================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
================================================================================
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 1-7867
WEATHERFORD ENTERRA, INC.
(Exact name of registrant as specified in its charter)
Delaware 74-1681642
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1360 Post Oak Boulevard
Suite 1000
Houston, Texas
77056
(Address of principal executive offices)
(Zip code)
(713) 439-9400
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] . No [ ].
There were 54,454,430 shares of Common Stock, $.10 par value, of the registrant
outstanding as of July 31, 1997.
(Page 1 of 14)
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
1997 1996
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..................... $ 33,232 $ 33,029
Receivables, net of allowance of
$17,898 and $16,241 ......................... 265,431 272,816
Inventories, net of allowance of
$20,661 and $21,261 ......................... 164,937 163,302
Deferred tax and other current assets ......... 37,334 36,287
----------- -----------
Total current assets ........................ 500,934 505,434
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST ........... 1,206,649 1,254,686
Less -- Accumulated depreciation .............. 672,708 693,496
----------- -----------
533,941 561,190
----------- -----------
GOODWILL, NET .................................... 270,519 290,474
----------- -----------
OTHER ASSETS ..................................... 41,348 40,625
----------- -----------
$ 1,346,742 $ 1,397,723
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion
of long-term debt ........................... $ 7,293 $ 24,508
Accounts payable .............................. 52,595 65,713
Accrued income taxes .......................... 28,365 17,427
Other accrued liabilities ..................... 94,746 103,711
----------- -----------
Total current liabilities ................... 182,999 211,359
----------- -----------
LONG-TERM DEBT ................................... 228,740 291,266
----------- -----------
DEFERRED TAX LIABILITIES ......................... 34,875 34,728
----------- -----------
OTHER LONG-TERM LIABILITIES ...................... 14,687 18,010
----------- -----------
MINORITY INTERESTS ............................... 722 752
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par; shares
authorized 1,000,000; none issued ........... -- --
Common stock, $.10 par; shares
authorized 80,000,000; issued
52,457,246 and 52,172,796 ................... 5,246 5,217
Paid-in capital ............................... 644,505 639,679
Retained earnings ............................. 250,063 200,316
Cumulative translation adjustment ............. (14,167) (2,768)
Treasury stock, 31,050 and 28,269
common shares, at cost ...................... (928) (836)
----------- -----------
Total stockholders' equity .................. 884,719 841,608
----------- -----------
$ 1,346,742 $ 1,397,723
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- ------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Services and rentals ............ $ 204,817 $ 174,938 $ 406,134 $ 337,013
Products ........................ 62,018 58,844 127,814 115,610
--------- --------- --------- ---------
Total revenues ................ 266,835 233,782 533,948 452,623
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of services and rentals .... 139,144 126,787 275,898 243,764
Cost of products ................ 39,870 44,268 84,687 85,813
Selling, general and
administrative expenses ....... 35,622 33,584 71,812 66,898
Research and development ........ 2,195 1,568 4,969 3,283
Equity in earnings of
unconsolidated affiliates ..... (543) (855) (1,052) (1,356)
Foreign currency (gain) loss, net (93) (483) 300 (502)
Other expense, net .............. 4,620 1,977 10,432 4,003
--------- --------- --------- ---------
Total costs and expenses ...... 220,815 206,846 447,046 401,903
--------- --------- --------- ---------
OPERATING INCOME ................... 46,020 26,936 86,902 50,720
Interest expense ................ 5,396 5,465 11,530 10,537
Interest income ................. (561) (421) (1,262) (990)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS .......... 41,185 21,892 76,634 41,173
Income tax provision ............ 14,393 6,963 26,863 12,788
Minority interests .............. (3) 31 24 10
--------- --------- --------- ---------
NET INCOME ......................... $ 26,795 $ 14,898 $ 49,747 $ 28,375
========= ========= ========= =========
Weighted average common and common
equivalent shares outstanding ... 52,630 52,082 52,599 51,791
========= ========= ========= =========
INCOME PER COMMON AND
COMMON EQUIVALENT SHARE ......... $ 0.51 $ 0.29 $ 0.95 $ 0.55
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION TREASURY
STOCK CAPITAL EARNINGS ADJUSTMENT STOCK TOTAL
------ -------- -------- ----------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 ......... $5,217 $639,679 $200,316 $ (2,768) $(836) $ 841,608
Shares issued under employee
benefit plans .................. 1 222 -- -- -- 223
Stock grants and options exercised 28 4,604 -- -- (92) 4,540
Currency translation adjustment .. -- -- -- (11,399) -- (11,399)
Net income ....................... -- -- 49,747 -- -- 49,747
------ -------- -------- -------- ----- ---------
BALANCE, JUNE 30, 1997 ............. $5,246 $644,505 $250,063 $(14,167) $(928) $ 884,719
====== ======== ======== ======== ===== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED-IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
1997 1996
-------- ---------
<S> <C> <C>
NET INCOME ....................................................... $ 49,747 $ 28,375
Income items not requiring (providing) cash:
Depreciation and amortization ................................. 54,997 51,147
Gain on sales of assets ....................................... (7,236) (6,552)
Deferred income tax provision (benefit) ....................... 660 (888)
Other non-cash charges ........................................ (796) (1,235)
Increase (decrease) in cash from changes in operating accounts:
Receivables, net ............................................ (29,713) (24,618)
Inventories, net ............................................ (28,837) (11,470)
Prepayments and other ....................................... 8,573 7,118
Accounts payable and accrued liabilities .................... 14,389 (5,895)
Other long-term liabilities ................................. (2,399) (12,387)
-------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES ............................ 59,385 23,595
-------- ---------
Purchases of property, plant and equipment ....................... (57,737) (57,409)
Proceeds from sales of businesses ................................ 57,716 --
Proceeds from other disposition of assets ........................ 14,643 12,957
Acquisitions, net of notes issued and cash acquired .............. -- (14,393)
Other net cash flows from investing activities ................... (2,784) 2,219
-------- ---------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .................. 11,838 (56,626)
-------- ---------
Borrowings under credit facilities ............................... 6,658 244,407
Repayment of borrowings .......................................... (85,635) (227,195)
Payment of deferred loan costs ................................... -- (4,538)
Net cash flows from currency hedging transactions ................ 3,772 1,615
Proceeds from sale of stock to employee benefit plans and stock
option exercises .............................................. 4,855 9,415
-------- ---------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES .................. (70,350) 23,704
-------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH .......................... (670) (3,856)
-------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................. 203 (13,183)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................... 33,029 32,800
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ......................... $ 33,232 $ 19,617
======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ...................................................... $ 11,556 $ 8,317
Income taxes, net of refunds received ......................... 6,318 5,850
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The consolidated financial statements of Weatherford Enterra, Inc. and its
subsidiaries (the "Company" or "Weatherford Enterra") included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of management, the
information furnished reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary for a fair presentation of the
results of the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading.
Certain reclassifications were made to previously reported amounts in the
consolidated financial statements and notes to make them consistent with the
current presentation format.
It is suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. No significant
accounting changes have occurred during the six months ended June 30, 1997.
(2) INCOME PER COMMON AND COMMON EQUIVALENT SHARE. Income per common and common
equivalent share is computed on the basis of the weighted average number of
shares of common stock and common stock equivalents (if dilutive) outstanding
during the respective periods. Fully diluted earnings per share are equal to
primary earnings per share in all periods presented.
(3) INVENTORIES. Consolidated net inventories consist of the following (in
thousands):
JUNE 30, DECEMBER 31,
1997 1996
-------- --------
Spare parts and components............. $ 54,062 $ 41,068
Raw materials ......................... 26,535 28,734
Work in process ....................... 28,185 26,902
Finished goods ........................ 56,155 66,598
-------- --------
$164,937 $163,302
======== ========
(4) DIVESTITURES. On June 12, 1997, the Company sold the business and assets of
CRC-Evans Pipeline International, Inc. and on June 30, 1997, the Company sold
Total Engineering Services Team, Inc. Aggregate cash proceeds from the
transactions of $57,716,000, subject to adjustment, was used primarily to repay
bank debt. No significant net gain or loss was realized as a result of these
sales.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
BUSINESS REVIEW
Certain of the statements which follow represent forward-looking information.
These forward-looking statements, including without limitation statements with
respect to the Company's future results of operations, financial condition,
capital resources and industry condition, are made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may be significantly impacted by various factors
described herein and in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1996. These
factors include, without limitation, market prices and worldwide demand for oil
and natural gas, oil and natural gas exploration and production activity, and
general economic and political conditions. There can be no assurance that
anticipated developments will occur.
Weatherford Enterra is a diversified 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. The Company's principal
industry segments are oilfield services, oilfield products and gas compression,
with operations in virtually every oil and gas exploration and production region
in the world. The Company's operating results include several other businesses
that the Company has either sold or announced its intention to sell.
RESULTS OF OPERATIONS
A summary of operating results by business segment is shown below (in
thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------- -----------------------
1997 1996 1997 1996
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Oilfield services...........$ 152,639 $ 121,757 $ 298,831 $ 241,052
Oilfield products ........... 44,891 31,213 85,900 58,234
Gas compression ............. 37,991 42,256 82,827 75,899
Other businesses ............ 31,314 38,556 66,390 77,438
-------- --------- --------- ---------
Total.....................$ 266,835 $ 233,782 $ 533,948 $ 452,623
======== ========= ========= =========
OPERATING INCOME:
Oilfield services...........$ 35,044 $ 20,129 $ 67,326 $ 40,513
Oilfield products ........... 9,553 4,695 16,624 7,622
Gas compression ............. 2,874 3,093 6,109 5,718
Other businesses ............ 716 895 2,131 1,326
Corporate ................... (2,167) (1,876) (5,288) (4,459)
-------- --------- --------- ---------
Total.....................$ 46,020 $ 26,936 $ 86,902 $ 50,720
======== ========= ========= =========
</TABLE>
OILFIELD SERVICES. Oilfield services operations are located worldwide near
oil and gas producing regions and consist of oilfield equipment rental, downhole
services including fishing and milling, and tubular running services including
the installation and testing of casing and tubing connections.
During the second quarter of 1997, revenues increased 25% to $152.6 million
and operating income grew 74% to $35.0 million compared to the second quarter of
1996, primarily as a result of increased demand and improved pricing in many
areas. In both the U.S. and international markets, oilfield service revenue
growth exceeded that of active drilling rigs. U.S. service revenues increased
32% to $75.4 million, with the most
7
<PAGE>
significant increases occurring in the Gulf of Mexico, South Texas and the Rocky
Mountain region. U.S. operations benefited from increased land drilling
activity, continued growth in the Gulf of Mexico and improved pricing.
International revenues increased 19% to $77.2 million, with the most significant
improvement occurring in the Middle East, Asia Pacific and Canada.
During the first six months of 1997, revenues increased 24% to $298.8 million
and operating income grew 66% to $67.3 million compared to the first six months
of 1996, primarily as a result of increased worldwide drilling activity,
improved pricing, the introduction of downhole services into certain new markets
and efficiencies resulting from combining the operations of the Company and
Enterra Corporation ("Enterra"), which was merged into the Company in October
1995.
OILFIELD PRODUCTS. Closely aligned with the oilfield services segment, the
oilfield products segment includes the manufacture, sale and service of
cementation products, liner hangers, gas lift equipment and equipment for resale
and used internally to provide oilfield services. The Company acquired the
business and assets of Nodeco AS, a Norwegian liner hanger manufacturer, and
Aarbakke AS (collectively "Nodeco") in May 1996.
During the second quarter of 1997, revenues increased 44% to $44.9 million
and operating income more than doubled to $9.6 million compared to the second
quarter of 1996, primarily as a result of improvement in the Company's
cementation products and liner hanger businesses. Nodeco contributed $5.8
million, or 42%, of the revenue increase. Cementation product sales improved
significantly during the second quarter of 1997, primarily reflecting increased
U.S. drilling activity, increased market share and the introduction of new
products. Manufacturing efficiencies achieved as a result of the higher volume
of product sales also contributed to the profitability improvement.
During the first six months of 1997, revenues increased 48% to $85.9 million
and operating income increased 118% to $16.6 million compared to the first six
months of 1996. The improved results are primarily attributable to increased
volume of cementation product sales, operating efficiencies and the inclusion of
the Nodeco operations for the full six-month period.
GAS COMPRESSION. The gas compression segment includes manufacturing,
packaging, renting, selling and providing parts and services for gas compressor
units over a broad horsepower range.
Revenues decreased 10% to $38.0 million and operating income decreased 7% to
$2.9 million during the second quarter of 1997 as compared to 1996, primarily as
a result of lower volume of packaged unit sales. Manufacturing and packaging
revenues were $12.8 million in the second quarter of 1997 compared to $19.8
million in the second quarter of 1996. Compressor rental and service revenues,
however, improved 12% over the second quarter of 1996 to $25.2 million,
reflecting expansion and increased utilization of the Company's compressor
rental fleet. At June 30, 1997, the Company's rental fleet was 415,000
horsepower with 83.6% utilization, compared to 81.5% utilization at June 30,
1996.
During the first six months of 1997, gas compression revenues increased 9% to
$82.8 million and operating income improved 7% to $6.1 million compared to the
first six months of 1996, reflecting expansion of the Company's compressor
rental fleet and increased service activity. Compressor rental and service
revenues improved 15% to $48.9 million, while manufacturing and packaging
revenues increased 1% to $33.9 million, comparing the first six months of 1997
to the same period in 1996.
8
<PAGE>
OTHER BUSINESSES. The Company has several non-core businesses that it has
either sold or announced its intention to sell. Such businesses include Barber
Industries Limited, Enterra Patco Oilfield Products, Inc., and Arrow Completion
Systems, Inc., each of which was sold in 1996; CRC-Evans Pipeline International,
Inc. ("CRC-Evans") and Total Engineering Services Team, Inc. ("TEST"), which
were sold in June 1997; and the American Aero Cranes division, which is expected
to be sold in the third quarter of 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of revenue decreased to 13.3% in the
second quarter of 1997 from 14.4% in the second quarter of 1996, and to 13.4% in
the first six months of 1997 from 14.8% for the same period of 1996, primarily
as a result of the increased revenues and continued cost efficiencies achieved
in consolidating the operations of Enterra into the Company.
RESEARCH AND DEVELOPMENT. Research and development costs of $2.2 million in
the second quarter of 1997 and $5.0 million in the first six months of 1997
increased 40% and 51%, respectively, compared to the corresponding periods in
1996. The increases primarily reflected the expansion of the Company's
operations and development activities to support its three principal business
segments.
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES. The Company owns an interest
of 50% or less in several joint ventures, primarily in the oilfield services
segment. Compared to the corresponding periods in 1996, the Company's equity in
the earnings of these affiliates decreased 36% to $543,000 in the second quarter
of 1997 and 22% to $1.1 million in the first six months of 1997, primarily as a
result of lower earnings in Saudi Arabia. The Company received cash dividends
from its 50% or less-owned affiliates totaling $490,000 and $783,000 in the
first six months of 1997 and 1996, respectively.
FOREIGN CURRENCY (GAIN) LOSS, NET. As a result of the fluctuation of the U.S.
dollar against the major foreign currencies in which the Company conducts
business, the Company recorded a net foreign currency gain of $93,000 in the
second quarter of 1997 and a net foreign currency loss of $300,000 in the first
six months of 1997 compared to net gains of $483,000 and $502,000 in the second
quarter and first six months of 1996, respectively.
OTHER EXPENSE, NET. Other expense, net, increased to $4.6 million in the
second quarter of 1997 compared to $2.0 million in the second quarter of 1996,
and to $10.4 million in the first six months of 1997 compared to $4.0 million in
the first six months of 1996. The increase was attributable to several factors,
including estimated losses recorded in 1997 related to the sales of non-core
businesses, lower gains on sales of assets and higher goodwill amortization as a
result of the Nodeco acquisition.
INTEREST. Net interest expense decreased to $4.8 million in the second
quarter of 1997 compared to $5.0 million in the second quarter of 1996,
primarily as a result of lower average debt balances outstanding at slightly
higher average interest rates. Comparing the first six months of 1997 with the
same period in 1996, net interest expense increased to $10.3 million compared to
$9.5 million, primarily as a result of higher average interest rates.
INCOME TAXES. Income tax provision as a percentage of income before income
taxes was 35% in the second quarter and first six months of 1997 compared to 32%
and 31%, respectively, for the corresponding periods in 1996. The lower
effective rate in 1996 primarily resulted from the reversal in 1996 of valuation
allowances on certain deferred tax assets, primarily U.S. net operating loss
carryforwards and general business credit carryforwards.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations provided cash of $59.4 million during the first six
months of 1997 compared to $23.6 million during the first six months of 1996,
primarily as a result of improved operating activity. Net income before
depreciation and amortization of $104.7 million in the first six months of 1997
increased 32% when compared to the same period in 1996. Changes in working
capital and other operating accounts used cash of $38.0 million during the first
six months of 1997 compared to $47.3 million in the same period of 1996. Working
capital increased to $317.9 million at June 30, 1997 compared to $294.1 million
at December 31, 1996. Capital expenditures, excluding the acquisition of Nodeco
in 1996, increased slightly to $57.7 million during the six months ended June
30, 1997 compared to $57.4 million for the same period in 1996.
In June 1997, the Company closed the sales of the CRC-Evans business and TEST
for aggregate cash proceeds of $57.7 million, subject to adjustment. Proceeds
were used primarily to repay bank debt.
The Company's consolidated indebtedness decreased to $236.0 million at June
30, 1997 from $315.8 million at December 31, 1996, primarily as a result of the
repayment of debt with the proceeds from the divestitures mentioned above. The
Company's ratio of total debt to total capitalization was 21% at June 30, 1997
compared to 27% at December 31, 1996.
The Company has $200 million of publicly-held 7 1/4% notes due May 15, 2006
(the "7 1/4% Notes"). Interest on the 7 1/4% Notes is payable semi-annually on
May 15 and November 15 of each year.
The Company also has bank credit facilities (the "Facilities") consisting of
a $200 million term loan (the "Term Loan") and a $200 million revolving credit
facility (the "Revolving Credit Facility"). The Term Loan was repaid in July
1997 with borrowings under the Revolving Credit Facility. The Revolving Credit
Facility matures on September 30, 2000. Amounts outstanding accrue interest at a
variable rate ranging from 0.375% to 0.625% above a specified Eurodollar rate,
depending on the Company's ratio of total debt to total capitalization. The
applicable interest rate on amounts outstanding at June 30, 1997 was 6.1%. A
commitment fee ranging from 0.15% to 0.225% per annum, depending on the
Company's ratio of total debt to total capitalization, is payable quarterly on
the unused portion of the Revolving Credit Facility. The Facilities agreement
requires the Company to maintain certain financial ratios, including a maximum
debt-to-capitalization ratio of 40%, and limits the Company's ability to incur
indebtedness, make investments and dispose of assets.
At July 31, 1997, the balance outstanding under the Revolving Credit Facility
was $20.0 million, and the Company had $180.0 million available to borrow under
the Revolving Credit Facility and $23.9 million available for borrowing under
working capital facilities of certain of its domestic and international
subsidiaries. The Company also has various credit facilities available only for
stand-by letters of credit and bid and performance bonds, pursuant to which
funds are available to the Company to secure performance obligations and certain
retrospective premium adjustments under insurance policies. The Company had a
total of $15.6 million of letters of credit and bid and performance bonds
outstanding at June 30, 1997.
The Company conducts a portion of its business in currencies other than the
U.S. dollar, including the Canadian dollar, major European currencies and
certain Latin American currencies. Although most of the revenues of the
Company's foreign operations are denominated in the local currency, the effects
of foreign currency fluctuations are largely mitigated because local expenses of
such foreign operations also generally are denominated in the same currency.
10
<PAGE>
The Company occasionally enters into forward exchange contracts only as a
hedge against certain existing economic exposures, and not for speculative or
trading purposes. These contracts reduce exposure to currency movements
affecting existing assets and liabilities denominated in foreign currencies,
such exposure resulting primarily from trade receivables and payables and
intercompany 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 contracts resulted in
net cash inflows totaling $3.8 million and $1.6 million during the first six
months of 1997 and 1996, respectively.
Management believes the combination of working capital, the unused portion of
existing credit facilities and cash flows from operations provide the Company
with sufficient capital resources and liquidity to manage its routine
operations. The Company continues to seek opportunities to enhance its
competitiveness through strategic acquisitions. Management believes that any
borrowings made in connection with any such acquisitions will not have a
materially adverse impact on the Company's liquidity. Management believes that
it is premature to provide specific information with respect to any other such
possible acquisitions because of the status of, and possible adverse impact on,
negotiations, and because, in any event, there can be no assurance that any of
such possible acquisitions will be consummated.
Like most multinational oilfield service companies, the Company has
operations in certain international areas, including parts of the Middle East,
North and West Africa, Latin America, the Asia-Pacific region and the
Commonwealth of Independent States (the "CIS"), that are inherently subject to
risks of war, political disruption, civil disturbance and policies that may
disrupt oil and gas exploration and production activities, restrict the movement
of funds, lead to U.S. government or international sanctions or limit access to
markets for periods of time. Historically, the economic impact of such
disruptions has been temporary and oil and gas exploration and production
activities have resumed eventually in relation to market forces. Certain areas,
including the CIS, Algeria, Nigeria, and parts of the Middle East and Latin
America, have been subjected to political disruption or social unrest in the
past twelve months. Generally, business interruptions resulting from civil or
political disruptions negatively impact near-term results of operations;
however, management 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 the
Company.
The Company has not declared dividends on Common Stock since December 1982
and management does not anticipate paying dividends on Common Stock at any time
in the foreseeable future.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 15, 1997, the Company held its annual meeting at which the
stockholders of the Company were asked to elect three directors, each
for a term of three years, approve certain amendments to the
Non-Employee Director Stock Option Plan (the "Director Option Plan")
and adopt the 1997 Non-Employee Director Restricted Stock Plan (the
"Director Stock Plan"). The stockholders elected as directors the
three persons nominated by the Board of Directors. Of the shares of
Common Stock entitled to vote and present at the meeting, (1)
45,343,091 shares were voted in favor of John A. Hill and 1,433,883
shares withheld or abstained; (2) 45,344,293 shares were voted in
favor of John W. Johnson and 1,432,681 shares withheld or abstained;
and (3) 45,342,339 shares were voted in favor of William E. Macaulay
and 1,434,635 shares withheld or abstained. The stockholders also
approved the amendments to the Director Option Plan, with 44,212,229
shares being voted in favor and 2,563,381 shares being withheld or
abstaining, and the stockholders approved adoption of the Director
Stock Plan, with 44,181,226 shares being voted in favor and 2,594,331
shares being withheld or abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
10.1* Non-Employee Director Stock Option Plan, as amended and
restated.
10.2* 1997 Non-Employee Director Restricted Stock Plan.
10.3* Employment Agreement with Thomas R. Bates, Jr.
10.4* Change of Control Agreement with Thomas R. Bates, Jr.
10.5* Indemnification Agreement with Thomas R. Bates, Jr.
10.6* Severance Agreement with Thomas N. Amonett.
27 Article 5 Finanical Data Schedule.
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* Management contract or compensatory plan or arrangement.
(B) Reports on Form 8-K
None.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEATHERFORD ENTERRA, INC.
(Registrant)
Date: AUGUST 14, 1997 By: /s/ NORMAN W. NOLEN
NORMAN W. NOLEN
Senior Vice President, Chief Financial
Officer & Treasurer
13
EXHIBIT 10.1
WEATHERFORD ENTERRA, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
MAY 15, 1997
ARTICLE I. ESTABLISHMENT, PURPOSE AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Weatherford Enterra, Inc. (the "Company"),
hereby establishes an incentive compensation plan to be known as the Weatherford
Enterra, Inc. Non-Employee Director Stock Option Plan (the "Plan"), as set forth
in this document. The Plan permits the grant of Non-qualified Stock Options to
Non-employee Directors, subject to the terms and provisions set forth herein.
The Plan was adopted by the Board of Directors of the Company on
March 16, 1995 (the "Effective Date") and approved by the stockholders of the
Company at the 1995 annual stockholders' meeting. Certain amendments to the Plan
were adopted by the Board of Directors on March 11, 1997, and approved by a
majority of stockholders of the Company at the 1997 stockholders' meeting.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Non-employee Directors to those of the Company's stockholders by
providing them with additional incentive through an increase in their
proprietary interest in the success of the Company - thereby encouraging them to
continue in their present capacity.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date
and shall remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 8 herein, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions. However, in no event may an Award be granted under the Plan on or
after March 15, 2005.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized.
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(a) "Award" means a grant of Non-qualified Stock Options under the
Plan.
(b) "Award Agreement" means an agreement entered into by and between
the Company and a Non-employee Director, setting forth the terms and provisions
applicable to an Award granted under the Plan.
(c) "Board" or "Board of Directors" means the Board of Directors of
the Company, and includes any committee of the Board of Directors designated by
the Board to administer part or all of the Plan.
(d) "Change of Control" of the Company shall mean: a) any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") acquires of beneficial ownership of 20 percent
or more of either (i) the then outstanding Shares or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of Directors; provided, however, that for purposes of
this subsection (a), a Person shall not include the Company or any subsidiary or
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any subsidiary; (b) as a result of, or in connection with, a
contested election for directors, the persons who were directors of the Company
before such election (the "Incumbent Board") shall cease to constitute a
majority of the Board of Directors of the Company; or (c) consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate Transaction") in
each case, unless, following such Corporate Transaction, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Shares and outstanding voting
securities immediately prior to such Corporate Transaction beneficially own,
directly or indirectly, more than 60 percent of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Corporate
Transaction of the outstanding Shares and the outstanding voting securities, as
the case may be, (ii) no Person (excluding any corporation resulting from such
Corporate Transaction or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Corporate Transaction)
beneficially owns, directly or indirectly, 20 percent or more of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (iii) at least a majority of the
members of
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the board of directors of the corporation resulting from such Corporate
Transaction were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Corporate Transaction; or (d) approval by the stockholders of the Company of a
complete liquidation of the Company. The Committee shall determine whether a
Change of Control has occurred within the herein meaning and shall determine
whether any such Change of Control has been approved, recommended or supported
by the Board of Directors of the Company, and its determination shall be final
and conclusive.
(e) "Change of Control Price" shall mean, the higher of (i) the
highest reported sales price of a Share in any transaction reported on the New
York Stock Exchange during the 60-day period prior to and including the date of
the approval by the stockholders of the Company of such merger, sale of assets
or dissolution or the occurrence of the Change of Control and (ii) if the Change
of Control is the result of a tender or exchange offer, the highest price per
Share paid in such tender or exchange offer; provided, however, that in the case
of an Option which is held by a Participant who is subject to Section 16(b) of
the Exchange Act and was granted within six months of the occurrence of a Change
of Control, then the Change of Control Price for such Option shall be the Fair
Market Value of the Stock on the date such Option is canceled.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Company" means Weatherford Enterra, Inc., a Delaware
corporation, or any successor thereto.
(h) "Director" means any individual who is a member of the Board of
Directors of the Company.
(i) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3).
(j) "Employee" means any full-time, non-union, salaried employee of
the Company. For purposes of the Plan, an individual whose only employment
relationship with the Company is as a Director shall not be deemed to be an
Employee.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
(l) "Fair Market Value" means the average of the high and low sales
prices per Share (as reported on the New York Stock Exchange on the relevant
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measuring date, or if there were no sales on the New York Stock Exchange on that
date, then as of the next following date on which there were sales).
(m) "Non-employee Director" means any individual who is a member of
the Board of Directors of the Company, but who is not otherwise an Employee of
the Company.
(n) "Non-qualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Article 6 herein.
(o) "Option" means a Non-qualified Stock Option granted under the
Plan.
(p) "Option Price" means the price at which a Share may be
purchased under an Option.
(q) "Participant" means a Non-employee Director of the Company who
has outstanding a viable Award granted under the Plan.
(r) "Retirement" means retirement from the Board in accordance with
any retirement policy then in effect as respects Non-employee Directors.
(s) "Shares" means the shares of common stock, $0.10 par value,
of the Company.
ARTICLE 3. ADMINISTRATION
3.1 THE BOARD OF DIRECTORS. The Plan shall be administered by the
Compensation and Stock Plans Committee (the "Committee") of the Board of
Directors of the Company, subject to the restrictions set forth in the Plan. If
the Committee is not composed solely of two or more "Non-Employee Directors" (as
defined in Rule 16b-3 of the Exchange Act) of the Company, then such additional
or different persons shall be appointed by the Board of Directors to act for
purposes of administering the Plan so that the Committee administering the Plan
shall be composed solely of two or more "NonEmployee Directors".
3.2 ADMINISTRATION BY THE BOARD OF DIRECTORS. The Board shall have the
full power, discretion and authority to interpret and administer the Plan in a
manner which is consistent with the Plan and Rule 16b-3. However, in no event
shall the Board have the power to determine Plan eligibility, or to determine
the number, the value, the vesting period or the timing of Awards to be made
under the Plan (all such determinations are automatic pursuant to the provisions
of the Plan).
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3.3 DECISIONS BINDING. All determinations and decisions made by the Board
pursuant to the provisions of the Plan, and all related orders or resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its shareholders and employees, the Participants and their estates and
beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares with respect to which Options may be granted
shall not exceed 48,500.
4.2 SHARE COUNTING. For purposes of determining at any time the number of
Shares that remain available for grant under this Plan, the number of Shares
then authorized pursuant to Section 4.1 of the Plan shall be (i) decreased by
the "gross" number of Shares issued pursuant to exercised Awards, (ii) decreased
by the "gross" number of Shares issuable pursuant to outstanding unexercised
Awards, and (iii) increased by the difference between the "gross" number of
Shares and the "net" number of Shares issued pursuant to exercised Awards. As
used herein, the "gross" number of Shares refers to the maximum number of Shares
that may be issued upon the exercise of an Award. The "net" number of Shares
refers to the net number of Shares actually issued to an Award holder upon
exercise of an Award, after reducing the "gross" number of Shares by the number
of Shares tendered back to the Company in payment of the Award's exercise price
for the satisfaction of any tax payment obligation. If a Participant shall
forfeit, voluntarily surrender or otherwise permanently lose his or her right to
exercise and Award under any provisions of this Plan or otherwise, or if any
Award shall terminate or expire pursuant to its terms, the Shares subject to the
Award shall once again be available to be awarded and sold under this Plan
pursuant to a new Award grant hereunder.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, combination of Shares or other change in the corporate
structure of the Company affecting the Shares, the Board may make such
adjustments to outstanding Awards as may be determined to be appropriate and
equitable by the Board in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that no such adjustment shall be made
if the adjustment may cause the Plan to fail to comply with the "formula award"
exception for grants of Awards to Directors, as set forth in Rule 16b-
3(c)(ii)(A) of the Exchange Act.
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ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in the Plan are limited
to Non- employee Directors who are serving on the Board on the date of each
scheduled grant under the Plan.
5.2 ACTUAL PARTICIPATION. All eligible Non-employee Directors shall
receive grants of Options pursuant to the terms and provisions set forth in
Article 6 herein.
ARTICLE 6. NON-QUALIFIED STOCK OPTIONS
6.1 INITIAL GRANT OF OPTIONS.
(a) For so long as the Plan is in effect and shares are available
for grant of Options, each individual who is a Non-employee Director on the
Effective Date shall be granted an Option to purchase 2,500 Shares.
(b) For so long as the Plan is in effect and shares are available
for the grant of Options, any individual who becomes a Non-employee Director
after the Effective Date shall be granted an Option to purchase 2,500 Shares
upon his or her election or appointment as director.
6.2 SUBSEQUENT GRANTS OF OPTIONS. For so long as the Plan is in effect and
shares are available for the grant of Options, on the day following each annual
meeting of stockholders, beginning with the meeting after the Effective Date,
each Non-employee Director shall be granted an Option to purchase 2,000 Shares.
6.3 LIMITATION ON GRANT OF OPTIONS. Other than those grants of Options set
forth in Section 6.1 and 6.2 herein, no additional Options shall be granted
under the Plan.
6.4 OPTION AWARD AGREEMENT. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the Option,
the number of Shares available for purchase under the Option and such other
provisions as the Board shall determine.
6.5 OPTION PRICE. The purchase price per Share available for purchase
under an Option shall equal the Fair Market Value of a Share on the date the
Option is granted.
6.6 DURATION OF OPTIONS. Except as otherwise provided herein, each Option
shall expire on the tenth (10th) anniversary date of its grant.
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6.7 VESTING AND EXERCISABILITY OF SHARES SUBJECT TO OPTION.
(a) Subject to the terms of the Plan, Options granted pursuant to
Sections 6.1 and 6.2 hereof shall vest and become exercisable six (6) months
after the date of grant, provided that the Participant is serving as a Director
on the vesting date.
(b) Regardless of the vesting schedule set forth hereinabove, all
Options held by a Participant shall immediately become 100 percent vested and
exercisable upon the first to occur of the following events, provided that he or
she is then serving as a Director:
1) The death of the Participant;
2) The Disability of the Participant;
3) The Retirement of the Participant; or
4) The effective date of a Change in Control of the
Company;
provided, however, that in the discretion of the Committee, on a case-by-case
basis, the options may become 100 percent vested and exercisable in the event a
Participant (a "withdrawing Non-employee Director") terminates his or her
service as a member of the Board (A) for reasons of personal or financial
hardship; (B) to serve in any governmental, diplomatic or any other public
service position or capacity; (C) to avoid or protect against a conflict of
interest of any kind; (D) on the advice of legal counsel; or (E) for any other
extraordinary circumstance that the Board determines to be comparable to the
foregoing. The withdrawing Non-employee Director shall abstain from
participating in any determination made by the Committee with respect to any
matter relating to the foregoing.
6.8 TERMINATION OF DIRECTORSHIP.
(a) In the event a Participant ceases to be a Director for any
reason other than death, Disability or Retirement, all Options not vested as of
the effective date of such cessation shall be forfeited and shall revert back to
the Company (with no further vesting to occur). All Options which are vested as
of such date shall remain exercisable for six (6) months following the date on
which the Director's service on the Board of Directors terminates, or until
their expiration date, whichever period is shorter.
(b) In the event a Participant ceases to be a Director by reason of
his or her death, all Options shall remain exercisable at any time prior to
their expiration date, or for one (1) year after the date of death, whichever
period is shorter, by such persons
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that have acquired the Participant's rights under the Option by will or by the
laws of descent and distribution.
(c) In the event a Participant ceases to be a Director by reason of
his or her Disability or Retirement, all Options shall remain exercisable at any
time prior to their expiration date, or for one (1) year after the effective
date of such cessation, whichever period is shorter, by the Participant.
6.9 EXERCISE OF OPTIONS.
(a) Options shall be exercised by the delivery of a written notice
of exercise to the Secretary of the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by full payment
for the Shares. The date of the notice letter shall be the "Notice Date".
(b) The Option Price upon exercise of any Option shall be payable to
the Company in full (a) in cash or its equivalent, (b) with previously acquired
Shares having a Fair Market Value at the time of exercise equal to the total
Option Price (provided that the Shares tendered upon Option exercise have been
held by the Participant for at least six (6) months prior to their tender to
satisfy the Option Price, and provided further that at the time of exercise the
Company has unrestricted earned surplus in an amount not less than the Option
Price of such Shares, all accrued cumulative preferential dividends and other
current preferential dividends on all outstanding preferred stock of the Company
have been fully paid, the reacquisition or exchange between the Company of its
own Shares for such purpose is permitted by applicable law and without the
consent of stockholders and the Board shall have adopted a resolution, which
remains in full force and effect, authorizing such reacquisition of Shares), (c)
by a combination of (a) and (b). Alternatively, subject to the provisions of
Rule 16b-3 of the Exchange Act, payment of the Option Price may be made by the
Participant's delivering to the Company the exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company an
amount equal to the Option Price of such Shares, such amount being either from
loan proceeds or from the sale of the Shares to be issued to the Participant.
6.10 RESTRICTIONS ON SHARE TRANSFERABILITY. The Board shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares; provided,
however, that no such restrictions shall be imposed if the restriction could
result in the failure to comply with the "formula award" exception for grants of
Awards to Directors, as set forth in Rule 16b-3(c)(ii)A) of the Exchange Act.
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6.11 NON-TRANSFERABILITY OF OPTIONS. No Option granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
ARTICLE 7. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
The existence of outstanding Options shall not affect in any way the right
or power of the Company or its stockholders to make or authorize all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Shares or the rights thereof, or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of Shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of Shares outstanding, without receiving compensation
therefor in money, services or property, then (a) the number, class and per
share price of Shares subject to outstanding Options hereunder shall be
appropriately adjusted in such a manner as to entitle a Participant to receive
upon exercise of an Option, for the same aggregate cash consideration, the same
total number and class of Shares as he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b)
the number and class of Shares then reserved for issuance under the Plan shall
be adjusted by substituting for the total number and class of Shares then
reserved that number and class of Shares that would have been received by the
owner of an equal number of outstanding Shares of each class of stock as the
result of the event requiring the adjustment.
Notwithstanding any other provision of this Article 7, if a Change of
Control occurs, the Participant shall have the right, within 60 days after the
occurrence of such Change of Control, to elect to surrender all or part of such
Options outstanding, irrespective of whether such Options are then exercisable,
in exchange for a cash payment by the Company in an amount equal to the number
of Shares subject to the Option held by such Participant multiplied by the
difference between the Change of Control Price and the Option Price of a
particular Option; provided, however, that if the occurrence of an event
specified herein is within six months after the date of grant of a particular
Option held by a Participant who is subject to Section 16(b) of the Exchange
Act, any cash payment to the Participant shall be made on the day which is six
months and one day after the date of grant of such Option. Notwithstanding the
foregoing, if any
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right granted pursuant to the foregoing would make any of the occurrences
specified above ineligible for pooling of interests accounting treatment under
APB No. 16 that but for this provision would otherwise be eligible for such
accounting treatment, the Participant shall receive Shares with a Fair Market
Value equal to the cash that would otherwise be payable hereunder in
substitution for the cash. If a Participant does not elect to surrender all
outstanding Options for a cash payment (or Shares) as provided above, such
Options, or replacement or substitution Options to be issued by the surviving or
acquiring corporation, shall become fully exercisable, to the extent they are
not, and shall remain exercisable for seven months after the Participant's
termination of the Non- employee Director's term or until the stated expiration
of the term of the Option, whichever is shorter. In the event that the
consideration offered to stockholders of the Company in any transaction
described in this paragraph consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of the consideration
offered which is other than cash.
ARTICLE 8. AMENDMENT, MODIFICATION AND TERMINATION
8.1 Subject to the terms set forth in this Section 8.1, the Board may
amend, modify or terminate the Plan at any time from time to time, provided,
however, that the provisions set forth in the Plan regarding the amount of
securities to be awarded to Directors, the price of securities awarded to
Directors and the timing of awards to Directors, may not be amended more than
once within any six (6) month period, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended from time
to time, or the rules thereunder.
8.2 Without the approval of the stockholders of the Company (as may be
required by the Code, by the insider trading rules of Section 16 of the Exchange
Act, by any national securities exchange or system on which the Shares are then
listed or reported, or by a regulatory body having jurisdiction with respect
thereto) no such amendment, modification or termination may:
(a) increase the total number or value of Shares which may be
available for grant of Awards under the Plan, except as provided in Section 4.3
herein; or
(b) change of the class of Participants eligible to participate in
the Plan; or
(c) materially increase the cost of the Plan or materially increase
the benefits accruing to Participants.
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8.3 Unless required by law, no amendment, modification or termination of
the Plan shall in any manner adversely affect any Award previously granted under
the Plan, without the written consent of the Participant holding the Award.
8.4 No Award shall be granted pursuant to the Plan after March 15, 2005.
ARTICLE 9. MISCELLANEOUS
9.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.
9.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
9.3 NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's stockholders.
9.4 SHARES AVAILABLE. The Shares made available pursuant to Awards under
the Plan may be either authorized but unissued Shares or Shares which have been
or may be reacquired by the Company, as determined from time to time by the
Board.
9.5 ADDITIONAL COMPENSATION. Shares granted under the Plan shall be in
addition to any annual retainer, attendance fees or other compensation payable
to each Participant as a result of his service on the Board.
9.6 REQUIREMENTS OF LAW.
(a) The granting of Awards under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. The
Company shall not be required to sell or issue any Shares under any Option if
the issuance of such Shares shall constitute or result in a violation by the
Participant or the Company of any provision of any law, statute or regulation of
any governmental authority. Specifically in connection with the Securities Act
of 1933, as now in effect or hereafter amended (the "Securities Act"), upon
exercise of any Option, the Company shall not be required to issue such Shares
unless the Committee has received evidence satisfactory to it to the effect that
the holder of such Option will not transfer such Shares except pursuant to a
registration statement in effect under such Act or unless an opinion of counsel
satisfactory
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to the Company has been received by the Company to the effect that such
registration is not required. Any determination in this connection by the
Committee shall be final, binding and conclusive.
(b) The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act.
(c) The Company may imprint the following legend or any other legend
which counsel for the Company considers necessary or advisable to comply with
the Securities Act:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws
of any State and may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an opinion of counsel
satisfactory to the Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale or transfer."
(d) The Company shall not be obligated to take any other affirmative
action in order to cause the exercise of an Option or the issuance of Shares
pursuant thereto to comply with any law or regulation of any governmental
authority.
9.7 GOVERNING LAW. To the extent not preempted by federal law, the Plan
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.
9.8 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD. With respect to
administration of the Plan, the Company shall indemnify each present and future
member of the Committee and the Board of Directors against, and each member of
the Committee and the Board of Directors shall be entitled without further act
on his or her part to indemnity from the Company for, all expenses (including
the amount of judgments and the amount of approved settlements made with a view
to the curtailment of costs of litigation, other than amounts paid to the
Company itself) reasonably incurred by him or her in connection with or arising
out of any action, suit, or proceeding in which he or she may be involved by
reason of his or her being or having been a member of the Committee and the
Board of Directors, whether or not he or she continues to be such member of the
Committee and the Board of Directors at the time of incurring such expenses;
provided, however, that such indemnity shall not include any expenses incurred
by any such member of the Committee and the Board of Directors (i) in respect of
matters as to which he or she shall be finally adjudged in any such action, suit
or proceeding to have been guilty of gross negligence or willful misconduct in
the performance of his or her duty as such member of the Committee and the Board
of
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Directors, or (ii) in respect of any matter in which any settlement is effected,
to an amount in excess of the amount approved by the Company on the advice of
its legal counsel; and provided further, that no right of indemnification under
the provisions set forth herein shall be available to or enforceable by any such
member of the Committee and the Board of Directors unless, within 60 days after
institution of any such action, suit or proceeding, he or she shall have offered
the Company, in writing, the opportunity to handle and defend same at its own
expense. The foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the Committee and
the Board of Directors and shall be in addition to all other rights to which
such member of the Committee and the Board of Directors may be entitled as a
matter of law, contract or otherwise.
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EXHIBIT 10.2
WEATHERFORD ENTERRA, INC.
1997 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
MAY 15, 1997
1. PURPOSE OF PLAN.
The purpose of this plan is to supplement the compensation paid to Outside
Directors, to increase their proprietary interest in the Company, to
attract and retain persons with outstanding qualifications to serve as
Directors of the Company and to enhance their identification with the
interests of the Company's stockholders, by grants of Common Stock.
2. DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the Compensation and Stock Plans Committee of
the Board.
(c) "Common Stock" shall mean the Common Stock, $.10 par value per
share, of the Company.
(d) "Company" shall mean Weatherford Enterra, Inc., a Delaware
corporation.
(e) "Effective Date" shall mean May 15, 1997, after approval of the Plan
by a majority of the holders of the shares of the Common Stock,
notwithstanding the approval of the Plan by the Board of Directors
on March 11, 1997.
(f) "Employee Director" shall mean a member of the Board who is a
full-time employee of the Company or any Subsidiary of the Company.
(g) "Fair Market Value" shall mean the average of the high and low sales
prices per share (as reported on the New York Stock Exchange on the
relevant measuring date, or if there were no sales on the New York
Stock Exchange on that date, then as of the next following date on
which there were sales).
(h) "Grant Date" shall mean the date on which Restricted Shares are
awarded to a Non-employee Director pursuant to paragraph 5 of the
Plan.
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(i) "Non-employee Director" shall mean a member of the Board who is not
a full-time employee of the Company or any Subsidiary of the
Company.
(j) "Plan" shall mean the Weatherford Enterra, Inc. 1997 Non-Employee
Director Restricted Stock Plan.
(k) "Restricted Period" shall mean the period of time, as specified in
paragraph 7 of the Plan, applicable to Restricted Shares granted
under the Plan.
(l) "Restricted Shares" shall mean shares of Common Stock automatically
granted to a Non-employee Director pursuant to paragraph 5 of the
Plan to which the Restricted Period still applies.
(m) "Restricted Shares Agreement" shall mean the agreement described in
paragraph 14 of the Plan.
(n) "Retained Distributions" shall mean the distributions which are
retained by the Company pursuant to subparagraph 7(f)(ii) of the
Plan.
(o) "Retirement" shall mean retirement from the Board in accordance with
the policy then in effect as respects Non-employee Directors.
(p) "Subsidiary of the Company" shall mean any corporation, partnership
or other entity in which the Company owns, directory or indirectly,
a controlling interest.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 below, the maximum
aggregate number of Restricted Shares which may be granted under the
Plan shall be 250,000; provided, however, that any Restricted Shares
granted under the Plan which are forfeited by the terms of the Plan
shall be deemed not to have been issued for the purpose of this
paragraph 3 and shall again become available for grant while the
Plan is in effect.
(b) Restricted Shares may be, in whole or in part, authorized but
unissued shares of Common Stock or shares of Common Stock previously
issued and outstanding and reacquired by the Company.
(c) The Company shall have no obligation to register Restricted Shares
with the Securities and Exchange Commission, either prior to or
after same are granted to a Non-employee Director.
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4. ELIGIBILITY.
The only persons eligible to participate in the Plan shall be Non-employee
Directors. An Employee Director who retires from employment with the
Company or any of its Subsidiaries shall become eligible to participate in
this Plan and shall be entitled to receive a grant of Restricted Stock
upon the commencement of his or her services as a Non-employee Director.
5. AUTOMATIC GRANTS.
(a) The first Grant Date shall be the Effective Date of the Plan, as to
each Non- employee Director then serving on the Board. Thereafter,
the first Grant Date shall be the date on which a Non-employee
Director is first elected or appointed to serve as a member of the
Board.
(b) Each person who is a Non-employee Director on the Effective Date
automatically shall be granted that number of Restricted Shares
which is determined by dividing $45,000 by the Fair Market Value of
a share of Common Stock on the Effective Date.
(c) Each person who is elected or appointed a Non-employee Director
after the Effective Date (or who is eligible for an additional grant
of Restricted Shares pursuant to paragraph 5(d) below) automatically
shall be granted on the date so elected or appointed that number of
Restricted Shares determined by dividing $45,000 by the Fair Market
Value of a share of Common Stock on such Grant Date.
(d) Each Non-employee Director who has previously received a grant of
Restricted Shares under the Plan and who is reelected for another
term as a Non-employee Director at, or whose term of office
otherwise continues following the date of, any annual meeting of
stockholders on which all such Restricted Shares have become fully
vested pursuant to paragraph 7 shall thereupon receive an additional
grant of Restricted Shares in accordance with paragraph 5(c) above.
(e) The value of any Restricted Shares granted pursuant to paragraphs
5(c) or 5(d) shall be adjusted for grants made in years after 1997
as follows: the dollar amount of each grant during any calendar year
after 1997 will be adjusted using the prior year's applicable grant
amount as a base amount and adjusting such preceding year's amount
for projected inflation by multiplying such base amount by a
fraction in which the numerator is the annual average Consumer Price
Index - U ("CPI-U") in the SURVEY OF CURRENT BUSINESS
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published by the U.S. Department of Commerce, Bureau of Economic
Analysis, for such preceding year and the denominator is the CPI-U
for the second immediately preceding year.
(f) The Corporate Secretary of the Company shall promptly cause the
Company to enter into an agreement (the "Restricted Share
Agreement") with each Non-employee Director who is granted
Restricted Shares and shall cause the Company to issue such
Restricted Shares, all without any further action required to be
taken by the Board, the Committee or any other committee of the
Board.
(g) The Company shall not be required to issue fractional Restricted
Shares. In lieu thereof, any fractional Restricted Share shall be
rounded to the next higher whole number.
6. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, subject to the
restrictions set forth in the Plan. If the Committee is not composed
solely of two or more "Non-employee Directors" (as defined in Rule
16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act"))
of the Company, then such additional or different persons shall be
appointed by the Board of Directors to act for purposes of
administering the Plan so that the Committee administering the Plan
shall be composed solely of two or more "Non- employee Directors".
(b) The Committee shall have full power, discretion and authority to
interpret and administer the Plan, except that the Committee shall
have no power to determine the eligibility for awards or number of
shares of Common Stock or timing or value of awards to be granted
pursuant to this Plan. The Committee's interpretations and actions,
except as otherwise determined by the Board of Directors, shall be
final, conclusive and binding on all persons for all purposes.
7. RESTRICTION PERIOD; RESTRICTIONS APPLICABLE TO RESTRICTED
SHARES; CERTIFICATES REPRESENTING RESTRICTED SHARES.
(a) All Restricted Shares granted pursuant to the Plan shall be subject
to the risk of forfeiture. The Restricted Period for each grant of
Restricted Shares shall commence as of the Grant Date.
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(b) Except as otherwise provided herein, the Restricted Period shall end
and all Restricted Shares (and related Retained Distributions) shall
become nonforfeitable in three equal installments over a three-year
period after the Grant Date, commencing one year after the Grant
Date, with respect to Shares having a Fair Market Value on the Grant
Date of $15,000 (such amount to be subject to adjustment in the same
manner as set forth in paragraph 5(e) above).
(c) Notwithstanding the provisions of subparagraph 7(b) but subject to
the provisions of subparagraph 7(h), the Restricted Period for any
grant shall end and all Restricted Shares and related Retained
Distributions shall become nonforfeitable on the earlier of any of
the following events:
(i) the date a Non-employee Director ceases to be a Director of
the Company by reason of Retirement;
(ii) the date a Non-employee Director completes his or her tenure
as a Director of the Company as provided in the Bylaws of the
Company and declines to stand for reelection;
(iii) the date a Non-employee Director, having been nominated for
and agreed to stand for reelection, is not reelected by the
stockholders of the Company to serve as a member of the Board;
(iv) the date of the death of a Non-employee Director;
(v) the date a Non-employee Director certifies in writing to the
Company that he or she is resigning as a member of the Board
due to medical or health reasons which render such
Non-employee Director unable to continue to serve as a member
of the Board; or
(vi) the occurrence of a Change of Control of the Company;
provided, however, that in the discretion of the Committee, on a
case-by-case basis, the Restricted Period applicable to all
Restricted Shares granted to a Non-employee Director shall end and
be deemed completed for all purposes of the Plan in the event a
Non-employee Director (a "withdrawing Non- employee Director")
terminates his or her service as a member of the Board (A) for
reasons of personal or financial hardship; (B) to serve in any
governmental, diplomatic or any other public service position or
capacity; (C) to avoid or protect against a conflict of interest of
any kind; (D) on the advice of legal counsel; or (E) for any other
extraordinary circumstance that the
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Board determines to be comparable to the foregoing. The withdrawing
Non- employee Director shall abstain from participating in any
determination made by the Committee with respect to any matter
relating to the foregoing.
(d) Restricted Shares, when issued, will be represented by a stock
certificate or certificates registered in the name of the
Non-employee Director to whom such Restricted Shares shall have been
granted. Each certificate issued pursuant hereto shall bear any
legend which counsel for the Company considers necessary or
advisable to comply with the Securities Act of 1933 (the "Securities
Act").
(e) Each certificate shall be deposited by the Non-employee Director
with the Company's Corporate Secretary, together with stock powers
or other instruments of assignment, each endorsed in blank, which
will permit transfer to the Company of all of any portion of the
Restricted Shares and any securities constituting Retained
Distributions that shall be forfeited or that shall not become
nonforfeitable in accordance with the Plan.
(f) Restricted Shares shall constitute issued and outstanding shares of
Common Stock for all corporate purposes. The Non-employee Director
will have the right to vote such Restricted Shares, to receive and
retain all regular cash dividends paid on such Restricted Shares and
exercise all other rights, powers and privileges of a holder of
Common Stock with respect to such Restricted Shares, with the
exception that:
(i) The Non-employee Director will not be entitled to delivery of
the stock certificate or certificates representing such
Restricted Shares until the Restricted Period applicable to
such shares or portion thereof shall have expired and unless
all other vesting requirements with respect thereto shall have
been fulfilled;
(ii) other than cash dividends and rights to purchase stock which
might be distributed to stockholders of the Company, the
Company will retain custody of all Retained Distributions made
or declared with respect to Restricted Shares (and such
Retained Distributions will be subject to the same
restrictions, terms and conditions as are applicable to
Restricted Shares with respect to which they were made, paid
or declared) until such time, if ever, as the Restricted
Period applicable to Restricted Shares with respect to which
such Retained Distribution shall have been made, paid or
declared shall have expired, and such Retained Distributions
shall not bear interest or be segregated in separate accounts;
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(iii) a Non-employee Director may not sell, assign, transfer,
pledge, exchange, encumber or dispose of any Restricted Shares
or any related Retained Distributions during the applicable
Restricted Period; and
(iv) upon the breach of any restrictions, terms or conditions
provided in the Plan or established by the Board with respect
to any Restricted Shares or Retained Distributions, such
Restricted Shares and any related Retained Distributions shall
thereupon be automatically forfeited.
(g) "Change of Control" of the Company shall mean: a) any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") acquires of beneficial ownership of 20 percent
or more of either (i) the then outstanding shares of Common Stock (the
"Shares") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
Directors; provided, however, that for purposes of this subsection (a), a
Person shall not include the Company or any Subsidiary or any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any Subsidiary; (b) as a result of, or in connection with, a contested
election for directors, the persons who were directors of the Company
before such election (the "Incumbent Board") shall cease to constitute a
majority of the Board of Directors of the Company; or (c) consummation of
a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Corporate
Transaction") in each case, unless, following such Corporate Transaction,
(i) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Shares and outstanding
voting securities immediately prior to such Corporate Transaction
beneficially own, directly or indirectly, more than 60 percent of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction of the outstanding Shares and the outstanding voting
securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Corporate Transaction or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Corporate Transaction) beneficially owns, directly or indirectly, 20
percent or more of, respectively, the then
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outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Corporate
Transaction and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Corporate Transaction; or (d) approval by the
stockholders of the Company of a complete liquidation of the
Company. The Committee shall determine whether a Change of Control
has occurred within the herein meaning and its determination shall
be final and conclusive.
(h) Notwithstanding any other provisions to the contrary in the Plan or
any Restricted Shares Agreement (unless such Restricted Shares
Agreement shall expressly refer to and nullify the operation of this
provision), if the scheduled expiration of the Restricted Period
applicable to any Restricted Shares granted to any Non-employee
Director would, as a result of the operation of Section 16(b) of the
Exchange Act, result, in the opinion of the Corporate Secretary of
the Company, in a substantial risk of loss to such Non-employee
Director pursuant to such Section 16(b) because of the timing of any
prior sale or sales of Common Stock made by or otherwise
attributable to such Non-employee Director, then, unless prior to
the scheduled expiration of the Restricted Period for any Restricted
Shares as described in subparagraph 7(b) hereof (or, in the case of
an expiration of the Restricted Period for any Restricted Shares as
described in subparagraph 7(c), within five business days
thereafter) such Non-employee Director shall file with the Corporate
Secretary a written waiver of this provision, in form satisfactory
to the Corporate Secretary, expiration of the Restricted Period for
such Restricted Shares automatically shall be delayed until the
first day on which expiration of the Restricted Period for such
Restricted Shares would no longer result in a substantial risk of
loss and the Non-employee Director shall continue to be subject to
the risk of forfeiture of such Restricted Shares pursuant to
subparagraph 8(a) hereof pending the delayed expiration of
Restricted Period for such Restricted Shares.
8. FORFEITURE; COMPLETION OF RESTRICTED PERIOD.
(a) If a Non-employee Director ceases to be a member of the Board for
any reason other than as set forth in subparagraph 7(c), then all
Restricted Shares and all Retained Distributions with respect
thereto issued to such Non- employee Director to which the
Restricted Period still applies shall be
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forfeited to the Company and the Non-employee Director shall not
have any rights (including dividend and voting rights) with respect
to such forfeited Restricted Shares and Retained Distributions.
(b) Upon completion of the Restricted Period with respect to all or any
portion of a Non-employee Director's Restricted Shares, and the
satisfaction of any other applicable restrictions, terms and
conditions, the affected Restricted Shares and any Retained
Distributions with respect to such Restricted Shares shall become
nonforfeitable. The Company shall promptly thereafter issue and
deliver to the Non-employee Director stock certificates or
instruments representing such Restricted Shares and Retained
Distributions registered in the name of the Non-employee Director
or, if deceased, his or her legatee, personal representative or
distributee; provided, however, (i) such new stock certificates may
be required to bear a restrictive legend, indicating that such
shares have not been registered under the Securities Act or other
legend deemed appropriate by the Company's counsel, and (ii) the
Company may require, as a condition precedent to the issuance of any
such certificates, that the Non-employee Director, or other person
receiving such certificate, execute and deliver to the Company a
letter, in a form satisfactory to the counsel for the Company, to
the general effect that such shares are being acquired by such
person for investment only and not with a view to distribution.
9. ADJUSTMENT IN THE EVENT OF CHANGES OF COMMON STOCK.
In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or liquidation or
the like, the aggregate number and class of Restricted Shares available
for grant under the Plan automatically shall be adjusted so that the total
number of shares of Common Stock or other securities or property issuable
under the Plan immediately following such event shall be the number of
shares of Common Stock and other securities or property which, had all
remaining shares of Common Stock available under the Plan been granted to
a single holder immediately prior to such event, would be held or received
by such holder immediately following such event.
10. NON-ALIENATION OF BENEFITS.
No Restricted Shares, Retained Distributions or rights or benefits under
the Plan or Restricted Shares Agreement shall be subject to anticipation,
alienation, sale, assignment, hypothecation, pledge, exchange, transfer,
encumbrance or charge, and any attempt to anticipate, alienate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge the
same shall be void. No Restricted Shares, Retained
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Distributions or rights or benefits under the Plan or a Restricted Shares
Agreement shall in any manner be liable for or subject to the debts,
contracts, liabilities or torts of any person entitled to such right or
benefit. If any Non-employee Director or beneficiary hereunder should
attempt to anticipate, alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge any Restricted Shares, Retained
Distributions or any right or benefit hereunder or thereunder, then such
Restricted Shares and related Retained Distributions automatically shall
be forfeited and such right or benefit shall cease and terminate.
11. APPOINTMENT OF ATTORNEY-IN-FACT.
Upon the issuance of any Restricted Shares and the delivery by a
Non-employee Director of the stock power referred to in subparagraph 7(e)
hereof, such Non- employee Director shall be deemed to have appointed the
Company, its successors and assigns, the attorney-in-fact of the
Non-employee Director, with full power of substitution, for the purpose of
carrying out the provisions of this Plan and taking any action and
executing any instruments which such attorney-in-fact may deem necessary
or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact shall be irrevocable and coupled with an interest. The
Company as attorney-in-fact for the Non-employee Director may, in the name
and stead of the Non-employee Director, make and execute all conveyances,
assignments and transfers of such Restricted Shares and Retained
Distributions deposited with the Company, as said attorney-in-fact, shall
do by virtue thereof. Nevertheless, the Non- employee Director shall, if
so requested by the Company, execute and deliver to the Company all such
instruments as may, in the judgment of the Company, be advisable for the
purpose.
12. AMENDMENT AND TERMINATION OF PLAN.
Subject to the provisions of paragraph 6, the Committee may at any time
terminate, modify or amend the Plan as it shall deem advisable; provided,
however, that in no event may the Plan be amended more frequently than
once every six months. Notwithstanding the foregoing, stockholder approval
shall be obtained for any action with respect to the Plan to the extent
required by applicable state or Federal rules, regulations or laws. No
termination or amendment of the Plan shall adversely affect the rights of
any Non-employee Director under any grant previously made.
13. EXECUTION OF AGREEMENT.
Each grant hereunder shall be contingent upon the execution by the
Non-employee Director of a Restricted Shares Agreement pursuant to which
such Non-employee Director shall agree in writing to the terms and
conditions set forth in this Plan or
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by counsel to the Company in order to comply with applicable Federal or
state securities laws or other legal requirements.
14. GOVERNMENT AND OTHER REGULATIONS.
Notwithstanding any other provisions of the Plan, the obligations of the
Company with respect to Restricted Shares and Retained Distributions shall
be subject to all applicable laws, rules and regulations, and such
approvals by any governmental agencies as may be required or deemed
appropriate by the Company. The Company reserves the right to delay or
restrict, in whole or in part, the issuance or delivery of Common Stock
pursuant to any grants of Restricted Shares and Retained Distributions
under the Plan until such time as:
(a) any legal requirements or regulations shall have been met relating
to the issuance of such Restricted Shares and Retained Distributions
or to their registration, qualification or exemption from
registration or qualification under the Securities Act or any
applicable state securities law; and
(b) satisfactory assurances shall have been received that such
Restricted Shares when delivered will be duly listed on the New York
Stock Exchange.
15. NO RIGHT TO RENOMINATION.
Nothing in the Plan or in any grant shall confer upon any Director the
right to be nominated for reelection to the Board.
16. NON-EXCLUSIVITY OF PLAN.
Neither the adoption of the Plan by the Board, nor the submission of the
Plan to the stockholders of the Company for approval, shall be construed
as creating any limitation on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including without
limitation, the awarding of Common Stock otherwise than under the Plan,
and such arrangements as may be either generally acceptable or applicable
in specific cases.
17. GOVERNING LAW.
The Plan shall be governed by, and construed in accordance with, the laws
of the State of Delaware.
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18. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD.
With respect to administration of the Plan, the Company shall indemnify
each present and future member of the Committee and the Board against, and
each member of the Committee and the Board shall be entitled without
further act on his or her part to indemnity from the Company for, all
expenses (including the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation,
other than amounts paid to the Company itself) reasonably incurred by him
or her in connection with or arising out of any action, suit, or
proceeding in which he or she may be involved by reason of his or her
being or having been a member of the Committee and/or the Board, whether
or not he or she continues to be such member of the Committee and/or the
Board at the time of incurring such expenses; provided, however, that such
indemnity shall not include any expenses incurred by any such member of
the Committee and/or the Board (i) in respect of matters as to which he or
she shall be finally adjudged in any such action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the
performance of his or her duty as such member of the Committee and/or the
Board, or (ii) in respect of any matter in which any settlement is
effected to an amount in excess of the amount approved by the Company on
the advice of its legal counsel; and provided further, that no right of
indemnification under the provision set forth herein shall be available to
or enforceable by any such member of the Committee and/or the Board
unless, within 60 days after institution of any such action, suit or
proceeding, he or she shall have offered the Company, in writing, the
opportunity to handle and defend same at its expense. The foregoing right
of indemnification shall inure to the benefit of the heirs, executors or
administrators of each such member of the Committee and/or the Board and
shall be in addition to all other rights to which such member of the
Committee and/or the Board may be entitled as a matter of law, contract or
otherwise.
19. MISCELLANEOUS PROVISIONS.
(a) Except as to automatic grants to Non-employee Directors, no employee
or other person shall have any claim or right to be granted
Restricted Shares under this Plan.
(b) The expenses of the Plan shall be borne by the Company.
(c) By accepting any grant under the Plan, each Non-Employee Director
and each personal representative or beneficiary and each other
person claiming by, under or through him or her shall be
conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under the Plan by
the Company, the Board or the Committee.
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(d) Each grant of Restricted Shares to any person serving at the Grant
Date as a Director shall be in consideration of past services of
such Director. Each grant of Restricted Shares to a person who was
not serving as a Director prior to the Grant Date shall be in
consideration of such person's agreement to stand for election as or
be considered for appointment as a director to serve as such if so
elected or appointed. Each such grant shall be deemed to constitute
a conclusive finding by the Board that such services or agreement,
as applicable, have a value equal to or in excess of the value of
such Restricted Shares, and constitute payment in full therefor. All
authorized and unissued shares issued as Restricted Shares in
accordance with the Plan shall be fully paid and nonassessable
shares and free from preemptive rights. No Restricted Shares shall
be issued for consideration having a value less than the par value
of the Common Stock.
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of
June 1, 1997 by and between Weatherford Enterra, Inc., a Delaware corporation
(the "Company"), and Thomas R. Bates, Jr., an individual currently residing in
Sugar Land, Texas ("Bates").
WHEREAS, the Board of Directors of the Company (the "Board") has made
Bates an offer of employment to serve as President and Chief Executive Officer
of the Company, on terms and conditions and for the consideration hereinafter
set forth, in addition to serving as a director of the Company;
WHEREAS, Bates has accepted the Board's offer of employment as President
and Chief Executive Officer and has agreed to serve as a director of the
Company; and
WHEREAS, the parties wish to memorialize the terms and conditions of
Bates' employment;
NOW, THEREFORE, for and in consideration of the premises and the
respective covenants and agreements of the parties herein contained, the Company
and Bates hereby agree as follows:
ARTICLE 1
EMPLOYMENT
The Company hereby agrees to employ Bates, and Bates hereby agrees to
serve the Company, on the terms and conditions set forth herein.
ARTICLE 2
TERM
The term of this Agreement shall commence as of June 1, 1997 (the
"Effective Date") and shall continue through May 31, 2002 (the "Term"), unless
sooner terminated as hereinafter provided.
ARTICLE 3
POSITION AND DUTIES
3.1 Bates shall serve as a director of the Company, in the class of
directors whose terms shall expire at the 1998 Annual Stockholders' Meeting and
initially shall be employed as President and Chief Executive Officer. Bates
shall have such responsibilities, duties and authority reasonably accorded to
and expected of a President and Chief Executive Officer and as may from time to
time be prescribed by the Board or pursuant to the Company's bylaws. The parties
expressly agree that the Board is under no obligation to reelect Bates as
President
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and Chief Executive Officer at any time in the future, nor is the Board required
to nominate Bates for reelection as a director upon the expiration of his
current term. Bates agrees to resign as President and Chief Executive Officer,
as a director, or both, at any time after the date hereof, if requested to do so
by a majority of the members of the Board. The provisions of Section 6 (a) of
this Agreement shall apply with respect to any such resignation, unless such
resignation is for Cause.
3.2 During the Term, and excluding any periods of vacation and sick
leave to which Bates is entitled, Bates shall devote such time and efforts to
the business and affairs of the Company as shall be necessary for him to
discharge the duties and responsibilities assigned to Bates. During the
Employment Period it shall not be a violation of this Agreement for Bates to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of Bates' responsibilities as an employee of the
Company in accordance with this Agreement.
ARTICLE 4
COMPENSATION AND RELATED MATTERS
4.1 SIGN-ON BENEFITS.
(a) On the Effective Date, Bates will receive a sign-on bonus of
$71,250 cash.
(b) On the Effective Date, Bate will receive 65,041 shares of the
Company's Common Stock, such shares to be granted pursuant to the Company's
Restricted Stock Incentive Plan (the "Restricted Plan") and to be subject to
restrictions on ownership in accordance with the terms of the Restricted Plan.
The ownership restrictions on such shares will terminate 25 percent per year,
beginning one year after the Effective Date, assuming Bates is still employed by
the Company on the appropriate date, unless otherwise provided herein.
(c) Bates will receive on the date hereof an option to purchase
150,000 shares of the Company's Common Stock, such option to be granted pursuant
to the Company's 1991 Stock Option Plan (the "Option Plan"). The option will
vest 20 percent per year, beginning one year after the grant date and will be
exercisable as provided by the Option Plan for ten years after the grant date.
4.2 SALARY. The Company shall pay to Bates an annual base salary of
$500,000, or such higher rate as may from time to time be determined in the sole
discretion of the Board, provided that the Compensation and Stock Plans
Committee of the Board (the "Compensation Committee") and the Board shall review
Bates' base salary on an annual basis. Bates' base salary shall be paid in
substantially equal semi-monthly installments.
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4.3 INCENTIVE COMPENSATION.
(a) Bates shall be eligible to receive an annual bonus, in cash,
stock, or a combination of both, equal to up to 100% of his base salary
calculated in accordance with the executive bonus plan then in effect and as
recommended by the Compensation Committee and approved by the Board; PROVIDED,
HOWEVER, that Bates will receive for 1997 a bonus equal to not less than 50
percent of his base salary, prorated for the number of months of his employment
by the Company during 1997.
(b) Bates shall be eligible to participate in the Company's
incentive stockbased plans offered to executive officers of the Company,
including the Option Plan and the Restricted Plan.
4.4 BENEFITS.
(a) Bates shall be eligible to participate in the Company's 401(k)
Savings Plan and the Company's Supplemental Savings Plan, as, and to the extent
such plans are, in effect from time to time during the Term.
(b) Bates and Bates' eligible dependents shall be entitled to
participate and shall receive all benefits under the Company's welfare benefit
plans, including, without limitation, medical, prescription, dental, disability,
salary continuance, group life, accidental death and travel accident insurance
plans and programs, as, and to the extent such plans and programs are, in effect
from time to time during the Term, provided that Bates shall pay any premiums or
other amounts required to be paid for such benefits.
4.5 VACATION. Bates shall be entitled to four weeks paid vacation during
each year of the Term. Bates shall also be entitled to all paid holidays and
personal time given by the Company to its employees.
4.6 CAR ALLOWANCE. The Company shall pay Bates a car allowance of $1,000
per month or such other rate as may from time to time be determined in the sole
discretion of the Board.
ARTICLE 5
TERMINATION OF EMPLOYMENT
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. Bates' employment shall terminate
automatically upon Bates' death during the Term. If the Company determines in
good faith that the Disability of Bates has occurred during the Term (pursuant
to the definition of Disability set forth below), it may give to Bates written
notice in accordance with Section 8.4 of this Agreement of its intention to
terminate Bates' employment. In such event, Bates'
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employment with the Company shall terminate effective 30 days after receipt of
such notice by Bates (the "Disability Effective Date"), provided that within the
30-day period after such receipt, Bates shall not have returned to full-time
performance of Bates' duties. For purposes of this Agreement, "Disability" shall
mean the absence of Bates from Bates' duties with the Company on a full-time
basis for 180 calendar days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to Bates or Bates' legal
representative.
(b) CAUSE. The Company may terminate Bates' employment during the
Term for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the material willful misconduct or gross negligence of
Bates in the performance of his duties to the Company and its affiliates (other
than any such misconduct or negligence resulting from his incapacity due to
physical or mental illness), in either such instances so as to cause substantial
financial harm to the Company or one or more of its affiliates;
(ii) the commission by Bates of fraud, misappropriation or
embezzlement in the performance of his duties hereunder; or
(iii) the conviction of Bates of a felony that has a
substantial adverse effect on the Company or one or more of its affiliates.
All conclusions and determinations required for purposes of
determining "Cause" under this provision shall be made by the Board in good
faith after the Board gives Bates written notice of the alleged act or failure
constituting Cause for termination and after Bates is given an opportunity,
together with counsel, to be heard by the Board.
(c) GOOD REASON. Bates' employment may be terminated by Bates during
the Term for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to Bates of any duties inconsistent in any
respect with Bates' position as President and Chief Executive Officer or his
authority, duties or responsibilities hereunder, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by Bates; or
(ii) any purported termination by the Company of Bates'
employment otherwise than as expressly permitted by this Agreement.
(d) NOTICE OF TERMINATION. Any termination during the Term by the
Company for Cause, or by Bates for Good Reason, shall be communicated by Notice
of
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Termination to the other party hereto given in accordance with Section 8.4
hereof. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Bates' employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 30 days after
the giving of such notice). The failure by Bates or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Bates or the
Company, respectively, from asserting such fact or circumstance in enforcing
Bates' or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" shall mean:
(i) if Bates' employment is terminated by the Company for
Cause, or by Bates for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be;
(ii) if Bates' employment is terminated by the Company other
than for Cause, death or Disability, the Date of Termination shall be the date
on which the Company notifies Bates of such termination; and
(iii) if Bates' employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of Bates or the
Disability Effective Date, as the case may be.
ARTICLE 6
COMPANY'S OBLIGATION UPON TERMINATION
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If,
during the Term, the Company shall terminate Bates' employment other than for
Cause, death or Disability, or Bates shall terminate employment for Good Reason:
(i) The Company shall pay to Bates in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) Bates' Annual Base Salary through the
Date of Termination to the extent not theretofore paid and (2) any compensation
previously deferred by Bates (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts
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described in clauses (1) and (2) shall be hereinafter referred to as the
"Accrued Obligations"), and
B. the amount equal to the product of (1) three times
(2) the sum of (x) Bates' annual base salary and (y) bonus paid to Bates for the
prior fiscal year.
(ii) For three years after Bates' Date of Termination, the
Company shall continue benefits to Bates and/or Bates' family equal to those
which would have been provided to them in accordance with the Company's employee
welfare benefits plan (except for disability plans) as if Bates' employment had
not been terminated; provided, however, that with respect to any of such plans
requiring an employee contribution, Bates shall continue to pay the monthly
employee contribution for same, and provided further, that if Bates becomes
reemployed by another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility;
(iii) For three years after Bates' Date of Termination, the
Company shall provide Bates with life insurance as if his employment has not
been terminated;
(iv) With respect to all options to purchase Common Stock held
by Bates pursuant to a Company stock option plan on or prior to the Date of
Termination, irrespective of whether such options are then exercisable, Bates
shall have the right, during the 60-day period after the Date of Termination, to
elect to surrender all or part of such options in exchange for a cash payment by
the Company to Bates in an amount equal the number of shares of Common Stock
subject to Bates' option(s) multiplied by the difference between (x) and (y)
where (y) equals the purchase price per share covered by the option and (x)
equals the highest reported sale price of a share of Common Stock in any
transaction reported on the New York Stock Exchange during the 60-day period
prior to and including Bates' Date of Termination (the "Surrender Price"); and
with respect to any SARs held by Bates granted under the Company's Stock
Appreciation Rights Plan on or prior to the Date of Termination, irrespective of
whether such SARs are then exercisable, Bates shall have the right, during the
60-day period after the Date of Termination, to elect to surrender all or part
of such SARs in exchange for a cash payment by the Company to Bates in an amount
equal to the number of SARs held by Bates multiplied by the difference between
(a) and (b) where (b) equals the fair market value of such SARs on the date on
which such SARs were awarded and (a) equals the Surrender Price. Such cash
payments shall be made within 30 days after the date of Bates' election;
provided, however, that if Bates' Date of Termination is within six months after
the date of grant of a particular option or SAR held by Bates and Bates is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, any
cash payments related thereto shall be made on the date which is six months and
one day after the date of grant of such option or SAR. Notwithstanding the
foregoing, if any right granted pursuant to the foregoing would make a Change of
Control transaction (as defined in Section
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8.1 below) ineligible for pooling of interests accounting treatment under APB
No. 16 that but for this Section 6(a)(iv) would otherwise be eligible for such
accounting treatment, Bates shall receive shares of Common Stock with a fair
market value equal to the cash that would otherwise be payable hereunder in
substitution for the cash, provided that any such shares of Common Stock so
granted to Bates shall be registered under the Securities Act of 1933, as
amended; any options or SARs outstanding as of the Date of Termination and not
then exercisable shall become fully exercisable as of Bates' Date of
Termination, and to the extent Bates does not elect to surrender same for a cash
payment (or the equivalent number of shares of Common Stock) as provided above,
such options and SARs shall remain exercisable for seven months after Bates'
Date of Termination or until the stated expiration of the stated term thereof,
whichever is shorter; restrictions applicable to any shares of Common Stock
granted to Bates under the Company's Restricted Stock Incentive Plan shall
lapse, as of the date of Bates' Date of Termination;
(v) The Company shall pay Bates a lump sum in cash within 30
days after Bates' Date of Termination equal to three times Bates' annual car
allowance; and
(vi) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to Bates any other amounts or benefits
required to be paid or provided or which Bates is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) DEATH. If Bates' employment is terminated by reason of Bates'
death during the Term, this Agreement shall terminate without further
obligations to Bates' legal representatives under this Agreement, other than for
payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to Bates' estate or beneficiaries,
as applicable, in a lump sum in cash within 30 days after the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include, without limitation, and
Bates' estate and/or beneficiaries shall be entitled to receive, benefits at
least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of Bates' peer executives
of the Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, in effect immediately
preceding the Date of Termination.
(c) DISABILITY. If Bates' employment is terminated by reason of
Bates' Disability during the Term, this Agreement shall terminate without
further obligations to Bates, other than for payment of Accrued Obligations and
the timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to Bates in a lump sum in cash within 30 days after the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(c) shall include, without limitation, and
Bates shall be entitled after the Disability Effective Date to receive,
disability and other benefits at
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least equal to the most favorable benefits generally provided by the Company and
its affiliated companies to Bates' disabled peer executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, in effect generally on the Date of Termination.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If Bates' employment is
terminated for Cause during the Term, this Agreement shall terminate without
further obligations to Bates, other than the obligation to pay to Bates (x) his
annual base salary through the Date of Termination, (y) the amount of any
compensation previously deferred by Bates, and (z) Other Benefits, in each case
to the extent theretofore unpaid. If Bates voluntarily terminates employment
during the Term, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to Bates, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to Bates in a lump sum in cash within 30
days after the Date of Termination.
ARTICLE 7
NON-COMPETITION OBLIGATIONS
7.1 As part of the consideration for the compensation and benefits to be
paid to Bates hereunder, in keeping with Bates' duties as a fiduciary and in
order to protect Bates' interests in the confidential information of the Company
and the business relationships developed by Bates with the clients and potential
clients of the Company, and as an additional incentive for the Company to enter
into this Agreement, the Company and Bates agree to the non-competition
provisions of this Article 7. Bates agrees that during the period of Bates'
non-competition obligations hereunder, Bates will not, directly or indirectly
for Bates or for others, in any geographic area or market where the Company or
any of its affiliates are conducting any business as of the Date of Termination
or have during the previous 12 months conducted any business:
(a) engage in any business competitive with the business conducted
by the Company or its affiliates;
(b) render advice or services to, or otherwise assist, any other
person, association or entity who is engaged, directly or indirectly, in any
business competitive with the business conducted by the Company or its
affiliates;
(c) induce any employee of the Company or any of its affiliates to
terminate his or her employment with the Company or its affiliates, or solicit
the employment of any such employee by person, association or entity not
affiliated with the Company.
These non-competition obligations shall extend until the latter of (i) the
expiration of the Term and (ii) one year after termination of the employment
relationship.
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7.2 Bates understands that the foregoing restrictions may limit his
ability to engage in certain businesses anywhere in the world during the period
provided for above, but acknowledges that Bates will receive sufficiently high
remuneration and other benefits (e.g., the right to receive compensation under
Article 6 for the remainder of the Term in certain circumstances) under this
Agreement to justify such restrictions. Bates acknowledges that money damages
would not be sufficient remedy for any breach of this Article 7 by Bates, and
the Company shall be entitled to enforce the provisions of this Article 7 by
terminating any payments then owing to Bates under this Agreement and/or to
specific performance and injunctive relief as remedies for such breach or any
threatened breach. Such remedies shall not be deemed the exclusive remedies for
a breach of this Article 7, but shall be in addition to all remedies available
at law or in equity to the Company, including, without limitation, the recovery
of damages from Bates or his or her agents involved in such breach.
7.3 It is expressly understood and agreed that the Company and Bates
consider the restrictions contained in this Article 7 to be reasonable and
necessary to protect the proprietary information of the Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be enforced.
ARTICLE 8
MISCELLANEOUS
8.1 "Change of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or
more of either (i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company,
(B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or
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(D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (a) of
this Section 8.1; or
(b) Individuals, who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction") in each case, unless, following such
Corporate Transaction, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Corporate Transaction beneficially own, directly or indirectly, more
than 60 percent of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (ii) no Person (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Corporate Transaction; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
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8.2 CHANGE OF CONTROL AGREEMENT. Bates is a party to a Change of Control
Agreement (the "COC Agreement") with the Company regarding compensation and
severance arrangements in the event of a change in control (as defined therein)
of the Company. In the event of any termination of Bates' employment to which
the COC Agreement would apply, Bates shall be entitled to all the benefits
provided under either this Agreement or the COC Agreement, whichever one in its
entirety he shall choose, but not under both, and when Bates has elected which
agreement shall apply, the other agreement shall be superseded in its entirety
and shall be of no further force and effect, and neither party shall have any
obligation to the other thereunder.
8.3 SUCCESSORS; BINDING AGREEMENT. The Company will require any successors
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
agreement in form and substance reasonably satisfactory to Bates, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
entitle Bates to compensation from the Company in the same amount and on the
same terms as if he had terminated his employment pursuant to Section 6(a),
except that for purposes of implementing the foregoing, the date on which each
such succession become effective shall be the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 8.2 or which otherwise becomes bound
by all of the terms and provisions of this Agreement by operation of law. This
Agreement and all rights of Bates hereunder shall inure to the benefit of and be
enforceable by Bates' personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If Bates
should die while any amounts would still be payable to him hereunder if he
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Bates' designated
beneficiaries set forth in a written beneficiary designation filed with the
Company or, if there be no such designated beneficiary, to Bates' estate.
8.4 NOTICES. For purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company to: 1360 Post Oak Blvd., Suite 1000
Houston, Texas 77056-3098
Attn: Suzanne Thomas
If to Bates to: 58 Greensward Lane
Sugar Land, Texas 77479
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or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
8.5 APPLICABLE LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to the conflict of law principles thereof.
8.6 WAIVER. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing, signed by Bates and such officer of the Company as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same time or
any prior or subsequent time.
8.7 VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not effect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8.9 ENTIRE AGREEMENT. This Agreement, together with any exhibits hereto,
constitutes, the entire agreement of the parties with regard to the subject
matter hereof, and contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to the employment of
Bates by the Company. Each party to this Agreement acknowledges that no
representation, inducement, promise or agreement, oral or written, has been made
by either party or by anyone acting on behalf of either party which is not
embodied herein, and that no agreement, statement or promise relating to the
employment of Bates by the Company, which is not contained in this Agreement, or
any exhibits hereto, shall be valid or binding. Any modification or amendment of
this Agreement will be effective only if it is in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
WEATHERFORD ENTERRA, INC.
By:______________________
______________________
Thomas R. Bates, Jr.
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EXHIBIT 10.4
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (this "Agreement") by and between
Weatherford Enterra, Inc., a Delaware corporation (the "Company"), and Thomas R.
Bates, Jr. (the "Executive"), is effective as of June 1, 1997.
RECITALS:
A. The Board of Directors of the Company (the "Board") has previously
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive, which are competitive with those of executives at other
corporations, will be satisfied.
B. To accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 1(c)) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter
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referred to as the "Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate 4 three
year(s) after such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to the Executive that the Change of Control
Period shall not be so extended.
(c) A "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20
percent or more of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company,
(B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or
(D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (iii) of
this Section 1(c); or
(ii) Individuals, who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a
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"Corporate Transaction") in each case, unless, following such Corporate
Transaction, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Corporate Transaction beneficially own, directly or indirectly, more than 60
percent of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Corporate Transaction; or
(iv) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
2. EMPLOYMENT PERIOD. The Company hereby agrees that the Company or an
affiliated company will continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company or an affiliate subject to
the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the "Employment
Period").
3. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements, authority, duties
and responsibilities) shall be at least commensurate in all material respects
with the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date and (B) the
Executive's services shall be
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performed at the location where the Executive was employed immediately preceding
the Effective Date or any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be paid
at a monthly rate, at least equal to 12 times the highest monthly base salary
paid or payable, including any base salary which has been earned but deferred,
to the Executive by the Company and/or its affiliated companies in respect of
the 12-month period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date and thereafter at least annually; provided, however,
that a salary increase shall not necessarily be awarded as a result of such
review. Any increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual Base Salary
shall not be reduced after any such increase other than a reduction that is part
of a general salary reduction implemented Company-wide or by the Executive's
employer consistently applied with respect to all or substantially all
employees. The term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased or decreased. As used in this Agreement,
the term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(ii) ANNUAL BONUS. The Executive shall be awarded, for each
fiscal year ending during the Employment Period, an annual bonus (the "Annual
Bonus") in cash
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at least equal to the Executive's highest bonus (whether in cash or Common Stock
of the Company) paid or payable under the Company's annual incentive program for
the last three full fiscal years prior to the Effective Date (annualized in the
event that the Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid
no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to the Executive's peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to the Executive's peer executives of the Company and its
affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
to participate in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to the Executive's peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to the Executive's peer executives of the
Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the
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Executive, as in effect generally at any time thereafter with respect to the
Executive's peer executives of the Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits (including, without limitation,
financial planning services, payment of club dues, a car allowance or use of an
automobile and payment of related expenses, as appropriate) in accordance with
the most favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to the
Executive's peer executives of the Company and its affiliated companies.
(vii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to the Executive's peer
executives of the Company and its affiliated companies.
(viii)OPTIONS/SARS. Upon the occurrence of a Change of Control
pursuant to which the Company is not the survivor (or survives only as a
subsidiary of another entity), the surviving corporation shall issue to the
Executive options and tandem stock appreciation rights ("SARs"), if applicable,
in substitution or replacement of all outstanding options or SARs previously
issued pursuant to a Company stock option plan or the Company's Stock
Appreciation Rights Plan, respectively, any such options and SARs to have terms
and conditions similar to the terms of any such original options and SARs.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective 30 days after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that within the 30-day period after such
receipt, the Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability" shall mean the
absence of the Executive from the Executive's duties with the Company on a
full-time basis for 180 calendar days as a result of incapacity due to mental or
physical illness which is determined
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to be total and permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially performed
the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act, or failure to
act, on the part of the Executive shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or of a senior officer of the Company or based upon the advice
of counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated by the
Executive during the Employment Period for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a) of this
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Agreement, or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 3(a)(i)(B) hereof or the
Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 9(c) of this Agreement.
For purposes of this Section 4(c), any good faith
determination of "Good Reason" made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination during the Employment
Period by the Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 11(b) of the Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 30 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" shall mean:
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(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be;
(ii) if the Executive's employment is terminated by the
Company other than for Cause, death or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such termination; and
(iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, death or Disability, or the Executive shall
terminate employment for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual
Bonus paid or payable, including any bonus or portion thereof which has been
earned but deferred (and annualized for any fiscal year consisting of less than
12 full months or during which the Executive was employed for less than 12 full
months), for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the "Highest Annual
Bonus") and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365, and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter referred to
as the "Accrued Obligations"), and
B. the amount equal to the product of (1) 8 three times
(2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus, and
C. an amount equal to the excess of (a) the actuarial
equivalent of the benefit under the Company's qualified defined benefit
retirement plan, if any, in which the Executive participates (the "Retirement
Plan") (utilizing actuarial
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assumptions no less favorable to the Executive than those in effect under the
Retirement Plan immediately prior to the Effective Date, if applicable), and any
excess or supplemental retirement plan related to the Retirement Plan in which
the Executive participates (together, the "SERP"), which the Executive would
receive if the Executive's employment continued for 9 three year(s) after the
Date of Termination assuming for this purpose that all accrued benefits are
fully vested, and assuming that the Executive's compensation in each of the 10
three year(s) is that required by Sections 3(b)(i) and 3(b)(ii), over (b) the
actuarial equivalent of the Executive's actual benefit (paid or payable), if
any, under the Retirement Plan and the SERP as of the Date of Termination, and
D. an amount equal to three times the total of the
Employer Matching Contribution credited to the Executive under the Company's
401(k) Savings Plan (the "401(k) Plan") and the Supplemental Matching Accrual
credited under the Company's Supplemental Savings Plan (the "Excess Plan")
during the 12-month period immediately preceding the month of the Executive's
Date of Termination, such amount to be grossed up so that the amount the
Executive actually receives after payment of any federal or state taxes payable
thereon equals the amount first described above;
(ii) For three year(s) after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family equal to those which
would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 3(b)(iv) of this Agreement if the
Executive's employment had not been terminated; provided, however, that with
respect to any of such plans, programs, practices or policies requiring an
employee contribution, the Executive shall continue to pay the monthly employee
contribution for same, and provided further, that if the Executive becomes
reemployed by another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility;
(iii) The Company shall, at its sole expense as incurred,
provide the Executive with outplacement services, the scope and provider of
which shall be selected by the Executive in his sole discretion;
(iv) With respect to all options to purchase Common Stock held
by the Executive pursuant to a Company stock option plan on or prior to the Date
of Termination, irrespective of whether such options are then exercisable, the
Executive shall have the right, during the 60-day period after the Date of
Termination, to elect to surrender all or part of such options in exchange for a
cash payment by the Company to the Executive in an amount equal the number of
shares of Common Stock subject to the Executive's option multiplied by the
difference between (x) and (y) where (y) equals the purchase price
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per share covered by the option and (x) equals the highest reported sale price
of a share of Common Stock in any transaction reported on the New York Stock
Exchange during the 60-day period prior to and including the Executive's Date of
Termination; and with respect to all SARs held by the Executive granted under
the Company's Stock Appreciation Rights Plan on or prior to the Date of
Termination, irrespective of whether such SARs are then exercisable, the
Executive shall have the right, during the 60-day period after the Date of
Termination, to elect to surrender all or part of such SARs in exchange for a
cash payment by the Company to the Executive in an amount equal to the number of
SARs held by the Executive multiplied by the difference between (a) and (b)
where (b) equals the fair market value of such SARs on the date on which such
SARs were awarded and (a) equals the price of a share of Common Stock set forth
in clause (x) above. Such cash payments shall be made within 30 days after the
date of the Executive's election; provided, however, that if the Executive's
Date of Termination is within six months after the date of grant of a particular
option or SAR held by the Executive and the Executive is subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, any cash payments
related thereto shall be made on the date which is six months and one day after
the date of grant of such option or SAR. Notwithstanding the foregoing, if any
right granted pursuant to the foregoing would make a Change of Control
transaction ineligible for pooling of interests accounting treatment under APB
No. 16 that but for this Section 5(a)(iv) would otherwise be eligible for such
accounting treatment, the Executive shall receive shares of Common Stock with a
Fair Market Value equal to the cash that would otherwise be payable hereunder in
substitution for the cash, provided that any such shares of Common Stock so
granted to the Executive shall be registered under the Securities Act of 1933,
as amended; any options or SARs outstanding as of the Date of Termination and
not then exercisable shall become fully exercisable as of the Executive's Date
of Termination, and to the extent the Executive does not elect to surrender same
for a cash payment (or the equivalent number of shares of Common Stock) as
provided above, such options and SARs shall remain exercisable for seven months
after the Executive's Date of Termination or until the stated expiration of the
stated term thereof, whichever is shorter; restrictions applicable to any shares
of Common Stock granted to the Executive under the Company's Restricted Stock
Incentive Plan shall lapse, as of the date of the Executive's Date of
Termination;
(v) All country club memberships, luncheon clubs and other
memberships which the Company was providing for the Executive's use at the time
Notice of Termination is given shall, to the extent possible, be transferred and
assigned to the Executive at no cost to the Executive (other than income taxes
owed), the cost of transfer, if any, to be borne by the Company;
(vi) The Company shall either transfer to the Executive
ownership and title to the Executive's Company car at no cost to the Executive
(other than income taxes owed) or, if the Executive receives a monthly car
allowance in lieu of a Company car,
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pay the Executive a lump sum in cash within 30 days after the Executive's Date
of Termination equal to three times the Executive's annual car allowance;
(vii) All benefits under the Retirement Plan, the SERP, the
401(k) Plan and the Excess Plan, and any other similar plans, not already vested
shall be 100% vested, to the extent such vesting is permitted under the Code (as
defined below); and
(viii)To the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies (such other amounts and benefits shall
be hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiaries, as applicable, in a lump sum in cash
within 30 days after the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 5(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of the Executive's peer executives of the Company and such
affiliated companies under such plans, programs, practices and policies relating
to death benefits, if any, in effect at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable, those in effect
on the date of the Executive's death.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days after the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
5(c) shall include, without limitation, and the Executive shall be entitled
after the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable benefits generally provided by the Company and
its affiliated companies to the Executive's disabled peer executives and/or
their families in accordance with such plans, programs, practices and policies
relating to disability, if any, in effect generally at any time during the
120-day period immediately preceding the Effective Date or, if more favorable,
those in effect at the time of the Disability.
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(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
is terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) his or her Annual Base Salary through the
Date of Termination, (y) the amount of any compensation previously deferred by
the Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
after the Date of Termination.
6. OTHER RIGHTS. Except as provided hereinafter, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor, subject to
Section 11(f), shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company or any
of its affiliated companies. Except as provided hereinafter, amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement. It is expressly agreed by the Executive that
he or she shall have no right to receive, and hereby waives any entitlement to,
any severance pay or similar benefit under any other plan, policy, practice or
program of the Company. In addition, if the Executive has an employment or
similar agreement with the Company at the Date of Termination, he or she agrees
that he or she shall have the right to receive all of the benefits provided
under this Agreement or such other agreement, whichever one, in its entirety,
the Executive chooses, but not both agreements, and when the Executive has made
such election, the other agreement shall be superseded in its entirety and shall
be of no further force and effect. The Executive also agrees that to the extent
he or she may be eligible for any severance pay or similar benefit under any
laws providing for severance or termination benefits, such other severance pay
or similar benefit shall be coordinated with the benefits owed hereunder, such
that the Executive shall not receive duplicate benefits.
7. FULL SETTLEMENT.
(a) NO RIGHTS OF OFFSET. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others.
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(b) NO MITIGATION REQUIRED. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment.
(c) LEGAL FEES. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expense which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereto (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 8(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net after-tax
benefit of at least $50,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is
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required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination shall be made by Arthur Andersen LLP
or, as provided below, such other certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days after the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Executive within five days
after the receipt of the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten business days after the Executive is
informed in writing of such claim, and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim the Executive
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
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(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claims; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such costs and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issues raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
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9. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies, provided that it shall not apply to information which is or shall
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement), information that is developed
by the Executive independently of such information, or knowledge or data or
information that is disclosed to the Executive by a third party under no
obligation of confidentiality to the Company. After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 9 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
10. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. MISCELLANEOUS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT
OF LAWS. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written
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<PAGE>
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Thomas R. Bates, Jr.
58 Greensward Lane
Sugar Land, Texas 77479
If to the Company: Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1000
Houston, TX 77056
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
Thomas R. Bates, Jr.
WEATHERFORD ENTERRA, INC.
By:
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EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of June 1, 1997 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and Thomas Bates, Jr.
(the "Officer"), an officer of the Company;
WHEREAS, in recognition of Officer's need for substantial protection
against personal liability in order to enhance Officer's continued service
to the Company in an effective manner and of Officer's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Officer under certain circumstances, and in part to provide Officer with
specific contractual assurance that the protection promised by such
By-Laws will be available to Officer (regardless of, among other things,
any amendment to or revocation of such By-Laws, any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), the Company wishes to provide in
this Agreement for the indemnification of, and the advancing of expenses
to, Officer to the fullest extent (whether partial or complete) permitted
by law and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Officer under the Company's
directors' and officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Officer
agreeing to serve or continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Officer was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Officer to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Officer, the Company shall advance (within
ten business days after such written request) any and all Expenses
to Officer (an "Expense Advance"). Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3
hereof, prior to a Change in Control (as defined hereinafter),
Officer shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Officer against
the Company or any director or officer of the Company, unless the
Company has joined in or consented to the initiation of such Claim.
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(b) Notwithstanding the foregoing, (I) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined
(in a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Officer
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance
pursuant to Section 1(a) shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that
Officer would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Officer (who
hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Officer has commenced
legal proceedings in a court of competent jurisdiction to secure a
determination that Officer should be indemnified under applicable
law, any determination made by the Reviewing Party that Officer
would not be permitted to be indemnified under applicable law shall
not be binding and Officer shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination
is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). If there has not been a
Change in Control, the Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control,
the Reviewing Party shall be the special independent counsel
referred to in Section 2 hereof. If there has been no determination
by the Reviewing Party or if the Reviewing Party determines that
Officer substantively would not be permitted to be indemnified in
whole or in part under applicable law, Officer shall have the right
to commence litigation in any court in the states of Texas or
Delaware having subject matter jurisdiction thereof and in which
venue is proper, seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of
process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the
Company and Officer.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the rights
of Officer to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter
in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from special independent counsel
selected by Officer and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company or Officer within the last five
years (other than in connection with such matters). Such counsel,
among other things, shall render its written opinion to the Company
and Officer as to whether and to what extent Officer would be
permitted to be indemnified under applicable law. The
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<PAGE>
Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to fully indemnify such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall indemnify
Officer against any and all expenses (including attorneys' fees)
and, if requested by Officer, shall (within ten business days after
such written request) advance such expenses to Officer, which are
incurred by Officer in connection with any claim asserted against or
action brought by Officer for (I) indemnification or advance payment
of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Officer ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Officer is entitled under any provision
of this Agreement to indemnification by the Company of some or a
portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Officer for
the portion thereof to which Officer is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Officer has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Officer shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Officer is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Officer is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement
(whether with or without court approval), conviction, or plea of
nolo contendere, or its equivalent, shall not create a presumption
that Officer did not meet any particular standard of conduct or have
any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Officer hereunder shall be in
addition to any other rights Officer may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) or the Company's By-Laws
permits greater indemnification by agreement than would be afforded
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<PAGE>
currently under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Officer shall enjoy by this
Agreement the greater benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Officer shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company officer.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (I) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee
or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
20% or more of the total voting power represented by the Company's
then outstanding Voting Securities (as defined hereinafter), or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders
of the Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative
or investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating,
defending, being a witness in or
4
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participating in (including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to any Indemnifiable
Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Officer is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or
fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by Officer in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Officer is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Officer, who shall execute all papers
required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made
against Officer to the extent Officer has otherwise actually
received payment (under any insurance policy, By-Law or otherwise)
of the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Officer
continues to serve as a director or officer (or in one of the
capacities enumerated in Section 8(d) hereof) of the Company or of
any other enterprise at the Company's request.
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13. SEVERABILITY. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state
without giving effect to the principles of conflicts of laws.
WEATHERFORD ENTERRA, INC.
By:_____________________
_____________________
Thomas Bates, Jr.
6
EXHIBIT 10.6
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made and entered into as of
May 15, 1997 by and between Weatherford Enterra, Inc., a Delaware corporation
(the "Company"), and Thomas N. Amonett, an individual residing in Houston, Texas
("Amonett").
RECITALS:
WHEREAS, the Company and Amonett have previously entered into that certain
Consulting Agreement dated as of July 26, 1996, as amended as of January 1, 1997
(the "Consulting Agreement"); and
WHEREAS, the Consulting Agreement was terminated as of January 31, 1997
and Amonett was employed by the Company as of February 1, 1997;
WHEREAS, Amonett is currently serving, at the request of the Board of
Directors of the Company, as Acting President and Chief Executive Officer while
the Board of Directors conducts a search for a President and Chief Executive
Officer;
WHEREAS, Amonett has been a director of the Company since 1974 and is
continuing to serve as a director in addition to serving as Acting President and
Chief Executive Officer;
WHEREAS, the Company recognizes that Amonett's agreement to serve as
Acting President and Chief Executive Officer is necessary to the management and
success of the Company during the interim period until the search for a
President and Chief Executive Officer is completed and further recognizes that
Amonett is foregoing certain opportunities by agreeing to serve in this capacity
during this interim period; and
WHEREAS, the Company wishes to provide Amonett with compensation in
addition to his compensation earned as an employee in connection with services
rendered as Acting President and Chief Executive Officer, such additional
compensation to be in recognition of his willingness to serve in this capacity
at the Company's request, notwithstanding lost opportunities;
NOW, THEREFORE, for and in consideration of the premises, the parties
hereto agree as follows:
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1. Upon the Board of Directors determining that Amonett's services as
Acting President and Chief Executive Officer are no longer required, Amonett's
employment by the Company shall terminate (the "Termination Date") and the
following shall occur:
(a) Amonett shall be entitled to receive or obtain from the Company,
beginning on the Termination Date and for one year after such date, the
following: (i) continuing payment on the first day of each month of an amount
equal to Amonett's base salary in effect immediately prior to the Termination
Date and (ii) the right to participate in all employee benefit plans (excluding
disability plans) and the life insurance program generally available to all
employees of the Company, on the same basis as such other employees. Amonett
shall not be eligible to participate in any bonus or incentive compensation
plans, disability plans or qualified plans. At any time during such one-year
period, upon ten days prior written notice to the Company, together with the
written concurrence of any person who was a director of the Company immediately
prior the Termination Date, Amonett may elect to receive from the Company a
payment equal to the aggregate of the remaining payments owed by the Company
under the foregoing item (i) of this paragraph, and upon such payment by the
Company to Amonett, the Company shall have no further obligations to Amonett
under this paragraph (a).
(b) The Company shall provide Amonett with an office and secretarial
assistance for one year after the Termination Date; provided, however, that the
office provided shall be in space already paid for by the Company and the cost
of the secretarial assistance furnished shall not exceed the cost to the Company
on the Termination Date.
(c) Amonett holds 5,000 shares of Common Stock that were granted to
Amonett pursuant to the Company's Restricted Stock Incentive Plan (the
"Restricted Stock Plan"), some or all of which shares may remain subject to
restrictions on ownership on the Termination Date (such shares of Common Stock
being herein called the "Restricted Shares"). Notwithstanding any contrary
provision of the Restricted Stock Plan or of any agreement pursuant to which the
Restricted Shares were granted to Amonett, all restrictions on ownership shall
terminate with respect to the Restricted Shares on the Termination Date.
(d) Amonett holds an option granted under the Company's 1991 Stock
Option Plan (the "Option Plan") to purchase up to 12,000 shares of Common Stock,
$.10 par value ("Common Stock"), of the Company, some or all of which option may
remain unvested at the Termination Date (the "Unvested Option"). Notwithstanding
any contrary provision of the Option Plan or of the agreement pursuant to which
the Unvested Option was granted to Amonett, the rights of Amonett with respect
to said Unvested Option shall be fully vested on the Termination Date and shall
be exercisable by Amonett at any time within three years after the Termination
Date in accordance with the terms of the Option Plan.
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2. Amonett's status as a director of the Company shall in no way be
affected by his employment by the Company, except that he will be deemed to have
been an inside or employee director of the Company for the period from February
1, 1997 through the Termination Date. Amonett shall be considered an outside or
non-employee director of the Company after the Termination Date.
3. Amonett hereby agrees that for a period of one year after the
Termination Date he will not, directly or indirectly, engage in any business
that is in competition with any business in which the Company or any of its
affiliates is engaged (the"Business") within any geographical area in which the
Business is being conducted as of the Termination Date as a director, officer,
employee, paid agent or paid consultant to, and he will not invest in or own,
directly or indirectly, any person, firm, partnership, corporation or other
entity that so competes (other than ownership of securities of a corporation of
which Amonett owns less than five percent of any class of outstanding
securities). In addition, Amonett agrees that for a period of one year after the
Termination Date he will not solicit for employment any individuals currently
employed by the Company.
4. Nothing herein shall require the Company to continue to employ Amonett,
and the Company's right to terminate his employment shall not be diminished or
affected by reason of this Agreement or by any provision hereof.
5. Amonett may not, without the Company's prior written consent, assign,
transfer or convey his rights or obligations under this Agreement. This
Agreement and all rights of Amonett hereunder shall inure to the benefit of and
be enforceable by Amonett's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Amonett should die while any amounts would still be payable to him hereunder if
he continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to Amonett's designated
beneficiaries set forth in a written beneficiary designation filed with the
Company or, if there be no such designated beneficiary, to Amonett's estate.
6. This Agreement and all of the Company's rights and obligations
hereunder may be assigned or transferred by it, in whole but not in part, to and
shall be binding on and inure to the benefit of any "successor" of the Company,
but such assignment or transfer shall not relieve the Company of any of its
obligations hereunder. As used herein, the term "successor" shall mean only any
person, firm, corporation or other business entity which at any time by merger,
consolidation or otherwise shall have acquired all or substantially all of the
assets of the Company or to which the Company shall have transferred all or
substantially all of its assets. Any such successor shall be deemed to be
substituted for all purposes as the "Company" hereunder.
- 3 -
<PAGE>
7. This Agreement contains all of the understandings and agreements
between the parties with respect to the subject matter hereof. Any discussions
heretofore had between the parties on any subjects not contained herein and all
prior agreements are hereby abandoned and neither party shall have any
obligations to the other in respect thereto except as would apply as a matter of
law, this Agreement notwithstanding.
8. This Agreement shall not be varied, altered, modified, changed or in
any way amended, except by an instrument in writing, executed by the parties
hereto.
9. Any notices or communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in the United
States mail, certified or registered, postage prepaid, and addressed as follows:
If to Amonett: Thomas N. Amonett
3609 W. Clay
Houston, TX 77019
If to the Company: Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1000
Houston, TX 77056
Attn: General Counsel
Either party may change by notice to the other party the address to which
notices or communications to him or it are to be given.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WEATHERFORD ENTERRA, INC.
By:/s/H. Suzanne Thomas
/S/THOMAS N. AMONETT
Thomas N. Amonett
- 4 -
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<PERIOD-END> JUN-30-1997
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0
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