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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
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)
<TABLE>
<S> <C>
DELAWARE 74-1681642
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1360 POST OAK BOULEVARD, SUITE 1000 77056
HOUSTON, TEXAS (Zip Code)
(Address of principal executive offices)
</TABLE>
(713) 439-9400
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<C> <C>
Common Stock, $.10 par value New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
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 ____.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the registrant's knowledge, in the Proxy Statement or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the outstanding Common Stock of the
registrant held by non-affiliates of the registrant as of March 21, 1997, based
on the closing sale price of the Common Stock on the New York Stock Exchange on
said date, was $1,147,026,635.
There were 52,087,290 shares of Common Stock of the registrant outstanding
as of March 21, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement issued in connection with the 1997 Annual
Meeting of Stockholders are incorporated into Part III of this Report.
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PART I
ITEM 1. BUSINESS.
INTRODUCTION TO BUSINESS
Weatherford Enterra, Inc. (formerly Weatherford International Incorporated)
was organized under the laws of the State of Delaware in 1970. The "Company" or
"Weatherford Enterra", as used herein, refers to Weatherford Enterra, Inc. and
its subsidiaries and affiliates, unless the context indicates otherwise.
Weatherford Enterra is a diversified international energy service and
manufacturing company that provides a variety of services and equipment to the
exploration, production and transmission sectors of the oil and gas industry.
The Company operates in virtually every oil and gas exploration and production
region in the world. Weatherford Enterra's principal business segments include
(i) the oilfield services segment, which consists of renting specialized
oilfield equipment, providing fishing, milling, well control assistance and
other downhole services and related tools, and providing tubular running
services and related tools; (ii) the oilfield products segment, which consists
of manufacturing, selling and servicing a variety of products, including
cementation products, liner hangers, gas lift equipment and equipment used to
provide oilfield services; and (iii) the gas compression segment, which consists
of manufacturing, packaging, selling, renting and providing parts and services
for reciprocating natural gas compressors. The Company also has several non-core
businesses that it plans to sell, including CRC-Evans(TM) pipeline services and
equipment, Total Engineering Services Team, Inc. ("TEST") and the American
Aero(R) Cranes division.
The Company has grown significantly through acquisitions, having acquired
more than 20 businesses since 1991. These acquisitions have allowed the Company
to expand its product and service lines, improve its worldwide market position
and realize significant consolidation cost savings. Management believes it has
positioned Weatherford Enterra as a market leader in its primary businesses
while significantly expanding and diversifying the Company's geographic
operations.
On May 23, 1996, the Company acquired the business and assets of Nodeco AS,
a Norwegian company, and its subsidiary, Aarbakke AS (collectively, "Nodeco")
for $14.4 million cash, net of cash acquired, 750,000 shares of the Company's
Common Stock and the assumption of all of Nodeco's liabilities, totaling
approximately $12.1 million. Nodeco designs, manufactures, sells and rents oil
and gas well completion products primarily consisting of liner hanger equipment
and related services, as well as pump packers. This business complements the
Company's existing products and services businesses in the North Sea and
worldwide.
FINANCIAL INFORMATION BY INDUSTRY SEGMENT
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 9 of Notes to Consolidated Financial Statements
contained elsewhere herein for additional information.
DESCRIPTION OF BUSINESS
Weatherford Enterra is a diversified international energy service and
manufacturing company that provides a variety of services and equipment to the
exploration, production and transmission sectors of the oil and gas industry.
The Company operates in three industry segments -- oilfield services, oilfield
products and gas compression.
Oilfield Services. Weatherford Enterra rents specialized equipment and
tools and tubular goods for drilling, completion and workover of oil and gas
wells. Operators and drilling contractors often find it uneconomic to maintain
complete inventories of tools, drill pipe and other equipment and therefore
supplement such inventories by renting. Items rented include pressure control
equipment (such as blowout preventers, high-pressure valves, accumulators,
adapters and choke and kill manifolds); drill string equipment (such as drill
pipe, drill collars, tubing and drilling jars); pipe handling equipment (such as
elevators, spiders,
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slips, tongs and kelly spinners); fishing and downhole tools (such as milling
tools, casing cutters, jars, spears and overshots) and other equipment,
including stabilizers, power swivels and bottom-hole assemblies.
Weatherford Enterra provides certain downhole services, including fishing,
milling and cutting services, which consist of removing or otherwise eliminating
"fish" or "junk" in a well (such as a piece of equipment, a tool, a part of the
drill string or debris) that is causing an obstruction. An essential step in the
fishing operation is the proper selection and assembly of the fishing string.
The string consists of jars, subs, overshots, spears, milling tools, casing
cutters and other tools for retrieving or eliminating the "fish". The Company
installs whipstocks, which are downhole tools that act as vertical ramps, to
"sidetrack" an existing well bore off a vertical drilling path. Whipstocks are
used primarily in multilateral and directional drilling applications.
Weatherford Enterra provides well control equipment and services in critical
well situations (such as a well blow-out or a high pressure sour gas well). The
Company also provides plugging and abandonment services, pipe recovery wireline
services, foam services and casing patch installation. Management believes that,
based on total revenues, Weatherford Enterra is the leading worldwide supplier
of rental tools and fishing and other downhole services.
Weatherford Enterra provides services and equipment used to "make up" and
test threaded tubular connections and to "run" tubulars that are used during the
drilling, completion and workover of oil and gas wells. These services and
related equipment ensure the mechanical integrity and leak-tight performance of
tubular connections. Tubulars include casing, tubing, special high alloy chrome
pipe and fiberglass reinforced pipe. Casing is larger diameter pipe installed
(or run) in a wellbore to protect the structural integrity of the wellbore and
to seal various zones in the well. Tubing is small diameter pipe run inside the
casing in a producing well through which oil and gas is produced. In running
tubulars, Weatherford Enterra personnel use manual or remote-controlled power
tongs (similar in principle to hydraulic wrenches) and other related tubular
handling equipment. The Company also provides cementation engineering services
(consisting of computer-generated recommendations as to the number and placement
of centralizers during cementation) and tubular inspection and cleaning
services. Management believes that, based on total revenues, the Company is the
leading worldwide provider of tubular running services.
Oilfield Products. Weatherford Enterra's oilfield products segment consists
of the manufacture, sale and servicing of a variety of products. The Company's
cementation products, marketed under the Weatherford and Gemoco trade names,
include mechanical cementing products used to center casing strings in the
wellbore (such as centralizers, wellbore wipers and scratchers); float equipment
used in the cementation of the casing string to prevent cement from flowing back
into the casing (such as guide shoes, float shoes and float collars); and stage
tools used to set cement in the annular space between the wellbore and the
casing string. The Company also sells various proprietary rubber and elastomer
products, including thread protectors and cementing plugs. Management believes
that, based on total revenues, the Company is the leading worldwide manufacturer
and supplier of cementation products.
Weatherford Enterra designs, manufactures and sells liner hanger equipment
and related services under the Nodeco trade name. Liner hanger equipment is used
in the drilling and completion of oil and gas wells, primarily for the
production casing string in deep, deviated or horizontal wells. Nodeco is a
leading supplier of liner hanger equipment and packers used in completions with
electric submersible pumps in the North Sea market, particularly the Norwegian
and U.K. sectors. The Company intends to expand this business in the future into
other geographic markets.
The Company manufactures, sells and services gas lift, plunger lift and
related equipment under the McMurry-Macco(TM) name. Gas lift equipment is used
to increase the flow of oil to the surface when natural flow does not occur.
Weatherford Enterra designs, manufactures, sells and services hydraulic
power tongs and related tubular handling equipment used to provide tubular
running services; tubular connection testing equipment used to verify the
integrity of connections; milling tools, cutters, spears, overshots and
whipstocks used to provide fishing and other downhole services; and weighted
drill pipe used in its rental business and sold to customers.
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Gas Compression. Weatherford Enterra manufactures, packages, sells, rents
and services reciprocating gas compressor units used for increasing natural gas
pressure to facilitate gas flow from the wellhead and through gas gathering
systems and processing plants, injecting natural gas into oil wells to enhance
oil recovery, injecting natural gas into gas storage wells and other general
uses such as cogeneration, seismic marine surveys and natural gas fueling
stations. The Company is a major manufacturer of gas compressors ranging in size
from 26 horsepower to 7200 horsepower. As natural reservoir pressure declines
over the life of a producing natural gas well, different compressor
configurations may be needed to bring the gas to the surface and through the
distribution system. Management believes that the Company is the largest gas
compressor rental company based on number of units and the fourth largest based
on available horsepower.
Other Businesses. The Company's CRC-Evans pipeline services and equipment
business manufactures, sells and rents equipment and provides services used in
pipeline construction and manufactures and sells specialized equipment for pipe
coating plants. TEST provides electrical and instrumentation construction
services to the oil and gas production industry and designs, builds, installs
and services instrument control systems for offshore production platforms and
other applications. The Company also designs, manufactures, sells and services
American Aero pedestal-mounted hydraulic cranes used on offshore production
platforms, marine vessels and dockside locations. The Company is currently in
the process of negotiating sales of these businesses.
PATENTS AND LICENSES
The Company has followed a policy of seeking U.S. and non-U.S. patents and
licenses for products and equipment that appear to have commercial applications.
The Company believes its patents and licenses to be adequate for the conduct of
its businesses and, while it considers them to be valuable in the aggregate, the
Company does not believe that its business is materially dependent on its
patents or licenses. In management's opinion, engineering and production skills
and application experience are more responsible for the Company's market
position than are patents or licenses.
SEASONALITY
Demand for the Company's oilfield services and products is generally
affected by the seasonality of drilling activity. Higher activity generally is
experienced in the spring, summer and fall. In the United States and Europe, the
lowest drilling activity generally occurs during the early months of the year
due to inclement weather; however, in Alaska and Canada, activity generally
slows in the spring and early summer due to difficulty in moving equipment
during the spring thaws. Weather conditions are not a significant factor in
other geographic areas in which the Company offers oilfield services and
products. Weather is not necessarily a significant factor in the Company's gas
compression segment, although increased demand for gas during the winter months
depletes gas reserves, thereby generally increasing the demand for gas
compression services.
BACKLOG ORDERS
At December 31, 1996, the Company's backlog of orders for products and
equipment believed to be firm was approximately $94,200,000 compared to
approximately $63,800,000 at December 31, 1995. Substantially all of such orders
will be filled in 1997.
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INTERNATIONAL AND U.S. OPERATIONS AND EXPORT SALES
The Company has manufacturing operations, either through direct ownership
(including joint ventures) or through license arrangements, in the United
States, Germany, Norway, Canada, the Netherlands, Italy and Saudi Arabia. The
Company has product and equipment sales or service operations in virtually every
oil and gas exploration and production region in the world.
The following table sets forth the Company's revenues, acquisition-related
costs and other unusual charges, operating income (loss) and identifiable assets
attributable to each of its geographic segments. See Note 9 of Notes to
Consolidated Financial Statements contained elsewhere herein for additional
information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
United States.................................... $ 579,024 $ 471,672 $ 383,076
Canada........................................... 78,497 106,491 75,809
Europe........................................... 145,126 110,065 84,830
Africa........................................... 72,457 57,450 41,574
Other international.............................. 119,364 113,229 91,460
---------- ---------- ----------
$ 994,468 $ 858,907 $ 676,749
========== ========== ==========
ACQUISITION-RELATED COSTS AND OTHER UNUSUAL
CHARGES:
United States.................................... $ -- $ 43,276 $ 2,500
Canada........................................... -- 2,850 --
Europe........................................... -- 4,302 --
Africa........................................... -- 624 --
Other international.............................. -- 8,119 --
Corporate........................................ -- 29,011 --
---------- ---------- ----------
$ -- $ 88,182 $ 2,500
========== ========== ==========
OPERATING INCOME (LOSS):
United States.................................... $ 72,042 $ 5,745 $ 28,924
Canada........................................... 12,557 11,382 15,502
Europe........................................... 19,470 3,088 3,023
Africa........................................... 15,028 13,912 11,204
Other international.............................. 14,617 4,267 12,490
Corporate........................................ (7,958) (38,212) (5,439)
---------- ---------- ----------
$ 125,756 $ 182 $ 65,704
========== ========== ==========
IDENTIFIABLE ASSETS:
United States.................................... $ 828,930 $ 790,625 $ 706,175
Canada........................................... 69,391 73,368 89,462
Europe........................................... 201,137 141,673 125,365
Africa........................................... 67,856 40,299 38,708
Other international.............................. 179,218 148,579 149,677
Corporate........................................ 51,191 64,316 44,583
---------- ---------- ----------
$1,397,723 $1,258,860 $1,153,970
========== ========== ==========
</TABLE>
During the three-year period ended December 31, 1996, the Company's
revenues and operating income, excluding acquisition-related costs and other
unusual charges, have increased in every geographic area except Canada,
primarily as a result of the impact of acquisitions, increased service activity
and the introduction of new services and products into various geographic areas.
Canadian revenues declined 26% and operating income before acquisition-related
costs and other unusual charges decreased 12% in 1996 compared to 1995,
primarily as a result of lower sales volume of gas compressor packages and the
sale of certain Canadian
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manufacturing businesses in 1996, which more than offset improved oilfield
service activity in Canada. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained elsewhere herein for
additional information.
The Company's international operations are subject to special
considerations inherent in doing business outside the United States that may
limit or disrupt markets, restrict the movement of funds or result in the
deprivation of contract rights or the taking of property without fair
compensation. Operations in certain areas, including the Commonwealth of
Independent States (the "CIS"), Algeria, Nigeria, parts of the Middle East and
parts of Latin America, have been subjected to war, political disruption or
civil disturbances in the past twelve months. Generally, business interruptions
resulting from war, political disruptions or civil disturbances negatively
impact near-term results of operations; however, management of the Company
believes that it is unlikely that any specific business disruption caused by
existing or foreseen civil or political instability will have a material adverse
impact on the financial condition or liquidity of the Company. International
operations also can be affected by U.S., local and international laws and
regulations limiting or prohibiting exports to, and operations in, certain
countries, including Iran, Iraq, Libya, Cuba and North Korea.
Government-owned petroleum companies in some of the countries in which the
Company operates have adopted policies (or are subject to governmental policies)
giving preference to the purchase of goods and services from companies that are
majority-owned by local nationals. As a result of such policies, the Company
relies on joint ventures, license arrangements and other business combinations
with local nationals in these countries. Political considerations may disrupt
the commercial relationships between the Company and government-owned petroleum
companies.
INDUSTRY CONDITIONS
Certain statements in this report may be forward looking statements,
including without limitation statements regarding expected worldwide drilling
activity, the Company's future capital expenditures and the expected performance
of the Company's businesses. The forward looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical results or those anticipated, including without
limitation adverse economic conditions, the impact of competitive products and
pricing, product demand and acceptance risks, the presence of competitors with
greater financial resources and adverse industry conditions. Readers are
cautioned not to place undue reliance on these forward looking statements, which
speak only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward looking statements, whether as a result of new
information, future events or otherwise.
The oil and gas industry in which the Company participates historically has
experienced significant volatility. Demand for the Company's oilfield services
and products depends primarily upon the level of worldwide spending for oil and
gas exploration and production, the number of oil and gas wells being drilled,
the depth and drilling conditions of such wells, the volume of production, the
number of well completions and the level of workover activity. Drilling and
workover activity can fluctuate significantly in a short period of time,
particularly in the United States and Canada.
Average worldwide drilling activity increased 7% in 1996 to 1,838 active
rigs compared to 1,711 active rigs in 1995. Average worldwide drilling activity
declined 3% in 1995 compared to 1994. Drilling activity outside of North America
increased 5% in 1996 and 3% in 1995 when compared to the prior year's average
activity levels. U.S. drilling activity increased 7% in 1996 and decreased 7% in
1995 when compared to the prior year's average activity levels. Canadian
drilling activity increased 17% in 1996 and decreased 12% in 1995 when compared
to the prior year's average activity level. Worldwide drilling activity is
expected to increase in 1997 compared to 1996. However, no assurance can be
given as to the level of future drilling activity or demand for the Company's
oilfield services and products.
The willingness of oil and gas operators to make capital expenditures for
the exploration and production of oil and natural gas will continue to be
influenced by numerous factors over which the Company has no control, including
the prevailing and expected market prices for oil and natural gas. Such prices
are impacted by, among other factors, worldwide demand for oil and gas, general
economic and political conditions, costs of
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exploration and production, availability of new leases and concessions, the
ability of the members of the Organization of Petroleum Exporting Countries
("OPEC") to maintain price stability through voluntary production limits, the
level of production by non-OPEC countries, and governmental regulations
regarding, among other things, environmental protection, taxation, price
controls and product allocations. Worldwide exploration and production
expenditures by the oil and gas industry increased approximately 13% in 1996
when compared to 1995 and management of the Company anticipates expenditures to
increase in 1997 compared to 1996. However, no assurance can be given as to the
level of future oil and gas industry activity or demand for the Company's
oilfield services and products.
Demand for the Company's gas compression equipment and services depends
primarily on demand for natural gas, the level and stability of natural gas
prices, natural gas production and consumption, the amount of natural gas in
storage, construction of gathering and storage systems, and the age and
operating pressures of natural gas wells. Demand for purchased compressor
packages fell in 1996 from the 1994 and 1995 levels, resulting in a weakening of
market prices. In the fourth quarter of 1996, market conditions improved,
resulting in higher demand for compressor packages and increased utilization of
rental units. Another factor impacting the U.S. gas compression business is the
trend of major oil companies toward outsourcing certain services and selling
U.S. gas reserves to smaller operators. Demand for larger horsepower rental
units is expected to increase as major oil companies and smaller natural gas
producers are less likely to own and operate gas compressor packages and are
more likely to rent compressor packages to meet their compression needs.
COMPETITION
Oilfield Services. The Company experiences significant price pressures in
the markets in which it offers rental tools and downhole services, particularly
in U.S. markets. The principal methods of competition that apply to the
Company's rental tools and downhole services are price, quality, availability
and reputation. Weatherford Enterra competes with Baker Hughes Incorporated and
Smith International, Inc. in most of the markets in which it participates. In
addition, the Company competes with numerous small, single-site operators,
larger concerns operating at multiple locations and various well servicing
companies engaged in such businesses. Also, many customers own and operate large
inventories of equipment they might otherwise rent and have the ability to
purchase additional equipment, as opposed to renting.
The Company historically has enjoyed a strong competitive position in
tubular running services in countries in which it operates outside the United
States, but has experienced increasing competition and price pressures in these
markets in recent years. The Company has experienced significant competition and
price pressures in the U.S. tubular running services market. The principal
methods of competition that apply to the Company's tubular running services
business are price, quality, reputation and range of services offered.
Weatherford Enterra competes with Frank's International, Inc. in all of the U.S.
markets and in some international markets in which the Company participates. In
addition, the Company competes with BJ Services Company in several of the
international markets in which the Company participates. Several other small to
medium-sized companies compete with Weatherford Enterra on a regional basis in
the United States and in certain other countries.
Management expects competition and customer price pressures to continue in
the foreseeable future in most international and U.S. markets.
Oilfield Products. The Company faces significant competition in the pricing
of its cementation products. Management of the Company believes that price will
continue to be a significant factor considered in customer purchasing decisions
in the foreseeable future. The principal methods of competition that apply to
the Company's cementation products business are price, quality, availability and
reputation. The Company competes with Halliburton Company, Davis-Lynch Inc. and
Top-Co Industries Ltd. in the cementation products business.
With respect to liner hangers, competition in the Company's existing
markets is primarily based on product design, reputation for quality, delivery
response time and price. The Company contacts customers through an experienced
sales force supported by an engineering and technical staff. This arrangement
allows
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the Company to quickly respond to customer requests for customization or
modification of products. The Company competes with Baker Hughes Incorporated,
TIW Corporation (owned by Pearce Industries) and Smith International, Inc.
In the Company's gas lift equipment business, the principal methods of
competition are price, delivery response time, reputation and quality. The
Company markets its gas lift product line primarily through an experienced sales
force in the United States and through agents outside the United States. The
Company competes with Camco International, Inc. and Energy Ventures, Inc. on a
worldwide basis and with several small to medium-sized companies on a regional
basis.
Weatherford Enterra has experienced competition in the pricing of virtually
all of its other oilfield products. The Company competes with small to
medium-sized companies as well as with larger companies and subsidiaries of
large public companies having significant financial resources.
Gas Compression. The Company has experienced competition in the pricing of
its gas compression equipment and services. Management believes that price and
delivery time will continue to be significant factors considered in customer
purchasing and rental decisions in the foreseeable future. The principal methods
of competition are price, delivery time, quality of equipment and service,
reliability and reputation. The Company competes with Tidewater Inc., Hanover
Compressors Company, Global (owned by G.E. Capital), CSI, Production Operators
and various small to medium-sized companies in the compressor rental business.
The Company competes with Ariel and several other companies in the compressor
manufacturing business.
CUSTOMERS
The Company had no customers that individually accounted for 10% or more of
its 1996 consolidated revenues.
EMPLOYEES
At December 31, 1996, the Company employed 6,578 persons, of whom 2,873
were in international locations and 3,705 were in the United States. Of the
6,578 employees, 3,968 were employed in the oilfield services segment, 944 in
the oilfield products segment, 747 in the gas compression segment, with 139 in
administrative functions. In addition, 780 employees are employed in the
businesses that the Company plans to sell. The Company considers its employee
relations to be satisfactory.
EXECUTIVE OFFICERS
The names of the executive officers of the Company and certain information
with respect to each of them are set forth below.
<TABLE>
<CAPTION>
NAME AGE OFFICES
---- --- -------
<S> <C> <C>
Philip Burguieres......................... 53 Chairman of the Board
Thomas N. Amonett......................... 53 Acting President and Chief Executive
Officer
James R. Burke............................ 59 Senior Vice President and President --
Products/Compression
M. E. Eagles.............................. 57 Senior Vice President and
President -- Services
Norman W. Nolen........................... 54 Senior Vice President, Chief Financial
Officer and Treasurer
H. Suzanne Thomas......................... 43 Senior Vice President, Secretary and
General Counsel
Jon R. Nicholson.......................... 54 Vice President -- Human Resources
</TABLE>
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Mr. Burguieres has been a director since April 23, 1991, and has served as
Chairman of the Board since December 10, 1992. From April 3, 1991 to October 17,
1996, he also served as President and Chief Executive Officer of the Company.
Mr. Amonett has served as Acting President and Chief Executive Officer
since July 26, 1996. He has been a director of the Company since 1974 and served
as Chairman of the Board of the Company from May 1986 to May 1989. From July
1992 to July 1996, Mr. Amonett served as President of Reunion Industries, Inc.,
a Houston, Texas-based company primarily engaged in the manufacture of high
volume, precision plastic products and the providing of engineered plastic
services, oil and gas exploration, development and production and wine grape
vineyard development. Previously he was Of Counsel with Fulbright & Jaworski
L.L.P., Attorneys at Law, Houston, Texas, from September 1986 to July 1992.
Mr. Burke, who joined the Company on December 12, 1991 as Senior Vice
President, Corporate Development and Marketing, became President of the Products
Division effective March 1, 1994 and Senior Vice President and
President -- Products/Compression effective October 5, 1995.
Mr. Eagles, who joined the Company on March 1, 1993 as Executive Vice
President and President and General Manager of the Rental and Fishing Tool
Division, became Senior Vice President of the Company and President -- Services
effective March 1, 1994. From June 1992 until March 1993, Mr. Eagles served as
Senior Vice President of McDermott, Inc., a marine engineering construction
company, and President of McDermott Energy Services, Inc.; and from November
1990 until June 1992, he served as Vice President of Marketing of McDermott,
Inc.
Mr. Nolen joined the Company on April 29, 1991 as Senior Vice President,
Chief Financial Officer and Treasurer.
Ms. Thomas, who joined the Company in January 1982 as Counsel, was elected
Secretary in March 1986, Vice President and General Counsel in July 1987 and
Senior Vice President in December 1989. Ms. Thomas was responsible for Human
Resources from January 1992 until October 1995. Prior to joining the Company,
Ms. Thomas was an attorney with the law firm of Baker & Botts from September
1978 to December 1981.
Mr. Nicholson, who joined the Company as Director of Human Resources in
February 1993, was elected Vice President-Human Resources effective October 5,
1995. From March 1992 until January 1993, he was a human resources consultant.
From July 1990 until March 1992, Mr. Nicholson served as President of Atlas
Bradford Corporation, an oilfield services company.
ITEM 2. PROPERTIES.
The Company has numerous manufacturing facilities located in the United
States and various other countries used for the manufacture of oilfield products
and equipment, the principal of which are as follows:
<TABLE>
<CAPTION>
OWNED (O)
OR
APPROXIMATE LEASED (L) --
LOCATION MANUFACTURED PRODUCTS SQUARE FEET EXPIRATION DATE
-------- --------------------- ----------- ---------------
<S> <C> <C> <C>
Houston, Texas.......... Cranes, power tongs, power units and 117,500 O
accessories
Pearland, Texas......... Fishing tools, milling tools, cutters, 127,500 O
overshots, whipstocks, weighted drill pipe
and coring equipment
Tulsa, Oklahoma......... Pipeline equipment 145,000 O
Corpus Christi, Texas... Gas compressors 90,000 O
Houma, Louisiana........ Mechanical cementing products, float 109,800 O
equipment, stage tools, rubber products and
industrial valves
Hannover, Germany....... Mechanical cementing products, power tongs, 65,950 L - 12/99
power units and accessories and
specialized bucking machines
Bryne, Norway........... Liner hanger equipment 60,000 L - 7/02
</TABLE>
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The Company believes that its manufacturing facilities will be suitable and
adequate to meet production demands anticipated during the next several years.
In addition to its manufacturing plants, the Company leases its corporate
headquarters office and various administrative offices in Houston, Texas and
leases or owns numerous sales offices, warehouses, service centers, pipe yards
and stocking locations for its operations in the United States and
internationally. During the year ended December 31, 1996, the Company paid real
estate rentals in the aggregate amount of approximately $11,900,000.
The Company's operations generally do not require highly specialized
facilities, and suitable facilities generally are readily available on a lease
or purchase basis, as required.
ITEM 3. LEGAL PROCEEDINGS AND REGULATORY MATTERS.
The Company is not a party to, nor is any of its property the subject of,
any material pending legal proceedings, other than ordinary routine litigation
incidental to its business and which is believed to be either covered by
insurance or not material in amount.
Various federal, state and local laws and regulations covering the
discharge of materials into the environment, or otherwise relating to the
protection of the public health and the environment, affect the Company's
operations, expenses and costs. The clear trend in environmental regulation has
been to place more restrictions and limitations on activities that may impact
the environment, such as emissions of pollutants, generation and disposal of
wastes, and use and handling of chemical substances. Increasingly strict
environmental restrictions and limitations have resulted in increased operating
costs for the Company and other similar businesses throughout the United States,
and it is possible that the costs of compliance with environmental laws and
regulations will continue to increase, both for the Company and its customers.
In this regard, the Resource Conservation and Recovery Act ("RCRA"), the
principal federal statute governing the disposal of solid and hazardous wastes,
includes a statutory exemption that allows oil and gas exploration and
production wastes to be classified as non-hazardous waste. A similar exemption
is contained in many of the state counterparts to RCRA. If oil and gas
exploration and production wastes were required to be managed and disposed of as
hazardous waste, either as a result of changes in RCRA or the imposition of more
stringent state regulations, domestic oil and gas producers, including many of
the Company's customers, could be required to incur substantial obligations with
respect to such wastes. Because of the potential impact on the Company's
customers, any regulatory changes that impose additional restrictions or
requirements on the disposal of oil and gas wastes could adversely affect demand
for the Company's services and products. In addition, the Company is subject to
laws and regulations concerning occupational health and safety. The Company
believes that it is in substantial compliance with the requirements of
environmental and occupational health and safety laws and regulations, but
inasmuch as such laws and regulations are frequently changed, the Company is
unable to predict the ultimate impact of such laws and regulations on the
Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of 1996.
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<PAGE> 11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock, $0.10 par value (the "Common Stock"), is traded
on the New York Stock Exchange under the symbol "WII". The following table sets
forth, on a per share basis for the periods indicated, the high and low sale
prices for the Common Stock as reported by the New York Stock Exchange. The
sales prices set forth below have been adjusted to reflect the one-for-two
reverse stock split effected on October 5, 1995.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1995
First Quarter............................................ $21.25 $16.50
Second Quarter........................................... 25.75 19.75
Third Quarter............................................ 30.00 23.50
Fourth Quarter........................................... 29.50 21.25
1996
First Quarter............................................ 35.88 26.00
Second Quarter........................................... 37.75 28.50
Third Quarter............................................ 32.75 23.13
Fourth Quarter........................................... 32.38 26.88
1997
First Quarter (through March 21, 1997)................... 38.13 28.50
</TABLE>
On March 21, 1997, the closing sale price for the Common Stock as reported
by the New York Stock Exchange was $29.88. As of March 21, 1997, there were
approximately 3,842 record holders of Common Stock.
The Company has not declared or paid dividends on the Common Stock since
December 1982 and management does not anticipate paying dividends on the Common
Stock at any time in the foreseeable future.
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<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA.
The Selected Financial Data set forth below has been derived from the
audited consolidated financial statements of the Company. This information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and the Notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996 1995(1) 1994(2) 1993(3) 1992
---------- ---------- ---------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues........................... $ 994,468 $ 858,907 $ 676,749 $500,491 $374,203
Acquisition-related costs and other
unusual charges................. -- 88,182 2,500 4,000 --
Operating income................... 125,756 182 65,704 49,671 35,579
Depreciation and amortization...... 105,857 95,957 71,037 50,449 35,738
Net income (loss).................. 70,073 (10,558) 41,977 35,175 26,760
Net income (loss) per share........ $ 1.35 $ (0.21) $ 0.94 $ 0.88 $ 0.73
PERCENTAGE OF REVENUES:
Selling, general and administrative
expenses........................ 14.1% 16.1% 17.1% 18.3% 22.6%
Gross profit....................... 28.2% 27.2% 27.9% 29.5% 33.2%
Operating income................... 12.6% 0.0% 9.7% 9.9% 9.5%
Net income (loss).................. 7.0% (1.2)% 6.2% 7.0% 7.2%
BALANCE SHEET DATA:
Working capital.................... $ 294,075 $ 267,380 $ 251,778 $211,834 $197,526
Total assets....................... 1,397,723 1,258,860 1,153,970 635,602 474,490
Total debt......................... 315,774 329,266 196,672 21,253 28,685
Stockholders' equity............... 841,608 730,843 734,634 474,472 349,458
Total debt-to-total
capitalization.................. 27% 31% 21% 4% 8%
OTHER DATA:
Capital expenditures, excluding
acquisitions.................... $ 148,656 $ 110,625 $ 114,018 $ 63,757 $ 38,259
Weighted average shares
outstanding..................... 52,097 50,989 44,845 38,607 34,786
</TABLE>
- ---------------
(1) Includes acquisition-related costs and other unusual charges of $88,182,000,
or $1.17 per common share.
(2) Includes acquisition-related costs of $2,500,000, or $0.06 per common share.
(3) Includes acquisition-related costs of $4,000,000, or $0.10 per common share.
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere herein.
Certain statements in this report may be forward looking statements,
including without limitation statements regarding expected worldwide drilling
activity, the Company's future capital expenditures and the expected performance
of the Company's businesses. The forward looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical results or those anticipated, including without
limitation adverse economic conditions, the impact of competitive products and
pricing, product demand and acceptance risks, the presence of competitors with
greater financial resources and adverse industry conditions. Readers are
cautioned not to place undue reliance on these forward looking statements, which
speak only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward looking statements, whether as a result of new
information, future events or otherwise.
BUSINESS REVIEW
Weatherford Enterra is a diversified international energy service and
manufacturing company that provides a variety of services and equipment to the
exploration, production and transmission sectors of the oil and gas industry.
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 oilfield services segment includes oilfield equipment rental, downhole
services and tubular running services. The Company rents specialized pressure
control equipment, drill string equipment, handling tools, stabilizers and other
equipment and tools used in the drilling, completion and workover of oil and gas
wells. Downhole services include fishing, milling, whipstock installation and
retrieval, well control assistance, plugging and abandonment services, pipe
recovery wireline services, foam services and casing patch installation. Tubular
running services include "making up" threaded tubular connections, installing
casing, tubing and other downhole tubulars, ensuring the mechanical integrity
and leak-tight performance of tubular connections, inspection and cleaning of
tubulars and related engineering services.
The oilfield products segment includes the manufacture, sale and service of
cementation products, liner hangers, gas lift equipment and equipment used to
provide oilfield services. Cementation products include centralizers, float
equipment, stage tools and elastomer products which are used in the process of
cementing casing strings in oil and gas wells. Liner hanger equipment is used in
the drilling and completion of oil and gas wells, primarily for the production
casing in deep, deviated or horizontal wells. Gas lift equipment is used to
inject gas in producing wells to enhance the flow of oil to the surface. Other
manufactured products include hydraulic power tongs and related equipment used
to provide tubular running services, milling tools, whipstocks and weighted
drill pipe used in rental and downhole services and sold to customers.
The gas compression segment includes the manufacturing, packaging, renting,
selling and providing parts and services for reciprocating gas compressor units
ranging in size from 26 to 7200 horsepower. Gas compressor units are used to
increase natural gas pressure to facilitate gas flow from the wellhead and
through gas gathering systems and processing plants, to inject natural gas into
oil wells for enhanced recovery and into gas storage wells, and in other general
applications such as cogeneration, seismic marine surveys and natural gas
fueling stations.
The Company's operating results include several other businesses that the
Company has either sold or announced its intention to sell. Such businesses
include Harrisburg/Woolley, which was sold in 1995; Barber Industries Limited,
Enterra Patco Oilfield Products, Inc. and Arrow Completion Systems, Inc.
("Arrow"), each of which were sold in 1996; and CRC-Evans Pipeline
International, Inc. ("CRC-Evans Pipeline"), the American Aero Cranes division
("Cranes") and Total Engineering Services Team, Inc. ("TEST"), which are in
various stages of being divested.
The Company has grown significantly through acquisitions, having acquired
more than 20 businesses since 1991. These acquisitions have allowed the Company
to expand its product and service lines, improve its
13
<PAGE> 14
worldwide market position and realize significant consolidation cost savings.
Management believes it has positioned Weatherford Enterra as a market leader in
its primary businesses while significantly expanding and diversifying the
Company's geographic operations.
RESULTS OF OPERATIONS
A summary of operating results by industry segment is shown below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Oilfield services................................ $520,195 $470,085 $420,981
Oilfield products................................ 149,713 115,399 86,580
Gas compression.................................. 154,503 94,386 46,145
Other businesses................................. 170,057 179,037 123,043
-------- -------- --------
$994,468 $858,907 $676,749
======== ======== ========
ACQUISITION-RELATED COSTS AND OTHER UNUSUAL
CHARGES:
Oilfield services................................ $ -- $ 31,715 $ 2,500
Oilfield products................................ -- 15,745 --
Gas compression.................................. -- -- --
Other businesses................................. -- 11,711 --
Corporate........................................ -- 29,011 --
-------- -------- --------
$ -- $ 88,182 $ 2,500
======== ======== ========
OPERATING INCOME (LOSS):
Oilfield services................................ $ 93,644 $ 41,849 $ 49,484
Oilfield products................................ 23,388 (13,253) 16,918
Gas compression.................................. 7,833 7,788 4,047
Other businesses................................. 8,849 2,010 694
Corporate........................................ (7,958) (38,212) (5,439)
-------- -------- --------
$125,756 $ 182 $ 65,704
======== ======== ========
</TABLE>
OILFIELD SERVICES. The oilfield services segment was significantly impacted
by cost savings achieved following the Company's mergers with Enterra
Corporation ("Enterra") in October 1995 and H & H Oil Tool Co., Inc. ("H & H")
in September 1994, both of which were accounted for as poolings of interest.
Revenues for the oilfield services segment increased 11% to $520.2 million
in 1996 as compared to 1995. International revenues increased 15% to $281.3
million, while U.S. revenues increased 6% to $238.9 million. The increase in
international service revenues is primarily attributable to increased activity
in Canada, the North Sea, North and West Africa and Latin America. The increase
in Canada is consistent with the 17% increase in the average drilling rig count
over 1995. The average international drilling rig count, excluding Canada,
increased 5% over the prior year, which contributed to the increase in
international service revenues. International revenues also benefitted from the
introduction of fishing and other downhole services into certain markets in
North and West Africa and Latin America in 1996. U.S. service revenues were
positively impacted by an increase in the average 1996 U.S. drilling rig count
of 7% over 1995, as well as price increases announced by the Company in August
1996 affecting most U.S. services and rentals. Excluding the impact of the
acquisition-related costs and other unusual charges in 1995 discussed below,
operating income for oilfield services increased 27% to $93.6 million in 1996 as
compared to 1995. This increase is attributable to the increase in revenues
experienced in 1996, along with cost savings achieved from the higher levels of
activity and from efficiencies resulting from consolidating the operations of
the Company and Enterra. These increases were partially offset by additional
costs incurred to introduce fishing and other downhole services into the markets
discussed above.
14
<PAGE> 15
Oilfield service revenues increased 12% in 1995 to $470.1 million compared
to $421.0 million in 1994. International revenues increased 23% to $245.2
million, primarily as a result of increased activity in certain markets,
including Latin America, Africa, the North Sea and Canada. During 1995, the
average international drilling rig count, excluding Canada, was 3% higher than
in 1994. U.S. revenues increased 1% to $224.9 million, despite a 7% decline in
the average U.S. drilling rig count. Operating income for the oilfield services
segment decreased in 1995 compared to 1994 as a result of the
acquisition-related costs and other unusual charges in 1995 discussed below.
Excluding such charges, operating income would have improved 42% to $73.6
million, primarily as a result of the increased international activity and cost
savings achieved in consolidating the operations of H & H and Enterra into the
Company.
OILFIELD PRODUCTS. The Company acquired the business and assets of Nodeco
AS, a Norwegian liner hanger manufacturer, and Aarbakke AS (collectively,
"Nodeco") in May 1996. The oilfield products segment was also significantly
impacted by the October 1995 Enterra merger and Enterra's acquisition of Total
Energy Services Company ("Total Energy") in August 1994.
Revenues increased 30% to $149.7 million in 1996 compared to 1995,
reflecting improved operating results from all manufacturing businesses. The
acquisition of Nodeco in May 1996 contributed $18.4 million, or 16%, to the
revenue increase. Cementation product sales improved significantly over the
prior year due to an increase in market share and the higher levels of drilling
activity worldwide. Excluding the impact of the acquisition-related costs and
other unusual charges discussed below, operating income increased over 800% to
$23.4 million compared to 1995. Approximately $4.0 million of the increase in
operating income is attributable to the Nodeco acquisition. The remaining
increase is due to the increase in revenues, combined with manufacturing
efficiencies achieved as a result of the higher volume of product sales.
Revenues increased 33% in 1995 to $115.4 million compared to 1994,
primarily as a result of the acquisition of the Total Energy businesses in
August 1994. Operating income, excluding the acquisition-related costs and other
unusual charges discussed below, decreased 85% to $2.5 million, primarily as a
result of operating losses incurred in 1995 by certain businesses acquired from
Total Energy, and large one-time shipments of products in 1994.
GAS COMPRESSION. Revenues increased 64% to $154.5 million in 1996 as
compared to 1995, primarily as a result of the acquisition of the natural gas
compression business and assets of Energy Industries, Inc. and Zapata Energy
Industries, L.P. (collectively, "Energy Industries") in December 1995. This
increase was offset by a weaker market for sales of gas compressor packages,
which resulted in a lower volume of manufacturing and packaging sales as well as
lower prices for packaged compressors. Operating income increased only slightly
over 1995 due to the weaker market, inefficiencies incurred in consolidating the
packaging operations of Energy Industries into the Company's existing gas
compression business, and amortization of goodwill arising from the Energy
Industries acquisition.
The gas compression segment was acquired as part of the Total Energy
acquisition, which was accounted for as a purchase, in August 1994.
Consequently, comparisons of the operating results between 1995 and 1994 are not
meaningful. Compression rental revenues remained fairly stable in 1995 and 1994.
Sales of packaged compression units, particularly in Canada, declined
significantly during the second half of 1995 due to the relatively low demand
for natural gas.
OTHER BUSINESSES. Revenues decreased 5% to $170.1 million in 1996 as
compared to 1995, primarily as a result of businesses which were sold in late
1995 and early 1996. This decrease was offset by higher revenues for TEST and
Cranes. TEST revenues improved primarily as a result of increased activity in
the Gulf of Mexico, while revenues for Cranes increased in relation to the
higher level of drilling activity, which resulted in new crane sales, service
and rental contracts worldwide. Operating income excluding the impact of the
acquisition-related costs and other unusual charges discussed below decreased
36% to $8.8 million, due primarily to the impact of the sold businesses. The
higher revenues for TEST and Cranes did not significantly impact operating
income due to higher levels of costs incurred in 1996.
Revenues for other businesses increased 46% in 1995 to $179.0 million
compared to 1994, primarily as a result of the addition of the Total Energy
businesses acquired in August 1994. Revenues were also positively
15
<PAGE> 16
impacted by increased activity for CRC-Evans Pipeline, including a large
international pipeline construction project and increased automatic welding unit
rental and service revenue in Canada, Malaysia and North Africa. Excluding the
acquisition-related costs and other unusual charges discussed below, operating
income increased to $13.7 million in 1995 compared to $0.7 million in 1994 as a
result of the Total Energy businesses operating for the full year in 1995
combined with the improved pipeline results. Also, 1994 operating income
included a loss of $4.2 million on a large contract to design and construct
specialized equipment to be installed on a large offshore pipe laying vessel.
The Company is currently in the process of negotiating sales of these
businesses.
GROSS PROFIT. The consolidated gross profit percentage was 28.2% in 1996
compared to 27.2% in 1995 and 27.9% in 1994. The increase in 1996 is due
primarily to improved gross profitability in U.S. oilfield services and the
oilfield products segments primarily as a result of consolidation cost savings,
improved pricing in certain areas and increased volume of activity. Compression
margins were lower due to the weak market and consolidation costs discussed
above. The decline from 1994 to 1995 is primarily attributable to weakness in
the gas compression segment and several businesses in the oilfield products
segment.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of revenues decreased to 14.1% in 1996
from 16.1% in 1995 and 17.1% in 1994. These decreases are a result of higher
levels of revenues, combined with cost efficiencies achieved in consolidating
the operations of acquired businesses into the Company.
RESEARCH AND DEVELOPMENT. Research and development costs of $7.2 million in
1996 increased $2.2 million, or 44%, compared to 1995. Research and development
costs of $5.0 million in 1995 increased 5% compared to 1994. The increases
primarily reflect 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. The Company's equity in the earnings of these affiliates was
$2.1 million in 1996 compared to $1.5 million in 1995 and $1.2 million in 1994.
These increases are primarily attributable to improved drilling activity in
Saudi Arabia. The Company received cash dividends from its 50% or less-owned
affiliates totaling $1.6 million, $1.7 million and $2.2 million in 1996, 1995
and 1994, respectively.
FOREIGN CURRENCY GAIN, 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 net foreign currency gains of $49,000 and $74,000
in 1996 and 1995, compared to a net gain of $2.2 million in 1994. A substantial
portion of the gain in 1994 represented an unrealized currency gain related to
certain intercompany loans.
OTHER EXPENSE, NET. Other expense, net, increased to $8.7 million in 1996
compared to $3.8 million in 1995 and $3.1 million in 1994. The increase in 1996
is primarily related to the amortization of goodwill related to the acquisition
of Energy Industries. The increase in 1995 was primarily attributable to the
amortization of goodwill related to the 1994 acquisitions of Total Energy and
the assets and business of the Rental Division of Odfjell Drilling and
Consulting Company, partially offset by increased gains on sales of property,
plant and equipment in 1995.
ACQUISITION-RELATED COSTS AND OTHER UNUSUAL CHARGES. During the second
quarter of 1995, Enterra recorded unusual charges totaling $28.3 million,
representing writedowns to fair value of certain businesses to be disposed of,
asset writedowns related to certain excess facilities, equipment and
inventories, and estimated costs in connection with the closure of certain
pipeline businesses and the consolidation of certain oilfield service
administrative and operating facilities. During the fourth quarter of 1995, the
Company recorded expenses of $59.9 million related to the Enterra merger and the
financial impact of management decisions related to the future operations of the
combined companies. These acquisition-related costs primarily consisted of
transaction costs, severance and termination agreements with former officers and
employees, facility closure costs primarily to consolidate the oilfield services
operations and administrative functions of Enterra and the Company, and the
reduction in recorded value of certain assets that had diminished future value
in the operations of the combined company.
16
<PAGE> 17
The Company recorded acquisition-related costs of $2.5 million in the third
quarter of 1994 related to the H & H merger. The 1994 acquisition-related costs
primarily represented transaction costs of the merger and employee termination
and facility closure costs to consolidate the operations of H & H into the
Company.
INTEREST. Net interest expense increased to $20.9 million in 1996 compared
to $15.1 million in 1995 and $6.9 million in 1994, primarily as a result of
higher average debt balances outstanding. The increased indebtedness primarily
relates to the acquisitions of Nodeco in May 1996, Energy Industries in December
1995, Total Energy in August 1994 and Odfjell Rental in April 1994.
INCOME TAXES. The income tax provision (benefit) consists of taxes on
foreign earnings, foreign taxes withheld on certain remittances from
international subsidiaries, U.S. alternative minimum tax, state taxes, the
recognition of general business tax credits currently available to reduce U.S.
federal income tax, and the recognition of future taxable amounts. Income tax
provision (benefit) as a percentage of income (loss) before income taxes and
minority interests was 33%, 31% and 29% for 1996, 1995 and 1994, respectively.
The increase in the effective tax rates was primarily a result of differences in
the components and tax rates applicable to foreign taxable income, the reversal
of the valuation allowance on U.S. net operating loss carryforwards in 1995 and
the nondeductible goodwill amortization related to the Total Energy acquisition.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations provided cash of $128.7 million during 1996
compared to $78.9 million during 1995 and $67.6 million during 1994. Operating
cash flow before changes in working capital accounts increased 45% to $172.5
million in 1996 over 1995, and 16% to $118.7 million in 1995 over 1994,
reflecting the impact of the acquisitions and growth in the Company's
operations. Changes in working capital and other operating accounts used cash of
$43.9 million in 1996 compared to $39.8 million during 1995 and $34.4 million in
1994. Working capital of $294.1 million at December 31, 1996 increased 10%
compared to December 31, 1995, primarily due to the growth experienced in the
Company's operations, including the acquisition of Nodeco. Working capital of
$267.4 million at December 31, 1995 increased 6% from December 31, 1994,
primarily due to the Energy Industries acquisition.
In connection with the plan to consolidate the operations of Enterra into
the Company's operations, the Company committed to vacate certain excess
facilities. Accrued liabilities associated with this plan decreased from $24.3
million at December 31, 1995 to $3.2 million at December 31, 1996, as a result
of cash payments in accordance with the consolidation plan.
On May 23, 1996, the Company acquired the business and assets of Nodeco in
a transaction accounted for as a purchase. The Company paid cash of $14.4
million net of cash acquired, issued 750,000 shares of its Common Stock and
assumed all liabilities of Nodeco, totaling approximately $12.1 million.
On December 15, 1995, the Company completed the acquisition of
substantially all of the assets of Energy Industries in a transaction accounted
for as a purchase. The Company paid approximately $130.0 million in cash and
assumed certain liabilities totaling approximately $12.5 million.
On October 5, 1995, the Company completed a merger with Enterra. The
Company issued approximately 23.7 million shares of Common Stock in exchange for
all the outstanding shares of Enterra common stock based on an exchange ratio of
0.845 of a share of Company Common Stock for each share of Enterra common stock
outstanding. The merger was accounted for as a pooling of interests. In
connection with the Enterra merger, the Company recorded acquisition-related
costs totaling $59.9 million.
Capital expenditures, excluding business acquisitions, increased 34% in
1996 to $148.7 million compared to 1995, primarily as a result of the
acquisition of Energy Industries in December 1995, the increase in industry
activity worldwide and the introduction of certain oilfield services businesses
into new areas in 1996. Capital expenditures, excluding business acquisitions,
decreased 3% to $110.6 million in 1995 compared to $114.0 million in 1994
reflecting lower capital spending in the oilfield services segment due to the
consolidation of the Company's and Enterra's rental and service equipment,
partially offset by the capital requirements of the Total Energy operations
acquired in August 1994. Management anticipates that the
17
<PAGE> 18
Company's capital spending levels will continue to be primarily influenced by
market opportunities and growth in the Company's operations.
The Company has announced its intention to sell certain non-core businesses
including CRC-Evans Pipeline, Cranes and TEST. Management expects that proceeds
from such divestitures would be used to repay debt and for general corporate
purposes. Effective December 6, 1996, the Company sold the business and assets
of Arrow for cash of $21.3 million, subject to a working capital adjustment, and
the assumption by the purchaser of substantially all operating liabilities of
Arrow. The proceeds from the sale were used primarily to repay a portion of the
Company's debt.
The Company's consolidated indebtedness decreased to $315.8 million at
December 31, 1996 from $329.3 million at December 31, 1995, primarily as a
result of scheduled debt payments and debt payments made with the proceeds from
the sale of Arrow, partially offset by increased debt related to the acquisition
of Nodeco. The Company's total debt-to-total capitalization ratio was 27% at
December 31, 1996 compared to 31% at December 31, 1995.
On May 28, 1996, the Company completed the sale of $200 million of 7 1/4%
notes due May 15, 2006 (the "7 1/4% Notes"). Net proceeds of $197.8 million were
used to repay amounts outstanding under the bank credit facilities discussed
below. Interest on the 7 1/4% Notes is payable semi-annually on May 15 and
November 15 of each year.
The Company 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 is payable in equal
quarterly installments through September 30, 2001. The Revolving Credit Facility
matures on September 30, 2000. Amounts outstanding under the Facilities 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 December
31, 1996 was 6.0%. 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 December 31, 1996, the balance outstanding under the Term Loan was $96.0
million, and the Company had $200 million available to borrow under the
Revolving Credit Facility and $16.3 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 $18.0 million of letters of credit and bid and performance bonds
outstanding at December 31, 1996.
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.
Changes in the value of the U.S. dollar relative to these foreign currencies
affect the weighted average currency exchange rates used to translate the
statements of income of the Company's international subsidiaries into U.S.
dollars. The impact of exchange rate fluctuations during 1996, 1995 and 1994 did
not have a material effect on reported amounts of revenues or net income.
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 $1.1 million in 1996 and net cash outflows of $2.7
million during 1995.
18
<PAGE> 19
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 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 eventually resumed 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.
19
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Weatherford Enterra, Inc.:
We have audited the accompanying consolidated balance sheets of Weatherford
Enterra, Inc. (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1996 and 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Weatherford Enterra, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 12, 1997
20
<PAGE> 21
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 33,029 $ 32,800
Receivables, net of allowance of $16,241 and $15,942...... 272,816 231,125
Inventories, net.......................................... 163,302 165,383
Deferred tax assets....................................... 20,090 10,995
Prepayments and other..................................... 16,197 23,059
---------- ----------
Total current assets.............................. 505,434 463,362
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land...................................................... 20,041 22,381
Buildings and improvements................................ 101,114 85,229
Rental and service equipment.............................. 1,017,866 965,603
Machinery and other equipment............................. 115,665 108,357
---------- ----------
1,254,686 1,181,570
Less -- Accumulated depreciation.......................... 693,496 667,025
---------- ----------
561,190 514,545
---------- ----------
GOODWILL, net............................................... 290,474 259,450
---------- ----------
OTHER ASSETS................................................ 40,625 21,503
---------- ----------
$1,397,723 $1,258,860
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of long-term debt..... $ 24,508 $ 36,976
Accounts payable.......................................... 65,713 52,157
Accrued compensation and employee benefits................ 29,885 31,353
Accrued income taxes...................................... 17,427 4,650
Accrued insurance......................................... 11,283 9,435
Other accrued liabilities................................. 62,543 61,411
---------- ----------
Total current liabilities......................... 211,359 195,982
---------- ----------
LONG-TERM DEBT.............................................. 291,266 292,290
---------- ----------
DEFERRED TAX LIABILITIES.................................... 34,728 5,243
---------- ----------
OTHER LONG-TERM LIABILITIES................................. 18,010 33,348
---------- ----------
MINORITY INTERESTS.......................................... 752 1,154
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par; shares authorized 1,000,000; none
issued................................................. -- --
Common stock, $.10 par; shares authorized 80,000,000;
issued 52,172,796 and 50,988,741....................... 5,217 5,099
Paid-in capital........................................... 639,679 602,231
Retained earnings......................................... 200,316 130,243
Cumulative translation adjustment......................... (2,768) (5,869)
Treasury stock, 28,269 and 41,260 common shares, at
cost................................................... (836) (861)
---------- ----------
Total stockholders' equity........................ 841,608 730,843
---------- ----------
$1,397,723 $1,258,860
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
21
<PAGE> 22
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Services and rentals..................................... $746,180 $612,597 $495,947
Products................................................. 248,288 246,310 180,802
-------- -------- --------
Total revenues................................... 994,468 858,907 676,749
COSTS AND EXPENSES:
Cost of services and rentals............................. 537,313 442,902 347,124
Cost of products......................................... 177,033 182,444 141,009
Selling, general and administrative expenses............. 140,614 137,959 115,978
Research and development................................. 7,154 4,954 4,735
Equity in earnings of unconsolidated affiliates.......... (2,078) (1,477) (1,169)
Foreign currency gain, net............................... (49) (74) (2,205)
Other expense, net....................................... 8,725 3,835 3,073
Acquisition-related costs and other unusual charges...... -- 88,182 2,500
-------- -------- --------
Total operating costs and expenses............... 868,712 858,725 611,045
-------- -------- --------
OPERATING INCOME........................................... 125,756 182 65,704
Interest expense........................................... 22,914 17,217 8,847
Interest income............................................ (2,005) (2,081) (1,959)
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS... 104,847 (14,954) 58,816
Income tax provision (benefit)............................. 34,593 (4,616) 16,958
-------- -------- --------
INCOME (LOSS) BEFORE MINORITY INTERESTS.................... 70,254 (10,338) 41,858
Minority interests......................................... 181 220 (119)
-------- -------- --------
NET INCOME (LOSS).......................................... $ 70,073 $(10,558) $ 41,977
======== ======== ========
Weighted average common and common equivalent shares
outstanding.............................................. 52,097 50,989 44,845
======== ======== ========
INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE....... $ 1.35 $ (0.21) $ 0.94
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE> 23
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
(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, 1993............... $4,089 $379,046 $ 98,824 $(7,044) $(442) $474,473
Shares issued under employee benefit
plans.................................. 1 178 -- -- -- 179
Stock grants and options exercised....... 13 1,905 -- -- (359) 1,559
Issuance of Common Stock in
acquisition............................ 955 212,615 -- -- -- 213,570
Currency translation adjustment.......... -- -- -- 2,876 -- 2,876
Net income............................... -- -- 41,977 -- -- 41,977
------ -------- -------- ------- ----- --------
BALANCE, December 31, 1994............... 5,058 593,744 140,801 (4,168) (801) 734,634
Shares issued under employee benefit
plans.................................. 1 187 -- -- -- 188
Stock grants and options exercised....... 40 8,300 -- -- (60) 8,280
Currency translation adjustment.......... -- -- -- (1,701) -- (1,701)
Net loss................................. -- -- (10,558) -- -- (10,558)
------ -------- -------- ------- ----- --------
BALANCE, December 31, 1995............... 5,099 602,231 130,243 (5,869) (861) 730,843
Shares issued under employee benefit
plans.................................. 3 1,367 -- -- 419 1,789
Stock grants and options exercised....... 40 9,636 -- -- (394) 9,282
Issuance of Common Stock in
acquisition............................ 75 26,445 -- -- -- 26,520
Currency translation adjustment.......... -- -- -- 3,101 -- 3,101
Net income............................... -- -- 70,073 -- -- 70,073
------ -------- -------- ------- ----- --------
BALANCE, December 31, 1996............... $5,217 $639,679 $200,316 $(2,768) $(836) $841,608
====== ======== ======== ======= ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE> 24
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
NET INCOME (LOSS)....................................... $ 70,073 $ (10,558) $ 41,977
Income items not requiring (providing) cash:
Depreciation and amortization......................... 105,857 95,957 71,037
Non-cash portion of acquisition-related costs and
other unusual charges.............................. -- 66,196 --
Deferred income tax provision (benefit)............... 12,103 (20,781) 649
Gain on sales of assets, net.......................... (14,058) (12,503) (9,559)
Other non-cash items, net............................. (1,428) 409 (2,094)
Increase (decrease) in operating cash flow resulting
from:
Receivables, net................................... (38,587) 16,277 (32,345)
Inventories, net................................... (8,384) (12,603) (14,619)
Payment of deferred loan costs..................... (4,820) (892) (818)
Prepayments and other.............................. (922) (5,799) (477)
Accounts payable and accrued liabilities........... 15,868 (46,307) 15,798
Other long-term liabilities........................ (7,024) 9,477 (1,980)
--------- --------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES................... 128,678 78,873 67,569
--------- --------- ---------
Purchases of property, plant and equipment.............. (148,656) (110,625) (114,018)
Proceeds from sales of businesses....................... 40,481 9,493 --
Acquisitions, net of notes issued and cash acquired..... (16,278) (139,226) (105,850)
Proceeds from sales of property, plant and equipment.... 20,215 31,137 19,810
Other net cash flows from investing activities.......... (15,388) (9,245) (1,502)
--------- --------- ---------
CASH USED IN INVESTING ACTIVITIES....................... (119,626) (218,466) (201,560)
--------- --------- ---------
Borrowings under credit facilities...................... 250,783 411,737 144,539
Repayment of borrowings................................. (271,565) (283,346) (45,299)
Net cash flows from currency hedging transactions....... 1,133 (2,719) (1,036)
Proceeds from stock option exercises, sales of stock to
employee benefit plans and other...................... 11,046 6,268 1,693
--------- --------- ---------
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES......... (8,603) 131,940 99,897
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH................. (220) 4,347 66
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 229 (3,306) (34,028)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.......... 32,800 36,106 70,134
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR................ $ 33,029 $ 32,800 $ 36,106
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest.............................................. $ 12,826 $ 14,396 $ 6,380
Income taxes.......................................... 14,652 17,741 14,236
Purchases of equipment financed by debt................. -- -- 3,213
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE> 25
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
Basis of presentation. Weatherford Enterra, Inc. is a diversified
international energy service and manufacturing company that provides a variety
of services and equipment to the exploration, production and transmission
sectors of the oil and gas industry. The accompanying consolidated financial
statements include the accounts of Weatherford Enterra, Inc. and its
subsidiaries (the "Company" or "Weatherford Enterra") after elimination of all
significant intercompany accounts and transactions. The Company accounts for its
50% or less-owned affiliates using the equity method.
Accounting estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
balance sheet date and the reported amounts of revenues and expenses during the
reporting period. While actual results could differ from these estimates,
management believes that the estimates are reasonable.
Cash and cash equivalents. The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. The reported value of all financial instruments approximates
market value. Prepayments and other current assets at December 31, 1996 and 1995
included cash of approximately $1,656,000 and $2,367,000, respectively, which
was restricted as a result of exchange controls in certain foreign countries or
cash collateral requirements for performance bonds, letters of credit and
customs bonds.
Inventories. Inventories, net of allowances, are valued at the lower of
cost (first-in, first-out or average) or market and are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Spare parts and components.................................. $ 41,068 $ 34,911
Raw materials............................................... 28,734 44,494
Work in process............................................. 26,902 27,287
Finished goods.............................................. 66,598 58,691
-------- --------
$163,302 $165,383
======== ========
</TABLE>
Work in process and finished goods inventories include the costs of
materials, labor and plant overhead.
Property, plant and equipment. Property, plant and equipment is depreciated
on a straight-line basis over the estimated useful lives of the assets.
Estimated useful lives of assets are as follows:
<TABLE>
<S> <C>
Buildings and improvements.................................. 5 - 45 years
Rental and service equipment................................ 3 - 15 years
Machinery and other equipment............................... 3 - 15 years
</TABLE>
Expenditures for major additions and improvements are capitalized while minor
replacements, maintenance and repairs are charged to expense as incurred. When
property is retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the related accounts, and any resulting gain or
loss is included in the consolidated statements of income.
Goodwill. Goodwill represents the excess of the aggregate price paid by the
Company in acquisitions accounted for as purchases over the fair market value of
the net assets acquired. Goodwill is amortized on a straight-line basis
generally over a period of 40 years. Goodwill amortization expense totaled
$7,044,000, $5,852,000 and $2,970,000 during 1996, 1995 and 1994, respectively.
Accumulated amortization at December 31, 1996 and 1995 was $14,199,000 and
$9,808,000, respectively.
25
<PAGE> 26
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income taxes. The Company applies the liability method of accounting for
income taxes. Accordingly, deferred tax assets and liabilities are determined
based on the estimated future tax effects of differences between the financial
statement and tax bases of assets and liabilities given the provisions of
enacted tax laws.
The Company does not provide federal income taxes on the undistributed
earnings of certain of its foreign subsidiaries because it believes these
amounts are permanently invested outside the United States. The cumulative
amount of such undistributed earnings on which federal taxes have not been
provided was $204,793,000 at December 31, 1996. If these foreign earnings were
to be ultimately remitted, certain foreign withholding taxes would be payable,
and U.S. federal income taxes payable at that time would be reduced by foreign
tax credits generated by the repatriation, net of operating loss carryforwards
and tax credit carryforwards.
Environmental expenditures. Environmental expenditures that relate to
ongoing business activities are expensed or capitalized, in accordance with the
Company's capitalization policy. Expenditures that relate to the remediation of
an existing condition caused by past operations, and which do not contribute to
current or future revenues, are expensed. Liabilities for these expenditures are
recorded when it is probable that obligations have been incurred and the costs
can be reasonably estimated. Estimates are based on currently available facts
and technology, presently enacted laws and regulations and the Company's prior
experience in remediation of contaminated sites. Liabilities included
$10,263,000 and $17,743,000 of accrued environmental expenditures at December
31, 1996 and 1995, respectively.
Foreign currency translation. The functional currency for most of the
Company's international operations is the applicable local currency. The
translation of the foreign currencies into U.S. dollars is performed for balance
sheet accounts using exchange rates in effect at the balance sheet date and for
income statement accounts using a weighted average exchange rate for the period.
The gains or losses resulting from such translation are included as a separate
component of stockholders' equity. Gains or losses resulting from foreign
currency transactions are included in the consolidated statements of income.
Foreign exchange contracts. The Company occasionally enters into foreign
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. The counterparties to the Company's
foreign exchange contracts are creditworthy multinational commercial banks.
Management believes that the risk of counterparty nonperformance is immaterial.
At December 31, 1996 and 1995, the Company had contracts maturing the following
January to sell $50,942,000 and $56,594,000, respectively, in Norwegian kroner,
U.K. pounds sterling and Dutch guilders. Had such respective contracts matured
on December 31, 1996 and 1995, the Company's required cash outlay would have
been immaterial.
Revenue recognition. Revenues are recognized when services and rentals are
provided and when products and equipment are shipped. Proceeds from customers
for the cost of oilfield rental equipment that is damaged or lost downhole are
reflected as revenues.
Income (loss) per common and common equivalent share. Income (loss) 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 periods. Fully diluted income per share is
equal to primary income per share in all periods presented.
Concentration of credit risk. The Company grants credit to its customers,
which are primarily in the oil and gas industry. Credit risk with respect to
trade accounts receivable is generally diversified due to the large number of
entities comprising the Company's customer base and their dispersion across many
different countries. The Company performs periodic credit evaluations of its
customers and generally does not require
26
<PAGE> 27
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
collateral. The Company monitors its exposure for credit losses and maintains an
allowance for anticipated losses (see Note 10).
Impairment of long-lived assets. In 1995, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121
requires that long-lived assets and intangibles to be held and used by an entity
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The statement
establishes the procedures for performing the review of recoverability and, if
necessary, the measurement of impairment. SFAS No. 121 also requires that
long-lived assets and intangibles to be disposed of be reported at the lower of
carrying amount or fair value net of selling costs.
Stock-based compensation. In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation,"
which establishes financial accounting and reporting standards for all
stock-based compensation, including stock-based compensation to employees. Under
this statement, costs for stock-based compensation to employees may be measured
based on fair value at the date of grant as defined by SFAS No. 123, or based on
the intrinsic value method prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB No. 25"), the method
historically applied by the Company. Entities electing to measure compensation
cost under APB No. 25 must make pro forma disclosures of net income and earnings
per share as if the fair value method had been applied. The Company has elected
to continue to measure employee stock-based compensation under APB No. 25 (see
Note 5).
Reclassifications. Certain reclassifications were made to previously
reported amounts in the consolidated financial statements and notes to make them
consistent with the current presentation format.
(2) ACQUISITIONS, MERGERS AND DIVESTITURES --
Results of operations for business combinations accounted for as purchases
are included in the accompanying consolidated financial statements since the
date of acquisition. With respect to business combinations accounted for as
poolings of interests, the consolidated financial statements have been restated
for all periods presented as if the companies had been combined since inception.
Nodeco. On May 23, 1996, the Company acquired the business and assets of
Nodeco AS, a Norwegian company, and its wholly-owned subsidiary, Aarbakke AS
(collectively "Nodeco"), in a transaction accounted for as a purchase. Nodeco
designs, manufactures, sells and rents oil and gas well completion products
primarily consisting of liner hanger equipment and related services, as well as
pump packers. Nodeco's primary markets for these products are the Norwegian and
United Kingdom sectors of the North Sea. The Company paid cash of $14,393,000
net of cash acquired, issued 750,000 shares of its Common Stock and assumed all
liabilities of Nodeco, totaling $12,109,000.
Energy Industries. On December 15, 1995, the Company acquired substantially
all of the assets of the natural gas compression business of Energy Industries,
Inc. and Zapata Energy Industries, L.P. (collectively, "Energy Industries") in a
transaction accounted for as a purchase. Energy Industries was engaged in the
business of fabricating, selling, installing, renting and servicing natural gas
compressor units used in the oil and gas industry. The Company paid
approximately $130,000,000 in cash and assumed certain liabilities totaling
approximately $12,485,000.
27
<PAGE> 28
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following unaudited pro forma summary results of operations assume that
the acquisitions of Nodeco and Energy Industries occurred on January 1 of the
indicated period (in thousands except per share amounts):
<TABLE>
<CAPTION>
1996 1995(1)
---------- --------
<S> <C> <C>
Revenues.................................................... $1,006,037 $948,010
Net income (loss)........................................... $ 70,591 $(12,401)
Income (loss) per common and common equivalent share........ $ 1.35 $ (0.24)
</TABLE>
- ---------------
(1) Includes unusual charges of $88,182,000, or $1.17 per common share (see Note
8).
The unaudited pro forma summary results of operations are not necessarily
indicative of results of operations that would have occurred had the
transactions taken place on January 1, 1996 or 1995, or of future results of
operations of the combined businesses.
Enterra. On October 5, 1995, the Company completed a merger with Enterra
Corporation ("Enterra"), a worldwide provider of specialized services and
products to the oil and gas industry through its oilfield, pipeline and gas
compression services businesses. The Company issued approximately 23,668,000
shares of Common Stock in exchange for all the outstanding shares of Enterra
common stock. The merger was accounted for as a pooling of interests. In
connection with the Enterra merger, the Company recorded acquisition-related
costs totaling $59,900,000 (see Note 8).
H & H. On September 1, 1994, the Company completed a merger with H & H Oil
Tool Co., Inc. ("H & H"), a rental and fishing tool company operating in
California and the Rocky Mountain Region. The Company issued approximately
1,323,000 shares of Common Stock in exchange for all the outstanding shares of
H & H common stock. The merger was accounted for as a pooling of interests. In
connection with the H & H merger, the Company repaid indebtedness of H & H
totaling $1,595,000, which included a $1,370,000 note payable to a shareholder
of H & H. In addition, the Company recorded acquisition-related costs totaling
$2,500,000, primarily representing transaction fees and employee termination and
facility closure costs to consolidate the H & H operations into the Company.
Total Energy. On August 12, 1994, Enterra acquired all of the outstanding
common stock of Total Energy Services Company ("Total Energy") in exchange for
shares of Enterra common stock valued, in the aggregate, at $213,570,000 in a
transaction accounted for as a purchase. Total Energy was primarily engaged in
the businesses of designing, fabricating, selling, installing and renting gas
compressor units and of manufacturing and servicing specialized oilfield
equipment for use in the oil and gas industry. Enterra also acquired the
minority interests in two Total Energy subsidiaries for $23,000,000 in cash,
paid transaction costs and employment-related obligations totaling approximately
$15,000,000 and assumed Total Energy's long-term debt of $75,000,000.
Odfjell Rental. On April 15, 1994, the Company acquired the rental assets
and business of various companies comprising the Rental Division of Odfjell
Drilling and Consulting Company (collectively, "Odfjell Rental") in a
transaction accounted for as a purchase. Odfjell Rental was engaged in the
rental of oilfield tools to the oil and gas industry in Norway, the United
Kingdom, the Netherlands and Southeast Asia. The Company paid $56,200,000 in
cash and assumed certain contractual rights and obligations.
Other acquisitions. During 1996, 1995 and 1994, the Company acquired
several businesses in addition to those mentioned above in transactions
accounted for as purchases. The impact of these acquisitions on reported results
of operations, on a pro forma basis, was not material to the Company's
consolidated results of operations.
Divestitures. During 1995, management of Enterra made strategic decisions
to sell certain oilfield products businesses (see Note 8). Enterra sold
substantially all of the fixed assets and inventory of one of
28
<PAGE> 29
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
these businesses for cash of $9,493,000 in September 1995. The sales of the
remaining businesses were completed during 1996 for aggregate cash proceeds of
$19,168,000 and a note receivable of $1,011,000.
On September 17, 1996, the Company announced that it was exploring the
divestiture of certain non-core businesses, including CRC-Evans Pipeline
International, Inc., Arrow Completion Systems, Inc. ("Arrow"), the American Aero
Cranes division and Total Engineering Services Team, Inc. (see Note 9). The
Company expects that proceeds from such divestitures would be used to repay debt
and for general corporate purposes. Effective December 6, 1996, the Company sold
the business and assets of Arrow for cash of $21,313,000, subject to a working
capital adjustment, and the assumption by the purchaser of substantially all
operating liabilities of Arrow.
(3) DEBT --
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
7 1/4% Notes................................................ $200,000 $ --
Term Loan................................................... 95,950 200,000
Revolving Credit Facility................................... -- 120,000
Foreign bank debt, denominated in foreign currencies........ 11,231 2,071
Other indebtedness.......................................... 8,593 7,195
-------- --------
315,774 329,266
Less -- Amounts due within one year......................... 24,508 36,976
-------- --------
$291,266 $292,290
======== ========
</TABLE>
On May 28, 1996, the Company completed the sale of $200,000,000 of 7 1/4%
Notes Due May 15, 2006 (the "7 1/4% Notes"). Net proceeds of $197,824,000 were
used to repay amounts outstanding under the bank credit facilities discussed
below. Interest on the 7 1/4% Notes is payable semi-annually on May 15 and
November 15 of each year.
The Company has bank credit facilities (the "Facilities") consisting of a
$200,000,000 term loan (the "Term Loan") and a $200,000,000 revolving credit
facility (the "Revolving Credit Facility"). The Term Loan is payable in equal
quarterly installments through September 30, 2001. The Revolving Credit Facility
matures on September 30, 2000. Amounts outstanding under the Facilities 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 December
31, 1996 was 6.0%. A commitment fee ranging 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 Company is
required under the Facilities agreement 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.
29
<PAGE> 30
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Maturities of the Company's long-term debt at December 31, 1996 were as
follows (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 24,508
1998........................................................ 30,704
1999........................................................ 20,930
2000........................................................ 20,764
2001........................................................ 15,757
Thereafter.................................................. 203,111
--------
$315,774
========
</TABLE>
At December 31, 1996, the Company had $200,000,000 available to borrow
under the Revolving Credit Facility and $16,307,000 available for borrowing
under working capital facilities of certain of the Company's domestic and
international subsidiaries. In addition, the Company 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 $18,031,000 of letters of credit
and bid and performance bonds outstanding at December 31, 1996.
(4) INCOME TAXES --
The components of income (loss) before income taxes and minority interests
were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Foreign............................................. $ 52,529 $ 23,853 $35,233
United States....................................... 52,318 (38,807) 23,583
-------- -------- -------
$104,847 $(14,954) $58,816
======== ======== =======
</TABLE>
The income tax provision (benefit) was comprised of the following (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
Current:
Foreign............................................ $18,548 $ 15,219 $13,790
U.S. alternative minimum taxes and state income
taxes........................................... 3,942 946 2,519
------- -------- -------
Total current.............................. 22,490 16,165 16,309
------- -------- -------
Deferred:
Foreign............................................ 478 3,038 847
U.S. Federal....................................... 11,625 (23,819) (198)
------- -------- -------
Total deferred............................. 12,103 (20,781) 649
------- -------- -------
$34,593 $ (4,616) $16,958
======= ======== =======
</TABLE>
30
<PAGE> 31
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The consolidated provision for income taxes differs from the provision
computed at the statutory U.S. federal income tax rate of 35% for the following
reasons (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
Tax provision (benefit) at U.S. statutory rate....... $36,696 $ (5,234) $20,399
Foreign income, taxed at more than U.S. statutory
rate............................................... 715 7,687 2,448
Intercompany dividends............................... -- 557 1,479
Benefit of U.S. NOL carryforwards and other
credits............................................ (9,550) (15,299) (8,869)
Nondeductible goodwill............................... 1,601 1,601 692
Nondeductible expenses related to acquisitions....... -- 3,307 --
U.S. alternative minimum taxes and state income
taxes.............................................. 3,942 946 517
Other................................................ 1,189 1,819 292
------- -------- -------
$34,593 $ (4,616) $16,958
======= ======== =======
</TABLE>
On the accompanying consolidated balance sheets, current deferred tax
assets and liabilities are netted within each tax jurisdiction. The components
of the net deferred tax assets (liabilities) shown on the consolidated balance
sheets are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Current deferred tax assets................................. $ 22,450 $20,850
Valuation allowance, current................................ (2,360) (9,855)
Non-current deferred tax assets............................. 26,806 11,299
Valuation allowance, non-current............................ (7,864) (6,644)
-------- -------
Total deferred tax assets......................... 39,032 15,650
-------- -------
Current deferred tax liabilities............................ (2,867) (117)
Non-current deferred tax liabilities........................ (34,728) (5,627)
-------- -------
Total deferred tax liabilities.................... (37,595) (5,744)
-------- -------
Net deferred tax assets (liabilities)....................... $ 1,437 $ 9,906
======== =======
</TABLE>
The change in the valuation allowance in 1996 and 1995 primarily relates to
utilization of U.S. operating loss ("NOL") and tax credit carryforwards and
management's assessment that future taxable income will be sufficient to enable
the Company to utilize remaining NOL and tax credit carryforwards. The tax
effects of significant temporary differences giving rise to deferred tax assets
(liabilities) are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
NOL and tax credit carryforwards............................ $ 24,990 $ 40,056
Depreciation and amortization............................... (18,939) (39,378)
Financial reserves and accruals not yet deductible.......... 19,426 16,804
Other differences between financial and tax bases of assets
and liabilities........................................... (13,816) 8,923
Valuation allowances........................................ (10,224) (16,499)
-------- --------
$ 1,437 $ 9,906
======== ========
</TABLE>
The Company has U.S. alternative minimum tax credit carryforwards of
approximately $3,756,000 which do not expire and can be used to reduce regular
tax to the extent it exceeds alternative minimum tax liability in future years.
The Company also has U.S. NOL carryforwards available to reduce future U.S.
taxable income of $14,027,000 expiring between 1999 and 2009 and general
business credit carryforwards available to reduce future U.S. federal income
taxes payable of $5,785,000 expiring between 1997 and 2000.
31
<PAGE> 32
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) STOCK-BASED COMPENSATION PLANS --
Stock Option Plans. The Company has a number of stock option plans pursuant
to which officers and other key employees may be granted options to purchase
shares of Common Stock. At December 31, 1996, there were 2,078,478 shares
available for issuance under the plans, at fair market value. Options generally
become exercisable in three annual installments, beginning one year after the
date of grant. Unexercised options expire five or ten years after the date of
grant. The Company has a Non-Employee Director Stock Option Plan (the "Director
Option Plan") pursuant to which each non-employee director receives upon initial
election as a director an option to purchase 2,500 shares and, at each annual
meeting thereafter, an additional option to purchase 500 shares of Common Stock,
in each case at fair market value. At December 31, 1996, there were 48,500
shares available for issuance under the Director Option Plan. Options become
exercisable six months after the date of grant, and unexercised options expire
ten years after the date of grant. Enterra had a similar plan, pursuant to which
directors of Enterra received immediately exercisable options to purchase shares
of Enterra common stock, at fair market value. All outstanding options under the
Enterra director plan were exercised prior to the Enterra merger.
The following table summarizes activity related to stock option plans of
the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES
--------------------------
NON-EMPLOYEE WEIGHTED AVERAGE
EMPLOYEES DIRECTORS EXERCISE PRICE
--------- ------------- ----------------
<S> <C> <C> <C>
Outstanding, December 31, 1993............ 966,943 38,025 $14.75
Granted................................... 156,201 29,575 19.80
Exercised................................. (84,188) (8,450) 9.50
Terminated................................ (60,021) -- 12.56
--------- -------
Outstanding, December 31, 1994............ 978,935 59,150 16.06
Granted................................... 953,985 57,575 20.89
Exercised................................. (220,284) (88,725) 16.02
Terminated................................ (424,404) -- 17.03
--------- -------
Outstanding, December 31, 1995............ 1,288,232 28,000 18.72
Granted................................... 325,650 3,000 31.59
Exercised................................. (238,665) (11,500) 19.09
Terminated................................ (376,977) -- 21.93
--------- -------
Outstanding, December 31, 1996............ 998,240 19,500 $21.79
========= =======
Exercisable, December 31, 1994............ 536,433 59,150 $13.13
Exercisable, December 31, 1995............ 432,494 20,500 15.49
Exercisable, December 31, 1996............ 398,569 19,500 15.92
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------- ----------------------
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
---------------- ----------- --------- -------- ----------- --------
<C> <C> <C> <C> <C> <C>
$ 6.75 to $15.75 217,794 5.0 $12.13 213,783 $12.14
17.50 to 19.75 244,867 7.4 19.04 118,644 19.22
21.30 to 24.70 263,129 3.0 21.56 82,642 22.22
31.56 to 35.50 291,950 9.1 31.59 3,000 --
--------- -------
$ 6.75 to $35.50 1,017,740 6.3 $21.79 418,069 $15.92
========= =======
</TABLE>
32
<PAGE> 33
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The weighted average fair values of options granted during 1996 and 1995
were $14.46 per share and $8.53 per share, respectively. The fair values were
estimated using the Black-Scholes option-pricing model with the following
weighted average assumptions for 1996 and 1995, respectively: expected
volatility of 50% and 52% (38% for options issued by Enterra prior to the
merger), risk free interest rates of 5.13% and 6.85% (7% for options issued by
Enterra prior to the merger), expected lives of 4 years and zero dividend yield.
If the fair value based method of accounting under SFAS No. 123 had been
applied, the Company's pro forma net income (loss) and earnings (loss) per share
would have been $68,412,000 and $1.31 in 1996, and $(11,926,000) and $(0.23) in
1995. As the disclosure requirements of SFAS No. 123 are not applicable to
options granted prior to 1995, the pro forma effects for 1996 and 1995 are not
indicative of the pro forma effects in future years.
In addition to the options in the above table, the Company granted options
to purchase 84,500, 45,337 and 34,200 shares of Common Stock in 1995, 1994 and
1991, respectively, to former directors and former employees of acquired
companies and to a former officer of the Company. These options were granted
pursuant to separate agreements and are not covered by an option plan. Exercises
of such options totaled 16,483, 40,334 and 5,600 shares in 1996, 1995 and 1994,
respectively, and 97,200 of such options were outstanding and exercisable at
December 31, 1996 at a weighted average exercise price of $23.85 per share.
Stock Appreciation Rights Plan. The Company has a Stock Appreciation Rights
Plan (the "SAR Plan") pursuant to which certain officers and other key employees
were granted stock appreciation units ("SAR's"). The SAR Plan was amended in
1992 to provide that no additional grants would be made. SAR's were awarded in
connection with stock options granted under one of the Company's stock option
plans and can be exercised only if the related stock option is exercised.
Compensation expense is recorded based on the increase in the market price of
the Company's Common Stock since the date of grant. At December 31, 1996, there
were 52,542 SAR's outstanding, all of which were vested, at an average price of
$10.45 per SAR. During 1996, 1995 and 1994, the Company recognized compensation
expense of $225,000, $121,000 and $350,000, respectively, in connection with
SAR's.
Stock Bonus Plan. The Company has a stock bonus plan (the "Bonus Plan")
pursuant to which officers and certain other key employees of the Company may be
granted shares of Common Stock. The market value of shares granted under the
Bonus Plan is recorded as compensation expense on the date of grant. With
respect to the Bonus Plan, the Company granted 21,391 and 9,875 shares in 1996
and 1994, respectively, and recognized compensation expense of $675,000 and
$195,000 during 1996 and 1994, respectively. The Company granted no shares under
the Bonus Plan in 1995. There were 3,788 shares available for future grants
under the Bonus Plan at December 31, 1996.
33
<PAGE> 34
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Restricted Stock Plan. The Company has a restricted stock plan for certain
officers of the Company (the "Restricted Plan"), pursuant to which shares of
Common Stock may be granted. Shares granted under the Restricted Plan are
subject to certain restrictions on ownership and transferability when granted.
Restrictions lapse in part based on continued employment and in part based on
Company performance. The compensation related to the restricted stock grants is
deferred and amortized to expense on a straight-line basis over the period of
time the restrictions are in place, and the unamortized portion is classified as
a reduction of paid-in capital in the accompanying consolidated balance sheets.
The following table provides a summary of activity related to the Restricted
Plan:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
---------
<S> <C>
Outstanding, December 31, 1993.............................. 83,138
Granted (market price: $19.75 per share).................... 25,450
Forfeited................................................... (2,438)
Restrictions terminated..................................... (52,318)
----------
Outstanding, December 31, 1994.............................. 53,832
Granted (market price: $18.50 per share).................... 29,500
Restrictions terminated..................................... (47,193)
----------
Outstanding, December 31, 1995.............................. 36,139
Granted (market price: $31.56 per share).................... 31,000
Restrictions terminated..................................... (37,735)
----------
Outstanding, December 31, 1996.............................. 29,404
==========
Shares available for future grants at December 31, 1996..... 129,437
==========
Compensation expense:
1996........................................................ $ 418,000
1995........................................................ 392,000
1994........................................................ 512,000
Deferred compensation at December 31:
1996........................................................ $1,445,000
1995........................................................ 884,000
</TABLE>
Stock Purchase Plan. The Company has an Employee Stock Purchase Plan (the
"ESPP"), pursuant to which eligible employees can purchase shares of Common
Stock through payroll deductions. The Company matches a specified percentage of
the employee contributions made to the ESPP. Company matching contributions to
the ESPP totaled $88,000, $48,000 and $45,000 during 1996, 1995 and 1994,
respectively. There were 63,323 shares available for future purchases under the
ESPP at December 31, 1996.
(6) RETIREMENT AND EMPLOYEE BENEFIT PLANS --
The Company has defined benefit and defined contribution pension plans
covering substantially all U.S. employees and certain international employees.
Plan benefits are generally based on years of service and average compensation
levels. The Company's funding policy is to contribute, at a minimum, the annual
amount required under applicable governmental regulations. With respect to
certain international plans, the Company has purchased irrevocable annuity
contracts to settle certain benefit obligations. Plan assets are invested
primarily in equity and fixed income mutual funds.
34
<PAGE> 35
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pension expense related to the Company's defined contribution pension plans
totaled $3,200,000, $4,489,000 and $3,691,000 in 1996, 1995 and 1994,
respectively. Pension expense related to the Company's defined benefit pension
plans included the following components (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ----- ------
<S> <C> <C> <C>
Service cost -- benefits earned during the period......... $1,248 $ 692 $1,071
Interest cost on projected benefit obligation............. 427 365 310
Actual return on plan assets.............................. (466) (354) (47)
Net amortization and deferral............................. 213 115 (121)
------ ----- ------
$1,422 $ 818 $1,213
====== ===== ======
</TABLE>
The following table sets forth the funded status of the Company's defined
benefit pension plans and the assumptions used in computing such information (in
thousands, except percentages):
<TABLE>
<CAPTION>
U.S. PLANS NON-U.S. PLANS
---------------- --------------------
1996 1995 1996 1995
------ ------ -------- --------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation.................... $1,257 $ 941 $ 2,933 $ 2,591
====== ====== ======== ========
Accumulated benefit obligation............... $1,902 $1,441 $ 3,388 $ 2,939
====== ====== ======== ========
Projected benefit obligation................. $2,026 $2,042 $ 4,192 $ 3,735
Plan assets at fair value.................... 1,383 1,130 2,194 1,729
------ ------ -------- --------
Projected benefit obligation in excess of
plan assets................................ (643) (912) (1,998) (2,006)
Unrecognized prior service cost.............. (637) 10 158 183
Unrecognized net (gain) loss................. 592 481 (775) (732)
Unrecognized transition obligation........... -- -- 125 160
------ ------ -------- --------
Unfunded accrued pension cost................ (688) (421) (2,490) (2,395)
Adjustment for minimum liability............. (9) (21) -- --
------ ------ -------- --------
Pension liability............................ $ (697) $ (442) $ (2,490) $ (2,395)
====== ====== ======== ========
Assumed discount rates....................... 7.25% 7.25% 6.5-8.0% 6.8-8.0%
Assumed rates of increase in compensation
levels..................................... 4.0% 4.0% 3.7-5.0% 4.0-5.0%
Assumed expected long-term rate of return on
plan assets................................ 8.0% 8.0% 8.0% 8.0%
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES --
Aggregate minimum rental commitments under noncancelable operating leases
with lease terms in excess of one year as of December 31, 1996 were as follows
(in thousands):
<TABLE>
<S> <C>
1997........................................................ $10,359
1998........................................................ 8,010
1999........................................................ 6,813
2000........................................................ 5,705
2001........................................................ 5,033
Thereafter.................................................. 31,833
-------
$67,753
=======
</TABLE>
35
<PAGE> 36
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company incurred total rental expense under operating leases of
$21,197,000, $18,499,000 and $15,329,000 in 1996, 1995 and 1994, respectively.
The Company is involved in certain claims and lawsuits arising in the
normal course of business. In the opinion of management, the likelihood that
uninsured losses, if any, resulting from the ultimate resolution of these
matters will have a material adverse effect on the financial position, results
of operations or liquidity of the Company is remote.
(8) ACQUISITION-RELATED COSTS AND OTHER UNUSUAL CHARGES --
During the second quarter of 1995, management of Enterra made certain
strategic decisions which resulted in $28,282,000 of unusual charges. Such
charges included a $10,041,000 writedown to fair value, based on management's
estimation of net sales price, related to three businesses to be sold. The
remaining second quarter unusual charges of $18,241,000 consisted primarily of
asset writedowns related to certain excess facilities, equipment and
inventories, as well as estimated costs in connection with the closure of
certain pipeline businesses and the consolidation of certain oilfield service
administrative and operating facilities. This restructuring resulted in
reductions of approximately 120 employees.
During the fourth quarter of 1995, the Company recorded expenses of
$59,900,000 related to the merger with Enterra and the financial impact of
management decisions related to the future operations of the combined company.
The acquisition-related costs primarily consisted of transaction costs,
severance and termination agreements with former officers and employees,
facility closure costs primarily to consolidate the oilfield service operations
and administrative functions (reducing approximately 600 employees), and the
reduction in recorded value of certain assets that had diminished future value
in the operations of the combined company.
A summary of the 1995 acquisition-related costs and other unusual charges
follows (in thousands):
<TABLE>
<S> <C>
Enterra merger transaction-related costs.................... $18,800
Severance and termination costs............................. 12,488
Facility closure and consolidation costs.................... 20,943
Writedowns of assets to be sold............................. 12,281
Other asset writedowns...................................... 21,972
Other....................................................... 1,698
-------
$88,182
=======
</TABLE>
The Company recorded acquisition-related costs of $2,500,000 in 1994
related to the H & H merger, consisting primarily of transaction costs, employee
terminations and facility closure costs to consolidate the operations of H & H
into the Company.
(9) SEGMENT INFORMATION --
The Company is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the exploration,
production and transmission sectors of the oil and gas industry. The Company
operates in three industry segments -- oilfield services, oilfield products and
gas compression. During 1995 and 1996, management of the Company made strategic
decisions to dispose of certain non-core businesses, which are presented
separately. Industry segment disclosures for 1995 and 1994 have been restated to
conform with this presentation.
Revenues by industry segment and geographic area include both revenues from
unaffiliated customers and intersegment revenues from related companies. The
price at which intercompany sales are made is
36
<PAGE> 37
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
generally based on the selling price to unaffiliated customers less a discount
or the direct product cost plus a mark-up. Indirect expenses have been allocated
to industry segments in proportion to outside revenues.
Export sales from the United States to unaffiliated customers in other
geographic areas were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Europe/Commonwealth of Independent States............. $27,523 $10,904 $16,443
Canada................................................ 11,334 14,729 10,557
Africa................................................ 26,079 17,792 9,605
Middle East........................................... 7,494 3,843 4,209
Asia-Pacific.......................................... 12,364 11,242 17,047
Latin America......................................... 7,247 5,552 4,969
Other................................................. 2,714 1,403 381
------- ------- -------
$94,755 $65,465 $63,211
======= ======= =======
</TABLE>
Information with respect to industry and geographic segments follows (in
thousands):
<TABLE>
<CAPTION>
CORPORATE
OILFIELD OILFIELD GAS OTHER AND
SERVICES PRODUCTS COMPRESSION BUSINESSES ELIMINATIONS CONSOLIDATED
-------- -------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1996:
Outside revenues................... $520,195 $149,713 $154,503 $170,057 $ -- $ 994,468
Intersegment revenues.............. -- 31,020 -- -- (31,020) --
Operating income (loss)............ 93,644 23,388 7,833 8,849 (7,958) 125,756
Identifiable assets................ 646,915 187,002 414,969 97,646 51,191 1,397,723
Depreciation and amortization ..... 70,552 6,264 23,554 4,787 700 105,857
Capital expenditures............... 99,570 10,569 30,392 8,125 -- 148,656
1995:
Outside revenues................... $470,085 $115,399 $ 94,386 $179,037 $ -- $ 858,907
Intersegment revenues.............. -- 20,537 -- 49 (20,586) --
Acquisition-related costs and other
unusual charges.................. 31,715 15,745 -- 11,711 29,011 88,182
Operating income (loss)............ 41,849 (13,253) 7,788 2,010 (38,212) 182
Identifiable assets................ 556,125 120,777 396,465 121,177 64,316 1,258,860
Depreciation and amortization ..... 65,217 5,519 14,421 9,070 1,730 95,957
Capital expenditures............... 83,849 2,731 16,246 7,657 142 110,625
1994:
Outside revenues................... $420,981 $ 86,580 $ 46,145 $123,043 $ -- $ 676,749
Intersegment revenues.............. -- 11,748 -- -- (11,748) --
Acquisition-related costs.......... 2,500 -- -- -- -- 2,500
Operating income (loss)............ 49,484 16,918 4,047 694 (5,439) 65,704
Identifiable assets................ 581,628 127,594 267,988 132,177 44,583 1,153,970
Depreciation and amortization ..... 54,521 3,120 4,969 6,584 1,843 71,037
Capital expenditures............... 94,520 4,132 10,857 4,347 162 114,018
</TABLE>
37
<PAGE> 38
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CORPORATE
UNITED OTHER AND
STATES CANADA EUROPE AFRICA INTERNATIONAL ELIMINATIONS CONSOLIDATED
-------- -------- -------- ------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996:
Outside revenues........... $579,024 $ 78,497 $145,126 $72,457 $119,364 $ -- $ 994,468
Intersegment revenues...... 27,966 566 9,848 5,452 1,860 (45,692) --
Operating income (loss).... 72,042 12,557 19,470 15,028 14,617 (7,958) 125,756
Identifiable assets........ 828,930 69,391 201,137 67,856 179,218 51,191 1,397,723
Capital expenditures....... 85,729 12,105 15,955 9,437 25,430 -- 148,656
1995:
Outside revenues........... $471,672 $106,491 $110,065 $57,450 $113,229 $ -- $ 858,907
Intersegment revenues...... 10,091 167 6,049 -- 1,638 (17,945) --
Acquisition-related costs
and other unusual
charges.................. 43,276 2,850 4,302 624 8,119 29,011 88,182
Operating income (loss).... 5,745 11,382 3,088 13,912 4,267 (38,212) 182
Identifiable assets........ 790,625 73,368 141,673 40,299 148,579 64,316 1,258,860
Capital expenditures....... 59,474 9,953 9,605 5,655 25,796 142 110,625
1994:
Outside revenues........... $383,076 $ 75,809 $ 84,830 $41,574 $ 91,460 $ -- $ 676,749
Intersegment revenues...... 17,499 287 5,104 -- 1,372 (24,262) --
Acquisition-related
costs.................... 2,500 -- -- -- -- -- 2,500
Operating income (loss).... 28,924 15,502 3,023 11,204 12,490 (5,439) 65,704
Identifiable assets........ 706,175 89,462 125,365 38,708 149,677 44,583 1,153,970
Capital expenditures....... 68,903 8,989 12,309 1,581 22,099 137 114,018
</TABLE>
(10) VALUATION ALLOWANCES --
Activity in the Company's allowance for doubtful accounts, deducted from
receivables in the consolidated balance sheets, was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year.......................... $15,942 $11,240 $11,747
Additions charged to costs and expenses............... 4,122 6,499 2,702
Deductions for uncollectible receivables written
off................................................. (4,842) (1,878) (3,437)
Translation and other, net............................ 1,019 81 228
------- ------- -------
$16,241 $15,942 $11,240
======= ======= =======
</TABLE>
Activity in the Company's allowance for obsolete or slow moving
inventories, deducted from inventories in the consolidated balance sheets, was
as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year.......................... $23,760 $16,470 $14,634
Additions charged to costs and expenses............... 897 10,683 2,754
Deductions for inventories written off................ (3,632) (3,520) (1,175)
Translation and other, net............................ 236 127 257
------- ------- -------
$21,261 $23,760 $16,470
======= ======= =======
</TABLE>
38
<PAGE> 39
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) UNAUDITED QUARTERLY FINANCIAL DATA (IN THOUSANDS EXCEPT PER SHARE
AMOUNTS) --
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER(1) QUARTER QUARTER(2) YEAR(3)
-------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
1996:
Revenues.................................. $218,841 $233,782 $259,070 $282,775 $994,468
Gross profit.............................. 60,319 62,727 76,545 80,531 280,122
Operating income.......................... 23,784 26,936 35,864 39,172 125,756
Income before income taxes and minority
interests.............................. 19,281 21,892 30,153 33,521 104,847
Net income................................ 13,477 14,898 19,828 21,870 70,073
Net income per share...................... $ 0.26 $ 0.29 $ 0.38 $ 0.42 $ 1.35
1995:
Revenues.................................. $219,289 $211,079 $220,375 $208,164 $858,907
Gross profit.............................. 61,898 55,239 62,456 53,968 233,561
Acquisition-related costs and other
unusual charges........................ -- 28,282 -- 59,900 88,182
Operating income (loss)................... 24,324 (9,163) 25,227 (40,206) 182
Income (loss) before income taxes and
minority interests..................... 20,580 (12,902) 21,352 (43,984) (14,954)
Net income (loss)......................... 14,439 (3,145) 13,148 (35,000) (10,558)
Net income (loss) per share............... $ 0.29 $ (0.06) $ 0.26 $ (0.68) $ (0.21)
</TABLE>
- ---------------
(1) Includes unusual charges in 1995 of $28,282,000, or $0.24 per common share
(see Note 8).
(2) Includes acquisition-related costs in 1995 of $59,900,000, or $0.93 per
common share (see Note 8).
(3) Includes acquisition-related costs and other unusual charges in 1995 of
$88,182,000, or $1.17 per common share (see Note 8). Due to changes in the
weighted average common shares outstanding, the sum of the quarterly per
share amounts for 1995 does not equal net loss per share for the year.
39
<PAGE> 40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE MATTERS.
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
For certain information concerning directors of the Company, reference is
made to the information included under the caption "Election of Directors"
included in the definitive Proxy Statement, which relates to the Annual Meeting
of Stockholders of the Company to be held on May 15, 1997 (the "Proxy
Statement"), which information is incorporated herein by such reference. For
certain information concerning executive officers of the Company, see the
caption "Executive Officers" in Item 1 elsewhere in this Report.
ITEM 11. EXECUTIVE COMPENSATION.
For information concerning this Item, reference is made to the caption
"Executive Compensation" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
For information concerning this Item, reference is made to the caption
"Security Ownership of Certain Beneficial Owners and Management" in the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For information concerning this Item, reference is made to the caption
"Executive Compensation" in the Proxy Statement.
P A R T I V
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)1. Consolidated Financial Statements of Weatherford Enterra, Inc. and
Subsidiaries:
Report of Arthur Andersen LLP, Independent Public Accountants, dated
February 12, 1997.
Consolidated Balance Sheets -- December 31, 1996 and 1995.
Consolidated Statements of Income for Each of the Three Years in the
Period Ended December 31, 1996.
Consolidated Statements of Stockholders' Equity for Each of the Three
Years in the Period Ended December 31, 1996.
Consolidated Statements of Cash Flows for Each of the Three Years in the
Period Ended December 31, 1996.
Notes to Consolidated Financial Statements.
2. Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of June 23, 1995,
as amended by Amendment No. 1 to Agreement and Plan of
Merger dated as of August 28, 1995, between Weatherford
International Incorporated and Enterra Corporation
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-4
(Registration No. 33-62195)).
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.2 -- Amendment No. 2 to Agreement and Plan of Merger dated as
of October 5, 1995, between Weatherford International
Incorporated and Enterra Corporation (incorporated by
reference to Exhibit 2.2 to the Company's Current Report
on Form 8-K dated October 5, 1995 (File No. 1-7867)).
2.3 -- Agreement dated as of September 20, 1995, among Zapata
Corporation, Energy Industries, Inc., Zapata Energy
Industries, L.P., Enterra Corporation and Enterra
Compression Company (incorporated by reference to Exhibit
2 to Enterra Corporation's Current Report on Form 8-K
dated October 2, 1995 (File No. 1-8153)).
3.1 -- Corrected Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 1-7867)).
3.2 -- Amended and Restated Bylaws of the Company.
4.1 -- Credit Agreement dated as of October 5, 1995 among
Weatherford Enterra, Inc., Weatherford Enterra U.S.,
Inc., Weatherford/Lamb, Inc., Bank of America Illinois,
as Documentation Agent, Texas Commerce Bank National
Association, as Administrative Agent, Credit Lyonnais New
York Branch, ABN Amro Bank, N.V., Bank of Montreal, First
Interstate Bank of Texas, N.A., Arab Banking Corporation
(B.S.C.) and the financial institutions listed on the
signature pages thereto (incorporated by reference to
Exhibit 4.1 to the Company's Form 10-Q Quarterly Report
for the quarter ended September 30, 1995 (File No.
1-7867)).
4.2 -- First Amendment to Credit Agreement dated as of December
29, 1995 among Weatherford Enterra, Inc., Weatherford
Enterra U.S., Inc., Weatherford/Lamb, Inc., Weatherford
Enterra U.S., Limited Partnership, Bank of America
Illinois, as Documentation Agent, Texas Commerce Bank
National Association, as Administrative Agent, Credit
Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of
Montreal, First Interstate Bank of Texas, N.A., Arab
Banking Corporation (B.S.C.) and the financial
institutions listed on the signature pages thereto
(incorporated by reference to Exhibit 4.2 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 1-7867)).
4.3 -- Agreement dated as of June 23, 1995, as amended as of
August 28, 1995 (the "Stockholders Agreement"), among
Weatherford International Incorporated and American Gas &
Oil Investors, Limited Partnership, AmGO II, Limited
Partnership, AmGO III, Limited Partnership, First Reserve
Secured Energy Assets Fund, Limited Partnership, First
Reserve Fund V, Limited Partnership, First Reserve Fund
V-2, Limited Partnership, and First Reserve Fund VI,
Limited Partnership (collectively, the "First Reserve
Funds"), and First Reserve Corporation (incorporated by
reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-4 (Registration No. 33-62195)).
4.4 -- Letters dated January 29, 1997, adding William E.
Macaulay and John A. Hill, respectively, as parties to
the Stockholders Agreement.
4.5 -- Indenture dated May 17, 1996, between the Company and
Bank of Montreal Trust Company, as Trustee (incorporated
by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated May 28, 1996 (File No. 1-7867)).
4.6 -- Form of the Company's 7 1/4% Notes Due May 15, 2006
(incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K dated May 28, 1996
(File No. 1-7867)).
4.7 -- Form of the Company's Common Stock certificate.
</TABLE>
41
<PAGE> 42
<TABLE>
<C> <S>
10.1* -- Amended and Restated Change of Control Agreements with James R. Burke, M.E. Eagles, Jon
Nicholson, Norman W. Nolen and H. Suzanne Thomas.
10.2* -- Indemnification Agreements with Thomas N. Amonett, William E. Greehey, Robert K. Moses,
Jr. and H. Suzanne Thomas (incorporated by reference to Exhibit 10.10 to the Company's
Form 10-K Annual Report for the year ended December 31, 1987 (File No. 1-7867)); Philip
Burguieres and Norman W. Nolen (incorporated by reference to Exhibit 10.4 to the
Company's Form 10-Q Quarterly Report for the quarter ended June 30, 1991 (File No.
1-7867)); James R. Burke and John W. Johnson (incorporated by reference to Exhibit 10.9
to the Company's Form 10-K Annual Report for the year ended December 31, 1991 (File No.
1-7867)); M.E. Eagles (incorporated by reference to Exhibit 10.8 to the Company's Form
10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)); John A.
Hill, William E. Macaulay, R. Rudolph Reinfrank and Roger M. Widmann (incorporated by
reference to Exhibit 10.2 to the Company's Form 10-Q Quarterly Report for the quarter
ended September 30, 1995 (File No. 1-7867)); and Thomas J. Edelman and Jon Nicholson.
10.3* -- 1987 Stock Option Plan, as amended and restated.
10.4* -- 1991 Stock Option Plan, as amended and restated.
10.5* -- Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.5 to the
Company's Form 10-K Annual Report for the year ended December 31, 1990 (File No.
1-7867)) and First Amendment to Stock Appreciation Rights Plan (incorporated by
reference to Exhibit 10.3 to the Company's Form 10-K Annual Report for the year ended
December 31, 1994 (File No. 1-7867)).
10.6* -- Restricted Stock Incentive Plan, as amended and restated.
10.7* -- Executive Incentive Stock Bonus Plan, as amended.
10.8* -- Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.10 to
the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No.
1-7867)); and First Amendment, Second Amendment and Third Amendment to Supplemental
Executive Retirement Plan.
10.9* -- Supplemental Savings Plan (incorporated by reference to Exhibit 10.11 to the Company's
Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)); and
First Amendment and Second Amendment to Supplemental Savings Plan.
10.10* -- Non-Employee Director Retirement Plan (incorporated by reference to Exhibit 10.12 to
the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No.
1-7867)).
10.11* -- Defer Compensation Plan for Non-Employee Directors (incorporated by reference to
Exhibit 10.12 to the Company's Form 10-K Annual Report for the year ended December 31,
1994 (File No. 1-7867)).
10.12* -- Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.13 to
the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No.
1-7867)).
10.13* -- Consulting Agreement dated October 5, 1995 between Weatherford Enterra, Inc. and D.
Dale Wood (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q
Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)).
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.14* -- Employment Agreement dated as of October 17, 1996 between
Weatherford Enterra, Inc. and Philip Burguieres.
10.15* -- Consulting Agreement dated as of July 26, 1996 between
Thomas N. Amonett and Weatherford Enterra, Inc.; and
First Amendment to Consulting Agreement dated as of
January 1, 1997.
21 -- Subsidiaries of the Company
23 -- Consent of Independent Public Accountants
27 -- Article 5 Financial Data Schedule
</TABLE>
- ---------------
* Management contract or compensatory plan or arrangement
The Company will furnish to the Commission upon request a copy of each
other instrument with respect to the long-term debt of the Company and its
subsidiaries that defines the rights of holders of such debt or includes
provisions that provide for cross default under such instruments.
The Company will furnish a copy of any exhibit described above to the
beneficial holder of its securities upon receipt of a written request therefor,
provided that such request sets forth a good faith representation that as of
March 31, 1997, the record date for the Company's 1997 Annual Meeting of
Stockholders, such beneficial holder is entitled to vote at such meeting, and
provided further that such holder pays to the Company a fee compensating the
Company for its reasonable expenses in furnishing such exhibits.
(b) Reports on Form 8-K:
None
43
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 25, 1997.
WEATHERFORD ENTERRA, INC.
By: /s/ THOMAS N. AMONETT
----------------------------------
Thomas N. Amonett
Acting President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS N. AMONETT Acting President and Chief March 25, 1997
- ----------------------------------------------------- Executive Officer (Principal
(Thomas N. Amonett) Executive Officer)
/s/ NORMAN W. NOLEN Senior Vice President, Chief March 25, 1997
- ----------------------------------------------------- Financial Officer and
(Norman W. Nolen) Treasurer (Principal
Financial and Accounting
Officer)
/s/ PHILIP BURGUIERES Chairman of the Board and March 25, 1997
- ----------------------------------------------------- Director
(Philip Burguieres)
/s/ THOMAS J. EDELMAN Director March 25, 1997
- -----------------------------------------------------
(Thomas J. Edelman)
/s/ WILLIAM E. GREEHEY Director March 25, 1997
- -----------------------------------------------------
(William E. Greehey)
/s/ JOHN A. HILL Director March 25, 1997
- -----------------------------------------------------
(John A. Hill)
/s/ JOHN W. JOHNSON Director March 25, 1997
- -----------------------------------------------------
(John W. Johnson)
/s/ WILLIAM E. MACAULAY Director March 25, 1997
- -----------------------------------------------------
(William E. Macaulay)
/s/ ROBERT K. MOSES, JR. Director March 25, 1997
- -----------------------------------------------------
(Robert K. Moses, Jr.)
/s/ R. RUDOLPH REINFRANK Director March 25, 1997
- -----------------------------------------------------
(R. Rudolph Reinfrank)
/s/ ROGER M. WIDMANN Director March 25, 1997
- -----------------------------------------------------
(Roger M. Widmann)
</TABLE>
44
<PAGE> 45
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of June 23, 1995,
as amended by Amendment No. 1 to Agreement and Plan of
Merger dated as of August 28, 1995, between Weatherford
International Incorporated and Enterra Corporation
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-4
(Registration No. 33-62195)).
2.2 -- Amendment No. 2 to Agreement and Plan of Merger dated as
of October 5, 1995, between Weatherford International
Incorporated and Enterra Corporation (incorporated by
reference to Exhibit 2.2 to the Company's Current Report
on Form 8-K dated October 5, 1995 (File No. 1-7867)).
2.3 -- Agreement dated as of September 20, 1995, among Zapata
Corporation, Energy Industries, Inc., Zapata Energy
Industries, L.P., Enterra Corporation and Enterra
Compression Company (incorporated by reference to Exhibit
2 to Enterra Corporation's Current Report on Form 8-K
dated October 2, 1995 (File No. 1-8153)).
3.1 -- Corrected Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 1-7867)).
3.2 -- Amended and Restated Bylaws of the Company.
4.1 -- Credit Agreement dated as of October 5, 1995 among
Weatherford Enterra, Inc., Weatherford Enterra U.S.,
Inc., Weatherford/Lamb, Inc., Bank of America Illinois,
as Documentation Agent, Texas Commerce Bank National
Association, as Administrative Agent, Credit Lyonnais New
York Branch, ABN Amro Bank, N.V., Bank of Montreal, First
Interstate Bank of Texas, N.A., Arab Banking Corporation
(B.S.C.) and the financial institutions listed on the
signature pages thereto (incorporated by reference to
Exhibit 4.1 to the Company's Form 10-Q Quarterly Report
for the quarter ended September 30, 1995 (File No.
1-7867)).
4.2 -- First Amendment to Credit Agreement dated as of December
29, 1995 among Weatherford Enterra, Inc., Weatherford
Enterra U.S., Inc., Weatherford/Lamb, Inc., Weatherford
Enterra U.S., Limited Partnership, Bank of America
Illinois, as Documentation Agent, Texas Commerce Bank
National Association, as Administrative Agent, Credit
Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of
Montreal, First Interstate Bank of Texas, N.A., Arab
Banking Corporation (B.S.C.) and the financial
institutions listed on the signature pages thereto
(incorporated by reference to Exhibit 4.2 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 1-7867)).
4.3 -- Agreement dated as of June 23, 1995, as amended as of
August 28, 1995 (the "Stockholders Agreement"), among
Weatherford International Incorporated and American Gas &
Oil Investors, Limited Partnership, AmGO II, Limited
Partnership, AmGO III, Limited Partnership, First Reserve
Secured Energy Assets Fund, Limited Partnership, First
Reserve Fund V, Limited Partnership, First Reserve Fund
V-2, Limited Partnership, and First Reserve Fund VI,
Limited Partnership (collectively, the "First Reserve
Funds"), and First Reserve Corporation (incorporated by
reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-4 (Registration No. 33-62195)).
4.4 -- Letters dated January 29, 1997, adding William E.
Macaulay and John A. Hill, respectively, as parties to
the Stockholders Agreement.
</TABLE>
<PAGE> 46
<TABLE>
<C> <S>
4.5 -- Indenture dated May 17, 1996, between the Company and Bank of Montreal Trust Company,
as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated May 28, 1996 (File No. 1-7867)).
4.6 -- Form of the Company's 7 1/4% Notes Due May 15, 2006 (incorporated by reference to
Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 28, 1996 (File No.
1-7867)).
4.7 -- Form of the Company's Common Stock certificate.
10.1* -- Amended and Restated Change of Control Agreements with James R. Burke, M.E. Eagles, Jon
Nicholson, Norman W. Nolen and H. Suzanne Thomas.
10.2* -- Indemnification Agreements with Thomas N. Amonett, William E. Greehey, Robert K. Moses,
Jr. and H. Suzanne Thomas (incorporated by reference to Exhibit 10.10 to the Company's
Form 10-K Annual Report for the year ended December 31, 1987 (File No. 1-7867)); Philip
Burguieres and Norman W. Nolen (incorporated by reference to Exhibit 10.4 to the
Company's Form 10-Q Quarterly Report for the quarter ended June 30, 1991 (File No.
1-7867)); James R. Burke and John W. Johnson (incorporated by reference to Exhibit 10.9
to the Company's Form 10-K Annual Report for the year ended December 31, 1991 (File No.
1-7867)); M.E. Eagles (incorporated by reference to Exhibit 10.8 to the Company's Form
10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)); John A.
Hill, William E. Macaulay, R. Rudolph Reinfrank and Roger M. Widmann (incorporated by
reference to Exhibit 10.2 to the Company's Form 10-Q Quarterly Report for the quarter
ended September 30, 1995 (File No. 1-7867)); and Thomas J. Edelman and Jon Nicholson.
10.3* -- 1987 Stock Option Plan, as amended and restated.
10.4* -- 1991 Stock Option Plan, as amended and restated.
10.5* -- Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.5 to the
Company's Form 10-K Annual Report for the year ended December 31, 1990 (File No.
1-7867)) and First Amendment to Stock Appreciation Rights Plan (incorporated by
reference to Exhibit 10.3 to the Company's Form 10-K Annual Report for the year ended
December 31, 1994 (File No. 1-7867)).
10.6* -- Restricted Stock Incentive Plan, as amended and restated.
10.7* -- Executive Incentive Stock Bonus Plan, as amended.
10.8* -- Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.10 to
the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No.
1-7867)); and First Amendment, Second Amendment and Third Amendment to Supplemental
Executive Retirement Plan.
10.9* -- Supplemental Savings Plan (incorporated by reference to Exhibit 10.11 to the Company's
Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)); and
First Amendment and Second Amendment to Supplemental Savings Plan.
10.10* -- Non-Employee Director Retirement Plan (incorporated by reference to Exhibit 10.12 to
the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No.
1-7867)).
10.11* -- Defer Compensation Plan for Non-Employee Directors (incorporated by reference to
Exhibit 10.12 to the Company's Form 10-K Annual Report for the year ended December 31,
1994 (File No. 1-7867)).
</TABLE>
<PAGE> 47
<TABLE>
<C> <S>
10.12* -- Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.13 to
the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No.
1-7867)).
10.13* -- Consulting Agreement dated October 5, 1995 between Weatherford Enterra, Inc. and D.
Dale Wood (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q
Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)).
10.14* -- Employment Agreement dated as of October 17, 1996 between Weatherford Enterra, Inc. and
Philip Burguieres.
10.15* -- Consulting Agreement dated as of July 26, 1996 between Thomas N. Amonett and
Weatherford Enterra, Inc.; and First Amendment to Consulting Agreement dated as of
January 1, 1997.
21 -- Subsidiaries of the Company
23 -- Consent of Independent Public Accountants
27 -- Article 5 Financial Data Schedule
</TABLE>
- ---------------
* Management contract or compensatory plan or arrangement
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
WEATHERFORD ENTERRA, INC.
(as amended through December 12, 1996)
ARTICLE I
OFFICES
SECTION 1.1. Registered Office. The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington, County
of New Castle, and the name of its registered agent shall be CSC
Networks/Prentice Hall Legal & Financial Services.
SECTION 1.2. Other Offices. The corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. Place of Meeting. All meetings of stockholders for
the election of directors shall be held at such place, either within or without
the State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
SECTION 2.2. Annual Meeting. The annual meeting of stockholders
shall be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting.
SECTION 2.3. Voting List. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.
SECTION 2.4. Special Meeting. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation of the corporation, may be
called only by the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors. The Board of Directors shall fix
the time and any place, either within or without the State of Delaware, as the
place for holding such meeting.
- 1 -
<PAGE> 2
SECTION 2.5. Notice of Meeting. Written notice of the annual and
each special meeting of stockholders, stating the time, place and purpose or
purposes thereof, shall be given to each stockholder entitled to vote thereat
not less than (i) 10 nor more than 50 days before any annual meeting; and (ii)
30 nor more than 60 days before any special meeting.
SECTION 2.6. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at any meeting of stockholders
for the transaction of business except as otherwise provided by statute or by
the Certificate of Incorporation of the corporation. Notwithstanding the other
provisions of the Certificate of Incorporation of the corporation or these by-
laws, the holders of a majority of the shares of capital stock entitled to vote
thereat, present in person or represented by proxy, whether or not a quorum is
present, shall have power to adjourn the meeting from time to time, without
notice or other announcement at the meeting, until a quorum shall be present or
represented. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.7. Voting. When a quorum is present at any meeting of
the stockholders, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which, by
express provision of statute, the Certificate of Incorporation of the
corporation or these by-laws, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Every stockholder having the right to vote shall be entitled to vote (i) in
person or (ii) by proxy appointed by an instrument in writing subscribed by
such stockholder, bearing a date not more than three years prior to voting,
unless such instrument provides for a longer period, and filed with the
Secretary of the corporation before, or at the time of, the meeting. If such
instrument shall designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at
any meeting at which their powers thereunder are to be exercised shall have and
may exercise all of the powers of voting or giving consents thereby conferred,
or if only one be present, then such powers may be exercised by that one; or,
if an even number attend and a majority do not agree on any particular issue,
each proxy so attending shall be entitled to exercise such powers in respect of
the same portion of the shares as such proxy is of the proxies representing
such shares.
SECTION 2.8. No Consent of Stockholders. Any action required or
permitted to be taken by the stockholders of the corporation must be effected
at a duly called annual or special meeting of stockholders of the corporation
and may not be effected by any consent in writing by such stockholders.
SECTION 2.9. Voting of Stock of Certain Holders. Shares standing
in the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation
may determine. Shares standing in the name of a deceased person may be voted
by the executor or administrator of such deceased person, either in person or
by
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proxy. Shares standing in the name of a guardian, conservator or trustee may
be voted by such fiduciary, either in person or by proxy, but no such fiduciary
shall be entitled to vote shares held in such fiduciary capacity without a
transfer of such shares into the name of such fiduciary. Shares standing in
the name of a receiver may be voted by such receiver. A stockholder whose
shares are pledged shall be entitled to vote such shares, unless in the
transfer by the pledgor on the books of the corporation, such stockholder has
expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or such pledgee's proxy, may vote thereon.
SECTION 2.10. Treasury Stock. The corporation shall not vote,
directly or indirectly, shares of its own stock owned by it; and such shares
shall not be counted in determining the total number of outstanding shares.
SECTION 2.11. Fixing Record Date. The Board of Directors may fix
in advance a date, not exceeding 60 days preceding the date of any meeting of
stockholders, or the date for payment of any dividend or distribution, or the
date for the allotment of rights, or the date when any change, conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining a consent, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend or distribution,
or to receive any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, as the case may be, and in such case stockholders and only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, any such meeting and any
adjournment thereof, or to receive payment of such dividend or distribution, or
to receive such allotment of rights, or to exercise such rights in respect of
any change, conversion or exchange of capital stock, or to give such consent,
as the case may be, notwithstanding any transfer of any stock on the books of
the corporation after any such record date fixed as aforesaid.
SECTION 2.12. Notice of Business.
(a) No business shall be conducted at an annual meeting of
stockholders unless such business is properly brought before the meeting in
accordance with the procedures hereinafter set forth in this Section 2.12;
provided, however, nothing in this Section 2.12 shall be deemed to preclude
discussion by any stockholder of any business properly brought before the
annual meeting in accordance with said procedures.
(b) To be properly brought before the meeting, business must be
(i) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors or (iii)
otherwise properly brought before the meeting by a stockholder who (A) is a
stockholder of record on the date of the giving of the notice provided for
below and on the record date for the determination of stockholders entitled to
vote at such annual meeting and (B) gives timely notice of such business in
writing to the Secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 90 days nor more than 120 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for date that is not within 30 days before or after such anniversary
date, notice by the
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stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or public disclosure of the annual meeting date was
made, whichever occurs first. A stockholder's notice to the Secretary of the
corporation shall set forth (i) a brief description of the each matter desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of
the corporation that are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) a representation
that such stockholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting.
(c) Any adjournment or postponement of the original meeting
whereby the meeting will reconvene within 30 days from the original date shall
be deemed for purposes of notice to be a continuation of the original meeting
and no business may be brought before any such reconvened meeting unless timely
notice of such business was given to the Secretary of the corporation for the
meeting as originally scheduled.
(d) If the Chairman of an annual meeting of stockholders
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
(e) For purpose of this Section 2.12, the term "public disclosure"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as
amended.
(f) Notwithstanding anything contained in this Section 2.12 to the
contrary, a stockholder shall also comply with all applicable requirements of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder with respect to the matters set forth in this Section
2.12. Nothing in this Section 2.12 shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the corporation's proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended.
SECTION 2.13. Amendment. Notwithstanding anything contained in
these by-laws to the contrary, the affirmative vote of the holders of at least
80% of the voting power of all of the shares of the corporation entitled to
vote for the election of directors shall be required to amend or repeal or to
adopt any provision inconsistent with Sections 2.4, 2.5(ii), 2.8, or 2.12 or
this Section 2.13 of this Article II.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. Powers. The business and affairs of the corporation
shall be managed by its Board of Directors, which may exercise all such powers
of the corporation and do all such lawful
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acts and things as are not by statute or by the Certificate of Incorporation of
the corporation or by these by-laws expressly directed or required to be
exercised or done by the stockholders.
SECTION 3.2. Number, Election and Terms. The number of directors
which shall constitute the whole Board shall not be less than six nor more than
fifteen. Such number of directors shall from time to time be fixed and
determined by the Board of Directors pursuant to a resolution adopted by a
majority of the entire Board of Directors and shall be set forth in the notice
of any meeting of stockholders held for the purpose of electing directors. The
directors shall be elected at the annual meeting of stockholders, except as
provided in Section 3.3. The directors shall be divided into three classes, as
nearly equal in number as possible. At each annual meeting of stockholders,
directors elected to succeed those directors whose terms expire shall be
elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election. Directors need not be residents of the
State of Delaware or stockholders of the corporation.
SECTION 3.3. Vacancies, Additional Directors and Removal from
Office. Subject to the provisions of the Certificate of Incorporation of the
corporation, if any vacancy occurs in the Board of Directors caused by death,
resignation, retirement, disqualification or removal from office of any
director, or otherwise, or if any new directorship is created by an increase in
the authorized number of directors, a majority of the directors then in office,
though less than a quorum, or a sole remaining director, may choose a successor
or fill the newly-created directorship. Any directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of the class to which they have been elected expires. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director. Any director or the entire Board of Directors, may
be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 80% of the voting power of all of
the shares of the corporation entitled to vote for the election of directors.
SECTION 3.4. Regular Meeting. A regular meeting of the Board of
Directors shall be held each year, without notice other than this by-law, at
the place of, and immediately following, the annual meeting of stockholders;
and other regular meetings of the Board of Directors may be held during a year,
at such time and place as the Board of Directors may provide, by resolution,
either within or without the State of Delaware, without notice other than such
resolution.
SECTION 3.5. Special Meeting. A special meeting of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
The Chairman or President so calling, or the directors so requesting, any such
meeting shall fix the time and any place, either within or without the State of
Delaware, as the place for holding such meeting.
SECTION 3.6. Notice of Special Meeting. Written notice of special
meetings of the Board of Directors shall be given to each director at least 48
hours prior to the time of such meeting. Any director may waive notice of any
meeting. The attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such
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meeting, except that notice shall be given of any proposed amendment to the
by-laws if it is to be adopted at any special meeting or with respect to any
other matter where notice is required by statute.
SECTION 3.7. Quorum. Except as may be otherwise specifically
provided by statute, by the Certificate of Incorporation of the corporation or
by these by-laws, which express provisions shall be controlling, a majority of
the Board of Directors shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.8. Action Without Meeting. Unless otherwise specified
by the Certificate of Incorporation of the corporation or these by-laws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof as provided in Article IV of these
by-laws, may be taken without a meeting, if a written consent thereto is signed
by all members of the Board of Directors or of such committee, as the case may
be, and such written consent is filed with the minutes of proceedings of the
Board of Directors or of such committee.
SECTION 3.9. Compensation. Directors, as such, shall not be
entitled to any stated salary for their services unless such a salary is
approved by the stockholders or the Board of Directors; but, by resolution of
the Board of Directors, a fixed sum and expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the Board of
Directors or any meeting of a committee of directors. No provision of these
by-laws shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 3.10. Nomination of Directors.
(a) Only persons who are nominated in accordance with the
procedures set forth in this Section 3.10 shall be eligible for election as
directors of the corporation.
(b) Nominations of persons for election to the Board of Directors
of the corporation may be made at a meeting of stockholders only (i) by or at
the direction of the Board of Directors or (ii) by a stockholder who (A) is a
stockholder of record on the date of the giving of the notice provided for
below and on the record date for the determination of stockholders entitled to
vote at such annual meeting and (B) gives timely notice in writing to the
Secretary of the corporation of such nomination. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 90 days nor more than 120 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for date that is not within 30 days before or after such anniversary
date, notice by the stockholder to be timely must be so received not later than
the close of business on the tenth day following the day on which such notice
of the date of the meeting was mailed or public disclosure of the annual
meeting date was made, whichever occurs first. A stockholder's notice to the
Secretary of the corporation shall set forth (i) as to each person
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whom the stockholder proposes to nominate for election or re-election as
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended, or any successor regulation
thereto, (ii) the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of the corporation that are
beneficially owned by the stockholder, (iv) a description of all arrangements
or understandings between such stockholder and each proposed nominee and any
other person or persons (including their names) pursuant to which the
nomination or nominations are to be made by such stockholder and (v) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in the notice. Such notice must be
accompanied by a written consent of each proposed nominee to being named as a
nominee and to serve as a director if elected.
(c) Any adjournment or postponement of the original meeting
whereby the meeting will reconvene within 30 days from the original date shall
be deemed for purposes of notice to be a continuation of the original meeting
and no nominations by a stockholder of persons to be elected as directors of
the corporation may be made at any such reconvened meeting unless timely notice
of such nominations was given to the Secretary of the corporation for the
meeting as originally scheduled.
(d) If the Chairman of a meeting of stockholders determines that a
nomination was not properly brought before the annual meeting in accordance
with the foregoing procedures, the Chairman shall declare to the meeting that
the nomination was not properly brought before the meeting and such nomination
shall be disregarded.
(e) For purpose of this Section 3.10, the term "public disclosure"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as
amended.
(f) Notwithstanding anything contained in this Section 3.10 to the
contrary, a stockholder shall also comply with all applicable requirements of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder with respect to the matters set forth in this Section
3.10. Nothing in this Section 3.10 shall be deemed to affect any rights of the
holders of any series of preferred stock of the corporation to elect directors
under specified circumstances.
SECTION 3.11. Amendment. Notwithstanding anything contained in
these by-laws to the contrary, the affirmative vote of the holders of at least
80% of the voting power of all of the shares of the corporation entitled to
vote for the election of director shall be required to amend or repeal, or to
adopt any provision inconsistent with, Section 3.2, Section 3.3 (other than the
first sentence of Section 3.3), the first sentence of Section 3.6, Section 3.10
or this Section 3.11 of this Article III.
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ARTICLE IV
COMMITTEE OF DIRECTORS
SECTION 4.1. Designation, Powers and Name. The Board of Directors
may, by resolution passed by a majority of the whole Board of Directors,
designate one or more committees, including, if they shall so determine, an
Executive Committee, each such committee to consist of two or more of the
directors of the corporation. The committee shall have and may exercise such
of the powers of the Board of Directors in the management of the business and
affairs of the corporation as may be provided in such resolution. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such director or directors
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Such committee or committees shall have such name or names and such
limitations of authority as may be determined from time to time by resolution
adopted by the Board of Directors.
SECTION 4.2. Minutes. Each committee of directors shall keep
regular minutes of its proceedings and report the same to the Board of
Directors when required.
SECTION 4.3. Compensation. Members of special or standing
committees may be allowed compensation for attending committee meetings, if the
Board of Directors shall so determine.
ARTICLE V
NOTICE
SECTION 5.1. Methods of Giving Notice. Whenever under the
provisions of statute, the Certificate of Incorporation of the corporation or
these by-laws, notice is required to be given to any director, member of any
committee or stockholder, such notice shall be in writing and delivered
personally or mailed to such director, member or stockholder; provided that in
the case of a director or a member of any committee such notice may be given
orally or by telephone, facsimile, telex or telegram. If mailed, notice to a
director, member of a committee or stockholder shall be deemed to be given when
deposited in the United States first class mail in a sealed envelope, with
postage thereon prepaid, addressed, in the case of a stockholder, to the
stockholder at the stockholder's address as it appears on the records of the
corporation or, in the case of a director or a member of a committee, to such
person at his business address. If sent by facsimile or telex, notice to a
director or member of a committee shall be deemed to be given when confirmation
of transmission of the facsimile or telex is received by the corporation. If
sent by telegraph, notice to a director or member of a committee shall be
deemed to be given when the telegram, so addressed, is delivered to the
telegraph company.
SECTION 5.2. Written Waiver. Whenever any notice is required to
be given under the provisions of statute, the Certificate of Incorporation of
the corporation or these by-laws, a waiver
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thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE VI
OFFICERS
SECTION 6.1. Officers. The officers of the corporation shall be a
Chairman of the Board (if such office is created by the Board), a President,
one or more Vice Presidents, any one or more of which may be designated
Executive Vice President or Senior Vice President, a Secretary and a Treasurer.
The Board of Directors may by resolution create the office of Vice Chairman of
the Board and define the duties of such office. The Board of Directors may
appoint such other officers and agents, including Assistant Vice Presidents,
Assistant Secretaries and Assistant Treasurers, as it shall deem necessary, who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined by the Board of Directors. Any two
or more offices, other than the offices of President and Secretary, may be held
by the same person. No officer shall execute, acknowledge, verify or
countersign any instrument on behalf of the corporation in more than one
capacity, if such instrument is required by law, by these by-laws or by any act
of the corporation to be executed, acknowledged, verified or countersigned by
two or more officers. The Chairman of the Board and Vice Chairman of the Board
shall be elected from among the directors. With the foregoing exceptions, none
of the other officers need be a director, and none of the officers need be a
stockholder of the corporation.
SECTION 6.2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its regular
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently possible. Each officer shall hold office until a successor shall
have been chosen and shall have qualified or until such officer's death or the
effective date of such officer's resignation or removal, or until such officer
shall cease to be a director in the case of the Chairman of the Board or Vice
Chairman of the Board.
SECTION 6.3. Removal and Resignation. Any officer or agent
elected or appointed by the Board of Directors may be removed without cause by
the affirmative vote of a majority of the Board of Directors whenever, in its
judgment, the best interests of the corporation shall be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed. Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein, and
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any office of
the corporation by death, resignation, removal or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term of such office.
SECTION 6.5. Salaries. The salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors or pursuant to its
direction; and no officer shall be prevented from receiving such salary because
such officer is also a director.
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SECTION 6.6. Chairman of the Board. The Chairman of the Board (if
such office is created by the Board of Directors) shall preside at all meetings
of the Board of Directors and the stockholders of the corporation. In the
Chairman of the Board's absence, such duties shall be attended to by the Vice
Chairman of the Board. The Chairman of the Board shall formulate and submit to
the Board of Directors or the Executive Committee matters of general policy for
the corporation and shall perform such other duties as usually appertain to the
office or as may be prescribed by the Board of Directors or the Executive
Committee.
SECTION 6.7. President. The President shall be the Chief
Executive Officer of the corporation unless the Board of Directors has
designated the Chairman of the Board as the Chief Executive Officer in which
case the President shall be the Chief Operating Officer. In the absence of the
Chairman of the Board or the Vice Chairman of the Board (if such offices are
created by the Board), the President shall preside at all meetings of the Board
of Directors and of the stockholders. He may also preside at any such meeting
attended by the Chairman of the Board or Vice Chairman of the Board if he is so
designated by the Chairman of the Board, or in the Chairman of the Board's
absence by the Vice Chairman of the Board. He may sign with the Secretary, or
any other officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation and any deeds, bonds,
mortgages, contracts, checks, notes, drafts or other instruments which the
Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof has been expressly delegated by these by-laws or
by the Board of Directors to some other officer or agent of the corporation, or
shall be required by law to be otherwise executed. The President shall vote,
or give a proxy to any other officer of the corporation to vote, all shares of
stock of any other corporation standing in the name of the corporation and in
general shall perform all other duties normally incident to the office of
President and such other duties as may be prescribed by the stockholders, the
Board of Directors or the Executive Committee from time to time.
SECTION 6.8. Chief Executive Officer. The Chief Executive Officer
shall have, subject to the control of the Board of Directors, supervision and
control of the business and affairs of the corporation and shall have the power
to appoint and remove subordinate officers, agents and employees, except those
elected or appointed by the Board of Directors. The Chief Executive Officer
shall keep the Board of Directors and the Executive Committee fully informed
and shall consult them concerning the business of the corporation.
SECTION 6.9. Chief Operating Officer. The Chief Operating Officer
(if such office is created by the Board of Directors) shall have, subject to
the control of the Board of Directors, general and active management of the
day-to- day operations of the corporation and, together with the Chief
Executive Officer, shall see that all orders and resolutions of the Board of
Directors are carried into effect.
SECTION 6.10. Vice Presidents. In the absence of the President, or
in the event of his inability or refusal to act, the Executive Vice President
(or in the event there shall be no Vice President designated Executive Vice
President, any Vice President designated by the Board) shall perform the duties
and exercise the powers of the President. Any Vice President may sign, with
the Secretary or Assistant Secretary, certificates for shares of the
corporation. The Vice Presidents shall
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perform such other duties as from time to time may be assigned to them by the
President, the Board of Directors or the Executive Committee.
SECTION 6.11. Secretary. The Secretary shall (a) keep the minutes
of the meetings of the stockholders, the Board of Directors and committees of
directors; (b) see that all notices are duly given in accordance with the
provisions of these by-laws and as required by law; (c) be custodian of the
corporate records and of the seal of the corporation, and see that the seal of
the corporation or a facsimile thereof is affixed to all certificates for
shares prior to the issue thereof and to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized in accordance
with the provisions of these by-laws; (d) keep or cause to be kept a register
of the address of each stockholder which shall be furnished by such
stockholder; (e) sign with the President, or an Executive Vice President or
Vice President, certificates for share of the corporation, the issue of which
shall have been authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the corporation; and (g) in
general, perform all duties normally incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the President,
the Board of Directors or the Executive Committee.
SECTION 6.12. Treasurer. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for moneys due and payable to the corporation from
any source whatsoever and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as the Board
of Directors may select; (b) prepare, or cause to be prepared, for submission
at each regular meeting of the Board of Directors, at each annual meeting of
the stockholders, and at such other times as may be required by the Board of
Directors, the President or the Executive Committee, a statement of financial
condition of the corporation in such detail as may be required; and (c) in
general, perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President, the
Board of Directors or the Executive Committee.
SECTION 6.13. Assistant Secretary or Assistant Treasurer. The
Assistant Secretaries and Assistant Treasurers shall, in general, perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President, the Board of Directors or the Executive
Committee. The Assistant Secretaries and Assistant Treasurers shall, in the
absence of the Secretary or Treasurer, respectively, perform all functions and
duties which such absent officers may delegate, but such delegation shall not
relieve the absent officer from the responsibilities and liabilities of such
office. The Assistant Secretaries may sign, with the President or a Vice
President, certificates for shares of the corporation, the issue of which shall
have been authorized by a resolution of the Board of Directors.
ARTICLE VII
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.1. Contracts. Subject to the provisions of Section 6.1
of these by-laws, the Board of Directors may authorize any officer, officers,
agent or agents to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
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SECTION 7.2. Checks, etc. All checks, demands, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers or such agent or agents of the corporation, and in such manner, as
shall be determined by the Board of Directors.
SECTION 7.3. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.1. Issuance. Each stockholder of the corporation shall
be entitled to a certificate or certificates showing the number of shares of
stock registered in the name of such stockholder on the books of the
corporation. The certificates shall be in such form as may be determined by
the Board of Directors, shall be issued in numerical order and shall be entered
in the books of the corporation as they are issued. They shall exhibit the
holder's name and number of shares and shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary. If any
certificate is countersigned (1) by a transfer agent other than the corporation
or any employee of the corporation, or (2) by a registrar other than the
corporation or any employee of the corporation, any other signature on the
certificate may be a facsimile. If the corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
designations, preferences and rights shall be set forth in full or summarized
on the face or back of the certificate which the corporation shall issue to
represent such class of stock; provided that, except as otherwise provided by
statute, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate which the corporation shall issue to represent
such class or series of stock, a statement that the corporation will furnish to
each stockholder who so requests the designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and rights. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in the case of a lost, stolen, destroyed or mutilated
certificate a new one may only be issued in accordance with Section 8.2.
Unless otherwise provided in the resolutions of the Board of Directors
providing for the issuance of Preferred Stock of the corporation of a
particular series, certificates shall not be issued representing fractional
shares of stock.
SECTION 8.2. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost, stolen or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the corporation an indemnity, including without
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limitation a bond, against any claim that may be made against the corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed, or both.
SECTION 8.3 Transfers. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Transfers of shares shall be made only on the books of the corporation by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney and filed with the Secretary of the corporation or the transfer agent
for shares of the corporation.
SECTION 8.4 Registered Stockholders. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Delaware.
ARTICLE IX
DIVIDENDS
SECTION 9.1. Declaration. Subject to the provisions of law and
the Certificate of Incorporation of the corporation, dividends upon the capital
stock of the corporation may be declared by the Board of Directors at any
regular or special meeting. Dividends may be paid in cash, in property or in
shares of capital stock, subject to the provisions of the Certificate of
Incorporation of the corporation.
SECTION 9.2. Reserve. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserve to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purposes as the Board of Directors shall think
conducive to the interest of the corporation, and the directors may modify or
abolish any such reserve in the manner in which it was created.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Third Party Actions. The corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and in
a manner such person reasonably
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<PAGE> 14
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's conduct was unlawful.
SECTION 10.2 Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that such person is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
SECTION 10.3. Determination of Conduct. The determination that an
officer, director, employee or agent has met the applicable standard of conduct
set forth in Sections 10.1 and 10.2 of these by-laws (unless indemnification is
ordered by a court) shall be made (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (ii) if such quorum is not obtainable, or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
SECTION 10.4. Payment of Expenses in Advance. Expenses (including
attorneys' fees) incurred by an officer, director, employee or agent in
defending a civil, criminal, administrative or investigative action, suit or
proceeding for which such person may be entitled to indemnity under this
Article X shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that such officer is not entitled to be
indemnified by the corporation as authorized in this Article X.
SECTION 10.5. Definition. For purposes of this Article X,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such
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<PAGE> 15
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article X, with respect to
the resulting or surviving corporation as such person would have with respect
to such constituent corporation if its separate existence had continued.
SECTION 10.6. Indemnity Not Exclusive. The indemnification and
advancement of expenses provided hereunder shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any other by-law, statute, agreement, vote of
stockholders or disinterested directors, insurance arrangement or otherwise,
both as to action in such a person's official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
SECTION 10.7. No Further Authorization Required. This Article X is
intended to make mandatory the indemnification permitted by Section 145 of the
Delaware General Corporation Law, as amended from time to time. This Article X
shall be deemed to constitute the authorization required by subsection (d) of
said Section 145, and no further authorization by the Board of Directors or the
stockholders of the corporation shall be necessary in any specific case if the
indemnification or advancement of expenses referred to in this Article X is, by
the terms of this Article X, required to be afforded in that case. Further,
this Article X is intended to make mandatory any other indemnification
permitted by the Delaware General Corporation Law, as amended from time to
time.
ARTICLE XI
BUSINESS COMBINATIONS
A. Higher Vote Required for Approval of Certain Business
Combinations.
(1) Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law, the Certificate of
Incorporation of the corporation or these by-laws, and except as otherwise
expressly provided in this Article XI:
(a) any merger or consolidation of the corporation or
any Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder (as hereinafter defined) or (ii) any other corporation
(whether or not itself an Interested Stockholder) which is, or after
such merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any Affiliate
of any Interested Stockholder of any assets of the corporation or any
Subsidiary having an aggregate Fair Market Value (as hereinafter
defined) of $1,000,000 or more; or
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<PAGE> 16
(c) the issuance or transfer by the corporation
or any Subsidiary (in one transaction or a series of transactions) of
any securities of the corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in exchange
for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $1,000,000 or more; or
(d) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or on behalf
of an Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(e) any reclassification of securities (including
any reverse stock split), or recapitalization of the corporation, or
any merger or consolidation of the corporation with any of its
Subsidiaries or any other transaction (whether or not with or into or
otherwise involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of
the corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder or any Affiliate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding shares of capital stock of the corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class (it being understood that for purposes of
this Article XI, each share of the Voting Stock shall have the number of votes
granted to it pursuant to Article FOURTH of the Certificate of Incorporation of
the corporation, including any resolution of the Board of Directors providing
for the designation of any series of the Serial Preferred Stock, par value
$1.00 per share, of the corporation ("Serial Preferred Stock"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) Definition of "Business Combination". The term
"Business Combination" as used in this Article XI shall mean any transaction
which is referred to in any one or more of clauses (a) through (e) of
subparagraph A(1).
B. When Higher Vote is not Required. The provisions of paragraph
A of this Article XI shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law and any other provisions of the Certificate of
Incorporation of the corporation, if all of the conditions specified in either
of the following paragraphs (1) or (2) are met:
(1) Approval by Continuing Directors. The Business
Combination shall have been approved by a majority of the Continuing Directors
(as hereinafter defined).
(2) Price and Procedure Requirements. All of the
following conditions shall have been met:
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<PAGE> 17
(a) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share
by holders of Common Stock, par value $.10 per share, of the
corporation ("Common Stock") in such Business Combination shall be at
least equal to the highest of the following:
(i) (if applicable) the highest per
share price (including any brokerage commissions, transfer
taxes and soliciting dealers fees) paid by the Interested
Stockholder for any shares of Common Stock acquired by it (A)
within the two-year period immediately prior to the first
public announcement of the proposal of the Business
Combination (the "Announcement Date") or (B) in the
transaction in which it became an Interested Stockholder,
whichever is higher;
(ii) the Fair Market Value per share of
Common Stock on the Announcement Date or on the date on which
the Interested Stockholder became and Interested Stockholder
(such latter date is referred to in this Article XI as the
"Determination Date"), whichever is higher; and
(iii) (if applicable) the price per share
equal to the Fair Market Value per share of Common Stock
determined pursuant to subparagraph B(2)(a)(ii) above,
multiplied by the ratio of (A) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested Stockholder
for any shares of Common Stock acquired by it within the two-
year period immediately prior to the Announcement Date to (B)
the Fair Market Value per share of Common Stock on the first
day in such two-year period upon which the Interested
Stockholder acquired any shares of Common Stock.
(b) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share
by holders of shares of any other class of outstanding Voting Stock
(other than Institutional Voting Stock (as hereinafter defined)) shall
be at least equal to the highest of the following (it being intended
that the requirements of this subparagraph B(2)(b) shall be required
to be met with respect to every class of outstanding Voting Stock
(other than Institutional Voting Stock), whether or not the Interested
Stockholder has previously acquired any shares of a particular class
of Voting Stock):
(i) (if applicable) the highest per
share price (including any brokerage commissions, transfer
taxes and soliciting dealers fees) paid by the Interested
Stockholder for any shares of such class of Voting Stock
acquired by it (A) within the two-year period immediately
prior to the Announcement Date or (B) in the transaction in
which it became an Interested Stockholder, whichever is
higher;
(ii) (if applicable) the highest
preferential amount per share to which the holders of shares
of such class of Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or winding
up of the corporation;
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<PAGE> 18
(iii) the Fair Market Value per share of
such class of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(iv) (if applicable) the price per share
equal to the Fair Market Value per share of such class of
Voting Stock determined pursuant to subparagraph B(2)(b)(iii)
above, multiplied by the ratio of (A) the highest per share
price (including any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by it
within the two-year period immediately prior to the
Announcement Date to (B) the Fair Market Value per share of
such class of Voting Stock on the first day in such two-year
period upon which the Interested Stockholder acquired any
shares of such class of Voting Stock.
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as the Interested Stockholder has
previously paid for shares of such class of Voting Stock. If the
Interested Stockholder has paid for shares of any class of Voting
Stock with varying forms of consideration, the form of consideration
for such class of Voting Stock shall be either cash or the form used
to acquire the largest number of shares of such class of Voting Stock
previously acquired by it.
(d) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination: (i) except as approved by a majority of the Continuing
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Serial Preferred Stock; (ii) there
shall have been (A) no reduction in the annual rate of dividends paid
on the Common Stock (except as necessary to reflect any subdivision of
the Common Stock), except as approved by a majority of the Continuing
Directors, and (B) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
the Common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Continuing Directors; and (iii) such
Interested Stockholder shall not have become the beneficial owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an
Interested Stockholder.
(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantages
provided by the corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of
the Securities Exchange Act of 1934,
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<PAGE> 19
as amended, and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall
be mailed to stockholders of the corporation at least 30 days prior to
the consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to
such Act or subsequent provisions).
C. Certain Definitions. For the purposes of this Article XI:
(1) A "person" shall mean any individual, firm,
corporation or other entity.
(2) "Interested Stockholder" shall mean any person (other
than the corporation or any Subsidiary) who or which:
(a) is the beneficial owner, directly or indirectly,
of more than 20% of the voting power of the outstanding Voting Stock;
or
(b) is an Affiliate of the corporation and at any
time within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of 20% or
more of the voting power of the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned by
any Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series of transactions
not involving a public offering within the meaning of the Securities
Act of 1933, as amended.
(3) A person shall be a "beneficial owner" of any Voting
Stock:
(a) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly or
indirectly; or
(b) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (ii) the right to vote pursuant to any agreement, arrangement or
understanding; or
(c) which are beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
(4) For purposes of subparagraph C(2), the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application of subparagraph C(3) but shall not include any other
shares of Voting Stock which may be issuable pursuant to any
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<PAGE> 20
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(5) "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on May 27,
1983.
(6) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in subparagraph C(2), the term "Subsidiary"
shall mean only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the corporation.
(7) "Continuing Director" means any member of the Board
of Directors of the corporation who is unaffiliated with the Interested
Stockholder and was a member of the Board of Directors prior to the time that
the Interested Stockholder became an Interested Stockholder, and any successor
of a Continuing Director who is unaffiliated with the Interested Stockholder
and is recommended to succeed a Continuing Director by a majority of Continuing
Directors then on the Board of Directors.
(8) "Fair Market Value" means: (a) in the case of stock,
the highest closing sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for New
York Stock Exchange listed stocks, or, if such stock is not quoted on the
Composite Tape on the New York Stock Exchange, or, if such stock is not listed
on such Exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended, on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or if no
such quotations are available, the fair market value on the date in question of
a share of such stock as determined by the Board of Directors in good faith;
and (b) in the case of property other than cash or stock, the fair market value
of such property on the date in question as determined by the Board of
Directors in good faith.
(9) "Institutional Voting Stock" shall mean any class of
Voting Stock which was issued to and continues to be held solely by one or more
insurance companies, pension funds, commercial banks, savings banks or similar
financial institutions or institutional investors.
(10) In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash" as used in
subparagraphs B(2)(a) and (b) shall include the shares of Common Stock or the
shares of any other class of outstanding Voting Stock retained by the holders
of such shares.
D. Determination by Directors. Notwithstanding anything to the
contrary in this Article XI, the directors of the corporation shall have the
power to determine for the purposes of this Article XI, on the basis of
information known to them after reasonable inquiry, (1) whether a person
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<PAGE> 21
is an Interested Stockholder, (2) the number of shares of Voting Stock
beneficially owned by any person, (3) whether a person is an Affiliate or
Associate of any person, (4) whether a class of Voting Stock is Institutional
Voting Stock, and (5) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more.
E. No Effect on Fiduciary Obligations of Interested Stockholders.
Nothing contained in this Article XI shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
F. Election to Not be Governed by Delaware "Anti-Takeover" Bill.
The corporation shall not be governed by Section 203 of the Delaware General
Corporation Law.
G. Amendment, Repeal, etc. Notwithstanding any other provisions
of the Certificate of Incorporation of the corporation or these by-laws (and
notwithstanding the fact that a lesser percentage may be specified by law, the
Certificate of Incorporation of the corporation or these by-laws), the
affirmative vote of the holders of 80% or more of the voting power of the
shares of the then outstanding Voting Stock, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions inconsistent
with, this Article XI of these by-laws.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Seal. The corporate seal shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or otherwise reproduced.
SECTION 12.2. Books. The books of the corporation may be kept
(subject to any provision contained in statute) outside the State of Delaware
at the offices of the corporation at Houston, Texas, or at such other place or
places as may be designated from time to time by the Board of Directors.
ARTICLE XIII
AMENDMENT
Except as may be otherwise expressly provided by these by-laws, which
express provisions shall be controlling, these by-laws may be altered, amended
or repealed at any regular meeting of the Board of Directors without prior
notice, or at any special meeting of the Board of Directors if notice of such
alteration, amendment or repeal is contained in the notice of such special
meeting.
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EXHIBIT 4.4
William E. Macaulay
7 Hill Road
Greenwich, CT 06830
January 29, 1997
Board of Directors
Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1360
Houston TX 77056
Attn.: Corporate Secretary
RE: AGREEMENT DATED AS OF JUNE 23, 1995
Gentlemen:
Section 4.2(iii) of the Agreement dated as of June 23, 1995 among
Weatherford International Incorporated ("Weatherford"), American Gas & Oil
Investors, AMGO II, AMGO III, First Reserve Secured Energy Assets Fund, L.P.,
First Reserve Fund V, L. P., First Reserve Fund V-2, L.P. and First Reserve
Fund VI, L.P. (collectively, the "First Reserve Funds") and First Reserve
Corporation ("FRC", the First Reserve Funds and FRC called the "FRC Group"), a
copy of which is attached hereto and made a part hereof for all purposes (the
"Agreement"), provides that members of the FRC Group may distribute Weatherford
Voting Securities (as defined in the Agreement) to any partner of a First
Reserve Fund; provided that any distributee that is a member of the FRC Group
has signed the Agreement. Accordingly, I hereby agree to be made a party to
the Agreement and to be bound by the terms of the Agreement.
Very truly yours,
/s/ William E. Macaulay
William E. Macaulay
attachment (1)
<PAGE> 2
John A. Hill
33 Avon Road
Bronxville, NY 10708
January 29, 1997
Board of Directors
Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1360
Houston TX 77056
Attn.: Corporate Secretary
RE: AGREEMENT DATED AS OF JUNE 23, 1995
Gentlemen:
Section 4.2(iii) of the Agreement dated as of June 23, 1995 among
Weatherford International Incorporated ("Weatherford"), American Gas & Oil
Investors, AMGO II, AMGO III, First Reserve Secured Energy Assets Fund, L.P.,
First Reserve Fund V, L. P., First Reserve Fund V-2, L.P. and First Reserve
Fund VI, L.P. (collectively, the "First Reserve Funds") and First Reserve
Corporation ("FRC", the First Reserve Funds and FRC called the "FRC Group"), a
copy of which is attached hereto and made a part hereof for all purposes (the
"Agreement"), provides that members of the FRC Group may distribute Weatherford
Voting Securities (as defined in the Agreement) to any partner of a First
Reserve Fund; provided that any distributee that is a member of the FRC Group
has signed the Agreement. Accordingly, I hereby agree to be made a party to
the Agreement and to be bound by the terms of the Agreement.
Very truly yours,
/s/ John A. Hill
John A. Hill
attachment (1)
<PAGE> 1
EXHIBIT 4.7
COMMON STOCK COMMON STOCK
PAR VALUE $.10 PAR VALUE $.10
NUMBER SHARES
HU
INCORPORATED UNDER THE CUSIP 947071 10 6
LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
WEATHERFORD ENTERRA, INC.
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF
Weatherford Enterra, Inc. transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed. This Certificate and the shares
represented hereby are issued and shall be subject to all the provisions of
the Certificate of Incorporation of the Corporation (copies of which are on
file with the Transfer Agent) as now or hereafter amended, to all of which
the holder hereof by acceptance hereof assents. This Certificate is not
valid unless countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated
[SEAL]
H. SUZANNE THOMAS
President Secretary
Courtesigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
Transfer Agent
and Registrant
By
Authorized Signature
<PAGE> 2
WEATHERFORD ENTERRA, INC.
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof of
the Corporation, and the qualifications, limitations, or restrictions of such
preferences and/or rights. Such request may be made to the Corporation or the
Transfer Agent.
Keep this certificate in a safe place. If it is lost, stolen or
destroyed the Corporation may require a bond of indemnity as a condition to the
issuance of a replacement certificate.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<CAPTION>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- .......... Custodian ..........
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act........................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the
above list.
For Value Received, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________
| |
_________________________________________
_______________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP
CODE, OF ASSIGNEE)
_______________________________________________________________________
_______________________________________________________________________
________________________________________________________________ Shares
of the stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
_____________________________________________________________ Attorney
to transfer the said same on the books of the within named Corporation
with full power of substitution in the premises.
Dated ______________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENTS
Weatherford Enterra, Inc. and each of the following individuals have entered
into the form of agreement attached hereto for the periods indicated:
<TABLE>
<CAPTION>
Protected Period Multiple of Pay
================================================================================
<S> <C> <C>
James R. Burke 3 3
- --------------------------------------------------------------------------------
M. E. Eagles 3 3
- --------------------------------------------------------------------------------
Jon Nicholson 3 3
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Norman W. Nolen 3 3
- --------------------------------------------------------------------------------
H. Suzanne Thomas 3 3
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</TABLE>
<PAGE> 2
AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
This Amended and Restated Change of Control Agreement (this
"Agreement") by and between Weatherford Enterra, Inc., a Delaware corporation
(the "Company"), and FIELD(1) (the "Executive"), is effective as of August 16,
1996.
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. The Company, formerly known as Weatherford International
Incorporated, and the Executive have previously entered into that certain
Change of Control Agreement dated FIELD(2), as amended (the "Previous
Agreement"), establishing various matters related to the Executive's
compensation and benefits in the event of a Change of Control (as defined in
Section 2 of the Previous Agreement). The Company and the Executive wish to
amend the provisions of the Previous Agreement, and this Agreement amends and
restates the Previous Agreement in its entirety, except as otherwise provided
herein.
C. 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
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<PAGE> 3
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 FIELD(3) 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 referred to as the "Renewal
Date"), unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate FIELD(4) 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
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<PAGE> 4
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 "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.
(d) The "Merger" shall mean the October 5, 1995 merger of
Enterra Corporation with and into Weatherford International Incorporated, the
latter entity being the surviving entity and being renamed Weatherford Enterra,
Inc., such Merger constituting a Change of Control under the Previous
Agreement.
(e) The "Previous Employment Period Expiration Date"
shall mean October 5, 199 FIELD(5).
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<PAGE> 5
2. Transition Period.
(a) If no Change of Control other than the Merger has
occurred prior to the Previous Employment Period Expiration Date, the
provisions of Section 4(b)(ii) hereof shall not apply and, in lieu thereof, the
Executive shall be eligible, for each fiscal year during the period commencing
on the Effective Date and ending on the Previous Employment Period Expiration
Date, an annual bonus (for purposes of this Section 2, the "Annual Bonus") in
cash or Common Stock of the Company, or a combination thereof, at the Company's
discretion, under the Company's annual incentive program applicable generally
to the Executive's peer executives of the Company and its affiliated companies,
but in no event shall such program provide the Executive with incentive
opportunities less favorable than the most favorable of those provided by the
Company and its affiliated companies for the Executive under any such program
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. 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.
(b) In the event the Executive's employment is terminated
as provided in Section 5(c) hereof prior to the Previous Employment Period
Expiration Date and no Change of Control other than the Merger has occurred
prior to that date, then the Executive shall receive the benefits provided for
in Section 6(a) of the Previous Agreement in lieu of the benefits provided for
in Section 6(a) hereof. For purposes of Section 6(a)(i)(A) of the Previous
Agreement, "Recent Annual Bonus" shall mean the Executive's highest bonus paid
or payable (whether in cash or Common Stock of the Company) under the Company's
annual incentive program for the last three full fiscal years prior to the
Effective Date (annualized in the event the Executive was not employed by the
Company for the whole of such fiscal year) and "Annual Bonus" shall have the
definition given in subsection 2(a) above.
(c) In the event the Executive's employment continues
beyond the Previous Employment Period Expiration Date, then the Previous
Agreement shall terminate in all respects as of the Previous Employment Period
Expiration Date and shall be of no further force and effect, and this Agreement
shall be the only agreement between the parties with respect to the subject
matter hereof.
(d) In the event a Change of Control (as defined in
Section 1(c) hereof) occurs after the effective date of this Agreement, then
the Previous Agreement shall terminate in all respects as of the date of the
Change of Control and shall be of no further
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<PAGE> 6
force and effect, and this Agreement shall be the only agreement between the
parties with respect to the subject matter hereof.
(e) The Company and the Executive agree that this
Agreement amends the Previous Agreement in its entirety, except as otherwise
provided herein.
3. 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 FIELD(6) anniversary of such
date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements, authority, duties and responsibilities) shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company
in accordance with this Agreement. It is expressly understood and agreed that
to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
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<PAGE> 7
(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. Except as provided in Section 2
hereof, in addition to Annual Base Salary, the Executive shall be awarded, for
each fiscal year ending during the Employment Period, an annual bonus (the
"Annual Bonus") in cash at least equal to the Executive's highest 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.
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<PAGE> 8
(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 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
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outstanding options or SARs previously issued pursuant to a Company stock
option plan or the Company's Stock Appreciation Rights Plan, respectively, any
such options and SARs to have terms and conditions similar to the terms of any
such original options and SARs.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its intention to terminate
the Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective 30 days after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that within the 30-day
period after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's
duties with the Company on a full-time basis for 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 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
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<PAGE> 10
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 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than as provided in Section 4(a)(i)(B)
hereof or the Company's requiring the Executive to travel on Company business
to a substantially greater extent than required immediately prior to the
Effective Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good
faith determination of "Good Reason" made by the Executive shall be conclusive.
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<PAGE> 11
(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 12(b) of the Agreement. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" shall
mean:
(i) if the Executive's employment is terminated by
the Company for Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be;
(ii) if the Executive's employment is terminated by
the Company other than for Cause, 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.
6. Obligations of the Company upon Termination.
(a) Good Reason; Other than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause, 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,
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<PAGE> 12
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) FIELD(8) 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 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 FIELD(9) 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 FIELD(10) year(s) is that required
by Sections 4(b)(i) and 4(b)(ii), over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under the Retirement Plan
and the SERP as of the Date of Termination, and
D. an amount equal to FIELD(11) 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 FIELD(12) year(s) after the Executive's
Date of Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family equal to those which
would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated; provided, however, that
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<PAGE> 13
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 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 6(a)(iv) would otherwise be eligible
for such accounting treatment, the Executive shall receive shares of Common
Stock with a Fair Market Value equal to the cash that would otherwise be
payable hereunder in substitution for the cash, provided that any such shares
of Common Stock so granted to the Executive shall be registered under the
Securities Act of 1933, as amended; any options or SARs outstanding as of the
Date of Termination and not then exercisable
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<PAGE> 14
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, pay the Executive a lump sum in
cash within 30 days after the Executive's Date of Termination equal to
FIELD(13) 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 6(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
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<PAGE> 15
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 6(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.
(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.
7. 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 12(f), shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. 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
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<PAGE> 16
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.
8. 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.
(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").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a
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<PAGE> 17
"Gross-Up Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 9(a), if it shall be determined that the Executive
is entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net
after-tax benefit of at least $50,000 (taking into account both income taxes
and any Excise Tax) as compared to the net after-tax proceeds to the Executive
resulting from an elimination of the Gross-Up Payment and a reduction of the
Payments, in the aggregate, to an amount (the "Reduced Amount") such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate,
shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination shall be made
by Arthur Andersen LLP or, as provided below, such other certified public
accounting firm as may be designated by the Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days after the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control,
the Executive shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days after the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
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<PAGE> 18
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable, but no later than ten business days after the
Executive is informed in writing of such claim, and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claims; provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such costs and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of
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<PAGE> 19
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issues raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 9(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies, provided that it shall not apply to information which is
or shall become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement), information
that is developed by the Executive independently of such information, or
knowledge or data or information that is disclosed to the Executive by a third
party under no obligation of confidentiality to the Company. After termination
of the Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable
to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
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<PAGE> 20
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICT OF LAWS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(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: FIELD(14)
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.
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<PAGE> 21
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Company, the employment of the Executive by the Company
is "at will" and, subject to Section 1(a) hereof, prior to the Effective Date,
the Executive's employment and/or this Agreement may be terminated by either
the Executive or the Company at any time prior to the Effective Date, in which
case the Executive shall have no further rights under this Agreement. From and
after the Effective Date this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof.
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.
--------------------------------------
FIELD(1)
WEATHERFORD ENTERRA, INC.
By:
------------------------------
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<PAGE> 1
EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of March 11, 1997 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and Thomas J. Edelman
(the "Director"), a director of the Company;
WHEREAS, in recognition of Director's need for substantial
protection against personal liability in order to enhance Director's
continued service to the Company in an effective manner and of
Director's reliance on the provisions of the Company's By-Laws
requiring indemnification of the Director under certain circumstances,
and in part to provide Director with specific contractual assurance
that the protection promised by such By-Laws will be available to
Director (regardless of, among other things, any amendment to or
revocation of such By-Laws, any change in the composition of the
Company's board of Directors or any acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for
the indemnification of, and the advancing of expenses to, Director to
the fullest extent (whether partial or complete) permitted by law and
as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Director under the Company's
directors' and officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of
Director agreeing to serve or continuing to serve the Company directly
or, at its request, with another enterprise, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to or witness
or other participant in, or is threatened to be made a party
to or witness or other participant in, a Claim (as defined
hereinafter) by reason of (or arising in part out of) an
Indemnifiable Event (as defined hereinafter), the Company
shall indemnify Director to the fullest extent permitted by
law as soon as practicable, but in any event no later than 30
days after written demand is presented to the Company, against
any and all Expenses (as defined hereinafter), judgments,
fines, penalties and amounts paid in settlement of such Claim.
If so requested by Director, the Company shall advance (within
ten business days after such written request) any and all
Expenses to Director an "Expense Advance". Notwithstanding
anything in this Agreement to the contrary, and except as
provided in Section 3 hereof, prior to a Change in Control (as
defined hereinafter), Director shall not be entitled to
indemnification pursuant to this Agreement in connection with
any Claim initiated by Director against the Company or any
director or officer of the Company, unless the Company has
joined in or consented to the initiation of such Claim.
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as defined hereinafter)
<PAGE> 2
shall not have determined (in a written opinion, in any case
in which the special independent counsel referred to in
Section 2 hereof is involved) that Director would not be
permitted to be indemnified under applicable law, and (ii)
the obligation of the Company to make an Expense Advance
pursuant to Section 1(a) shall be subject to the condition
that, if when and to the extent that the Reviewing Party
determines that Director would not be permitted to be so
indemnified under applicable law, the Company shall be
entitled to be reimbursed by Director (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Director has commenced legal
proceedings in a court of competent jurisdiction to secure a
determination that Director should be indemnified under
applicable law, any determination made by the Reviewing Party
that Director would not be permitted to be indemnified under
applicable law shall not be binding and Director shall not be
required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has not been a Change in
Control, the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control, the
Reviewing Party shall be the special independent counsel
referred to in Section 2 hereof. If there has been no
determination by the Reviewing Party or if the Reviewing Party
determines that Director substantively would not be permitted
to be indemnified in whole or in part under applicable law,
Director shall have the right to commence litigation in any
court in the states of Texas or Delaware having subject matter
jurisdiction thereof and in which venue is proper, seeking an
initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof,
and the Company hereby consents to service of process and to
appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on
the Company and Director.
2. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the Company's
Board of Directors who were directors immediately prior to
such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Director to
indemnity payments and Expense Advances under this Agreement
or any other agreement or Company By-Law now or hereafter in
effect relating to Claims for Indemnifiable Events, the
Company shall seek legal advice only from special independent
counsel selected by Director and approved by the Company
(which approval shall not be unreasonably withheld), and who
has not otherwise performed services for the Company or
Director within the last five years (other than in connection
with such matters). Such counsel, among other things, shall
render its written opinion to the Company and Director as to
whether and to what extent Director would be permitted to be
indemnified under applicable law. The Company agrees to pay
the reasonable fees of the special, independent counsel
referred to above and to fully indemnify such counsel against
any and all expenses
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<PAGE> 3
(including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement
pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including
attorneys' fees) and, if requested by Director, shall (within
ten business days after such written request) advance such
expenses to Director, which are incurred by Director in
connection with any claim asserted against or action brought
by Director for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect
relating to Claims for Idemnifiable Events and/or (ii)
recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of
whether Director ultimately is determined to be entitled to
such indemnification, advance expense payment or insurance
recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company
of some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company
shall nevertheless indemnify Director for the portion thereof
to which Director is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Director
has been successful on the merits or otherwise in defense of
any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter
therein, including dismissal without prejudice, Director shall
be indemnified against all Expenses incurred in connection
therewith. In connection with any determination by the
Reviewing Party or otherwise as to whether Director is
entitled to be indemnified hereunder, the burden of proof
shall be on the Company to establish that Director is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the
termination of any action, suit or proceeding by judgment,
order, settlement (whether with or without court approval),
conviction, or plea of nolo contendere, or its equivalent,
shall not create a presumption that director did not meet any
particular standard of conduct or have any particular belief
or that a court has determined that indemnification is not
permitted by applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall
be in addition to any other rights Director may have under the
Company's By-Laws or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware
General Corporation Law (whether by statute or judicial
decision) or the Company's By-Laws permits greater
indemnification by agreement than would be afforded currently
under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Director shall enjoy by this
Agreement the greater benefits so
- 3 -
<PAGE> 4
afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and
officers' liability insurance, Director shall be covered by
such policy or policies, in accordance with its or their
terms, to the maximum extent of the coverage available for any
Company director.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other
than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing 20% or more of the
total voting power represented by the Company's then
outstanding Voting Securities (as defined hereinafter), or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election
by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least 80% of the total
voting power represented by the Voting Securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation or the stockholders of the
Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of
all or substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted
by the Company or any other party, whether civil, criminal,
administrative or investigative.
(c) EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating
in (including on appeal), or preparing to defend, be a witness
in or participate in any Claim relating to any Indemnifiable
Event.
- 4 -
<PAGE> 5
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the
fact that Director is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done or not done by
Director in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of
a member or members of the Company's Board of Directors or any
other person or body appointed by the Board (including the
special independent counsel referred to in Section 2) who is
not a party to the particular Claim for which Director is
seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed
in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing
waiver.
10. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment
to all of the rights of recovery of Director, who shall
execute all papers required and shall do everything that may
be necessary to secure such rights, including the execution of
such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with
any claim made against Director to the extent Director has
otherwise actually received payment (under any insurance
policy, By-Law or otherwise) of the amounts otherwise
indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any
direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, and
personal and legal representatives. This Agreement shall
continue in effect regardless of whether Director continues to
serve as a director (or in one of the capacities enumerated in
Section 8(d) hereof) of the Company or of any other enterprise
at the Company's request.
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,
- 5 -
<PAGE> 6
paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable,
and the remaining provisions shall remain enforceable to the
fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Delaware applicable to contracts made and to be
performed in such state without giving effect to the
principles of conflicts of laws.
Executed as of March 11, 1997.
WEATHERFORD ENTERRA, INC.
By: /s/ H. Suzanne Thomas
------------------------------------
Name: H. Suzanne Thomas
Title: Senior Vice President, Secretary
and General Counsel
/s/ Thomas J. Edelman
----------------------------------------
Thomas J. Edelman
- 6 -
<PAGE> 7
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of October 5, 1995 is between Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), and Jon Nicholson (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.
<PAGE> 8
(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
2
<PAGE> 9
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
3
<PAGE> 10
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
<PAGE> 11
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.
5
<PAGE> 12
13. SEVERABILITY. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent
permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Delaware applicable to contracts made and to be
performed in such state without giving effect to the
principles of conflicts of laws.
Executed as of October 5, 1995.
WEATHERFORD ENTERRA, INC.
By: /s/ Philip Burguieres
------------------------------------
Name: Philip Burguieres
Title: Chairman, President and
Chief Executive Officer
/s/ Jon Nicholson
---------------------------------------
Jon Nicholson
6
<PAGE> 1
EXHIBIT 10.3
WEATHERFORD ENTERRA, INC.
1987 STOCK OPTION PLAN
AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995
1. PURPOSE. This 1987 Stock Option Plan (the "Plan") of
Weatherford Enterra, Inc. (the "Company"), for executive officers and other key
employees (who may be members of the Board of Directors) of the Company and of
certain related corporations, and others providing services to the Company and
such related corporations (an "Optionee"), is intended to advance the best
interest of the Company and those related corporations by providing those
persons who have a substantial responsibility for its management and growth
with additional incentive and by increasing their proprietary interest in the
success of the Company and those related corporations--thereby encouraging them
to continue their employment or affiliation.
2. ADMINISTRATION. The Plan shall be administered by a committee
to be appointed by the Board of Directors of the Company (hereinafter called
the "Committee"); and all questions of interpretation and application of the
Plan, or of options granted hereunder (hereinafter called the "Options") shall
be subject to the determination, which shall be final and binding, of the
Committee. The Committee shall consist of not less than three members of the
Board of Directors, all of whom shall be "disinterested persons". A
"disinterested person" is a person who at the time he exercises discretion with
respect to the grant of any Option is not, and for at least one year prior to
that time has not been, eligible to receive options under the Plan or under
other similar plans of the Company. A majority of its members will constitute
a quorum. All determinations of the Committee will be made by a majority of
its members. Any decision or determination reduced to writing and signed by a
majority of the members will be as effective as if it had been made by a
majority vote at a meeting properly called and held. The Plan shall be
administered in such a manner as to permit the Options granted hereunder which
are designated as such to qualify as "incentive stock options" ("Incentive
Options") as described in section 422A of the Internal Revenue Code of 1986, as
amended (the "Code").
3. (a) SHARES AVAILABLE. The stock subject to the Options
and other provisions of the Plan shall be shares of the Company's Common Stock,
$0.10 par value (the "Stock"). The total amount of the Stock with respect to
which Options may be granted shall not exceed in the aggregate 69,401 shares;
provided, that such aggregate number of shares shall be subject to adjustment
in accordance with the provisions of Paragraph 18 hereof. Such shares may be
treasury shares or authorized but unissued shares.
(b) MAXIMUM AWARD. The maximum aggregate number of
shares of Stock available for Options to any one Optionee during any 12-month
period is 200,000.
<PAGE> 2
(c) 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 3 of the Plan shall be (i)
decreased by the "gross" number of shares issued pursuant to exercised Options,
(ii) decreased by the "gross" number of shares issuable pursuant to outstanding
unexercised Options, and (iii) increased by the difference between the "gross"
number of Shares and the "net" number of shares issued pursuant to exercised
Options. As used herein, the "gross" number of shares refers to the maximum
number of shares that may be issued upon the exercise of an Option. The "net"
number of shares refers to the net number of shares actually issued to an
Optionee upon exercise of an Option, after reducing the "gross" number of
shares by the number of shares tendered back to the Company in payment of the
Option Price (as defined hereinafter) for the satisfaction of any tax payment
obligation. If an Optionee shall forfeit, voluntarily surrender or otherwise
permanently lose his or her right to exercise an Option under any provision of
this Plan or otherwise, or if any Option shall terminate or expire pursuant to
its terms, the shares subject to the Option shall once again be available to be
awarded and issued under this Plan pursuant to a new Option grant hereunder.
4. AUTHORITY TO GRANT OPTIONS. The Committee may grant from time
to time to such eligible individuals as it shall from time to time determine an
Option, or Options, to buy a stated number of shares of Stock under the terms
and conditions of the Plan. With respect to each Option, the Committee shall
specify whether such Option shall constitute an Incentive Option or an Option
not intended to qualify as an Incentive Option (a "Nonqualified Option").
Subject only to any applicable limitations set forth elsewhere in the Plan, the
number of shares of Stock to be covered by any Option shall be as determined by
the Committee.
5. ELIGIBILITY. The individuals who shall be eligible to receive
Incentive Options shall be such executive officers and other key employees (who
may be members of the Board of Directors) of the Company, or of any parent or
subsidiary corporation, as the Committee shall determine from time to time.
With respect to Incentive Options, any reference to a parent or subsidiary
corporation shall mean a parent corporation within the meaning of section
425(e) of the Code or a subsidiary corporation within the meaning of section
425(f) of the Code. The individuals who shall be eligible to receive
Nonqualified Options shall be such executive officers and other key employees
(who may be members of the Board of Directors) of the Company, or of any parent
or subsidiary corporation, or any other person performing services for the
Company or any parent or subsidiary corporation, as the Committee shall
determine from time to time. With respect to Nonqualified Options, any
reference to a parent corporation shall mean a corporation which has actual
control of the Company through its direct or indirect ownership of not less
than 51 percent of each class of voting stock of the Company; and any reference
to a subsidiary corporation shall mean a corporation of which the Company owns,
directly or indirectly, not less than 40 percent of each class of voting stock.
2
<PAGE> 3
6. OPTION PRICE. The price at which shares may be purchased
pursuant to an Option (the "Option Price") shall be determined by the Committee
at the time each Option is granted but shall not be less than 100 percent of
the Fair Market Value (as defined hereinafter) of the shares of Stock on the
date the Option is granted. In the case of any employee of the Company or a
parent or subsidiary corporation who owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the corporation
employing the employee or of its parent or subsidiary corporation, the price at
which shares may be so purchased under an Incentive Option shall be not less
than 110 percent of the Fair Market Value of the Stock on the date the
Incentive Option is granted. "Fair Market Value" for purposes of this Plan
means the average of the high and low reported sales prices per share of Stock
(as reported on the New York Stock Exchange) as of the relevant measuring date,
or if there is no sale on the New York Stock Exchange on that date, then as of
the next following day on which there is a sale.
7. DURATION OF OPTIONS. Each Option shall expire on the tenth
(10th) anniversary date of its grant. In the case of any employee of the
Company who owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the corporation employing the employee
or of its parent or subsidiary corporation, no Incentive Option shall be
exercisable after the expiration of five years after the date such Incentive
Option is granted. The Committee in its discretion may provide that an Option
shall be exercisable during such 10-year period or five-year period, as the
case may be, or during any lesser period of time.
8. MAXIMUM VALUE OF STOCK SUBJECT TO INCENTIVE OPTIONS.
Notwithstanding any other provisions of the Plan to the contrary, the aggregate
Fair Market Value (determined as of the date the Incentive Option is granted)
of the Stock with respect to which Incentive Options are exercisable for the
first time by the Optionee in any calendar year (under this Plan and any other
incentive stock option plan(s) of the Company and any parent and subsidiary
corporation) shall not exceed $100,000.
9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as
it is valid and outstanding, from time to time, in whole or in part, in such
manner and subject to such conditions, as the Committee in its discretion may
provide in the option agreement (described in Paragraph 22 hereof).
10. EXERCISE OF OPTIONS.
(a) NOTICE. Options shall be exercised by the delivery
of written notice (the "Exercise Notice") to the Secretary of the Company
setting forth the number of shares with respect to which the Option is to be
exercised and the address to which the certificates representing shares of the
Stock issuable upon the exercise of such Option shall be mailed (the "Exercise
Date"). The date on which the Exercise Notice is delivered to the Company is
the "Notice Date".
3
<PAGE> 4
(b) PAYMENT. Unless otherwise prescribed by the
Committee, the Optionee shall tender to the Company on, or within three
business days after, the Exercise Date full payment of the Option Price for the
shares of Stock, together with any federal, state or local taxes required to be
collected or withheld by the Company in connection with the exercise of the
Option ("Taxes"), in cash (by personal check, cashier's check, certified check,
bank draft or postal or express money order payable to the order of the Company
or by payroll deduction). Alternatively, subject to the provisions of Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
payment of the Option Price and any Taxes may be made by the Optionee'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 of Stock and any Taxes, such amount being
either from loan proceeds or from the sale of the shares of Stock to be issued
to the Optionee. Alternatively, unless otherwise provided in the option
agreement, payment of the Option Price and any Taxes may be made in whole or in
part in shares of Stock previously issued to the Optionee, if at the time of
delivery of the Exercise Notice (i) the Company has unrestricted earned surplus
in an amount not less than the Option Price of such shares, (ii) all accrued
cumulative preferential dividends and other current preferential dividends on
all outstanding preferred stock of the Company have been fully paid, (iii) the
reacquisition or exchange by the Company of its own shares for the purpose of
enabling such Optionee to exercise such Option is otherwise permitted by
applicable law and without any vote or consent of any shareholder of the
Company and would not result in the Company's being in violation of any
agreement by which it is bound, and (iv) there shall have been adopted, and
there is in full force and effect, a resolution of the Board of Directors of
the Company authorizing the reacquisition by the Company of its own shares for
such purpose. If payment is made in whole or in part in shares of Stock, then
the Optionee shall deliver to the Company, in payment of the Option Price of
the shares with respect of which such Option is exercised, (i) certificates
registered in the name of such Optionee representing a number of shares of
Stock legally and beneficially owned by such Optionee, free of all liens,
claims, and encumbrances of every kind, and having a Fair Market Value on the
date of delivery of such notice that is not greater than the Option Price of
the shares with respect to which such Option is to be exercised, such
certificates to be accompanied by stock powers duly endorsed in blank by the
record holder of the shares represented by such certificates, with the
signature of such record holder guaranteed by a national banking association,
and (ii) if the Option Price of the shares with respect to which such Option is
to be exercised exceeds the Fair Market Value of such certificates, payment of
the difference shall be made as provided above. Notwithstanding the foregoing
provisions of this Paragraph 10, the Committee, in its sole discretion, may
refuse to accept shares of Stock in payment of the Option Price of the shares
with respect to which such Option is to be exercised and, in that event, any
certificates representing shares of Stock which were delivered to the Company
with such written notice shall be returned to such Optionee together with
notice by the Company to such Optionee of the refusal of the Committee to
accept such shares of Stock.
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(c) STOCK PURCHASE AGREEMENT. In its sole and absolute
discretion, the Committee may require, as an additional condition to the
issuance of Stock upon exercise of an Option, that the Optionee furnish the
Committee with an executed copy of a stock purchase agreement, in such form as
may be required by the Committee, at the time the Exercise Notice is delivered
to the Company or within three business days after the proposed agreement is
presented to the Optionee, if later.
(d) SHARE CERTIFICATES. As promptly as practicable after
the receipt by the Company of (i) the Exercise Notice from the Optionee setting
forth the number of shares with respect to which such Option is to be
exercised, (ii) payment of the Option Price of such shares in the form required
by the foregoing provisions of this Paragraph 10, and (iii) a fully executed
stock purchase agreement in the form required by the Committee, if any is so
required, the Company shall cause to be delivered to such Optionee (or to a
specified escrow agent, if so required under the terms of any applicable stock
purchase agreement) certificates representing the number of shares of Stock
with respect to which such Option has been so exercised, such certificates to
be registered in the name of such Optionee, provided that such delivery shall
be considered to have been made when such certificates shall have been mailed,
postage prepaid, to such Optionee at the address specified for such purpose in
the Exercise Notice from the Optionee to the Company.
(e) VALUATION. Any calculation with respect to an
Optionee's income, required tax withholding or otherwise shall be made using
the Fair Market Value of such shares of Stock on the Notice Date, whether or
not the Exercise Notice is delivered to the Company before or after the close
of trading on that date, unless otherwise specified by the Committee.
11. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by
the Optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by the
Optionee.
12. TERMINATION OF EMPLOYMENT OR AFFILIATION OF OPTIONEE. Except as
may be otherwise expressly provided in this Paragraph 12 or elsewhere in the
Plan, if the Optionee's employment with the Company is terminated, the Optionee
shall have the right to exercise the Option, to the extent to which he was
entitled to exercise such Option immediately prior to such termination, at any
time during the period ending the earlier of 30 days after such termination and
the expiration of the Option. Whether authorized leave of absence, or absence
on military or government service, shall constitute severance of the employment
or affiliation relationship between the Company and the Optionee shall be
determined by the Committee at the time thereof. In the event of the death of
the Optionee while affiliated with or in the employ of the Company, or within
three months after his retirement or termination due to age or disability as
provided below, such Option shall terminate on the earlier of one year
following the date of such death and the expiration of the Option. After the
death of the Optionee, the time for exercise of the Option shall be
accelerated and the Option shall be
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<PAGE> 6
exercisable in full, and the Optionee's executors, administrators or any
persons to whom his Option may be transferred by will or by the laws of descent
and distribution, shall have the right, at any time prior to such termination,
to exercise the Option, in whole or in part, without regard to any limitations
set forth in or imposed pursuant to Paragraph 9 hereof. If, before the date of
expiration of the Option, the Optionee shall be retired in good standing from
the employ of the Company, or the affiliation shall be severed for reasons of
age or disability under the then established rules of the Company, the Option
shall terminate on the earlier of three months after the date of such
retirement or severance and the expiration of the Option. In the event of such
retirement or severance, the Optionee shall have the right prior to the
termination of such Option to exercise the Option to the extent to which he was
entitled to exercise such Option immediately prior to such retirement or
severance. For the purpose of determining the employment relationship or other
affiliation between the Company and the Optionee, employment by or affiliation
with any parent or subsidiary corporation shall be considered employment by or
affiliation with the Company.
13. REQUIREMENTS OF LAW. The Company shall not be required to sell
or issue any shares of Stock under any Option if the issuance of such shares
shall constitute or result in a violation by the Optionee 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 Optionee will not
transfer such shares except pursuant to a registration statement in effect
under such Act or unless an opinion of counsel satisfactory 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. The Company may, but shall in no event be
obligated to, register the shares of Stock covered hereby pursuant to the
Securities Act. In the event the shares of Stock issuable on exercise of an
Option are not registered under the Securities Act, 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."
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.
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<PAGE> 7
14. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a
stockholder with respect to shares of Stock covered by his Option until the
date of issuance of a stock certificate for such shares; and, except as
otherwise provided in Paragraph 18 hereof, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
15. EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of an
Option shall not impose upon the Company or any parent or subsidiary
corporation any obligation to employ or become affiliated with, or continue to
employ or be affiliated with, any Optionee; and the right of the Company or any
parent or subsidiary corporation to terminate the employment or affiliation of
any person shall not be diminished or affected by reason of the fact that an
Option has been granted to him.
16. FORFEITURE FOR COMPETITION. Notwithstanding any other
provision of the Plan, if at any time during the term of an Option granted
hereunder the Committee finds by a majority vote, after full consideration of
the facts presented on behalf of the Company and the Optionee, that such
Optionee, without the written consent of the Company, directly or indirectly
owns, operates, manages, controls or participates in the ownership, management,
operation or control of, or is employed by or is paid as a consultant or as an
independent contractor by a business which competes with the Company or any
parent or subsidiary corporation in the trade area served by the Company or any
parent or subsidiary corporation at any time during the term of the Option but
prior to its exercise in full and in which area the Optionee had performed
services for the Company or any parent or subsidiary corporation while employed
by it, the Optionee shall forfeit all unexercised Options and all exercised
Options under which the Company has not yet delivered the certificates and
which had been granted to the Optionee by the Committee earlier. The preceding
provisions of this Paragraph 16 shall not be deemed to have been violated
solely by reason of the Optionee's ownership of a stock or securities of any
publicly owned corporation, provided that such ownership does not result in
effective control of such corporation, and provided further that written notice
of such ownership, if in excess of one percent of the outstanding stock of said
corporation, is given to the Committee within 60 days after the later of (i)
the date on which the Optionee is notified of the award of an Option, or (ii)
the date on which such ownership is acquired.
17. FORFEITURE FOR DISHONESTY. Notwithstanding anything to the
contrary in the Plan, if the Committee finds by a majority vote, after full
consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his employment by
or affiliation with the Company or any parent or subsidiary corporation which
damaged the Company or any parent or subsidiary corporation, or for disclosing
trade secrets of the Company or any parent or subsidiary corporation, the
Optionee shall forfeit all unexercised Options and all exercised Options under
which the Company has not yet delivered the certificates and which had been
granted the Optionee by the Committee earlier.
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<PAGE> 8
The decision of the Committee as to the cause of an Optionee's discharge and
the damage done to the Company or any parent or subsidiary corporation shall be
final. No decision of the Committee, however, shall affect the finality of the
discharge of such Optionee by the Company or any parent or subsidiary
corporation in any manner.
18. 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 Stock 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 of Stock outstanding, without
receiving compensation therefor in money, services or property, then (a) the
number, class and per share price of shares of Stock subject to outstanding
Options hereunder shall be appropriately adjusted in such a manner as to
entitle an Optionee 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 of Stock then reserved that number and class
of shares of stock 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; provided in each case that with respect to Incentive
Stock Options and Nonqualified Options intended to be qualified as
performance-based compensation under Section 162(m)(4)(C) of the Code, no
adjustment shall be authorized to the extent that the adjustment would cause
the Plan to violate Section 422(b)(1) of the Code or would cause any part of
such Option to fail to qualify under Section 162(m) of the Code, as the case
may be, or any successor provisions thereto, and provided further, that the
number of shares of Stock subject to any Option shall always be a whole number.
After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, without regard to any limitations
set forth or imposed pursuant to Paragraph 9 hereof, each holder of an
outstanding Option shall, at no additional cost, be entitled upon exercise of
such Option to receive (subject to any required action by stockholders) in lieu
of the number and class of shares as to which such Option shall then be so
exercisable, the number and class of shares of stock or other securities to
which such Optionee would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such merger or
consolidation, such Optionee had been
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<PAGE> 9
the holder of record of the number and class of shares of Stock equal to the
number and class of shares as to which such Option shall be so exercised.
Notwithstanding any other provision of this Paragraph 18, if
(i) the Company merges or consolidates with any other corporation (other than a
wholly owned subsidiary) and is not the surviving corporation (or survives only
as a subsidiary of another corporation), (ii) the Company sells all or
substantially all of its assets to any other person or entity (other than a
wholly owned subsidiary), (iii) the Company is dissolved or liquidated, or (iv)
there is a Change of Control (as hereinafter defined) of the Company that is
not approved, recommended or supported by the Board of Directors of the Company
in actions taken prior to, and with respect to, such Change of Control, the
Optionee shall have the right, within 30 days after the approval by the
stockholders of the Company of such merger or consolidation, sale of assets or
dissolution or 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 of Stock subject to the Option held by
such Optionee multiplied by the difference between the Change of Control Price
(as defined below) 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 an Optionee who
is subject to Section 16(b) of the Exchange Act, any cash payment to the
Optionee 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 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 Optionee shall receive shares of Stock with a Fair Market Value
equal to the cash that would otherwise be payable hereunder in substitution for
the cash. If an Optionee does not elect to surrender all outstanding Options
for a cash payment (or shares of Stock) 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 three months after the Optionee's termination of
employment 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.
For purpose of this Plan, "Change of Control" means: 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 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; 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
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<PAGE> 10
the Company or any subsidiary; or 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 shall cease to constitute a majority of the Board of
Directors 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.
For purposes of this Plan, "Change of Control Price" means the
higher of (i) the highest reported sales price of a share of Stock 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 of Stock paid in such tender or
exchange offer; provided, however, that in the case of an Option which is held
by an Optionee who is subject to Section 16(b) of the Exchange Act and was
granted within six months of the occurrence of an event specified herein, then
the Change of Control Price for such Option shall be the Fair Market Value of
the Stock on the date such Option is cancelled.
Except as hereinbefore expressly provided, the issue by the
Company of shares of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, class
or price of shares of Stock then subject to outstanding Options.
19. SUBSTITUTION OPTIONS. Options may be granted under this Plan
from time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the
Company or any parent or subsidiary corporation as the result of a merger or
consolidation of the employing corporation with the Company or any parent or
subsidiary corporation, or the acquisition by the Company or any parent or
subsidiary corporation of the assets of the employing corporation, or the
acquisition by the Company or any parent or subsidiary corporation of stock of
the employing corporation as the result of which it becomes a subsidiary of the
Company. The terms and conditions of the substitute Options so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Board of Directors of the Company at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted.
20. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may
modify, revise or terminate this Plan at any time and from time to time;
provided, however, that without the further approval of the holders of at least
a majority of the outstanding shares of Stock, the Board of Directors may not
(i) materially increase the benefits accruing to
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participants under the Plan; (ii) change the aggregate number of shares of
Stock which may be issued under Options pursuant to the provisions of the Plan;
(iii) reduce the Option Price at which Options may be granted to an amount less
than the Fair Market Value per share at the time the Option is granted; or (iv)
change the class of employees eligible to receive Options; provided, however,
that the Board shall have the power to make such changes in the Plan and in the
regulations and administrative provisions hereunder or in any outstanding
Incentive Option as in the opinion of counsel for the Company may be necessary
or appropriate from time to time to enable any Incentive Option granted
pursuant to the Plan to qualify as an incentive stock option or such other
stock option as may be defined under the Code so as to receive preferential
federal income tax treatment.
21. INTENTIONALLY OMITTED.
22. WRITTEN AGREEMENT. Each Option granted hereunder shall be
embodied in a written option agreement, which shall be subject to the terms and
conditions prescribed above and shall be signed by the Optionee and by an
authorized officer of the Company for and in the name and on behalf of the
Company. Such an option agreement shall contain such other provisions as the
Committee in its discretion shall deem advisable.
23. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS.
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 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 in connection with or arising
out of any action, suit or proceeding in which he may be involved by reason of
his being or having been a member of the Committee and the Board of Directors,
whether or not he 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
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 duty
as such member of the Committee and the Board of 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 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
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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.
24. EFFECT OF AMENDMENTS. This 1987 Stock Option Plan, as amended
through October 5, 1995, constitutes a complete amendment and restatement of
such Plan. Any Option granted under the Plan shall be subject to the terms of
the Plan as in effect at the time the Option is granted; provided, however,
that by agreement between the Committee and the Optionee, any such Option may
be amended to incorporate and become subject to the provisions of the Plan as
amended through a date which is subsequent to the date on which the Option was
granted.
25. EFFECTIVE DATE OF PLAN. The Plan became effective March 18,
1987. No Option shall be granted pursuant to this Plan after March 17, 1997.
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EXHIBIT 10.4
WEATHERFORD ENTERRA, INC.
1991 STOCK OPTION PLAN
AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995
1. PURPOSE. This 1991 Stock Option Plan (the "Plan") of
Weatherford Enterra, Inc. (the "Company"), for executive officers and other key
employees (who may be members of the Board of Directors) of the Company and of
certain related corporations, and others providing services to the Company and
such related corporations (an "Optionee"), is intended to advance the best
interest of the Company and those related corporations by providing those
persons who have a substantial responsibility for its management and growth
with additional incentive and by increasing their proprietary interest in the
success of the Company and those related corporations--thereby encouraging them
to continue their employment or affiliation.
2. ADMINISTRATION. The Plan shall be administered by a committee
to be appointed by the Board of Directors of the Company (hereinafter called
the "Committee"); and all questions of interpretation and application of the
Plan, or of options granted hereunder (hereinafter called the "Options") shall
be subject to the determination, which shall be final and binding, of the
Committee. The Committee shall consist of not less than three members of the
Board of Directors, all of whom shall be "disinterested persons". A
"disinterested person" is a person who at the time he exercises discretion with
respect to the grant of any Option is not, and for at least one year prior to
that time has not been, eligible to receive options under the Plan or under
other similar plans of the Company. A majority of its members will constitute
a quorum. All determinations of the Committee will be made by a majority of
its members. Any decision or determination reduced to writing and signed by a
majority of the members will be as effective as if it had been made by a
majority vote at a meeting properly called and held. The Plan shall be
administered in such a manner as to permit the Options granted hereunder which
are designated as such to qualify as "incentive stock options" ("Incentive
Options") as described in section 422A of the Internal Revenue Code of 1986, as
amended (the "Code").
3. (a) SHARES AVAILABLE. The stock subject to the Options
and other provisions of the Plan shall be shares of the Company's Common Stock,
$0.10 par value (the "Stock"). The total amount of the Stock with respect to
which Options may be granted shall not exceed in the aggregate 1,814,894
shares; provided, that such aggregate number of shares shall be subject to
adjustment in accordance with the provisions of Paragraph 18 hereof. Such
shares may be treasury shares or authorized but unissued shares.
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(b) MAXIMUM AWARD. The maximum aggregate number of
shares of Stock available for Options to any one Optionee during any 12-month
period is 200,000.
(c) 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 3 of the Plan shall be (i)
decreased by the "gross" number of shares issued pursuant to exercised Options,
(ii) decreased by the "gross" number of shares issuable pursuant to outstanding
unexercised Options, and (iii) increased by the difference between the "gross"
number of Shares and the "net" number of shares issued pursuant to exercised
Options. As used herein, the "gross" number of shares refers to the maximum
number of shares that may be issued upon the exercise of an Option. The "net"
number of shares refers to the net number of shares actually issued to an
Optionee upon exercise of an Option, after reducing the "gross" number of
shares by the number of shares tendered back to the Company in payment of the
Option Price (as defined hereinafter) for the satisfaction of any tax payment
obligation. If an Optionee shall forfeit, voluntarily surrender or otherwise
permanently lose his or her right to exercise an Option under any provision of
this Plan or otherwise, or if any Option shall terminate or expire pursuant to
its terms, the shares subject to the Option shall once again be available to be
awarded and issued under this Plan pursuant to a new Option grant hereunder.
4. AUTHORITY TO GRANT OPTIONS. The Committee may grant from time
to time to such eligible individuals as it shall from time to time determine an
Option, or Options, to buy a stated number of shares of Stock under the terms
and conditions of the Plan. With respect to each Option, the Committee shall
specify whether such Option shall constitute an Incentive Option or an Option
not intended to qualify as an Incentive Option (a "Nonqualified Option").
Subject only to any applicable limitations set forth elsewhere in the Plan, the
number of shares of Stock to be covered by any Option shall be as determined by
the Committee.
5. ELIGIBILITY. The individuals who shall be eligible to receive
Incentive Options shall be such executive officers and other key employees (who
may be members of the Board of Directors) of the Company, or of any parent or
subsidiary corporation, as the Committee shall determine from time to time.
With respect to Incentive Options, any reference to a parent or subsidiary
corporation shall mean a parent corporation within the meaning of section
425(e) of the Code or a subsidiary corporation within the meaning of section
425(f) of the Code. The individuals who shall be eligible to receive
Nonqualified Options shall be such executive officers and other key employees
(who may be members of the Board of Directors) of the Company, or of any parent
or subsidiary corporation, or any other person performing services for the
Company or any parent or subsidiary corporation, as the Committee
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shall determine from time to time. With respect to Nonqualified Options, any
reference to a parent corporation shall mean a corporation which has actual
control of the Company through its direct or indirect ownership of not less
than 51 percent of each class of voting stock of the Company; and any reference
to a subsidiary corporation shall mean a corporation of which the Company owns,
directly or indirectly, not less than 40 percent of each class of voting stock.
6. OPTION PRICE. The price at which shares may be purchased
pursuant to an Option (the "Option Price") shall be determined by the Committee
at the time each Option is granted but shall not be less than 100 percent of
the Fair Market Value (as defined hereinafter) of the shares of Stock on the
date the Option is granted. In the case of any employee of the Company or a
parent or subsidiary corporation who owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the corporation
employing the employee or of its parent or subsidiary corporation, the price at
which shares may be so purchased under an Incentive Option shall be not less
than 110 percent of the Fair Market Value of the Stock on the date the
Incentive Option is granted. "Fair Market Value" for purposes of this Plan
means the average of the high and low reported sales prices per share of Stock
(as reported on the New York Stock Exchange) as of the relevant measuring date,
or if there is no sale on the New York Stock Exchange on that date, then as of
the next following day on which there is a sale.
7. DURATION OF OPTIONS. Each Option shall expire on the tenth
(10th) anniversary date of its grant. In the case of any employee of the
Company who owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the corporation employing the employee
or of its parent or subsidiary corporation, no Incentive Option shall be
exercisable after the expiration of five years after the date such Incentive
Option is granted. The Committee in its discretion may provide that an Option
shall be exercisable during such 10-year period or five-year period, as the
case may be, or during any lesser period of time.
8. MAXIMUM VALUE OF STOCK SUBJECT TO INCENTIVE OPTIONS.
Notwithstanding any other provisions of the Plan to the contrary, the aggregate
Fair Market Value (determined as of the date the Incentive Option is granted)
of the Stock with respect to which Incentive Options are exercisable for the
first time by the Optionee in any calendar year (under this Plan and any other
incentive stock option plan(s) of the Company and any parent and subsidiary
corporation) shall not exceed $100,000.
9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as
it is valid and outstanding, from time to time, in whole or in part, in such
manner and
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subject to such conditions, as the Committee in its discretion may provide in
the option agreement (described in Paragraph 22 hereof).
10. EXERCISE OF OPTIONS.
(a) NOTICE. Options shall be exercised by the delivery
of written notice (the "Exercise Notice") to the Secretary of the Company
setting forth the number of shares with respect to which the Option is to be
exercised and the address to which the certificates representing shares of the
Stock issuable upon the exercise of such Option shall be mailed (the "Exercise
Date"). The date on which the Exercise Notice is delivered to the Company is
the "Notice Date".
(b) PAYMENT. Unless otherwise prescribed by the
Committee, the Optionee shall tender to the Company on, or within three
business days after, the Exercise Date full payment of the Option Price for the
shares of Stock, together with any federal, state or local taxes required to be
collected or withheld by the Company in connection with the exercise of the
Option ("Taxes"), in cash (by personal check, cashier's check, certified check,
bank draft or postal or express money order payable to the order of the Company
or by payroll deduction). Alternatively, subject to the provisions of Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
payment of the Option Price and any Taxes may be made by the Optionee'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 of Stock and any Taxes, such amount being
either from loan proceeds or from the sale of the shares of Stock to be issued
to the Optionee. Alternatively, unless otherwise provided in the option
agreement, payment of the Option Price and any Taxes may be made in whole or in
part in shares of Stock previously issued to the Optionee, if at the time of
delivery of the Exercise Notice (i) the Company has unrestricted earned surplus
in an amount not less than the Option Price of such shares, (ii) all accrued
cumulative preferential dividends and other current preferential dividends on
all outstanding preferred stock of the Company have been fully paid, (iii) the
reacquisition or exchange by the Company of its own shares for the purpose of
enabling such Optionee to exercise such Option is otherwise permitted by
applicable law and without any vote or consent of any shareholder of the
Company and would not result in the Company's being in violation of any
agreement by which it is bound, and (iv) there shall have been adopted, and
there is in full force and effect, a resolution of the Board of Directors of
the Company authorizing the reacquisition by the Company of its own shares for
such purpose. If payment is made in whole or in part in shares of Stock, then
the Optionee shall deliver to the Company, in payment of the Option Price of
the shares with respect of which such Option is exercised, (i) certificates
registered in the name of such Optionee representing a number of shares of
Stock legally and beneficially owned by such
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<PAGE> 5
Optionee, free of all liens, claims, and encumbrances of every kind, and having
a Fair Market Value on the date of delivery of such notice that is not greater
than the Option Price of the shares with respect to which such Option is to be
exercised, such certificates to be accompanied by stock powers duly endorsed in
blank by the record holder of the shares represented by such certificates, with
the signature of such record holder guaranteed by a national banking
association, and (ii) if the Option Price of the shares with respect to which
such Option is to be exercised exceeds the Fair Market Value of such
certificates, payment of the difference shall be made as provided above.
Notwithstanding the foregoing provisions of this Paragraph 10, the Committee,
in its sole discretion, may refuse to accept shares of Stock in payment of the
Option Price of the shares with respect to which such Option is to be exercised
and, in that event, any certificates representing shares of Stock which were
delivered to the Company with such written notice shall be returned to such
Optionee together with notice by the Company to such Optionee of the refusal of
the Committee to accept such shares of Stock.
(c) STOCK PURCHASE AGREEMENT. In its sole and absolute
discretion, the Committee may require, as an additional condition to the
issuance of Stock upon exercise of an Option, that the Optionee furnish the
Committee with an executed copy of a stock purchase agreement, in such form as
may be required by the Committee, at the time the Exercise Notice is delivered
to the Company or within three business days after the proposed agreement is
presented to the Optionee, if later.
(d) SHARE CERTIFICATES. As promptly as practicable after
the receipt by the Company of (i) the Exercise Notice from the Optionee setting
forth the number of shares with respect to which such Option is to be
exercised, (ii) payment of the Option Price of such shares in the form required
by the foregoing provisions of this Paragraph 10, and (iii) a fully executed
stock purchase agreement in the form required by the Committee, if any is so
required, the Company shall cause to be delivered to such Optionee (or to a
specified escrow agent, if so required under the terms of any applicable stock
purchase agreement) certificates representing the number of shares of Stock
with respect to which such Option has been so exercised, such certificates to
be registered in the name of such Optionee, provided that such delivery shall
be considered to have been made when such certificates shall have been mailed,
postage prepaid, to such Optionee at the address specified for such purpose in
the Exercise Notice from the Optionee to the Company.
(e) VALUATION. Any calculation with respect to an
Optionee's income, required tax withholding or otherwise shall be made using
the Fair Market Value of such shares of Stock on the Notice Date, whether or
not the Exercise Notice is delivered to the Company before or after the close
of trading on that date, unless otherwise specified by the Committee.
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<PAGE> 6
11. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by
the Optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by the
Optionee.
12. TERMINATION OF EMPLOYMENT OR AFFILIATION OF OPTIONEE. Except as
may be otherwise expressly provided in this Paragraph 12 or elsewhere in the
Plan, if the Optionee's employment with the Company is terminated, the Optionee
shall have the right to exercise the Option, to the extent to which he was
entitled to exercise such Option immediately prior to such termination, at any
time during the period ending the earlier of 30 days after such termination and
the expiration of the Option. Whether authorized leave of absence, or absence
on military or government service, shall constitute severance of the employment
or affiliation relationship between the Company and the Optionee shall be
determined by the Committee at the time thereof. In the event of the death of
the Optionee while affiliated with or in the employ of the Company, or within
three months after his retirement or termination due to age or disability as
provided below, such Option shall terminate on the earlier of one year
following the date of such death and the expiration of the Option. After the
death of the Optionee, the time for exercise of the Option shall be accelerated
and the Option shall be exercisable in full, and the Optionee's executors,
administrators or any persons to whom his Option may be transferred by will or
by the laws of descent and distribution, shall have the right, at any time
prior to such termination, to exercise the Option, in whole or in part, without
regard to any limitations set forth in or imposed pursuant to Paragraph 9
hereof. If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company, or the affiliation
shall be severed for reasons of age or disability under the then established
rules of the Company, the Option shall terminate on the earlier of three months
after the date of such retirement or severance and the expiration of the
Option. In the event of such retirement or severance, the Optionee shall have
the right prior to the termination of such Option to exercise the Option to the
extent to which he was entitled to exercise such Option immediately prior to
such retirement or severance. For the purpose of determining the employment
relationship or other affiliation between the Company and the Optionee,
employment by or affiliation with any parent or subsidiary corporation shall be
considered employment by or affiliation with the Company.
13. REQUIREMENTS OF LAW. The Company shall not be required to sell
or issue any shares of Stock under any Option if the issuance of such shares
shall constitute or result in a violation by the Optionee 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
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<PAGE> 7
effect that the Optionee will not transfer such shares except pursuant to a
registration statement in effect under such Act or unless an opinion of counsel
satisfactory 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. The Company may, but shall
in no event be obligated to, register the shares of Stock covered hereby
pursuant to the Securities Act. In the event the shares of Stock issuable on
exercise of an Option are not registered under the Securities Act, 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."
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.
14. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a
stockholder with respect to shares of Stock covered by his Option until the
date of issuance of a stock certificate for such shares; and, except as
otherwise provided in Paragraph 18 hereof, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
15. EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of an
Option shall not impose upon the Company or any parent or subsidiary
corporation any obligation to employ or become affiliated with, or continue to
employ or be affiliated with, any Optionee; and the right of the Company or any
parent or subsidiary corporation to terminate the employment or affiliation of
any person shall not be diminished or affected by reason of the fact that an
Option has been granted to him.
16. FORFEITURE FOR COMPETITION. Notwithstanding any other
provision of the Plan, if at any time during the term of an Option granted
hereunder the Committee finds by a majority vote, after full consideration of
the facts presented on behalf of the Company and the Optionee, that such
Optionee, without the written consent of the Company, directly or indirectly
owns, operates, manages, controls or participates in the ownership, management,
operation or control of, or is employed by or is paid as a consultant or as an
independent contractor by a business which competes with the
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<PAGE> 8
Company or any parent or subsidiary corporation in the trade area served by the
Company or any parent or subsidiary corporation at any time during the term of
the Option but prior to its exercise in full and in which area the Optionee had
performed services for the Company or any parent or subsidiary corporation
while employed by it, the Optionee shall forfeit all unexercised Options and
all exercised Options under which the Company has not yet delivered the
certificates and which had been granted to the Optionee by the Committee
earlier. The preceding provisions of this Paragraph 16 shall not be deemed to
have been violated solely by reason of the Optionee's ownership of a stock or
securities of any publicly owned corporation, provided that such ownership does
not result in effective control of such corporation, and provided further that
written notice of such ownership, if in excess of one percent of the
outstanding stock of said corporation, is given to the Committee within 60 days
after the later of (i) the date on which the Optionee is notified of the award
of an Option, or (ii) the date on which such ownership is acquired.
17. FORFEITURE FOR DISHONESTY. Notwithstanding anything to the
contrary in the Plan, if the Committee finds by a majority vote, after full
consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his employment by
or affiliation with the Company or any parent or subsidiary corporation which
damaged the Company or any parent or subsidiary corporation, or for disclosing
trade secrets of the Company or any parent or subsidiary corporation, the
Optionee shall forfeit all unexercised Options and all exercised Options under
which the Company has not yet delivered the certificates and which had been
granted the Optionee by the Committee earlier. The decision of the Committee
as to the cause of an Optionee's discharge and the damage done to the Company
or any parent or subsidiary corporation shall be final. No decision of the
Committee, however, shall affect the finality of the discharge of such Optionee
by the Company or any parent or subsidiary corporation in any manner.
18. 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 Stock 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
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<PAGE> 9
reduction of the number of shares of Stock outstanding, without receiving
compensation therefor in money, services or property, then (a) the number,
class and per share price of shares of Stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a manner as to entitle an
Optionee 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 of Stock then reserved that number and class of
shares of stock 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; provided in each case that with respect to Incentive
Stock Options and Nonqualified Options intended to be qualified as
performance-based compensation under Section 162(m)(4)(C) of the Code, no
adjustment shall be authorized to the extent that the adjustment would cause
the Plan to violate Section 422(b)(1) of the Code or would cause any part of
such Option to fail to qualify under Section 162(m) of the Code, as the case
may be, or any successor provisions thereto, and provided further, that the
number of shares of Stock subject to any Option shall always be a whole number.
After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, without regard to any limitations
set forth or imposed pursuant to Paragraph 9 hereof, each holder of an
outstanding Option shall, at no additional cost, be entitled upon exercise of
such Option to receive (subject to any required action by stockholders) in lieu
of the number and class of shares as to which such Option shall then be so
exercisable, the number and class of shares of stock or other securities to
which such Optionee would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such merger or
consolidation, such Optionee had been the holder of record of the number and
class of shares of Stock equal to the number and class of shares as to which
such Option shall be so exercised.
Notwithstanding any other provision of this Paragraph 18, if
(i) the Company merges or consolidates with any other corporation (other than a
wholly owned subsidiary) and is not the surviving corporation (or survives only
as a subsidiary of another corporation), (ii) the Company sells all or
substantially all of its assets to any other person or entity (other than a
wholly owned subsidiary), (iii) the Company is dissolved or liquidated, or (iv)
there is a Change of Control (as hereinafter defined) of the Company that is
not approved, recommended or supported by the Board of Directors of the Company
in actions taken prior to, and with respect to, such Change of Control, the
Optionee shall have the right, within 30 days after the
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<PAGE> 10
approval by the stockholders of the Company of such merger or consolidation,
sale of assets or dissolution or 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 of Stock subject to the
Option held by such Optionee multiplied by the difference between the Change of
Control Price (as defined below) 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 an
Optionee who is subject to Section 16(b) of the Exchange Act, any cash payment
to the Optionee 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 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 Optionee shall receive shares of Stock with a Fair Market Value
equal to the cash that would otherwise be payable hereunder in substitution for
the cash. If an Optionee does not elect to surrender all outstanding Options
for a cash payment (or shares of Stock) 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 three months after the Optionee's termination of
employment 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.
For purpose of this Plan, "Change of Control" means: 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 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; 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; or 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 shall cease to constitute a
majority of the Board of Directors 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.
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<PAGE> 11
For purposes of this Plan, "Change of Control Price" means the
higher of (i) the highest reported sales price of a share of Stock 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 of Stock paid in such tender or
exchange offer; provided, however, that in the case of an Option which is held
by an Optionee who is subject to Section 16(b) of the Exchange Act and was
granted within six months of the occurrence of an event specified herein, then
the Change of Control Price for such Option shall be the Fair Market Value of
the Stock on the date such Option is cancelled.
Except as hereinbefore expressly provided, the issue by the
Company of shares of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, class
or price of shares of Stock then subject to outstanding Options.
19. SUBSTITUTION OPTIONS. Options may be granted under this Plan
from time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the
Company or any parent or subsidiary corporation as the result of a merger or
consolidation of the employing corporation with the Company or any parent or
subsidiary corporation, or the acquisition by the Company or any parent or
subsidiary corporation of the assets of the employing corporation, or the
acquisition by the Company or any parent or subsidiary corporation of stock of
the employing corporation as the result of which it becomes a subsidiary of the
Company. The terms and conditions of the substitute Options so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Board of Directors of the Company at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted.
20. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may
modify, revise or terminate this Plan at any time and from time to time;
provided, however, that without the further approval of the holders of at least
a majority of the outstanding shares of Stock, the Board of Directors may not
(i) materially increase the benefits accruing to participants under the Plan;
(ii) change the aggregate number of shares of Stock which may be issued under
Options pursuant to the provisions of the Plan; (iii) reduce the Option Price
at which Options may be granted to an amount less than the Fair Market Value
per share at the time the Option is granted; or (iv) change
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<PAGE> 12
the class of employees eligible to receive Options; provided, however, that the
Board shall have the power to make such changes in the Plan and in the
regulations and administrative provisions hereunder or in any outstanding
Incentive Option as in the opinion of counsel for the Company may be necessary
or appropriate from time to time to enable any Incentive Option granted
pursuant to the Plan to qualify as an incentive stock option or such other
stock option as may be defined under the Code so as to receive preferential
federal income tax treatment.
21. INTENTIONALLY OMITTED.
22. WRITTEN AGREEMENT. Each Option granted hereunder shall be
embodied in a written option agreement, which shall be subject to the terms and
conditions prescribed above and shall be signed by the Optionee and by an
authorized officer of the Company for and in the name and on behalf of the
Company. Such an option agreement shall contain such other provisions as the
Committee in its discretion shall deem advisable.
23. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS.
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 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 in connection with or arising
out of any action, suit or proceeding in which he may be involved by reason of
his being or having been a member of the Committee and the Board of Directors,
whether or not he 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
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 duty
as such member of the Committee and the Board of 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 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
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<PAGE> 13
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.
24. EFFECT OF AMENDMENTS. This 1991 Stock Option Plan, as amended
through October 5, 1995, constitutes a complete amendment and restatement of
such Plan. Any Option granted under the Plan shall be subject to the terms of
the Plan as in effect at the time the Option is granted; provided, however,
that by agreement between the Committee and the Optionee, any such Option may
be amended to incorporate and become subject to the provisions of the Plan as
amended through a date which is subsequent to the date on which the Option was
granted.
25. EFFECTIVE DATE OF PLAN. The Plan became effective March 19,
1991. No Option shall be granted pursuant to this Plan after March 18, 2001.
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<PAGE> 1
EXHIBIT 10.6
WEATHERFORD ENTERRA, INC.
RESTRICTED STOCK INCENTIVE PLAN
AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995
1. INTRODUCTION AND STATEMENT OF PURPOSE.
1.1 This Restricted Stock Incentive Plan (the "Plan") of
Weatherford Enterra, Inc. (the "Company"), for executive officers and other key
employees of the Company and certain related corporations ("Key Employees"), is
intended to advance the best interest of the Company (who may be members of the
Board of Directors) and those related corporations by providing those persons
who have significant ultimate responsibility for the management and planning of
the Company's operations and who directly influence the growth and profits of
the Company and those related corporations with additional opportunities for
meaningful capital accumulation, and by increasing their proprietary interest
in the success of the Company and those related corporations, encourage their
continued employment with the Company or those related corporations. It is
desired that the benefits available under this Plan, when added to other
benefits payable to Key Employees, will furnish total compensation to those
employees which is competitive in the Company's industry.
1.2 The Plan provides for two types of awards: Restricted Share
grants and Performance Share grants (collectively called "Share Grants").
Restricted Share grants are designed to retain Key Employees in the employ of
the Company. Performance Share grants are designed to reward long-term and
short- term performance of Key Employees, such as reducing the debt-equity
ratio of the Company, achieving certain operating and net income goals or stock
appreciation goals (long-term), or selling or acquiring certain business
assets, identifying and developing successor candidates for Key Employee
positions or raising equity for the Company (short-term).
1.3 A Share Grant under the Plan could consist of a combination of
Restricted Shares and Performance Shares, or could consist of only one type of
shares, at the Committee's sole discretion.
2. ADMINISTRATION.
2.1 The Plan shall be administered by a committee to be appointed
by the Board of Directors of the Company (hereinafter called the "Committee").
The Committee shall consist of not less than three members of the Board of
Directors, all of whom shall be "disinterested persons". A "disinterested
person" is a person who at the time he exercises discretion with respect to the
award of a Share Grant is not, and for at least one year prior to that time has
not been, eligible to receive Share Grants under the Plan or under other
similar plans of the Company. A majority of the Committee's members will
constitute a quorum and all determinations of the Committee will be made by a
majority of its members.
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<PAGE> 2
2.2 The Committee is empowered to:
(a) Make all determinations regarding individuals
eligible to participate in the Plan, including prospective employees
of the Company who, upon commencing employment, would be Key Employees
of the Company (the "Key Employees");
(b) Make all determinations and computations concerning
the issuance of Restricted Shares and Performance Shares under the
Plan and the number of shares to be granted to each Key Employee;
(c) Cause the Company to enter into a written agreement
with each Key Employee setting forth the terms and provisions of the
Share Grant awarding the Restricted Shares and Performance Shares (the
"Share Grant Agreement");
(d) Make rules and regulations for the administration of
the Plan which are not inconsistent with the terms and provisions
hereof;
(e) Construe and administer all terms, provisions,
conditions and limitations of the Plan in good faith;
(f) Make equitable adjustments for any mistakes or errors
in the administration of the Plan or deemed by the Committee to be
necessary as the result of any unusual situation or any ambiguity in
the Plan; and
(g) Select, employ and compensate, from time to time,
such consultants, accountants, attorneys and other agents and
employees as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan.
2.3 The foregoing list of express powers is not intended to be
either complete or exclusive, and the Committee shall, in addition, have such
powers, whether or not expressly authorized, which it may deem necessary,
desirable, advisable or proper for the supervision and administration of the
Plan. Except as otherwise specifically provided herein, the decision or
judgment of the Committee on any question arising hereunder in connection with
the exercise of any of its powers shall be final, binding and conclusive upon
all parties concerned (including the Key Employee and any person claiming by,
through or under a Key Employee) and shall not be subject to review.
3. SHARES SUBJECT TO GRANT.
3.1 The stock subject to the Share Grants and other provisions of
the Plan shall be shares of the Company's Common Stock, $.10 par value (the
"Stock"). The total amount of the Stock with respect to which Share Grants may
be granted shall not exceed in the aggregate 160,437 shares, except as provided
below. Distributions of shares hereunder may, at the Committee's sole
discretion, be made from authorized but unissued shares or shares reacquired by
the Company and held as treasury shares. Within such aggregate maximum number
of shares
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<PAGE> 3
there is no maximum number of such shares which may be issued as Restricted
Shares or Performance Shares.
3.2 In the event that any Stock issued or granted under the Plan
shall be forfeited, for any reason, the aggregate number of additional shares
of Stock which may be issued or granted hereunder shall be increased by such
number of shares, and said shares of Stock so forfeited may again be the
subject of a Share Grant under the Plan.
3.3 In the event that the issued and outstanding shares of the
Company's Stock should, as a result of any stock dividend, stock split or
spin-off, recapitalization, combination or exchange of shares, merger,
consolidation, acquisition of property or stock, separation, reclassification,
reorganization, liquidation, or other similar event, be increased or decreased
or changed into or exchanged for a different number or kind of share of stock
or other securities of the Company or of another corporation, the number and
class of additional shares or other securities which may be issued under the
Plan will be appropriately adjusted to reflect such action. If any such
adjustment results in a fractional share of Stock being issuable under the
Plan, such fraction will be disregarded.
4. ELIGIBILITY. The individuals who shall be eligible to receive
Stock under this Plan shall be such executive officers and other key employees
(who may be members of the Board of Directors) of the Company, or of any parent
or subsidiary corporation, as the Committee shall determine from time to time.
Any reference to a parent corporation shall mean a corporation which has actual
control of the Company through its direct or indirect ownership of not less
than 51 percent of each class of voting stock of the Company; and any reference
to a subsidiary corporation shall mean a corporation of which the Company owns,
directly or indirectly, not less than 40 percent of each class of voting stock.
5. SHARE GRANTS.
5.1 The Committee may cause the Company to issue, from time to
time, Restricted Shares or Performance Shares to, and enter into Share Grant
Agreements with, such Key Employees as the Committee, in its sole discretion,
may determine and designate. Subject to the final authority of the Committee,
the selection of the Key Employees may be based on recommendations of the
Company's Chief Executive Officer.
5.2 If the Committee decides to make a Share Grant, the Committee
will designate the number of shares of Stock to be issued; whether the shares
will be Restricted Shares or Performance Shares or a combination of the two
types of shares; the nature of the restrictions on the Key Employee's ownership
of the shares; the time or times at which the restrictions on ownership will be
removed; the condition or conditions upon which the restrictions on ownership
will be removed; and such other terms and provisions, not inconsistent with the
Plan, as the Committee deems appropriate. The terms and provisions of the
Share Grant will be set forth in a Share Grant Agreement.
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<PAGE> 4
5.3 If the Committee decides to award Performance Shares to a Key
Employee, in addition to the other terms and provisions of the Share Grant
Agreement, the Committee will determine the Key Employee's performance
objectives and specify the times within the Performance Period at which the Key
Employee's performance will be evaluated.
5.4 The Committee will designate at the time of each Share Grant
the commencement date and length of the Performance Period. Performance
Periods with respect to Restricted Shares generally will be four years,
although the Committee will have the discretion to designate a different length
for a Performance Period, not less than three nor more than five years.
Performance Periods with respect to Performance Shares will be determined by
the nature of the applicable performance objectives and achievement thereof but
in no event less than six months nor more than eight years.
5.5 The Committee shall have the authority to make a Share Grant
to a Key Employee at any time; however, the Committee generally will commence a
Share Grant for a Key Employee only one time per year.
6. OWNERSHIP AND RESTRICTIONS ON OWNERSHIP OF SHARES.
6.1 The Key Employee will own the shares of Stock from the date of
the Share Grant, subject to the restrictions on ownership and other terms and
provisions designated by the Committee and set forth in the Share Grant
Agreement.
6.2. The Committee will determine whether a stock certificate
representing part or all of the shares granted under the Plan will be issued to
the Key Employee at the commencement of a Performance Period or at any time
prior to the unrestricted ownership of the shares vesting in the Key Employee.
In the event this occurs, the stock certificate will contain a legend
restricting the sale, exchange, transfer, assignment, pledge or other
disposition of the shares. In addition, the Committee will determine whether a
Key Employee will have the right to vote any of the shares prior to the
ownership restrictions being removed. The Committee will also determine
whether the Key Employee will have the right to receive any dividends paid on
any of such shares prior to the ownership restrictions being removed or whether
such dividends will be accrued and paid to the Key Employee only when the
restrictions on his ownership of the shares are removed.
6.3 All shares of Stock granted pursuant to the Plan will be
subject to restrictions on ownership when granted, and a Key Employee will not
be able to sell, exchange, transfer, assign, pledge or otherwise dispose of
such shares until the restrictions on ownership are removed by the Committee in
accordance with the terms and provisions of the Plan and the Share Grant
Agreement. Further, the Key Employee may not assign, transfer or otherwise
dispose of any right or interest under the Share Grant Agreement, except as
provided therein.
7. REMOVAL OF RESTRICTIONS ON OWNERSHIP OF SHARES.
7.1 The Committee will determine, in its sole discretion, when the
restrictions on ownership of the shares of stock granted under this Plan will
be removed.
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<PAGE> 5
7.2 The restrictions on the Key Employee's ownership of any
Restricted Shares will be removed on all such shares at the end of a
Performance Period or on a certain portion of such shares at times designated
by the Committee (such as annually). The Key Employee generally must be
employed by the Company at the designated time (or times) in order for the
restrictions to be removed, although the Committee can provide otherwise. In
the event the Key Employee's employment by the Company terminates prior to the
ownership restrictions on the Restricted Shares being removed, the Key Employee
will, upon the request of the Committee, for no consideration, forfeit all
Restricted Shares which remain subject to such restrictions and surrender to
the Company all stock certificates representing such shares, if any have been
issued and delivered to him.
7.3 The restrictions on the Key Employee's ownership of any
Performance Shares will be removed upon the achievement of the Key Employee's
performance objectives or at the end of the Performance Period, unless the
Committee has specified otherwise, provided that the Key Employee is still
employed by the Company. In the event the Key Employee's employment with the
Company terminates prior to his achieving his performance objectives or prior
to the end of the Performance Period, the Key Employee will, upon the request
of the Committee, for no consideration, forfeit all or part, as applicable, of
the Performance Shares which remain subject to ownership restrictions and
surrender to the Company all stock certificates representing such shares, if
any have been issued and delivered to him.
8. HOLDING PERIOD. Notwithstanding any other provision hereof,
any shares of stock granted hereunder must be held by the Key Employee for at
least six months prior to sale, assignment, transfer or exchange, and any
attempt to sell, assign, transfer or exchange such shares during the six months
after grant shall be void.
9. DEATH OR DISABILITY.
9.1 Should a Key Employee's employment be terminated by death or
total and permanent disability prior to the removal of the ownership
restrictions on any shares of stock granted hereunder, the Committee has the
right to remove the restrictions on part or all of such shares. The Committee
will determine, in its sole discretion, whether and on which shares the
restrictions should be removed, based on the length of service the Key Employee
has in the Performance Period, the Key Employee's performance during the
Performance Period and such other matters as the Committee deems relevant.
9.2 For purposes of the Plan, the Committee shall determine, in
the exercise of its discretion, whether or not a Key Employee is totally and
permanently disabled for purposes of the Plan and the date such disability (if
any) commenced. Any such determinations by the Committee shall be conclusive
and binding on the Key Employee and any person claiming by, through or under
the Key Employee. Any determination of total and permanent disability and of
the commencement date thereof will be made on the basis of medical reports and
other evidence satisfactory to the Committee and in accordance with a uniform,
non-discriminatory policy applied by the Committee. However, such
determinations will not be binding on the Company or any Key Employee with
respect to any other employee benefit or other plan or insurance policy
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<PAGE> 6
wherein such determinations may be relevant, and need not be consistent with
any determinations made under any such other plan or insurance policy.
10. EARLY RETIREMENT. Should a Key Employee take early retirement
at the convenience of the Company prior to the removal of the ownership
restrictions on any shares of stock granted hereunder, the Committee has the
right to remove the restrictions on part or all of the shares. The Committee
will determine, in its sole discretion, whether and on which shares the
restrictions should be removed, based on the length of service the Key Employee
has in the Performance Period, the Key Employee's performance during the
Performance Period and such other matters as the Committee deems relevant.
11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. Notwithstanding
any other provision of the Plan to the contrary, in the event of a Change of
Control (as defined below) occurs, all restrictions to which the Key Employee's
Restricted Shares or Performance Shares remained subject at such time shall
automatically terminate and such shares shall become fully vested and
transferable. The Company shall promptly deliver to the Key Employee stock
certificates for such shares without the legend restricting the sale, exchange,
transfer, assignment, pledge or other disposition, other than as may be
required by applicable Securities laws. For purposes of this paragraph, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30 percent of more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control:
(i) any acquisition directly from the Company,
(ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or
(iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 11; 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
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<PAGE> 7
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, 30 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.
12. EMPLOYMENT OR AFFILIATION OBLIGATION. The making of a Share
Grant shall not impose upon the Company or any parent or subsidiary corporation
any obligation to employ or continue to employ a Key Employee, and the right of
the Company or any parent or subsidiary corporation to terminate the employment
of any person shall not be diminished or affected by reason of the fact that a
Share Grant has been granted to him.
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<PAGE> 8
13. AMENDMENT OR TERMINATION OF PLAN.
13.1 The Board of Directors, without approval of or notice to the
Key Employees, may modify or amend this Plan at any time it deems advisable;
provided, however, that without stockholder approval the Board of Directors may
not (i) except as permitted in the case of stock splits and other
recapitalizations, materially increase the aggregate number of shares which may
be granted pursuant to the provisions of the Plan; (ii) materially increase the
benefits accruing to the Key Employees under the Plan; or (iii) materially
modify the requirements as to eligibility for participation in the Plan.
13.2 The Board of Directors, without approval of or notice to the
Key Employees, may terminate the Plan at any time.
13.3 Any amendment or termination of the Plan shall not affect
shares already issued or Share Grant Agreements already executed, without the
consent of the Key Employee. In each case where the Board of Directors
determines it to be appropriate or is advised by counsel that such approval is
required, an amendment or termination of the Plan shall be submitted to the
stockholders of the Company for approval.
14. MISCELLANEOUS PROVISIONS.
14.1 As a condition to the issuance of shares hereunder, the
Company may require the Key Employee receiving such shares to represent and
warrant at the time of issuance that the shares are being acquired only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such representation is required
under the Securities Act of 1933, or any other applicable law, regulation or
rule of any governmental authority.
14.2 During the term of the Plan, the Company will at times reserve
and keep available, or have authorized but unissued, such number of shares of
Stock as shall be sufficient to satisfy the requirements of the Plan. The
inability of the Company to obtain from any regulatory body having
jurisdictional authority deemed by the Company's counsel to be necessary to the
lawful issuance of Stock hereunder shall relieve the Company of any liability
in respect of the non-issuance of such Stock as to which such requisite
authority shall not have been obtained.
14.3 Until the issuance of a stock certificate for Restricted
Shares or Performance Shares, as appropriate, to a Key Employee (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive cash dividends or
other distributions or any other rights as a stockholder of the Company shall
exist with respect to such Restricted Shares or Performance Shares,
notwithstanding the grant of such shares, the execution of a Share Grant
Agreement, or the occurrence of any event or the passing of any period of time
giving rise to a right in the Key Employee to receive unrestricted ownership of
such shares under the Share Grant Agreement. No adjustment will be made for
any cash dividend or other distribution or other rights for which the record
date is prior to the date the stock certificates representing such Restricted
Shares or Performance Shares are issued, except
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<PAGE> 9
as otherwise expressly determined by the Committee. The Company shall endeavor
in good faith to issue stock certificates for Restricted Shares or Performance
Shares which are authorized to be issued under the Plan as promptly as
practicable. However, neither the Company, the Committee or any member
thereof, any transfer agent nor any other person shall have any liability to
any Key Employee (or to any person claiming by, through or under any Key
Employee) as the result of any delay in the issuance of any such certificates,
including delays resulting from the negligence or willful misconduct of any
such person or entity.
14.4 Notwithstanding anything to the contrary contained in this
Plan or any Share Grant Agreement entered into hereunder, any Share Grant made
under this Plan shall be granted subject to the approval of this Plan by the
affirmative vote of the holders of a majority of the Stock of the Company
present or represented and entitled to vote at a meeting duly called and held
for such purpose in accordance with applicable Delaware law. No Share Grant
Agreement entered into under this Plan nor any Share Grant made under this Plan
shall create any obligation in the Company prior to such approval. In the
event that the holders of a majority of the Stock of the Company do not so
approve this Plan, any and all Share Grant Agreements theretofore entered into
shall thereupon terminate and shall be void and of no force and effect and no
Restricted Shares or Performance Shares shall be issued thereunder.
14.5 Any and all taxes payable with respect to income to a Key
Employee resulting from the grant of Restricted Shares or Performance Shares
hereunder shall be the sole responsibility of the Key Employee, not of the
Company, whether or not the Company shall have withheld or collected from the
Key Employee any sums required to be so withheld or calculated in respect of
such income, and whether or not any sums so withheld or collected shall be
sufficient to provide for any such taxes. The Company or any parent or
subsidiary corporation shall be entitled to deduct from other compensation
payable to each Key Employee any sums required by federal, state or local tax
law to be withheld with respect to the grant of Restricted Shares or
Performance Shares hereunder; but, in the alternative, the Company may require
the Key Employee to pay such sums directly to the employer corporation. If the
Key Employee elects to pay such sums directly, written notice of that election
shall be delivered prior to the ownership restrictions on such Shares being
removed and, whether pursuant to such election or pursuant to a requirement
imposed by the Company, payment in cash or by check of such sums for taxes
shall be delivered within ten days after the date on which ownership
restrictions on such shares are removed. In addition, any such sums may be
satisfied by the Key Employee in shares of Stock, at the discretion of the
Committee, if the Key Employee instructs the Company in writing at or before
the time the ownership restrictions on such shares are removed to withhold from
the shares that number of shares having a value equal to the amount necessary
to satisfy the sums required by federal, state or local tax law or if the Key
Employee delivers to the Company that number of shares of Stock having a value
equal to such amount. The number of shares required to satisfy such taxes will
be calculated based on the fair market value of the Stock determined in
accordance with the procedures established by the Committee.
14.6 The Company shall be entitled but shall have no obligation to
cause the shares of Stock issuable hereunder to be registered under the
Securities Act.
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15. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS.
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 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 in connection with or arising
out of any action, suit or proceeding in which he may be involved by reason of
his being or having been a member of the Committee and the Board of Directors,
whether or not he 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
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 duty
as such member of the Committee and the Board of Directors, or (ii) in respect
of any matter in which any settlement is effected in 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 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.
16. EFFECT OF AMENDMENTS. This Restricted Stock Incentive Plan,
as amended through October 5, 1995, constitutes a complete amendment and
restatement of such Plan. Any Share Grant granted under the Plan shall be
subject to the terms of the Plan as in effect at the time the Share Grant is
granted; provided, however, that by agreement between the Committee and the Key
Employee, any such Share Grant may be amended to incorporate and become subject
to the provisions of the Plan as amended through a date which is subsequent to
the date on which the Share Grant was granted.
17. EFFECTIVE DATE OF PLAN. The Plan, effective March 18, 1987,
is of perpetual duration.
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EXHIBIT 10.7
WEATHERFORD ENTERRA, INC.
EXECUTIVE INCENTIVE STOCK BONUS PLAN
AS AMENDED MARCH 20, 1996
1. PURPOSE OF PLAN.
This Executive Incentive Stock Bonus Plan (the "Plan") of Weatherford
International Incorporated (the "Company"), for officers and other key
employees of the Company and certain related corporations ("Key Employees"), is
intended to advance the best interest of the Company by providing those persons
who have significant ultimate responsibility for the management and planning of
the Company's operations and who directly influence the growth and profits of
the Company and those related corporations with additional opportunities for
meaningful capital accumulation, and by increasing their proprietary interest
in the success of the Company and those related corporations, encourage their
continued employment with the Company or those related corporations. It is
desired that the benefits available under this Plan, when added to other
benefits payable to Key Employees, will furnish total compensation to those
employees which is competitive in the Company's industry.
2. CERTAIN DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Bonus Shares" shall mean shares of Common Stock granted to a
Key Employee pursuant to Section 5 of the Plan.
(c) "Bonus Share Agreement" shall mean the agreement described in
Section 6 of the Plan.
(d) "Bonus Share Grant" shall mean a grant of Bonus Shares
pursuant hereto.
(e) "Committee" shall mean the committee specified in Section 6
hereof.
(f) "Common Stock" shall mean the Common Stock, $.10 par value per
share, of the Company.
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<PAGE> 2
(g) "Company" shall mean Weatherford Enterra, Inc., a Delaware
corporation.
(h) "Fair Market Value" shall mean the closing sale price of the
Company's Common Stock on a Grant Date (or if Common Stock was
not traded on such day, the first day following the Grant Date
on which Common Stock was traded).
(i) "Grant Date" shall mean the date on which Bonus Shares are
awarded to a Key Employee pursuant to Section 5 of the Plan.
(j) "Officer" shall mean a Key Employee who is an officer of the
Company.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 8 below, the maximum
aggregate number of Bonus Shares which may be granted under
the Plan shall be 25,179.
(b) Bonus 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 Bonus Shares
with the Securities and Exchange Commission, either prior to
or after same are granted to a Key Employee.
4. ELIGIBILITY.
The individuals who shall be eligible to receive Bonus Shares under
this Plan shall be such officers and other key employees (including officers
who may be members of the Board of Directors) of the Company, or of any
subsidiary or affiliated corporation, as the committee appointed by the Board
of Directors (the "Committee"), in its sole discretion, shall determine from
time to time. Any reference to a subsidiary or affiliated corporation shall
mean a corporation of which the Company owns, directly or indirectly, not less
than 40 percent of each class of voting stock.
5. GRANTS.
(a) The Committee may cause the Company to issue, from time to
time, Bonus Shares to, and enter into Bonus Share Agreements
with, such Key Employees as the Committee, in its sole
discretion, may determine. The Committee will determine, in
its sole discretion, if a Key Employee is
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<PAGE> 3
eligible to receive a bonus for a given fiscal year, and if
so, the amount of such bonus. The number of Bonus Shares to
be issued to the Key Employee pursuant to the Plan will be
calculated using the closing sale price of the Company's
Common Stock (the "Fair Market Value") on the date on which
the Bonus Shares are awarded (the "Grant Date").
(b) The Company shall not be required to issue fractional Bonus
Shares. In lieu thereof, any fractional Bonus Shares shall be
rounded to the next higher whole number.
6. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a committee to be appointed
by the Board of Directors of the Company (hereinafter called
the "Committee"). The Committee shall consist of not less
than three members of the Board of Directors, all of whom
shall be "disinterested persons". A "disinterested person" is
a person who at the time he exercises discretion with respect
to the award of Bonus Shares is not, and for at least one year
prior to that time has not been, eligible to receive Bonus
Shares under the Plan or under other similar plans of the
Company. A majority of the Committee's members will
constitute a quorum and all determinations of the Committee
will be made by a majority of its members.
(b) The Committee is empowered to:
(i) Make all determinations regarding individuals who
are considered Key Employees of the Company;
(ii) Make all determinations and computations
concerning the issuance of Bonus Shares under the
Plan and the number of shares to be granted to a
Key Employee;
(iii) Cause the Company to enter into a Bonus Share
Agreement with each Key Employee awarded Bonus
Shares setting forth the terms and provisions of
the such grant;
(iv) Make rules and regulations for the administration
of the Plan which are not inconsistent with the
terms and provisions hereof;
(v) Construe and administer all terms, provisions,
conditions and limitations of the Plan in good
faith;
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<PAGE> 4
(vi) Make equitable adjustments for any mistakes or
errors in the administration of the Plan or deemed
by the Committee to be necessary as the result of
any unusual situation or any ambiguity in the
Plan; and
(vii) Select, employ and compensate, from time to time,
such consultants, accountants, attorneys and other
agents and employees as the Committee may deem
necessary or advisable for the proper and
efficient administration of the Plan.
(c) The foregoing list of express powers is not intended to be
either complete or exclusive, and the Committee shall, in
addition, have such powers, whether or not expressly
authorized, which it may deem necessary, desirable, advisable
or proper for the supervision and administration of the Plan.
Except as otherwise specifically provided herein, the decision
or judgment of the Committee on any question arising hereunder
in connection with the exercise of any of its powers shall be
final, binding and conclusive upon all parties concerned
(including a Key Employee and any person claiming by, through
or under a Key Employee) and shall not be subject to review.
7. CERTIFICATES REPRESENTING SHARES.
Bonus Shares will be represented by a stock certificate or
certificates registered in the name of the Key Employee to whom such Bonus
Shares shall have been granted.
8. HOLDING PERIOD.
Any Bonus Shares granted must be held by an Officer for at least
six-months prior to sale, assignment, transfer or exchange, and any attempt to
sell, assign, transfer or exchange such shares during the six months after
grant shall be void.
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 Bonus Shares available for grant under
the Plan shall be ratably adjusted by the Committee, whose determination shall
be conclusive.
10. NON-ALIENATION OF BENEFITS.
No rights or benefits under the Plan or a Bonus Share Agreement shall
be subject to anticipation, alienation, sale, assignment, hypothecation,
pledge, exchange, transfer,
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<PAGE> 5
encumbrance or charge, and any attempt to anticipate, alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void. No rights or benefits under the Plan or a Bonus 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 Key Employee or
beneficiary hereunder should attempt to anticipate, alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge any right or
benefit hereunder, then such right or benefit shall cease and terminate.
11. WITHHOLDING TAXES.
Each Key Employee granted Bonus Shares shall pay to the Company, or
the Company may deduct from other compensation payable to each Participant, the
amount of any Federal, state or local taxes of any kind required by law to be
withheld by the Company with respect thereto. If any such amounts must be
withheld by the Company and the Key Employee elects to pay such sums directly,
written notice of that election and such sums for taxes shall be delivered to
the Company prior to delivery of such Bonus Shares. Any such taxes owed maybe
satisfied by the Key Employee in shares of Common Stock, at the discretion of
the Committee, if the Key Employee instructs the Company in writing prior to
the issuance of a share certificate evidencing the Bonus Shares to withhold
from such shares that number of shares having a value equal to the amount
necessary to satisfy the taxes owed, or if the Key Employee delivers to the
Company that number of shares of Common Stock having a value equal to that
amount. The number of shares of Common Stock required to satisfy such taxes
will be calculated based on the Fair Market Value of the Common Stock.
12. AMENDMENT OR TERMINATION OF PLAN.
The Board 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 Key Employee under any grant previously made.
13. EXECUTION OF AGREEMENT.
Each grant hereunder shall be contingent upon the execution by the Key
Employee of a Bonus Share Agreement agreeing to the terms and condition set
forth in this Plan, and any other terms and conditions required by counsel to
the Company in order to comply with applicable Federal or state securities laws
or other legal requirements.
- 5 -
<PAGE> 6
14. GOVERNMENT AND OTHER REGULATIONS.
Notwithstanding any other provisions of the Plan, the obligations of
the Company with respect to Bonus Shares 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 Bonus Shares under the Plan until such
time as:
(a) any legal requirements or regulations shall have been met
relating to the issuance of such Bonus Shares or to their
registration, qualification or exemption from registration or
qualification under the Securities Act of 1933 or any
applicable state securities law; and
(b) satisfactory assurances shall have been received that such
Bonus Shares when delivered will be duly listed on the
American Stock Exchange.
15. NON-EXCLUSIVITY OF PLAN.
The adoption of the Plan by the Board shall not 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 stock of the Company otherwise than under the Plan, and such
arrangements as may be either generally acceptable or applicable in specific
cases.
16. GOVERNING LAW.
The Plan shall be governed by, and construed in accordance with, the
laws of the State of Texas.
17. 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
- 6 -
<PAGE> 7
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 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/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.
18. MISCELLANEOUS PROVISIONS.
(a) Except as to grants to a Key Employee, no employee or other
person shall have any claim or right to be granted Bonus
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 Key Employee 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.
19. EFFECT OF AMENDMENTS.
This Executive Incentive Stock Bonus Plan, as amended through March
20, 1996, constitutes a complete amendment and restatement of such Plan. Any
Bonus Share Grant granted under the Plan shall be subject to the terms of the
Plan as in effect at the time the Bonus Share Grant is granted; provided,
however, that by agreement between the Committee and the Key Employee, any such
Bonus Share Grant may be amended to incorporate and become subject to the
provisions of the Plan as amended through a date which is subsequent to the
date on which the Bonus Share Grant was granted.
20. EFFECTIVE DATE OF PLAN.
The Plan shall become effective and shall be deemed to have been
adopted on May 15, 1992. The duration of the Plan is to be perpetual.
- 7 -
<PAGE> 1
EXHIBIT 10.8
FIRST AMENDMENT TO WEATHERFORD INTERNATIONAL
INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS AGREEMENT by Weatherford International Incorporated (the
"Sponsor"),
W I T N E S S E T H:
WHEREAS, the Sponsor maintains the Plan known as "Weatherford
International Incorporated Supplemental Executive Retirement Plan" (the
"Plan"); and
WHEREAS, the Sponsor retained the right in Section 7.1 of the
Plan to amend the Plan from time to time; and
WHEREAS, the Sponsor desires to clarify the eligibility
provisions of the Plan; and
WHEREAS, the Board of Directors of the Sponsor approved
resolutions to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of
January 1, 1992, as follows:
Section 2.1 of the Plan is hereby completely amended and
restated to provide as set forth in the substitute page attached
hereto which shall be inserted into the Plan in place of the
above-described original section.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement
this _____ day of December, 1993.
WEATHERFORD INTERNATIONAL INCORPORATED
By ____________________________________
<PAGE> 2
ARTICLE II
ELIGIBILITY
2.1 INITIAL ELIGIBILITY. Those employees of any Company who are
designated by the Committee as members of a select group of management or
highly compensated employees. Participants in the Weatherford Pension Plan who
are designated by the Committee as members of a select group of management or
highly compensated employees will automatically become a Participant in this
Plan.
2.2 TERMINATION OR FREEZE OF WEATHERFORD PENSION PLAN. If the
Weatherford Pension Plan is either frozen or terminated then each Participant
in this Plan shall become fully vested in his Accrued Benefit to the date of
the freeze or termination. The Deferred Compensation Benefit shall then be
payable at the time, in the form and under the terms and conditions for the
payment of benefits under the Weatherford Pension Plan.
II-1
<PAGE> 3
SECOND AMENDMENT TO WEATHERFORD INTERNATIONAL
INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS AGREEMENT by Weatherford International Incorporated (the
"Sponsor"),
W I T N E S S E T H:
WHEREAS, the Sponsor maintains the Plan known as "Weatherford
International Incorporated Supplemental Executive Retirement Plan" (the
"Plan"); and
WHEREAS, the Sponsor retained the right in Section 7.1 of the
Plan to amend the Plan from time to time; and
WHEREAS, the Sponsor desires to clarify what compensation
shall be taken into account under the Plan; and
WHEREAS, the Board of Directors of the Sponsor approved
resolutions to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of
___________________, 1994, as follows:
Section 3.2 of the Plan is hereby completely amended and
restated to provide as set forth in the substitute pages attached
hereto which shall be inserted into the Plan in place of the
above-described original section.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement
this _____ day of __________________, 1994.
WEATHERFORD INTERNATIONAL INCORPORATED
By ___________________________________
<PAGE> 4
ARTICLE III
DEFERRED COMPENSATION BENEFIT
3.1 ENTITLEMENT TO DEFERRED COMPENSATION BENEFIT. A Participant shall
be entitled to a Deferred Compensation Benefit under the terms of this Plan
only upon fulfilling the requirements to become entitled to a benefit under the
terms and provisions of the Weatherford Pension Plan as amended from time to
time.
3.2 CALCULATION OF DEFERRED COMPENSATION BENEFIT. The Deferred
Compensation Benefit payable to a Participant under the terms of this Plan
shall be the same benefit which would be payable to the Participant under the
applicable provisions of the Weatherford Pension Plan had the compensation
considered under that plan for benefit accruals included all compensation paid
the Participant in addition to the compensation permitted to be considered for
plan purposes, including incentive cash and stock bonuses attributable to the
Plan Year in which earned, regardless of when paid, and elective contributions
under the Weatherford Supplemental Savings Plan, and had none of this benefit,
so calculated, been subject to any mandatory limitations then applicable to it
under the Code, ERISA or any other federal statute which now limits or will in
the future limit benefits payable from that Plan (by way of illustration but
not limitation, FOR EXAMPLE, the limitation on compensation set out in
Section 401(a)(17) of the Code or the Section 415 limitation on benefits
permitted to be paid by a qualified plan) reduced by the actual benefit paid
under the Weatherford Pension Plan as subjected to those same limitations. In
computing the Deferred Compensation Benefit and the benefit payable under the
Weatherford Pension Plan, the same actuarial assumptions required by the
definition of Accrued Benefit shall be used
III-1
<PAGE> 5
both in the calculation of the benefit and any additional assumptions necessary
because of an election of form or time of consummation of benefits.
3.3 FORM AND TIME OF PAYMENT. The Deferred Compensation Benefit
shall be payable to the Participant by the Company at the time, in the form and
subject to the same conditions and limitations as are set out under the terms
and provisions of the Weatherford Pension Plan, as amended from time to time.
Should there be any dispute as to the form or the commencement date of payment
of benefits, the resolution of that dispute for purposes of the Weatherford
Pension Plan shall be conclusively deemed to be the resolution of that same
dispute under the terms of this Plan.
III-2
<PAGE> 6
THIRD AMENDMENT TO WEATHERFORD INTERNATIONAL
INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS AGREEMENT by Weatherford International Incorporated (the "Sponsor"),
W I T N E S S E T H :
WHEREAS, the Sponsor maintains the Plan known as "Weatherford
International Incorporated Supplemental Executive Retirement Plan" (the
"Plan"); and
WHEREAS, the Sponsor retained the right in Section 7.1 of the
Plan to amend the Plan from time to time; and
WHEREAS, the Board of Directors of the Sponsor approved
resolutions to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of
January, 1995, as follows:
Section 3.1 of the Plan is hereby completely amended
and restated to provide as set forth in the substitute page
attached hereto which shall be inserted into the Plan in place
of the above-described original section.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement
this 23rd day of August, 1995.
WEATHERFORD INTERNATIONAL
INCORPORATED
By /s/ P. BURGUIRES
----------------------------------
<PAGE> 7
ARTICLE III
DEFERRED COMPENSATION BENEFIT
3.1 ENTITLEMENT TO DEFERRED COMPENSATION BENEFIT. A Participant
shall be entitled to a Deferred Compensation Benefit under the terms of this
Plan only upon fulfilling the requirements to become entitled to a benefit
under the terms and provisions of the Weatherford Pension Plan as amended from
time to time. Notwithstanding the preceding sentence, each Participant shall
be entitled to a Deferred Compensation Benefit under the terms of this Plan
upon the occurrence of a "change of control" that is not approved, recommended
or supported by the Board of Directors in actions taken prior to, and with
respect to, such "change of control." A "change of control" shall be deemed to
have occurred if: (i) a third person, including a "group" as determined in
accordance with section 13(d)(3) of the Securities Exchange Act of 1934,
becomes the beneficial owner of shares of the Employer having 20% or more of
the total number of votes that may be cast for the election of directors of the
Employer; or (ii) as a result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Employer before the
Transaction shall cease to constitute a majority of the board of directors of
the Employer or any successor to the Employer. The Committee shall determine
whether a "change of control" has occurred within the meaning of this Section
3.1 and shall determine whether any such "change of control" has been approved,
recommended or supported by the Board of Directors, and its determination shall
be final and conclusive.
III-1
<PAGE> 1
EXHIBIT 10.9
FIRST AMENDMENT TO
WEATHERFORD SUPPLEMENTAL SAVINGS PLAN
THIS AGREEMENT by Weatherford International Incorporated (the
"Sponsor"),
W I T N E S S E T H:
WHEREAS, the Sponsor maintains the plan agreement known as
"Weatherford Supplemental Savings Plan" (the "Plan"); and
WHEREAS, the Sponsor retained the right in Section 7.1 of the Plan to
amend the Plan from time to time; and
WHEREAS, the Board of Directors of the Sponsor approved resolutions to
amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of January 1,
1995, as follows:
Section 6.1 of the Plan is hereby completely amended and
restated to provide as set forth in the substitute pages attached
hereto which shall be inserted into the Plan in place of the
above-described original Section.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement
this 28th day of August, 1995.
WEATHERFORD INTERNATIONAL INCORPORATED
By /s/ P. BURGUIERES
---------------------------------------
<PAGE> 2
ARTICLE VI
MEMBER'S RIGHTS AND BENEFITS
6.1 MEMBER'S VESTED INTEREST. Each Member shall have a
100% vested and nonforfeitable interest in the amounts allocated to his Basic
Deferred Compensation Accrual Account under this Plan on the books of the
Employer. Each Member shall have a 100% vested and nonforfeitable interest in
the amounts allocated to his Supplemental Matching Accrual Account under the
Plan on the books of the Employer in the event of his death, disability (as
defined under the Basic Plan), or the attainment of age 65. If a Member severs
employment for any other reason, he shall receive the vested portion of this
Supplemental Matching Accrual Account in accordance with the following
schedule:
<TABLE>
<CAPTION>
Vested Percentage in
Supplemental
Completed Years of Active Service Matching Accrual Account
--------------------------------- ------------------------
<S> <C>
Less than two years . . . . . . . . . . . . . . . 0%
Two years but less than 3 years . . . . . . . . . 25%
Three years but less than 4 years . . . . . . . . 50%
Four years but less than 5 years . . . . . . . . 75%
Five years or more. . . . . . . . . . . . . . . .100%
</TABLE>
Notwithstanding the vesting schedule above, each Member shall acquire a 100%
vested interest in the amounts allocated to his Supplemental Matching Accrual
Account under the Plan on the books of the Employer upon the occurrence of a
"change of control" that is not approved, recommended or supported by the Board
of Directors in actions taken prior to, and with respect to, such "change of
control." A "change of control" shall be deemed to have occurred if: (i) a
third person, including a "group" as determined in accordance with section
13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner
of shares of the Employer having 20% or more of the total number of votes that
may be cast for the election of directors of the Employer; or (ii) as a result
of, or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing transactions (a "Transaction"), the persons who were directors
of the Employer before the Transaction shall cease to constitute a majority of
the board of directors of the Employer or any successor to the Employer. The
Committee shall determine whether a "change of control" has occurred within the
meaning of this Section 6.1 and shall determine whether any such "change of
control" has been approved, recommended or supported by the Board of Directors,
and its determination shall be final and conclusive.
6.2 TIME OF BENEFIT PAYMENTS. Vested benefits due under this Plan
shall be paid 90 days after the end of the quarter in which the Member (a)
terminates, (b) retires, (c) dies, or (d) becomes disabled (as defined under
the Basic Plan). If a
VI-1
<PAGE> 3
SECOND AMENDMENT TO
WEATHERFORD ENTERRA, INC.
SUPPLEMENTAL SAVINGS PLAN
THIS AGREEMENT by Weatherford Enterra, Inc. (the "Sponsor"),
W I T N E S S E T H :
WHEREAS, the Sponsor maintains the plan agreement known as
"Weatherford Enterra, Inc. Supplemental Savings Plan" (the "Plan"); and
WHEREAS, the Sponsor retained the right to amend the Plan from
time to time; and
WHEREAS, the Board of Directors of the Sponsor approved
resolutions to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of
July 1, 1996, as follows:
Articles II, III, IV and Sections 1.15 and 6.1 of the
Plan are hereby completely amended and restated to provide as
set forth in the substitute pages attached hereto which shall
be inserted into the Plan in place of the above-described
original Articles and Sections.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement
this 12th day of December 1996.
WEATHERFORD ENTERRA, INC.
By /s/ H. SUSANNE THOMAS
----------------------------------
<PAGE> 4
INCLUDES
FIRST AMENDMENT 8/4/95
SECOND AMENDMENT 12/12/96
WEATHERFORD SUPPLEMENTAL SAVINGS PLAN
<PAGE> 5
1.13 "EXCESS AGGREGATE 401(m) CONTRIBUTIONS" means a Member's Excess
Aggregate 401(m) Contributions as defined under the Basic Plan.
1.14 "MEMBER" means an Employee who is participating in this Plan.
1.15 "PLAN" means this Weatherford ENTERRA, INC. Supplemental
Savings Plan, as amended from time to time.
1.16 "PLAN YEAR" means the Plan Year as defined under the Basic
Plan.
1.17 "SPONSOR" means Weatherford International Incorporated.
1.18 "SUPPLEMENTAL MATCHING ACCRUALS" means the accrual made by the
Employer on behalf of the Members pursuant to the provisions of Article IV.
I-2
<PAGE> 6
ARTICLE II
ELIGIBILITY
Those persons who are designated by the Committee to be members of a
select group of management or highly compensated employees are eligible to
participate in this Plan.
II-1
<PAGE> 7
ARTICLE III
BASIC DEFERRED COMPENSATION ACCRUALS
A Member shall be entitled to defer out of his regular Considered
Compensation for the Plan Year A percentage of Considered Compensation provided
he makes his election in writing prior to the beginning of each Plan Year under
the rules and regulations established by the Committee. Any election of a
deferral of compensation shall continue to be effective until the expiration
date in the election form or if none is specified until it is later changed or
resolved in writing by the Member. A Member shall also be entitled to make a
separate election to defer any PORTION OR ALL OF A bonus he may be entitled to
receive under rules and regulations established by the Committee. An election
to defer a portion of any bonus shall continue to be effective until the
expiration date in the election form or if none is specified until it is later
changed or resolved in writing by the Member.
III-1
<PAGE> 8
ARTICLE IV
SUPPLEMENTAL MATCHING ACCRUALS
The Employer shall make a Supplemental Matching Accrual equal to (a)
50% of the first 6% of the Member's Deferred Compensation Accruals under this
Plan, plus (b) an amount equal to any Employer Matching Contributions which are
treated as Excess Aggregate 401(m) Contributions under the Basic Plan.
However, the Supplemental Matching Accrual for any given Plan Year when added
to the Employer Matching Contributions made by the Employer to the Basic Plan
for that Plan Year shall not exceed 50% of 6% of the Member's TOTAL
COMPENSATION for the same Plan Year.
IV-1
<PAGE> 9
ARTICLE VI
MEMBER'S RIGHTS AND BENEFITS
6.1 MEMBER'S VESTED INTEREST. Each Member shall have a
100% vested and nonforfeitable interest in the amounts allocated to his Basic
Deferred Compensation Accrual Account under this Plan on the books of the
Employer. Each Member shall have a 100% vested and nonforfeitable interest in
the amounts allocated to his Supplemental Matching Accrual Account under the
Plan on the books of the Employer in the event of his death, disability (as
defined under the Basic Plan), or the attainment of age 65. If a Member severs
employment for any other reason, he shall receive the vested portion of this
Supplemental Matching Accrual Account in accordance with the following
schedule:
Vested Percentage in
Supplemental
Completed Years of Active Service Matching Accrual Account
--------------------------------- ------------------------
Less THAN ONE YEAR . . . . . . . . . . . . . . . . . . 0%
ONE YEAR BUT LESS than Two years . . . . . . . . . . . 20%
Two years but less than THREE years . . . . . . . . . . 40%
Three years but less than FOUR years . . . . . . . . . 60%
Four years but less than FIVE years . . . . . . . . . . 80%
Five years or more. . . . . . . . . . . . . . . . . . .100%
Notwithstanding the vesting schedule above, each Member shall acquire a 100%
vested interest in the amounts allocated to his Supplemental Matching Accrual
Account under the Plan on the books of the Employer upon the occurrence of a
"change of control" that is not approved, recommended or supported by the Board
of Directors in actions taken prior to, and with respect to, such "change of
control." A "change of control" shall be deemed to have occurred if: (i) a
third person, including a "group" as determined in accordance with section
13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner
of shares of the Employer having 20% or more of the total number of votes that
may be cast for the election of directors of the Employer; or (ii) as a result
of, or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing transactions (a "Transaction"), the persons who were directors
of the Employer before the Transaction shall cease to constitute a majority of
the board of directors of the Employer or any successor to the Employer. The
Committee shall determine whether a "change of control" has occurred within the
meaning of this Section 6.1 and shall determine whether any such "change of
control" has been approved, recommended or supported by the Board of Directors,
and its determination shall be final and conclusive.
6.2 TIME OF BENEFIT PAYMENTS. Vested benefits due under this Plan
shall be paid 90 days after the end of the quarter in which the Member (a)
terminates, (b) retires, (c) dies, or (d) becomes disabled (as defined under
the Basic Plan). If a
VI-1
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of October 17, 1996 by and between Weatherford Enterra, Inc., a Delaware
corporation ("Weatherford" or the "Company"), and Philip Burguieres, an
individual currently residing in Houston, Texas ("Burguieres").
RECITALS:
WHEREAS, prior to the date of this Agreement, Burguieres has been
employed by the Company since April 4, 1991 and prior to the date hereof served
as Chairman, President and Chief Executive Officer of the Company; and
WHEREAS, Burguieres has resigned as President and Chief Executive
Officer of the Company as of the date hereof, but will continue as an employee
of the Company, on terms and conditions and for the consideration hereinafter
set forth, and serve as a director and as Chairman of the Board of Directors of
the Company, subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the premises and the
respective covenants and agreements of the parties herein contained, the
Company and Burguieres hereby agree as follows:
ARTICLE 1
EMPLOYMENT
The Company hereby agrees to employ Burguieres, and Burguieres 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 October 17, 1996 (the
"Effective Date") and shall continue through October 16, 2001, unless sooner
terminated as hereinafter provided.
ARTICLE 3
POSITION AND DUTIES
3.1 Burguieres shall initially be employed as a director and as
Chairman of the Board of Directors of the Company (the "Board") and shall have
such responsibilities, duties and authority reasonably accorded to and expected
of a Chairman and as may from time to time be prescribed by the Board or
pursuant to the Company's bylaws. The parties expressly
- 1 -
<PAGE> 2
agree that the Board is under no obligation to reelect Burguieres as Chairman
at any time in the future, nor is the Board required to nominate Burguieres for
reelection as a director upon the expiration of his current term. Burguieres
agrees to resign as Chairman, 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.
Burguieres' resignation as Chairman, a director, or both, shall have no effect
on Burguieres' employment by the Company. Should Burguieres resign either or
both positions, the Board shall assign to him such other responsibilities,
duties and authority as are deemed appropriate by the Board.
3.2 During the term of his employment, and excluding any periods
of vacation and sick leave to which Burguieres is entitled, Burguieres shall
devote such time and efforts to the business and affairs of the Company as
shall be necessary to discharge his responsibilities and duties; provided,
however, that Burguieres shall be permitted to engage from time to time in and
to receive compensation for outside business activities, including the
management of businesses and investments that are not related to the business
and affairs of the Company to the extent such activities do not significantly
interfere with the performance of Burguieres' responsibilities to the Company
in accordance with this Agreement and do not cause Burguieres to be in
violation of Article 6 of this Agreement.
ARTICLE 4
COMPENSATION AND RELATED MATTERS
4.1 Salary. During the term of employment set forth in Article 2,
the Company shall pay to Burguieres an annual base salary of $300,000, or such
higher rate as may from time to time be determined in the sole discretion of
the Board, the base salary to be paid in substantially equal semi-monthly
installments.
4.2 Benefits. Burguieres shall not be eligible to participate in
the Company's incentive compensation plans (including, without limitation, any
cash or stock bonus plans (including any bonus that otherwise might have been
paid or payable by the Company to Burguieres on account of performance during
that portion of the fiscal year of the Company ending December 31, 1996 that
preceded the Effective Date) or any incentive stock-based plans, such as stock
option plans and restricted stock plans. During the term of this Agreement,
Burguieres shall be eligible for the benefit plans and programs enumerated
below:
(a) Burguieres shall be entitled to continue his
participation 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 of this Agreement.
(b) Burguieres and Burguieres' eligible dependents shall
be entitled to continue 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
- 2 -
<PAGE> 3
of this Agreement; provided, however, that Burguieres shall pay any premiums or
other amounts required to be paid for such benefits. Upon termination of
Burguieres' employment, he shall be entitled to health benefits pursuant to the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), provided that he
shall pay any premiums owed in connection with such health benefits. After
expiration of the COBRA benefits, Burguieres shall be entitled to convert the
Company's health plan, as it relates to Burguieres and any eligible dependents,
to an individual policy, upon payment of the applicable conversion fee.
(c) During the first two years of the term of this
Agreement, Burguieres shall be entitled to a Company telephone calling card, a
Company corporate American Express card, but only to the extent this perquisite
is afforded to other key employees of the Company and reimbursement for his
expenses related to one mobile telephone.
4.3 Stock Options and Stock Appreciation Rights.
(a) Immediately prior to the Effective Date, Burguieres
held options granted under various of the Company's Stock Option Plans (the
"Option Plans") to purchase (i) up to 50,000 shares of Common Stock, $.10 par
value ("Common Stock"), of the Company at $10.50 per share, (ii) up to 12,500
shares of Common Stock at $8.75 per share, (iii) up to 27,500 shares of Common
Stock at $15.75, (iv) up to 27,500 shares of Common Stock at $19.75 per share,
(v) up to 27,500 shares of Common Stock at $18.50 per share, and (vi) up to
30,000 shares of Common Stock at $31.563 per share (such options being herein
collectively called the "Unvested Options"). Notwithstanding any contrary
provision of the Option Plans or of the several agreements pursuant to which
the Unvested Options were granted to Burguieres, the rights of Burguieres with
respect to said Unvested Options shall be fully vested at the Effective Date
(such Unvested Options hereinafter included in the term the "Options") and
exercisable by Burguieres at any time after the Effective Date in accordance
with the terms of the Option Plan.
(b) Immediately prior to the Effective Date, Burguieres
held unvested stock appreciation units granted under the Company's Stock
Appreciation Rights Plan (the "SAR Plan"), (i) 25,000 of which have a price of
$10.75 per unit, and (ii) 6,250 which have a price of $9.00 per unit (such
stock appreciation units being herein collectively called the "Unvested
Units"). Notwithstanding any contrary provision of the SAR Plan or of the
several agreements pursuant to which the Unvested Units were granted, the
rights of Burguieres with respect to said Unvested Units shall be fully vested
at the Effective Date (such Unvested Units hereinafter included in the term the
"Units") and exercisable by Burguieres at any time after the Effective Date in
accordance with the terms of the SAR Plan.
(c) Except as otherwise specifically provided in this
Section 4.3, Burguieres shall not be entitled to participate in any stock
option plan or stock appreciation rights plan of the Company, including but not
limited to any Option Plan or the SAR Plan, at any time on or after the
Effective Date.
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<PAGE> 4
(d) The Company shall be entitled to withhold from any
payment to be made pursuant to Section 4.3 any portion of any taxable income
that (i) is realized by Burguieres as a result of the exercise of any of the
Options or the Units and (ii) the Company shall determine it is required by law
or regulation to so withhold under applicable tax laws.
4.4 Restricted Stock.
(a) Immediately prior to the Effective Date, Burguieres
held 125,500 shares of Common Stock that were granted to Burguieres pursuant to
the Company's Restricted Stock Incentive Plan (the "Restricted Stock Plan") and
which remained subject to restrictions on ownership on the Effective 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 Burguieres,
all restrictions on ownership shall terminate with respect to the Restricted
Shares as originally scheduled; provided, however, that all restrictions shall
terminate upon the expiration or earlier termination of this Agreement.
(b) Except as otherwise specifically provided in this
Section 4.4, Burguieres shall not be entitled to participate in the Restricted
Stock Plan at any time on or after the Effective Date.
(c) The Company shall be entitled to withhold from any
payments to be made pursuant to Section 4.4 any portion of any taxable income
that (i) is realized by Burguieres as a result of the termination of any
restriction on ownership on any of the Restricted Shares and (ii) the Company
shall determine it is required by law or regulation to so withhold under
applicable tax laws.
4.5 Vacation. Burguieres shall be entitled to paid vacation
during each year of the Agreement, determined in accordance with the Company's
then current vacation policy. Burguieres shall also be entitled to all paid
holidays given by the Company to its employees.
4.6 Business Expenses. During the term of this Agreement, the
Company will reimburse Burguieres for authorized business expenses incurred by
Burguieres for Company-related business purposes, including expenses for
entertainment and business development, travel and similar items, provided such
expenses are made in accordance with the Company's policies and procedures and
are approved by the Company. The Company will reimburse Burguieres on a
monthly basis upon presentment by Burguieres of an itemized accounting of such
expenditures, including receipts setting forth (in appropriate detail the date
place, amount, names, etc.) the individual items for which reimbursement is
sought. Major expense items, such as travel, must be authorized by the Company
prior to Burguieres' incurring the expense.
4.7 Office and Support Staff. The Company contemplates that
Burguieres in performing under this Agreement will require office space,
secretarial assistance, telephone
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usage, facsimile, computer and other office equipment usage and other
assistance. During the first two years of the term of this Agreement, the
Company shall furnish Burguieres with office space, either in one of the
Company's locations or elsewhere, and supply Burguieres' reasonable
requirements at no expense to Burguieres.
ARTICLE 5
TERMINATION
5.1 Termination by the Company.
(a) Termination Due to Disability. Burguieres'
employment hereunder shall terminate upon his "Disability". In the event of
such termination, the Company shall pay to Burguieres the compensation pursuant
to Section 4.1 to which he would otherwise be entitled had his employment
continued through the date indicated in Article 2 hereof, in the same manner as
paid while Burguieres was employed, and extend to Burguieres the benefits
pursuant to Section 4.2(b), in accordance with the Company's policy with
respect to Disability, 4.2(c), 4.3, 4.4 and 4.7; provided, however, that the
Company shall be entitled to credit against any such benefits payable by it any
amount paid to Burguieres under the Company's disability benefit programs
provided for the benefit of Burguieres. For purposes of this Agreement,
"Disability" is defined to mean that, as a result of Burguieres' incapacity due
to physical or mental illness, Burguieres shall have been absent from his
duties with the Company on a full-time basis for a period of one year and a
physician acceptable to the Company is of the opinion that (i) Burguieres is
suffering from "total disability" as defined in the Company's long-term
disability plan, or any successor plan or program or (ii) Burguieres will
qualify for a social security disability payment, and (iii) within thirty (30)
days after written notice of termination is given, Burguieres shall not have
returned to the full-time performance of Burguieres' duties.
(b) Termination Due to Death. Burguieres' employment
hereunder shall terminate upon his death. In the event of such termination,
the Company shall pay to Burguieres' estate the compensation pursuant to
Section 4.1 to which he would otherwise be entitled had his employment
continued through the date indicated in Article 2 hereof, in the same manner as
paid while Burguieres was employed, and extend to Burguieres' eligible
dependents or estate, as appropriate, the benefits pursuant to Sections 4.2(b),
in accordance with the Company's policy with respect to death, 4.2(c), 4.3, 4.4
and 4.7.
(c) Termination Without Cause. The Company, without
cause, may terminate this Agreement at any time by written notice to
Burguieres. In the event of such termination, the Company shall pay Burguieres
the compensation pursuant to Section 4.1 and extend to Burguieres the benefits
pursuant to Sections 4.2(b), except for long- term disability, 4.2(c), 4.3, 4.4
and 4.7 to which he would otherwise be entitled had his employment continued
through the date indicated in Article 2 hereof in the same manner as paid or
extended while Burguieres was employed.
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<PAGE> 6
(d) Termination for Cause. The Company may terminate
Burguieres' employment for "Cause". In the event of such termination, the
Company shall cease paying Burguieres compensation pursuant to Section 4.1 and
shall terminate benefits pursuant to Sections 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7,
except as required by law. For purposes of this Agreement, the Company shall
have "Cause" to terminate Burguieres' employment hereunder only (i) if
termination shall have been the result of an act or acts of dishonesty on
Burguieres' part constituting a felony and resulting, or intending to result,
directly or indirectly, in gain or personal enrichment at the expense of the
Company, or (ii) upon the willful and continued failure by Burguieres to
substantially perform his duties with the Company (other than any such failure
resulting from his incapacity due to mental or physical illness) after demand
in writing for substantial performance is delivered to Burguieres by the Board,
which demand specifically identifies the manner in which such Board believes
that Burguieres has not substantially performed his duties, and such failure to
perform his duties results in demonstrably material injury to the Company, or
(iii) upon the breach by Burguieres of Article 6, which breach remains
uncorrected for 30 days following written notice to Burguieres by the Company
of such breach. Burguieres' employment shall in no event be considered to have
been terminated by the Company for cause if such termination took place as a
result of (i) bad judgment or negligence on his part, or (ii) any act or
omission without intent of gaining therefrom, directly or indirectly, a profit
to which Burguieres was not legally entitled, or (iii) any act or omission
believed by Burguieres in good faith to have been in or not opposed to the
interests of the Company, or (iv) any act or omission in respect of which a
determination is made that Burguieres met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under
the bylaws of the Company or the laws of the State of Texas or the directors
and officers liability insurance of the Company, in each case as in effect at
the time of such act or omission. Burguieres shall not be deemed to have been
terminated for cause unless and until there shall have been delivered to
Burguieres a copy of a resolution duly adopted by the affirmative vote of not
less than three-fourths (3/4) of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to Burguieres and an opportunity for Burguieres, together with his counsel, to
be heard before the Board) finding that in the good faith of the Board he was
guilty of conduct set forth above in clauses (i) through (iii) of the first
sentence of this paragraph and specifying the particulars thereof in detail.
5.2 Termination by Burguieres. Burguieres may terminate his
employment hereunder without any breach of this Agreement under any of the
following circumstances:
(a) the assignment to Burguieres by the Board of duties
inconsistent with the position, duties, responsibilities and status of the
Company's Chairman; or
(b) the failure of the Company to re-elect or re-appoint
Burguieres as Chairman, a director, or both, except in connection with the
termination of employment pursuant to Section 5.1(c); or
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<PAGE> 7
(c) for the Company's breach of any provision of this
Agreement which, if correctable, remains uncorrected for 30 days following
written notice to the Company by Burguieres of such breach; or
(d) in the event a Change of Control (as defined
hereinafter) occurs. 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 (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
(D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 5.2(d); 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 "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,
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<PAGE> 8
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
(iv) Approval by the stockholders of the Company of
a complete liquidation or dissolution of the Company.
In the event of such termination, the Company shall pay to
Burguieres the compensation pursuant to Section 4.1 and extend to Burguieres
the benefits pursuant to Sections 4.2(b), except for long-term disability
coverage, 4.2(c), 4.3, 4.4 and 4.7 to which he would otherwise be entitled had
his employment continued through the date indicated in Article 2, in the same
manner as paid or extended while Burguieres was employed; provided, however, if
termination occurs after a Change of Control, Burguieres can request, at his
option, that the compensation owed pursuant to Section 4.1 be paid in a lump
sum at his date of termination.
5.3 Date and Effect of Termination. "Date of Termination" shall
mean (i) if Burguieres' employment is terminated by his death, the date of his
death, (ii) if Burguieres' employment is involuntarily terminated pursuant to
Section 5.1(b) (other than by reason of death) or Section 5.1(c) herein, the
date specified in the notice of termination, (iii) if Burguieres' employment is
terminated upon his Disability, the date 30 days after the Company's notice to
Burguieres as contemplated in Section 5.1(a) hereof, and (iv) if Burguieres
voluntarily terminates his employment, the date set forth in any notice to
terminate under Section 5.2. This Agreement shall terminate on the Date of
Termination relating to a termination pursuant to Section 5.1(a), 5.1(b) 5.1(c)
or 5.2 and thereafter neither party will have any liability or obligation to
the other under this Agreement, except for the covenants in Sections 5.1(a),
5.1(b) and 6.
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<PAGE> 9
ARTICLE 6
NON-COMPETE
In consideration of his employment hereunder and in view of the key
position in which he will serve the Company, Burguieres agrees that during the
period of his employment by the Company hereunder, he will not, without the
prior written consent of the Board of Directors of the Company, directly or
indirectly, own, manage, operate, control, be employed by, participate in or be
connected in any manner with the ownership, management, operation or control of
any business which competes, in the Company's reasonable judgment, with any
business conducted by the Company or any of its subsidiaries or affiliates at
the time of such termination in any area where such business is being conducted
at the time of such termination. In addition, Burguieres agrees that during
the period of his employment by the Company, he will not solicit for employment
any individuals currently employed by the Company or any of its subsidiaries or
affiliates. Breach by Burguieres of this covenant while he is employed by the
Company shall be deemed to be "Cause", as defined in Section 5.1(c).
ARTICLE 7
MISCELLANEOUS
7.1 No Mitigation Required; Other Employment.
(a) If Burguieres' employment is terminated prior to the
date indicated in Article 2 and he is receiving compensation and benefits
hereunder, he shall not be required to mitigate the amount of any payment or
benefit provided for in Section 4.1 or 4.2 by seeking other employment or
otherwise.
(b) If Burguieres' employment is terminated for any
reason other than Cause and Burguieres obtains other employment that would not
be a breach of the non-compete covenant included in Article 6 if he were still
employed, the Company shall continue paying the compensation owed pursuant to
Section 4.1 without reduction by any compensation earned by Burguieres as a
result of employment by another employer after the date of termination, or
otherwise. The benefits provided for in Section 4.2 shall terminate
immediately, except as required by law.
7.2 Change of Control Agreement. Burguieres is party to a Change
of Control Agreement dated December 9, 1993, as amended (the "COC Agreement"),
with Weatherford, regarding compensation and severance arrangements in the
event of a change in control (as defined therein) of Weatherford. The COC
Agreement is rescinded in its entirety as of the date hereof, and Burguieres
hereby waives all of his rights thereunder. This Agreement shall supersede and
replace in its entirety the COC Agreement and the COC Agreement shall be of no
further force and effect, and neither party shall have any obligation to the
other thereunder.
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<PAGE> 10
7.3 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
Burguieres, 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 Burguieres to compensation from the Company in
the same amount and on the same terms as if he had terminated his employment
pursuant to Section 5.2, 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 7.3 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
Burguieres hereunder shall inure to the benefit of and be enforceable by
Burguieres' personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Burguieres 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 Burguieres' designated
beneficiaries set forth in a written beneficiary designation filed with the
Company or, if there be no such designated beneficiary, to Burguieres' estate.
7.4 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 Burguieres to: 3229 Del Monte
Houston, Texas 77019
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.
7.5 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.
7.6 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
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<PAGE> 11
Burguieres 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.
7.7 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.
7.8 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.
7.9 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 Burguieres 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 Burguieres 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: /s/ H. SUZANNE THOMAS
-----------------------------------
/s/ PHILIP BURGUIERES
---------------------------------------
Philip Burguieres
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<PAGE> 1
EXHIBIT 10.15
CONSULTING AGREEMENT
This Consulting Agreement dated as of July 26, 1996 between
Weatherford Enterra, Inc. (the "Company") and Thomas N. Amonett (the
"Consultant").
WHEREAS, the Company desires to engage Consultant to perform certain
services, as hereinafter specified; and
WHEREAS, Consultant is willing to enter into this Agreement with
respect to such services upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. Duties. Consultant will serve as Acting President and Chief Executive
Officer of the Company and otherwise consult with the Board of
Directors for the term of this Agreement.
2. Term and Termination. This Agreement will commence on July 26, 1996
and will continue indefinitely until terminated by either party's
giving written notice to the other of its intention to terminate same.
3. Compensation. The Company will pay to Consultant $22,750 per month,
commencing July 26, 1996. The Consultant will continue to receive his
quarterly retainer and meeting fees owed by the Company in connection
with his serving as a director of the Company.
4. Relationship Between the Parties. Consultant is retained and engaged
by the Company only for the purposes and to the extent set forth in
this Agreement, and his relation to the Company and its affiliated or
subsidiary companies shall be that of an independent contractor, and
he shall be free to dispose of such portion of his entire time, energy
and skill during regular business hours as he is not obligated to
devote hereunder to the Company and its affiliated or subsidiary
companies, to other pursuits, persons, firms or corporations which are
not competitive to the businesses or products of the Company.
Consultant shall not be considered under the provisions of this
Agreement or otherwise as having an employee status and shall not be
entitled to participate in any plans, arrangements or distributions by
the Company or its affiliated or subsidiary companies pertaining to or
in connection with any pension, stock, bonus, insurance, profit
sharing or similar benefits for the Company's regular employees.
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<PAGE> 2
5. Taxes. Consultant will be liable for all taxes imposed on him or his
business by any government. Accordingly, the Company will not
withhold from Consultant's fees any monies for payment of taxes,
including income taxes, social security taxes, etc. Consultant agrees
to hold harmless and indemnify the Company from and against the
payment of any taxes on account of Consultant's performance hereunder.
6. Trade Secrets and Confidential Information. Consultant recognizes and
acknowledges that he may have access to certain trade secrets and
other confidential information of the Company and corporations
affiliated with the Company and that such information constitutes
valuable, special and unique property of the Company and such other
corporations. Consultant will keep such information strictly
confidential and will not, during the term of this Agreement, or for a
period of five (5) years after the termination hereof, disclose any of
such trade secrets or confidential information to any person, firm,
corporation or other entity for any reason or purpose whatsoever
except to authorized representatives of the Company and its affiliated
corporations. In the event of a breach or threatened breach by
Consultant of the provisions of this provision, the Company shall be
entitled to an injunction restraining Consultant from disclosing, in
whole or in part, such trade secrets and confidential information.
Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages from Consultant.
7. Other Contracts. Consultant warrants that his entering into this
Agreement does not conflict with any obligations he has under any
other agreement.
8. Conflict of Interest. Consultant agrees that he will not, without the
prior written consent of the Company, serve any interest or do any act
or thing which would, in the reasonable opinion of the Company,
conflict with the interests of the Company or any of its affiliates
during the term of this Agreement, and Consultant will not, without
the prior written consent of the Company, enter into competition with
the Company or any of its affiliated or subsidiary companies or
perform services for any competitor of the Company or any of its
affiliated or subsidiary companies during said period.
9. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given
when deposited in the U.S. mail in a registered, postage prepaid
envelope addressed, if to Consultant, 3609 W. Clay, Houston, Texas
77019, and if to the Company, Weatherford Enterra, Inc., 1360 Post Oak
Boulevard, Houston, Texas 77056, Attn.: H. Suzanne
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<PAGE> 3
Thomas, or to such other address as either party shall designate by
written notice to the other.
10. Assignment. Consultant may not assign his rights or obligations
hereunder without obtaining the prior written consent of the Company.
The rights and obligations of the Company hereunder shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Company.
11. Miscellaneous.
(a) This Agreement shall be subject to and governed by the laws of
the State of Texas.
(b) Failure to insist upon strict compliance with any provision
hereof shall not be deemed a waiver of such provision or any
other provision hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other
provision.
12. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the engagement of Consultant by the
Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
WEATHERFORD ENTERRA, INC.
By: /s/ H. SUZANNE THOMAS
-------------------------------
Name: H. Suzanne Thomas
Title: Senior Vice President and
Secretary
/s/ THOMAS N. AMONETT
---------------------------------------
Thomas N. Amonett
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<PAGE> 4
FIRST AMENDMENT TO CONSULTING AGREEMENT
This First Amendment to Consulting Agreement dated as of January 1,
1997 between Weatherford Enterra, Inc. (the "Company") and Thomas N. Amonett
(the "Consultant").
WHEREAS, the Company and Consultant have previously entered into that
certain Consulting Agreement dated as of July 26, 1996 (the "Consulting
Agreement"); and
WHEREAS, the parties which to amend the Consulting Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Section 3 of the Consulting Agreement is hereby deleted in its
entirety and replaced with the following language:
"COMPENSATION.
(a) The Company will pay to Consultant $30,000 per month,
commencing January 1, 1997. Consultant will continue to
receive his quarterly retainer and meeting fees owed by the
Company in connection with his serving as a director of the
Company during the term of this agreement.
(b) Upon Consultant's services as Acting President and Chief
Executive Officer no longer being required, the Company will
pay to Consultant an amount equal to one year's pay, such
amount to be paid at such times and in such installments as
directed by Consultant. In addition, the Company will provide
Consultant with an office and secretarial assistance for one
year thereafter; provided, however, that this shall be
furnished at no additional cost to the Company."
2. The remainder of the Consulting Agreement shall remain in full
force and effect as written.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Consulting Agreement as of the day and year first above written.
WEATHERFORD ENTERRA, INC.
By: /s/ H. SUZANNE THOMAS
---------------------------------
Name: H. Suzanne Thomas
---------------------------------
Title: Sr. Vice President and
Secretary
---------------------------------
/s/ Thomas N. Amonett
----------------------------------------
Thomas N. Amonett
<PAGE> 1
EXHIBIT 21
WEATHERFORD ENTERRA, INC.
SUBSIDIARIES AND AFFILIATES
(December 31, 1996)
<TABLE>
<CAPTION>
JURISDICTION % OF COMPANY OWNERSHIP
NAME OF INCORPORATION (DIRECT OR INDIRECT)
---- ---------------- ----------------------
<S> <C> <C>
A-1 Bit & Tool Co., B.V. Netherlands 100% by W/Eurasia B.V.
Aarbakke AS Norway 100% by W/Norge
Arrow Completion Systems, Inc. (formerly Watson Packer, Inc.) Texas 100% by EPEG
Bit & Tool A-1 S.r.l. Italy 100% by WEMESPA
CanaRoss Limited Russia 50% by Enterra Cyprus
CRC-Evans Automatic Welding, Inc. ("CRC-Evans Welding") Texas 100% by CRC-Evans
CRC-Evans Automatic Welding Limited Delaware 100% by WUSI
CRC-Evans Canada Ltd. ("CRC-Evans Canada") Canada 100% by WE/Canada
CRC-Evans Holland B.V. Netherlands 100% by CRC-Evans
CRC-Evans Limited Delaware 100% by CRC-Evans
CRC-Evans Pipeline International (UK) Limited ("CRC-Evans Ltd.") United Kingdom 100% by W/Eurasia Ltd.
CRC-Evans Pipeline International, Inc. ("CRC-Evans") Delaware 100% by WEI
CRC-Evans Rehabilitation Systems, Inc. (CRC-Rehab.") Delaware 100% by CRC-Evans
CRC-Evans Services Limited United Kingdom 100% by W/Eurasia Ltd.
EMI-Elettro Magnetica Ispezioni Italia S.r.l. Italy 100% by WEMESPA
Energy Industries Financial Services, Inc. Delaware 100% E/Compression
Enterra (Thailand) Ltd. Thailand 100% by WEI
Enterra (U.K.) Limited United Kingdom 100% by OFRH
Enterra Compression Company ("E/Compression") Delaware 100% by EPEG
Enterra Compression Investment Company ("E/Investment") Delaware 100% by E/Compression
Enterra Corporation Nevada 100% by WEI
Enterra Cyprus Limited Cyprus 100% by WE/Canada
Enterra International Limited United Kingdom 100% by OFRH
Enterra Norway AS Norway 100% by WEI
Enterra Oil Field Services, Ltd. ("EOFS") Bermuda 100% by WUSI
Enterra Oilfield Rentals (Malaysia) Sdn. Bhd. Malaysia 100% by WAPP
Enterra Oilfield Rentals Limited Hong Kong 100% by WEI
Enterra Oilfield Rentals Pty. Ltd. Australia 100% by WLI
Enterra Patco Oilfield Products Incorporated Texas 100% by WEI
Enterra Petroleum Equipment Group, Inc. ("EPEG") Delaware 100% by WEI
Enterra Petroleum Equipment Group (UK) Ltd. United Kingdom 100% by W/Eurasia Ltd.
Enterra Quality Drilling Tools Pte. Ltd. Singapore 100% by WAPP
Enterra Rental and Fishing Company Delaware 100% by WUSI
European Material Inspection (EMI) B.V. Netherlands 100% by W/Eurasia B.V.
Homco Arabian Gulf, Inc. Delaware 100% by WUSI
Homco Oilfield Services Limited United Kingdom 100% by W/Eurasia Ltd.
Keltic Oil Tools Limited United Kingdom 100% by OFRH
Nana Test, Inc. Alaska 100% by TEST
Nodeco A/S Norway 100% by W/Norge
Nodeco Ltd. United Kindgom 100% by W/Eurasia Ltd.
Offshore Pipeline Services Limited United Kingdom 45% by CRC-Evans Ltd.
Oil Field Rental Holdings Limited ("OFRH") United Kingdom 100% by W/Eurasia Ltd.
Oiltools Weatherford Limited British Virgin Island 50% WLI
PETCO Fishing & Rental Tools (U.K.) Ltd. United Kingdom 100% by W/Eurasia Ltd.
Pipeline Induction Heat Limited ("PIH") United Kingdom 91.67% by W/Eurasia Ltd.
Pipetex Limited United Kingdom 100% by PIH
ServiciosTec LDC Cayman Islands 100% by EOFS
Technical Oil Services Limited British Virgin Islands 100% by EOFS
Test, Inc. Louisiana 100% by TEST
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
JURISDICTION % OF COMPANY OWNERSHIP
NAME OF INCORPORATION (DIRECT OR INDIRECT)
---- ---------------- ----------------------
<S> <C>
Test International E.C. Bahrain 100% by TEST
Test International Ltd. Cayman Island 100% by TEST
Test Saudi Arabia Ltd. Sauda Arabia 50% by TEST
Total Energy Services International, Inc. - FSC Barbados 100% by EPEG
Total Engineering Services Team, Inc. ("TEST") Louisiana 100% by EPEG
Triumph-LOR International, Inc. ("T-LOR") Texas 100% by WUSI
Weatherford Abu Dhabi, Limited ("W/Abu Dhabi") Cayman Islands 100% by WLI
Weatherford/Al-Rushaid Ltd. Saudi Arabia 49% by W/Overseas Products, Ltd.
Weatherford Asia Pacific Pte. Ltd ("WAPP") (formerly Enterra
Oilfield Pte. Ltd.) Singapore 100% by WLI
Weatherford Australia Pty. Limited Australia 100% by WLI
Weatherford/Bin Hamoodah Abu Dhabi, UAE 49% by W/Abu Dhabi
Weatherford East Europe Service GmbH Germany 100% by W/Holding
Weatherford Enterra Canada Ltd. ("WE/Canada") Canada 85.68% by WLI, 4.45% by CRC-Evans
and 9.87 by EPEG
Weatherford Enterra de Mexico S.A. de C.V. (formerly
Enterra de Mexico S.A. de C.V.) Mexico 99% WLI, 1% WUSI
Weatherford Enterra S.A. (formerly Enterra Oilfield Rental S.A.) Argentina 100% by WLI
Weatherford Enterra Colombia Limited (formerly
Enterra Colombia Limited) British Virgin Islands 100% by EOFS
Weatherford Enterra Compression Company, L.P. Delaware 99% by E/Investment &
1% by E/Compression
Weatherford Enterra U.S., Limited Partnership Louisiana 99% by CRC-Evans Welding &
1% by WUSI
Weatherford Espana, S.A. Spain 100% by W/Holding
Weatherford Eurasia B.V. ("W/Eurasia B.V.") Netherlands 100% by WLI
Weatherford Eurasia Ltd. ("W/Eurasia Ltd.") United Kingdom 99.9% by WLI & .1% by WEI
Weatherford France, S.A. France 100% by WEI
Weatherford Holding GmbH ("W/Holding") Germany 100% by WLI
Weatherford, Inc. ("WINC") Panama 100% by WLI
Weatherford International, Inc. (formerly Barber Industries, Inc.) Delaware 100% by CRC-Evans Canada
Weatherford Ireland Limited Ireland 50% by W/U.K. & 50% by WLI
Weatherford/Lamb, Inc. ("WLI") Delaware 100% by WEI
Weatherford Latin America S.A. Panama 100% by WLI
Weatherford (Malaysia) Sdn. Bhd. Malaysia 40% by WLI
Weatherford Mediterranea S.p.A. ("WEMESPA") Italy 100% by W/Eurasia B.V.
Weatherford Nigeria Ltd. Nigeria 60% by WLI
Weatherford Norge A/S ("W/Norge") Norway 100% by W/Eurasia B.V.
Weatherford Oil Tool Ges.m.b.H. Austria 95% by WLI & 5% by WEI
Weatherford Oil Tool GmbH Germany 100% by W/Holding
Weatherford Oil Tool Middle East Limited British Virgin Islands 100% by WLI
Weatherford Oil Tool Nederland B.V. Netherlands 100% by W/Eurasia B.V.
Weatherford Oil Tool (Private) Limited Singapore 100% by WLI
Weatherford Overseas Products, Limited Cayman Islands 100% by WLI
Weatherford Overseas Services, Limited Cayman Islands 100% by WLI
Weatherford QAF (B) Sdn. Bhd. Brunei 50% by WLI
Weatherford (Saudi Arabia), Ltd. Saudi Arabia 49% by W/Overseas Services, Ltd.
Weatherford Services, S.A. Panama 100% by W/Holding
Weatherford (U.K.) Limited United Kingdom 100% by W/Eurasia Ltd.
Weatherford U.S., Inc. ("WUSI") Delaware 100% by CRC-Evans
Weatherford Venezuela, S.A. Venezuela 100% by WLI
WII Rental Company Delaware 100% by WLI
WI Products and Equipment, Inc. Cayman Islands 100% by WLI
World Wide Leasing LDC Cayman Islands 99% by EOFS & 1% by WUSI
</TABLE>
2
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated February 12, 1997, on the December 31, 1996 consolidated
financial statements, included in this Form 10-K, into the Company's previously
filed Registration Statement File Numbers 33-18187, 33-30522, 33-43131,
2-88509, 33-54842, 33-54844, 33-54846, 33-54848, 33-54850, 33-62253, 33-63215,
33-80068, 33-84076 and 33-84074.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
March 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000029302
<NAME> WEATHERFORD ENTERRA, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 33,029
<SECURITIES> 0
<RECEIVABLES> 289,057
<ALLOWANCES> 16,241
<INVENTORY> 163,302
<CURRENT-ASSETS> 505,434
<PP&E> 1,254,686
<DEPRECIATION> 693,496
<TOTAL-ASSETS> 1,397,723
<CURRENT-LIABILITIES> 211,359
<BONDS> 0
0
0
<COMMON> 5,217
<OTHER-SE> 836,391
<TOTAL-LIABILITY-AND-EQUITY> 1,397,723
<SALES> 994,468
<TOTAL-REVENUES> 994,468
<CGS> 714,346
<TOTAL-COSTS> 714,346
<OTHER-EXPENSES> 13,752
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,914
<INCOME-PRETAX> 104,847
<INCOME-TAX> 34,593
<INCOME-CONTINUING> 70,073
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,073
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
</TABLE>
