
acquisition of Aarbakke AS is amortized over 10 years.
LEASES
Under the terms of several leases for production equipment, substantially
all the risks and rewards of ownership of the leased assets are transferred to
the Company. Such leases have been accounted for as operational leases in the
Norwegian GAAP financial statements. Under US GAAP these leases are considered
to be capital leases whereby they are recorded as the acquisition of assets and
liabilities incurred.
DEFERRED TAX ASSET
Norwegian GAAP prohibits recognition of a net deferred tax asset. Under US
GAAP, deferred tax assets are recognized to the extent realization is considered
probable.
PENSIONS
In the Norwegian GAAP financial statements, pension cost is charged to
expense based upon premiums paid to an insurance company for funded plans.
Under US GAAP, pension cost is actuarially determined in accordance with
Statement of Financial Accounting Standards (SFAS) No. 87, "Employers"
Accounting for Pensions'.
EMPLOYEE STOCK OPTIONS
For purposes of Norwegian GAAP, Nodeco does not recognize any expense
related to employee stock options. Under US GAAP, in accordance with Accounting
Principles Board Statement No. 25, Nodeco measures compensation expense as the
difference between the option price and the fair value of the underlying stock
at the date the option is granted and accrues the expense
over the vesting period.
EXTRAORDINARY GAINS AND LOSSES
Under Norwegian GAAP, the criteria for classification of gains or losses as
extraordinary are less restrictive than the criteria applied under US GAAP.
Accordingly, an item which is considered to be extraordinary under Norwegian
GAAP may not be considered extraordinary under US GAAP. Under Norwegian GAAP,
extraordinary gains and losses are presented before income taxes. Under US GAAP,
extraordinary gains and losses are presented net of related income taxes. The
differences between Norwegian GAAP and US GAAP in the determination and
presentation of extraordinary items does not result in differences in net income
or shareholders' equity.
F-13
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
FOREIGN CURRENCY TRANSACTIONS
As described in Note 1, under Norwegian GAAP the Company follows a policy
of remeasuring non-current liabilities denominated in a foreign currency using
the higher of the exchange rate on the transaction date or on the balance sheet
date. Net unrealized gains on non-current assets and liabilities denominated in
foreign currency calculated on a portfolio basis are not recognized in income.
Under US GAAP, all assets and liabilities denominated in a foreign currency are
remeasured using the year-end exchange rate, and both unrealized gains and
unrealized losses are recognized currently in income.
DIVIDENDS
Under Norwegian law, dividends are payable out of annual earnings. The
amount of dividends is subject to approval by the Company's shareholders at the
annual general meeting, following the fiscal year to which the dividends relate.
Under Norwegian GAAP, dividends are accrued in the year of the earnings to which
they relate. Under US GAAP, dividends are recorded when declared. Accordingly,
under US GAAP, dividends are recorded in the year following the year in which
they are recorded under Norwegian GAAP.
CLASSIFICATION OF CASH FLOWS
For Norwegian GAAP purposes, Nodeco has presented the reduction in
consolidated assets and liabilities which results from the 1995 sale of its
subsidiary, Bryne Petropark AS, as cash flows related to operating, investing
and financing activities, depending upon the classification of the related
balance sheet items of such subsidiary. Under US GAAP, the total net proceeds
from the sale of such subsidiary are presented as one line item within cash
flows from investing activities. For US GAAP purposes, cash flows from
operating, investing and financing activities aggregate a positive NOK
10,783,000, a negative NOK 16,210,000 and a positive NOK 4,662,000,
respectively, for the year ended December 31, 1995.
F-14
NODECO AS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1993 UNAUDITED) -- (CONTINUED)
NOTE 11 RECONCILIATION OF NET INCOME AND SHAREHOLDERS' EQUITY TO U.S.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The following is a summary of the estimated adjustments to shareholders'
equity and net income as of December 31, 1995 and 1994 and for the years then
ended that would be required if US GAAP had been applied instead of Norwegian
GAAP in the consolidated financial statements (in thousands of NOK):
As Of And For The
Year Ended December 31,
--------------------
1995 1994
--------- ---------
Net income in Norwegian GAAP
consolidated financial
statements......................... 15,598 7,918
Increase (decrease) due to:
Accounting for leases........... 1,334 1,143
Pension costs................... 374 --
Change in deferred tax asset.... 1,660 482
Difference in depreciation of
fixed assets acquired in the
Aarbakke AS purchase........... 260 (162)
Amortization of goodwill arising
from the Aarbakke AS
purchase....................... (1,118) (1,118)
Stock options................... -- (441)
Deferred taxes related to the
adjustments above.............. (551) (275)
--------- ---------
Net income in conformity with US
GAAP............................... 17,557 7,547
========= =========
Shareholders' equity in Norwegian
GAAP consolidated financial
statements......................... 44,908 29,020
Increase (decrease) due to:
Goodwill arising from the
Aarbakke AS purchase........... 7,545 8,663
Accounting for leases........... 6,639 5,304
Purchase accounting adjustments
related to fixed assets
acquired in the Aarbakke AS
purchase....................... 1,380 1,120
Dividends....................... -- 4,938
Pension costs................... 92 (282)
Deferred tax asset.............. 3,893 2,233
Deferred taxes related to the
adjustments above.............. (2,271) (1,719)
--------- ---------
Shareholders' equity in conformity
with US GAAP....................... 62,186 49,277
========= =========
F-15
APPENDIX A:
PURCHASE AND SALE AGREEMENT
A-1
PURCHASE AND SALE AGREEMENT
BETWEEN
NODECO AS AND AARBAKKE AS, AS SELLERS
AND
WEATHERFORD ENTERRA, INC., AS PURCHASER
RELATING TO THE BUSINESS, ASSETS AND LIABILITIES OF
NODECO AS AND AARBAKKE AS
LIST OF CONTENT
PAGE
----
1 DEFINITIONS AND INTERPRETATION... 1
2 SALE AND PURCHASE................ 3
3 CONSIDERATION.................... 4
4 DUE DILIGENCE.................... 5
5 EFFECTIVE DATE................... 5
6 APPROVAL BY THE MINISTRY OF
INDUSTRY AND ENERGY............. 6
7 SELLERS' COVENANTS............... 6
8 SELLERS' WARRANTIES AND
INDEMNIFICATION................. 7
9 PURCHASER'S WARRANTIES AND
INDEMNIFICATION................. 9
10 THE REGISTRATION STATEMENT; SALE
OF CONSIDERATION SHARES......... 10
11 THE CONTRACTS.................... 10
12 INDEMNITY BY THE PURCHASER....... 10
13 BOOKS AND RECORDS................ 11
14 NON-COMPETITION.................. 11
15 COSTS AND TAXES.................. 11
16 SUCCESSORS AND ASSIGNS........... 11
17 CHANGE OF NAME................... 12
18 BROKERAGES AND COMMISSIONS....... 12
19 ANNOUNCEMENTS.................... 12
20 NOTICES AND RECEIPTS............. 12
21 GENERAL PROVISIONS............... 12
22 ENTIRE AGREEMENT; THIRD PARTY
BENEFICIARIES................... 13
23 LAW AND JURISDICTION............. 14
Schedule 1: Audited Accounts for 1995 of each of the Sellers and each of the
Subsidiaries and for Nodeco on a consolidated basis ("Accounts")
Schedule 2: List of Equipment
Schedule 3: List of Motor Vehicles
Schedule 4: List of Property
Schedule 5: List of Rental Equipment
Schedule 6: Sellers' Warranties
Schedule 7: List of Shareholders
Schedule 8: List of Employees
Schedule 9: Purchaser's Warranties
Schedule 10: List of material contracts
Schedule 11: List of Intangible Property
Schedule 12: Excluded Assets
Schedule 13: Form of Shareholders' Guarantee
Schedule 14: Disclosure Letter
Schedule 15: Unaudited balance sheets as of January 31, 1996 and February
29, 1996 and unaudited profit and loss accounts for the one and
two months periods then ended ("unaudited financials") of Nodeco,
Aarbakke each Subsidiary and Nodeco on a consolidated basis.
i
This purchase and sale agreement (the "Agreement") is entered into on the
28th day of March 1996 by and between:
1 NODECO AS, Haland Haust, Postboks 10, N-4341 Bryne, Organisation No
917757984 ("Nodeco"), and
2 AARBAKKE AS, Kong Haakonsvei 4, N-4341 Bryne, Organisation No
870920962 ("Aarbakke")
(Nodeco and Aarbakke are collectively referred to as the "Sellers"
and are jointly and severally liable for Sellers' obligations under
this Agreement), and
3 WEATHERFORD ENTERRA, INC., 1360 Post Oak Blvd. Suite 1000,
Houston, Texas TX 77056, USA (the "Purchaser")
WHEREAS
A Nodeco is a Norwegian joint stock company that designs, manufactures
and sells oil and gas well completion products primarily consisting
of liner hanger equipment and related services as well as packers
used in completions with electric submersible pumps.
B Aarbakke is a wholly owned subsidiary of Nodeco.
C The Purchaser is a Houston, Texas-based diversified international
energy service and manufacturing company that provides products and
services around the world to the oil and gas exploration, production
and transmission industries.
D The Purchaser wishes to acquire the Business (as defined below) on a
going concern basis through the purchase of all of the Assets (as
defined below) and the assumption of all of the Assumed Liabilities
(as defined below).
NOW THEREFORE, the Parties (as defined below) have agreed as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement:
"Accounts" means the audited balance sheets as of the Accounts Date
and audited profit and loss accounts for the year ended on the Accounts
Date of Nodeco, Aarbakke, each Subsidiary and Nodeco on a consolidated
basis and the notes and directors' report relating to them as set out in
Schedule 1.
"Accounts Date" means December 31, 1995.
"Assets" means all the assets (other than the Excluded Assets) and
contractual rights of the Sellers at the Effective Date whether reflected
on the Sellers' balance sheets included in the Accounts or not and
including, but not limited to, cash and cash equivalents, the Contracts,
the Equipment, the Rental Equipment, the Goodwill, the Motor Vehicles, the
Property, the Shares, the Stock, the Intangible Property and the
Outstanding Claims.
"Assumed Liabilities" means all liabilities (other than the Excluded
Liabilities) of the Sellers at the Effective Date whether or not reflected
on the Sellers' balance sheets included in the Accounts, and whether or not
accrued, absolute, contingent or otherwise.
"Business" means the business being carried on by the Sellers on the
Effective Date through the Assets and the Assumed Liabilities.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New
York, New York are authorised or obligated by law to close.
"Consideration Shares" means 750,000 shares of the Purchaser's common
stock, par value USD 0.10 per share, to be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and listed on the New York
Stock Exchange prior to the Effective Date.
1
"Contracts" means all the written or oral contracts related to the
Business to which the Sellers are a party.
"Disclosure Letter" means a letter of today's date from the Sellers to
the Purchaser, attached hereto as Schedule 14.
"Effective Date" means (a) the latest of (i) the fifth Business Day
after the Purchaser has notified the Sellers in writing that the Securities
and Exchange Commission ("SEC") has declared the Registration Statement (as
defined in Clause 5.3 hereof) effective under the Securities Act, provided
that on such fifth Business Day no stop order shall be in effect with
respect thereto, and (ii) the first Business Day after such stop order has
been removed (such notice of effectiveness or removal of a stop order to be
given by the Purchaser immediately after the SEC has declared the
Registration Statement effective or has removed such stop order) and (iii)
the fifth Norwegian business day after the Purchaser has notified the
Sellers in writing of Ministry Approval (such notice of approval to be
given by the Purchaser immediately after the Ministry Approval), and (iv)
the approval of the shareholders of each Seller of the sale of the Business
and Assets to the Purchaser; provided, however, that the Purchaser may, in
its sole discretion, waive the requirement of Ministry Approval, in which
case the Effective Date shall be the latest of (i), (ii) and (iv) above, or
(b) such other day as the Sellers and the Purchaser may agree.
"Employees" means the Sellers' employees as set out in Schedule 8.
"Equipment" means the tangible assets (other than Motor Vehicles and
the Stock) employed in or used for the purpose of the Business including,
but not limited to, the fixed and loose plant, machinery, furniture,
fittings, implements, tools, utensils, computer hardware and software and
other chattels wherever situated owned by the Sellers for the use in the
conduct of the Business as set out in Schedule 2.
"Excluded Assets" means the assets as set out in Schedule 12.
"Excluded Liabilities" means Net Debt in excess of NOK 32 mill. at
the Accounts Date.
"Goodwill" means the goodwill of the Sellers relating to the Business
including, but not limited to, the right of the Purchaser to represent
itself as carrying on the Business in succession of the Sellers.
"Intangible Property" means the patents, trademarks, service marks,
trade names and applications for any of the foregoing set out in Schedule
11.
"Ministry Approval" means approval by the Ministry of Industry and
Energy under the Norwegian Acquisition of Business Act of 1994 of the
purchase of the Business by the Purchaser without conditions that
materially alter the economic value to the Purchaser of the transaction or,
alternatively that the time limit under 10 of the Norwegian Acquisition of
Business Act of 1994 has elapsed without further notice from the Ministry
of Industry and Energy.
"Motor Vehicles" means the Motor Vehicles owned by the Sellers,
details of which are set out in Schedule 3.
"Net Debt" means the sum of Nodeco's (on a consolidated basis) bank
overdrafts, other short-term interest bearing liabilities, mortgage and
other long-term debt and subordinated loans less any cash and cash
equivalents as listed in the Accounts at the Accounts Date.
"Outstanding Claims" means the accounts receivable, prepayments and
existing legal claims, including unasserted claims, of the Sellers as of
the Effective Date.
"Parties" means the Purchaser and the Sellers.
"Products" means the products produced and sold by the Business.
"Property" means the real property owned, leased or rented by the
Sellers, details of which are set out in Schedule 4.
"Rental Equipment" means the equipment set out in Schedule 5.
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"Shares" means 100% of the shares of Nodeco Limited, 100% of the
shares of Aarbakke Eiendom AS and 51% of the shares of Subsurface
Technology AS.
"Shareholders" means the shareholders as set out in Schedule 7.
"Stock" means the stock-in-trade owned by the Sellers in connection
with the Business at the Effective Date.
"Subsidiaries" means Nodeco Limited, Aarbakke Eiendom AS and
Subsurface Technology AS (owned 51% by Nodeco).
"Warranties" means the Sellers' warranties set out in Clause 8 of
this Agreement.
2 SALE AND PURCHASE
2.1 Subject to the assumption of the Assumed Liabilities by the Purchaser
and in consideration of the payment to the Sellers of the Purchase Price (as
defined in Section 3.1 hereof), the Sellers hereby sell and agree to transfer
the Assets and the Business to the Purchaser as a going concern on the Effective
Date, and the Purchaser agrees to purchase the Assets and the Business and to
assume the Assumed Liabilities on the Effective Date.
2.2 The Assets to be purchased by the Purchaser shall, for the sake of
clarification, include, but not be limited to:
a) cash and cash equivalents
b) the Equipment
c) the Rental Equipment
d) the Motor Vehicles
e) the Goodwill
f) the Outstanding Claims
g) the Property
h) the Shares
i) the Stock
j) the benefit (subject
to the burden) of the
Contracts
k) the Intangible
Property.
l) all amounts allocated to the Sellers' collective pension plan as
of the Effective Date in excess of the liability under the plan
at the Effective Date.
2.3 The Purchaser agrees to assume all the Assumed Liabilities as of the
Effective Date; which, for the sake of clarification includes, but is not
limited to:
(i) the employment contracts of all of the Sellers' employees as of
the Effective Date (including any and all liabilities for
holiday allowances, unpaid salaries and other benefits as of the
Effective Date),
(ii) the Sellers' collective pension plan as of the Effective Date,
(iii)the Sellers' lease agreements for the Sellers' property in
Haland Haust, Bryne and Nyland, Bryne,
(iv) any orders from customers received and accepted but not yet
delivered as of the Effective Date,
(v) any taxes allocated or attributable to any period up to the
Effective Date,
together with such other liabilities by way of obligations under the Contracts
or otherwise (other than the Excluded Liabilities), which, as of the Effective
Date, shall be considered as an integrated part of the Business as a going
concern.
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A list of all the Sellers' Employees as of the date hereof is set out in
Schedule 8 hereto setting out, inter alia, for each employee, the name of the
employee, the employee's age, the date the employee was employed by the Sellers,
the employee's salary (including profit sharing plans, incentive bonus plans or
other employee benefits) and the employee's position as of the date hereof. The
Purchaser undertakes to offer each employee a similar position on similar terms
as set out in Schedule 8 at the Effective Date and shall offer each employee a
new employment contract for this purpose prior to the Effective Date.
3 CONSIDERATION
3.1 The Purchase Price for the Assets and the Business (the "Purchase
Price") shall be NOK 260,000,000 (Norwegiankroner twohundredandsixtymillion)
representing the sum of the Cash Consideration and the Share Consideration as
set out in Clause 3.2, as adjusted in Clause 3.3; provided, however, that if the
average Purchaser common stock closing price (as determined below) exceeds USD
35.00 per share or is less than USD 25.00 per share, the Purchase Price shall
not equal NOK 260,000,000. In addition, the Purchaser shall assume the Assumed
Liabilities as of the Effective Date.
3.2 Subject to the adjustments described in Clause 3.3, the Purchase Price
shall consist of the following:
a) Cash Consideration: NOK 117,649,250
b) Share Consideration: Consideration Shares
3.3 Adjustments to Cash Consideration: The Purchaser and the Sellers agree
to adjust the Cash Consideration set forth above to be paid to Sellers to
compensate for movements in Purchaser's stock price and the NOK/USD exchange
rate between the date hereof and the Effective Date, subject to certain
limitations. Specifically, the Cash Consideration set forth above will be
adjusted at the Effective Date according to the following formula:
Adjustment to Cash Consideration =
NOK 142,350,750 -- (Average Stock Price x 750,000 x Exchange Rate)
If the adjustment referred to above is a positive number, the Cash
Consideration shall be increased by an amount equal to such positive number. If
the adjustment is a negative number, the Cash Consideration shall be decreased
by an amount equal to such negative number. On the Effective Date, the Purchaser
shall pay to the Sellers the Cash Consideration, as so adjusted.
"Average Stock Price" shall mean the average Purchaser common stock closing
price as reported in the New York Stock Exchange Composite Transaction List in
The Wall Street Journal for the 10 Business Days ending on the last Business Day
prior to the Effective Date, provided, however, that if the average Purchaser
common stock closing price for the 10 Business Days ending on the last Business
Day prior to the Effective Date is greater than USD 35.00 per share, the
"Average Stock Price" shall be USD 35.00; provided, further, that if the average
Purchaser common stock closing price for the 10 Business Days ending on the last
Business Day prior to the Effective Date is less than USD 25.00 per share, the
"Average Stock Price" shall be USD 25.00. Notwithstanding the foregoing, if the
average Purchaser common stock closing price for the 10 Business Days ending on
the last Business Day prior to the Effective Date is less than USD 20.00 per
share, the Purchaser may either (i) terminate this Agreement by notice to
Sellers or (ii) pay the following to Sellers at the Effective Date as additional
Cash Consideration:
(the amount by which USD 20.00 exceeds the average Purchaser common
stock closing price for the 10 Business Days ending on the last Business
Day prior to the Effective Date) x 750,000 x Exchange Rate.
"Exchange Rate" shall mean the average NOK/USD exchange rate as reported by
Dagens Naeringsliv for the 10 Business Days ending on the last Business Day
prior to the Effective Date; provided, however, that if the average NOK/USD
exchange rate for the 10 Business Days ending on the last Business Day prior to
the Effective Date is greater than 6.4532 NOK/USD, the "Exchange Rate" shall be
6.4532; provided,
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further, that if the average NOK/USD exchange rate for the 10 Business Days
ending on the last Business Day prior to the Effective Date is less than 6.2002
NOK/USD, the "Exchange Rate" shall be 6.2002.
3.4 Interest: The Sellers shall be entitled to interest on the Purchase
Price at the rate of 5% p a for the period beginning on the sixth Business Day
after the date the SEC has declared the Registration Statement effective under
the Securities Act and ending on the earlier of (i) the last Business Day prior
to the Effective Date and (ii) 60 days from the date hereof. In the event the
Effective Date has not taken place within 60 days from the date hereof and the
Sellers do not exercise the option to terminate this Agreement after 60 days
under Clause 5.4, the Sellers shall be entitled to interest on the Purchase
Price at the rate of 10% p a for a period beginning on the 61st day after the
date hereof and ending on the last Business Day prior to the Effective Date.
Interest accrued shall be paid by the Purchaser to the Sellers at the Effective
Date.
4 DUE DILIGENCE
The Purchaser and its advisers have had, prior to the date of this
Agreement, full access and opportunity to carry out a due diligence review of
the Sellers and the Subsidiaries. The Purchaser and any person authorised by it
have been given full access to the business, properties and the books and
records relating to such financial, accounting, tax, legal, employment and
customer related matters of the Sellers and the Subsidiaries as the Purchaser
has required.
5 EFFECTIVE DATE
5.1 The Parties agree that the Assets, Business and the Assumed Liabilities
shall be acquired by the Purchaser on the Effective Date.
Subject to the provisions of this Clause 5, the closing shall take place at
the offices of Norsk Vekst ASA in Oslo, Norway on the Effective Date.
The Sellers shall, on or prior to the Effective Date, deliver the following
documents to the Purchaser:
a) A certified copy of the Company Certificate (firmaattest) and
Articles of Association (vedtekter) of each of the Sellers and the
Subsidiaries.
b) Certified copies of minutes of a meeting of the Board of Directors
and of the shareholders' meeting of each of the Sellers authorising
the sale of the Business and the Assets to the Purchaser and the
assumption of the Assumed Liabilities by the Purchaser on the terms
and conditions set out in this Agreement.
5.2 On the Effective Date the Sellers shall also:
a) deliver to the Purchaser such notification to public registry, and
such bills of sale, deeds, assignments and similar instruments, as
shall be required to formally transfer ownership of the Assets to
the Purchaser duly executed by the Sellers;
b) make available for collection by the Purchaser the originals of
the Contracts (to the extent available in writing);
c) execute and deliver to the Purchaser deeds of assignment or novation
in the agreed terms (to the extent that the same may be legally or
equitably assignable or otherwise subject to Clause 11) of the
benefit (subject to the burden) of the Contracts including any
monies due or owing to the Sellers under the Contracts;
d) deliver to the Purchaser all the share certificates for the Shares
with duly executed transfers in favour of Purchaser;
e) deliver to the Purchaser a certificate from the Chairman of the
Board of Directors of Nodeco to the effect that each of the
statements in Schedule 6 is true and accurate on the Effective Date
and does not omit any material fact and that the Sellers have
complied with all covenants required to be complied with by them
prior to the Effective Date; and
f) deliver to the Purchaser duly executed Shareholders guarantees in
accordance with Schedule 13.
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5.3 On the Effective Date the Purchaser shall:
a) satisfy the Cash Consideration referred to in Clause 3.2, as
adjusted by Clause 3.3, by payment of the Cash Consideration as
adjusted, together with interest accrued on the Purchase Price, if
any, pursuant to Clause 3.4, to the Sellers nominated bank account;
b) deliver to Nodeco share certificates (without any restrictive
legends) issued in the name of Nodeco representing the Consideration
Shares together with the prospectus which will be included in the
Purchaser's Registration Statement on Form S-3 or other appropriate
form with respect to the Consideration Shares (the "Registration
Statement");
c) deliver to the Sellers counterparts of the documents referred to
in Clause 5.2.c duly executed and acknowledged as appropriate by
the Purchaser;
d) deliver to the Sellers a certified copy of minutes of the Board of
Directors of the Purchaser approving the entering into by the
Purchaser of this Agreement, the issuance of the Consideration
Shares to the Sellers, the payment of the Cash Consideration
referred to in Clause 3.2, as adjusted by Clause 3.3, the filing of
the Registration Statement with the SEC and the entering into of and
any other documents referred to in this Agreement;
e) deliver to the Sellers a certificate from the Secretary of the
Purchaser to the effect that each of the statements in Schedule 9 is
true and accurate on the Effective Date and does not omit any
material fact and that the Purchaser has complied with all covenants
required to be complied with by it prior to the Effective Date; and
f) deliver to the Sellers a confirmation of Ministry Approval,
unless the Purchaser, in its sole discretion, has waived the
requirement of Ministry Approval.
All the Assets are transferred "as is, where is" at the Effective Date.
5.4 In the event the SEC has not declared the Registration Statement
effective and all stop orders have not been removed within 60 days from the
signing of this Agreement, or, unless the Purchaser has waived the requirement
of Ministry Approval, in the event the Purchaser has not obtained Ministry
Approval within 60 days from signing of this Agreement, the Sellers shall have
the right to terminate this Agreement. The Sellers may only exercise such option
to terminate this Agreement by delivery to the Purchaser of a written notice to
such effect within 5 Business Days after such 60 day time limit has elapsed. In
the absence of such timely notice, a new period shall run for another 60 days
after which, in the event the SEC has not declared the Registration Statement
effective and all stop orders have not been removed within 120 days from the
signing of this Agreement, or, unless the Purchaser has waived the requirement
of Ministry Approval, in the event the Purchaser has not obtained Ministry
Approval within 120 days from signing of this Agreement, each Party shall have
the right to terminate this Agreement. Each Party may only exercise such option
to terminate this Agreement by delivery to the other Parties of a written notice
to such effect within 5 Business Days after such 120 days time limit has
elapsed.
6 APPROVAL BY THE MINISTRY OF INDUSTRY AND ENERGY
6.1 At the signing of this Agreement the Purchaser shall provide the
Sellers with a copy of the completed draft application for Ministry Approval in
form and substance acceptable to Nodeco.
The Purchaser undertakes to apply for Ministry Approval immediately after
signing of the Agreement. In the event further information is required by the
Ministry of Industry and Energy, the Parties shall co-operate in presenting such
information.
The Purchaser shall be entitled to terminate the Agreement in the event
Ministry Approval is not obtained, unless the Purchaser, in its sole discretion,
has waived the requirement of Ministry Approval.
7 SELLERS' COVENANTS
The Sellers hereby covenant and agree with the Purchaser that from the date
hereof until the Effective Date, the Sellers shall and shall cause each
Subsidiary to:
6
(i) conduct the business of the Sellers and the Subsidiaries in the
ordinary and usual course, consistent with past practices.
(ii) not without the Purchaser's prior approval, issue shares of the
Sellers' or the Subsidiaries' stock, grant any options,
warrants or other rights to purchase such stock; declare or pay
any dividends; redeem any stock; amend the Articles of
Association or the Bylaws of either Seller or any Subsidiary;
sell, pledge or dispose of any assets of either Seller or any
Subsidiary (other than in the ordinary and usual course of
business, consistent with past practice); grant to any
director, officer or employee any increase in compensation or
any severance or termination pay in excess of what is
consistent with prior business practice (except as required by
law); or establish any new or increase any existing pension
plans, profit sharing plans or employee benefits; acquire any
corporation, partnership or other business organisation; incur
any indebtedness other than in the ordinary and usual course of
business consistent with past practice; grant any guarantee or
financial support of any kind to third parties other than in
the ordinary and usual course of business consistent with past
practice; enter into any material contracts or engage in any
transaction which, even though in the ordinary and usual course
of business, is not consistent with the prior business practice
of the Sellers or the Subsidiaries; or make any changes in the
accounting principles and practises of the Sellers or the
Subsidiaries.
(iii) not adopt or file a plan of complete or partial liquidation,
dissolution, merger or other reorganisation.
(iv) not do anything that may cause the Sellers' warranties to
become incorrect.
(v) make all reasonable efforts to preserve intact all licenses and
permits of the Sellers and the Subsidiaries and maintain the
business relationships of the Sellers and the Subsidiaries.
(vi) pay any taxes (social security premiums included) or other
amounts owed and to file any tax returns or other similar filings
required by applicable law.
(vii) each Seller shall call and hold a meeting of its shareholders
at which meeting such shareholders will be asked to approve the
sale of the Business and the Assets to the Purchaser and the
assumption of the Assumed Liabilities by the Purchaser,
provided that each Seller shall use its best efforts to hold
such meeting as promptly as is practicable following the
declaration by the SEC of the effectiveness of the Registration
Statement.
The Purchaser shall be given full access at all reasonable times to the
premises and records of the Sellers and the Subsidiaries and the Sellers shall
upon request furnish information regarding the Business requested by the
Purchaser.
8 SELLERS' WARRANTIES AND INDEMNIFICATION
8.1 The Sellers warrant to the Purchaser that at the date hereof:
a) Each of the statements in the Schedules (except Schedules 9 and
13) is true and accurate and the Schedules do not omit any
material fact;
b) the Sellers have, to the best of their knowledge, provided all
information relating to the Sellers and the Subsidiaries and
their respective affairs which would be material to the Purchaser
for the valuation of the Business and the Assets;
8.2 If any one or more of the warranties in Clause 8.1 or in the Schedules
are untrue, inaccurate, misleading or breached at the Effective Date, the Cash
Consideration to be paid at the Effective Date shall be reduced by the
Deficiency Amount (as such term is defined below); provided that if the
Purchaser provides written notice to the Sellers, or the Sellers provide written
notice to the Purchaser, that the aggregate Deficiency Amount is in excess of
NOK 44,000,000, the Parties shall use their reasonable best efforts to reach an
agreement with respect to the sale of the Business to the Purchaser on mutually
acceptable terms; provided further that if the Parties are unable to reach such
an agreement within
7
10 Business Days following delivery of any such notice, any Party may terminate
this Agreement by delivery to the other Parties of a written notice to such
effect within 5 Business Days after such 10 Business Day time limit has elapsed.
The "Deficiency Amount" shall equal, as applicable, the value at the Effective
Date of the specific Assets (or portions thereof) and the specific Assumed
Liabilities (or portions thereof) that resulted in the warranties in Clause 8.1
and the Schedules being untrue, inaccurate, misleading or breached; provided
that "Deficiency Amount" shall not include any indirect or consequential loss or
damage, including, but not limited to, loss of goodwill or similarly related
indirect losses or damages. If any one or more of the warranties in Clause 8.1
and the Schedules are untrue, inaccurate, misleading or breached at the
Effective Date, but such untrue, inaccurate, misleading or breached warranty is
not discovered until after the Effective Date, the Sellers shall promptly
reimburse to the Purchaser an amount equal to the Deficiency Amount, plus
interest on such amount at the rate of 8% per annum from the Effective Date
until the date of repayment.
To the extent that any third party presents a claim against the Purchaser
or any Subsidiary related to events that occurred prior to the Effective Date
and such claim has not resulted in the reduction of the Cash Consideration at
the Effective Date or a reimbursement by the Sellers to the Purchaser as
described in the immediately preceding paragraph, the Sellers shall indemnify
and hold harmless the Purchaser and the Subsidiaries, as the case may be,
against all losses, claims, damages, liabilities, costs or other expenses
("Losses") relating to such third party claims that the Purchaser or any
Subsidiary, as the case may be, may reasonably incur or become subject to,
insofar as such Losses (or actions in respect thereof) arise out of, are based
upon or are in connection with any untrue, inaccurate, misleading or breached
warranty made by the Sellers under Clause 8.1 or the Schedules, by reimbursing
the Purchaser an amount equal to such Losses, provided that Losses shall not
include any indirect or consequential loss or damage, including, but not limited
to, loss of goodwill or similarly related indirect losses or damages.
The Sellers shall without undue delay be notified of any third party claim
for which indemnification will be sought by the Purchaser or any Subsidiary
under this Agreement and the Sellers will have the right to assume control and
direct defence thereof using counsel selected by the Sellers provided that such
counsel shall not have a conflict with the Purchaser in connection with such
legal representation. The Parties shall cooperate with each other and provide
each other with access to relevant books and records in their possession. No
such third party claim shall be settled without the prior written consent of the
Sellers. If a firm written offer is made to settle any such third party claim
and the Sellers propose to accept such settlement, and the Purchaser refuses to
consent to such settlement, then the Sellers shall be excused from and the
Purchaser shall be solely responsible for all further defence of such third
party claim. The maximum liability for the Sellers relating to such third party
claim shall be the amount of the proposed settlement.
For a period of three years from the Effective Date, the Sellers will
indemnify and hold harmless the Purchaser and the Subsidiaries as the case may
be against any and all Losses (including deficiencies, taxes, interest and
penalties) they may reasonably incur or become subject to, insofar as such
Losses arise out of, are based upon or are in connection with a claim by any
taxing authority for any taxes allocated or attributable to any period ending on
or before the Accounts Date, which has not been included in the Accounts;
provided however, that this indemnity shall only apply if the Purchaser and the
Subsidiaries have given the Sellers the right to take all action to refute such
claim by such taxing authority.
The Sellers shall promptly reimburse each indemnified party for all legal
or other expenses reasonably incurred by it in connection with investigating or
defending any Losses, including any amounts paid in settlement of any litigation
commenced or threatened if such settlement is effected with a prior written
consent of the Sellers.
The liability of the Sellers under this Clause 8.2 (other than liability
under the fourth paragraph hereof) shall not arise unless the aggregate amount
of all claims (other than claims under the fourth paragraph hereof) exceeds NOK
4,000,000, in which event the liability of the Sellers shall be limited to the
amount in excess of NOK 4,000,000. The liability of the Sellers under the fourth
paragraph of this Clause 8.2 shall not arise unless the aggregate amount of all
claims under the fourth paragraph of this Clause 8.2 exceeds NOK
8
1,000,000, in which event the liability of the Sellers shall be limited to the
amount in excess of NOK 1,000,000.
8.3 The liabilities of the Sellers in respect of the warranties (except
those referred to in Clause 8.2, fourth paragraph above) shall terminate one
year after the Effective Date unless written notice of the matter complained of
(giving such details as shall be reasonably practicable) shall have been given
by the Purchaser to the Sellers prior to the expiry of such one year period.
8.4 The Sellers' liability under this clause shall under no circumstances
exceed in aggregate NOK 75 million. No claim shall be made in respect of
indirect or consequential loss or damage.
8.5 The Sellers shall not be liable for any claim under this Clause 8, when
the claim or the issues and circumstances giving rise to the claim is disclosed
to the Purchaser in the Accounts, in the Disclosure Letter or during the
Purchaser's due diligence review of the Sellers and its Subsidiaries, provided,
however, the Sellers can prove beyond reasonable doubt that such disclosure has
taken place.
8.6 The Sellers' liability under this clause shall be guaranteed by the
Shareholders in a joint but not several manner and in the form set forth in
Schedule 13 and none of the Shareholders shall be responsible towards the
Purchaser for more than its percentage of any claim presented which is equal to
its guarantee percentage as set out in Schedule 7.
8.7 The warranties in Clause 8.1 and the Schedules, and the remedies
available to the Purchaser in case of breach of warranties set out in this
Agreement, are exhaustive and the Sellers shall have no liability to the
Purchaser other than as set out in this Agreement.
9 PURCHASER'S WARRANTIES AND INDEMNIFICATION
9.1 The Purchaser warrants to the Sellers that at the date hereof each of
the statements in Schedule 9 is true and accurate and Schedule 9 does not omit
any material fact.
9.2 Purchaser shall indemnify and hold harmless each Seller against all
Losses it may reasonably incur or become subject to under the Securities Act,
the Securities Exchange Act of 1934, as amended, or otherwise, insofar as such
Losses (or actions in respect thereof) arise out of, are based upon or are in
connection with (1) any untrue, inaccurate, misleading or breached warranty made
by the Purchaser under Clause 9.1 or Schedule 9; (2) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the prospectus included therein, or any amendments, supplements or
exhibits thereto or material incorporated by reference therein, or the omission
or alleged omission to state in such documents a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
Purchaser will not be liable under this clause (2) to the extent Losses are
based on an untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to either
Seller or any Subsidiary furnished in writing by either Seller or any Subsidiary
to the Purchaser expressly for inclusion therein; or (3) the failure of the
Purchaser to comply with the Securities Act or any other law, rule or regulation
with respect to the distribution of the Consideration Shares to the Sellers.
The Purchaser shall without undue delay be notified of any third party
claim for which indemnification will be sought by either Seller under this
Agreement and the Purchaser will have the right to assume control and direct
defence thereof using counsel selected by the Purchaser provided that such
counsel shall not have a conflict with the Sellers in connection with such legal
representation. The Parties shall cooperate with each other and provide each
other with access to relevant books and records in their possession. No such
third party claim shall be settled without a prior written approval of the
Purchaser. If a firm written offer is made to settle any such third party claim
and the Purchaser proposes to accept such settlement, and the Sellers refuse to
consent to such settlement, then the Purchaser shall be excused from and the
Sellers shall be solely responsible for all further defence of such third party
claim. The maximum liability for the Purchaser relating to such third party
claim shall be the amount of the proposed settlement.
9.3 Purchaser shall promptly reimburse each indemnified party for all legal
or other expenses reasonably incurred by it in connection with investigating or
defending any Losses, including any amounts
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paid in settlement of any litigation commenced or threatened if such settlement
is effected with the prior written consent of the Purchaser.
10 THE REGISTRATION STATEMENT; SALE OF CONSIDERATION SHARES
10.1 The Purchaser shall prepare and file with the SEC as soon as is
reasonably practicable after the date hereof the Registration Statement which
provides for the registration under the Securities Act of the Consideration
Shares to be issued to the Sellers pursuant hereto. The Purchaser shall use its
reasonable best efforts to (a) cause the Registration Statement to become
effective as promptly as practicable, (b) remove any stop order that may be
issued by the SEC with respect thereto, and (c) take all or any action necessary
or required under applicable federal or state securities laws in connection with
the issuance of the Consideration Shares to the Sellers pursuant hereto. The
Purchaser shall immediately notify the Sellers when the SEC has requested any
additional information regarding the Registration Statement, declared the
Registration Statement effective or issued or removed any stop order with
respect thereto. The Purchaser shall use its best efforts to cause the
Consideration Shares to be listed on the New York Stock Exchange.
10.2 Sellers agree to use their reasonable best efforts to sell any
Consideration Shares in an orderly manner and to provide Purchaser with prior
notice of its intention to sell such stock.
11 THE CONTRACTS
11.1 The Purchaser shall in respect of the period after the Effective Date
use its reasonable best efforts to meet its obligations under the Contracts.
Insofar as any consents or licences to the transfer or assignment of the benefit
and burden of the Contracts have not been obtained on the Effective Date, or if
such benefit or burden cannot effectively be so transferred or assigned to the
Purchaser except with the consent of or by an agreement with the other party or
parties thereto, then:
a) the Sellers shall use their reasonable best efforts to obtain the
consent of such other party or parties to the Contracts being
novated or assigned in terms reasonably acceptable to the
Purchaser; and
b) unless and until all of the Contracts shall have been so novated or
assigned, the Sellers shall provide to the Purchaser from the
Effective Date the benefit and burden of the Contracts as if the
same had been effectively novated or assigned to the Purchaser.
The Sellers do not warrant that the Contracts are assignable or
transferable and shall not be liable or responsible in the event any of the
Contracts are cancelled or terminated due to the Purchaser's acquisition of the
Business.
11.2 The Purchaser shall indemnify and hold harmless the Sellers against
any and all Losses they may reasonably incur or become subject to, insofar as
such Losses arise out of, are based upon or are in connection with the
non-performance or the defective or negligent performance after the Effective
Date by the Purchaser of any Contracts. The indemnification hereunder shall,
however, not apply if the Purchaser's non-performance or the defective or
negligent performance is caused by the Sellers by any breach of representations
or warranties set out in this Agreement or the schedules hereto.
11.3 After the Effective Date the Sellers will assist the Purchaser in
notifying all existing customers of the Business in writing (in such form and at
such times as the Purchaser may reasonably require) of the sale of the Business
to the Purchaser and the arrangements being made in respect thereof and the
Sellers will use their reasonable best efforts to obtain the written consent of
such customers to such arrangements.
12 INDEMNITY BY THE PURCHASER
In the event the Sellers receive any invoice or in the event a claim is
presented to the Sellers in any other way after the Effective Date and such
claim relates to the Assumed Liabilities, the Sellers shall without undue delay
send the invoice or written documents relating to the claim to the Purchaser and
the Purchaser shall pay the claim directly to the third party on the due date.
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The Purchaser shall indemnify and hold harmless the Sellers against all
Losses they may reasonably incur or become subject to, insofar as such Losses
arise out of, are based upon or are in connection with any of the Assumed
Liabilities under this Agreement. The Purchaser shall furthermore indemnify and
hold harmless the Sellers against all Losses (including deficiencies, taxes,
interest and penalties) they may reasonably incur or become subject to, insofar
as such Losses arise out of, are based upon or are in connection with a claim by
any taxing authority for any taxes allocated or attributable to any period
ending on or before the Effective Date; provided, however, that this indemnity
shall only apply if the Sellers have given the Purchaser the right to take all
action to refute such claim by such taxing authority.
The indemnification hereunder shall, however, not apply if the Loss is
caused by the Sellers by any breach of representations or warranties set out in
this Agreement or the schedules hereto.
13 BOOKS AND RECORDS
The Sellers shall on the Effective Date (insofar as the Sellers are not
required to retain the same under Norwegian law or otherwise) deliver to the
Purchaser all of the books, records, files, papers and other documents of the
Sellers and the Subsidiaries related to the Business and in particular the
Sellers shall deliver to the Purchaser the original executed copies of the
Contracts.
The Purchaser will for a period of ten years keep safely in Norway all such
books, records, files, papers and other documents related to the Business as the
Sellers shall transfer or cause to be transferred to the Purchaser and shall
afford the Sellers reasonable access thereto, during reasonable business hours
after notice, for as long as shall be necessary to enable the Sellers to deal
with its taxation and other liabilities in respect of the period up to the
Effective Date and will permit the Sellers and its servants, agents and
professional advisers upon reasonable notice to make copies at the Sellers'
expense of such books, records, files, papers and other documents for the
purpose of answering any query raised or disposing of any dispute in relation
thereto.
14 NON-COMPETITION
For a period of two years following the Effective Date neither the Sellers
nor any person, group, partnership, corporation or entity that controls or is
controlled by or under common control with the Sellers ("Seller Affiliate") will
compete, directly or indirectly, with the Purchaser or any person, group,
partnership, corporation or entity that controls or is controlled by or under
common control with the Purchaser ("Purchaser Affiliate") in designing,
manufacturing, selling, renting or running liner hangers, packers and gas lift
valves and systems. Furthermore, no Seller or Seller Affiliate will solicit for
employment any employee of the Purchaser or Purchaser Affiliate, including any
employee of a Seller or a Subsidiary who becomes an employee of the Purchaser or
a Purchaser Affiliate.
15 COSTS AND TAXES
Each party shall pay its own costs in relation to the negotiations leading
up to the sale and purchase of Assets contemplated by this Agreement and the
preparation and carrying into effect of this Agreement and of all other
documents referred to herein.
The Purchaser shall be liable for all costs and expenses with respect to
preparing, filing and printing the Registration Statement and distributing the
prospectus contained therein and listing the Consideration Shares on the New
York Stock Exchange and all fees, duties and administrative fees payable in
connection with the sale and the purchase of the Assets contemplated hereby,
including, but not limited to, any registration fees and taxes for the transfer
of the title to any of the Assets and any value added taxes.
16 SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
parties and the successors in interest to the parties, but shall not be
assignable by either party, except as provided for below.
11
The Purchaser shall be entitled to assign this Agreement to a Norwegian
subsidiary, but the Purchaser shall always remain jointly and severally liable
with its Norwegian subsidiary for all of the Purchaser's obligations and
liabilities under this Agreement.
17 CHANGE OF NAME
The Sellers shall change the name of each Seller not later than at the
Effective Date and undertake to send the relevant form to the Central Register
to have the name deregistered not later than two Business Days after the
Effective Date. The Purchaser shall be entitled to exclusive use of the name of
each Seller from and after the Effective Date.
18 BROKERAGES AND COMMISSIONS
No party, including Paine Webber Incorporated, is entitled to receive from
the Purchaser any finder's fee, brokerage or commission in connection with this
Agreement.
19 ANNOUNCEMENTS
19.1 No announcement concerning this sale and purchase or any ancillary
matter will be made before, on, or after the Effective Date, by any of the
parties hereto except as required by law, the Oslo Stock Exchange, the New York
Stock Exchange or with approval of the other parties (such approval not to be
unreasonably withheld or delayed). Each party agrees to notify the other party
prior to any announcement and provide the other Party the opportunity to review
prior to dissemination and to co-ordinate joint announcement efforts.
Notwithstanding the foregoing, the Parties will issue a joint press release
immediately after execution of this Agreement.
20 NOTICES AND RECEIPTS
20.1 Any notice or other documents to be provided under this Agreement may
be delivered or sent by registered mail or telex or telefax to the party to
receive such notice or document at its address appearing in this Agreement or at
such other address as it may have notified to the other parties in accordance
with this Clause.
The Sellers appoint Norsk Vekst AS, P.O.Box 1223 Vika, 0110 Oslo, telefax
(47) 22 83 89 29, as their agent for service of any indemnification claim or
notice.
Notice to the Purchaser shall also be sent to Advokatfirmaet Schj6dt,
attention: Erling Christiansen, Dronning Maudsgt 10, Postboks 2444, Solli,
N-0201 Oslo.
20.2 Any notice or document shall be deemed to have been served:
a) if delivered, at the time of delivery; or
b) if posted, at 10.00 a.m. on the fifth Business Day after it was
put into the post; or
c) if sent by telefax, at the expiration of 2 hours after the time
of receipt of the correct answerback or telefax confirmation, if
such answerback or confirmation is received before 3.00 p.m. or
any Business Day, and in any other case at 10.00 a.m. on the next
Business Day.
20.3 In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the notice or
document was properly addressed and posted as registered mail or that the
telefax message was properly addressed and the correct answerback or telefax
confirmation was received as the case may be.
21 GENERAL PROVISIONS
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
12
practicable, the transactions contemplated by this Agreement, including, without
limitation, (i) the obtaining of all necessary consents, approvals or waivers
required in connection with the consummation of the transactions contemplated by
this Agreement (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 transactions contemplated by this Agreement) and
(ii) the execution and delivery of any additional instruments 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.
21.2 Amendment and Waiver. This Agreement may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf of
each party hereto. 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.
21.3 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.
22 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES
22.1 This Agreement, the Schedules attached hereto and the Disclosure
Letter constitute the entire agreement and supersede 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.
13
23 LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of Norway and the Parties hereby irrevocable submit to the exclusive
jurisdiction of Oslo City Court.
Sellers' signatures: Purchaser's signature:
NODECO AS WEATHERFORD ENTERRA, INC.
By /s/ Lars A. Grinde By /s/ H. Suzanne Thomas
Name: Lars A. Grinde Name: H. Suzanne Thomas
Title: Attorney-in-Fact Title: Sr. Vice President, Secretary
and General Counsel
AARBAKKE AS
By /s/ Lars A. Grinde
Name: Lars A. Grinde
Title: Attorney-in-Fact
14
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 Bylaws 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
Bylaws 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 other costs,
II-1
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:
2 -- Purchase and Sale Agreement dated March 28, 1996, among
Weatherford Enterra, Inc., Nodeco AS and Aarbakke AS.
4.1 -- Corrected Restated Certificate of Incorporation of
Weatherford Enterra, Inc., as amended through January 26,
1996 (incorporated by reference to Exhibit 3.1 to
Weatherford Enterra, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1995 (File No. 1-7867)).
4.2 -- Bylaws of Weatherford Enterra, Inc., as amended through
March 17, 1994 (incorporated by reference to Exhibit 3.1 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K dated
April 28, 1994 (File No. 1-7867)).
4.3 -- Credit Agreement dated as of October 5, 1995, among
Weatherford Enterra, Inc., Weatherford Enterra U.S., Inc.,
Weatherford/Lamb, Inc., Bank of America Illinois, as
Documentation Agent, Texas Commerce Bank National
Association, as Administrative Agent, Credit Lyonnais New
York Branch, ABN Amro Bank, N.V., Bank of Montreal, First
Interstate Bank of Texas, N.A., Arab Banking Corporation
(B.S.C.) and the financial institutions listed on the
signature pages thereto (incorporated by reference to
Exhibit 4.1 to Weatherford Enterra, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995 (File
No. 1-7867)).
4.4 -- First Amendment to Credit Agreement dated as of December 29,
1995, among Weatherford Enterra, Inc., Weatherford Enterra
U.S., Inc., Weatherford/Lamb, Inc., Weatherford Enterra
U.S., Limited Partnership, Bank of America Illinois, as
Documentation Agent, Texas Commerce Bank National
Association, as Administrative Agent, Credit Lyonnais New
York Branch, ABN Amro Bank, N.V., Bank of Montreal, First
Interstate Bank of Texas, N.A., Arab Banking Corporation
(B.S.C.) and the financial institutions listed on the
signature pages thereto (incorporated by reference to
Exhibit 4.2 to Weatherford Enterra, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1995 (File No.
1-7867)).
4.5 -- Form of Indenture, between Weatherford Enterra, Inc. and
Bank of Montreal Trust Company, as Trustee (incorporated by
reference to Exhibit 4.1 to Weatherford Enterra, Inc.'s
Registration Statement on Form S-3 (Registration No.
333-02281)).
5 -- Opinion of Fulbright & Jaworski L.L.P., regarding legality
of securities.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Price Waterhouse a.s.
II-2
23.3 -- Consent of Fulbright & Jaworski L.L.P. (contained in Exhibit
5).
24 -- Powers of Attorney (included on page II-4 hereof).
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.
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-3
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 April 18, 1996.
WEATHERFORD ENTERRA, INC.
By: 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 of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ----------------- ----------------------------------- ---------------
PHILIP BURGUIERES Chairman of the Board, President and Chief April 18, 1996
PHILIP BURGUIERES Executive Officer (Principal Executive
Officer)
NORMAN W. NOLEN Senior Vice President, Chief Financial April 18, 1996
NORMAN W. NOLEN Officer and Treasurer (Principal Financial
and Accounting Officer)
THOMAS N. AMONETT Director April 18, 1996
THOMAS N. AMONETT
WILLIAM E. GREEHEY Director April 18, 1996
WILLIAM E. GREEHEY
II-4
SIGNATURE TITLE DATE
- ------------------ --------- --------------
JOHN A. HILL Director April 18, 1996
JOHN A. HILL
JOHN W. JOHNSON Director April 18, 1996
JOHN W. JOHNSON
WILLIAM E. MACAULAY Director April 18, 1996
WILLIAM E. MACAULAY
ROBERT K. MOSES, JR. Director April 18, 1996
ROBERT K. MOSES, JR.
R. RUDOLPH REINFRANK Director April 18, 1996
R. RUDOLPH REINFRANK
ROGER W. WIDMANN Director April 18, 1996
ROGER W. WIDMANN
II-5
EXHIBIT 2
PURCHASE AND SALE AGREEMENT
A-1
PURCHASE AND SALE AGREEMENT
BETWEEN
NODECO AS AND AARBAKKE AS, AS SELLERS
AND
WEATHERFORD ENTERRA, INC., AS PURCHASER
RELATING TO THE BUSINESS, ASSETS AND LIABILITIES OF
NODECO AS AND AARBAKKE AS
LIST OF CONTENT
PAGE
----
1 DEFINITIONS AND INTERPRETATION... 1
2 SALE AND PURCHASE................ 3
3 CONSIDERATION.................... 4
4 DUE DILIGENCE.................... 5
5 EFFECTIVE DATE................... 5
6 APPROVAL BY THE MINISTRY OF
INDUSTRY AND ENERGY............. 6
7 SELLERS' COVENANTS............... 6
8 SELLERS' WARRANTIES AND
INDEMNIFICATION................. 7
9 PURCHASER'S WARRANTIES AND
INDEMNIFICATION................. 9
10 THE REGISTRATION STATEMENT; SALE
OF CONSIDERATION SHARES......... 10
11 THE CONTRACTS.................... 10
12 INDEMNITY BY THE PURCHASER....... 10
13 BOOKS AND RECORDS................ 11
14 NON-COMPETITION.................. 11
15 COSTS AND TAXES.................. 11
16 SUCCESSORS AND ASSIGNS........... 11
17 CHANGE OF NAME................... 12
18 BROKERAGES AND COMMISSIONS....... 12
19 ANNOUNCEMENTS.................... 12
20 NOTICES AND RECEIPTS............. 12
21 GENERAL PROVISIONS............... 12
22 ENTIRE AGREEMENT; THIRD PARTY
BENEFICIARIES................... 13
23 LAW AND JURISDICTION............. 14
Schedule 1: Audited Accounts for 1995 of each of the Sellers and each of the
Subsidiaries and for Nodeco on a consolidated basis ("Accounts")
Schedule 2: List of Equipment
Schedule 3: List of Motor Vehicles
Schedule 4: List of Property
Schedule 5: List of Rental Equipment
Schedule 6: Sellers' Warranties
Schedule 7: List of Shareholders
Schedule 8: List of Employees
Schedule 9: Purchaser's Warranties
Schedule 10: List of material contracts
Schedule 11: List of Intangible Property
Schedule 12: Excluded Assets
Schedule 13: Form of Shareholders' Guarantee
Schedule 14: Disclosure Letter
Schedule 15: Unaudited balance sheets as of January 31, 1996 and February
29, 1996 and unaudited profit and loss accounts for the one and
two months periods then ended ("unaudited financials") of Nodeco,
Aarbakke each Subsidiary and Nodeco on a consolidated basis.
i
This purchase and sale agreement (the "Agreement") is entered into on the
28th day of March 1996 by and between:
1 NODECO AS, Haland Haust, Postboks 10, N-4341 Bryne, Organisation No
917757984 ("Nodeco"), and
2 AARBAKKE AS, Kong Haakonsvei 4, N-4341 Bryne, Organisation No
870920962 ("Aarbakke")
(Nodeco and Aarbakke are collectively referred to as the "Sellers"
and are jointly and severally liable for Sellers' obligations under
this Agreement), and
3 WEATHERFORD ENTERRA, INC., 1360 Post Oak Blvd. Suite 1000,
Houston, Texas TX 77056, USA (the "Purchaser")
WHEREAS
A Nodeco is a Norwegian joint stock company that designs, manufactures
and sells oil and gas well completion products primarily consisting
of liner hanger equipment and related services as well as packers
used in completions with electric submersible pumps.
B Aarbakke is a wholly owned subsidiary of Nodeco.
C The Purchaser is a Houston, Texas-based diversified international
energy service and manufacturing company that provides products and
services around the world to the oil and gas exploration, production
and transmission industries.
D The Purchaser wishes to acquire the Business (as defined below) on a
going concern basis through the purchase of all of the Assets (as
defined below) and the assumption of all of the Assumed Liabilities
(as defined below).
NOW THEREFORE, the Parties (as defined below) have agreed as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement:
"Accounts" means the audited balance sheets as of the Accounts Date
and audited profit and loss accounts for the year ended on the Accounts
Date of Nodeco, Aarbakke, each Subsidiary and Nodeco on a consolidated
basis and the notes and directors' report relating to them as set out in
Schedule 1.
"Accounts Date" means December 31, 1995.
"Assets" means all the assets (other than the Excluded Assets) and
contractual rights of the Sellers at the Effective Date whether reflected
on the Sellers' balance sheets included in the Accounts or not and
including, but not limited to, cash and cash equivalents, the Contracts,
the Equipment, the Rental Equipment, the Goodwill, the Motor Vehicles, the
Property, the Shares, the Stock, the Intangible Property and the
Outstanding Claims.
"Assumed Liabilities" means all liabilities (other than the Excluded
Liabilities) of the Sellers at the Effective Date whether or not reflected
on the Sellers' balance sheets included in the Accounts, and whether or not
accrued, absolute, contingent or otherwise.
"Business" means the business being carried on by the Sellers on the
Effective Date through the Assets and the Assumed Liabilities.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New
York, New York are authorised or obligated by law to close.
"Consideration Shares" means 750,000 shares of the Purchaser's common
stock, par value USD 0.10 per share, to be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and listed on the New York
Stock Exchange prior to the Effective Date.
1
"Contracts" means all the written or oral contracts related to the
Business to which the Sellers are a party.
"Disclosure Letter" means a letter of today's date from the Sellers to
the Purchaser, attached hereto as Schedule 14.
"Effective Date" means (a) the latest of (i) the fifth Business Day
after the Purchaser has notified the Sellers in writing that the Securities
and Exchange Commission ("SEC") has declared the Registration Statement (as
defined in Clause 5.3 hereof) effective under the Securities Act, provided
that on such fifth Business Day no stop order shall be in effect with
respect thereto, and (ii) the first Business Day after such stop order has
been removed (such notice of effectiveness or removal of a stop order to be
given by the Purchaser immediately after the SEC has declared the
Registration Statement effective or has removed such stop order) and (iii)
the fifth Norwegian business day after the Purchaser has notified the
Sellers in writing of Ministry Approval (such notice of approval to be
given by the Purchaser immediately after the Ministry Approval), and (iv)
the approval of the shareholders of each Seller of the sale of the Business
and Assets to the Purchaser; provided, however, that the Purchaser may, in
its sole discretion, waive the requirement of Ministry Approval, in which
case the Effective Date shall be the latest of (i), (ii) and (iv) above, or
(b) such other day as the Sellers and the Purchaser may agree.
"Employees" means the Sellers' employees as set out in Schedule 8.
"Equipment" means the tangible assets (other than Motor Vehicles and
the Stock) employed in or used for the purpose of the Business including,
but not limited to, the fixed and loose plant, machinery, furniture,
fittings, implements, tools, utensils, computer hardware and software and
other chattels wherever situated owned by the Sellers for the use in the
conduct of the Business as set out in Schedule 2.
"Excluded Assets" means the assets as set out in Schedule 12.
"Excluded Liabilities" means Net Debt in excess of NOK 32 mill. at
the Accounts Date.
"Goodwill" means the goodwill of the Sellers relating to the Business
including, but not limited to, the right of the Purchaser to represent
itself as carrying on the Business in succession of the Sellers.
"Intangible Property" means the patents, trademarks, service marks,
trade names and applications for any of the foregoing set out in Schedule
11.
"Ministry Approval" means approval by the Ministry of Industry and
Energy under the Norwegian Acquisition of Business Act of 1994 of the
purchase of the Business by the Purchaser without conditions that
materially alter the economic value to the Purchaser of the transaction or,
alternatively that the time limit under 10 of the Norwegian Acquisition of
Business Act of 1994 has elapsed without further notice from the Ministry
of Industry and Energy.
"Motor Vehicles" means the Motor Vehicles owned by the Sellers,
details of which are set out in Schedule 3.
"Net Debt" means the sum of Nodeco's (on a consolidated basis) bank
overdrafts, other short-term interest bearing liabilities, mortgage and
other long-term debt and subordinated loans less any cash and cash
equivalents as listed in the Accounts at the Accounts Date.
"Outstanding Claims" means the accounts receivable, prepayments and
existing legal claims, including unasserted claims, of the Sellers as of
the Effective Date.
"Parties" means the Purchaser and the Sellers.
"Products" means the products produced and sold by the Business.
"Property" means the real property owned, leased or rented by the
Sellers, details of which are set out in Schedule 4.
"Rental Equipment" means the equipment set out in Schedule 5.
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"Shares" means 100% of the shares of Nodeco Limited, 100% of the
shares of Aarbakke Eiendom AS and 51% of the shares of Subsurface
Technology AS.
"Shareholders" means the shareholders as set out in Schedule 7.
"Stock" means the stock-in-trade owned by the Sellers in connection
with the Business at the Effective Date.
"Subsidiaries" means Nodeco Limited, Aarbakke Eiendom AS and
Subsurface Technology AS (owned 51% by Nodeco).
"Warranties" means the Sellers' warranties set out in Clause 8 of
this Agreement.
2 SALE AND PURCHASE
2.1 Subject to the assumption of the Assumed Liabilities by the Purchaser
and in consideration of the payment to the Sellers of the Purchase Price (as
defined in Section 3.1 hereof), the Sellers hereby sell and agree to transfer
the Assets and the Business to the Purchaser as a going concern on the Effective
Date, and the Purchaser agrees to purchase the Assets and the Business and to
assume the Assumed Liabilities on the Effective Date.
2.2 The Assets to be purchased by the Purchaser shall, for the sake of
clarification, include, but not be limited to:
a) cash and cash equivalents
b) the Equipment
c) the Rental Equipment
d) the Motor Vehicles
e) the Goodwill
f) the Outstanding Claims
g) the Property
h) the Shares
i) the Stock
j) the benefit (subject
to the burden) of the
Contracts
k) the Intangible
Property.
l) all amounts allocated to the Sellers' collective pension plan as
of the Effective Date in excess of the liability under the plan
at the Effective Date.
2.3 The Purchaser agrees to assume all the Assumed Liabilities as of the
Effective Date; which, for the sake of clarification includes, but is not
limited to:
(i) the employment contracts of all of the Sellers' employees as of
the Effective Date (including any and all liabilities for
holiday allowances, unpaid salaries and other benefits as of the
Effective Date),
(ii) the Sellers' collective pension plan as of the Effective Date,
(iii)the Sellers' lease agreements for the Sellers' property in
Haland Haust, Bryne and Nyland, Bryne,
(iv) any orders from customers received and accepted but not yet
delivered as of the Effective Date,
(v) any taxes allocated or attributable to any period up to the
Effective Date,
together with such other liabilities by way of obligations under
the Contracts or otherwise (other than the Excluded Liabilities),
which, as of the Effective Date, shall be considered as an
integrated part of the Business as a going concern.
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A list of all the Sellers' Employees as of the date hereof is set out in
Schedule 8 hereto setting out, inter alia, for each employee, the name of the
employee, the employee's age, the date the employee was employed by the Sellers,
the employee's salary (including profit sharing plans, incentive bonus plans or
other employee benefits) and the employee's position as of the date hereof. The
Purchaser undertakes to offer each employee a similar position on similar terms
as set out in Schedule 8 at the Effective Date and shall offer each employee a
new employment contract for this purpose prior to the Effective Date.
3 CONSIDERATION
3.1 The Purchase Price for the Assets and the Business (the "Purchase
Price") shall be NOK 260,000,000 (Norwegiankroner twohundredandsixtymillion)
representing the sum of the Cash Consideration and the Share Consideration as
set out in Clause 3.2, as adjusted in Clause 3.3; provided, however, that if the
average Purchaser common stock closing price (as determined below) exceeds USD
35.00 per share or is less than USD 25.00 per share, the Purchase Price shall
not equal NOK 260,000,000. In addition, the Purchaser shall assume the Assumed
Liabilities as of the Effective Date.
3.2 Subject to the adjustments described in Clause 3.3, the Purchase Price
shall consist of the following:
a) Cash Consideration: NOK 117,649,250
b) Share Consideration: Consideration Shares
3.3 Adjustments to Cash Consideration: The Purchaser and the Sellers agree
to adjust the Cash Consideration set forth above to be paid to Sellers to
compensate for movements in Purchaser's stock price and the NOK/USD exchange
rate between the date hereof and the Effective Date, subject to certain
limitations. Specifically, the Cash Consideration set forth above will be
adjusted at the Effective Date according to the following formula:
Adjustment to Cash Consideration =
NOK 142,350,750 -- (Average Stock Price x 750,000 x Exchange Rate)
If the adjustment referred to above is a positive number, the Cash
Consideration shall be increased by an amount equal to such positive number. If
the adjustment is a negative number, the Cash Consideration shall be decreased
by an amount equal to such negative number. On the Effective Date, the Purchaser
shall pay to the Sellers the Cash Consideration, as so adjusted.
"Average Stock Price" shall mean the average Purchaser common stock closing
price as reported in the New York Stock Exchange Composite Transaction List in
The Wall Street Journal for the 10 Business Days ending on the last Business Day
prior to the Effective Date, provided, however, that if the average Purchaser
common stock closing price for the 10 Business Days ending on the last Business
Day prior to the Effective Date is greater than USD 35.00 per share, the
"Average Stock Price" shall be USD 35.00; provided, further, that if the average
Purchaser common stock closing price for the 10 Business Days ending on the last
Business Day prior to the Effective Date is less than USD 25.00 per share, the
"Average Stock Price" shall be USD 25.00. Notwithstanding the foregoing, if the
average Purchaser common stock closing price for the 10 Business Days ending on
the last Business Day prior to the Effective Date is less than USD 20.00 per
share, the Purchaser may either (i) terminate this Agreement by notice to
Sellers or (ii) pay the following to Sellers at the Effective Date as additional
Cash Consideration:
(the amount by which USD 20.00 exceeds the average Purchaser common
stock closing price for the 10 Business Days ending on the last Business
Day prior to the Effective Date) x 750,000 x Exchange Rate.
"Exchange Rate" shall mean the average NOK/USD exchange rate as reported by
Dagens Naeringsliv for the 10 Business Days ending on the last Business Day
prior to the Effective Date; provided, however, that if the average NOK/USD
exchange rate for the 10 Business Days ending on the last Business Day prior to
the Effective Date is greater than 6.4532 NOK/USD, the "Exchange Rate" shall be
6.4532; provided,
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further, that if the average NOK/USD exchange rate for the 10 Business Days
ending on the last Business Day prior to the Effective Date is less than 6.2002
NOK/USD, the "Exchange Rate" shall be 6.2002.
3.4 Interest: The Sellers shall be entitled to interest on the Purchase
Price at the rate of 5% p a for the period beginning on the sixth Business Day
after the date the SEC has declared the Registration Statement effective under
the Securities Act and ending on the earlier of (i) the last Business Day prior
to the Effective Date and (ii) 60 days from the date hereof. In the event the
Effective Date has not taken place within 60 days from the date hereof and the
Sellers do not exercise the option to terminate this Agreement after 60 days
under Clause 5.4, the Sellers shall be entitled to interest on the Purchase
Price at the rate of 10% p a for a period beginning on the 61st day after the
date hereof and ending on the last Business Day prior to the Effective Date.
Interest accrued shall be paid by the Purchaser to the Sellers at the Effective
Date.
4 DUE DILIGENCE
The Purchaser and its advisers have had, prior to the date of this
Agreement, full access and opportunity to carry out a due diligence review of
the Sellers and the Subsidiaries. The Purchaser and any person authorised by it
have been given full access to the business, properties and the books and
records relating to such financial, accounting, tax, legal, employment and
customer related matters of the Sellers and the Subsidiaries as the Purchaser
has required.
5 EFFECTIVE DATE
5.1 The Parties agree that the Assets, Business and the Assumed Liabilities
shall be acquired by the Purchaser on the Effective Date.
Subject to the provisions of this Clause 5, the closing shall take place at
the offices of Norsk Vekst ASA in Oslo, Norway on the Effective Date.
The Sellers shall, on or prior to the Effective Date, deliver the following
documents to the Purchaser:
a) A certified copy of the Company Certificate (firmaattest) and
Articles of Association (vedtekter) of each of the Sellers and the
Subsidiaries.
b) Certified copies of minutes of a meeting of the Board of Directors
and of the shareholders' meeting of each of the Sellers authorising
the sale of the Business and the Assets to the Purchaser and the
assumption of the Assumed Liabilities by the Purchaser on the terms
and conditions set out in this Agreement.
5.2 On the Effective Date the Sellers shall also:
a) deliver to the Purchaser such notification to public registry, and
such bills of sale, deeds, assignments and similar instruments, as
shall be required to formally transfer ownership of the Assets to
the Purchaser duly executed by the Sellers;
b) make available for collection by the Purchaser the originals of
the Contracts (to the extent available in writing);
c) execute and deliver to the Purchaser deeds of assignment or novation
in the agreed terms (to the extent that the same may be legally or
equitably assignable or otherwise subject to Clause 11) of the
benefit (subject to the burden) of the Contracts including any
monies due or owing to the Sellers under the Contracts;
d) deliver to the Purchaser all the share certificates for the Shares
with duly executed transfers in favour of Purchaser;
e) deliver to the Purchaser a certificate from the Chairman of the
Board of Directors of Nodeco to the effect that each of the
statements in Schedule 6 is true and accurate on the Effective Date
and does not omit any material fact and that the Sellers have
complied with all covenants required to be complied with by them
prior to the Effective Date; and
f) deliver to the Purchaser duly executed Shareholders guarantees in
accordance with Schedule 13.
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5.3 On the Effective Date the Purchaser shall:
a) satisfy the Cash Consideration referred to in Clause 3.2, as
adjusted by Clause 3.3, by payment of the Cash Consideration as
adjusted, together with interest accrued on the Purchase Price, if
any, pursuant to Clause 3.4, to the Sellers nominated bank account;
b) deliver to Nodeco share certificates (without any restrictive
legends) issued in the name of Nodeco representing the Consideration
Shares together with the prospectus which will be included in the
Purchaser's Registration Statement on Form S-3 or other appropriate
form with respect to the Consideration Shares (the "Registration
Statement");
c) deliver to the Sellers counterparts of the documents referred to
in Clause 5.2.c duly executed and acknowledged as appropriate by
the Purchaser;
d) deliver to the Sellers a certified copy of minutes of the Board of
Directors of the Purchaser approving the entering into by the
Purchaser of this Agreement, the issuance of the Consideration
Shares to the Sellers, the payment of the Cash Consideration
referred to in Clause 3.2, as adjusted by Clause 3.3, the filing of
the Registration Statement with the SEC and the entering into of and
any other documents referred to in this Agreement;
e) deliver to the Sellers a certificate from the Secretary of the
Purchaser to the effect that each of the statements in Schedule 9 is
true and accurate on the Effective Date and does not omit any
material fact and that the Purchaser has complied with all covenants
required to be complied with by it prior to the Effective Date; and
f) deliver to the Sellers a confirmation of Ministry Approval,
unless the Purchaser, in its sole discretion, has waived the
requirement of Ministry Approval.
All the Assets are transferred "as is, where is" at the Effective Date.
5.4 In the event the SEC has not declared the Registration Statement
effective and all stop orders have not been removed within 60 days from the
signing of this Agreement, or, unless the Purchaser has waived the requirement
of Ministry Approval, in the event the Purchaser has not obtained Ministry
Approval within 60 days from signing of this Agreement, the Sellers shall have
the right to terminate this Agreement. The Sellers may only exercise such option
to terminate this Agreement by delivery to the Purchaser of a written notice to
such effect within 5 Business Days after such 60 day time limit has elapsed. In
the absence of such timely notice, a new period shall run for another 60 days
after which, in the event the SEC has not declared the Registration Statement
effective and all stop orders have not been removed within 120 days from the
signing of this Agreement, or, unless the Purchaser has waived the requirement
of Ministry Approval, in the event the Purchaser has not obtained Ministry
Approval within 120 days from signing of this Agreement, each Party shall have
the right to terminate this Agreement. Each Party may only exercise such option
to terminate this Agreement by delivery to the other Parties of a written notice
to such effect within 5 Business Days after such 120 days time limit has
elapsed.
6 APPROVAL BY THE MINISTRY OF INDUSTRY AND ENERGY
6.1 At the signing of this Agreement the Purchaser shall provide the
Sellers with a copy of the completed draft application for Ministry Approval in
form and substance acceptable to Nodeco.
The Purchaser undertakes to apply for Ministry Approval immediately after
signing of the Agreement. In the event further information is required by the
Ministry of Industry and Energy, the Parties shall co-operate in presenting such
information.
The Purchaser shall be entitled to terminate the Agreement in the event
Ministry Approval is not obtained, unless the Purchaser, in its sole discretion,
has waived the requirement of Ministry Approval.
7 SELLERS' COVENANTS
The Sellers hereby covenant and agree with the Purchaser that from the date
hereof until the Effective Date, the Sellers shall and shall cause each
Subsidiary to:
6
(i) conduct the business of the Sellers and the Subsidiaries in the
ordinary and usual course, consistent with past practices.
(ii) not without the Purchaser's prior approval, issue shares of the
Sellers' or the Subsidiaries' stock, grant any options,
warrants or other rights to purchase such stock; declare or pay
any dividends; redeem any stock; amend the Articles of
Association or the Bylaws of either Seller or any Subsidiary;
sell, pledge or dispose of any assets of either Seller or any
Subsidiary (other than in the ordinary and usual course of
business, consistent with past practice); grant to any
director, officer or employee any increase in compensation or
any severance or termination pay in excess of what is
consistent with prior business practice (except as required by
law); or establish any new or increase any existing pension
plans, profit sharing plans or employee benefits; acquire any
corporation, partnership or other business organisation; incur
any indebtedness other than in the ordinary and usual course of
business consistent with past practice; grant any guarantee or
financial support of any kind to third parties other than in
the ordinary and usual course of business consistent with past
practice; enter into any material contracts or engage in any
transaction which, even though in the ordinary and usual course
of business, is not consistent with the prior business practice
of the Sellers or the Subsidiaries; or make any changes in the
accounting principles and practises of the Sellers or the
Subsidiaries.
(iii) not adopt or file a plan of complete or partial liquidation,
dissolution, merger or other reorganisation.
(iv) not do anything that may cause the Sellers' warranties to
become incorrect.
(v) make all reasonable efforts to preserve intact all licenses and
permits of the Sellers and the Subsidiaries and maintain the
business relationships of the Sellers and the Subsidiaries.
(vi) pay any taxes (social security premiums included) or other
amounts owed and to file any tax returns or other similar filings
required by applicable law.
(vii) each Seller shall call and hold a meeting of its shareholders
at which meeting such shareholders will be asked to approve the
sale of the Business and the Assets to the Purchaser and the
assumption of the Assumed Liabilities by the Purchaser,
provided that each Seller shall use its best efforts to hold
such meeting as promptly as is practicable following the
declaration by the SEC of the effectiveness of the Registration
Statement.
The Purchaser shall be given full access at all reasonable times to the
premises and records of the Sellers and the Subsidiaries and the Sellers shall
upon request furnish information regarding the Business requested by the
Purchaser.
8 SELLERS' WARRANTIES AND INDEMNIFICATION
8.1 The Sellers warrant to the Purchaser that at the date hereof:
a) Each of the statements in the Schedules (except Schedules 9 and
13) is true and accurate and the Schedules do not omit any
material fact;
b) the Sellers have, to the best of their knowledge, provided all
information relating to the Sellers and the Subsidiaries and
their respective affairs which would be material to the Purchaser
for the valuation of the Business and the Assets;
8.2 If any one or more of the warranties in Clause 8.1 or in the Schedules
are untrue, inaccurate, misleading or breached at the Effective Date, the Cash
Consideration to be paid at the Effective Date shall be reduced by the
Deficiency Amount (as such term is defined below); provided that if the
Purchaser provides written notice to the Sellers, or the Sellers provide written
notice to the Purchaser, that the aggregate Deficiency Amount is in excess of
NOK 44,000,000, the Parties shall use their reasonable best efforts to reach an
agreement with respect to the sale of the Business to the Purchaser on mutually
acceptable terms; provided further that if the Parties are unable to reach such
an agreement within
7
10 Business Days following delivery of any such notice, any Party may terminate
this Agreement by delivery to the other Parties of a written notice to such
effect within 5 Business Days after such 10 Business Day time limit has elapsed.
The "Deficiency Amount" shall equal, as applicable, the value at the Effective
Date of the specific Assets (or portions thereof) and the specific Assumed
Liabilities (or portions thereof) that resulted in the warranties in Clause 8.1
and the Schedules being untrue, inaccurate, misleading or breached; provided
that "Deficiency Amount" shall not include any indirect or consequential loss or
damage, including, but not limited to, loss of goodwill or similarly related
indirect losses or damages. If any one or more of the warranties in Clause 8.1
and the Schedules are untrue, inaccurate, misleading or breached at the
Effective Date, but such untrue, inaccurate, misleading or breached warranty is
not discovered until after the Effective Date, the Sellers shall promptly
reimburse to the Purchaser an amount equal to the Deficiency Amount, plus
interest on such amount at the rate of 8% per annum from the Effective Date
until the date of repayment.
To the extent that any third party presents a claim against the Purchaser
or any Subsidiary related to events that occurred prior to the Effective Date
and such claim has not resulted in the reduction of the Cash Consideration at
the Effective Date or a reimbursement by the Sellers to the Purchaser as
described in the immediately preceding paragraph, the Sellers shall indemnify
and hold harmless the Purchaser and the Subsidiaries, as the case may be,
against all losses, claims, damages, liabilities, costs or other expenses
("Losses") relating to such third party claims that the Purchaser or any
Subsidiary, as the case may be, may reasonably incur or become subject to,
insofar as such Losses (or actions in respect thereof) arise out of, are based
upon or are in connection with any untrue, inaccurate, misleading or breached
warranty made by the Sellers under Clause 8.1 or the Schedules, by reimbursing
the Purchaser an amount equal to such Losses, provided that Losses shall not
include any indirect or consequential loss or damage, including, but not limited
to, loss of goodwill or similarly related indirect losses or damages.
The Sellers shall without undue delay be notified of any third party claim
for which indemnification will be sought by the Purchaser or any Subsidiary
under this Agreement and the Sellers will have the right to assume control and
direct defence thereof using counsel selected by the Sellers provided that such
counsel shall not have a conflict with the Purchaser in connection with such
legal representation. The Parties shall cooperate with each other and provide
each other with access to relevant books and records in their possession. No
such third party claim shall be settled without the prior written consent of the
Sellers. If a firm written offer is made to settle any such third party claim
and the Sellers propose to accept such settlement, and the Purchaser refuses to
consent to such settlement, then the Sellers shall be excused from and the
Purchaser shall be solely responsible for all further defence of such third
party claim. The maximum liability for the Sellers relating to such third party
claim shall be the amount of the proposed settlement.
For a period of three years from the Effective Date, the Sellers will
indemnify and hold harmless the Purchaser and the Subsidiaries as the case may
be against any and all Losses (including deficiencies, taxes, interest and
penalties) they may reasonably incur or become subject to, insofar as such
Losses arise out of, are based upon or are in connection with a claim by any
taxing authority for any taxes allocated or attributable to any period ending on
or before the Accounts Date, which has not been included in the Accounts;
provided however, that this indemnity shall only apply if the Purchaser and the
Subsidiaries have given the Sellers the right to take all action to refute such
claim by such taxing authority.
The Sellers shall promptly reimburse each indemnified party for all legal
or other expenses reasonably incurred by it in connection with investigating or
defending any Losses, including any amounts paid in settlement of any litigation
commenced or threatened if such settlement is effected with a prior written
consent of the Sellers.
The liability of the Sellers under this Clause 8.2 (other than liability
under the fourth paragraph hereof) shall not arise unless the aggregate amount
of all claims (other than claims under the fourth paragraph hereof) exceeds NOK
4,000,000, in which event the liability of the Sellers shall be limited to the
amount in excess of NOK 4,000,000. The liability of the Sellers under the fourth
paragraph of this Clause 8.2 shall not arise unless the aggregate amount of all
claims under the fourth paragraph of this Clause 8.2 exceeds NOK
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1,000,000, in which event the liability of the Sellers shall be limited to the
amount in excess of NOK 1,000,000.
8.3 The liabilities of the Sellers in respect of the warranties (except
those referred to in Clause 8.2, fourth paragraph above) shall terminate one
year after the Effective Date unless written notice of the matter complained of
(giving such details as shall be reasonably practicable) shall have been given
by the Purchaser to the Sellers prior to the expiry of such one year period.
8.4 The Sellers' liability under this clause shall under no circumstances
exceed in aggregate NOK 75 million. No claim shall be made in respect of
indirect or consequential loss or damage.
8.5 The Sellers shall not be liable for any claim under this Clause 8, when
the claim or the issues and circumstances giving rise to the claim is disclosed
to the Purchaser in the Accounts, in the Disclosure Letter or during the
Purchaser's due diligence review of the Sellers and its Subsidiaries, provided,
however, the Sellers can prove beyond reasonable doubt that such disclosure has
taken place.
8.6 The Sellers' liability under this clause shall be guaranteed by the
Shareholders in a joint but not several manner and in the form set forth in
Schedule 13 and none of the Shareholders shall be responsible towards the
Purchaser for more than its percentage of any claim presented which is equal to
its guarantee percentage as set out in Schedule 7.
8.7 The warranties in Clause 8.1 and the Schedules, and the remedies
available to the Purchaser in case of breach of warranties set out in this
Agreement, are exhaustive and the Sellers shall have no liability to the
Purchaser other than as set out in this Agreement.
9 PURCHASER'S WARRANTIES AND INDEMNIFICATION
9.1 The Purchaser warrants to the Sellers that at the date hereof each of
the statements in Schedule 9 is true and accurate and Schedule 9 does not omit
any material fact.
9.2 Purchaser shall indemnify and hold harmless each Seller against all
Losses it may reasonably incur or become subject to under the Securities Act,
the Securities Exchange Act of 1934, as amended, or otherwise, insofar as such
Losses (or actions in respect thereof) arise out of, are based upon or are in
connection with (1) any untrue, inaccurate, misleading or breached warranty made
by the Purchaser under Clause 9.1 or Schedule 9; (2) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the prospectus included therein, or any amendments, supplements or
exhibits thereto or material incorporated by reference therein, or the omission
or alleged omission to state in such documents a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
Purchaser will not be liable under this clause (2) to the extent Losses are
based on an untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to either
Seller or any Subsidiary furnished in writing by either Seller or any Subsidiary
to the Purchaser expressly for inclusion therein; or (3) the failure of the
Purchaser to comply with the Securities Act or any other law, rule or regulation
with respect to the distribution of the Consideration Shares to the Sellers.
The Purchaser shall without undue delay be notified of any third party
claim for which indemnification will be sought by either Seller under this
Agreement and the Purchaser will have the right to assume control and direct
defence thereof using counsel selected by the Purchaser provided that such
counsel shall not have a conflict with the Sellers in connection with such legal
representation. The Parties shall cooperate with each other and provide each
other with access to relevant books and records in their possession. No such
third party claim shall be settled without a prior written approval of the
Purchaser. If a firm written offer is made to settle any such third party claim
and the Purchaser proposes to accept such settlement, and the Sellers refuse to
consent to such settlement, then the Purchaser shall be excused from and the
Sellers shall be solely responsible for all further defence of such third party
claim. The maximum liability for the Purchaser relating to such third party
claim shall be the amount of the proposed settlement.
9.3 Purchaser shall promptly reimburse each indemnified party for all legal
or other expenses reasonably incurred by it in connection with investigating or
defending any Losses, including any amounts
9
paid in settlement of any litigation commenced or threatened if such settlement
is effected with the prior written consent of the Purchaser.
10 THE REGISTRATION STATEMENT; SALE OF CONSIDERATION SHARES
10.1 The Purchaser shall prepare and file with the SEC as soon as is
reasonably practicable after the date hereof the Registration Statement which
provides for the registration under the Securities Act of the Consideration
Shares to be issued to the Sellers pursuant hereto. The Purchaser shall use its
reasonable best efforts to (a) cause the Registration Statement to become
effective as promptly as practicable, (b) remove any stop order that may be
issued by the SEC with respect thereto, and (c) take all or any action necessary
or required under applicable federal or state securities laws in connection with
the issuance of the Consideration Shares to the Sellers pursuant hereto. The
Purchaser shall immediately notify the Sellers when the SEC has requested any
additional information regarding the Registration Statement, declared the
Registration Statement effective or issued or removed any stop order with
respect thereto. The Purchaser shall use its best efforts to cause the
Consideration Shares to be listed on the New York Stock Exchange.
10.2 Sellers agree to use their reasonable best efforts to sell any
Consideration Shares in an orderly manner and to provide Purchaser with prior
notice of its intention to sell such stock.
11 THE CONTRACTS
11.1 The Purchaser shall in respect of the period after the Effective Date
use its reasonable best efforts to meet its obligations under the Contracts.
Insofar as any consents or licences to the transfer or assignment of the benefit
and burden of the Contracts have not been obtained on the Effective Date, or if
such benefit or burden cannot effectively be so transferred or assigned to the
Purchaser except with the consent of or by an agreement with the other party or
parties thereto, then:
a) the Sellers shall use their reasonable best efforts to obtain the
consent of such other party or parties to the Contracts being
novated or assigned in terms reasonably acceptable to the
Purchaser; and
b) unless and until all of the Contracts shall have been so novated or
assigned, the Sellers shall provide to the Purchaser from the
Effective Date the benefit and burden of the Contracts as if the
same had been effectively novated or assigned to the Purchaser.
The Sellers do not warrant that the Contracts are assignable or
transferable and shall not be liable or responsible in the event any of the
Contracts are cancelled or terminated due to the Purchaser's acquisition of the
Business.
11.2 The Purchaser shall indemnify and hold harmless the Sellers against
any and all Losses they may reasonably incur or become subject to, insofar as
such Losses arise out of, are based upon or are in connection with the
non-performance or the defective or negligent performance after the Effective
Date by the Purchaser of any Contracts. The indemnification hereunder shall,
however, not apply if the Purchaser's non-performance or the defective or
negligent performance is caused by the Sellers by any breach of representations
or warranties set out in this Agreement or the schedules hereto.
11.3 After the Effective Date the Sellers will assist the Purchaser in
notifying all existing customers of the Business in writing (in such form and at
such times as the Purchaser may reasonably require) of the sale of the Business
to the Purchaser and the arrangements being made in respect thereof and the
Sellers will use their reasonable best efforts to obtain the written consent of
such customers to such arrangements.
12 INDEMNITY BY THE PURCHASER
In the event the Sellers receive any invoice or in the event a claim is
presented to the Sellers in any other way after the Effective Date and such
claim relates to the Assumed Liabilities, the Sellers shall without undue delay
send the invoice or written documents relating to the claim to the Purchaser and
the Purchaser shall pay the claim directly to the third party on the due date.
10
The Purchaser shall indemnify and hold harmless the Sellers against all
Losses they may reasonably incur or become subject to, insofar as such Losses
arise out of, are based upon or are in connection with any of the Assumed
Liabilities under this Agreement. The Purchaser shall furthermore indemnify and
hold harmless the Sellers against all Losses (including deficiencies, taxes,
interest and penalties) they may reasonably incur or become subject to, insofar
as such Losses arise out of, are based upon or are in connection with a claim by
any taxing authority for any taxes allocated or attributable to any period
ending on or before the Effective Date; provided, however, that this indemnity
shall only apply if the Sellers have given the Purchaser the right to take all
action to refute such claim by such taxing authority.
The indemnification hereunder shall, however, not apply if the Loss is
caused by the Sellers by any breach of representations or warranties set out in
this Agreement or the schedules hereto.
13 BOOKS AND RECORDS
The Sellers shall on the Effective Date (insofar as the Sellers are not
required to retain the same under Norwegian law or otherwise) deliver to the
Purchaser all of the books, records, files, papers and other documents of the
Sellers and the Subsidiaries related to the Business and in particular the
Sellers shall deliver to the Purchaser the original executed copies of the
Contracts.
The Purchaser will for a period of ten years keep safely in Norway all such
books, records, files, papers and other documents related to the Business as the
Sellers shall transfer or cause to be transferred to the Purchaser and shall
afford the Sellers reasonable access thereto, during reasonable business hours
after notice, for as long as shall be necessary to enable the Sellers to deal
with its taxation and other liabilities in respect of the period up to the
Effective Date and will permit the Sellers and its servants, agents and
professional advisers upon reasonable notice to make copies at the Sellers'
expense of such books, records, files, papers and other documents for the
purpose of answering any query raised or disposing of any dispute in relation
thereto.
14 NON-COMPETITION
For a period of two years following the Effective Date neither the Sellers
nor any person, group, partnership, corporation or entity that controls or is
controlled by or under common control with the Sellers ("Seller Affiliate") will
compete, directly or indirectly, with the Purchaser or any person, group,
partnership, corporation or entity that controls or is controlled by or under
common control with the Purchaser ("Purchaser Affiliate") in designing,
manufacturing, selling, renting or running liner hangers, packers and gas lift
valves and systems. Furthermore, no Seller or Seller Affiliate will solicit for
employment any employee of the Purchaser or Purchaser Affiliate, including any
employee of a Seller or a Subsidiary who becomes an employee of the Purchaser or
a Purchaser Affiliate.
15 COSTS AND TAXES
Each party shall pay its own costs in relation to the negotiations leading
up to the sale and purchase of Assets contemplated by this Agreement and the
preparation and carrying into effect of this Agreement and of all other
documents referred to herein.
The Purchaser shall be liable for all costs and expenses with respect to
preparing, filing and printing the Registration Statement and distributing the
prospectus contained therein and listing the Consideration Shares on the New
York Stock Exchange and all fees, duties and administrative fees payable in
connection with the sale and the purchase of the Assets contemplated hereby,
including, but not limited to, any registration fees and taxes for the transfer
of the title to any of the Assets and any value added taxes.
16 SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
parties and the successors in interest to the parties, but shall not be
assignable by either party, except as provided for below.
11
The Purchaser shall be entitled to assign this Agreement to a Norwegian
subsidiary, but the Purchaser shall always remain jointly and severally liable
with its Norwegian subsidiary for all of the Purchaser's obligations and
liabilities under this Agreement.
17 CHANGE OF NAME
The Sellers shall change the name of each Seller not later than at the
Effective Date and undertake to send the relevant form to the Central Register
to have the name deregistered not later than two Business Days after the
Effective Date. The Purchaser shall be entitled to exclusive use of the name of
each Seller from and after the Effective Date.
18 BROKERAGES AND COMMISSIONS
No party, including Paine Webber Incorporated, is entitled to receive from
the Purchaser any finder's fee, brokerage or commission in connection with this
Agreement.
19 ANNOUNCEMENTS
19.1 No announcement concerning this sale and purchase or any ancillary
matter will be made before, on, or after the Effective Date, by any of the
parties hereto except as required by law, the Oslo Stock Exchange, the New York
Stock Exchange or with approval of the other parties (such approval not to be
unreasonably withheld or delayed). Each party agrees to notify the other party
prior to any announcement and provide the other Party the opportunity to review
prior to dissemination and to co-ordinate joint announcement efforts.
Notwithstanding the foregoing, the Parties will issue a joint press release
immediately after execution of this Agreement.
20 NOTICES AND RECEIPTS
20.1 Any notice or other documents to be provided under this Agreement may
be delivered or sent by registered mail or telex or telefax to the party to
receive such notice or document at its address appearing in this Agreement or at
such other address as it may have notified to the other parties in accordance
with this Clause.
The Sellers appoint Norsk Vekst AS, P.O.Box 1223 Vika, 0110 Oslo, telefax
(47) 22 83 89 29, as their agent for service of any indemnification claim or
notice.
Notice to the Purchaser shall also be sent to Advokatfirmaet Schj6dt,
attention: Erling Christiansen, Dronning Maudsgt 10, Postboks 2444, Solli,
N-0201 Oslo.
20.2 Any notice or document shall be deemed to have been served:
a) if delivered, at the time of delivery; or
b) if posted, at 10.00 a.m. on the fifth Business Day after it was
put into the post; or
c) if sent by telefax, at the expiration of 2 hours after the time
of receipt of the correct answerback or telefax confirmation, if
such answerback or confirmation is received before 3.00 p.m. or
any Business Day, and in any other case at 10.00 a.m. on the next
Business Day.
20.3 In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the notice or
document was properly addressed and posted as registered mail or that the
telefax message was properly addressed and the correct answerback or telefax
confirmation was received as the case may be.
21 GENERAL PROVISIONS
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
12
practicable, the transactions contemplated by this Agreement, including, without
limitation, (i) the obtaining of all necessary consents, approvals or waivers
required in connection with the consummation of the transactions contemplated by
this Agreement (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 transactions contemplated by this Agreement) and
(ii) the execution and delivery of any additional instruments 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.
21.2 Amendment and Waiver. This Agreement may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf of
each party hereto. 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.
21.3 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.
22 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES
22.1 This Agreement, the Schedules attached hereto and the Disclosure
Letter constitute the entire agreement and supersede 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.
13
23 LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of Norway and the Parties hereby irrevocable submit to the exclusive
jurisdiction of Oslo City Court.
Sellers' signatures: Purchaser's signature:
NODECO AS WEATHERFORD ENTERRA, INC.
By /s/Lars A. Grinde By /s/H. Suzanne Thomas
Name: Lars A. Grinde Name: H. Suzanne Thomas
Title: Attorney-in-Fact Title: Sr. Vice President, Secretary
and General Counsel
AARBAKKE AS
By /s/Lars A. Grinde
Name: Lars A. Grinde
Title: Attorney-in-Fact
14
EXHIBIT 5
FULBRIGHT & JAWORSKI
L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP HOUSTON
1301 MCKINNEY, SUITE 5100 WASHINGTON
HOUSTON, TEXAS 77010-3095 AUSTIN
TELEPHONE:713/651-5151 SAN ANTONIO
TELEX:76-2829 DALLAS
FACSIMILE:713/651-5246 NEW YORK
LOS ANGELES
April 18, 1996 LONDON
HONG KONG
Weatherford Enterra, Inc.
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Ladies and Gentlemen:
We have acted as counsel for Weatherford Enterra Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of 750,000 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 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 April 19, 1996. The Shares are to be issued in connection with the
acquisition (the "Acquisition") by the Company of all of the assets of Nodeco
AS, a Norwegian joint stock company ("Nodeco"), and Aarbakke AS, a Norwegian
joint stock company ("Aarbakke"), pursuant to a Purchase and Sale Agreement
dated March 28, 1996 (the "Purchase Agreement"), among the Company, Nodeco and
Aarbakke.
In connection therewith, we have examined originals or copies certified or
otherwise identified to our satisfaction of the Registration Statement, the
Purchase Agreement, the Restated Certificate of Incorporation of the Company,
the Bylaws of the Company, the corporate proceedings with respect to the
Acquisition 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
opinion 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 Acquisition have been duly
authorized for issuance and, when issued in accordance with the terms of the
Purchase Agreement, will be validly issued, fully paid and nonassessable.
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 Prospectus contained in the Registration Statement.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
Fulbright & Jaworski L.L.P.
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 report dated
February 29, 1996, included in Weatherford Enterra, Inc.'s Form 10-K for the
year ended December 31, 1995 and our report dated February 23, 1996 included in
Weatherford Enterra, Inc.'s Form 8-K/A dated February 27, 1996 and to all
references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
April 19, 1996
EXHIBIT 23.2
CONSENT OF PRICE WATERHOUSE A.S.
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Weatherford Enterra, Inc. of our report
dated March 15, 1996 except as to Notes 10 and 11 which are as of April 12, 1996
relating to the consolidated financial statements of Nodeco AS, which appears in
such Prospectus. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE A.S.
JAN EGIL HAGA
State Authorized Public Accountant
Oslo, Norway
April 17, 1996
